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Pricing disputes curtail opening day carriage of Yankees, Dodgers networks


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Pricing disputes curtail opening day carriage of Yankees, Dodgers networks

Openingday is here for two of Major League Baseball's most storied franchises and manyfans of the Los Angeles Dodgers and New York Yankees won't be able to watch theballgames on television.

On theWest Coast, Time Warner Cable Inc.,which handles distribution for SportsNetLA (US), has significantly lowered the asking price for the Dodgersnetwork, but has found no takers. Thus, most pay TV viewers in southern Californiawill miss the team's April 4 opener against the Padres at Petco Park in San Diego.

A disputeover monthly license fees for the YESNetwork (US), the cable home of the New York Yankees, has kept 900,000Comcast Corp. subscribersin New Jersey, Connecticut and Pennsylvania from watching the service since November2015. The Bronx Bombers will host the Houston Astros on April 5.

The prospectsthat fans of the clubs will get to see their games this season via YES Network,majority-owned by 21st Century FoxInc.'s FOX Sports, and SportsNet LA are not sanguine, as the partieshave dug in their spikes in entrenched positions.

Comcast'sdisconnect from YES is now into its fifth month and has caused the MSO's customersto miss Brooklyn Nets NBA games as well as shutting out the start of the Yankees'season, while the impasse in Los Angeles is entering its third year since Dodgersowner Guggenheim Partners LLCformed the single-team service and Time Warner Cable began managing the affiliatefunction under a 25-year, $8.35 billiondeal.

Dodgers' net fails to connectwith new carriage deals

TimeWarner Cable has been footing the affiliate fee bill even as other distributors— AT&T Inc.'s DIRECTVand U-verse video platforms, Cox CommunicationsInc. and DISH NetworkCorp. — continue to balk. Thus far, SportsNet LA only has distributionon Time Warner Cable in southern California and Bright House Networks LLC in the Bakersfield, Calif., market.Both of the MSOs are awaitingfederal approval of their proposed acquisition by Charter Communications Inc. which rolled out the RSN in the Los Angeles area last June.

In anattempt to coax other distributors to take SportsNet LA, Time Warner Cable its monthly subscriber feeby 30% to $3.50, saying that it wanted to ensure that viewers could witness thelast season of legendary broadcaster Vin Scully calling Dodgers games. Scully isembarking on his 67th and final year as the Dodgers' television announcer, a runthat dates back to 1950 when the club hailed from Brooklyn. SNL Kagan estimatedSportsNet LA's monthly per subscriber fee at $4.33 in 2015 and $4.59 for 2016.

Afterthe Scully discount pricing gambit failed to move the negotiating needle, as areadistributors were hesitant to take a one-year deal and then see prices jump backup, Time Warner Cable broacheda new offer.

The Los Angeles Times reported that Time WarnerCable proposeda six-year deal with rates for SportsNet LA that were roughly comparable to whatAT&T charges for Root Sports Northwest, the RSN home to the Seattle Mariners.SNL Kagan estimates that RSN monthly subscriber fee at $3.84.

TimeWarner Cable would only confirm that it had made a multiyear offer and that it hasfailed to connect.

"We'veoffered short-term deals and long-term deals, we've lowered the price by 30%, we'veasked for arbitration, we've offered to pay them the same thing they charge fortheir RSNs, we've told them we'd meet them anytime, anywhere to negotiate, and nothinghas worked," the company said in a statement. "They've rejected everyoffer we've made. We don't believe they're interested in carrying SportsNet LA,and fans should switch to Time Warner Cable, Charter or Bright House Networks ifthey want to see the Dodgers."

AT&Tdeclined comment.

whichtook over Verizon Communications Inc.'swireline and video business in Los Angeles on April 1 as part of a broader $10.54billion deal, issued thefollowing statement: "We will evaluate the channel lineups and other productsand services that we would like to provide our new customers. But we don't planon making any changes right now. For the time being, we are 100% focused on a smoothtransition for all our new customers."

Somewonder if area distributors are waiting to see if Charter gains regulatory approvalfor its purchase of Time Warner Cable and Bright House Networks. That could provideanother opportunity to restart negotiations for SportsNet LA.

