Talks could extend past deadline; TW Cable could offer rival bid
Fox has now offered a record $6 billion-plus over 25 years in its bid to extend its local cable rights deal with the Los Angeles Dodgers past 2013, but negotiations could extend past a Friday deadline for exclusive talks between the two.
As first reported by Deadline.com, Fox’s latest offer is worth an average of at least $240 million per year, nearly a tenfold increase over what Fox is paying in its current cable rights deal for the Dodgers and roughly triple what Guggenheim Partners paid to purchase the Dodgers in March.
Fox’s 45-day window for exclusive negotiations ends Friday, but sources indicate that talks have progressed far enough that they could extend into early December to complete what would be a complex financial transaction.
“The Dodgers and Fox have been longtime partners, and we’re in discussions now to extend that relationship well into the future,” Fox said in a statement. “We’re working hard to reach an agreement that achieves the goals of Dodgers ownership and also makes sense for our business. The discussions are private and ongoing, so out of respect for the process, we’re not going to comment further.”
As expected, Fox’s current offer tops its 20-year, $3 billion deal for the Los Angeles Angels in 2011, as well as Time Warner Cable’s $3 billion, 20-year deal for the Los Angeles Lakers (a deal with options that could increase it to $5 billion over 25 years). Though the Lakers get higher ratings, nearly three times as many Dodger games are available on local cable annually.
After Fox’s exclusive window expires, the company retains the right to match competing offers of equal or lesser value — following which point the Dodgers would be free and clear to accept any alternative bids, most likely from Time Warner Cable, which is interested in the Dodgers as a complement to its recently launched sports cable channels featuring the Los Angeles Lakers, soccer’s Los Angeles Galaxy and the Los Angeles Sparks of the WNBA, along with high school and college sports.
Meanwhile, Fox has sought to retain the Dodgers as the centerpiece of its Los Angeles sports offerings that also include the Angels, the NBA’s Clippers and the NHL’s Kings and Ducks. With the stakes already as high as they are, Fox would not welcome a bidding war with Time Warner Cable but would be unlikely to walk away from negotiations entirely even after the calendar turns to December.
While Fox’s latest offer demonstrates its determination to hang onto the Dodgers, Fox’s investment (worth $1.5 billion at the outset, with options for growth) last week in the YES Network, which has rights to televise the New York Yankees through 2042, offers an alternative area of focus.
The Dodgers also could choose to create a self-owned sports network, with or without Fox or Time Warner Cable as a partner.
Though a protracted carriage dispute between the Pac-12 Networks and DirecTV and Charter offers evidence to the contrary, recently completed carriage negotiations between Time Warner Cable with DirecTV and others (excluding Dish) to air the Lakers channels indicate that, as much as distributors balk at the soaring valuation of sports networks — costs of which may well be passed onto consumers, including those with no interest in sports — there is an overall level of acceptance of the rising dollars. Despite not making a World Series appearance since 1988, the Dodgers remain the second most popular franchise in Los Angeles behind the Lakers, and Guggenheim has kindled interest in the baseball team with its willingness over the summer to invest in big-name talent (buttressed by the anticipated TV dollars).