The Breakdown

Explaining Southern California's economy

The LA 'sports tax': $312 a year, whether you ever watch a game or not?

85193 full
85193 full

Cable and satellite television bills are expensive, and a big reason why is sports channels like ESPN that command high carriage fees.

If you don't watch sports, you're paying alot of money for channels you don't need.

But just how much? The New York Times estimated in 2011 American cable customers spend $100 a year on sports channels.

In L.A. that number is likely way too low, because of the proliferation of regional sports networks  (RSN's) here, seven in all. 

In a conference call with analysts following the release of DirecTV's second-quarter earnings Thursday, DirecTV CEO Mike White said his million-plus L.A. subscribers would be paying $312 a year to watch their hometown teams if they all demanded terms as rich as the Lakers and the Dodgers, which both started their own RSN's operated by Time Warner Cable.

“This [The Dodgers] and the Lakers deal that Time Warner Cable did creates stratospheric pricing in the Los Angeles market that if you did it for all the sports team that L.A. subscribers have to pay for, you would be at $26 dollars per subscriber per month in the bill, and that’s a huge tax, particularly on the many households that don’t watch sports," said White.

White is likely including the Pac-12 Networks in that estimate, which like SportsNet LA, DirecTV does not carry, and every team won't start their own RSN, though Steve Ballmer will probably like to for the Clippers. So the $26 a month figure is hypothetical, but since TV providers don't usually break down the cost of your bill this way, it's illustrative.

Of course, White is not a consumer advocate. He's trying to direct the anger over the Dodgers channel to Time Warner Cable and the team itself. 

Still, his point has to resonate with non-sports fans and non-Dodgers fans, which seems to be alot of people.

"Last year, the Dodgers viewership was on average, 128,000 for any given game out of a total pay-TV marketplace in the L.A. area of 4.4 million,” White said.

White also revealed DirecTV's latest offer to Time Warner, which he said was more than generous. 

"In June, we put forward a proposal that would have compensated the Dodgers equivalent or more than the entire rights fees they got from all distributors combined in 2013, and it was rejected out of hand by Time Warner Cable.”

Until Thursday, DirecTV indicated it was not interested in engaging in binding arbitration, as Time Warner Cable and the Dodgers want to do. However, on Thursday, White said the company would consider it, as long as the team is involved.

"Frankly, without the active and constructive participation of the ownership of the Dodgers, it’s hard to see how you would get any resolution to this dispute,” White said.

Translation: The Dodgers need to renegotiate their $8.3 billion deal with Time Warner Cable, because as long as Time Warner Cable is on the hook for so much money, it's not going to want to charge lower monthly fees to distributors.

Time Warner: Don't expect carriage deals this season

The Dodgers also loomed over Time Warner Cable's second-quarter earnings, which were released Thursday. From the Wall Street Journal:

Clouding the results was the company's big bet on the Dodgers sports channel, SportsNet LA. Higher programming costs associated with the network lifted operating costs and damped profits. The company lowered its profit and revenue growth guidance for the year, citing revenue shortfalls related to SportsNet LA.

Arthur T. Minson, Time Warner Cable's Chief Financial Officer and Executive Vice President, told analysts not to expect any carriage deals this season.

"While we continue to work hard to engage with other distributors of that carriage for the Dodgers network, my recommendation for modeling purposes is to assume we do not sign additional affiliate agreements for the Dodgers network this year," Minson said.

blog comments powered by Disqus

Enjoy reading The Breakdown? You might like KPCC’s other blogs.

What's popular now on KPCC