Bloomberg News

U.S. Tells Time Warner Cable to Act in Dodgers-Games Tiff

July 29, 2014

Federal Communications Commission Chairman Tom Wheeler told Time Warner Cable Inc. (TWC:US) “inaction is no longer acceptable” in a fee dispute that’s kept Dodgers baseball games from Los Angeles pay-TV customers.

Wheeler in a letter today asked Time Warner Cable Chief Executive Officer Rob Marcus to submit documents including contracts in a dispute that has blacked out games for customers of DirecTV and other pay-TV carriers that don’t have a deal.

“Your actions appear to have created the inability of consumers in the Los Angeles area to watch televised games of the Los Angeles Dodgers,” Wheeler said in the letter released by the FCC.

“We’re grateful for the FCC’s intervention and happy to work with them to gain carriage for the Dodgers -- that has been our goal all along,” Maureen Huff, a spokeswoman for Time Warner Cable, said in an e-mail. “We hope that Chairman Wheeler is making similar inquiries of DirecTV and other LA television distributors to determine their rationale for refusing to carry SportsNet LA.”

Wheeler said the FCC would intervene “as appropriate” to bring relief to consumers.

Time Warner Cable has a long-term contract with SportsNet LA, a regional network owned by the Dodgers, and about 70 percent of the Los Angeles market has been shut out of viewing the ball club’s games this season, Wheeler wrote.

Fans Suffered

Legislators representing Southern California have urged the companies to resolve the dispute, saying fans have suffered. Last week eight Democratic members of Congress, including Brad Sherman, asked the FCC to mediate. Yesterday, Sherman sent a letter toMarcus and to Michael White, CEO of DirecTV, the largest U.S. satellite-TV service, asking them to accept binding arbitration.

“We are willing to enter into binding arbitration with DirecTV, and we appreciate the congressman’s concern for Dodger fans,” Time Warner Cable said in a statement today. “We prefer to reach agreements through private business negotiations, but given the current circumstance, we are willing to agree to binding arbitration and to allow DirecTV customers to watch the Dodgers games while the arbitration is concluded.”

DirecTV, based in El Segundo, California, is leading negotiations that will influence the rates paid by the others including AT&T Inc. and Charter Communications Inc. (CHTR:US)

‘TWC Blinked’

“It appears that Time Warner Cable has blinked,” said Paul Sweeney, a Bloomberg Intelligence analyst. “Given their investment in the regional sports network, they need to get on the air. They have a compelling product but it doesn’t matter if viewers can’t see it.”

Sports rights are becoming more important to TV networks and their advertisers because the programs are watched live and draw large audiences. The dispute is taking place while both Time Warner Cable and DirecTV are being acquired. AT&T can cancel its planned purchase of DirecTV for $66 billion if the satellite carrier can’t renew its NFL Sunday Ticket contract, which allows customers to watch out-of-market football games.

Time Warner Cable, the largest cable company in the Los Angeles market, paid $8.35 billion for 25 years of Dodgers games in 2013. It is the charter distributor of SportsNet LA, carrying the channel and responsible for advertising and affiliate sales.

‘Ongoing Stalemate’

The company has asked the other carriers to pay $4 a month and include the channel with the so-called expanded basic tiers of programming included in most cable packages. DirecTV (DTV:US) and others have sought to make the channel optional.

“Rather than force everyone to bail Time Warner Cable out, the simplest solution is to enable only those who want to pay to see the remaining Dodgers games to do so at the price Time Warner Cable wants to set,” DirecTV said in a statement.

Midway through the season, the Dodgers have a 59-47 win-loss record and lead the San Francisco Giants by two games in the National League West division.

The July 25 letter to the FCC, signed by eight members of Congress, asked Wheeler to step in.

“The ongoing stalemate between Time Warner Cable and other pay-TV providers has reached a point where mediation by the FCC is necessary,” the lawmakers said in the letter.

The letter was signed by Representatives Tony Cardenas and Sherman, as well as Lucille Roybal-Allard, Alan Lowenthal, Linda Sanchez, Janice Hahn, Julia Brownley and Judy Chu.

Time Warner Cable has agreed to be bought by Philadelphia-based Comcast Corp. (CMCSA:US) in a $45.2 billion deal that is under review by U.S. regulators. After divestitures, the combined company would have about 30 million cable-TV subscribers, in addition to NBCUniversal and regional sports networks. Comcast is the largest U.S. cable-TV operator.

To contact the reporters on this story: Anthony Palazzo in Los Angeles at apalazzo@bloomberg.net; Todd Shields in Washington at tshields3@bloomberg.net

To contact the editors responsible for this story: Romaine Bostick at rbostick@bloomberg.net; Anthony Palazzo at apalazzo@bloomberg.net Elizabeth Wasserman


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Companies Mentioned

  • TWC
    (Time Warner Cable Inc)
    • $143.39 USD
    • -1.58
    • -1.1%
  • CHTR
    (Charter Communications Inc)
    • $151.09 USD
    • -4.49
    • -2.97%
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