SBD/September 19, 2011/Media

Dodgers Seek Bankrutpcy Court's Approval To Sell TV Rights

The Dodgers late Friday filed a motion with the U.S. Bankruptcy Court for the District of Delaware to begin marketing their cable TV rights, shifting the case at its core and likely setting up dramatic conflicts with MLB and Fox, the team's current rightsholder. The TV rights are also the key instrument Dodgers Owner Frank McCourt intends to use to pay off his creditors, emerge from bankruptcy and retain ownership of the team. The filing outlines a proposed 45-day exclusive negotiating window with Fox, followed by a wider auction of at least 60 days that the Dodgers believe will attract the likes of Charter, Time Warner, DirecTV, Dish Network and others. The club remains open to both a standard rights deal or the creation of a "Dodgers-branded RSN." Fox's Prime Ticket currently holds a 45-day exclusive negotiating period beginning Oct. 15, 2012 in a rights deal that currently last through the '13 season. But the Dodgers argue in the latest filing that the current market for TV rights is so frothy that waiting would not be in their best financial interests. "Market conditions are optimal for licensing the telecast rights because the market for sports media rights in Los Angeles is vibrant at this time," the filing reads, citing in part the recent mammoth deal Time Warner struck to launch two Lakers-anchored RSNs. "There can be no assurance that these ideal market conditions will last, however." Fox additionally only would have limited protections in the new structure, as a deal struck in the initial phase would qualify Fox only for the second round and establish a new floor for bidding. 

MUCH NEEDED BOOST: The club also said in the filing that Dodgers Stadium attendance, currently in sharp decline, will be slow to recover and other sources of revenue such as radio rights and merchandising are largely tapped. Still, the Dodgers project that the TV rights auction will allow the club to emerge from bankruptcy next year and hold "excess cash of more than $175 million as of the end of 2012." A hearing will be held on the motion on Oct. 12 in Wilmington, Del. The move also promises a battle with MLB, which has already rejected three separate proposals from the Dodgers to extend their rights deal with Fox. The club said in its motion it is "hopeful" that MLB Commissioner Bud Selig will approve a deal this time, and will be satisfied that McCourt is maximizing the value of the club's TV rights and is not conflicted by his ongoing divorce or prior issues meeting payroll. But the Dodgers added, "if [Selig] does not act in good faith in declining to approve the successful bid or back-up bid, [we are] prepared to demonstrate that this court should nonetheless authorize [us] to consummate the transactions."
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