In a letter to Time Warner Cable CEO Rob Marcus, FCC Chairman Tom Wheeler blasted the company for its inability to reach agreements with other area MVPDs for SportsNet LA, the new Dodgers-owned channel.
Wheeler sent the letter to Marcus 7/29 after conversations about the standoff with Rep. Tony Cárdenas (D-Los Angeles) who had written the FCC to weigh in on the matter and Rep. Henry Waxman (D-Beverly Hills).
From the letter: “I am writing to express my strong concern about how your actions appear to have created the inability of consumers in the Los Angeles area to watch televised games of the Los Angeles
Dodgers. The FCC will continue to monitor this dispute closely and will intervene as appropriately necessary to bring relief to consumers…As you know, soaring bills for cable and other MVPD services have become a cause of consumer dismay.”
The FCC wants Time Warner Cable to send it a written explanation detailing the arbitration process it is proposing within the next ten days. It also wants details of Time Warner Cable’s terms for carriage of SportsNet LA.
A Time Warner Cable spokeswoman told The LA Times the company is “grateful for the FCC’s intervention and happy to work with them to gain carriage for the Dodgers.” The spokeswoman added that Time Warner Cable hopes that Wheeler is “is making similar inquiries of DirecTV and other LA television distributors to determine their rationale for refusing to carry SportsNet LA.”
An FCC spokeswoman said for now Wheeler has only written Time Warner Cable.
On 7/29 Time Warner Cable said it would agree to arbitration after six congressmen led by Rep. Brad Sherman (D-Sherman Oaks) sent a letter suggesting the move to DirecTV CEO Michael White and Marcus.
Sherman’s letter comes one day after Cárdenas wrote a letter to the FCC asking it to mediate an agreement between Time Warner Cable and other providers.
No progress has been made in the standoff between Time Warner Cable, which is distributing the new Los Angeles Dodgers-owned channel SportsNet LA, and local MVPD providers including DirecTV, Dish, Charter and Cox.
The Dodgers are in first place in their division and gunning for a berth in the World Series in October. But as the second half of the season begins Friday, most local fans aren’t able to watch any of it on television, noted the LA Times.
Executives at DirecTV, Cox and other distributors contend that Time Warner Cable’s price for the sports channel is too high and would force them to charge consumers, many of whom are not sports fans, even more for their pay-TV packages. They are equally pessimistic about coming to terms on deals this season.
Time Warner Cable is seeking more than $4 a month per subscriber for SportsNet LA, and the price escalates sharply from there, people familiar with the negotiations said. Though Time Warner Cable declines to comment on its offer, it says the price is not out of line with the value of Dodgers baseball to distributors.
DirecTV and other TV providers say consumers know that a Dodgers TV deal would mean significantly higher monthly bills — requiring subscribers to fork over around $50 a year more even if they are not baseball fans.
Time Warner Cable landed distribution rights for SportsNet LA last year after a heated bidding war with Fox’s Prime Ticket, which had been carrying the bulk of Dodgers games. Time Warner Cable agreed to a massive $8.35 billion, 25-year deal to run the network, according to a valuation by the Dodgers and Major League Baseball. That topped the Fox bid by $2 billion. A year earlier, Time Warner Cable won rights to the Lakers, which had been on Fox Sports West, with an over-the-top $3-billion, 20-year deal.
The annual fee that Time Warner Cable agreed to pay to the Dodgers started at $210 million this season, or $1.5 million per game, and increases through the life of the contract. That is more than four times what the Dodgers got last season from Prime Ticket and CBS-owned KCAL-TV Channel 9, which aired 49 games last season.
American Cable Association President and CEO Matthew M. Polka issued the following statement commending Wheeler for monitoring the carriage dispute involving Time Warner Cable and Dodgers-owned SportsNet LA, and for suggesting FCC intervention may be necessary to protect consumers:
“ACA commends FCC Chairman Wheeler for monitoring the dispute between Time Warner Cable and other pay-TV providers regarding the carriage of SportsNet LA, and expressing his willingness to intervene to bring relief to consumers, if appropriate and necessary.”
RBR-TVBR observation: It’s all about the money. In arbitration, TWC will point out the huge fees it is paying to carry the Dodgers on SportsNet LA. It will show that passing on those fees to other MVPDs are the only way to make the network profitable—or at least break even. So bottom line, the Dodgers should be blamed as well here—and the fans should too.
However, DirecTV is not in favor of arbitration: “Rather than force everyone to bail Time Warner Cable out, the simplest solution is to enable only those who want to pay to see the remaining Dodger games to do so at the price Time Warner Cable wants to set,” a DirecTV spokesman told The Times, adding that people who aren’t sports fans should not have to pay for Time Warner Cable’s “excess.”