SBD/March 29, 2012/Media

Dodgers' Next TV Deal To Be Substantial, Likely Will Help Cover Sales Price Of Team

Dodgers expected to command more than Angels' nearly $150M a year TV rights deal
Guggenheim Baseball Management, the new ownership group of the Dodgers, in the next six to 12 months must decide the future of the team's local TV rights by selecting "one of two lucrative alternatives to pursue at a time when marquee live-sports events have become increasingly valuable," according to Matthew Futterman of the WALL STREET JOURNAL. The "simplest move would be to sell their local TV rights to an existing regional sports network." The Dodgers would be entering the market "at the perfect time." News Corp.'s Fox unit is "trying to stave off a challenge from the new regional sports network that Time Warner Cable plans to launch next year." Dodgers telecasts "form the backbone of Fox's Prime Ticket, which would lose substantial value without the team's games." Recent TV rights deals for the Angels and the Rangers are valued at nearly $150M a year, including "equity in the sports networks." LHB Sports Entertainment & Media President & CEO Lee Berke said that as the "top baseball brand in such a large market, the Dodgers would likely command more than that." Futterman notes the greater L.A. TV market "is just under five million homes, but its outlying areas boost that figure to more than seven million." The other alternative would be for the Dodgers to "launch their own network" as the Yankees did with YES Network and the Mets did with SportsNet N.Y. These networks "have become cash cows for team owners because of the monthly fees cable operators pay on behalf of all of their basic subscribers." Analysts said that a Dodgers network "could command a monthly fee of about $3.50 per home beginning in 2014 and reach a market that could stretch as far east as Las Vegas and north to San Luis Obispo." That could translate into nearly $300M "in revenue annually before the network sells a single ad spot" (WALL STREET JOURNAL, 3/29).

RETURN ON INVESTMENT: In N.Y., Richard Sandomir notes at some point, team owners "do want a return on their money." The Dodgers' $2.15B sale price "is enormous because the buyers anticipate a huge windfall from a new cable TV deal that would go into effect" after the '13 season. Dodgers controlling Owner and Guggenheim Partners CEO Mark Walter said, “It will be substantial.” Sandomir notes to get the "most money, the Dodgers will probably be the centerpiece of a regional sports channel that will funnel enormous annual rights fees to the team and amass monthly subscriber fees from the cable, satellite and telephone companies that will carry its games." Bevilacqua Media Company CEO Chris Bevilacqua said of the Dodgers, "The marketplace continues to escalate for valuable sports rights and they’re in the second-biggest sports market with one of the biggest sports brands in the world." He added that the bidders for the TV deal with the team "could include" News Corp., TWC, Microsoft, Apple, Google, Hulu and Netflix (N.Y. TIMES, 3/29). In L.A., Joe Flint noted while TWC and Fox will "likely be willing to pay more than double and perhaps even triple what the Dodgers are currently getting, that still may not be enough" to win the rights. If the Dodgers create their own cable sports channel, the team can "keep not only subscriber fees from cable and satellite companies, but also advertising revenue." Additionally, the Dodgers have a broadcast deal with KCAL-CBS, "which carries 50 games." Those likely will "go away because the team can get more money from cable than broadcast" (LATIMES.com, 3/28).

INTERESTED PARTIES: SportsCorp President Marc Ganis said that the Dodgers' new owners "must already have a clear plan for the team’s broadcasting future." Ganis said that co-Owner Stan Kasten is a "well-respected businessman and sports executive, and you don’t pay that price unless you have an idea of how you’ll recoup all that money." Bloomberg News reported that Fox is "set to launch a national sports network -- though insiders say it isn't imminent -- that would seem to make a deal with parent company News Corp. even more attractive" (THEWRAP.com, 3/28).
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