After doing the math, pay-TV providers appear to be sticking to their story that carrying the all-Los Angeles Dodgers channel SportsNet LA on Time Warner Cable’s terms doesn’t pencil out.

Time Warner Cable, which operates the channel, has been trying to sell it to pay-TV companies so the channel will be available on basic cable and satellite packages in Los Angeles. The cost would be between $4 and $5 per subscriber a month, with that price going up over time.

But nearly a dozen games into the baseball season, no major pay-TV company has signed up, at least not by the Business Journal’s press time, indicating that it might not have been a mere negotiating tactic when they declined to pick up the channel when it launched in February.

Pay-TV providers told the Business Journal that not enough people watch Dodgers games to justify the high price tag, and they don’t want to anger the bulk of their subscribers by raising their bills.

“The vast majority of our U-Verse subscribers only watch a few games a season,” said Chris Lauricella, vice president of content at AT&T in Century City. “It’s a lose-lose if we take the rates Time Warner Cable is asking now. We have to pass those costs on to subscribers or reduce our margins.”

Dan York, chief content officer at DirecTV in El Segundo, said the satellite company also has done extensive analysis of past viewership of Dodgers games on KCAL (Channel 9) and Fox Sports Prime Ticket and found the numbers don’t support Time Warner Cable’s asking price.

“We take a very data-driven, granular approach to determining fair value for all the content we carry,” he said. “We have a good sense of how many of our customers are truly Dodgers fans and how many are not – which is far and away the vast majority.”

The carriers want the channel; they know some of their L.A. subscribers want Dodgers games. But they’re hoping to bring Time Warner Cable down on price.

Meanwhile, they’re trying to negotiate alternatives, including putting the channel in a premium-priced package instead of the main tier, as it is on Time Warner Cable.

Also, pay-TV companies said they might want to offer the channel to customers on an a la carte basis or pay Time Warner Cable a fee based on viewership numbers.

Time Warner Cable is resisting these innovations, saying that they would change the rules midgame, since regional sports networks are typically offered in basic packages.

What’s more, the company has said in recent media interviews that it pays more to carry other regional sports networks, including one owned by DirecTV in Pittsburgh, than it is asking carriers to pay for SportsNet LA in Los Angeles.

“The business model for SportsNet LA is consistent with every other regional sports network in the country,” said Maureen Huff, vice president of public relations at Time Warner Cable, “including the ones owned by companies like DirecTV. We believe that the value of SportsNet LA is completely in line with other regional sports networks across the country.”

Changing landscape

The standoff comes as pay-TV companies are feeling more pressure than ever to retain subscribers by keeping bills low, especially as they face lower-cost digital alternatives such as Netflix. Last year was the first time pay-TV subscriptions fell in the United States. The companies are struggling to keep their audience and get new viewers as more of today’s teens and young adults get their entertainment elsewhere, especially via the Internet.

Rising content costs are perhaps most pronounced in the sports world, since the value of broadcast rights has skyrocketed in recent years, as exemplified in the recent deal for Dodgers games.

Time Warner Cable also launched a channel in 2012 to carry Los Angeles Lakers games and other local sports. Time Warner Cable feuded with some providers over price, although the major ones eventually agreed to carry it, except for Dish Network, which still does not.

But as the Lakers struggle through a dismal season, pay-TV executives said they feel they’re paying too much for the channel relative to its ratings. That sentiment might have carried over into talks for carriage of SportsNet LA.

Huff said DirecTV has asked for a “fair weather” clause that would allow the service to drop the Dodgers channel if the team and ratings suffer. She said that was just one reason talks with DirecTV have ended. Another demand from DirecTV was that the channel be carried a la carte.

“It’s not just about money. It’s about terms they were demanding,” Huff said. “They want the right to drop the network if the Dodgers don’t play well.”

(While Huff said talks are off, DirecTV said negotiations are continuing.)

