Regional sports channel rights muddle Comcast-TWC merger, drive up costs across industry

A growing firestorm of consumer dissatisfaction with regional sports channels--highlighted, but by no means restricted to the ongoing brouhaha about Time Warner Cable's (NYSE: TWC) deal to pay $8 billion for the video rights of the Los Angeles Dodgers--should create concern about whether Comcast (NASDAQ: CMCSA) can acquire TWC for $45.2 billion, an op-ed in The Consumerist maintains.

In testimony before the Senate Judiciary Committee, Comcast and TWC execs brushed aside questions about whether the merger would affect regional sports channels because the two providers don't offer overlapping service.

"This isn't about overlap," The Consumerist's Chris Morran said in an opinion piece. "It's about using the combined assets of Comcast and TWC to force customers off the only real remaining competition in the pay TV market: satellite service from DirecTV and Dish."

Unlike Fox Sports, the article continued, Comcast "balks at offering satellite providers access to some of its most coveted sports offerings out of concern that it will lose its stranglehold on the local pay TV business."

While the cable industry was stirred this week when Los Angeles Mayor Eric Garcetti used a Cable Show keynote welcome as a bully pulpit to urge TWC deal with competing providers for the Dodgers, the matter of regional sports control goes back well before that.

In Philadelphia, Comcast used a "terrestrial loophole" to withhold Philadelphia sports teams' coverage from satellite operators. While Comcast has made CSN Philadelphia available to Verizon (NYSE: VZ) FiOS and RCN, it still is locked off DirecTV (NASDAQ: DTV) and Dish Network (NASDAQ: DISH)--presumably because it costs too much. Comcast exacerbated the situation this year when it cut a deal that put all but 10 of the Phillies' 162 games under its control.

In Houston, the article continued, CSN Houston is available to only about 40 percent of the TV market because "Comcast has yet to reach a deal with either DirecTV or Dish" or even AT&T (NYSE: T) U-verse.

In Los Angeles, the situation continues to devolve with Los Angeles Times sports columnist David Lazarus accusing sports team owners of "greed" for charging TWC $8 billion for broadcast rights to their games, "knowing full well that pay TV companies would have to pass along this sky high cost to all customers." Lazarus tossed in TWC as a "partner in crime" for paying that much money in the first place knowing it would have to charge the fans to make it up.

Additionally, the article cut beneath the surface of a typical pay service bill to expose all the hidden fees that consumers pay for sports programming.

"Sports channels account for roughly half of the average monthly pay TV bill," Lazarus wrote. "And if you're not a sports fan you're subsidizing those who are."

The conclusion: "Such runaway costs are a key factor in prompting a growing number of people to cut the cord and seek programming through online resources such as Netflix (NASDAQ: NFLX) and Amazon (NASDAQ: AMZN)."

For more:
- The Consumerist has this article
- the Los Angeles Times has this column

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