Time Warner Cable (NYSE: TWC) will pay the Los Angeles Dodgers $7 billion for a 20-year rights deal to carry the team's baseball games on a new regional sports network, The Los Angeles Times reported Tuesday.
After agreeing to pay the Los Angeles Lakers $3 billion for a 20-year rights deal, the nation's second largest cable MSO flipped the switch on Time Warner Cable SportsNet last fall. But Time Warner won't run Dodgers games on SportsNet. Instead, it will carry baseball games on a new regional sports network that it will manage for Dodgers owner Guggenheim Partners.
Time Warner Cable clashed with Los Angeles area providers last year over the cost of SportsNet, finding it challenging to strike carriage deals with Cox Communications, Verizon (NYSE: VZ), AT&T (NYSE: T) and DirecTV (Nasdaq: DTV). Launching another regional sports network in Los Angeles could push the wholesale monthly costs for sports programming to more than $20 per subscriber, and will likely spark another backlash from cable and satellite providers who argue that not all subscribers should be forced to pay for sports programming.
The Time Warner Cable deal is a setback for News Corp. (Nasdaq: NWSA), which distributes Dodgers games on regional sports network Prime Ticket. The network will likely face pressure from affiliates to reduce its license fee after its Dodgers rights deal expires later this year. The new Dodgers network managed by Time Warner Cable is expected to launch in 2014.
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