Time Warner Cable (NYSE:TWC)
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NEW YORK (DOW JONES)--Time Warner Cable Inc. (TWC) would consider buying a stake in the Los Angeles Dodgers new ownership structure, in order to negotiate a broadcast deal for the team's future games and snatch the rights away from News Corp.'s (NWS NWSA) Fox Sports, people familiar with the matter said.
Such a deal, which would be aimed at securing a broadcast contract starting with the 2014 Major League Baseball season, highlights the lengths cable operators will consider taking in order to secure must-have sports content, which is their most expensive programming costs.
Getting a TV deal with the Dodgers would help Time Warner Cable build out its sports holdings in the Los Angeles market, where it is currently launching two regional sports networks. Last year, Time Warner Cable acquired the broadcast rights to the National Basketball Association's Los Angeles Lakers and other local teams. Adding Dodgers games to the lineup would help support viewing year-round with coverage of two iconic sports brands.
Meanwhile, the Dodgers' new ownership group--led by basketball legend Earvin "Magic" Johnson and backed by financial firm Guggenheim Partners--may welcome a cash infusion from another partner after agreeing to pay a pricey $2.15 billion for the team, nearly twice the previous record sales price for a U.S. sports franchise.
The buyer group also faces questions about its makeup and financing ahead of a confirmation hearing Friday in U.S. Bankruptcy Court.
Earlier this week, Fox sought a written affirmation in bankruptcy court to make sure that the undisclosed bankruptcy documents don't include a future rights deal with a rival like Time Warner Cable. Fox characterized the objection as "a routine administrative filing to ensure our rights are protected."
Fox said it remains interested in extending its broadcasting deal with the Dodgers and has some advantages in the upcoming talks, including an exclusive negotiating window that expires Nov. 30. The Dodgers could only pursue a deal with Time Warner Cable or other potential bidders if Fox turns down its final offer.
News Corp. has ruled out buying the team directly, but the Dodgers "is a business we like a lot," Chief Operating Officer Chase Carey told investors in February. Fox owns the rights to Dodgers games through the 2013.
Like Time Warner Cable, Fox has the cash to finance a multiyear broadcast agreement that could cost anywhere between $1.7 billion and $2.7 billion, according to reports.
News Corp. owns Dow Jones Newswires and The Wall Street Journal.
Another option for the Dodgers' new owners is partnering with additional financial investors and launching their own regional sports network, as the New York Yankees baseball team has already done, bankers and industry analysts said.
-By William Launder, Dow Jones Newswires; 212-416-3412; firstname.lastname@example.org