Before Disney/ESPN put what could be the final nail in the coffin for bundled pay-TV programming with a spectacularly expensive $1.9-billion-a-year rights deal for 16 “Monday Night Football” games a year, the erstwhile Time Warner Cable exceeded the limits of consumer price tolerance on the local level.
In January of 2013, TWC agreed to pay the Los Angeles Dodgers $8.35 billion over 25 years for the Major League Baseball team’s exclusive local broadcast rights. The problem: TWC greatly overestimated its ability to recoup its investment through TV distribution of the Dodgers.
To understand what happened, let’s back up a bit.
Just two months before inking its landmark Dodgers deal, TWC launched a regional sports network built around the Los Angeles Lakers and a $3 billion, 20-year rights deal. Even with Lakers star Kobe Bryant still a must-see Los Angeles sports star, and the Lakers only two years removed from their last NBA Championship, it wasn’t an easy sell for TWC.
The problem with the Lakers was centered around the No. 2 operator in the Southern California region, DirecTV, which hesitated over carrying the games, navel-gazing over the austere economics. Ultimately, DirecTV caved on licensing TWC’s Lakers channel. But with the Dodgers nearly 25 years removed from their last World Series, and baseball popularity questionable in the LA market, DirecTV balked on paying a reported $5 per subscriber for Dodgers channel TWC SportsNet LA
What’s more, not only did DirecTV refuse to license the Dodgers regional sports network from TWC, it colluded—illegally, in the eyes of the U.S. Justice Department—with other pay-TV operators in the region to also reject the network.
From fans to TWC and DirecTV, the result has been disastrous for nearly everyone, save for the Dodgers, who have the best record in the MLB this season, along with the highest payroll.
Just prior to its agreement to be purchased by Charter Communications, TWC took a $1 billion write-down on SportsNet LA, with its channel only available to 55% of its target market.
In March, AT&T—which subsequently purchased DirecTV—reached a settlement with the Justice Department for its alleged collusion with other operators, agreeing that it would never share details about contract negotiations with programmers again.
Meanwhile, as the Dodgers closed out the legendary career of play-by-play man Vin Scully and steadily improved to become arguably the best team in baseball, fans who don’t subscribe to Charter Spectrum are left out in the cold, unable to watch games in the nation’s second largest TV market.