Selling the Dodgers will end up costing News Corp. a lot
Nov 15, 2012 (Los Angeles Times - McClatchy-Tribune Information Services via COMTEX) --
As News Corp.'s Fox Sports unit prepares to spend billions of dollars to keep television rights to the Los Angeles Dodgers, one has to wonder if the media giant has any pangs of regret over selling the team in the first place.
News Corp. owned the Dodgers from 1998 to 2004. It paid $350 million to get the team from the O'Malley family and sold it for $430 million to Frank McCourt, who earlier this year sold it to private equity firm Guggenheim Partners for $2.1 billion.
Now, if Fox Sports wants to keep the Dodgers on its Prime Ticket cable channel here, it will likely have to pay an average of at least $150 million a season. When McCourt still owned the team, Fox Sports made an offer of $3 billion for a 20-year deal. Fox Sports is nearing the end of its exclusive negotiating window with Guggenheim Partners for a new TV agreement.
Waiting in the wings if Fox Sports can't get a deal done is Time Warner Cable, which already snagged the rights to the Lakers away from Fox for its new channel, SportsNet.
A potential battle for the Dodgers was no doubt a motivating factor in Fox Sports' efforts to secure a minority stake in the YES Network, the sports channel owned by the New York Yankees. The last thing Fox Sports wants is to see Time Warner Cable get a piece of YES. Also, should Fox lose the TV rights to the Dodgers on top of the Lakers, having a stake in YES is not a bad consolation prize.
No price has been put on the YES deal yet, but the estimates of the channel's value run to at least $3 billion. If Fox Sports is acquiring stakes held by Goldman Sachs and other equity partners, it will probably cost north of $1 billion.
Hindsight is always 20/20. When News Corp. owned the Dodgers, it was losing about $50 million a year on the team. Sports rights were only wildly out of control then and not completely insane as they are today. The team wasn't a good fit with the rest of the company and fans didn't like News Corp. ownership, especially after it traded star player Mike Piazza.
But as Fox Sports prepares to write a number with nine zeroes on it to show to Guggenheim, someone in News Corp.'s accounting department with a long memory will probably be rolling his eyes.
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