By Matthew Futterman
The Los Angeles Dodgers are poised to partner with Time Warner
Cable (TWC) to launch their own regional sports network, according
to people with knowledge of the process.
If consummated, the deal is expected to be valued at more than
$6 billion over at least the next 25 years. It would highlight the
continuing escalation in the price of TV rights for sports as well
as the desire on the part of the biggest brands in the industry to
control their own media destiny.
Time Warner Cable is the second biggest cable operator in the
U.S. after Comcast Corp. (CMCSA) but the biggest television
provider in the Los Angeles region, with more than 2 million
subscribers or more than 40% of the L.A. market. That means it is
able to offer the Dodgers ample distribution of what will be one of
the most expensive channels in the pay TV universe.
Any agreement, which could be announced any day, still has to
pass muster with Major League Baseball, however.
The Dodgers were acquired last year by investment firm
Guggenheim Partners for $2.15 billion, a price largely driven by
the opportunity to launch a Dodger-owned regional sports network in
the middle of a hot market for sports media.
Dodgers games are currently aired in Los Angeles on a regional
sports network owned by News Corp's (NWSA, NWS) Fox Sports but that
deal expires at the end of the 2013 season. The expected deal with
Time Warner Cable comes weeks after the Dodgers appeared to be
closing in on a new agreement with Fox. (News Corp. owns Dow Jones
& Co., publisher of The Wall Street Journal and this
newswire.)
Fox and the Dodgers had been negotiating an agreement under
which the Dodgers would have gotten a stake in a Fox-owned regional
sports network. That deal also would have guaranteed the Dodgers a
rights fee of $84 million a year, plus a $100 million annual
dividend. Under those terms the Dodgers would have had to share
more of their media revenue with the other 29 teams in Major League
Baseball than the Dodgers preferred.
Ever since teams like the New York Yankees moved rights to their
games to regional sports networks they owned, the league's policy
has been to subject guaranteed payments to revenue sharing but not
profits from the networks themselves. The league's media and
revenue-sharing definitions committee also must approve all
regional sports network agreement and rights fees to ensure that
they are priced according to the current market.
--William Launder contributed to this article.
Subscribe to WSJ: http://online.wsj.com?mod=djnwires