Skip to content

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

Jan 23, 2013, 12:52 PM EST

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.

Latest Posts
  1. Matt Kemp has officially been traded to the Padres

    Dec 18, 2014, 11:27 PM EST

    matt kemp dodgers getty Getty Images

    It took long enough, but Matt Kemp has finally been traded to the Padres.

  2. Padres acquire catcher Derek Norris from Athletics

    Dec 18, 2014, 9:30 PM EST

    Derek Norris Getty Getty Images

    The Padres continue to overhaul their lineup while the A’s continue to unload.

  3. Delmon Young would prefer to re-sign with the Orioles

    Dec 18, 2014, 8:46 PM EST

    Delmon Young AP

    Young, 29, batted .302 with seven home runs and .779 OPS (120 OPS+) over 255 plate appearances this past season.

  4. Mariners sign Mark Lowe

    Dec 18, 2014, 7:50 PM EST

    Mark Lowe AP AP

    Lowe began his career with Seattle and had his best season with the club in 2009.

  5. Report: Josh Johnson is “on the verge” of re-signing with the Padres

    Dec 18, 2014, 6:07 PM EST

    San Diego Padres Photo Day Getty Images

    Johnson missed the entire 2014 season after undergoing Tommy John surgery in late April.

  6. Ichiro is getting “some consideration” from the Orioles

    Dec 18, 2014, 6:00 PM EST

    Ichiro Suzuki Getty Images

    Does Ichiro really have one more year left in him?

  7. Royals designate Johnny Giavotella for assignment

    Dec 18, 2014, 5:17 PM EST

    Johnny Giavotella Getty Images

    Giavotella is a career .315 hitter with an .835 OPS and as many walks as strikeouts in nearly 2,000 plate appearances at Triple-A.

  8. The Walter White of the Biogenesis case pleads guilty

    Dec 18, 2014, 4:47 PM EST

    Screen Shot 2014-12-18 at 4.46.36 PM

    He’s probably not the one who knocks. Indeed, this crew seemed so amateurish he probably called first to make sure it was a good time for everyone.

  9. What Communists thought about baseball in 1934

    Dec 18, 2014, 3:34 PM EST

    Screen Shot 2014-12-18 at 3.21.56 PM

    Between Cuba and North Korea, it’s been a big couple of days for communism. Let’s see what communists thought about baseball once upon a time.

  10. Royals sign Kris Medlen for two years, with option for 2017

    Dec 18, 2014, 3:18 PM EST

    kris medlen getty Getty Images

    Medlen missed all of this year recovering from his second Tommy John elbow surgery.

  11. Must-Click Link: Tyler Kepner salutes Sy Berger and baseball cards of the 1980s

    Dec 18, 2014, 1:06 PM EST

    Screen Shot 2014-12-18 at 1.05.44 PM

    Baseball card collecting in the post-bicycle spokes, pre-crash world of the 1980s.

  12. Report: Matt Kemp has arthritis in both hips

    Dec 18, 2014, 12:17 PM EST

    Matt Kemp Getty Images

    And the Padres “continue to consult medical experts.”

  13. Let’s not get ahead of ourselves on the United States’ conquest of baseball in Cuba

    Dec 18, 2014, 11:39 AM EST

    Cake

    Let’s pump the brakes a bit on the imminent MLB takeover of Cuba.

Featured video

Cubs shore up rotation with Jon Lester
Top 10 MLB Player Searches
  1. W. Myers (3585)
  2. M. Cabrera (3303)
  3. M. Kemp (3237)
  4. M. Morse (2457)
  5. J. Lester (2186)
  1. J. Kang (2126)
  2. C. Headley (2108)
  3. C. Hamels (1763)
  4. W. Miley (1735)
  5. A. Rios (1722)