Lawmakers, FCC chairman urge arbitration over Dodgers channel
Political pressure is mounting on Time Warner Cable to bring an end to the bitter standoff that has prevented many Dodgers fans from watching the team on television this season.
More than a dozen members of Congress and the chairman of the Federal Communications Commission have called for the cable giant to find a way to end its dispute with other area pay-TV providers over its distribution of SportsNet LA, the new local TV home for Dodgers games.
The actions mark a potential step forward in what has been stalled negotiations. But it remains to be seen whether the political push will hasten an end to the nearly six-month stalemate.
FCC Chairman Tom Wheeler was particularly harsh on Time Warner Cable, saying in a letter Tuesday to Chief Executive Rob Marcus that he was “troubled by the negative impact that your apparent actions are having on consumers and the overall video marketplace.”
The FCC, Wheeler said, “intends to monitor this situation closely in order to determine whether intervention is appropriate and necessary.”
Rep. Brad Sherman (D-Sherman Oaks) called on Time Warner Cable and DirecTV to agree to binding arbitration, which would entail letting a neutral third party determine a fair value for the channel. DirecTV is the largest provider refusing to carry SportsNet LA.
“Despite negotiations, the dispute continues and there is no indication that your companies are making progress on reaching a resolution,” Sherman said in a letter to the two companies. “This will be a fair and fast way to return programming to consumers.”
Time Warner Cable said it would agree to such an approach.
“We want to get fans this network and these games as fast as possible,” Time Warner Cable Sports President David Rone said. “We are happy to submit ourselves to binding arbitration.”
As for the letter from Wheeler, a Time Warner Cable spokeswoman said: “We’re grateful for the FCC’s intervention and happy to work with them to gain carriage for the Dodgers.... We hope that Chairman Wheeler is making similar inquiries of DirecTV and other L.A. television distributors to determine their rationale for refusing to carry SportsNet LA.”
DirecTV, which has almost 1.3 million subscribers locally, brushed back the arbitration idea, saying non-fans should not have to pay for Time Warner Cable’s “excess.”
“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 Dodger games to do so at the price Time Warner Cable wants to set,” the satellite broadcaster said in a statement.
Despite the heat from politicians and regulators, industry observers don’t see the showdown ending any time soon, viewing Time Warner Cable’s willingness to submit to binding arbitration as little more than a public relations ploy.
“It certainly has the look of that,” said Dan Hill, president of the media consulting firm Ervin Hill Strategy. By agreeing to arbitration, “it releases some of the pressure on them.”
Few who have been following the situation expect DirecTV to submit to binding arbitration.
“I don’t think it changes anything,” said Ed Desser, head of Desser Sports Media, a consulting firm that specializes in sports television. “DirecTV has the leverage right now.”
Even coming to terms on how the arbitration would proceed could prove to be too much of a challenge.
Among the issues the arbitrator might have to weigh in on are the price for SportsNet LA, the length of the contract and whether the channel should be mandatory to all subscribers or offered on an a la carte basis to those who want it.
“If you give an arbitrator authority to decide on all these issues, there is a lot of risk for everybody,” said Jeffrey Dasteel, an adjunct professor of law at UCLA. “It would be surprising if they entered into that kind of arbitration.”
Time Warner Cable landed the rights to distribute the Dodgers-owned SportsNet LA in a record-breaking 25-year deal worth $8.35 billion, according to a valuation by the Dodgers and Major League Baseball.
DirecTV, Cox Communications, Dish Network and other distributors have passed on carrying SportsNet LA, saying the anticipated rate hikes could lead some people to cancel their service. Although Time Warner Cable has never disclosed what it is seeking for SportsNet LA, people familiar with the talks have put the price at more than $4 a month per subscriber in the first year. That figure steadily rises throughout the life of the deal.
The standoff has left about 70% of all pay-TV homes in the Los Angeles market without access to Dodgers games except for the few that have been on national television. The team is in a tight pennant race, making the bickering between media giants even harder for fans to swallow.
Rep. Tony Cardenas (D-Los Angeles), who got the ball rolling on arbitration with a letter to Wheeler on Sunday asking for the FCC to assist in brokering a deal, said his constituents were frustrated because “they can’t watch their favorite team and they’re bummed.”
The Dodgers have tried to stay on the sidelines, although many fans point the finger at the team for selling rights to the channel at such a premium. There’s also been little backlash from fans. A person familiar with DirecTV has said that it has lost fewer than 2,000 subscribers as a result of not carrying the games.
Dodgers President Stan Kasten applauded Time Warner Cable’s willingness to accept arbitration. “If you want to carry Dodgers baseball, this is obviously the way to do it,” he said.
Kasten declined to comment when asked whether the Dodgers would be willing to renegotiate its deal with Time Warner Cable if it meant getting the games back on television.
The FCC’s Wheeler gave Time Warner Cable 10 days to provide it with an explanation of its plans for arbitration. The agency also wants to see what terms Time Warner Cable has offered SportsNet LA to other providers out of concern that it is engaged in “unfair or deceptive acts or practices” aimed at keeping content away from other pay-TV providers.
“Given the breadth and protracted nature of this dispute, it is appropriate that we begin to assemble the facts and build a record. Inaction is no longer acceptable,” Wheeler wrote.
Time staff writer Mike Hiserman contributed to this report.
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