Fox Sports won a key victory in its battle with the Los Angeles Dodgers that could cut the value of the bankrupt baseball team while putting the News Corp unit in a powerful position to renew its telecast rights.
Fox persuaded a judge to temporarily halt the team's plan to sell the media rights to games starting in 2014 - rights that were expected to be worth billions. Putting that process on hold likely will have a major impact on an auction of the team that starts next month.
U.S. District Judge Leonard Stark in Delaware on Friday granted Fox's request for an emergency stay of a bankruptcy court ruling. The judge indicated he is likely to reverse the lower court at a hearing on January 12.
The bankruptcy court had found that protections in Fox's contract with the Dodgers were unenforceable, and kicked off a sale of the Dodgers media rights 10 months ahead of schedule.
The Dodgers have been in bankruptcy since June and want to sell the rights to future games as a way to boost the value of the team before it goes up for sale next month.
"This is a great Christmas gift to Fox," said Marc Ganis, president of Sports Corp Ltd, a sports consultancy not involved in the Dodgers case.
Ganis said that the team will be seen as less valuable if the media rights do not go up for sale. Many potential bidders for the Dodgers were counting on the media rights auction to help finance bids for the team that were expected to top $1 billion.
Ganis said he expects the Dodgers to now seek a deal with Fox that would allow the broadcaster to renew its telecast rights. In turn, Fox may play a role in the sale of the team by providing funding to potential bidders, he said.
Stark said in his order he would issue an opinion on Tuesday explaining his decision. The Dodgers declined to comment on the order, saying they were awaiting the opinion.
The Dodgers agreed last month to auction the team to help end a feud between team owner Frank McCourt and Major League Baseball's commissioner, Bud Selig. In return, baseball agreed to allow McCourt to sell the media rights.
The Dodgers and Fox had a rights deal for future games in hand in June, but Selig shot it down. Days later the Dodgers filed for bankruptcy, unable to make payroll.
The bankruptcy case is In re: Los Angeles Dodgers LLC, U.S. Bankruptcy Court, District of Delaware, No. 11-12010.
The appeal is U.S. District Court, District of Delaware, No. 11-cv-1235.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Gary Hill)