Fox seeks stay of ‘legally unprecedented’ TV-sale order

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Fox Sports asked Wednesday that the Dodgers be barred from selling their television rights pending an appeal of what the television company called “a legally unprecedented order that is economically disastrous for Prime Ticket and completely unnecessary to the upcoming team sale.”

U.S. Bankruptcy Judge Kevin Gross ruled last week that the Dodgers could sell their television rights along with the team, despite a contract with Fox that prevents the team from negotiating with another broadcast outlet until Nov. 30, 2012.

“Although it is black-letter law that a bankruptcy court cannot rewrite a debtor’s contract ... the bankruptcy court did exactly that,” according to the Fox filing in U.S. District Court in Wilmington, Del.

Gross agreed with the Dodgers’ position that advancing that date to Jan. 19 was “not material” to the contract and could help command a higher price for the sale of the team, which owner Frank McCourt must complete by April 30.

In its filing, Fox asserted the contractual rights at issue were crucial to the company’s chances of retaining the Dodgers’ television rights. In an echo of an argument that failed to sway Gross, Fox claimed that an early negotiation would increase the likelihood of the company losing the Dodgers’ rights and ultimately closing Prime Ticket, triggering a damage claim that could threaten the team’s ability to repay its creditors.

“This will result in Prime Ticket asserting a ... claim of at least $1 billion, which will render the debtors’ estates insolvent and destroy any hope of rehabilitation,” according to the Fox filing.

Prime Ticket is worth about $1 billion, former Fox Sports Networks President Robert Thompson testified last week in Bankruptcy Court. A creditors’ committee endorsed the Dodgers’ plan to market their television rights.

The Dodgers plan for Gross to hold a hearing at which any damages could be estimated, enabling the team to halt the sale of television rights if the damages would be too great. Fox asserted that Gross had “no authority” to give the Dodgers “an advance screening of the financial consequences flowing from a contractual breach.”

Even if Gross had the authority to redo the contract, he had no basis to do so, Fox argued. The team should sell for more than enough money to repay creditors, Fox claimed, with no need to tamper with the current contract.

“Solvent debtors ... cannot use the Bankruptcy Code as a sword to inflict pain upon a single creditor,” the Fox filing read.

If McCourt really needed more money, Fox said, he should have revived the long-term contract he negotiated last spring with the company, valued by McCourt at $3 billion and rejected by MLB Commissioner Bud Selig.

“If the [Dodgers] truly needed to sell the future telecast rights, they could simply follow through with their [pre-bankruptcy] agreement to sell the rights to Prime Ticket for an initial payment of $385 million,” the Fox filing read. “The [Dodgers have] repeatedly touted the benefit of that very deal.”

It is possible that the Dodgers and Fox could reach a settlement that would revive that long-term contract, although the value assuredly would be higher and the deal would be subject to acceptance by a the team’s buyer. Still, for Fox to argue that the Dodgers could “follow through” with the spring proposal rings a bit hollow, because Fox pulled that proposal off the table before McCourt could present it to the Bankruptcy Court.

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-- Bill Shaikin