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Published on 01 May 2014

What happens when a pay-TV provider uses live sports content to build its bottom line by playing hardball in licensing the must-see TV broadcasts to competing providers? Ask fans of the L.A. Dodgers baseball team who currently must switch to Time Warner Cable’s service to see the team’s games live.

Pay-TV providers continue to pay megabucks for the local rights to a top sports team’s season of games as live sports remains the most coveted live TV content. They look to recoup that cost by selling the content broadcasts to as many other providers as possible in a metro market.

In a rerun of past contentious sports content licensing disputes here and in Philadelphia; TWC is urging fans to pressure their providers to cut a deal with the cableco to carry the Dodgers-owned LA SportsNet channel. The situation had the city’s mayor taking the case to the audience of the cable industry’s own trade association show in a keynote speech.

“I'm calling on all participants to resolve this so we can get our hometown Dodgers,” Mayor Eric Garcetti said, according to a story in Deadline. “We love the Dodgers and we love Time Warner.” TWC reportedly spent over $8 billion for the local TV rights for the channel owned by the Los Angeles Dodgers, a team whose popularity is on the rise after its return to the MLB playoffs last fall. Only TWC currently carries the channel.

Prices, Tensions Rise

Satellite TV provider DIRECTV cited what it called “record fees” to carry the channel in a statement updated yesterday. It read: “Now that the season’s begun, it’s regrettable Time Warner Cable keeps coming between loyal Dodger fans and their games. We want to work with Time Warner Cable to free these same passionate fans to get the games at the best value, while also allowing casual fans and those who don’t watch sports the simple power to choose whether to pay record fees for these games or not.”

The rising costs of live sports programming – combined with the backlash from customers uninterested in paying pay-TV provider separate ‘broadcast TV’ and regional sports network (RSN) fees atop of monthly subscription costs – likely serves to build demand for over-the-top (OTT) services with live sports content such as the forthcoming offering from DISH Networks.

Of equal importance is the sizable number of pay-TV subscribers who don’t watch sports and would prefer not to pay for that content in any way. OTT services lacking live pro sports content such as Netflix seem extremely popular with those who can, and or want to, do without.

Business as Usual

TWC is not doing anything illegal by playing hardball with competitors when it comes to licensing (or not) broadcast rights for the channel. The situation does, add to the frustration if fans that don’t already, nor want to, subscribe to TWC and seek to follow the Dodger’s season live on TV.

The dispute underscores the status quo lack of power for fans that are caught in the middle of sports content licensing disputes. The top professional sports are among the most-watched – and most expensive - live TV content today. Major League Baseball’s nearly six-month regular season of games offer advertisers and sponsors a wide array of marketing and messaging opportunities.

In the meantime, a website has been launched for Dodgers fans interested in urging their pay-TV provider to carry SportsNet LA. It’s unclear whether this site will drive TWC competitors to carry the channel in question, or simply raise the level of fan frustration skyward.

The Bottom Line

The TWC-LA SportsNet situation is hardly the first and very likely not the last, case where the business of live sports content leaves countless fans caught in a negotiations crossfire. The followers care not about assigning blame but are swimming in the same sea of frustration as their mayor.

As the frustrations – and live sports license costs rise – pay-TV providers, broadcasters and content owners should give pause and consider what would happen when customers grow tired of playing the game or find an alternative. Who provides the alternative makes all the difference.

Perhaps the growing list of those exploring OTT services provides answers.