Time Warner Cable is expected to shoulder the burden of its bad deal to acquire TV rights to Los Angeles Dodgers games by writing down the value of the asset by up to $1 billion, sources say.
Time Warner Cable and Dodgers fans are facing a second season of silence from West Coast TV distributors who, so far, are balking at the price for carrying Time Warner Cable’s SportsNet LA, which carries the Dodgers games exclusively.
The cable operator paid rights owners, led by Guggenheim Partners, $8.35 billion over 25 years, but has not been able to get rival pay-TV operators to carry the network at around $5 per subscriber per month.
That’s left some 70 percent of Southern California households without games.
Also, 21st Century Fox had been a competitor for the Dodgers TV rights.
Sources told The Post that the market rate for the channel is more likely $3 per subscriber per month, meaning the charge will be almost $1 billion when adjusted over the life of the contract or in the region of $700 million in present-day terms.
“Comcast will be made whole,” said the source, suggesting this mess had to be cleaned up as a condition of Comcast’s proposed deal to acquire Time Warner Cable.
“Unless the deal closes, there will not be another [Dodgers] season shown outside of Time Warner Cable. I don’t believe they’ll get carriage,” a source told The Post.
Time Warner Cable declined to comment on financial details but CFO Artie Minson said on the firm’s second-quarter 2014 earnings call that it would reforecast revenue and operating income for the full year.
“So on a full year basis and including lost advertising revenue, I expect SportsNet LA to cost us around 50 basis points of revenue growth and 125 basis points of adjusted Ebitda growth,” he said.
Comcast’s proposed deal to buy Time Warner Cable offers TWC shareholders 2.875 Comcast common shares for each Time Warner Cable share.
One Wall Street source said: “You basically saw in their financials what a year looks like when they’re paying the Dodgers but not getting paid.”
This person added: “The price of [regional sports networks] were going up. Time Warner Cable wanted to lock in cost increases, they cut a deal that was a bridge too far and they ended up standing on the bridge.”