Fox's Murdoch may acquire baseball's celebrated Dodgers

Journal Record, The (Oklahoma City), May 14, 1997 by Dave McNary Los Angeles Daily News

LOS ANGELES -- Rupert Murdoch, billionaire chairman of News Corp., is the leading candidate to buy the Los Angeles Dodgers because the baseball team fits well with his strategy of building a worldwide sports empire.

Analysts believe Murdoch and Dodgers owner Peter O'Malley, who put the team up for sale in January, are likely to conclude a deal within a few months. O'Malley confirmed he is negotiating with News Corp., in a deal reportedly worth at least $400 million.

By buying the Dodgers, News Corp. would own one of the world's most high-profile sports franchises and obtain a reliable source of programming for its television networks, according to John Mansell of media consultant Paul Kagan Associates. "The speculation has always been that Murdoch was the logical buyer, and it makes a lot of sense for a lot of reasons," Mansell said. "There's always a need for more programming, and it's easier when you've got your own and don't have to pay for it." Such a deal would place ownership of one of baseball's top performers in the hands of a worldwide conglomerate based in Australia. It could also launch baseball -- which has been rebounding somewhat in popularity after the 1994 players strike -- into international markets to a far greater degree. Analyst David Davis noted that the Dodgers already have a strong array of foreign stars with Hideo Nomo from Japan, Chan Ho Park from South Korea, Ismael Valdes from Mexico and Raul Mondesi and Pedro Martinez from the Dominican Republic. "I was at the Stadium Saturday night, and there were thousands of Koreans there because Park was pitching," said Davis, with the investment bank of Houlihan, Lokey, Zukin and Howard. "I think the Dodgers are the most international team in major American sports." Davis said buying the Dodgers would also bring higher ratings in the United States for Murdoch's Fox Television, since the team has usually been at or near the top of the standings. "With the Dodgers, there are a lot of opportunities for cross-promotion," he said. Three major-league baseball teams are owned by media conglomerates -- Walt Disney Co. owns the Anaheim Angels, Time Warner Inc. owns the Atlanta Braves, and Tribune Co. owns the Chicago Cubs. Other possible buyers of the Dodgers mentioned this year have included entertainment conglomerate Viacom Inc., Universal Studios owner Seagram Co. and former baseball commissioner Peter Ueberroth. But analysts believe News Corp. has the greatest motivation to buy the team, which has been controlled by the O'Malley family since 1950. "Murdoch is really the only logical buyer left," said Arthur Rockwell, director of institutional research at Yaeger Capital Markets in Los Angeles. "What we're talking about is control of programming. People used to think Ted Turner was a fool for owning the Atlanta Braves baseball team and the Atlanta Hawks basketball team, and it turned out to be an inexpensive source of programming." When he put the team up for sale, O'Malley said the changing economics of sports was bringing about an end to the era of family ownership. Rockwell agreed, saying that individual owners would have difficulty competing for massive distribution fees and taking advantage of the lucrative potential from installing luxury boxes at stadiums. Murdoch has not previously owned a sports team, but Rockwell said the recognizability of the Dodger name, domestically and overseas, makes it attractive to News Corp. "It may be the most valuable sports franchise after the New York Yankees," he said. "I don't think anyone expected it to be on the block. This is a unique franchise and it's where the action is." News Corp. already owns Fox Television, 20th Century Fox and TV Guide and has controlling interest in British Sky Broadcasting and Star TV in Asia. Murdoch stunned the sports world in late 1993 by obtaining the rights to broadcast National Football League games for $1.56 billion over four years, outbidding CBS, then cut a deal with Major League Baseball that led to its first World Series broadcast last fall. News Corp. has also been snapping up sports broadcasting rights around the globe. Despite News Corp.'s $6.7 billion debt load, Murdoch has been continuing to expand in satellite TV through joint ventures with Echostar Corp. domestically and with Softbank Corp.in Japan. Besides the team, the Dodgers assets include Dodger Stadium, Dodger Town in Vero Beach, Fla., and Campo Las Palmas in the Dominican Republic. O'Malley has said his decision to sell stemmed from wanting to avoid inheritance taxes and from his frustration over failing to convince the Los Angeles City Council to back his efforts to build a separate football stadium near Dodger Stadium. Mansell said he believes Murdoch would eventually build new baseball and football stadiums at Elysian Park despite Mayor Richard Riordan and the Los Angeles City Council favoring the Coliseum as a site for a football team. Rockwell agreed, saying, "I think the kid gloves would come off," he said, referring to Murdoch's reputation for being a tough negotiator. Jack Kyser, an analyst with the Los Angeles Economic Development Corp., said a deal with Murdoch also would underscore the growth of professional sports as part of the entertainment business. "If you're News Corp., you want a variety of weapons in your arsenal," he said. "The Dodgers may not be a cheap source, but they're very powerful. I can see the broadcasts doing very well in places like Japan and Korea."