Time Warner Cable raised a lot of eyebrows when it paid $3B for TV rights to the LA Lakers for the next 20 years and then a record $8B for LA Dodgers rights for the next 25 years. When the Dodgers deal launches in 2014, the cable company will have four new networks for all that content. But the plan to partially pay for those new channels via boosting TWC customers’ fees — even from Southern California users who don’t want the channels and have no way to opt out of the bundles — apparently is not sitting well. Some of those customers filed a class action suit in LA Superior Court today targeting TWC, the Lakers and the Dodgers for restitution and injunctive relief for violating California Business & Professions Code 172000. The complaint (read it here) says unless restrained by the court, TWC will “pass these costs along to its total Southern California subscriber base, resulting, directly or indirectly, in additional fees passed onto subscribers beginning with the 2014 season of approximately $4-$5 per month per subscriber … which together add (or will if unrestrained) $100 per year to the subscriber’s TWC bill”. READ MORE »
The No. 2 cable operator took it on the chin this morning after telling analysts in a conference call that rising programming costs and the lack of political ads will ding profits more than many expected. The stock is down 10% at mid-day. The disclosures inevitably led some to wonder whether Time Warner Cable contributed to its problems, at least in Southern California, by agreeing to pay hefty amounts to help create a regional sport channels that carries the Los Angeles Lakers and become a charter distributor for one for the Dodgers. CEO Glenn Britt says he had little choice. “We do not pretend that these deals are inexpensive or cheap,” he said. But sports is must-have programming, and the agreements “minimize and stabilize the cost over a long time period….In both cases these rights were up for auction and were going to be expensive no matter what happened.”
Execs say it’s too early to calculate the hit it will take in 2014 when the Dodgers’ SportsNet LA launches. The upshot, though, is that the vow Britt made last month to draw the line on rising programming costs will mostly affect small channels that few people watch — including Ovation, which the cable company ditched at year end. Britt renewed his commitment to “drop or re-position channels that don’t add to price-value.” Time Warner’s programming costs jumped 32% over the last four years, he says, while the Consumer Price Index rose 9%.
LOS ANGELES, (January 28, 2013) – The Los Angeles Dodgers ownership group created American Media Productions, LLC (AMP) in December 2012 to launch a new Los Angeles Dodgers regional sports network. Today, AMP announced its plans for SportsNet LA, the new regional television home for the Los Angeles Dodgers beginning with the 2014 Major League Baseball season. In addition to being the exclusive local home for all of the Dodger games, SportsNet LA will provide comprehensive behind-the-scenes Dodger programming, featuring more insights, analysis and commentary about the team than ever available before.
UPDATE: Not so fast. The deal didn’t get done and now Time Warner Cable is hot and heavy into the negotiating mix. Fox is pissed, to say the least.
EXCLUSIVE: It seems strangely logical that the highest-priced sports team in the world is about to score the richest TV deal ever in pro sports history. Insiders tell me that Fox Sports is close to clinching the exclusive TV rights for the Los Angeles Dodgers by paying between $6 billion and $7 billion over 25 years to put the team on its regional sports network in Southern California and of course its national Fox Broadcasting Company. Fox already shows the games on its Prime Ticket local cable channel but also has Fox Sports West here.
The previous agreement expires at the end of next season, and saw Fox Sports paying only about $40 million per season for the Dodgers TV rights. There was speculation the final price would just go north of $150 million per season. This new deal soars to $280 million per season (the average for the life of the contract). The huge outlay by News Corp demonstrates the increasing value of sports to its bottom line, while the huge payday for Guggenheim offsets the record-setting $2.15 billion price paid for the Dodgers.
But the sheer greed of Guggenheim’s ask on this new deal is staggering, especially when you consider it will all get passed down to the cable systems, advertisers, and ultimately consumers. The alternative for Guggenheim included higher ticket prices which would serve to only further alienate fans. Plus the new owners claim to need the money to bribe talented players to come to the mediocre Dodgers. And then there’s the sad fact that Major League Baseball teams are shifting from broadcast TV to cable networks – so fewer games will be available on free TV. Fox Sports expects to broadcast only one or two Major League Baseball games a week for the national audience next season.
Guggenheim and Fox Sports began preliminary talks in May. Then Fox Sports Media Group Co-President/COO Randy Freer enjoyed a 45-day exclusive negotiating window with Guggenheim Baseball Management’s Todd Boehly, the president of private equity firm Guggenheim Partners who was negotiating solo for the Dodgers owners. (Those owners also include former Los Angeles Lakers star turned mega-investor Magic Johnson, former Atlanta Braves and Washington Nationals president Stan Kasten and Mandalay Entertainment CEO Peter Guber.) Those talks began October 15th and are set to expire on November 30th. My insiders think, barring any unforeseen obstacles, the Fox-Dodgers deal could clinch by Tuesday. If it doesn’t get done by the 30th deadline, Boehly will have blown the negotiations bigtime.
