Fox Moves to Buy 40% Share of Kings

A month after getting approval to buy the Dodgers, Rupert Murdoch’s Fox Group has taken steps to purchase a minority interest in the Los Angeles Kings hockey team, according to Chase Carey, co-chief operating officer of News Corp. and chairman and chief executive of its Fox Television group.

The alliance with the Kings surfaced after a news conference Friday at which Fox confirmed reports that it is buying, with its sports partner Liberty Media Corp., a 40% interest in the $300-million Staples Center, which is scheduled to open in the fall of 1999. At the same time, the Staples Center announced that the Kings and the Lakers and Clippers basketball teams would move to the new sports complex, making it the first arena in the country to house three major professional sports franchises.

In the surprising new development, Fox confirmed signing a deal with the Kings earlier this week for the rights to an option for 40% of the National Hockey League team, pending NHL approval.

The move is just the latest step in Murdoch’s ambitious plan to dominate pro sports in Los Angeles, the headquarters of his 20th Century Fox studios and his Fox broadcasting empire. Murdoch has been on a buying spree lately, paying a record $311 million last month for the Dodgers, angling to bring a pro football team to town, and stepping up for the Kings, the Lakers and the Staples Center this week. In a separate deal confirmed this week, the Kings have agreed to sell Fox 40% of the team’s option to buy 25% of the Lakers.

For Murdoch, ownership of teams assures valuable programming for Fox’s two regional sports networks. Fox has long-term cable rights to Laker, Kings and Dodger games, and owning interests in those teams guarantees that they will not move to a rival network, such as the one the Walt Disney Co. plans to launch in October through its ESPN cable arm.

Disney and Fox have been locked in a battle for sports cable dominance, bidding up sports rights across the country over the last year. Fox has assembled a powerful group of regional sports networks over the past four years to challenge Disney’s ESPN juggernaut.

The rivalry is expected to seep into the debate at the NHL--with Disney, which owns the Mighty Ducks of Anaheim, trying to block Fox from teaming up with the Kings.

Although both Fox and the Kings are interested in becoming partners, the league does not now permit single entities to own more than one hockey club. Fox owns a passive 20% stake in New York’s Madison Square Garden, giving the company a minority ownership in the National Basketball Assn.’s Knicks and the NHL’s Rangers.

Sources at Fox said that it is not clear whether the league has the authority to approve or reject the kind of deal the company has structured with the Kings, but that Fox was involving the league early and was preparing for the day when league rules change.

The league, which confirmed receiving documents regarding the Fox proposal, is in the process of reviewing its ownership rules and is said to be predisposed to the NBA’s approach to multiple ownership. The NBA allows owners to take minority stakes in multiple teams as long as those interests do not exceed 50%.

There is already a precedent, illustrating the murkiness of the NHL rules. Liberty Media, the programming arm of cable giant Tele-Communications Inc. and Fox’s 50-50 partner in sports, owns a 20% interest in the Rangers and a stake in the NHL’s future expansion team, the Atlanta Thrashers, through its 10% passive stake in Time Warner, the team’s owner.

Yet Disney Co. has vigorously opposed relaxing the rules in past meetings of the NHL board of governors.

“Multiple ownership is clearly in violation of league rules,” said Tony Tavares, who as president of Anaheim Sports Inc. operates Disney’s two pro sports teams, the Mighty Ducks and the baseball Angels. “What we were opposed to and what we were very vocal about was multiple team ownership. It’s not good for any league any time there are trades or competitive issues.”

For Murdoch and Disney chief Michael Eisner, the biggest battleground has become Southern California, where both media moguls are building sports war chests. In addition to owning the Ducks and the Angels, Eisner has had his eye on buying the Clippers and has approached owner Donald Sterling several times about it.

“Murdoch’s rivalry with Eisner is going to far overshadow his rivalry with Turner,” said a source close to Fox, referring to the Atlanta Braves’ Ted Turner, who urged baseball owners to vote against Fox’s purchase of the Dodgers and whose media feud with Murdoch is legendary.

ESPN needs the Clippers to flush out the ESPN West sports channel it intends to launch in October.

As part of Friday’s announcement, the Clippers said they would play nine of their games at the Arrowhead Pond of Anaheim next year, finishing up their contract, and the other 32 games at the Sports Arena. Under a six-year contract, the Clippers will move to the Staples Center for the 1999-2000 season. “We plan to be here forever,” said Andy Roeser, executive vice president of the team, appearing at the news conference on behalf of Sterling, who he said was traveling.

The Clippers’ move is a blow to Disney, which has been pushing to get the team to play full time in Anaheim. Although Fox Television Chairman Carey insisted that the move was not tied to renewal of the team’s rights for the Fox Sports regional channel, he said the partnership would set the stage for a closer relationship. “We hope this will help us expand the relationship,” he said. “But the rights negotiation is a separate process.”

Times staff writer Martin Henderson contributed to this story.