Monday, April 25, 2016

Cable Merger Getting Over the Hump - Will Charter Sell SportsNet LA to Direct TV?

A major hurdle to the merger between Charter and Time Warner has now been crossed.  Per Diane Bartz at Reuters, "Justice Dept approves Charter’s acquisition of Time Warner Cable with conditions."
The U.S. Justice Department on Monday approved Charter Communications Inc's proposed purchase of Time Warner Cable Inc and Bright House networks, which would create the second-largest broadband provider and third-largest video-provider.

Following the deal, the merged company will be called New Charter. Under terms, New Charter agreed to refrain from telling its content providers that they cannot also sell shows online, the Justice Department said in a statement.
Furthermore, we learned today, via Meg James at the LA Times, that the FCC has recommended approval of the deal.
Federal Communications Commission Chairman Tom Wheeler has recommended approval of Charter Communications' $78-billion acquisition of Time Warner Cable, subject to several conditions aimed at increasing the number of homes with high-speed Internet connections.
The other hurdle is the California PUC - who also recommended approval a few weeks ago.  So, it seems likely that it's smooth sailing for the marriage.

As I've written before, once the merger closes I suspect we'll see some real movement to expand coverage of SportsNet LA, but there is one thing I didn't see coming.  Per a tweet by LA Times sports reporter Bill Shaikin, Charter might look to sell SportsNet LA to Direct TV:
I don't know if this is mere speculation or a rumor that is finally coming to light, but it is something I never considered.

As you may know, Direct TV, through its parent company AT&T, already directly controls several Regional Sports Networks (RSN).  Teams already under the finger of the company include the Seattle Mariners, Pittsburgh Pirates, Colorado Rockies and the Houston Astros.  So, adding the Dodgers could be a natural fit.  Unfortunately, several things might have to happen for this to come to fruition - like a bankruptcy filing. Although, maybe a discounted sale price to Direct TV is already fixed into the merger value, so Charter might not need to go through that process.  On the other hand, I think it's clear that the size of the contract the Dodgers received is way too high (as evidenced by a FanGraphs story today), and some renegotiation will be necessary.  Hence, a forced renegotiation of that contract through the bankruptcy courts.

Either way, the next few months should be interesting for Dodgers fans.  We will likely know very soon if we will all get the Dodgers on all our television sets before the end of the season.

UPDATE:  It has come to my attention that SportsNet LA isn't actually owned by Time Warner.  In fact, it's owned by the Dodgers under a company they formed called American Media Productions (press release here).
The Los Angeles Dodgers ownership group created American Media Productions, LLC (AMP) in December 2012 to launch a new Los Angeles Dodgers regional sports network. Today, AMP announced its plans for SportsNet LA, the new regional television home for the Los ngeles Dodgers beginning with the 2014 Major League Baseball season. In addition to being the exclusive local home for all of the Dodger games, SportsNet LA will provide comprehensive behind-the-scenes Dodger programming, featuring more insights, analysis and commentary about the team than ever available before.
Time Warner Cable (TWC) has agreed to be SportsNet LA’s charter distributor, and will carry the new network for its customers throughout Southern California and Hawaii under a long-term affiliation deal. In addition, in return for agreeing to make payments over the life of the deal, TWC will be the exclusive advertising and affiliate sales agent for the new network and will have certain branding and programing rights with respect to the network. TWC will also provide certain non-game production and technical services to AMP.
So, what Time Warner would be selling, if that's the route they choose to go, is the right to be the distributor of the network and the sales agent for advertising on the channel. 

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