Last week, the Los Angeles Dodgers announced a new television contract with Time Warner Cable (TWC), valued between $7 billion to $8 billion, which calls for the creation of a new “SportsNet LA” channel that will be the exclusive home of everything Dodgers.
The deal is simple: the Dodgers have to play baseball and collect the $7 billion or $8 billion TWC will pay them over the life of the 25-year agreement. TWC owns the programming, must produce the channel, and get it carried (and paid for) on other cable and satellite systems in the DMA.
The deal was met with smiles from the new ownership group that purchased the team just last year for a record $2.15 billion.
However, it was met with almost universal outrage and disgust by everyone else. The Los Angeles Times exclaimed that “rising sports programming costs could have consumers crying foul.” Industry analysts labeled the deal a "game changer," "essentially a high tax on a lot of households,” and “for some, the straw that breaks the camel’s back.” Consumers, such as Vincent Castellanos, 51, a fashion stylist who lives inLos Feliz, were quoted as complaining "I’ve never once gone to a single sports channel. I wasn’t even aware I was paying for it."
This kind of outrage is expected, easy to understand, and on the face of it, entirely logical.
But, a deeper analysis of the deal shows that it may also be short-sighted and incomplete. Over the long-term, this deal could actually save pay-TV consumers a whole lot of money.