However, the landscape of television and consumer entertainment options is changing fast.
If the Cubs were counting on a Dodger-TW megadeal, think again.
Time Warner Cable is expected to lose $1 billion in its deadl involving the Dodgers television rights, according to the New York Post.
The company acquired the right
to air Dodgers' games on SportsNet LA in 2013. The reported contract was
worth $8.35 billion over 25 years. Time Warner Cable believed providers
such as DirecTV or Dish Network would pay to carry the channel, but
that hasn't been the case thus far.
Time Warner Cable hasn't lowered
its demands, which means roughly 70 percent of Southern California
households will be unable to watch games for the second year of the deal. The company is reported asking for about $5 per subscriber in order for providers to carry the channel.
That would make SportNet LA the
third most-expensive sports channel in the United States, according to a
survey conducted by SNL Kagan, a consulting firm. And, according to the
Post at least, Time Warner would rather take a $1 billion hit than
bring down its price:
Sources told The Post that the market rate for the channel is more likely $3 per subscriber per month, meaning the charge will be almost $1 billion when adjusted over the life of the contract or in the region of $700 million in present-day terms.
“Comcast will be made whole,” said the source, suggesting this mess had to be cleaned up as a condition of Comcast’s proposed deal to acquire Time Warner Cable.
“Unless the deal closes, there will not be another [Dodgers] season shown outside of Time Warner Cable. I don’t believe they’ll get carriage,” a source told The Post.
Time Warner Cable has reportedly attempted to rectify the situation in recent weeks, but there has been no progress, according to the Los Angeles Times. The company has also denied that it is facing such a massive loss.
"Time Warner Cable has no plans to take a write-down in connection with its Dodgers contract," the company said late Tuesday in a statement. "In fact, TWC does not carry an asset on its balance sheet related to the Dodgers and, therefore, there is no asset for it to write down now or in the future."
If Time Warner Cable were to
"take a write-down" that would mean the company would have to admit that
the rights to air Dodgers games is a declining asset. This would have a
huge impact on their financial situation if the reported figures are
true.
Another point to be made is that the Dodgers cable deal has caused the values of all baseball franchises to skyrocket. So much so that the Cubs have sold minority interests in the holding company - - - which is selling slices at peak prices (and before this latest news). One could argue that all baseball franchises are now substantially overvalued as no cable operator-TV partner in the future is going to make a similar Dodger-TW mistake.
