Why Cox Is Balking in Dodgertown

The high cost of sports has been an issue with cable, satellite and telco TV operators for years now, and as Major League Baseball’s regular season approaches — opening day was scheduled for Sunday, April 5, with the St. Louis Cardinals traveling to Wrigley Field to meet the Chicago Cubs — one major regional sports network continues to be out in the lurch: Time Warner Cable-distributed SportsNet LA, home of the Los Angeles Dodgers. While negotiations between the network and distributors in the market are nonexistent as of press time — the Dodgers home opener is scheduled for April 6 — Multichannel News senior finance editor Mike Farrell spoke with Cox Communications’s point man for programming negotiations, senior vice president of content acquisition Andy Albert, about sports costs and how cable operators can use programming deals to differentiate themselves from the over-the-top threat. An edited transcript follows.

MCN:Major League Baseball’s regular season is fast approaching. Where do you stand on your sports deals right now?

Andy Albert: A lot of those deals are long-term deals that are locked up. The one that is not locked up is the Dodgers. Not much has changed in Dodgers Land. The Dodgers asked for too much, Time Warner paid too much and we’re finding it really difficult to burden ourselves with the cost of the Dodgers. Right now, what they have talked about for the last year is a very inflexible deal that does burden non-sports fans with the very high cost of the Dodgers. I don’t see anything changing there.

MCN:Cox has owned RSNs in the past and has had to come up with a way to price and market them, so you know it’s not easy. Time Warner Cable is taking it on the chin, but at least with this network, they don’t own it, they’re just managing it for the Dodgers. Is the team the party that is being unrealistic here?

AA: There is no doubt that sports costs are high and getting higher on a regular basis. I think the Dodgers just set a new standard of unreasonableness. They [TWC] may not own it but they certainly crafted the economic relationship between themselves and the Dodgers.

MCN:Is there any hope that if the Time Warner Cable-Comcast deal gets done, there will be a new wave of reasonableness?

AA: [Laughs.] I have no idea. I would love to see something break there that would be good for our customers. We definitely know that there are Dodgers fans. We want to do everything we can to serve all of our customers as best as we can. Some are Dodgers fans; many of them are not Dodgers fans.

MCN:Do you think TWC and the Dodgers overestimated the market? When TWC launched the Lakers network [SportsNet LA], the Lakers were and are insanely popular in that market. But baseball has always seemed to be secondary to basketball in L.A.

AA: The Lakers are probably two or three times more popular than the Dodgers in L.A. And baseball is a long season — 162 games; basketball is 82, and football is only 16. There are a lot of baseball games on television. There are a good number of games on ESPN and some on Fox when they play other teams on the West Coast. Not enough for a real hard-core fan, but there are certainly a smattering of Dodgers games available.

MCN:Are distributors drawing a line in the sand against rising sports costs?

AA: I don’t know if there is a line being drawn in the sand. But it just shows you that there is a problem with sports. [Satellite-TV provider] Dish [Network], as far as I know, doesn’t carry any New York sports at all. More people have been choosing among sports networks that are affordable for customers. The Astros network is another one; it sat out there for a long time without any distribution before DirecTV bought it.

MCN:Let’s step away from the Dodgers for a moment and talk about programming in general. When you go into negotiations, is pricing still the main consideration?

AA: We want to pay the right price. We have expectations now that all of our deals will include the right to stream networks in and out of the home. If you look in the home, we are at about 100 networks that you can stream. And we have rights with a lot of networks where you can go to their websites and apps and, if you’re a customer, you already have out-of-home access.

MCN:When TV Everywhere first came into vogue, programmers were OK with in-home viewing on multiple devices, but they resisted out-of-home viewing. Now it seems like anything goes. What changed their minds?

AA: A lot of their reluctance for a long time was about ratings. But the ratings are starting to come around now. Look at some of the over-the-top announcements — networks are trying to figure out where the [audience] is shifting towards, and they’re trying to be there if they can. We have all of these rights today for our customers. We have the right to watch a lot of that stuff outside the home on an authenticated basis. And we do that within the home as a managed service, so there is a quality of service you don’t get necessarily with a Sony or a Sling or any of those guys.

MCN:The OTT services are starting to emerge — Sling TV is out, Sony is in three cities with its Play- Station Vue, and HBO Now is launching this month. Does this put added pressure on you to do more sports deals because that’s one of the few things left that viewers watch live?

AA: I agree with your statement, but we have a lot of sports. Our sports fans are pretty well-covered today.

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.