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SBD/January 28, 2013/MediaPrint All
Time Warner Cable's 25-year deal with the Dodgers became official this morning. The deal is worth nearly $8B and will lead to the creation of a sixth RSN for the L.A. market. The Dodgers will launch SportsNet L.A. in '14 through American Media Productions LLC, a fully owned subsidiary that the team quietly launched just last month. TWC will not have an ownership stake in the RSN. Rather, it will handle all ad sales and affiliate sales for the channel. TWC has assumed most of the risk around the channel and promised to cover affiliate fees from distributors who refuse to carry it. TWC already has agreed to carry the service on its systems in southern California and Hawaii. TWC will provide non-game production and technical services to the network, as well. The deal has some big hurdles to work through, as it still needs MLB approval. A league spokesperson this morning said, "We are still in the process of discussing with the Dodgers. We are awaiting final documentation on the deal and will then review it as we do all broadcast deals." MLB Exec VP/Economics & League Affairs Rob Manfred has been in extensive talks in recent weeks with Dodgers Chair Mark Walter over the agreement, including sessions in Phoenix and N.Y. At issue is the amount of revenue in the pact that will be shared with the other clubs. Under league rules, teams must contribute 34% of local TV revenue to aid small-market clubs. A bankruptcy court settlement between the league and Dodgers pegged the fair-market value of the club's local TV rights at $84M per year plus annual escalators. With the 25-year deal worth an average of $280M per year, the outstanding question is how that additional money will be divided.
RSN WILL BE COSTLY TO CARRY: It is too early to determine how much TWC will charge for the channel, but it is certain to be one of the country's highest-priced RSNs. TWC Exec VP and Chief Video & Content Officer Melinda Witmer said that the deal makes sense for TWC because it builds cost certainty into its business. "Being able to secure the content for a very, very long time without the risk of third-party decision making around the rate of increases on the product is very helpful," she said. "We have an opportunity to secure content we want for a long time to come and to have control over our economic destiny." TWC last year launched two RSNs in L.A. around the Lakers, one in Spanish and one in English. Fox Sports operates two RSNs in the market, FS West and Prime Ticket. Pac-12 Networks has a Southern California channel in the market that focuses on USC and UCLA. Now the Lakers' offering means that six high-priced sports channels will be in the market as of '14. Even though it lost the Lakers last year and will lose the Dodgers next year, it is unlikely that Fox would shut down either of its two channels. In N.Y., for example, MSG still operates two RSNs even though it no longer carries the Yankees or Mets. Witmer said she is conscious of consumer costs but said sports providers are not the biggest problems for distributors. "As one of the largest providers in that market, we are unquestionably very focused on what costs are to consumers," Witmer said. "As an operator, the rate of increase that we experience (with sports) is outpaced by retransmission consent asks by many multiples. Yes, I do think that rising costs is a big issue for operators. There are a lot of ways that we are doing the best we can to manage it."
IMPACT IN OTHER MARKETS: Consumers in other markets could experience a knock-on effect from the Dodgers deal. Over the next few years, TWC will have to negotiate with Fox RSNs in close to a dozen markets, including N.Y., where Fox owns part of YES Network, Dallas (FS Southwest) and Milwaukee (FS Wisconsin). Look for Fox to try to get a similar affiliate fee as either the Dodgers or Lakers' channels in those markets. Reports have suggested that the Dodgers' channel could cost distributors around $5 per subscriber per month. Witmer said the team never discussed a straight rights deal with TWC. "From the first conversation we ever had with the team, they had already made the decision to launch their own vehicle," she said. "That was not a conversation that they were open to when we met with them." There has been no decision yet about who will run the channel or how it will be staffed.
ENTERING SWAN SONG WITH FOX: The Dodgers will spend one more season on the Fox Sports-owned Prime Ticket before launching SportsNet L.A. Sources said Fox had talks over the weekend with the Dodgers about getting involved in the planned channel, but the two sides did not come to an agreement. Fox Sports held certain back-end rights that would give it the right to match or object to any deal. Sources said that the matching rights would not kick in if the Dodgers launched a channel on their own.
With sports channel costs "soaring," Verizon's FiOS TV service "says it will surcharge almost five million customers $2.42 a month for regional sports networks," according to Bob Fernandez of the PHILADELPHIA INQUIRER. Verizon last week "launched its first non-sports cable-TV package." DirecTV, the nation's "second-largest pay-TV operator after Comcast Corp., also is implementing sports-related surcharges." The actions come "amid a national debate over sports entertainment, which is now estimated to account for half the programming costs in the typical cable- and satellite-TV bill." DirecTV now "levies a $3 surcharge for new customers and next month will add a $2 surcharge for existing customers in TV markets with more than one regional sports network." DirecTV PR Dir Robert Mercer said that the surcharges apply "to about 20 percent of DirecTV customers" (PHILLY.com, 1/25). CABLEFAX DAILY notes Verizon will start applying its fee in February in certain markets and will "roll it out to other regions" in March and April. Verizon's fee will "apply in all markets (all but one market has multiple RSNs), with new customers and those on month-to-month contracts impacted initially" (CABLEFAX DAILY, 1/28).
