Few consumers are welcoming the new Los Angeles Dodgers/Time Warner Cable TV deal because they’re going to get screwed out of more hard-earned money per month. They can thank Guggenheim Partners which bought the Dodgers with an ownership group including Magic Johnson and Peter Guber for $2.15 billion last year. Guggenheim plans to carry the games on a new regional sports network it’ll own called SportsNetLA. It’s got Time Warner Cable doing the heavy lifting as its charter distributor, exclusive advertising and affiliate sales agent, and channel operations manager. But now there’s a problem: the January deal has yet even to be submitted to Major League Baseball for approval. The reason is that MLB wants to know exactly what its cut of the $7 billion, 25-year television deal will be. And Guggenheim looks like it’s trying to pitch curveballs to the league. Trust me, if you think Hollywood studios are greedy, you’ve never seen sports team owners or their leagues. So this is greed vs greedier vs greediest.
To summarize what’s in dispute, the current collective bargaining agreement’s base portion of the revenue-sharing plan calls on MLB teams to contribute 34% of net local revenue. But the way that figure gets calculated is becoming increasingly blurred by stuff like these regional sports networks and who owns them. Guggenheim’s deal is even blurrier. So now everything from rights fees, naming rights, guaranteed carriage money, and other revenue expected to go into Guggenheim’s wallet can be picked by MLB’s revenue-sharing plan. That’s the crux of the delay. Why didn’t Guggenheim forsee this? [ESPN on Thursday explained it very well here.] None of this would have been in dispute had Guggenheim taken the straightford but still gynormous Fox Sports deal on the table first.
News Corp wanted to continue in business with the Dodgers. At one point it owned the team and pays about $40 million a year to broadcast the games. But that contract expires this year. In fact, the Fox Sports offer was just $100M behind Time Warner Cable’s. But News Corp execs are still furious at Guggenheim’s Todd Boehly who conducted the Dodgers negotiations and according to insiders never seemed to know what he should do. (“He was the strangest man I’ve ever dealt with,” one exec puzzled.)
Boehly led the media giant into thinking it had a deal during an exclusive negotiating window, and then let News Corp twist in the wind. While Fox wanted the team for its new national sports network which starts August 17th to rival ESPN, Time Warner Cable needed the Dodgers more to pair with its 20-year LA Laker deal and as a hedge against retransmission fee hikes. In the end Boehly opted for the riskier SportsNetLA deal for Guggenheim - he’s a part-owner and expects more reward if the gamble pays off – than the sure thing with Fox Sports.
Problem is, no amount of big money can put the Dodgers at the same status level as, say, the Yankees. And then there’s the disgrace of what this deal is doing to consumers and their love of sports. Any day now enough viewers will hate on the Dodgers deal and give up watching to force an end to this price gouging.
RELATED: LA Dodgers Plans Sports Channel With Time Warner Cable As Charter Distributor
RELATED: Fox Closing In On Deal For Dodgers’ TV Rights: ‘We’re Out’ If Not Done By Nov. 30
Major League Baseball, the NHL, Comcast and DirecTV failed today in their team effort to get an antitrust class action suit against them dismissed in a New York District Court. “Plaintiffs have plausibly alleged that the NHL and MLB have used their monopoly power to restrict the broadcast of television programming in a manner that harms competition,” said the ruling (read it here) from U.S. District Judge Shira Scheindlin on Wednesday. The ruling means the class action instigated in the spring can go forward. The various plaintiffs claim that the leagues, regional sports networks and the cable and satellite companies have created monopolies over the airing of games on TV and online by dividing up territories and instating blackouts. In a response this summer, the defendants said the plaintiff’s claims were “meritless” and sought to have the case tossed. While the judge rejected the notion that self-proclaimed “middlemen” DirecTV, Comcast and the regional sports networks actively conspired to monopolize individual markets, Sheindlin kept everyone on the hook for their collective actions. “The notion that the exhibition of league games on television and the Internet is clearly a ‘league issue’ is contrary to long-standing precedent that agreements limiting the telecasting of professional sports games are subject to antitrust scrutiny,” Scheindlin wrote in the 53-page ruling.
A conference hearing in New York has been scheduled for December 18.
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Deadline’s Executive Editor David Lieberman talks with host David Bloom in Episode 4 of Deadline Big Media. This week Lieberman discusses how Major League Baseball managed to hit a home run in negotiating renewed rights deals with three networks; Netflix’s very good week with analysts and others; and an analyst report suggesting that, with TV’s booming syndication revenues across many platforms, it’s going to be very difficult and expensive for Apple or any other company to break up how the industry does business.
