TWC Gets LA Dodgers Broadcasts - Analyst Blog
January 24 2013 - 1:30PM
Zacks
As per a media report, Time Warner Cable (TWC)
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 giant
News Corp.’s (NWSA) 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 basketball games.
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
DirecTV (DTV), AT&T Inc.’s
(T) 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
churn.
Time Warner Cable currently has a Zacks Rank #3 (Hold).
DIRECTV (DTV): Free Stock Analysis Report
NEWS CORP INC-A (NWSA): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
TIME WARNER CAB (TWC): Free Stock Analysis Report
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