The Dodgers Thursday night in bankruptcy court won the right to pursue an accelerated auction of their cable TV rights, a major victory for the team in its ongoing legal battle with FSN. Following an often-combative, two-day hearing in the U.S. Bankruptcy Court for the District of Delaware, Judge Kevin Gross said he is permitting the Dodgers to start marketing the rights nearly a year ahead of an exclusive renegotiation period that was to begin next November. Gross said he is "satisfied the proposed modifications are non material" with respect to potential damages to FSN. Gross: "That to me is the key." He also cited the support of the Dodgers' creditors, who owe at least $599M, in the new timetable as another important factor in his decision. Under the hastened schedule, FSN will have an exclusive window lasting until Jan. 14 to negotiate a potential new Dodgers rights deal. Following that period, the club can solicit bids from other suitors. The next owner of the Dodgers, however, would not automatically be bound to take that deal. Rather, the marketing of the rights now is designed to identify and isolate the future value of those rights and, in turn, boost the overall sales price to team Owner Frank McCourt. "This critical information will make clear the enhanced value of the Dodgers and we expect that this will result in a purchase transaction of the Dodgers that will maximize the value of the estates and achieve maximum long-term return success," the club said in a statement.
MORE LEGAL BATTLES COMING: Despite Gross' ruling in favor of the Dodgers, more legal battles are coming. A formal written decision from Gross will not arrive until early next week. And Fox said they will immediately pursue a 14-day stay before the order goes into effect, as well as an appeal, likely in district court. "While we are disappointed in the judge's decision, we understand the court process and will appeal this decision to protect our contractual rights," Fox said in a statement. "Those rights are material and valuable, and the current owner accepted them as binding when he purchased the team in 2004." Thursday's proceedings focused mainly on expert witness testimony from veteran sports TV exec and consultant Ed Desser, and former Fox National Cable Sports President Bob Thompson. Desser testified that the Dodgers' cable TV rights fees from Fox, scheduled to be $36.9M next year, could easily surpass $100M per year in a new deal. Thompson said a change to FSN's back-end contract rights with the Dodgers could heighten the chance of the net losing the rights, and in turn threaten the very existence of Prime Ticket, which earns $70M in annual profit thanks in large part to the club. FSN agreed to pay the Dodgers more than $300M between '04 and '13 as part of an extension signed when McCourt bought the club. But had he known the back-end rights would be altered, Thompson said the cable rights would be worth "at least 25% less." Thompson also suggested the Dodgers could be liable for up to $1B in damages should Prime Ticket cease operations (Eric Fisher, SportsBusiness Journal).
WAR OF THE WORDS: In L.A, Joe Flint wrote, "You can tell a fight is getting ugly when the companies involved stop hiding behind anonymous quotes and come right out and say what's on their minds -- on the record." That is "what is starting to happen with Fox Sports and Time Warner Cable in their battle to see who will end up with the television rights for the Los Angeles Dodgers." FSN VP/Communications Chris Bellitti said Thursday, "The contract, which was written in 2004, states the Dodgers are restricted in partnering with 'Time Warner' in an RSN and both sides have always, up to today, acted consistently with the understanding of the meaning that Time Warner Cable is restricted from making a media rights deal with the Dodgers." Flint noted while Fox is "charging the mound, Time Warner Cable is staying in the dugout. For now" (LATIMES.com, 12/8).
