The Dodgers big money blackout
Two young boys watch baseball on TV while mom cooks dinner and dad tinkers in the garage in Rancho Cucamonga. The two boys, Dominic and Isaac Larson, eight and six years old are watching the Los Angeles Angels of Anaheim's starting pitcher Hector Santiago strike out Colorado Rockies infielder Troy Tulowitzki on TV while dad, Keith Larson, 40, listens to Vin Scully describe Dodgers starter Carlos Frias walk Miami Marlin Martin Prado on a transistor radio in the garage.
Scenes like this have become the norm as the Los Angeles Dodgers enter their second season of blackout in the Los Angeles area. Time Warner Cable (TWC), who paid 8.35 Billion dollars for 25 years of exclusive rights to broadcast Dodger games over the channel “SportsnetLA” has been unable to come to an agreement with any television providers other than Cox Communications.
“I take them to Dodger games about once a month, but because we can’t watch the games on TV the boys have gravitated to the Angels,” Larson said.
Though Larson is disappointed in the generational shift from the Boy's of Summer to the Halo's, he is truly saddened that his sons, like the majority of LA, can not hear the legendary voice of Vin Scully.
"I grew up with Vin Scully in my living room night after night. I feel like he is part of my family in a way. Nothing against the Angels broadcast team, but it saddens me to think my kids may not get to share Vin Scully’s final seasons with me,” Larson said.
In 2011 and 2012, TWC established the blueprint for their Dodger strategy by purchasing the broadcast rights to the Los Angeles Lakers for $3 Billion over 20 years.
TWC then turned around and, with public pressure, negotiated a deal with all regional competitors to carry the Lakers channels for $3.95 per subscriber by the second week of the NBA season.
Cut to January 28, 2013 when Time Warner Cable outbid Fox by $2 Billion to gain broadcast and advertising rights for the Los Angeles Dodgers for $8.35 Billion over 25 years.
This time around, however, smaller providers such as AT&T U-Verse and Verizon Fios have waited on the sidelines to see what DirecTV will do. Charter Communications, which owns Charter Cable announced plans to negotiate for access rights.
Notorious for driving a hard bargain, DirecTV has dug in their heels in this battle with TWC.
Despite pressure from Mayor Garcetti, the public, and the FCC Chairman Tom Wheeler, neither side, TWC or DirecTV, is blinking.
The closest to an agreement they have come has been an offer by TWC for binding arbitration to establish a fair-market price for SportsnetLA. DirecTV has ignored the offer.
A spokesman for TWC emailed the following: “We want all Dodger fans to have access to SportsNet LA. Despite our repeated attempts, other providers are unwilling to engage in any discussions. If Dodger fans want to enjoy SportsNet LA this season, we encourage them to switch to a provider that carries the network. SportsNet LA is available on fair terms consistent with its value. We know that the rates for the network owned by this iconic franchise are in line with what other RSN’s around the country charge.”
Multiple efforts to reach DirecTV and Los Angeles Dodger representatives for a statement or interviews were unanswered.
Follow up questions sent to TWC regarding specifics were ignored.
Major League Baseball controls the live streaming rights to all MLB games.
It is obvious that the Guggenheim Baseball Management group had some idea as to what the television rights were likely to fetch on the open market before making their bid to purchase the Dodgers. This time, however, their business acumen may work against them, as the price TWC paid for the broadcast rights is almost impossible to overcome and break even, much less turn a profit, selling the channel to other providers.
To make matters worse, minority owner and spokesman Ervin “Magic” Johnson enraged fans by saying the Dodger Brand has “not been hurt” by the LA television blackout.
“I think the Dodgers are the most to blame. If they really wanted their fans in LA to see their games they could get all parties in a room and get a deal done," Dodger fan for 50 years Dave Adair of Manhattan Beach said. "That might mean subsidizing the purchase price paid to TWC, but so be it. The Dodgers have the money to bridge the gap and get the deal done.”
After finding success with the Lakers network, and perhaps counting on a proposed merger with Comcast to give them some negotiating clout, TWC overpaid for the Dodger television and advertising rights.
Most industry analysts estimate they paid somewhere between $700 million and $1 billion over market value.
With AT&T and Verizon falling in line with DirecTV and refusing to pay the $5-per-subscriber asking price turn a bad deal into an absolute nightmare.
DirecTV has shown a history of driving a hard bargain. Disputes with AMC, TWC and with local affiliates around the country show that DirecTV plays hardball when negotiating contracts.
“It comers down to greed,” says Grunions Bar and Grill of Manhattan Beach owner Robert Koch. “Greed from the Dodgers for taking $8 Billion from Time Warner, greed from Time Warner thinking DirecTV would pay and charge their subscribers $5.00 each month. But if I had to blame someone it would be Time Warner. They made a bad deal and now have dug their heels in…”
Major League Baseball is not responsible for negotiating contracts with local providers, but the fact remains: MLB controls the streaming rights to all MLB regular season games. The fact that Dodger fans in Los Angeles cannot stream Dodger games is because of MLB policy.
The question is now raised of just how much power corporations will have over access to events, and how high the cost will be.