The Los Angeles Dodgers and Time Warner Cable Inc. (TWC:US) will create a network to televise the baseball team’s games, a deal designed to help the pay-TV company absorb rising costs for sports programming.
SportsNet LA will be available throughout Southern California and Hawaii on Time Warner Cable for the 2014 Major League Baseball season, according to a statement today. While the companies didn’t disclose financial terms, a person familiar with the contract said it was worth about $7 billion. The deal will last 25 years, said another person, who asked not to be named because details are private.
The increasing cost of sports helps propel pay-TV programming fees almost 10 percent higher each year. DirecTV (DTV:US), the largest U.S. satellite TV operator, has begun charging a separate monthly fee to customers in regions with large numbers of regional sports networks, including Los Angeles, to account for the added expenses. Verizon Communications Inc. (VZ:US)’s FiOS plans to start charging new customers $2.42 a month for the channels, Heather Wilner, a Verizon spokeswoman, said in an e-mail.
“We all know the costs of sports are going up,” Melinda Witmer, Time Warner Cable’s executive vice president and chief video and content officer, said in an interview. “We want access to this content for a long time and want some control over our economic destiny. This gives us some cost certainty where we can sustain manageable rates of increase.”
The agreement wrests away the Dodgers’ TV rights from their current partner, News Corp. (NWSA:US)’s Fox Sports. The team’s games and related programming will begin airing on the new network after the Fox contract ends in 2013. The channel will be available to customers of other pay-TV providers, which will license it from New York-based Time Warner Cable.
Time Warner Cable owns the TV rights to basketball’s Los Angeles Lakers, carried on a separate channel, Time Warner Cable SportsNet. The company has sold distribution for that network to other carriers including DirecTV and AT&T Inc. (T:US)’s U-verse. Time Warner Cable will have a similar plan with the Dodgers, Witmer said.
“The network belongs to the Dodgers,” Witmer said. “It’s very important to the Dodgers that there’s as much distribution as possible. Time Warner Cable isn’t looking to buy sports rights to keep them away from competitors, but we want to make sure others don’t take the rights and make them exclusive from us.”
The Dodgers ownership group has created a new company, American Media Productions LLC, to begin the network. AMP is evaluating producing and airing games in Spanish, although there are no plans to create a second network, Witmer said. Dodgers and Lakers programming will remain on different networks, said David Rone, president of Time Warner Cable Sports, in an interview.
“We concluded last year that the best way to give our fans what they want -- more content and more Dodger baseball -- was to launch our own network,” Mark Walter, chairman of the Dodgers, said in the statement.
The agreement with Time Warner Cable is subject to closing conditions, the companies said. Bloomberg News first reported on the creation of the new network on Jan. 22.
Time Warner Cable, the second-largest U.S. cable company after Comcast Corp., rose 0.5 percent to $101.11 at 2:29 p.m. in New York.
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