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Questions and Answer Time as Dodger Deal Heads for Home

Here are nine questions - one for each player on the diamond - that TWC's impending deal with the L.A. Dodgers raises for the industry 1/25/2013 08:10:46 PM Eastern

The hype may be building for football season's annual Super Bowl
climax, but baseball is taking center stage for many sports-TV watchers.

Time Warner Cable is reportedly close to clinching a deal
valued at between $7 billion and $8 billion to carry Los Angeles
Dodgers games over a 20-to-25-year period. If those are indeed the final
terms, the No. 4 MSO would pay the roughly $5-per-subscriber carriage
fees for any provider in the market that opts not to go with the new
Dodger service.

Guggenheim Partners, which bought the Dodgers last year for a record
$2.15 billion with participation by a glittery consortium that included
Magic Johnson and former studio boss Peter Guber, would own the new
network. TWC would manage and operate the service, which would launch in
2014.

As the deal moves toward being announced, here are nine questions -
one for each player on the diamond - that the pact-in-progress raises
for the industry:

Q: Will TWC look to do this in other big markets?

A: TWC's Glenn Britt has complained recently about rising sports
costs. The MSO already tried to steal the San Diego Padres away from Fox
and had been handling affiliate and ad sales for SportsTime Ohio, which
Fox recently purchased.

Q: Will this signal more cable ops buying more local rights fees and creating their own nets to cut out middle man?

A: The rising carriage costs have led to some ugly spats (the TWC-MSG
dispute last winter). This could be a way for MSOs to have more
control. Before it was spun off in 2010, Cablevision owned MSG Networks
in New York, which is the TV home for the NBA's Knicks and NHL's
Rangers, Islanders and New Jersey Devils.

Q: Will more cable/satellite providers (like DirecTV/Verizon are doing) start charging extra for RSNs?

A: Right now, these extra surcharges are for DMAs that boast multiple
RSNs. But with the cost of sports rights rising higher and higher, it's
likely that the consumers will be the ones footing the bill.

Q: How will this affect future media rights deals?

A: NBA commissioner David Stern (or Adam Silver when he takes over in
2014) has to be giddily looking forward to its next media rights deal;
its current one expires in 2016. The impending deal, along with those
from last year, prove live sports are among the most sought-after
commodities in the marketplace.

Q: Can the L.A. market handle that many RSNs? 

A: New York, the nation's No. 1 DMA, only has four regional nets and
some of those struggle during months their teams aren't playing. So
while Fox has no plans currently to consolidate its nets (see more
below), don't be surprised if that happens down the road.

Q: Will Fox shutter Prime Ticket?

A: Not likely, at least not anytime soon. Without the Dodgers, Prime
Ticket still has rights to the resurgent Clippers (which had the
third-best record in the NBA heading into weekend play) for the next
three seasons and the Anaheim Ducks through 2014. Analyst Michael
Nathanson of Nomura Securities believes some Angels and Kings games
could move to Prime Ticket to fill out the schedule, especially during
baseball season.

Q: What will Fox do with the $$ saved? Put it towards the Fox Sports 1/2 launch? FX2?

A: News Corp. is planning to reshape its ancillary cable nets by
rebranding the low-rated Speed and Fuel into national sports nets Fox
Sports 1 and Fox Sports 2. It also has to convince MSOs to keep Fox
Soccer, which its reportedly planning to turn into FX2 (or, a source says, FXX), a sister net for FX.

Q: Does this affect Fox Sports 1?

Not really, though it means Fox won't be able to air as many Dodger
games as would have been able had it kept the team's rights. Sports Business Journal's John Ourand reports a new stipulation in Fox's MLB rights deal allows it to show 26 local RSN-produced games on every Saturday during the regular season via its national cable channel.

Q: What will happen to Fox's regional sports networks in Los Angeles?

A: Nothing this season, since Fox's Prime Ticket will televise the
games in 2013. After that, Fox still might have enough programming to
maintain its two channels even without the Dodgers, though its sub fees
and ad revenue might fall, changing the equation, according to
Nathanson. He estimates that the Los Angeles RSNs now account for about
$150 million in earnings, or about 15% of Fox's RSN profits.

After losing Lakers rights to Time Warner Cable, Fox signed a
20-year, $3 billion deal to televised Los Angeles Angles games on Fox
Sports West. FSW also agreed to a $250 million deal with the Stanley Cup
Champion Kings that runs through 2004.

Nathanson says that Fox will have to roll back the monthly subscriber
fees it charges cable operators when its channels no longer feature
Dodger games. "How much will be determined by what the Dodgers will
ultimately try to commend, given Prime Ticket looks relatively cheap at
$2.50 compared to  $4 per sub the Lakers were seeking." he wrote in a
recent research note.

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