O’Malley and Murdoch Reported Close to Deal

Los Angeles Dodgers owner Peter O’Malley is close to a deal to sell his team and Dodger Stadium to media mogul Rupert Murdoch for more than $350 million, sources close to the talks said Monday, and O’Malley confirmed that he asked Major League Baseball to approve the negotiations.

O’Malley said he is negotiating exclusively with the media conglomerate controlled by Murdoch and has asked baseball’s executive council for permission to continue the talks, in keeping with league rules governing ownership changes. Approval is expected today and a deal could be presented next month for league approval.

For Murdoch’s News Corp., which owns the Fox television network and regional cable channels, purchase of the Dodgers would provide the foundation for a Los Angeles-based sports juggernaut that could eventually include a new pro football team and possibly an ownership stake in a local basketball franchise, according to sources close to the company. Under terms of the deal, Murdoch would pay about $400 million for Dodger Stadium and the team.

News Corp.’s bid is part of a growing trend toward corporate ownership of sports properties, putting the media group into the same league as rivals Walt Disney Co. and Time Warner Inc., which each control two professional sports teams.

Corporate ownership is on the rise because sports teams, by themselves, do not generate huge profits. But broadcasting games and selling sports merchandise can make ownership by media companies a gold mine.

Analysts say News Corp. would aggressively market the Dodgers with increased television exposure, merchandising deals and a Dodger Stadium upgrade that would include lucrative luxury boxes that are a standard feature at many venues.

A final deal with News Corp. could be presented for approval at the league owners’ quarterly meeting June 10-12 in Philadelphia. The deal would require 75% approval among owners.

Most likely, however, transfer of ownership would take 45 days to three months--until July or August. At that time, baseball owners are expected to meet again for an update on the search for a new commissioner.

“We’re in the fifth month of what we expected to be a six-month process and I am pleased that it has not been a distraction to date. For that I am grateful,” O’Malley said in a statement Monday.

Although sources indicated that Murdoch and O’Malley are close to a deal, O’Malley’s future role with the team has not yet been discussed. O’Malley, president of the Dodgers for 27 years, and other key executives may remain as part of the management team.

But in an interview with The Times last week, O’Malley said he wanted time away from the Dodgers after a sale to reflect on his career with baseball.

While O’Malley had failed to win city approval to build a professional football facility next to Dodger Stadium, sources said News Corp. could make it happen. Murdoch may have leverage as a corporate taxpayer and employer and as a political contributor. In Los Angeles, his holdings include Fox Broadcasting Co. and 20th Century Fox studios. And billionaire Murdoch is a generous contributor to the Republican Party, giving the state GOP $1 million last fall. Such donations have helped him to win favored treatment with Congress and with New York City Mayor Rudolph Giuliani.

Los Angeles Mayor Richard Riordan, also a Republican, seemed enthusiastic at the prospect of News Corp. ownership. He called Australian-born Murdoch “a very loyal resident of Los Angeles for a number of years now,” adding that Murdoch is “a very quality human being.”

National Football League sources said that while Murdoch could build a football facility on the Dodger property, they would prefer that he not own the team because Fox also televises NFL games.

Other football team owners could be hurt if Murdoch uses his ownership clout with the league to hold down prices for broadcast rights to benefit Fox.

But media sources say Murdoch wants professional sports teams largely so he can sit on both sides of the bargaining table--as team owner and buyer of broadcast rights to their games. In addition to NFL games, News Corp. broadcasts Major League Baseball games on both the Fox network and the FX cable channel. Dodger games are currently aired regionally on News Corp.’s Fox Sports West 2 cable channel.

Rising costs of obtaining rights to televise games, driven up in large part by Fox, have made sports broadcasting a loss-leader for television networks and cable operators. Fox, for example, has been losing an estimated $100 million a year or more on its unprecedented four-year, $1.6-billion package with the NFL, sources say. Fox has been able to exploit its valuable NFL viewership to promote other network programming.

But as an owner, Fox would in effect be paying itself for broadcast rights, thus not hurting its bottom line for high fees.

Murdoch has seen sports as the cornerstone of his worldwide television strategy. The contract with the NFL helped give instant credibility to Fox. Exclusive sports rights have made News Corp.’s British Sky Broadcasting satellite service the dominant pay television provider in the Great Britain.

While Murdoch has been aggressive in acquiring sports rights, he has not been successful in buying a team. Competitor Disney owns the Mighty Ducks hockey club and the Angels baseball team, both in Anaheim. Through its purchase of Turner Broadcasting System, Time Warner owns two teams, the NBA’s Atlanta Hawks and baseball’s Atlanta Braves.

Both Disney and News Corp. have tried unsuccessfully to buy the Los Angeles Clippers basketball team. Sources say that Murdoch is trying to buy a piece of the Los Angeles Lakers.

News Corp. and Disney are in a heated competition for cable sports dominance. Murdoch is trying to take on Disney-owned ESPN through Fox Sports Net, which owns eight regional sports networks, including the local Fox Sports West.

Owning any team would put Fox Sports West on more solid footing against encroaching rivals, such as Disney, whose teams make it a potential powerhouse in Southern California. Fox Sports, in fact, was so fearful of a Disney threat that it recently paid excessive fees to tie up Clippers games, sources said.

In Philadelphia, the purchase by cable company Comcast Corp. of the NHL’s Flyers and NBA’s 76ers last year highlighted the importance of team ownership. The cable company started its own regional sports network to air Flyers and 76ers games, severely weakening the dominant SportsChannel network.