Fox Reaches Dodger Goals

Sparking renewed speculation that the Dodgers might be sold, NewsCorp chairman Rupert Murdoch said Fox has achieved the primary business objective it had for purchasing the team, despite two years of staggering financial losses.

With the Dodgers in Fox hands, the Walt Disney Co. surrendered in the race to launch a second local cable sports channel, Murdoch told a national television audience in a rare interview this week.

The Dodgers are not for sale now, club President Bob Graziano said Wednesday.

But the Dodgers last week reported operating losses of $55 million last season and $88 million over the last two seasons, by far the most of any major league team and a painful price for killing Disney’s dream of a channel to rival Fox Sports Net.

With the Dodgers anchored on Fox Sports Net 2, and with Disney’s Angels and Mighty Ducks also tied to Fox cable broadcasts, Graziano said, “There’s not another benefit to NewsCorp to lose money.”

Two analysts said Wednesday that Fox could fetch more than $400 million for the Dodgers, which would allow the company to recoup its purchase price, stadium renovation costs and some operating losses. As part of any sale, Fox would undoubtedly retain the Dodgers’ cable rights for years to come.

“One of the reasons media companies buy into sports teams--the main reason--is for their content value. If you can hold the content value and spin off your asset and pick up some asset appreciation, that’s not a bad thing,” said John Moag, chief executive of Moag and Co., a Baltimore-based sports investment banking firm.

“You can make some money, and you have not lost the reason for buying the franchise in the first place.”

Murdoch paid $311 million for the Dodgers in 1998 and moved their cable broadcasts to the new Fox Sports Net 2, successfully betting that local viewers would demand cable operators add the channel so they could watch their favorite baseball team.

Disney’s teams do not command similar fan loyalty. Four months after Fox bought the Dodgers, Disney abandoned the proposed ESPN West cable channel that would have aired Angel and Duck games and sold those rights to Fox.

In discussing the Dodger purchase in an interview with Charlie Rose of PBS, Murdoch said, “The economic reason was that ... we were trying to establish a second cable network in Southern California and Disney was trying to get one going too, around their teams. And, by getting in first

Rose did not follow up by asking whether, with that business secure and with the Dodgers reportedly hemorrhaging money, Murdoch would sell the team.

Fox is not soliciting offers, sources said, but the company is willing to entertain them and is intrigued by record prices offered in bidding for the Boston Red Sox, another of baseball’s marquee franchises. But that auction, dominated by local bidders, includes a majority stake in the team and in New England Sports Network, a regional equivalent of Fox Sports Net.

Fox would sell only the team, valued at $432 million by Moag and at “north of $400 million” by Marc Ganis, president of Chicago-based Sportscorp Ltd. And, by launching Fox Sports Net 2 and locking up the Dodgers there, Ganis said Fox added “literally hundreds of millions of value” to its broadcast holdings.

While the Dodgers’ revenues have doubled over the last six years, the player payroll has nearly tripled, according to figures released last week.

“Our objective is to try to turn around the economics of the ballclub,” Graziano said. “NewsCorp has taken a long-term perspective. We are as hopeful as any other owner that the economic system of major league baseball will get fixed. We’re not looking to continue to incur losses year after year.”

In the absence of economic reform, and beyond the Fox Sports Net holdings, Graziano said, “I don’t think there’s a significant strategic reason for [NewsCorp] to own the Dodgers. But there’s not a lot of strategic reasons for anybody to own a team.

“That’s what [Commissioner] Bud [Selig] was trying to explain” when he testified last week that 25 of 30 teams lost money last season.

Many teams control costs by ridding their rosters of veterans with fat contracts, but the Dodgers do not believe fans would turn out to watch a team stripped of expensive players and dominated by younger and cheaper ones.

“We’re not going to go through a rebuilding process,” Graziano said. “You can’t tear down the team completely. It wouldn’t be fair to the fans. You can’t do here what happened in Florida and San Diego.”