Second largest cable MSO (multi service operator) in the U.S.
Time Warner Cable Inc.
) continuing efforts to incur expenses to carry the rights to
broadcast LA Lakers and LA Dodgers games has landed it into
trouble. Four consumers, who are grappling with rising monthly
cable bills, have filed a legal suite against the company and the
teams in the Supreme Court of the United States.
Notably in Oct last year, Time Warner Cable launched two new
regional sports channels to broadcast the LA Lakers basketball
games. Furthermore, earlier during the year Time Warner Cable
agreed with Major League Baseball team Los Angeles (LA) Dodgers
to broadcast the latter's games for the next twenty years
starting from 2014.
The cable MSO out bid media giant
) sports arm Fox Sports in the process. Per the deal, Time Warner
Cable will run the new sports channel of Dodgers, which will cost
them around $7 billion.
The suit claims that the LA Lakers contract has already
causing a pocket pinch for its subscribers, who have to pay an
additional $4 a month for the two channels. The new Dodgers
channel when launched will fetch another $4 to $5 a month from
The suit also claims that as these channels are sold as a
bundle with the MSO's cable satellite or telephone services
non-sports loving fans have no options but to subscribe to it.
The suit wants the network to be sold separately to the sport
loving fans as a large part of the LA consumer is not interested
in paying the additional $40 to $ 50 a year.
Of late, sports entertainment has become a lucrative form of
revenue for cable MSOs like Time Warner Cable, which charge high
rates from customers to cover up their high cost of acquiring the
However, we believe that if the cable MSO loses the legal
battle and is forced to sell the sports channel on a standalone
basis it will dampen its future revenue prospect. The company's
policy of recovering the acquisition cost via raising the monthly
bill will also be dealt a serious blow.
TWC currently carries a Zacks Rank #3 (Hold). Among the other
companies in the industry,
Charter Communications Inc.
) with a Zacks Rank #2 (Buy), is a better option for the
CHARTER COMM-A (CHTR): Free Stock Analysis
NEWS CORP INC-A (NWSA): Free Stock Analysis
TELUS CORP (TU): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis
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