As per a media report,
Time Warner Cable
) has agreed with Major League Baseball's Los Angeles Dodgers to
broadcast their games for the next twenty years starting 2014.
The second largest cable company in the U.S. has outbid Media
) sports arm Fox Sports in the process.
Per the deal, Time Warner Cable will run the new sports
channel of Dodgers, create new programs and earn revenues through
advertisements. Nevertheless, the ownership rights of the channel
will remain with the baseball team. The deal, expected to close
this week will cost Time Warner Cable around $7 billion.
Fox Sports' contract with the Dodgers is set to expire after
the current season. The media company agreed to pay more than $6
billion for Dodgers on its Prime Ticket sports network for a
period of 25 years. However, Fox Sports lost the bidding after
its exclusive negotiation period ended in Nov, last year thus
paving the way for Time Warner Cable.
The new deal, once officially announced, will significantly
improve the $40 million fees that Dodgers was receiving for
selling its TV rights to Fox Sports. Notably, last year
Guggenheim Partners and Magic Johnson bought the bankrupt team
from its previous owner Frank McCourt for $2 billion.
The contract means that Time Warner Cable has secured two
major sports right deals in the last three years after it
snatched the right to broadcast LA Lakers basketball games for
the next 20 years in 2011 by paying around $3 billion.
Additionally, in Oct last year, Time Warner Cable launched two
new regional sports channels to broadcast the LA Lakers
Of late, sports entertainment has become a lucrative form to
earn revenue for cable Multi Service Operators (MSOs) like Time
Warner Cable, which charge high rate from customers to cover up
their high cost of acquiring the rights.
We believe securing the Dodgers' rights will allow the New
York-based cable MSO to sell its right to pay-TV companies like
) U-Verse and Verizon's FiOS TV. The only downside for this deal
is that it could increase the monthly cable bills of nearly 5
million inhabitants of LA, which in turn could lead to customer
Time Warner Cable currently has a Zacks Rank #3 (Hold).
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