On Saturday, the Arizona Diamondbacks and the Los Angeles Dodgers kicked off the baseball season with two games in Sydney, Australia. Fans in most of the country watched the games on the official Major League Baseball Network. But in Los Angeles, home of the Dodgers, fans could only watch on a brand new all-Dodgers channel.
Right now the only cable company carrying SportsNet LA in Los Angeles is Time Warner. That means what used to be a free service through local television is now a subscription-only channel. It is a huge shock to the system. Just last season, fans could watch about 50 Dodgers games for free on TV. This season, there will be zero.
The new network is a product of the team’s sale to new owners. The Dodgers went through a painful bankruptcy a few years ago and were eventually sold to new owners who paid a whopping $2 billion for the team. One of the reasons they paid so much is that the team’s television rights were up for negotiation.
“One of the big pieces of the sale was that they were going to be able to extract a lot of money from local cable television,” says David Carter of the University of Southern California’s Sports Business Institute.
The two channels that aired Dodgers games last season — including KCAL, the local CBS affiliate — paid just $50 million for those rights. So the owners turned instead to the region’s largest cable provider, Time Warner, and made a deal that’s very good for the team’s owners.
“The Dodgers would collect a little over $8 billion over 25 years,” says Carter. “Time Warner Cable would be responsible for gaining subscribers.”
So far, gaining subscribers hasn’t been easy: No other major TV provider has yet purchased the Dodgers channel. In part, it’s a price issue. Because Time Warner is paying so much money to the team, they’re passing on that cost to the consumer. Time Warner has not commented on current negotiations, but it’s reportedly asking for between $4 and $5 per subscriber per month from providers.
Dan York, the chief content officer of the company DirecTV says that price is unreasonable. “Time Warner’s proposed price for the Dodgers is over double what the average regional sports network costs in the United States. And virtually every one of those other networks has more than one team,” he says.
All three of the next most popular TV providers in Los Angeles — DirecTV, Cox and Verizon — say they are negotiating with Time Warner, hoping they’ll either lower the price or allow the providers to unbundle the channel from their basic packages. Until they reach a deal, there will be no Dodgers games for their subscribers.
Andy Albert, a senior vice president for Cox, says it is not just the Dodgers fans they have to consider in their negotiations. He says that Los Angeles-area subscribers are already paying “pretty close to $20” per month for the sports channels Cox carries there. “And a lot of those [subscribers] aren’t sports fans,” he points out.
As more teams and leagues move to their own special networks, providers are beginning to fear that there might be a breaking point. Cable bills are growing four times faster than inflation, and they already average about $100 a month.
Eventually, people who don’t care about sports may decide it just does not make sense to keep paying so much for games they don’t watch.
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