The Breakdown

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Time Warner Cable adds 'sports programming fee' to the bill. Thank you, Dodgers?

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93325 full

Starting Jan. 1, your Time Warner Cable bill is going to get a little more expensive, with the addition of a “sports programming fee” of $2.75 a month. The charge is modest, but remember a lot of your cable bill goes to sports already, to pay hefty carriage fees to ESPN and an increasing number of regional sports networks (RSN's).

Time Warner Cable will charge the fee whether you ever watch sports or not. (Though 75 percent of customers won't see the charge at first because they are on promotional plans.)

"The cost of sports programming has been escalating dramatically," said Time Warner Cable spokesman Bret Picciolo. "Since 2008, our cost for cable sports programming has gone up by 91% and we think it is important to show customers the impact of these rising costs through a specific item on their bills. The new fee will only reflect a small portion of the escalating costs we are now paying for sports."

Time Warner Cable is no doubt paying an increasing amount for sports channels, but as Maury Brown, who writes about sports business for Forbes, points out - some of those skyrocketing costs are due to very expensive deals Time Warner itself has made in Los Angeles.

“The Dodgers media rights are $8.3 billion over 25 years," Brown said. "The Lakers is a $4 billion deal. There’s absolutely no way you’re going to make deals like that and not pass it on.”

In the case of the Dodgers, Time Warner Cable has not been able to make deals with any other providers to carry their all-Dodgers channel, SportsNet LA. That situation has drawn the ire of fans who don't subscribe to Time Warner Cable and were left, for the most part, unable to see their home team play on TV. It has also become a major financial drain for the company. In July, Time Warner Cable lowered its earnings guidance, blaming a lack of carriage deals.

Time Warner Cable argues that, far from contributing to the problem, its deals with the Lakers and Dodgers have kept the cost of sports rights fees in check.

"With the Los Angeles RSNs, we're confident that our investment is helping to better control these skyrocketing costs, since we have been able to eliminate the middleman," Picciolo said.

In 2011, The New York Times estimated the average household spends $100 a year for sports channels, a figure that has surely climbed much higher. 

ESPN is by far the most expensive cable channel, costing providers over $6 a month, according to SNL Kagan.

To help offset rising carriage costs, Verizon and DirecTV – Time Warner's main adversary in the Dodgers fight – already charge a sports programming fee.

For now, sports is the glue holding pay-TV together, but Brown doesn’t think rights fees – and cable bills - can keep going up much longer.

“It will just collapse under its own weight, whether it’s due to the fact that Congress steps in or the carriers finally stop allowing for it.”

Already, cord-cutting is a serious concern for carriers. Last quarter, Time Warner Cable lost 184,000 cable subscribers.

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