Dodgers settle with Fox, ending battle over TV rights sale
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The Dodgers and Fox Sports ended their legal hostilities Tuesday night, with the team agreeing to abandon its proposed sale of television rights and Fox agreeing to withdraw its objection to the settlement between Major League Baseball and outgoing owner Frank McCourt.
The settlement means that McCourt has reached agreement with his two primary adversaries in U.S. Bankruptcy Court -- MLB and Fox -- and can proceed to meet an April 30 deadline for the sale of the Dodgers.
The settlement, once approved by the court, ‘will enable the [Dodgers] ... to focus their complete attention on the sale process,’ attorneys for the Dodgers said in a court filing Tuesday night.
The impetus for the settlement was the ruling last month that stayed the Dodgers from selling their television rights along with the team. U.S. District Judge Leonard Stark indicated he would likely make that ruling permanent.
The Dodgers had said they could command a higher sale price by marketing their television rights now. Fox had asked for the enforcement of its current contract, which forbids the team from negotiating with other broadcast outlets before Nov. 30. U.S. Bankruptcy Judge Kevin Gross ruled in favor of the Dodgers, but Fox appealed and Stark put the sale on hold.
The Dodgers agreed Tuesday to honor the existing Fox contract, which expires after the 2013 season. That leaves a new owner free to launch his own Dodgers cable channel starting in 2014, or leverage that threat into a bidding war between Fox and Time Warner Cable. Under the settlement, Fox and the Dodgers agreed to withdraw the lawsuits each had filed against the other. Fox also agreed to end its various legal challenges to the Dodgers, including its motion to dismiss the team from bankruptcy for abusing the process and its claim to damages for the team’s alleged violations of the current television contract.
Fox did not, however, release McCourt from his obligation to repay a $30 million personal loan provided by the company in April so that he could meet the first payrolls of the season.
That loan is secured by McCourt’s malpractice claim against Bingham McCutchen, the Boston-based law firm responsible for the faulty marital property agreement upon which McCourt relied to establish his sole ownership of the Dodgers. The agreement was invalidated, and ultimately McCourt agreed to settle his divorce by paying his ex-wife $131 million by April 30.
Fox retained the right to challenge any sale of the team, in part or in whole, to Time Warner Cable. The settlement also clarified that Time Warner Cable is bound by a provision of the TV contract that hampers the ability of ESPN, Comcast or Time Warner to hold a share of a Dodgers’ cable channel.
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