EVERYONE PAYS: In N.Y., Brian Stelter in a front-page piece noted the "eye-popping price tags have restarted debate about a topic near and dear to sports fans, fairness: many TV customers never watch the mightily expensive channels at all, yet almost all must pay." Stelter wrote just about "everybody in the business agrees that the overall costs are outrageous," but nobody has "an easy solution." For the most part, "all of these networks are requirements, not options for cable customers." Industry critics said that if "anything ever causes distributors to try more of an 'à la carte' model of pricing, it’s sports programming." Some distributor execs "privately agree." They "talk of a bubble caused by the high license fees commanded by sports leagues, and demanded by the networks that pay those fees." They said that they "want to keep costs down, and some have even threatened to drop low-rated channels from their lineups." But they "continue to agree to pay more and more for sports." Bevilacqua Helfant Ventures co-Founder & CEO Chris Bevilacqua said, "If consumers were that upset by the costs, they'd be dropping their cable subscriptions in droves" (N.Y. TIMES, 1/26).
CBS earned a 3.7 overnight Nielsen rating for Sunday's coverage of the PGA Tour Farmers Insurance Open, which saw Tiger Woods maintain a lead after three rounds of play. Coverage yesterday was primarily of the third round due to fog cancelling play on Saturday. The 3.7 overnight is up 85% from a 2.0 overnight for the final round on Sunday last year, which saw Brandt Snedeker win in a playoff against Kyle Stanley. Woods did not play Torrey Pines last year. The 3.7 overnight is also on par with the final round from '11, when Bubba Watson held off Phil Mickelson and Jhonattan Vegas for the victory. Woods' last win at the event in '08 drew a 4.6 overnight for the final round (Austin Karp, THE DAILY).
UNUSUAL CIRCUMSTANCES: In California, Mark Whicker notes a Monday finish for a PGA Tour event ordinarily "would happen as early as possible to let everyone else get on with life.” But CBS is “intrigued with showing Tiger's 75th PGA Tour victory," so play will begin at 2:10pm ET and Woods "will finish at about" 5:30pm. PGA Tour VP/Rules & Competition Mark Russell said, "CBS is our broadcast partner. If this is what they want us to do, this is what we're going to do." Golfer Nick Watney said, "Starting at 11 [PT] is a little strange. When we finish, it's not even going to be prime time on the East Coast” (ORANGE COUNTY REGISTER, 1/28). In San Diego, John Maffei writes the “general feeling is that Monday's conclusion” of the tournament “wouldn't be on CBS if, say, Brad Fritsch were leading.” Networks “usually have local programming leading into evening news shows.” So Woods “figures to provide a nice lead into the news.” Golfer Billy Horschel, who played with Woods yesterday, said that he and Woods “talked about possible start times” yesterday. Horschel said, “Tiger has a big effect on TV times, and it’s justified with what he’s done in his career. We figured it would be up to the network executives” (SAN DIEGO UNION-TRIBUNE, 1/28). GOLFWEEK.com's Sean Martin wrote the move is "all about television." CBS "will show the tournament's conclusion" and there is "little question the desire to televise Monday's finish was based on the man atop the leaderboard" (GOLFWEEK.com, 1/27). But GOLF WORLD MONDAY's Geoff Shackelford writes the late finish is "super for golf fans because it means bonus coverage by both Golf Channel and CBS." The late start "also lets the tour and networks find out just how many office workers will watch their online streaming coverage." A PGA Tour official called the move decided on Sunday morning "unprecedented" (GOLF WORLD MONDAY, 1/28 issue).
LOST IN THE FOG: In Tampa, Tom Jones writes CBS’ luck “went from really good to simply awful on Saturday.” The net was “supposed to kick off its 2013 PGA coverage and it caught a huge break when ratings giant Tiger Woods took a two-shot lead going into Saturday's third round.” But the first day of CBS' golf season was “wiped out because of dense fog.” So CBS “dusted off the broadcast of a 2011 tournament and aired that instead on Saturday.” Jones: “Why not use these weather delays to introduce viewers to up-and-comers on the PGA Tour and, perhaps, viewership wouldn't fall off the cliff whenever Woods doesn't play or isn't in contention” (TAMPA BAY TIMES, 1/28).
