Fox, Dodgers clash in court spat over media rights

WILMINGTON, Del./LOS ANGELES Wed Dec 7, 2011 7:01pm EST

Los Angeles Dodgers owner Frank McCourt listens during the unveiling of a new Dodgers baseball field for children in Compton, Los Angeles, California November 14, 2011.REUTERS/Lucy Nicholson

Los Angeles Dodgers owner Frank McCourt listens during the unveiling of a new Dodgers baseball field for children in Compton, Los Angeles, California November 14, 2011.

Credit: Reuters/Lucy Nicholson

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WILMINGTON, Del./LOS ANGELES (Reuters) - Prospective bidders are piling up for the Los Angeles Dodgers, but Fox Sports argued on Wednesday that the bankrupt team's owner Frank McCourt is improperly breaking its broadcasting contract in his effort to sell the team.

Terms of a November 2 agreement between the Dodgers and Major League Baseball were sketched out in a court filing on Tuesday, effectively starting the auction for the team and stadium.

The agreement to sell the team ended months of bitter feuding between the Dodgers' owner Frank McCourt and baseball's commissioner Bud Selig.

In return for the team's sale, MLB agreed not to oppose the sale of the right to broadcast games beginning in 2014.

The Dodgers are seeking court permission to auction the future media rights earlier than expected to boost the price, a move opposed by Fox Sports.

"These are fundamental breaches and go the heart of the contract," said Gregory Werkheiser of Morris, Nichols, Arsht & Tunnell LLP, who represents Fox, at a U.S. bankruptcy court hearing in Delaware on Wednesday.

News Corp's Fox Sports holds the rights through 2013 and exclusive negotiating rights beginning November 2012. The Dodgers argued during a five-hour hearing that bringing that exclusive period forward by 10 months will not harm Fox.

Blackstone Advisory Partners is managing the team sale process and as many as 15 parties have already signed confidentiality agreements as a first step in the bidding process, according to three sources familiar with the process.

Basketball legend Magic Johnson, hedge-fund titan Steven Cohen, media mogul Mark Cuban, California financier Ron Burkle, sports agent and Los Angeles businessman Dennis Gilbert, former Dodgers star Steve Garvey are among several parties who have signed confidentiality agreements, sources have said.

The bankruptcy court will oversee the sales process that will ultimately require MLB's approval.

The potential bidders all declined comment.

One source who is advising potential bidders said the field will be narrowed once the Dodgers send out detailed offering documents and the interested parties begin trying to firm up financing.

The team anticipates that initial bids will be submitted by January 13.

Terms of the settlement agreement filed on Tuesday stated that McCourt must sell the Dodgers and the stadium by April 30. Fox's Werkheiser said that date may have been chosen because it is the deadline for McCourt to pay his ex-wife $130 million in a divorce settlement.

The team filed for bankruptcy in June after MLB rejected McCourt's previous agreement to renew the television rights in a deal worth $3 billion. That agreement was struck with Fox, now the team's bitter adversary, which Judge Kevin Gross called a "tremendous irony."

The sale price for the team, one of baseball's most storied franchises, is likely to be among the highest in baseball history, although some experts said on Wednesday that the historic baseball franchise may not fetch the estimated $1 billion pricetag as the sale excluded key assets, like the parking lots.

"If this were the same assets in the same form that McCourt bought from the News Corp then I think we'd be talking $900 million to $1 billion," Andrew Zimbalist, a sports economist with Smith College in Northampton, Massachusetts.

However, Zimbalist said a number of factors will chip away at that price, estimating Dodgers Stadium will likely need renovations costing hundreds of millions of dollars.

McCourt bought the team in 2004 for $430 million, primarily financed with debt. Forbes magazine valued the assets at $800 million in March.

The bankruptcy case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No.11-12010.

(Reporting by Tom Hals in Wilmington, Delaware and Sue Zeidler in Los Angeles)

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