TWC's Dodgers channel dispute a case for a la carte pricing

TWC’s Dodgers channel dispute

Sports channels account for about 37% of the average pay-TV bill, said Derek Baine, research director for SNL Kagan, a media-industry consulting firm. Above, a TV camera in the press box at Dodger Stadium. (Brian van der Brug, Los Angeles Times / July 29, 2014)

Time Warner Cable was patting itself on the back this week after saying it was willing to have a federal arbitrator step in to resolve its long-running dispute with other pay-TV companies over the cost of the new Dodgers channel.

"We prefer to reach agreements through private business negotiations," the cable giant said in a statement, "but given the current circumstance, we are willing to agree to binding arbitration."

What a swell bunch of guys. And what a curveball for consumers.

All Time Warner Cable is doing is attempting to make every pay-TV customer in Southern California shell out at least something for SportsNet LA, the Dodgers channel that the company paid more than $8 billion to exclusively distribute — and that no other major pay-TV company went along with.

Time Warner Cable's kumbaya gambit shows that the company knows its previous take-it-leave-it stance on SportsNet LA was a non-starter with the rest of the pay-TV industry, which says it's unfair to make non-sports fans pony up for yet another sports channel.

It also underlines that the dispute over the Dodgers channel could be a turning point for an industry that has long gouged consumers by charging them for dozens if not hundreds of channels they never watch.

Time Warner Cable on Thursday reported pocketing almost $500 million in profit over the last three months — despite losing an additional 152,000 TV customers.

Pay-TV viewers have long called for an a la carte system under which they'd pay only for the channels they wanted. Although that's still probably a long way off, breaking off sports channels from current programming packages would be a big step in the right direction.

Derek Baine, research director for SNL Kagan, a media-industry consulting firm, said sports channels account for about 37% of the average pay-TV bill.

In other words, the bills of non-sports fans would drop by more than a third if these channels were unbundled from programming packages and offered only to those who wanted them.

Steve Lawrence is one such TV viewer. The Mar Vista resident is sick of paying for channels that he never watches.

"I don't watch any of the Spanish channels," Lawrence, 67, told me. "But I still have to pay for them. Why?"

Well, there's a good answer to that: He has to pay for unwanted channels because lawmakers allow the pay-TV industry to get away with ripping people off. There's no other U.S. industry that, month after month, makes consumers buy products they don't want.

But that could be changing.

Baine said the situation with the Dodgers channel makes it more likely that programmers and distributors would be willing to rewrite existing contracts to unbundle sports channels — rather than face the regulatory wrath of increasingly impatient lawmakers.

"It's getting pretty intense," he said.

Time Warner Cable's sudden embrace of arbitration came after a half-dozen Democratic members of Congress, led by Rep. Brad Sherman (D-Sherman Oaks), sent a letter suggesting the move to Time Warner Cable Chief Executive Rob Marcus and DirecTV CEO Michael White.

"We urge that Time Warner Cable, DirecTV and all other TV providers enter into binding arbitration, so that a neutral third party can determine the right price and terms for the Dodgers network," the letter said.

DirecTV wasted no time in slapping down that idea.

"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," said Robert Mercer, a DirecTV spokesman.

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