old TV

Could the Dodgers’ giant TV deal be the beginning of the end for giant TV deals?


We talk a lot about the skyrocketing TV deals baseball teams are getting from cable operators these days. One wonders, though, whether or not we’re witnessing a bubble that’s going to soon burst. If it does, we may look at the Dodgers’ new TV deal as the beginning of the end.

The Dodgers TV deal with Time Warner is reported to be upwards of $8 billion. To pay for that, Time Warner is going to charge other carriers (Direct TV, Dish Network, other cable systems) $4 or $5 per subscriber for the right to carry the new Los Angeles Dodgers network they’re operating, with those costs passed on to the other carriers’ customers. This is how all sports TV rights deals go. It’s just way bigger with the Dodgers and Time Warner.

Many — probably most — of the customers who are seeing their cable bill go up are not Dodgers fans. They just want to watch Nick Jr. or History Channel or BBC America or any number of other channels. But, because you can’t (for the most part anyway) pick and choose which channels you get, the non-sports watchers are helping subsidize the sports watchers. Again, this is how it always works, but this time the rate hikes in question are going to be quite large.

Joe Flint and Bill Shaikin of the L.A. Times write about this today, and they talk to one former TV executive who thinks that such a pattern is unsustainable:

But non-sports fans and pay TV companies are increasingly frustrated at having to pick up the tab for big sports deals. There have been calls to sell sports channels “a la carte,” or separately from other programming.

The Dodger agreement with Time Warner Cable may be a tipping point.

“That is the solution everyone should be looking at seriously,” said Derek Chang, a former senior executive at satellite broadcaster DirecTV. Such a move, he added, may be the only way to lower the cost of TV sports. “Ultimately the market for fees would then reset.”

All it takes is a political groundswell — and someone talking about how we should think of the children who just want to watch “Spongebob” is a great way to get that going — for Congress to wade in and either begin legislating or begin threatening to legislate with respect to cable TV in such a way that a la carte pricing becomes available.  If it does, companies in Time Warner’s position won’t be able to demand across-the-board rights fees like they are now and, in turn, they won’t be able to offer sports teams like the Dodgers the billions of dollars in rights fees like they’re currently doing.

If that bubble bursts, down with it comes the TV money. Then down go the franchise values, which are escalating due to the TV money sports teams are attracting. If team values go down, team payrolls will eventually come down too.  No aspect of baseball finances would be untouched by it.

Will it happen? I don’t know. And if it does, I don’t know when. But I also know that no bubble in history has ever failed to burst, and that when they do burst, the bubbles tend to take down just about everyone.

Rangers set ALDS rotation: Gallardo in Game 1, Hamels in Game 2

Yovani Gallardo
Leave a comment

Setting their rotation for the beginning of the ALDS versus the Blue Jays, the Rangers announced that right-hander Yovani Gallardo will start Game 1 and left-hander Cole Hamels will start Game 2.

Gallardo posted a 3.42 ERA in 33 starts this season, but averaged just 5.6 innings per start and hasn’t completed six or more innings in a start since mid-August. Clearly the Rangers will be hoping for five or six innings from him before turning it over to the bullpen.

Hamels, on the other hand, averaged seven innings in his 12 post-trade starts for the Rangers, including tossing a complete-game against the Angels in the regular season finale. He’s obviously the Rangers’ best starting pitcher, but because Hamels was needed to clinch the division title in Game 162 he’s not available to start Game 1 of the playoffs.

Indians promote Chris Antonetti to President, name new GM

Chris Antonetti
Leave a comment

In the seemingly never-ending trend of front office officials getting new titles, the Cleveland Indians just announced that General Manager Chris Antonetti has been promoted to President of Baseball Operations and Mike Chernoff is now the GM.

Antonetti has been the Tribe’s GM for the past five years and is moving up in the wake of team president Mark Shapiro moving on to Toronto. Shapiro, however, also held business side responsibilities which Antonetti will not assume. Meaning, as before, he will be the top guy on baseball ops decisions, albeit with a grander title.

Chernoff has been an assistant GM for five years and has been with the organization for the past 12 years. As many new GMs these days he will, functionally speaking, still be an assistant when it comes to baseball decisions.