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Fox to Baseball: We Will Walk

After years of red ink on pro sports deals, News Corp. President Peter Chernin says Fox Broadcasting will not renew its deal with Major League Baseball unless it breaks even or see some profit from the deal.

Speaking during News Corp.’s quarterly earnings call, Chernin said that Fox has a "very straightforward view" of baseball. "We have enjoyed our relationship with them and are more than happy to renew, if we can make money on the contract. We are not prepared to sign a deal that loses money and we are prepared to walk away," Chernin says.

Sports has long been a loss leader for TV networks, which pay up then often bleed hundreds of millions of dollars. Fox itself has lost $200 million over the term of its current six-year, $2.6 billion baseball deal, which expires after the 2006 season.

Fox has the right to negotiate exclusively with the league until Dec. 31, 2005, but couldn’t come to terms. The league has been courting other networks, such as ESPN and NBC, whose ratings plunge has awakened a new willingness to pay up for pro football at a stiff loss.

During the call, News Corp. Chairman Rupert Murdoch added that he has no intereest in the ongoing auction of Spanish-language broadcaster Unvision. 

FCC rules prohibit News Corp. from adding more stations in its local markets, but more importantly Murdoch says that he consider’s Univsion CEO and controlling shareholder Jerry Perrenchio a friend and smart seller. "So I don’t spring to attention when he’s putting something on the market."

Fox’s strong ratings success this season is masked a bit by its financial results.

For the third quarter ended March, revenues at the Fox network fell 5% to $1.3 billion, but that’s because Fox carried the Super Bowl last year,but not this year. Operating income increased 29% to $289 million.

The network has a stronger schedule than at any point in years, with an unusually large number of shows returning and solid numbers from its Sunday night adult cartoons and drama Prison Break, strong showings from dramas House and 24, and stellar ratings from franchise player American Idol. Chernin says Fox heads into the upfront ad season "in the most competitive position we've ever been in."

Fox’s cable networks soared, with revenue jumping 33% to $839 million and operating income zooming 23% to $211 million.