Local Congressman clarifies proposal for ‘binding baseball-style arbitration’ over SportsNet LA.

Congressman Brad Sherman (D-Sherman Oaks) sent a letter today to the chairmen of Time Warner Cable, DirecTV and the Federal Communications Commission spelling out his earlier proposal for a binding arbitration process. It’s the third letter sent by a local member of Congress to the FCC concerning the ongoing dispute over SportsNet LA, the Dodgers’ home channel.

Here is the full text of the letter signed by Sherman. It’s a fairly dry read, but the level of specificity emphasizes the level of thought put into the proposal. Proposing binding arbitration becomes more than a two-word soundbite:

On July 28, I wrote a letter urging binding arbitration of the Dodgers telecasting dispute. The letter Was addressed to Robert Marcus of Time Warner Cable and Michael White of DirecTV. The letter Was also signed by five of my Los Angeles area colleagues, and copies Were sent to the satellite and cable television providers that are following DirecTV’s lead.

On July 29, FCC Chairman Wheeler thanked me for bringing this matter to his attention, began an investigation, and requested the details of the proposed arbitration process. On July 31, DirecTV CEO Michael White, speaking in his quarterly earnings conference call, indicated a desire for additional details of how arbitration would proceed. Accordingly, I provide below a clarification of my proposal.

This technical clarification letter is not signed by my Íive colleagues, but I believe that it is not inconsistent with their views. Binding arbitration would take place as follows:

l. Any satellite, cable or telco provider Within the Dodgers home television territory that agrees to binding arbitration shall immediately launch SportsNet LA, commonly known as the Dodgers Network. Those satellite, cable, or telco companies would be able to insert four 30 second commercials each hour (as the current format provides), and would otherwise be carrying the station’s feed.

2. SportsNet LA would be available to all cable, satellite and telco subscribers throughout the Dodgers home television territory.

3. All parties would enter into binding baseball-style arbitration pursuant to the rules ofthe American Arbitration Association Which, pursuant to its practices, Would appoint three qualified neutral arbitrators.

4. The Arbitrators would determine the amount to be paid (carriage fee) by the cable, satellite and telco companies for the 2014 season, including games aired prior to the conclusion of the arbitration process.

5. The Arbitrators would also determine the price to be paid (carriage fee) by the cable, satellite and telco providers for the 2015 season.

6. The Arbitrators would take into consideration all relevant data regarding regional sports networks not only in Los Angeles but across the country. The parties would cooperate in providing relevant information, and the Arbitrators Would keep proprietary information confidential.

7. The parties Would begin separate negations to determine the terms under which SportsNet LA would be shown on all area cable and satellite households throughout the Los Angeles area in 2016 and subsequent years.

I realize this is a private business matter. To the extent that any federal agency has a jurisdiction, it is the Federal Communications Commission, not an ad hoc group of 6 Los Angeles area members of Congress. That said, I hope the July 28 letter signed by myself and my colleagues will prod the top management of the corporations involved, and the leadership of the Federal Communications Commission, to give this matter the highest priority. Accordingly I am available to discuss this matter With any of the interested parties, particularly because Congress is adjourned for the summer.

Sincerely,

Brad Sherman
Member of Congress

P.S. In his quarterly earnings teleconference, Michael White of DirecTV indicated that he believes that Time Warner overpaid for the right to air SportsNet LA and that DirecTV should not have to pay a carriage fee based on what he regards as a profligate business decision. As noted in point 6 above, my proposal envisions that the Arbitrators would be looking at scores of contracts involving regional sports networks (RSNs), from coast to coast. Thus the overwhelming majority of RSN contracts analyzed would reflect prices not influenced by any alleged Time Warner profligacy.

The letter is copied to Dodgers President and CEO Stan Kasten, who on July 31 wrote a letter in support of Sherman’s proposal for binding arbitration.

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About J.P. Hoornstra

J.P. Hoornstra covers the Dodgers, Angels and Major League Baseball for the Los Angeles Daily News, Long Beach Press-Telegram, Torrance Daily Breeze, San Gabriel Valley Tribune, Pasadena Star-News, San Bernardino Sun, Inland Valley Daily Bulletin, Whittier Daily News and Redlands Daily Facts. Before taking the beat in 2012, J.P. covered the NHL for four years. UCLA gave him a degree once upon a time; when he graduated on schedule, he missed getting Arnold Schwarzenegger's autograph on his diploma by five months.