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Fox missed bigger picture in ill-fated loan to Dodgers owner Frank McCourt

April 25, 2011 | 12:32 pm

Sometimes one can be so caught up looking at the trees that they miss the forest.

That seems to be what happened to News Corp.'s Fox. The company was so worried about Time Warner Cable's plans to build a rival sports network in Los Angeles, it made an ill-fated choice to lend embattled Dodgers owner Frank McCourt $30 million so he could meet the team's payroll.

That loan, which was given a thumbs up by News Corp. President Chase Carey, was seen as a major factor in Major League Baseball Commissioner Bud Selig's decision to take over operations of the franchise.

"I have taken this action because of my deep concerns regarding the finances and operations of the Dodgers," Selig said last week.

Major League Baseball is none too happy with Fox for making the loan to McCourt. How the loan will affect Fox's relationship with Major League Baseball remains to be seen. Fox currently shells out more than $250 million for regular- and postseason baseball for the network. In addition to the Dodgers, whose games are carried on Fox's Prime Ticket channel in Los Angeles, Fox Sports also has cable TV rights to 14 other teams around the country.

Fox insiders say the loan was made because Time Warner Cable was trying to romance the Dodgers away from Prime Ticket to its new channel that is due to launch in 2012. Time Warner Cable had already snagged the Lakers away from Fox Sports West and was throwing money at the team for a marketing deal, hoping that would eventually clear the way for a TV rights contract.

Even given the legitimate concerns about Time Warner Cable, Fox's current deal with the Dodgers still had three seasons left on it. Furthermore, Fox and McCourt had agreed on a new TV deal to keep the team on Prime Ticket. Contrary to previous reports published in the Los Angeles Times and elsewhere, the new deal is not for 20 years at a price tag of $3 billion -- rather, it is a 13-year deal valued at $1.6 billion, a person familiar with the pact said. Major League Baseball had not approved that contract yet, but it was submitted to the league only a few weeks ago. Approval usually takes a couple of months.

Even with the new deal in limbo, Fox's current TV deal with the team gives Fox the right to match any competing offers. Odds are, that clause will remain in effect even if the ownership of the team changes.

In other words, there was no reason other than paranoia to lend McCourt money, especially since Fox had already advanced McCourt money on the current TV deal, much to the chagrin of Major League Baseball.

If Fox had not been so focused on Time Warner Cable, perhaps the company would have recognized just how fragile the situation between McCourt and Major League Baseball had become and kept its distance from him. Instead, it continued to prop up a guy who long ago lost the faith of the fans and now was losing support from the league as well.

On the other hand, maybe the league should be grateful to Fox. After all, the loan gave Selig a reason to pull the plug on McCourt, whom he clearly wanted gone.

-- Joe Flint

 

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