The TWC-L.A. Dodgers Carriage Crisis: History in the Making?
Until recently, the two certainties in life were death and taxes. But a closer look at what seemed to be a commonplace dispute between a sports content rights holder and potential distribution partners may have carriage deals added to the saying.
But months later and a third of the way into the regular season, the cable giant has yet to sign a single sizable carriage deal, with potential partners adamant that the price is too high and fans without TWC crying foul louder than ever. An estimated 63 percent of the L.A. market can’t yet watch Dodgers games.
TWC has yet to sign a distribution agreement with AT&T, Verizon (News - Alert), DISH Networks, Charter or Cox Communications. If those firm’s execs feel the same way as DIRECTV, we could be witness a landmark event in live sports distribution history, one that might impact more than just Major League Baseball.
DIRECTV has been especially critical of TWC’s deal with SportsNet LA.
“Time Warner Cable did an unprecedented deal and now they expect all their competitors to bankroll that deal,” Dan York (News - Alert), vice-president of programming for DIRECTV told ESPNLosAngeles.com. “That includes the customers who have no interest in watching the Dodgers, and that's not fair to millions of families.”
Pricing it Out
The core question here is how high can we go in terms of the price of distribution agreements for live sports events and leagues, clearly the most coveted live content among sports fans. Until recently, the answer seemed to be “the sky’s the limit.”
But, also consider recent live sports mega-deals. It’s important to note that the following are rights deals, not distribution agreements. The price tags do, however, provide a rough idea of what landing coveted live sports content costs.
-DIRECTV is in an exclusive negotiation period with the National Football League in hopes of retaining the wildly popular NFL Sunday Ticket package which could see a 40 percent rate increase over past years.
-The WWE signed a TV deal with NBC which will earn the sport $200 million over the next few years which represents an increase over the $160 million in revenue from the prior deal. But with viewership dropping, others potential media partners passed with NBC being described as “having saved the WWE.”
The RSN Opportunity & Challenge
The rise of league, team and conference-specific regional sports networks (RSN) creates opportunities for the content owners such as the University of Texas with The Longhorn Network and challenges for those looking to land the distribution rights from their owners. I define RSNs as channels with live sports contests.
Obviously, with ratings success comes higher prices, which has many potential distribution partners concerned and subscribers to traditional pay-TV services, whether they watch sports or not, less than pleased.
Back to L.A.
So is this a seminal moment that forces all in the TV ecosystem to rethink the challenge of soaring sports content rates? If potential distribution partners stand their ground, the answer is yes, even though other sports such as pro football are more coveted.
If the satellite, telco and other cablecos cave in to TWC’s demands, it’s just another case of them begrudgingly paying more than what they believe live sports content is worth. This process has been in progress for a very long time.
Pay-TV providers have tried to minimize the impact on non-sports fans for years by charging extra for sports channels, events and networks in special packages but even that effort could not stem the rising tide of rights and distribution costs.
That was made evident when cablecos starting implementing monthly RSN fees to cover or help cover the rising costs of these popular and fast-spreading live sports nets. RSNs often carry pro and college sports in a dense region of local fans. Some are conference- specific to span broader areas and attract more viewers.
The Bottom Line
We’ll just have to stay tuned to see what happens in L.A. Rest assured that the result won’t stay in L.A. With major league baseball’s top team in attendance and in the top U.S. TV market with the baseball regular season one third over, the situation is dire.
Will TWC break under mounting pressure or will distributors decide to break the bank? It will be a historic or eye-rolling moment.
By Bob Wallace, Founder, Fast Forward Thinking LLC
Edited by Maurice Nagle