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Could the Dodgers’ giant TV deal be the beginning of the end for giant TV deals?

Jan 23, 2013, 12:52 PM EDT

old TV

We talk a lot about the skyrocketing TV deals baseball teams are getting from cable operators these days. One wonders, though, whether or not we’re witnessing a bubble that’s going to soon burst. If it does, we may look at the Dodgers’ new TV deal as the beginning of the end.

The Dodgers TV deal with Time Warner is reported to be upwards of $8 billion. To pay for that, Time Warner is going to charge other carriers (Direct TV, Dish Network, other cable systems) $4 or $5 per subscriber for the right to carry the new Los Angeles Dodgers network they’re operating, with those costs passed on to the other carriers’ customers. This is how all sports TV rights deals go. It’s just way bigger with the Dodgers and Time Warner.

Many — probably most — of the customers who are seeing their cable bill go up are not Dodgers fans. They just want to watch Nick Jr. or History Channel or BBC America or any number of other channels. But, because you can’t (for the most part anyway) pick and choose which channels you get, the non-sports watchers are helping subsidize the sports watchers. Again, this is how it always works, but this time the rate hikes in question are going to be quite large.

Joe Flint and Bill Shaikin of the L.A. Times write about this today, and they talk to one former TV executive who thinks that such a pattern is unsustainable:

But non-sports fans and pay TV companies are increasingly frustrated at having to pick up the tab for big sports deals. There have been calls to sell sports channels “a la carte,” or separately from other programming.

The Dodger agreement with Time Warner Cable may be a tipping point.

“That is the solution everyone should be looking at seriously,” said Derek Chang, a former senior executive at satellite broadcaster DirecTV. Such a move, he added, may be the only way to lower the cost of TV sports. “Ultimately the market for fees would then reset.”

All it takes is a political groundswell — and someone talking about how we should think of the children who just want to watch “Spongebob” is a great way to get that going — for Congress to wade in and either begin legislating or begin threatening to legislate with respect to cable TV in such a way that a la carte pricing becomes available.  If it does, companies in Time Warner’s position won’t be able to demand across-the-board rights fees like they are now and, in turn, they won’t be able to offer sports teams like the Dodgers the billions of dollars in rights fees like they’re currently doing.

If that bubble bursts, down with it comes the TV money. Then down go the franchise values, which are escalating due to the TV money sports teams are attracting. If team values go down, team payrolls will eventually come down too.  No aspect of baseball finances would be untouched by it.

Will it happen? I don’t know. And if it does, I don’t know when. But I also know that no bubble in history has ever failed to burst, and that when they do burst, the bubbles tend to take down just about everyone.

  1. koufaxmitzvah - Jan 23, 2013 at 3:28 PM

    From what I gathered last season with the sale of the Dodgers, the main reason why sports team values have risen isn’t just because of dedicated sports channels, but rather, the DVR market which allows viewers to skp advertising. The marketplace has the idea that sports fans would rather watch their game live– and therefore be susceptible to the TV advertising.

    Sports advertising should be like how it is during the World Cup anyway with paid corporate imagery around the screen border. That’ll cut the game time down and keep a trapped audience invested in the imagery. But whatever.

  2. dcfan4life - Jan 23, 2013 at 4:14 PM

    It be nice if a new cable subscriber let you build your own packages. Ideally you would be able to add every channel individually, with like a channel limit per price to keep the company in business. 200 channels this price, 300 channels this price, etc… Id love for this massive TV deals to create that domino effect if indeed it is a bubble.

    • hojo20 - Jan 23, 2013 at 6:43 PM

      Yeah, like I have to pay for crap like BET…..I don’t need to see “Booty Call” every night.

      • jimeejohnson - Jan 24, 2013 at 9:07 PM

        Every other night is enough.

  3. deep64blue - Jan 23, 2013 at 5:04 PM

    I’m stunned that US Subscribers put up with this model. In the UK you have various “bundles” on top of the basic tier – childrens, music, movies, sports etc with the last two being much dearer than the others.

    • dcfan4life - Jan 23, 2013 at 9:45 PM

      As a normal american all i can say to that comment is “well then move to the UK!!!” Sorry, its the answer to every comment that insults the US haha.

      • jimeejohnson - Jan 24, 2013 at 9:08 PM

        Take it or leave it.

  4. pandorasdadca - Jan 23, 2013 at 6:56 PM

    Awesome. I HATE the Ducking Fodgers and now I get to pay more on my DirecTV bill because of them.

    • thebadguyswon - Jan 23, 2013 at 9:49 PM

      I’m with you and rates are increasing Feb 7 for DirecTV. Go figure.

  5. sparty0n - Jan 23, 2013 at 7:42 PM

    Why cant ALL programming be a la carte?

  6. thebadguyswon - Jan 23, 2013 at 9:46 PM

    This really sucks for everyday people. Lets hope the future of television is in for massive upheaval.

  7. joerymi - Jan 23, 2013 at 11:04 PM

    Sports in general have the biggest television bargaining chip of all. Dish probably lost customers that wanted to watch Breaking Bad, but that is a minuscule fraction of what they would lose if people’s favorite teams aren’t on their carriers.

    Look at the Big Ten. They rejected geographically restrictive conferencing for their TV Network. And while Maryland and Rutgers aren’t exactly football meccas, the Big Ten knows full well that the fans of these programs will never tolerate a cable/sat provider in their home without their team, and the providers know it also.

  8. BigBeachBall - Jan 24, 2013 at 6:54 AM

    What does a la carte mean? Does it hurt?

  9. tuscaloosaguy - Jan 24, 2013 at 6:05 PM

    Only movie channel I really care about is Encore Westerns, but I’m not going to order Showtime/Encore just to watch that one channel. Be nice if we could order a la carte sports channels.

  10. bh0673 - Jan 24, 2013 at 6:37 PM

    Bring on ala carte pricing! . My kids are grown so I could ax Nick, Disney and every other kids channel, I could dump ABC as well as all the Spanish Stations I can’t watch since I don’t speak the language, even the Networks like ABC, CBS & NBC are charging per viewer even though they broadcast over the airwaves. Ok I have to keep CBS, NBC and Fox for some sports but I still can’t stomach Joe Buck, at least ESPN finally got the message and dumped Miller and Morgan but I would dump probably 80% of the channels I have.

  11. jimeejohnson - Jan 24, 2013 at 9:12 PM

    Guess the French are smarter than we thought: they invented “a la carte”. They perfected “we give up”!

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