Could a combined Comcast and Time Warner or AT&T and DirecTV break the SportsNet LA Carriage standoff?
Given the fact that one of the most popular baseball teams in the country can’t be seen by about 70% of fans in their home market, which also happens to be one of the nation’s largest, you’d think there might be more pressure to resolve the current dispute over carriage of the Los Angeles Dodgers’ games. All signs however, point to the contrary. Time Warner Cable, who paid over $8 billion for rights to the games in anticipation of making it up by gouging other TV providers to carry the newly created Sports Net LA, won’t come down on the price they’re asking. The region’s other cable providers won’t pay up the absurd $5 per subscriber that Time Warner is asking, which would make the channel one of the most expensive on TV. Other TV providers have offered to carry the channel on an á la carte basis, where customers could choose to opt in to the channel, but non-sports fans wouldn’t be saddled up with its high cost, but Time Warner Cable balked at that suggestion as well. With cable bills perpetually on the rise, such a channel would likely be the first one cut for bill relief, leaving Time Warner with a substantial loss.
Many fans looked to the Dodgers to step up and help resolve the dispute, since it’s their loyal fans that are suffering the most. While most people loathe their TV providers, sports teams are generally viewed much more positively, so the Dodgers clearly have more to lose as outrage and frustration boil over. But the Dodgers are also perhaps the biggest beneficiaries of Time Warner Cable’s bad deal. They get their money even if TWC can’t resell the channel, and much of that money has already been committed to stadium improvements, as well as the highest payroll in Major League Baseball. There’s no incentive for them to offer to renegotiate their deal with Time Warner; they’ll take $8 billion over mollifying the fans any day. And in fact, this perfect storm has perhaps created one positive side effect for the team: ticket sales are way up.
The Dodgers have made it pretty clear that they’re not going to be the ones to fix this mess, leaving the burden on Time Warner Cable and the other TV providers to negotiate a solution. However, having failed at that already, both sides seem to be standing pat, awaiting additional leverage from potential mergers currently in review. Time Warner Cable is in the midst of being acquired by Comcast, pending regulators’ blessing. A combined Time Warner Cable and Comcast would be by far the largest TV provider in the country, and perhaps give the new company more clout with which to pressure the other TV providers. Among the companies balking at Time Warner’s $5 per subscriber ask are DirecTV and AT&T, with their own pending merger before regulators. Should Comcast’s bid for Time Warner fail, a combined AT&T and DirecTV could find itself with more leverage to bring down Time Warner’s asking price. However, until the mergers are settled, everybody seems to be taking a “wait and see” approach, perhaps for fear of striking a bad deal that new management would then be stuck with.