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SBD/January 23, 2013/Media
TWC Close To Agreement With Dodgers, But Fox Could Have Right To Match Deal
Published January 23, 2013
SETTING AN EXAMPLE: In L.A., Tom Hoffarth notes if "rumors hold that the deal in the $8 billion range covering 25 years is accurate, it would make it the most expensive local TV deal in history." This arrangement would give the Dodgers "a long-term business model that is along the lines" of what the Yankees did with the launch of YES Network 10 years ago. Rather than take "any short-term cash benefits from signing a deal with a local cable operator, the Yankees went on their own and started their own channel, absorbed a couple years of losses at the start, but have built the brand" to where Fox spent $500M on a 49% share of YES (L.A. DAILY NEWS, 1/23). CABLEFAX DAILY writes the TWC agreement "is a blow to Fox." But News Corp. "seemed to be developing an insurance policy against losing the Dodgers rights" in striking the YES deal. The Dodgers' "attraction to TWC is clear." Not only does it "guarantee carriage as the dominant distributor in the market, but it has the successful track record of TWC SportsNet, which was able to reach deals with all the major MVPDs shortly after the 1st Lakers game" (CABLEFAX DAILY, 1/23).
FILLING IN THE HOLES: In L.A., Shaikin & Flint noted Fox Sports "launched a second local cable channel -- now called Prime Ticket -- to carry the Dodgers in 1997." Fox Sports previously "lost rights to Lakers games to Time Warner Cable, and the departure of the Dodgers would leave Fox with the Angels, Clippers, Ducks and Kings as the anchor teams for two channels" (LATIMES.com, 1/22). The L.A. TIMES' Joe Flint cited a Fox source as saying that there are "no plans to consolidate Prime Ticket and Fox Sports West into one channel." However, some Angels and Kings games "could find their way to Prime Ticket." While Fox may be able to "keep Prime Ticket going, it will likely have to renegotiate its current contracts with distributors." Losing the Dodgers will "mean lower ratings and the channel will be of less value to area pay-TV distributors, including Time Warner Cable and DirecTV." Data from SNL Kagan shows that Prime Ticket is "due to receive about $2.50 per subscriber per month from distributors." After next season, when the Dodgers are "no longer on the service, that fee will come down" (LATIMES.com, 1/22).