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Tuesday, January 22, 2013

LATimes: Dodgers, Time Warner Cable have a deal

The Dodgers have agreed with Time Warner Cable on a new television contract that will provide the team with a channel of its own, according to two people familiar with the deal but not authorized to discuss it.

Time Warner Cable now has secured the television rights to the two most popular teams in Los Angeles — the Dodgers and the Lakers — within two years.

The Dodgers’ deal is expected to be finalized and announced Thursday. The team has not yet submitted the deal to Major League Baseball for approval, but the control of the channel is expected to rest with the Dodgers’ owners rather than with Time Warner.

The Dodgers had no comment.

The Dodgers’ current contract with Fox Sports expires after the 2013 season. The team had discussed a new deal with Fox last fall, worth at least $6 billion over 25 years. However, as MLB and the Dodgers debated how much of that money would have to be contributed to baseball’s revenue-sharing program, the Fox exclusive negotiating window expired, enabling Time Warner to initiate negotiations with the team.

Fox was believed to be willing to restructure its offer but was not believed to be willing to significantly raise the amount.

Fox Sports launched a second local cable channel — now called Prime Ticket — to carry the Dodgers in 1997. Fox Sports previously lost rights to Lakers games to Time Warner Cable, and the departure of the Dodgers would leave Fox with the Angels, Clippers, Ducks and Kings as the anchor teams for two channels.

Tripon Posted: January 22, 2013 at 02:18 PM | 9 comment(s) Login to Bookmark
  Tags: dodgers

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   1. Gold Star - just Gold Star Posted: January 22, 2013 at 05:14 PM (#4352799)
Reports: Deal is worth as much as $8 billion.

OMG.
   2. phredbird Posted: January 22, 2013 at 05:19 PM (#4352803)
love how they have a picture of gonzalez lumbering into home about to be tagged out.

tripon, you better stay in touch. pretty soon the only way we'll be able to afford going to a game is my freebies.

all i can say is it looks like those guggenheim guys had a long game in mind. the dodgers are about to take a quantum leap into the same rarefied air occupied by the yanks and sox. i think it makes sense. L.A. is a huge underexpoited market. the murdoch ownership was too disorganized to see it, and frank mccourt was a clown without enough dough to make these kinds of plays. with the lakers sliding into mediocrity, the door is open for the dodgers to really capture L.A.

their biggest obstacle is finding a way to get the right players. ned colletti is not the sharpest knife in the drawer, but a lot of people were saying that about sabean a couple of years ago.

in the immortal words of joaquin andujar, in baseball youneverknow.
   3. RoyalsRetro (AG#1F) Posted: January 22, 2013 at 05:21 PM (#4352809)
I was just reading a 1978 Sporting News article about the inequities of local media deals, lamenting that the Royals only got $350k a year, while the mighty Red Sox got over $2.4 MILLION!!!!
   4. Tripon Posted: January 22, 2013 at 05:29 PM (#4352823)

tripon, you better stay in touch. pretty soon the only way we'll be able to afford going to a game is my freebies.


Haha. That's the only way I can go to the game as is.
   5. Gold Star - just Gold Star Posted: January 22, 2013 at 05:36 PM (#4352833)
Meanwhile, Shakin is reporting season-tix sales are jumping about 55% from last season (17K to 26K-27K).
   6. Walt Davis Posted: January 23, 2013 at 06:39 AM (#4353120)
Meanwhile the 2013 Cub payroll is $96 M.

I had no idea the Cubs had grabbed Nate Schierholz -- that actually looks sensible. Not to worry, they have balanced it by not kicking Ian Stewart to the curb and he's back for $2M.
   7. Jeff Frances the Mute Posted: January 23, 2013 at 01:38 PM (#4353394)
This deal is a monster. The rumored deal with Fox in November was supposedly $6-7 billion over 25 years. The Time Warner numbers are rumored to be $7-8 billion over 20 years.
   8. Austin Posted: January 23, 2013 at 02:25 PM (#4353448)
I still can't wrap my head around the money being thrown around here. The simple AAV of the deal is about $375M if the rumored numbers are accurate. I don't want to do exact calculations, but let's say the US has 4% annual inflation over the life of the deal (high, but perhaps plausible). Then $1 now will be the equivalent of $2.19 in 20 years. We can get a ballpark estimate of the current-dollar value of the deal by finding a Year 1 value that, when inflation is computed, averages out with the Year 20 value to equal the AAV. It turns out that with the 4% inflation estimate, $240M in Year 1 will be the equivalent of $526M in Year 20, which averages out to $383M, close enough for our purposes. So Time Warner is conservatively paying the 2013 equivalent of about $235M-$240M annually, which is absolutely nuts. And a (probably) more accurate estimate of 3% inflation would make the 2013-equivalent AAV about $270M. How many people are going to watch the Dodgers on TV on even a semi-regular basis? Are non-TV outlets (like streaming) going to make a substantial difference? Even in a media market as big as LA, I just don't see how this kind of money makes sense.
   9. Heinie Mantush (Krusty) Posted: January 23, 2013 at 06:00 PM (#4353666)
I still can't wrap my head around the money being thrown around here. The simple AAV of the deal is about $375M if the rumored numbers are accurate. I don't want to do exact calculations, but let's say the US has 4% annual inflation over the life of the deal (high, but perhaps plausible). Then $1 now will be the equivalent of $2.19 in 20 years. We can get a ballpark estimate of the current-dollar value of the deal by finding a Year 1 value that, when inflation is computed, averages out with the Year 20 value to equal the AAV. It turns out that with the 4% inflation estimate, $240M in Year 1 will be the equivalent of $526M in Year 20, which averages out to $383M, close enough for our purposes. So Time Warner is conservatively paying the 2013 equivalent of about $235M-$240M annually, which is absolutely nuts. And a (probably) more accurate estimate of 3% inflation would make the 2013-equivalent AAV about $270M. How many people are going to watch the Dodgers on TV on even a semi-regular basis? Are non-TV outlets (like streaming) going to make a substantial difference? Even in a media market as big as LA, I just don't see how this kind of money makes sense


I think it's worth noting that the Fed is willing to allow up to... 2.5% inflation, maybe a bit more, for the duration of the recovery, maybe a bit longer. I think it's likely one of Ben Bernanke's successor's during that post-recovery stretch is going to be tighter than Paul Volcker after drinking 3 bottles of Pepto Bismol.

...which is to say, wow. TW just cut a serious check. Good on the Dodgers, good on MLB. With the NFL running headlong into the emerging CTE scandal (which will probably seriously effect baseball vis a vis catchers at some point), I think there's a distinct chance that the football gets stigmatized in a way similar to boxing over the next couple of decades. That would put in MLB in prime position to reclaim its rightful throne, or at least some additional market share. This is clearly a bet in that direction, along with sports remaining relatively TIVO/DVR-proof.

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