Sun March 23, 2014
In LA, Watching Home Team's Ball Games Just Got More Complicated
Originally published on Sun March 23, 2014 5:37 pm
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.
ARUN RATH, HOST:
It's ALL THINGS CONSIDERED from NPR West. I'm Arun Rath.
Major League Baseball kicked off the season a little early this year with two games in Sydney, Australia, between the Arizona Diamondbacks and the Los Angeles Dodgers. The rest of the regular season opens in a week. Most of the country watched these early games on the MLB Network. But here in Los Angeles, you could only watch on a brand-new, all-Dodgers channel. It was the most high-profile moment yet in what's become quite the controversy in baseball and beyond. NPR's Becky Sullivan reports.
BECKY SULLIVAN, BYLINE: It's Saturday night in L.A. and I'm watching the Dodgers here at a bar called The Short Stop. The bar is full. But every few minutes, the bartender has to stop serving drinks so he can answer the phone.
UNIDENTIFIED MAN: Short Stop. Yes, we have the Dodger game on. Anything else?
SULLIVAN: Turns out, almost everyone is here because for the first season ever, the Dodgers aren't on free local TV. Instead, they're on a new channel owned by the Dodgers called SportsNet LA. And right now, Time Warner is the only major provider in all of Southern California that carries it. Joseph Caldera(ph) even had trouble finding a sports bar with the game.
JOSEPH CALDERA: Nobody had it. And so at the last minute, we remembered here and, all right, let's get down there because how else are we going to see it?
SULLIVAN: It is a huge shock to the system. Just last season, the Dodgers played about 50 games on free, over-the-air TV. David Carter is the director of USC's Sports Business Institute. He's been watching this deal since the Dodgers were sold for $2 billion a couple years ago.
DAVID CARTER: 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.
SULLIVAN: The two channels that aired Dodgers games last season paid just $50 million for those rights. Look at the Yankees. They're due to pull in nearly double that this season. So David Carter says the Dodgers made a deal with the region's biggest TV provider, Time Warner Cable.
CARTER: The Dodgers would collect a little over $8 billion over 25 years. That money would flow into the team, and then Time Warner Cable would be responsible for gaining subscribers and generating advertising revenue over that timeframe.
SULLIVAN: You heard that right. Time Warner is paying more than $8 billion to broadcast the Dodgers. That is double what even the Yankees are making. But this deal puts Time Warner in a pickle.
CARTER: They have some financial risk, to say the least.
SULLIVAN: To make this deal work, Time Warner has to get other TV providers to carry SportsNet LA. The company won't comment on current negotiations, but they're reportedly asking for between four and $5 per subscriber per month. I'll let Dan York of DirecTV put that in context.
DAN YORK: 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.
SULLIVAN: DirecTV is the number two provider in the L.A. area. I called them up, along with Cox and Verizon, providers number three and four. They all said they were negotiating with Time Warner but that they hadn't yet reached a deal. In other words, no Dodgers for their subscribers. Andy Albert of Cox says it's not just the Dodgers fans they have to consider.
ANDY ALBERT: The cost for just regional sports that we carry today and ESPN is probably pretty close to $20 out of every month what customers pay on their cable bill. And a lot of those aren't sports fans.
SULLIVAN: Cable bills already average about 100 bucks a month. And as more teams move to their own special networks, a breaking point could be on the horizon. Eventually, people who don't care about sports may decide it just doesn't make sense to keep paying so much.
UNIDENTIFIED WOMAN: Yeah.
(SOUNDBITE OF CHEERING)
SULLIVAN: But that's still in the future. Here now back at The Short Stop, Joseph Caldera is just hoping for a smooth resolution.
CALDERA: It's just the business people are going to work it out, and I'm going to get the game soon. But we'll see. If it drags on a few weeks, a month in the season, I don't know what I'm going to do. I'm going to be going crazy a little bit.
SULLIVAN: One game at the bar ain't so bad, he says, but Joseph can't come here for every game. If all these TV companies can't reach a deal, he and all the other Angelinas here at the bar will have to figure out other ways to watch their Dodgers. Becky Sullivan, NPR News. Transcript provided by NPR, Copyright NPR.