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Which Media Rights Will Go With Dodger Sale?

With owner Frank McCourt finally
succumbing to Major League Baseball pressure to
sell the Los Angeles Dodgers, the list of potential
buyers for the once-storied franchise seems to grow

While new ownership for the team won’t sort itself
out for months to come, a more immediate question
remains: Will the club’s media rights — which along
with the team, Dodger Stadium and other assets are
expected to draw bids well north of $1 billion — be
included in the deal?

Fox Sports currently holds the local media rights
to the team for the 2012 and 2013 seasons, with
games slated to air on its Prime Ticket regional
sports network.

Time Warner Cable, which after wresting rights
to the National Basketball Association’s Los Angeles Lakers
rights from KCAL-TV and Fox’s FS West in February, is working
toward tipping off a pair of L.A.-based RSNs in time for the
2012-13 NBA season, would secure year-round pro sports programming
for the channels by presenting Dodgers games.

The long-term media rights could be valued at as much as $3
billion, as McCourt indicated back in June. At the time, MLB
commissioner Bud Selig nixed a 17-year extension with Fox.
According to McCourt at the time, the Fox deal, which would
have superseded the final three years of the team’s rights deal
with Prime Ticket and extended it through the 2027 campaign,
was valued at more than $3 billion over its term.

MLB executives reportedly valued it at $1.7 billion. A source
familiar with the deal, which included a provision for McCourt
to garner a 35% stake in Prime Ticket, pegged it in excess of
$2.7 billion. The pact called for some $385 million in upfront
allocations, but $173.5 million would have been earmarked
for divorce proceedings between McCourt and his ex-wife Jamie.
That would have left $211.5 million for team operations,
an amount MLB deemed to be insufficient and in keeping with
McCourt’s pattern of using the club to finance his personal affairs.

McCourt and MLB issued this joint statement last week:
“The Los Angeles Dodgers and Major League Baseball announced
that they have agreed … to a court-supervised process
to sell the team and its attendant media rights in a manner
designed to realize maximum value for the Dodgers and their
owner, Frank McCourt. The Blackstone Group LP will manage
the sale process.”

In a traditional sale of a baseball team, the attendant media
rights are typically transferred as part of the club’s assets.
MLB didn’t return calls seeking comment.

However, during the bankruptcy proceedings McCourt had
sought to auction off the media rights, while Fox had filed motions
against that pursuit.

It was unclear at press time if the McCourt camp, following
its divestiture agreement, had withdrawn that request. If so,
that would presumably leave Fox’s media rights — which are
also said to include various negotiating and matching provisions
— intact for at least the next two seasons.

A bankruptcy trial, which had been scheduled for late October,
was postponed until later this month.

Some have speculated about the economic sense of Fox and
or Time Warner Cable purchasing the club, or a piece of it, as a
means to secure the media rights.

However, News Corp. president, chief operating officer and
deputy chairman Chase Carey said during the media company’s
first-quarter call with analysts on Nov. 2: “We are not buying
the Dodgers.”

News Corp., which bought the Dodgers in 1998 from the
same O’Malley family that had moved the club from Brooklyn
40 years earlier, sold the team to McCourt in 2004.

Time Warner Cable declined to comment about buying or
taking a stake in the Dodgers and whether it has interest
in its media rights. However, the nation’s No. 2 MSO has
signaled increased attention to the value of athletic programming,
establishing a dedicated sports unit, headed
by David Rone, in June.

Should the bankruptcy court give the ultimate OK for
the team to be sold, there figures to be no shortage of suitors.
Those who have either outwardly expressed interest
or are expected to be in the game include: former Dodgers
owner Peter O’Malley; former players Steve Garvey
and Orel Hersheiser; HD Net and Dallas Mavericks owner
Mark Cuban, who earlier balked at McCourt’s price tag.