Dodgers TV Carriage Problems

News broke this week in Sports TV land. In a land-moving development, the Dodgers were actually seen on TV in the majority of Southern California homes — even if it was only four of the team’s players during the All-star game.dodgers

“But wait,” one might ask, “haven’t the Dodgers been on TV all season long?” Of course they have. They’ve been broadcast on Sportsnet LA, a Regional Sports Network owned by the Dodgers, operated by Time Warner Cable and exclusively dedicated to the broadcasting of team-oriented content. It’s the fan’s one-stop shop for more Dodgers content than he could have ever dreamed of watching.

And by being broadcast on SportsNet LA, the Dodgers have effectively gone underground.

Only Time Warner Cable (the Dodgers own the channel), Bright House Networks and Champion Broadband broadcast the all-Dodgers all the time cable channel, while other major market players Cox, Dish Network and DirecTV (especially DirecTV) have scoffed at the prospect of broadcasting the channel, leaving swaths of Southern California without TV access to the boys in blue.

Whose fault this is depends on which PR campaign you choose to believe. Time Warner and the Dodgers try to make it sound like DirecTV is holding their subscribers hostage in order to drive down the cost of carrying the channel while taking advantage of Dodger fans to generate more revenue of their own. DirecTV tries to make it sound like Time Warner and the Dodgers got themselves in a financial bind when they opted to launch the $7 billion channel, expecting revenues associated with Dodgers’ TV broadcasts to more than make up for the annual cost.

Why so much? Why was Time Warner willing to pay $280 million per year to broadcast the Dodgers? There are two reasons.

First, cable channels collect per subscriber per month fees from cable companies for their content, and the $4 Time Warner is purported to be charging is a doozy. The SEC didn’t get half of that price in its negotiations with Comcast for the new SEC network. ESPN is the worldwide leader in per subscriber per month fees, their rates registering at $5.54. To suggest that the Dodgers alone are worth much more than TNT and slightly less than ESPN to the Los Angeles market is a very, very bold suggestion.

Secondly, sports television programming is the last line of defense against the DVR. Fans have to watch the game live, and that makes air time valuable to marketers and advertisers.

Time Warner and the Dodgers bet that fan demand for the Dodgers would force widespread distribution of the channel, allowing Time Warner to rake in the subscription fees by the millions. Meanwhile, the vastness and avidness of the Dodger summertime audience in Southern California would make advertising time on the channel that much more valuable, which would allow the channel to rake in the millions from companies trying to align themselves with the Dodger brand. The lynchpin in this whole strategy was the wager that any pay-TV distributor wouldn’t dare to anger its subscriber base. Time Warner bet that fans would revolt against any distributor that didn’t carry the channel.

But the revolts haven’t happened. Fans have certainly been upset that they haven’t been able to watch their team, but not so much that they’ve brought the cable providers of Los Angeles to their knees. It’s now looking like the $280 million per year price tag Time Warner paid for the rights to make the channel and distribute it are going to be difficult to recoup.

But, besides the fans, who pays the price for the unresolved TV carriage situation? In the short term, it’s definitely Time Warner. In the long term, the Dodgers lose.

Baseball in general, not just in Los Angeles, is looking at a looming crisis of its own. Popularity of the sport seems to be high with 14 million viewers tuning in to last year’s World Series between the Cardinals and the Red Sox, growth of 12 percent year-over-year. But look closer. The average age of the World Series viewer was 54.4 years in 2013. In general, national television ratings for baseball have declined significantly since 2007.

And all this while popularity of soccer — yes, soccer — is level with baseball among 12- to 17-year-old kids.

To connect with new fans, baseball doesn’t necessarily need to rebrand itself, but it needs to figure out a way to market itself to the next generation, a generation with increasingly short attention spans and with more substitutes than were ever before available. It needs to figure out how to cater to fans with less leisure time than a generation ago, with less patience than a generation ago and with more distractions than any generation in the history of the world.

How can it do that without being on television? Sports teams learned long ago that television is as much of a marketing tool as it is a revenue stream. The more people see the product, the more likely they are to identify with it and follow it, both in the stadium and at home. Without television, all the Dodgers have is an ever-shrinking, aging, avid-but-angry fan base whose access to their heroes is limited. Furthermore, the offended casual fan is more apt to move on to something else. For the Dodgers, this is not a strategy for growth.

The Dodgers’ $7 billion dollar deal is supposed to last for 25 years. That’s a lot of money. Whether or not the Dodgers can figure out how to make sure there are still fans to watch their games in 25 years without widespread local distribution remains to be seen. Lack of TV exposure in their own market could lead to a slow erosion of the fan base.

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