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Media Rights Settlement with Fox Opens Door to Dodgers Sale

1/11/2012 3:42 PM Eastern

In a move that paves the way for the sale of the club by April 30, the U.S. Bankruptcy Court for the District of Delaware today has formally approved the Los Angeles Dodgers' legal settlements with Major League Baseball and Fox Sports.
The Jan. 11 accord follows various legal actions between embattled Dodgers owner Frank McCourt, Fox Sports, MLB and his ex-wife Jaime. The Blackstone Group is administering the sale -- initial bids for which are due on Jan. 23 -- out of the bankruptcy court.
Fox Sports, whose Prime Ticket regional sports network airs the team's games, had been engaged in litigation as McCourt, the Dodgers and MLB wanted to move up the time frame to sell the media rights, beginning with the 2014 season, as a means to further enhance the franchise's value. The impetus for the settlement emanated from a December ruling by U.S. District Judge Leonard Stark that stayed the Dodgers from selling the TV rights, along with the team.
Under Bankruptcy Court Judge Kevin Gross's game plan, Fox would have had to try to strike a new deal with the Dodgers this month. Moreover, any such media rights pact would have been subject to approval by the successful bidder for the team, a condition Fox said would decrease its leverage.

However, it was determined that Fox would like win an appeal against the Dodgers.

"We are pleased that these matters between our two organizations have been resolved," said Fox Sports in a statement. "We were never in favor of litigation, but it was imperative that we protect our exclusive media rights. Under the terms of the settlement, Fox's media rights remain in place and we look forward to working with new ownership on future television rights discussions."

For their part, the Dodgers issued this statement: "This agreement is a significant step towards a successful sale of the Los Angeles Dodgers. It resolves all of the parties' differences relating to the telecast rights agreement with Fox. This consensual resolution of all disputes between the debtors and Fox will enable the sale of the Dodgers to proceed forward, free of any uncertainty relating to the various issues under dispute, with the continued objective of maximizing value for the debtors and their estates."

With the legalities behind them, the Dodgers games will remain on Prime Ticket through the end of the 2013 season. Fox Sports also retains an exclusive 45-day negotiating window that lasts through Nov. 30. It is expected that Time Warner Cable, which will tip off a pair of Los Angeles Lakers RSNs this year, carved in large part from rights previously held by Fox Sports West, DirecTV and AT&T U-verse could all bid for Dodgers rights, should they become available.
Under the settlement, McCourt still owes Fox $30 million from a borrowing made in April to help meet the team's payroll. Fox can also still object to any purchase of the team by any entity owned directly or indirectly by Time Warner Cable or affiliated with Time Warner. Time Warner Cable has indicated that it has interest in purchasing the team as a means of controlling its media rights.

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