That may be the only way to break the impasse between Time Warner Cable‘s SportsNet LA, which controls the team’s TV rights, and pay TV distributors, DirecTV CEO Michael White said today. His comment followed a conference call this morning where TWC CFO Arthur Minson urged analysts to “assume we do not sign additional affiliate agreements for the Dodgers network this year.” Indeed he helped them to compute the potential impact, saying that the lack of an agreement could shave 50 basis points [or 0.5%] from TWC’s expected revenue growth this year and 125 basis points [or 1.25%] from its expected cash flow growth.
White said, in a separate meeting with analysts, that he feels no business pressure to back down from his view that SportsNet’s just too expensive with terms for about $5 per subscriber per month. Even without Dodgers games “we’re actually positive net adds” for subscriptions in the LA area in the three months ending in June. Now he has little hope of a resolution “without the active and constructive participation of the ownership of the Dodgers.” White says that in June his company made an offer that would have given the team more than it collected from all distributors last year. “It was rejected out of hand by Time Warner Cable.”
He won’t back down because the terms that TWC accepted to handle the Lakers and Dodgers TV rights “creates stratospheric pricing…If you did it for all of the sports team you’d be at $26 per subscriber per month in the bill. That’s a huge tax, particularly on the many households that don’t watch sports.”
TWC has proposed that the matter go to binding arbitration. But others seem unimpressed with the idea. Earlier this week FCC Chairman Tom Wheeler told TWC chief Rob Marcus in a letter that “I strongly urge you to end the impasses that are depriving Los Angeles consumers from being able to watch their home baseball team.” The FCC “intends to monitor this situation closely in order to determine whether intervention is appropriate and necessary.”