NBC earned a 7.7 overnight Nielsen rating for the NFL Pro Bowl last night, a figure which is expected to give the net a win among all nets in primetime, but down from the game's overnights in recent years. NBC earned a 7.9 overnight for last year's contest and Fox earned an 8.6 rating in '11 (Austin Karp, THE DAILY). NBC's Al Michaels during last night's game said, “The Pro Bowl takes a lot of grief. A lot of fans say, ‘It’s a piece of crap, we don’t want to watch it, who cares?’ Look at the ratings. You think the NBA All-Star Game would take this rating? The NHL, MLB?” NBC's Cris Collinsworth added, “I don’t know if we’re ever going to get to the saturation point of the NFL. Everywhere you go there’s another show” ("NFL Pro Bowl," NBC, 1/27). ESPN’s J.A. Adande said, “People have shown they’ll watch anything NFL-related. More people watch the Draft than watch NBA playoff games, so the NFL brand will bring people to the TV sets.” ESPN’s Jackie MacMullan added, “Ratings, ratings, ratings equals money, money, money. They have to keep it on.” But columnist Kevin Blackistone said the NFL “can ignore the ratings” because “it’s one game out of the year." Blackistone: "The NFL has been brilliant marketing-wise. They’ve turned their league into a 24/7, 365-day television event. They don’t need the Pro Bowl” (“Around The Horn,” ESPN, 1/25). CBS Sports Network’s Doug Gottlieb said, “It should go away, but people watch. ... As long as people watch, it’s not going away.” CBS Sports Network’s Allie La Force added, “Last year, which was considered by many the worst Pro Bowl in history, still had more viewers than the World Series” (“Lead Off,” CBS Sports Network, 1/25).
The Reds are "waging a multi-front crusade for hearts and minds -- and eyes and especially ears -- as the club tries to return to baseball's mountaintop," according to John Erardi of the CINCINNATI ENQUIRER. The Reds Radio Network over the last five years has "doubled the number of affiliates" it has, and recently added "more coverage in Indianapolis." The radio network had "totaled 115 affiliates during the glory years of the Big Red Machine" between '70-76, but that number had dropped to 45 by the time Reds Owner Bob Castellini "brought the network back under house control in 2008." The Indianapolis market "holds a lot of potential" for the Reds because it is "a two-team pro town ... that is within 100 miles of Great American Ball Park." A Reds official said that Indianapolis' WXNT-AM would be "carrying 145-155 Reds games this season." It is considered a "plum of an add, because it’s been so long since the Indianapolis Indians’ Triple-A farm team was a Reds affiliate (1968-83 and 1993-99)." Besides the games, local stations "get Reds-produced programming and promos for every series and whatever game highlights they want." Meanwhile, Erardi noted there is a "need to get a Reds presence into the bars" in the bigger cities of "Reds Country," including Indianapolis and Columbus. Erardi wrote, "Used to be you’d see Cubs stuff in the bars in Indy. Now you see Reds stuff. It’s all part of the multi-front strategy." Reds Broadcast & Affiliates Manager Joe Zerhusen "has a goal of getting to 97" affiliates this year. The Reds' approach is "not to try to flip a station that is already carrying the games" of another MLB team, but "rather finding a station that isn’t yet carrying any games" (CINCINNATI ENQUIRER, 1/27).
ROAD-TRIP RECORD: In Dayton, Greg Billing reports during the final leg of the Reds Caravan tour yesterday, more than 2,000 fans "packed" the Museum of the U.S. Air Force's parking lot to celebrate the team, "setting a single-stop Caravan record." More than 1,000 fans "greeted them at stops in Lima and Columbus on Saturday -- also records for those sites" (DAYTON DAILY NEWS, 1/28).
In N.Y., Bob Raissman cited sources as saying that SportsNet N.Y. execs have “reached out” to former MLB manager Bobby Valentine to “discuss a possible studio role on Mets telecasts.” Valentine would be “featured on about 20 games, mostly marquee matchups like the Subway Series” and “would be seen on SNY’s new pre-pregame show.” Valentine also would “fill in for Bobby Ojeda, SNY’s No. 1 studio analyst, on his off days.” But it is not clear at all if Valentine, who managed the Mets from '96-'02, “even wants to return” (N.Y. DAILY NEWS, 1/27).
THUMBS UP DOWN UNDER: SI.com’s Richard Deitsch wrote ESPN’s Chris McKendry, Mary Joe Fernandez, Darren Cahill, Pam Shriver and Chris Evert did “excellent work” during Victoria Azarenka's win over Li Na in the Australian Open women's final. The group “dealt with plenty of subplots, including a 10-minute break in the third set while fireworks boomed overhead from nearby Australia Day celebrations, but never stopped providing viewers with pertinent conversation” (SI.com, 1/27).
IN THE BOOTH: In Toronto, Norris McDonald wrote driver Paul Tracy is “going to do colour commentating on Sportsnet’s telecast” of the Honda Indy Toronto and “maybe other races” in the Izod IndyCar Series. Sportsnet “took over the IndyCar series telecasts” for ‘13 after former IndyCar CEO Randy Bernard became “disenchanted with TSN for not showing all the races live” (THESTAR.com,1/27).