A strong message was sent Tuesday when FCC Chairman Tom Wheeler issued a letter to Time Warner Cable weighing in on the Los Angeles Dodgers blackout, saying he is “troubled by the negative impact” of the long-standing carrier dispute and expects a written response in 10 days from Time Warner Cable that details the arbitration process proposed by an L.A. politician that could resolve the issue with other cable and satellite providers.
At issue is Time Warner Cable’s asking price of $4 to $5 per subscriber for SportsNet LA — a price AT&T, DirecTV and other providers refuse to pay for a channel that includes almost entirely Dodger-related content.
In 2013, Time Warner Cable paid $8.3 billion for the distribution rights to Los Angeles Dodgers games and team-related content on its newly formed SportsNet LA network.
To date, SportsNet LA is carried on Time Warner Cable and absent from other major cable and satellite providers. Only 30 percent of Los Angeles-area households have Time Warner Cable, meaning Dodger games have been blacked out in nearly 70 percent of the L.A. market for over half the season.
The letter from the FCC also expresses concern over the “negative impact [the blackout] may have on growth of broadband services in the Los Angeles area” due to the limited availability of Dodger games online and the vertical inclusion of SportsNet LA in a package with Time Warner Cable.
FCC Chairman Wheeler even goes on to cite relevant parts of the law (U.S.C. Sections 548 and 628, to be exact) for added gravitas.
Wheeler, who has received his own share of criticism for his highly unpopular net neutrality plans, is an industry veteran who was appointed FCC Chairman in November 2013. Prior to assuming the chairmanship, Wheeler was a successful venture capitalist and prominent lobbyist for the cable and television industry in Washington.
Asking Wheeler to regulate his former pals is a bit like asking the fox to watch the hen house – a phenomenon we regularly see in business called “regulatory capture.”
Regardless, by issuing a strongly worded letter peppered with legal citations that displays real concern over the programming stalemate, the new FCC chairman — in spite of his deep industry ties — may very well have restored order to the barnyard negotiations for SportsNet LA that could compel Time Warner Cable to move its $4 to $5 per subscriber ask downward to a more reasonable market price and end the stalemate once and for all — or until the next round of negotiations.