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Category Archives: Regional Sports networks

Why Time Warner Cable Must Convince The Dodgers and Lakers That They Need Each Other

SportsNet LA Cartoon courtesy of Stop The CapThe folly that is SportsNet LA continues apace.

Last week, in a last-ditch attempt to get carriage for the Los Angeles Dodgers’ regional sports network (RSN) on TV services other than its own — and Charter’s, for obvious reasons — Time Warner Cable announced that it would lower the carriage fee of SportsNet LA for one year, from $4.90/month per subscriber to $3.50/month.

The answer from DirecTV, Dish Network, Verizon, and Cox? Still no. Carriers suggested to the Los Angeles Times that the one-year discount wasn’t a good bargain, and they expressed buyer’s remorse over TWC’s other LA-based RSN, TWC SportsNet, which carries the LA Lakers and the LA Galaxy, costs subscribers $4/month, and hasn’t been a huge success.

The end result is that only 1.8 million homes will carry SportsNet LA in this, Vin Scully’s final season as the voice of the Dodgers. At $4.90/month, the RSN will collect $105.8 million in carriage fees in 2016, the third year of TWC’s 25-year, $8.35 billion deal with the Dodgers — a deal that leaves TWC on the hook for roughly $225 million this season. Industry estimates suggest TWC has been losing $100 million per year on SportsNet LA, which prompted layoffs and cost-cutting on both its RSNs last year.

As big as that loss is for Time Warner Cable, though, it really shouldn’t have that much of an impact for TWC’s LA operations. TWC SportsNet collects $4/month from 6.4 million homes in southern California. That’s $307.2 million per year. This year, that channel will pay the Lakers roughly $130 million and the Galaxy about $5 million. If we presume advertising covers the operational costs, that’s a profit of more than $175 million. Surely, that would be enough to help TWC absorb its losses with the Dodgers deal, yes?

Here’s the problem with that — TWC does not own SportsNet LA. The Dodgers own the channel and lease the management rights to TWC. That prevents TWC from fully combining SportsNet LA operations with TWC SportsNet.

If TWC wants to rescue SportsNet LA, that has to change. Fox has some synergy with its two SoCal-area RSNs, Fox Sports West and Prime Ticket; TWC does not, likely because the Dodgers’ ownership of SportsNet LA prevents it. If the Dodgers really want to get the MLB team’s games into more homes, their best option is to let TWC combine their RSNs and show Dodgers games on TWC SportsNet. This would allow TWC to repackage SportsNet LA as SportsNet 2, an overflow channel that would cost, say, $2.40/month — still a lot, but no more than Prime Ticket costs, and much easier for other carriers to swallow.

This would be the perfect year to do that, too. The Lakers will miss the playoffs by a mile, so their season will end on April 13. What will TWC SportsNet have to show until November but an MLS game once a week? Aging Steven Gerrard might be a legend in Liverpool, but he is not exactly must-see TV for the vast majority of SoCal.

The end result would be two RSNs carrying two iconic teams (and one that wants to be) in 6.4 million homes, collecting a combined $6.40/month. That’s $491.5 million in carriage fees. The Dodgers would receive $225 million this year, the Lakers would receive $130 million next season, and the Galaxy would get its $5 million. If advertising covers the operational costs, TWC would have an operation with a $131.5 million profit in 2016, rather than one with a $100 million loss.

And if Time Warner Cable really wants to make this happen, there’s only one man who could help them…

Magic Johnson

Magic Johnson won five championships as a player for the Lakers. He now owns a piece of the Dodgers as part of the Guggenheim Baseball Management group that bought the baseball club for $2 billion four years ago. If anyone can convince the Dodgers and the Lakers that they need to work together to get the most out of their TV deals, it’s Magic.

The only other option for SportsNet LA? A messy CSN Houston-style bankruptcy, which serves nobody and makes a mockery of a legendary announcer’s final season. Given the recent rises in cord-cutting and the escalator clause on the Dodgers’ contract, however, bankruptcy just might be the only way TWC gets out from under this deal — and given the billions in debt that Charter is prepared to heap on the merged cable company, anything that loses $100 million per year seems like a prime candidate to be shut down.

In the meantime, expect this fiasco to get worse before it gets better.

Steve Ballmer Seeks A Million True Clippers Fans

Say this much for Los Angeles Clippers owner Steve Ballmer: he’s never been afraid to look silly. The former Microsoft CEO probably looked very silly to a lot of other NBA team owners when he reportedly turned down a $60 million-per-year offer from Fox Sports to keep Clippers games on Prime Ticket, one of Fox’s… Continue Reading

22 Reasons Why Fox Said No To Sling TV

UPDATE (April 20, 2016): Since this article was written, Fox struck a deal with Dish Network to have Fox-owned channels (including regional sports networks) as part of a separate Sling TV bundle that did not include ESPN channels. Details about this deal are at the end of this post.  Last weekend, Cord Cutters News reported that… Continue Reading

A Not-So-Happy New Year For Your Cable Bill

A new calendar year is upon us, and that means your local cable company is introducing new ways to take more money out of your pocket. Starting in January, Time Warner Cable will join a growing list of cable and satellite providers which are charging for sports. For instance, DirecTV has a regional sports channel fee… Continue Reading

Is Comcast Angling To Rescue SportsNet LA?

Yesterday, while everyone else in Los Angeles was talking about Donald Sterling (and generally missing the point), Comcast released the details of its plan to shed enough customers to make its proposed buyout of Time Warner Cable more palatable to regulators. One particular part of this plan, as detailed here in the L.A. Times, caught… Continue Reading

Most Interested Party In Comcast Buyout of Time Warner Cable? Magic Johnson

When Comcast announced this week it was planning to buy out for $45 billion in stock, how much do you think Magic Johnson’s ears perked up? Johnson, of course, won five NBA titles as a player for the Los Angeles Lakers, and he’s currently a partner in Guggenheim Baseball Management, the consortium that owns the Los… Continue Reading

Comcast Buyout of Time Warner Cable Is All About Preserving The Cable Bundle

When Comcast announced it was going to throw $45 billion in stock at Time Warner Cable and create one giant cable company, you could barely contain the groans across the Internet — and with good reason. Here are two of the most hated companies in America attempting to form like Voltron into one giant behemoth of consumer… Continue Reading

How To Boil A Frog: Comcast’s Contract Extension With The Philadelphia Phillies

UPDATE (1/6/2014): Estimated numbers in this piece have been updated to reflect this report in Sports Business Daily. Perhaps it was too much to ask any network to try and swipe the Philadelphia Phillies away from a company based in Philadelphia. Indeed, Comcast had little trouble keeping the TV rights to the Phillies. The team… Continue Reading

Comcast Gives Up On CSN Houston

If a regional sports network falls down and nobody is watching, does it make a sound? Last August, this Forbes article covered how much Comcast would pay the Houston Astros for the rights to broadcast their games on Comcast SportsNet Houston — about $80 million per year. Combined with other revenue and a minimalist $21… Continue Reading

Cost Of Local Sports Networks In New York City: $125.40 Per Year

There is perhaps no bigger sports town on the planet — certainly not in North America — than New York City. The Yankees, Mets, Giants, Jets, Knicks, Nets, Rangers, and Islanders all dominate the conversation in the Big Apple. (The Red Bulls? Not so much.) That might explain why the cable channels that show New… Continue Reading


     

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