Few cable companies have been "as vocal about the rising costs of sports programming as Time Warner Cable," but at the same time, the latest example of TWC's "split personality is its tentative agreement with the Dodgers" for a TV contract worth an estimated $7-8B, according to Joe Flint of the L.A. TIMES. Sources said that Fox Sports "wanted to keep the Dodgers but its offer topped out at around $6 billion." For TWC, the "accord comes less than two years after it outbid another Fox channel" with a 20-year, $3.6B deal for rights to the Lakers. The "bulk of those costs ultimately get passed on to consumers." While TWC has "taken some franchises away from Fox Sports in Los Angeles, in San Diego the strategy backfired." Fox held "onto the rights to the Padres despite a big bid" from TWC. Flint: "The end result: Fox raised the price of its sports channel there to cover the costs of its new deal, and Time Warner Cable refuses to carry the network." SportsCorp President Marc Ganis said, "They do seem to be talking out of both sides of their mouth. Time Warner Cable has at one moment railed against excessive rights fees being paid and in the next moment pays an exorbitant rights fee and demands a massive subscription fee" (LATIMES.com, 1/23). The INVESTOR'S BUSINESS DAILY's Reinhardt Krause noted TWC could be "playing with fire" by partnering with the Dodgers amid "escalating monthly bills for pay-TV service." Nomura Equity Research analyst Michael Nathanson said, "Clearly, the L.A. sports market is experiencing significant price inflation and it is still (too early to tell) whether these levels of investments will prove to be justified many years down the road or if we have reached the top of the sports rights bubble." By bidding for "sports rights vs. pure content companies like ESPN, cable TV companies run the risk of pushing costs even higher." Bernstein Research analyst Craig Moffett said, "The incessant cost inflation in regional sports threatens to kill the goose that laid the golden pay-TV egg" (INVESTORS.com, 1/23).