I’m told a deal came “very close” to being done about a week ago “and then it went a little bit south”. To rattle Guggenheim’s cages, Fox Sports delivered an ultimatum that a deal had to be done by the end of this month or else it would stop negotiating. (Terms like “It’s dead” and “We’re out” were used.) The Fox Sports gambit worked. Because it would have left Guggenheim in a terrible situation without multiple bidders and with little leverage for next-in-line Time Warner Cable since CBS, Comcast/NBC, ABC/ESPN and even the MSG Network (controlled by the owners of Cablevision) never materialized. Of course, Guggenheim could have opted for the Dodgers to start its own network, as the Mets and Yankees have done. But big rewards come with big risks.
Also, in the middle of the run-up to negotiations in early October, Guggenheim’s Boehly bought Dick Clark Productions and put on the table a “programming element” involving Fox Broadcasting Network and DCP. Specifically, it called for DCP to have “more inventory” i.e. more shows airing on Fox Networks, sources tell me. I’m told the provision has been “in and out and in” the deal over recent weeks but appears to be ‘in’ right now.
Freer really knows this business – he ran the Fox regional sports networks for nearly half a decade - and knows not to overpay. He’s not when you consider that the Dodgers will play 162 games when the season starts in April. And yet TV rights to the Lakers who play 82 games just sold to Time Warner Cable for $3B over 20 years. And Fox just paid $3B for 49% of the YES Network which owns TV rights to the New York Yankees for 20 years.
They can’t formally begin talks until Oct. 15, but Fox Sports and the Los Angeles Dodgers are said to have started preliminary discussions on a new cable pact. Last year, Fox and former Dodgers owner Frank McCourt struck a 20-year, $3B deal that included a provision giving the Dodgers 30% of the Fox Sports channel. But, Baseball Commissioner Bud Selig did not allow that pact to proceed. Citing a source familiar with the current talks, Reuters reports the renewal being discussed since May would “almost certainly exceed” the kiboshed deal and include joint ownership of English and Spanish language channels. According to the Reuters source, no financials have been discussed, but sports consultant Marc Ganis said the new deal could cost $4B or more. Fox and the Dodgers’ current deal expires at the end of next year.
Time Warner Cable is looking for other sports rights to add to its two new Southern California regional sports networks that are launching October 1 — and that now includes the lucrative local TV rights to the Los Angeles Dodgers. “We are hopeful that we will have an opportunity to speak with the new ownership,” TWC Sports president David Rone told Sports Business Daily. “Those are conversations we are interested in having and prepared to have.” It’s not a surprise that the new networks, Time Warner Cable SportsNet and Spanish-language Time Warner Cable Deportes, would seek to bid on those rights, but it marks one of the first open acknowledgments that they are ready to compete with current rightsholder Fox Sports for a long-term Dodgers deal that could be worth $3 billion or more. (The Dodgers were purchased in March for $2.15 billion, a record price for a U.S. sports franchise. Much of the team’s value is wrapped up in the next TV rights deal.) The RSNs showed that they will be a major player in the nation’s second-largest media market, plopping down serious cash in a 20-year deal with the Los Angeles Lakers. But now the networks need other content, and Rone said in the interview that they are seeking out other deals, including college sports rights.
Time Warner Cable SportsNet and its Spanish-language sibling Time Warner Cable Deportes will launch October 1 as the exclusive home to the NBA’s Los Angeles Lakers, Major League Soccer’s L.A. Galaxy and the WNBA’s Los Angeles Sparks. The regional sports networks’ names were unveiled today; at launch, they will show than 120 live sports events per year including local high school sports. “We are building Time Warner Cable SportsNet and Time Warner Cable Deportes from the ground up to be the new homes for Southern California sports fans,” Time Warner Cable Sports President David Rone said. “Our networks are created around live coverage of some of the region’s signature franchises and represent a 24/7 commitment to give fans more access and insight than they have ever seen before.” It will be the first time that all Lakers games will be on one network after TWC inked the team to a 20-year deal in February and announced the formation of the networks.
