I hope no one is cheering. Victory Sports could have been a good idea, but it’s dead. Dead as the proverbial doornail.
I serve on the board of the Southwest Suburban Cable Commission. We meet twice each year to discuss issues that effect cable television in the communities of Eden Prairie, Minnetonka, Richfield, Edina, and Hopkins. At our most recent meeting, which was just two weeks ago, an official from time Warner Cable explained to us the theory of Victory Sports.
Cable television is not an unusual market-based product. The distributors (Time Warner, Charter, Comcast, etc)sell you programming which is made by others. You pay the distributor and the distributor pays the programmer. While individual distributors have effective monopolies in individual communities (How many cable tv providers can you choose from?), they must still compete with free broadcasters and with satellite, or as the cable guys like to call it - The Dish.
Last year, the Twins were being paid about $6,000,000 by Fox Sports Net for the privilege of producing and telecasting Twins baseball games. Fox Sports Net then makred-up the product and re-sold these telecasts to the cable distributors so that we could all watch the Twins on our local cable systems. The Twins got $6,000,000 out of that deal. There’s no way to tell how much the cable companies got.
The Twins thought that the cable companies were probably making in the vicinity of a Ton o’ Money off Twins baseball telecasts. They thought to themselves: Why should we make only $6,000,000 from our product when Fox Sports Net and the cable companies are making money for nothing? The Twins figured that if they could produce and telecast their own games they could make a Ton o’ Money - and keep all of it! Their projections showed that they could gross about $52,000,000 if they could get their own baseball telecasts on to all the cable and Dish customers in the Twins baseball market and get paid $2.50/household for that product.
Well, the cable companies did not want to buy the Twins baseball broadcasts at $2.50/household and then raise our cable bills a like amount. The Twins did not want the baseball games to be distributed as Pay-Per-View. The cable companies also did not want to buy the telecasts and then give them to their loyal customers for free.
After months of negotiations among the Twins, the cable distributors, Fox Sports Net, the Governor’s Office, and countless others, the Twins broke the stalemate this weekend. The Twins decided to go back to Fox Sports Net. They sold Fox Sports Net the rights to produce and telecast Twins baseball games for the next eight years. They will get between somewhere in the neighborhood of $12,000,000 to $14,000,000 per year from Fox Sports Net. We will get to watch the games.
Will Fox Sports Net raise its costs to the cable distributors to cover the higher cost of buying Twins baseball? Of course they will. Will the cable distributors pass that cost on to you and me? Of course they will. That’s how our economy works.
Now excuse me. I’ve got to catch the highlights of the game today. We got kicked around by the A’s in Oakland. It’s good to see the Twinkies on my television again.