Time Warner Cable subscribers who never watch a minute of sports are likely to see their cable bills go up when the Los Angeles Dodgers finalize a long-term deal for broadcasting their games.
The agreement is expected to net the team $7 billion to $8 billion over 20 years which, if history is a guide, will be paid for with increased subscriber charges. People familiar with the deal told Bloomberg that Time Warner would run the new network and sell advertising, but would not own the broadcast rights. Rupert Murdoch’s News Corp. currently broadcasts Dodger games on Fox but only pays around $40 million a year to do so.
In a Los Angeles Times story last month, it was estimated that about half of a consumer’s typical $90-a-month cable/satellite television bill paid for the sports packages carried by the provider. The story predicted that those bills would rise an average of 40% over the next three years as teams like the Dodgers and Los Angeles Lakers inked new, lucrative pacts.
Deals like this are the reason that teams are able to pay astronomical salaries to athletes. Alex Rodriguez of the New York Yankees signed a 10-year extension in 2007 that pays him $275 million. His previous 10-year contract was worth $252 million, meaning he will have made a half-billion dollars playing baseball in his career.
John Malone, a cable industry pioneer and chairman of Liberty Media, told the Los Angeles Times that the end may be near for these kinds of mega media sports deals. “We've got runaway sports rights, runaway sports salaries and what is essentially a high tax on a lot of households that don't have a lot of interest in sports,” he said.
Fox was reportedly willing to ante up $6 billion for the Dodger broadcasts, but got outbid. Time Warner agreed to pay $3 billion to snatch the Lakers away from Fox Sports West last year, a deal which may not look so sweet now that the basketball team is off to one of its worst starts ever.
Escalating prices for a growing number of television offerings that most people don’t want to see have fueled arguments for a la carte pricing that allows people to just pay for the programs they watch rather than a lump sum for general access. Tiered pricing for premium channels addresses some of those concerns, but that’s a model more appealing to wealthier viewers.
The big media companies that own sports channels like the current system and have the influence with providers to get their way.
Kevin Drum at Mother Jones, a savvy observer of the media who lives in Southern California, was shocked to discover how big a “tax” non-sports fans were paying to subsidize sports programming and, by extension, sports salaries. But he wasn’t surprised that he was shocked.
“Consumers should always assume they are being ripped off if prices are hidden in some way,” Drum wrote in an argument supporting alternative pricing. “The end result of a la carte programming would be more competition between sports providers, which would force them to offer better products, and it would also (probably) result in less money flowing into pro and college sports, which would be an almost unalloyed good.”
And, he pointed out, his mother wouldn’t be forced to pay $400 for sports programming she would never watch.
–Ken Broder
To Learn More:
Time Warner Cable Said to Win Right to Carry Dodgers Games (by Alex Sherman and Scott Soshnick, Bloomberg)
The Sports Tax That Everyone Pays (by Kevin Drum, Mother Jones)
Rising Sports Programming Costs Could Have Consumers Crying Foul (by Joe Flint and Meg James, Los Angeles Times)