RSN, MSO engage in game of YESand no

BackEast, the nation's leading regional sports network is at the center of carriagecontretemps dating back to November 2015 with the country's largest cable operator.

SNL Image

YES' anti-Comcast campaign
Source: YES Network

The dispute,which is being spotlighted through a multimedia campaign launched by the RSN andreturning salvos from the MSO, has kept YES dark for 900,000 Comcast customers,approximately 500,000 of whom reside in New Jersey, 300,000 in Connecticut and 100,000in Pennsylvania.

The YEScampaign, which has featured Yankees players, encompasses print ads in The New York Times, The Wall Street Journal and the NewYork Post, among other newspapers, and outdoor media, including "a redecorating"of Port Authority, the New York-New Jersey transportation hub. Commercials havealso aired on the RSN and WNYW, the FOX-owned station in New York.

MarcienJenckes, executive vice president of consumer services at Comcast Cable, said thecompany is using digital and social platforms, as well as some cross-channel promos,to get its message across. It is also deploying some paid media, including ads onWFAN, the CBS Corp.-ownedsports talk radio station in New York that airs Yankees games.

Comcastmaintains that YES is the highest-priced RSN in the country and is seeking a 33%price increase, even as its ratings have eroded.

"YESis the most expensive RSN and is looking for a significant increase despite decliningratings over the past five years," Jenckes said in an interview.

SNL Kagandata pegs YES subscriber base at 8.8 million and its average monthly subscriberfee at $5.93 in 2015 and $5.36 this year.

Jenckessaid Comcast made a "creative construct" to bridge the "price-valuegap," which YES didn't respond to. He said there have been no conversationssince YES launched its media campaign early last month.

Jenckessaid Comcast's long-term deal with YES expired in January 2015 and that it continuedto carry the network through a series of short-term extensions on FOX's terms. "That'snot the same as agreeing to a long-term deal at a high price increase," hesaid.

YES presidentand CEO Tracy Dolgin disputes Comcast's claim that YES was seeking a 33% rise infees at the time the MSO dropped the network, after it agreed to pay a rate increasefrom February through November.

"Comcastis misleading customers that we just asked for a price increase, and that they'reworking to hold down costs for consumers," said Dolgin in an interview. "Whatthey're really doing is holding down costs for themselves, and in the short termmaking more money and increasing shareholder profits."

YES saidComcast has increased its video package price by 4% and added to its RSN surcharge,a lineup that no longer includes YES.

Dolginsaid Comcast was paying the market rate that other larger distributors in the NewYork DMA — Cablevision Systems Corp.,Time Warner Cable, and Verizon — had agreed to. He also suggested that Comcast wasamenable to paying the increased rate while it was trying to gain federal approvalfor its merger with Time Warner Cable. That pursuit ended in April 2015 after running into regulatory hurdles.

Notingthat YES has been the most-watched RSN for 12 of the past 13 years, Dolgin questionedComcast's characterization of YES as a niche network. He noted YES' superior deliveryrelative to the eight RSNs Comcast owns, including SportsNet New York (US), the regional to the New York Mets, sayingYES had topped that service by 69% on average over the past 10 years. He also saidYES had outperformed entertainment networks operated by NBCUniversal Media LLC.

Jenckessaid YES has sustained ratings declines and that the company's set-top-box dataprovides greater detail about its subscriber viewing habits, "which doesn'tjustify the price increase," than data from Nielsen Holdings.

Askedabout customer complaints and defections stemming from the YES dispute, Jenckessaid Comcast "expects that some customers will move to other providers, butso far there has been less activity than anticipated. We will continue to monitorit."

Withthe MLB season beginning, those numbers could begin to rise.

Thereis one point on which the parties agree: negotiations are at a standstill.

"There'snothing going on. If someone wanted to start a conversation, it would be the personwho dropped the other person," said Dolgin. "The reason we're spendingall this money is to tell consumers it's extremely likely they will miss openingday and there's a pretty good chance they will miss the entire season because that'show the fact pattern lays out."