About 70 percent of TV households in Los Angeles still can’t see the games. The only cable provider to pick up SportsNet LA is Bright House Networks, which has ties to Time Warner Cable and a Southern California audience that’s concentrated in the Bakersfield area; the provider serves fewer than 6,000 households in Los Angeles, according to research firm SNL Kagan.

There are about 4.9 million pay-TV households in Los Angeles. Time Warner Cable serves about 34 percent of the pay-TV market and DirecTV serves about 26 percent. Nine other providers cover the rest, including U-Verse, which serves about 6 percent.

Given those numbers and assuming a median carriage fee of $4.50 per subscriber, DirecTV would have to pay $67.8 million in its first year to carry SportsNet LA in Los Angeles. U-Verse would pay $16.6 million.

Also, those fees would go up over time, and do not include payments to carry the channel in outlying areas such as Nevada, although carriage is generally cheaper where demand is lower.

‘Greater risk’

SportsNet LA launched just a couple of months ago, but has been in the works since the purchase of the Dodgers in 2012 by Guggenheim Baseball Management. The group, which includes team president Stan Kasten and Earvin “Magic” Johnson, paid $2.15 billion with the expectation of making a big TV rights deal.

Last year, Time Warner Cable agreed to pay $8.35 billion for the 25-year rights to Dodgers broadcasting. The number was widely reported but hasn’t been confirmed by either the Dodgers or Time Warner. After revenue sharing with Major League Baseball, the Dodgers are expected to make about $6 billion from the deal. Under the arrangement, Time Warner Cable operates the channel, which is owned by the Dodgers.

The idea for Time Warner Cable was to recoup its huge outlay by making distribution deals with other carriers. Regional sports networks typically make about 80 percent of their revenue from such carriage agreements. Time Warner Cable is on the hook to make payments to the Dodgers regardless of how much it gets from other carriers, according to industry sources.

Other pay-TV companies now say that Time Warner Cable overpaid and is asking other carriers’ subscribers to pick up the tab.

“What we’ve seen first and foremost is a drastic overpayment from Time Warner Cable,” said AT&T’s Lauricella. “It’s a very rich deal that is taxing to our subscribers if we take it.”

But ratings did rise under the Dodgers’ new ownership last season. A July matchup against the New York Yankees drew 603,000 viewers on KCAL – it was the highest-rated local broadcast of a regular season Dodgers game in 15 years.

Viewership of games on Fox Sports Prime Ticket rose as well. Through September, the Dodgers’ ratings were up 41 percent compared with the 2012 season, to about 154,000 viewers.

The individual pay-TV companies wouldn’t disclose specific viewership numbers. But given those ratings and the companies’ respective market shares, about 40,000 households were tuning in to the Fox Sports Prime Ticket games on DirecTV and about 10,000 were watching on U-Verse.

That means that there are plenty of disgruntled customers this season because they can’t watch the games on TV. But Lauricella said U-Verse has not lost subscribers due to the dispute and is in fact still growing its subscriber base in Los Angeles.

York said subscriber losses at DirecTV have been minimal. He said the company has ways of projecting how many diehard fans might ultimately defect from the service due to a lack of Dodgers games but that number hasn’t been big enough to force the company’s hand.

Some providers are trying more than others to ensure they do not lose customers due to the dispute. Verizon FiOS, for example, has offered its L.A. subscribers three free months of HBO or Showtime.

“While we seek a fair and equitable agreement with Time Warner Cable on behalf of our customers, we hope this offer is incentive enough to remain a FiOS customer,” FiOS said in a statement to the Business Journal.

But Richard Tullo, a media analyst who follows cable companies at Albert Fried and Co. in New York, said it is in the best interest of the pay-TV companies to eventually come to an agreement to pick up the channel, since local sports are among the core offerings subscribers expect.

“The greater risk is not providing the content,” Tullo said. “I don’t think it’s a good business plan not to have sports.”