Sports television couldn’t have gotten off to a better start to the year than last night’s Super Bowl. NBC had the game, the most-watched event in TV history. A total of 111.3 million viewers tuned in to see the team from the nation’s largest media market win the championship in the nation’s most popular sport. As if anyone needed further proof, the New York Giants’ victory over the New England Patriots is the latest example of how important live sports is to broadcasters and the advertising industry that pays their bills. The leagues and the networks that show them know this better than ever, and watching how each exploits and benefits from this reality will make for a fun spectator sport in 2012 as they go head-to-head with the carriers who are increasingly blanching at the increasingly high fees sports-rich networks can and plan to command. In the middle and up for grabs is the biggest slice of what ZenithOptimedia estimates is $61.9 billion in expected TV ad spend this year, led by anticipation for the London Summer Olympics. Here’s a scorecard of the players to watch:
If the Super Bowl isn’t enough, the most powerful sports league flexed its muscle in December by inking a broadcast rights deal with NBC, CBS and Fox for a combined $27.5 billion over nine years — a whopping 63% increase over the previous contract. (ESPN and the NFL Network have a separate contract for cable.) The deal comes just in time for the networks and affiliates’ retransmission consent negotiations with cable and satellite providers and sets up a showdown over those fees – Miller Taback analyst David Joyce crunched the numbers and found that for all media partners to break even on the new contract, the average pay TV subscriber would have to pay an extra $11.23 a month, up $6.87 from the previous contract that ends after next season. It will be a serious fight. “Congress and the Federal Communications Commission need to throw a flag, because rules and regulations shouldn’t force consumers to bear the burden of broadcasters’ profligate spending, which will surely enrich NFL owners and players just as much as it will impoverish all pay-TV subscribers, particularly those who will never watch an NFL game,” American Cable Association CEO Matthew Polka said after the deal was announced. The new contract, struck in December, came after a labor lockout that threatened the start of the season and centered on how owners and players would split its revenue, including lucrative TV rights. In effect, the potential loss of games only proved how valuable the NFL is, much like the NBA’s own labor stoppage, which trimmed the season but it quickly re-upped with key advertisers and sponsors.
NBC bet big on the Olympics in June on the backs of new owner Comcast, blowing out rivals’ bids with a $4.38 billion move for a comprehensive rights deal through the 2020 Games. We’ll begin to figure out how smart that was right away: the network is prepping the London Summer Olympics for July and August. The all-in for Olympics programming is part of a bigger play by Comcast, which is setting itself up to compete with the likes of ESPN and Turner in the sports realm by rebranding its niche Versus channel the NBC Sports Network. Visions of ESPN’s $4.69-per-customer carriage fee are spurring the move — Versus took in $122.6 million in ad revenue last year, according to SNL Kagan, while ESPN took in $1.48 billion in ad sales and $5.27 billion in affiliate revenue. It’s a long-term play for sure, but Olympics coverage will plant NBC Sports Network’s flag in a bunch of new homes this summer, as eventually will new deals signed last year with the NHL (10 years, $2 billion; ESPN and Turner were in the race for that deal) and to a lesser extent Major League Soccer (three years, about $30 million). NBCUniversal and Comcast aren’t the only ones gunning for ESPN. Fox Sports in October beat out the sports giant for English-language rights to the next soccer World Cup contract in 2018 and 2022, in bidding that also saw NBCUniversal-owned Telemundo claim Spanish-language rights from Univision. Fox Sports and cable sibling FX also inked a multiyear deal with UFC, the mixed-martial arts league.
Joe Torre, the former Los Angeles Dodgers manager who last year moved into Major League Baseball’s front office, stepped down from his executive post today and announced he was joining LA developer Rick Caruso to bid on the Los Angeles Dodgers. The team is being sold by current owner Frank McCourt as part of a bankruptcy settlement with MLB that included the early auctioning of the team’s local TV rights, which could fetch as much as $3 billion. Forbes estimates the franchise is worth around $800 million, and some believe any sale would eclipse the record price for a baseball franchise, set a couple of years ago with the Chicago Cubs’ $845 million tab. Caruso is the man behind The Grove complex adjacent to the LA Farmers Market among other real estate holdings. And Torre has done a little bit of everything in the sport: winning an MVP as a player, winning multiple World Series as manager of the New York Yankees, and a long stint as a broadcaster in between. He was EVP Baseball Operations at MLB before deciding to join Caruso.
