News Corp.’s Fox Sports Said to Consider Bidding for Los Angeles Dodgers
News Corp. (NWS)’s Fox Sports may participate in an auction for the bankrupt Los Angeles Dodgers baseball team, a person familiar with the company’s thinking said.
In a conference call to discuss the company’s earnings, News Corp. Chief Operating Officer Chase Carey said the company doesn’t plan to buy the team.
Fox planned to compare the price of renewing its current telecast contract with the cost of buying the team, said the person, who declined to be named because the deliberations are not public.
News Corp. owned the team from 1998 until 2004, when it sold the club to current owner Frank McCourt for $421 million after locking up the TV rights until 2013.
The Dodgers said today that McCourt will sell the team and its media rights as part of a deal to end a court fight with Major League Baseball over the best way to get the club out of bankruptcy. The proposed auction must be approved by the federal judge in Wilmington, Delaware, overseeing the team’s bankruptcy.
The Dodgers filed bankruptcy in June after Baseball Commissioner Bud Selig rejected a proposed, new contract McCourt negotiated with Fox worth about $3 billion.
Future Media Rights
“If it comes down to paying $3 billion for telecast rights or $1 billion for the team, the math may mean you buy the team,” the person said. There are also drawbacks to owning a sports team, which the company experienced when they previously owned the Dodgers, the person said.
Fox had been battling the Dodgers over McCourt’s attempt to sell future media rights. Fox has an exclusive right to negotiate future telecast rights until next year, according to court papers.
Allowing a sale, or even negotiations, before November 2012 would violate the contract and expose the Dodgers to a claim for damages, Fox, MLB and lower-ranking creditors all said separately in court papers filed in recent weeks.
Today’s statement announcing the sale process appeared to be designed to give the Dodgers the option to sell the media rights separately, bankruptcy attorney Bryan Krakauer with the law firm Sidley Austin LLP said in an interview. Krakauer represents the bankrupt newspaper publisher, Tribune Co., and helped design the sale of that company’s controlling stake in the Chicago Cubs baseball team for an MLB record $845 million.
The ambiguity in the statement may give Fox a reason to be concerned, Krakauer said.
“I don’t know about raising a red flag, but potentially it raises a yellow flag,” Krakauer said. “You can’t tell from this statement what their intentions are.”
The reference in the public statement to a sale of the media rights surprised officials at Fox, the person familiar with the company’s thinking said.
The case is In re Los Angeles Dodgers LLC, 11-12010, U.S. Bankruptcy Court, District of Delaware (Wilmington).
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