Thursday, December 08, 2011

BK Judge to Allow Faux Sale of TV Rights

This is big news in the Bankruptcy case. The U.S. Bankruptcy Judge Kevin Gross agrees to allow the Dodgers to sell the TV rights- to the consternation of Fox. Via Steve Dilbeck at LA Times. Furthermore,

Fox Sports now has until Jan. 14 to negotiate a new television contract with the Dodgers, after which the team can entertain bids from other potential broadcast partners.

However, Fox plans to seek a 14-day stay of Gross' ruling and file an appeal as well, Fox attorney Gregory Werkheiser said.

Dodgers attorney Bruce Bennett said he hoped to reach an agreement with Fox that would satisfy the company that it could pursue a stay and proceed with negotiations at the same time. The parties are expected to resume mediation as well.

This likely means a huge sales price for McCourt, while allowing him the ability to retain ownership of the parking lots, and (assuming Fox does not sign a new contract) could potentially open up a lawsuit against the new Dodgers owners for damages if Fox's Prime Ticket folds shop. Here's the kicker, though, according to the LA Times article.
The bidder would not be obligated to proceed with that contract.
So, since there is no real obligation to accept the contract negotiated during the BK process a second bidding process for the TV rights might be in order after the conclusion of the sale of the team, and/or a lawsuit enforcing the original TV contract that provides Fox a 1st right of refusal.

In other words, the TV Rights sale is no sale at all. It is only a mechanism to allow the future owner to have a better idea what the value of those TV Rights are in a open bidding process.

Does that sound right?

UPDATE: Official statements from both sides can be found here.

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