Fox Sports has won a temporary stay that bars the Los Angeles Dodgers from shopping broadcasting rights to new bidders until a judge considers the network’s appeal of the federal bankruptcy court ruling in favor of the team. Federal …
The Los Angeles Dodgers received bankruptcy court permission Thursday to try to sell future TV rights to its baseball games months before their existing contract with Fox Sports allows, Bloomberg reported. The federal bankruptcy judge in Delaware overruled …
L.A. Lakers icon Magic Johnson is the latest big entertainment name to throw his hat in the ring to buy the Los Angeles Dodgers, which are currently in bankruptcy protection and could be about a month away from holding an auction to sell the franchise. The NBA Hall of Famer probably won’t be the latest high-profile star to attach himself to a potential ownership group — Johnson’s team, confirmed today, is a Santa Monica-based group of private investors known as Guggenheim Baseball Management, which includes Mark Walter, CEO of financial services firm Guggenheim Partners, and veteran baseball exec Stan Kasten — as bidders jockey for position in an auction in which the team will likely fetch more than $1 billion. (Johnson and his Magic Johnson Enterprises sold his ownership stake in the Lakers last year and also is part of the group that is trying to bring the NFL to downtown Los Angeles, so he’s definitely a serious player.) Other big names being bandied about as part of separate possible Dodgers ownership groups include Dallas Mavericks and HDNet’s billionaire owner Mark Cuban — he tried to buy the Chicago Cubs from Tribune a year ago — and former CNN host Larry King. Those kind of high-profile figures also don’t hurt in boosting the Dodgers’ profile as networks prepare to take a crack at landing the team’s lucrative local TV rights, which could mean a $3 billion windfall to the financially strapped team — if the courts can ever decide how that process will unfold.
A U.S. Bankruptcy judge today set December 7 to kick off a two-day hearing about whether the Los Angeles Dodgers can begin marketing the team’s lucrative future local TV rights, which Fox Sports holds through the end of the 2013 baseball season. Fox already has sued the Dodgers to block any early rights sale. The network claims its regional network has an exclusive window to renegotiate a new deal as part of its current contract, and that that team is using bankruptcy protection to break that agreement. (As part of that lawsuit, Fox will ask Judge Kevin Gross to dismiss the team’s bankruptcy altogether in a hearing set for December 27.) How valuable are those TV rights? Soon-to-be-ex-Dodgers owner Frank McCourt at one time had a $3 billion deal with Fox in place before it was rejected by Major League Baseball and commissioner Bud Selig, forcing McCourt to seek bankruptcy for the team and eventually agree to sell the franchise outright.
The Los Angeles Dodgers sued Fox Sports on Wednesday, accusing the News Corp-owned network of attempting to ”interfere with the sale of the Dodgers and their assets in bankruptcy.” The Dodgers’ goal is to sell the team and its valuable TV rights through separate court-sanctioned auctions to maximize returns. In a sharply worded court response filed Wednesday night Fox said it would ask that the Dodgers be dismissed from bankruptcy, according to the LA Times. Fox slammed Major League Baseball as “Prime Ticket’s former ally” and asserted the only reason Frank McCourt wants to auction the team’s TV rights now is to put “value rightfully belonging to Prime Ticket,in his own pocket” — referring to Fox Sports’ package of programming. The Dodgers’ suit was filed in U.S. Bankruptcy Court in Delaware, where Fox already has a suit pending against the team for alleged breach of contract in the continuing squabble over TV rights. Responding to the latest development, the Dodgers called Fox “obviously desperate” to prevent an auction that would reveal the “enormous value” of those rights and “lead to a record-smashing sale price for the team and benefit not just the Dodgers but all of baseball.”
UPDATE, 2:35 PM: The comment about James came from News Corp president Chase Carey, filling in for Rupert Murdoch, who wasn’t on the quarterly conference call with analysts and reporters. Despite growing concerns about James’ role in the News Of The World hacking scandal, the deputy COO “has done a good job and we are not contemplating any changes,” Carey said. He added, in response to a question, that the company is taking “seriously” the strong opposition that several shareholders expressed at the recent annual meeting to many members of the News Corp board — which includes three members of the Murdoch family. “The board will, and is, discussing those votes,” he says. “The board continues to evolve. …. That being said, we’re proud of the board.”
In other matters, Carey says that “we’re not buying the (Los Angeles) Dodgers,” but didn’t elaborate. Sports costs are not a big concern for the company for now because “outside of Los Angeles, most of our contracts are long term,” he says. He’s also unfazed by the NBA strike, saying that “it’s not a significant financial event for us” although “we’d like to see them settle it.” Carey denied that Fox is offering make-goods ads for lower-than-expected initial ratings for The X Factor: ”We have the No. 1 show and make real money from it,” he says. “It came out a bit below where we targeted … but is building momentum.” Not much detail about the collapse of the auction for Hulu. Carey says that it ”has been a positive for us in terms of creating value” despite its “complicated ownership structure.” Carey also didn’t provide much insight into the new programming deal with DirecTV, although he says it’s “fair for both of us.”