Fox Sports seeks halt to Dodgers media rights sale
Friday, December 16, 2011
DOVER, Del. (AP) — A bankruptcy judge on Thursday blasted Fox Sports for claiming that the Los Angeles Dodgers’ plan to sell media rights to future games is intended to enrich team owner Frank McCourt after Fox negotiated a failed deal that would have left McCourt with hundreds of millions of dollars.
Judge Kevin Gross took Fox to task in a formal opinion authorizing the Dodgers to begin the media rights marketing process as part of the team’s plan to emerge from bankruptcy.
The Dodgers sought bankruptcy protection in June after baseball Commissioner Bud Selig rejected a new TV deal with Fox that McCourt was counting on to keep the franchise solvent.
Fox is now challenging the team’s plan to sell media rights to games starting in 2014, saying the sale process violates Fox’s exclusive rights under its existing contract with the Dodgers.
Gross pointed out that in the deal rejected by Selig, Fox was willing to advance more than $300 million to McCourt with no restrictions. He noted the irony in Fox now arguing that the media rights sale is unnecessary and alleging that it is timed to help McCourt meet an April 30 deadline to pay his ex-wife, Jamie, $131 million as part of their divorce settlement.
“Now, when Fox faces changes to the rights amendment, Fox raises arguments about what is in the debtors’ best interests,” the judge wrote. “Fox is not a credible party to raise such issues.”
But Fox is pressing its challenge, filing an appeal in federal district court in Delaware seeking to overturn Gross’ ruling.
Fox Sports is asking the district court judge to immediately halt the implementation of Gross’ order while he considers Fox’s appeal. The district judge has scheduled a teleconference with attorneys Friday to discuss the appeal.
The plan to sell media rights is a key component of a settlement between the Dodgers and Major League Baseball that also calls for McCourt to sell the team.
The Dodgers’ plan calls for initial bids by Jan. 13 and completion of the sale by April 30.
Fox argues that the sale process violates its exclusive rights under the existing contract, which gives Fox an exclusive 45-day period starting in October 2012 to negotiate a contract extension with the Dodgers.
But the Dodgers say a media rights sale now in conjunction with selling the team itself is the best way to maximize value for creditors and emerge from bankruptcy.
In his ruling, Gross agreed with the Dodgers that Fox will maintain many of the same rights under the proposed sale process as it has under its existing contract, including the exclusive negotiating period. The judge said the only changes to the rights agreement with Fox were moving up the exclusive negotiating period by about 10 months, and a requirement that any deal between the Dodgers and Fox be approved not just by MLB, as in the contract, but any buyer of the team as well.
Gross said Fox will have the opportunity later to argue that it is entitled to damages for breach of contract, and the Dodgers will be able to decide whether those damages, if any, make a media rights deal with someone else economically unwise.