Deadline Big Media Episode 4 (MP3 format)
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UPDATE, 12:56 PM: The eight-year agreement with Fox Sports Media Group is the second shoe to drop today in Major League Baseball’s renewal deals, following the one we reported earlier with Turner. When you add these agreements with the one that MLB previously struck with ESPN, the league says that it will see a 100% increase in its annual rights fees compared with its current deals. That jibes with earlier leaks about the terms. In the new arrangement, which begins in 2014, Fox will keep the World Series and All-Star Game and share the League Championship Series and Division series with TBS and MLB Network. Fox will be able to broadcast 52 regular season games nationally on Saturdays, up from 26, and Fox can air 12 of them exclusively. The network also agreed to air a weekly 30-minute show created by Major League Baseball Productions. The pacts include TV Everywhere rights. They also end blackouts that prevented subscribers of MLB Extra Innings and MLB.tv from watching Saturday out-of-market games. Baseball Commissioner Allan H. (Bud) Selig says that “the unprecedented and historic commitment these networks have made to televising Major League Baseball for years to come is truly amazing.”
The big question now is whether the networks will be able to pass some of the new costs off to pay TV distributors — and, by extension, consumers who might have to pay higher monthly bills. The deals with Fox and Turner will cost $6.8B over the eight years, Sports Business Daily reports. That comes to an average of $525M a year for Fox, and $325M a year for Turner. “The plain truth is that these MLB deals will send monthly pay-TV bills streaking skyward,” says American Cable Association Matthew Polka. “They will make life hard for families whose incomes, hammered by the recession, can’t keep pace with the greed of broadcasters, cable networks and sports leagues. And these MLB deals follow the announcement of equally harmful deals between the National Football League and CBS, NBC, Fox and ESPN worth more than $42 billion.”
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The networks have agreed to extend their current contracts with Major League Baseball to 2021 at about double what they’re paying now, according to media reports. The deals have not been officially announced. If true, though, it means Fox will pay about $4 billion over eight years for its slate of games that includes the World Series and some League Championship Series matchups that it shares with TBS, according to USA Today. TBS parent Turner will play about $2.8 billion over the eight years. The packages are essentially the same, with TBS giving up some first-round playoff games to Fox and its soon-to-be-rebranded Speed channel, Sports Business Daily reports. The publication also says MLB Network could receive some of those early-round games — the League Divisional Series — from Fox. Read More »
The numbers work out to roughly $700 million a year, more than twice the current deal,ESPN has inked an eight-year deal with MLB worth $5.6 billion, … Read More »
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. Read More »
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.” Read More »
If Frank McCourt’s fight to remain owner of the Los Angeles Dodgers seemed long and arduous, it was — after all, he had to fight his ex-wife Jamie with one hand and baseball commissioner Bud Selig with the other. If … Read More »
The Los Angeles Dodgers today asked the judge in their bankruptcy case to let them auction off their local TV rights for the 2014 season and beyond. The team said the sports rights market was “vibrant” now and they wanted … Read More »
All of Broadway will go dark Saturday and Sunday as Hurricane Irene approaches the East Coast and New York braces for winds, rain and potential flooding during the weekend. It will be the biggest emergency shutdown of the Great White … Read More »
The Delaware court that is sorting out the Los Angeles Dodgers’ Chapter 11 filing has authorized the team to enter into a $150 million bankruptcy financing arrangement that will allow owner Frank McCourt to meet the Dodgers’ payroll obligations … Read More »
Last week, Dodgers owners Frank and Jamie McCourt agreed to a plan for a divorce settlement that would have given Frank McCourt sole ownership of the franchise — if Major League Baseball approved a lucrative TV deal that McCourt struck with Fox. That multiyear deal worth $3 billion (and, more importantly, $385 million upfront) would help McCourt shore up the Dodgers, who right now are being controlled by the league during all of this divorce mess. Well, baseball commissioner Bud Selig always seemed reluctant to OK the Fox contract, and today Selig made it official by rejecting the deal, saying in part that “the transaction is structured to facilitate the further diversion of Dodgers assets for the personal needs of Mr. McCourt.” Ouch. Under terms of the divorce plan, it means the Dodgers are one step closer to being sold off — the assets would be split 50-50 between Frank and Jamie — unless Frank can find some other way to get a massive amount of money together to play his players’ monthly salaries and restore the league’s faith in him as an owner. Here’s Selig’s statement: Read More »
The war of words between Major League Baseball and Los Angeles Dodgers owner Frank McCourt escalated today when McCourt said during an interview on CNBC that commissioner Bud Selig was ducking his calls and suggested that the league was purposefully … Read More »
Baseball commissioner Bud Selig has tapped former Texas Rangers president J. Thomas Schieffer as the monitor of the Los Angeles Dodgers, a week after Major League Baseball seized operations of the team from beleaguered and cash-strapped owner Frank McCourt. Schieffer, a former U.S. ambassador, attorney and Texas state rep, will have oversight of the day-to-day … Read More »
A former TV sports executive said today that the trustee who will be appointed by Major League Baseball to handle day-to-day operations of the financially strapped Los Angeles Dodgers would have to consider scrapping a TV rights offer from Fox … Read More »
Less than a week after a report surfaced that Los Angeles Dodgers owner Frank McCourt arranged for a $30 million personal loan from TV partner Fox to help pay the team’s bills, Major League Baseball owner Bud Selig said today … Read More »