Other pay service providers shouldn't have to pay the freight because Time Warner Cable (NYSE: TWC) paid more than reasonable market value for the rights to broadcast the Los Angeles Dodgers on its SportsNet LA channel, DirecTV (NASDAQ: DTV) CFO Patrick Doyle told analysts during a first quarter earnings call.
"Time Warner Cable did an unprecedented deal far above any rational view of the market for a premier baseball team and created another channel that only has content six months of the year," Doyle said.
The deal, valued at $8.35 billion over 25 years, has rattled an L.A. sports fan base accustomed to watching their team on TV. Now those fans must purchase a TWC subscription if they want to see the Dodgers because, Doyle said, the MSO is "looking to double what the average RSN (regional sports network) charges DirecTV customers per pro game" and the satellite provider isn't buying.
"We'd still like to carry the Dodgers. We're still having discussions with Time Warner Cable. And we recognize that we would have to step up and pay more for the Dodgers this year" because the team is a "premier franchise," Doyle continued.
On the other hand, there are limits.
"I do think this kind of pay-whatever-price and then dump it on every pay TV provider in the market to pay for the decision that was made by Time Warner Cable management is just … not right," he continued.
The Dodgers donnybrook is only the latest in a series of controversies surrounding sports rights. DirecTV has been involved in a few of its own with cable operators who object to the satellite provider's exclusive NFL package and Comcast (NASDAQ: CMCSA) has long been embroiled in a battle in Philadelphia with satellite providers who don't have access to the area's professional and college teams.
Regional sports networks and disputes over who has the rights to broadcast local sports franchises has even seeped into Comcast's bid to acquire Time Warner Cable, with some critics suggesting the sports situation could worsen if the two companies merge.
Whatever the case, sports is a bigger deal than it perhaps should be.
"We recognize sports is a valuable asset," Doyle continued. "I think what we're all just trying to say is … it seems to be the only industry I know of where in some ways the more competition the higher the price is. And in this case it's a tax on most customers who wouldn't pay it if they had a choice."
- see this earnings call transcript
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