Dodgers can sell TV rights, judge rules
Reporting from Wilmington, Del. -- The Dodgers can sell their television rights along with the team, U.S. Bankruptcy Judge Kevin Gross ruled Thursday.
The ruling could send Fox Sports scrambling on two fronts — to appeal in the hope of stopping the sale, and to negotiate in the hope of reaching a new deal in the next five weeks.
However, the Dodgers would have the right to talk with other potential broadcast partners thereafter, with Time Warner Cable, DirecTV, AT&T and Verizon among the possibilities.
The Dodgers’ current TV contract with Fox prevents the team from negotiating with another broadcast outlet before Nov. 30, 2012. Fox failed to convince Gross that moving that date up would alter the contract so as to constitute irreparable harm.
“I am satisfied the proposed modifications are not material,” Gross said. “That, to me, is the key.”
In a statement, Fox called the contract rights in dispute “material and valuable” and vowed to appeal.
Gross issued his ruling at the end of a two-day hearing, saying he would explain his decision in writing in the coming days. He did say he thought the accelerated sale of TV rights was in the best interest of the Dodgers and their creditors.
However, Fox plans to seek a 14-day stay of the ruling as well as to file an appeal, Fox attorney Gregory Werkheiser said.
Gross did not address the issue of whether the Dodgers might be liable for any financial damages. The Dodgers have proposed a hearing on that issue in January or February and have said they would halt the sale of TV rights if the damages were found to be too great.
In a statement, the Dodgers said they were “extremely gratified” by the ruling.
Dodgers owner Frank McCourt has agreed to sell the team by April 30. He and his advisors argued the Dodgers would command a higher sale price if the TV rights could be sold now and bidders would know exactly how many billions a new TV contract would be worth.
The bidder would not be obligated to proceed with that contract.
Former Fox Sports Networks chief Robert Thompson testified Thursday that Fox would have subtracted about $75 million from its current $300-million Dodgers deal without the negotiating rights at issue in Gross’ ruling. Thompson also estimated Prime Ticket was worth about $1 billion.
As a result, Werkheiser argued, the Dodgers could be liable for “waterfall damages” beyond $1 billion if Fox lost the Dodgers and had to close Prime Ticket.
Bruce Bennett, the Dodgers’ attorney, said the damages might be “zero” and scoffed at the suggestion that preserving the negotiating window would enhance Fox’s chance to retain the Dodgers, because the Lakers and Galaxy already have bolted for Time Warner Cable this year.
Bennett also said cable operators already know Fox is at risk of losing the Dodgers, even under a current contract that expires in 2013, given that two teams already have been lost.
“They’re know you’re 0 and 2,” Bennett said. “They know it’s up for grabs. They know that Time Warner is on the prowl.”
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