SBJ/May 1 - 7, 2006/This Weeks News

Is Liberty Media right fit for Braves?

Liberty Media’s impending purchase of the Atlanta Braves from Time Warner is being coolly received by the Braves organization, Major League Baseball insiders and industry analysts, with questions centering on whether the club is about to become the property of a distant, disengaged corporate owner and languish as a result.

Wall Street does not expect Liberty to be a long-
term and active operator of the Braves. The company,
led by John Malone (above), has made its name
by maximizing fiscal return and minimizing taxes
at every opportunity.
A Liberty acquisition of the club — part of a complex asset transfer worth more than $2 billion — could be announced as early as this week and place a value on the Braves in excess of $400 million. The extractable value for the club could, in fact, exceed the $450 million price that’s been set in the upcoming deal for the MLB-owned Washington Nationals.

One well-placed MLB executive, however, said the Liberty deal raises red flags for the potential future of the Braves, one of the baseball’s more storied and successful franchises.

“There are concerns about the length of holding and about a media company owning the team,” the executive said. “The structure and involvement of Liberty will be important factors. … This is something that will certainly bear close examination.”

Unlike the highly anticipated Nationals sale, which MLB hopes to put up for approval at its May 17-18 owners’ meetings, the Braves transaction would likely be placed on a longer timetable and be voted on later in the spring or early summer.

Industry sources close to the developing transaction said the Colorado-based holding company, which has extensive interests in cable TV, would endeavor to keep much of the team’s leadership structure intact, minimize visible change to day-to-day operations and not seek an immediate resale of the Braves. In particular, team president Terry McGuirk, a Turner Broadcasting employee who has minimal involvement with other company assets, and general manager John Schuerholz are expected to be invited to stay with the club, industry sources said.

Liberty officials declined comment. The company has not articulated an operating plan for the Braves to MLB, Time Warner or the public. Wall Street, however, does not expect Liberty to be a long-term and active operator of the Braves. The John Malone-led company has made its name by maximizing fiscal return and minimizing taxes at every opportunity.

“I certainty wouldn’t envision Liberty as a long-term owner of this team,” said Richard Greenfield, managing director of Pali Capital Research, which covers Liberty.

Corporate ownership has been an often-rocky affair within MLB, with baseball’s own control of the Montreal Expos-turned Nationals, News Corp.’s ownership of the Los Angeles Dodgers and Walt Disney Co.’s management of the then-Anaheim Angels all running into monetary or operational issues.

Time Warner’s ownership of the Braves also has diverted from the more hands-on approach seen by the likes of current Angels owner Arte Moreno and Mark Attanasio in Milwaukee. The Braves payroll has fallen from $106 million in 2003 to $90 million this year despite sharply rising national revenue within baseball and generally stable team attendance, and the forthcoming transaction originally stems from the club no longer being seen as a core asset in the eyes of Time Warner.

Clamor among Atlanta fans and team members has been strongly in favor of Atlanta Falcons owner Arthur Blank prevailing in the bidding war for the club. Star player Chipper Jones recently told Atlanta reporters, “When people are more concerned with the bottom line, you’re going to have your troubles competing with the big boys.”

But executives for Turner Broadcasting, the Time Warner division that oversees the Braves, said dollars, not emotions or management plans, are dictating the sales process.

“This is a corporate asset, and our duty is always to put the maximization of those assets first,” said Shirley Powell, Turner Broadcasting senior vice president.

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