Wednesday, August 03, 2011

McCourt Losing Fox's Support, Too

No man is an island, but Frank McCourt seems to be doing a pretty damn good job at testing John Donne's theory, eroding allies with each day. And today's revelation comes from the WSJ (no link), which says that Frank's move to hire Blackstone to help with marketing the Dodgers' media rights imperils McCourt's relations with Fox, one of the few guys left in McCourt's corner:

News Corp.'s Fox Sports is protesting the Los Angeles Dodgers' request to hire Blackstone Group to market the team's media rights, setting up a potential battle with the broadcaster that, until recently, had been one of embattled owner Frank McCourt's biggest supporters.

The baseball team's primary television partner, Fox Sports' Prime Ticket, said in court papers that Blackstone's proposed marketing plan treads on the current agreement to broadcast Dodgers games through the 2013 season and violates a provision that gives Fox Sports exclusive negotiation rights through November 2012.

"Therefore, the current employment of Blackstone for that purpose is premature, and such employment should be denied," Fox Sports attorneys said in papers filed Friday with the U.S. Bankruptcy Court in Wilmington, Del.

News Corp. also owns The Wall Street Journal.

The Dodgers' move to hire Blackstone to market its broadcast rights is key to the team's plan to emerge from bankruptcy with Mr. McCourt's ownership stake fully intact. The tactic, however, threatens to anger Fox, which until the bankruptcy had been a supporter and lender to the team.

Fox Sports has already advanced to Mr. McCourt's team all of the fees for the Dodgers' 2011 television rights. Furthermore, the network had consented to a 17-year, $2.7 billion extension to the current broadcast deal that would have allowed the team to avoid a bankruptcy filing.

Major League Baseball Commissioner Bud Selig, however, rejected that proposal because a portion of a $385 million loan that came with the renewed contract would have gone to a divorce settlement with Mr. McCourt's former wife, Jamie.

Mr. McCourt placed the team into Chapter 11 protection in late June with the aim of selling the team's broadcast rights without needing MLB's approval. But to sell those rights in bankruptcy court, the Dodgers must market them to Fox Sports rivals and likely hold an auction.

Such a process threatens confidentially agreements, negotiating exclusivity and even the current television deal, Fox Sports said. [...]

The Dodgers have yet to formally ask the court to allow it to sell the broadcast rights, but the team has made it clear in hearings and in court papers that it intends to so as soon as this month. A hearing on the Dodgers' request to hire Blackstone is set for Aug. 16. The team is seeking to tap Blackstone as its investment banker and financial adviser, so the firm's role wouldn't necessarily be limited to running the broadcast sale.

If Mr. McCourt is unable to sell the broadcast rights, he may have no other option than to sell part or all of the team. He has already put up for collateral Dodger Stadium, the surrounding land and ticket revenue in order to access financing prior to the bankruptcy.

In a sale scenario, MLB, which has been at odds with Mr. McCourt, would have a greater degree of control. Last month, a judge allowed the league to become the team's bankruptcy lender over the club's preferred banker, a hedge fund controlled by J.P. Morgan Chase & Co.

1 comments:

Mr. Customer said...

Yeah, color me surprised that Fox wouldn't want their exclusive negotiating rights waived! I thought I had read that they would withdraw their support for Frank if he filed for bankruptcy (citation needed).