CommentsLA WATCHDOG--For the last four seasons, three million Southern California households have been unable to watch the Dodgers in the comfort of their own homes because of a business dispute between two media giants, Charter Communications, the owner of Time Warner Cable now doing business as Spectrum, and Direct TV, a wholly owned subsidiary of AT&T, the world’s largest telecommunications company with a market capitalization exceeding $200 billion.
In 2013, Time Warner Cable agreed to pay the Dodgers $8.35 billion over the next 25 years for the exclusive media rights to the Dodgers regular season games. In its efforts to build a regional sports network centered on the Dodgers, Time Warner Cable assumed that Direct TV and other cable pay TV operators would carry the games as part of their basic programming package. But these other system operators refused to sign on because they did not want to hit up their subscribers for an additional $5 a month.
Underlying their refusal to increase the cost to the already stressed subscribers is the concern that higher prices will lead to additional “cord cutting,” especially by millennials who are relying on other streaming services for their in home entertainment.
Direct TV and the other cable operators are also not very happy with the Time Warner Cable (now Spectrum) as they have been burned by TWC’s 2011, $3 billion, 20 year, over the top deal with the Lakers. Viewership and ratings are in the toilet because of the team’s losing record. In 2011, the Lakers won 57 games. Last year, they lost 56 games of their 82 games and were the third worst team in the NBA.
Some have argued that the Dodgers should give Spectrum a break. But this is not realistic as the Dodgers are using this media money to support the highest payroll in Major League Baseball and to pay for over $150 million in improvements to Dodger Stadium.
Spectrum also has the flexibility to negotiate new terms with Direct TV and other system operators. When Time Warner Cable was acquired by Charter Communications in 2016, John Malone, Charter’s controlling shareholder who is worth an estimated $8 billion, no doubt discounted the value of the Dodger contract that was generating losses believed to be in the range of $100 million a year.
At the same time, the self-made Malone more than likely wrote down the value of the Lakers’ contract.
Direct TV and AT&T, on the other hand, do not appear to be willing to negotiate with Spectrum. Rather, AT&T is more interested in completing its $85 billion anti-competitive merger with Time Warner, the former parent of Time Warner Cable and the owner of Warner Brothers, HBO, and CNN.
Direct TV has also shown that it is unwilling to negotiate in good faith. In November of 2016, the US Department of Justice sued Direct TV and AT&T for collusion as they were allegedly sharing competitively sensitive information with other cable operators about its negotiations with Spectrum. Direct TV and AT&T settled the litigation in March of 2017 by agreeing not to share confidential information with the other cable operators.
There are numerous ways to develop a solution so that the three million excluded Southern California households can enjoy the Dodgers on their home screens. These include a compromise on the pricing of the contract, the duration of the contract, or tying pricing to the TV ratings or the on field performance of the Dodgers. There is also the possibility of merging the money losing Dodger network with the troubled Laker channel and adjusting the price accordingly.
While we are not party to the negotiations involving the Dodgers, we can express our displeasure by refusing to do business with AT&T. This could include boycotting not only Direct TV, but AT&T’s internet and wireless services.
We can also register our opposition to the consumer unfriendly merger of AT&T and Time Warner where together they will be able screw consumers by raising prices and reducing services.
While AT&T and Charter Communications are monster corporations with a combined market capitalization pushing $300 billion, their Chief Executive Officers and other key executives need to realize that the Dodgers are a beloved Southern California institution that needs to be available to all Dodger fans throughout the Southland.
It’s Time For Dodger Baseball.
(Jack Humphreville writes LA Watchdog for CityWatch. He is the President of the DWP Advocacy Committee and is the Budget and DWP representative for the Greater Wilshire Neighborhood Council. He is a Neighborhood Council Budget Advocate. He can be reached at: [email protected].)
-cw
