Michael Perez/Associated Press
NBC cameras at an N.F.L. game last month in Philadelphia.
For a glimpse of how out of control sports bidding wars have become, look no further than your cable television bill.
Time Warner Cable subscribers in Southern California will eventually see their monthly bills increase thanks to an impending $7 billion deal with the Los Angeles Dodgers, the most lucrative for any sports team in history. DirecTV, the country’s most popular satellite service, and Verizon FiOS have started adding a $2 to $3 monthly surcharge in markets like New York and Los Angeles to pay for regional sports networks.
Per-subscriber fees for sports networks keep going up: ESPN, the granddaddy of them all, passed the $5-a-month mark last year.
The eye-popping price tags have restarted debate about a topic near and dear to sports fans, fairness: many TV customers never watch the mightily expensive channels at all, yet almost all must pay. There was a shudder in the industry when John Malone, the business tycoon who helped create the modern-day cable system, said in November that “runaway sports rights” costs amounted to “a high tax on a lot of households that don’t have a lot of interest in sports.” The only short-term fix, he said, was government intervention.
The price increases reflect the leverage big sports leagues have as distributors like Time Warner Cable and programmers like ESPN desperately try to hang onto live programming in the age of the digital video recorder and the Internet.
Sports are the television industry’s bulwark against rapid technological change: while the companies fear cord-cutting by customers who can cobble together a diet of TV on the Internet, they rest a little easier knowing that former customers would be hard-pressed to find their favorite teams live online.
Pretty much everybody in the business agrees that the overall costs are outrageous. Nobody has an easy solution.
The latest example of this is likely to come on Monday when the Dodgers’ owners are expected to announce a 20- to 25-year deal to create a regional sports network with Time Warner Cable. The cost per subscriber in Southern California is likely to be between $4 and $5 a month, though Time Warner Cable will swallow some of the amount itself.
In assessing the impending Dodgers deal, Michael Nathanson, a media analyst at Nomura Securities, wondered earlier this week “if we have reached the top of the sports rights bubble.”
But while the price is steep, the alternative might have been worse; the other bidder, Fox Sports, could have turned around and charged Time Warner Cable even more per subscriber.
“When a team sees their rights fees, and therefore the costs to consumers, rise more than sixfold, as is rumored, for the exact same games that they got last season, that’s an unsustainable model,” said Dan York, who oversees DirecTV’s decisions to carry and not carry networks. Yet Mr. York said DirecTV hopes to continue to carry the Dodgers in the years to come.
As both he and his counterparts at Time Warner Cable know, the games are popular with a segment of its customer base.
News Corporation, knowing the same thing, acquired a 49 percent stake in the Yankees-branded YES Network for nearly $2 billion two months ago. News Corporation is planning a national rival to ESPN, tentatively named Fox Sports 1, joining other competitors like Comcast, which has the one-year-old NBC Sports Network, and CBS, which has the CBS Sports Network. The National Football League has its own network, which clawed its way onto all the major distributors’ channel lineups despite costing nearly $1 per subscriber per month. An increasing number of college conferences have their own television homes, as well.
For the most part, all of these networks are requirements, not options for cable customers. (Some distributors charge extra for special packages of sports channels for die-hard fans, but the big networks remain in the basic packages that most customers get.) Some games are hugely popular: On the high end of the ratings, NBC’s “Sunday Night Football” averaged 21.4 million viewers this season. But Dodgers games, like those of many local teams, were lucky to garner 100,000 viewers on any given day.
But analysts and industry critics say that if anything ever causes distributors to try more of an “à la carte” model of pricing, it’s sports programming.
All Viewers Pay to Keep TV Sports Fans Happy
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All Viewers Pay to Keep TV Sports Fans Happy
