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Congressman Brad Sherman Outlines How Dodgers Arbitration Would Work

Rep. Brad Sherman (D-Calif.), who suggested binding arbitration as a way of ending an impasse that has left about 70% of Los Angeles area residents without TV access to Dodgers games, on Monday provided more details in hopes of bringing pay TV players to the table.

Time Warner Cable, which snapped up the rights last year to distribute the all Dodgers network SportsNet LA, has agreed to arbitration, but its largest competitor in the market, DirecTV, has not. The satellite provider’s CEO, Michael White, said on a conference call with analysts last week that he would be open to mediation, which is much different than arbitration, and said that the team also would probably have to be part of the process.

In a letter to FCC chairman Tom Wheeler, TW Cable’s Rob Marcus and DirecTV’s White, Sherman wrote that the arbitration would be subject to the rules of the American Arbitration Assn., in a format similar to those used to resolve other disputes in baseball. Any multichannel provider that agreed to arbitration would be able to immediately launch SportsNet LA.

He wrote that three “qualified neutral arbitrators” would determine the amount to be paid by the cable, satellite and telco providers for the rest of the 2014 season and for the 2015 season. The parties would hold separate negotiations for 2016 and beyond.

Sherman wrote that the arbitrators would “take into consideration all relevant data regarding regional sports networks not only in Los Angeles but across the country.” That is a key point, as White suggests that TW Cable overpaid for the Dodgers rights.

Sherman said his proposal “envisions that the Arbitrators would be looking at scores of contracts involving regional sports networks, from coast to coast. Thus the overwhelming majority of RSN contracts analyzed would reflect prices no influenced by any alleged Time Warner profligacy.”

Last week, Sherman and five other lawmakers sent a letter to Marcus and White urging that they enter into binding arbitration. TW Cable quickly agreed, but DirecTV did not. Dodgers President Stan Kasten also endorsed the idea of arbitration.

A DirecTV spokesman responded: “We share the concern of Representatives Cardenas, Sherman and other local elected officials, as well as FCC Chairman Wheeler, that consumers are not able to watch the LA Dodgers on television.

“Throughout our discussions with Time Warner Cable, we have always kept the best interests of our more than 1 million LA customers at the forefront, including those who don’t watch the Dodgers.  It also seems that every other distributor in the market also recognizes that customers should not be forced to pay a tax nearing a half of a billion dollars for TWC’s reckless decision to create three separate, overpriced RSNs.

“We will continue to have discussions in good faith and will consider mediation, rather than arbitration, to reach a deal that benefits all of our customers.

“But any such talks must include all TV providers in the area as well as compromise by the ownership of the Dodgers to be meaningful.”

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