(Reuters) - Fox Sports and the Los Angeles Dodgers began preliminary talks in May on a multi-billion dollar cable TV deal, a person familiar with the talks said, the latest in a string of rich cable TV contracts for teams in the largest U.S. TV markets.
The talks would give the Dodgers the financial firepower for big player deals and began weeks before the major league baseball team went on a spending spree that included a high-profile August 25 trade with the Boston Red Sox in which the Dodgers assumed four player contracts valued at more than $260 million through 2018.
The Dodgers and Fox, a unit of News Corp, cannot formally begin talks until October 15, under terms of their existing TV contract, but the renewal being discussed includes joint ownership of English and Spanish language channels.
Fox would not comment. Representatives of the Dodgers and Time Warner could not be reached.
No financial terms were discussed, the source said, but both sides have acknowledged that any agreement would almost certainly exceed the 20-year, $3 billion agreement that former owner Frank McCourt struck with Fox in 2011. That deal was rejected by Major League Baseball commissioner Bud Selig in June 2011, and included a provision by which the Dodgers would own 30 percent of the channel. A new Dodger TV deal would take the place of the team's existing agreement with Fox, which expires at the end of the 2013 season.
That agreement could cost Fox, or a competing bid, $4 billion or more, said Marc Ganis, a Chicago sports consultant and president of SportsCorp Ltd who advised on the 2002 creation of the Yankees Entertainment and Sports Network.
LONG-TERM COMMITMENT
After preliminary talks with Fox began, the Dodgers acquired Miami Marlins star infielder Hanley Ramirez, whose contract calls for $31.5 million through 2014.
On Aug. 25, the Dodgers acquired Boston stars Arian Gonzalez and Carl Crawford, both of whom make $20 million a year, and pitcher Josh Beckett, who has a $17 million a year contract, according to Cot's Baseball Contracts.
The Dodgers were acquired in a deal announced on March 17 for $2.15 billion by a group headed by private investment firm Guggenheim Partners and including former basketball star Earvin "Magic" Johnson, Hollywood producer Peter Guber and Stan Kasten, a long-time baseball and basketball executive.
"Stan Kasten is one of the smartest guys in sports," said Ganis, the sports consultant. "He wanted to make sure he had a long-term TV commitment in the billions before he went out to make those deals."
The new deal being discussed by Fox and the Dodgers would mirror the 2011 deal signed by Time Warner Cable with the Los Angeles Lakers basketball team that replaced an existing Fox contract. Under that deal, Time Warner agreed to launch separate English and Hispanic language channels and to pay an estimated $2.5 billion over 20 years.
The two channels are scheduled to launch on Oct.1. Time Warner is expected to also bid for a sports channel with the Dodgers if Fox and the team are unable to the come to an agreement during Fox's six week long period of exclusivity that begins on Oct. 15.
© Thomson Reuters. All Rights Reserved