Business

Pay-TV providers playing hardball on TWC sports channel

Time Warner Cable may have to rethink its pitch as it prepares to launch a new Dodgers channel next year.

The No. 2 cable company is tasked with persuading other pay-TV providers to carry the new regional sports channel in Los Angeles, where it just rammed through two other pricey sports deals.

Time Warner Cable has yet to start negotiations for the Dodgers network, named SportsNet LA, and already several pay-TV providers are balking at the expected asking price, sources said.

“They know several distributors will say no [to Dodgers channel] because of the costs,” said one source.
While Time Warner Cable gained distribution for its SportsNet and Deportes channels last year, the contentious negotiations with distributors left little appetite for another pricey deal.

For the Dodgers channel, Time Warner Cable is expected to ask for $5 a month per subscriber, a fee that would escalate to $8 over five years, said a source with direct knowledge of the company.

That would be a record for a regional sports network. In New York, MSG, which carries the Knicks and Rangers, charges roughly $5 for its two channels. YES, home to the Yankees and the Nets, charges around $3 a subscriber, while Mets channel SNY charges a bit less.

Time Warner Cable wants to offer the Dodgers channel on expanded basic cable and not a separate sports tier, the source added.

If the pitch falls short, Time Warner Cable, along with Dodgers owner Guggenheim Partners, may have to reconsider their game plan.

One possible option is rolling the Dodgers rights into Time Warner Cable’s existing SportsNet channel, rather than attempting to launch another stand-alone channel, according to a source.

Time Warner Cable and Guggenheim Partners declined to comment.

Time Warner Cable is under pressure to get top dollar after agreeing to pay $8 billion over 25 years for the Dodgers rights — the most lucrative deal for a single sports team ever.

As part of the deal with Guggenheim Partners, Time Warner Cable agreed to carry the Dodgers channel and get other pay-TV providers in southern California to do the same. In exchange, TWC gets to keep the ad revenue that it sells for the network.

A group led by Magic Johnson and financed by Guggenheim Partners bought the Dodgers last year in a deal valued at $2.3 billion.

In addition to the Dodgers deal, TWC agreed to pay north of $3 billion for a 20-year deal with the Lakers to anchor its SportsNet. It also struck a $55 million, 10-year deal with Major League Soccer’s Galaxy to get Spanish-language Deportes channel off the ground.

If it is to launch the Dodgers network early next year, TWC will have to start negotiations soon with at least five Los Angeles pay-TV providers — AT&T’s U-verse, Charter Communications, Cox Communications, DirecTV and Verizon FiOS.

“TWC needs to sign these cable deals in the first quarter, so time is of the essence,” said a source close to the company.