Contract provision is key in Dodgers-Fox-Time Warner Cable fight
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The outcome of the fight among Time Warner Cable, Fox Sports and the Los Angeles Dodgers over a new TV deal for the baseball franchise may hinge on a legal interpretation of a key provision in the current contract between Fox Sports and the team.
When News Corp.’s Fox Sports signed an agreement to carry Dodger games on its Prime Ticket regional sports network in 2004, it included a clause that prohibited the team from creating its own channel in partnership with Time Warner, Comcast Corp. or Walt Disney Co.’s ESPN.
Now Time Warner Cable is trying to land the Dodgers for its new regional sports network and Fox is crying foul.
Here’s the rub: When Fox signed its deal with the Dodgers in 2004, Time Warner Cable was a unit of Time Warner Inc. Five years later, Time Warner Cable was spun off from Time Warner, becoming its own publicly traded company.
It appears that Fox’s contract with the Dodgers was not amended to reflect that Time Warner Cable is now a separate entity, said people familiar with the agreement who declined to speak publicly about the ongoing legal issue.
Time Warner Cable probably will make the case that the provision does not apply because it is a separate company from Time Warner. Fox probably will counter that the intent of the contract is clear and that there is no loophole for Time Warner Cable to exploit.
The Dodgers are currently squaring off in U.S. Bankruptcy Court in Delaware against Fox. At issue is whether the team, which is currently in bankruptcy and for sale, can opt out of its pact and negotiate a new and more lucrative agreement with someone else.
Ultimately, the new owner of the Dodgers will have the final say on future TV deals.
There are two potential outcomes to the provision kerfuffle: Either a court will decide whether Fox or Time Warner Cable is right about the provision, or Fox will get a settlement from the Dodgers or Time Warner Cable.
Either way, the lawyers will clean up as usual.
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-- Joe Flint
