News' sports spree
Murdoch taking control of Fox/ Liberty for $1.4 bil
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Announcement of the deal could come as early as today. News Corp. and Malone's Liberty Media declined to comment.
But one insider says Murdoch is eager to take complete control of the regional sports-network biz in the U.S. so he can try to drive down the cost of local cable rights fees to professional sports teams. These escalating rights fees have made it harder for owners of regional sports nets to make a profit.
Malone cleaning house
The motivation of Malone, according to Paine Webber media analyst Chris Dixon, is to simplify Liberty Media's portfolio, which has tended to be undervalued on Wall Street: The company owns equity stakes in so many cable networks that analyzing its assets becomes a bookkeeper's nightmare.
Murdoch is also negotiating with Cablevision Systems to buy out CSC's stake in sports regionals covering New England, Ohio, Chicago and the Bay Area. In exchange, Fox/Liberty would hand over to CSC its ownership position in all of CSC's assets in New York. These assets include the Madison Square Garden Network, Fox Sports New York, the New York Knicks and Rangers, the MSG arena and Radio City Music Hall. CSC wants to keep these Gotham holdings because the company owns cable systems in the area reaching more than 2 million subscribers. A CSC spokesman refused to comment on these negotiations.
Control of sports nets
In the Fox/Liberty deal, Murdoch would get 100% ownership of 10 regional sports nets branded under the umbrella name Fox Sports, including Fox Sports West 1 and 2. It would also get the general-entertainment FX cable net and, among other operations, minority stakes in cable channels Speedvision, Outdoor Life and the Golf Channel.
"Murdoch has such confidence in his sports product that he feels secure enough to sever his relationships with cable operators," which have helped to make his sports nets successful by slotting them on their cable systems, said Neil Pilson, a sports consultant and former prexy of CBS Sports. CSC is the sixth largest cable operator in the U.S. Malone will soon be a former cable operator once AT&T completes its takeover of Malone's Tele-Communications Inc.
Taking on ESPN
Pilson said Murdoch's regionals could become tough competitors to ESPN by ramping up the sale of ad spots during the primetime games of professional sports teams on all of its regional sports channels -- what the industry calls an "unwired network."
These games would potentially be of more interest to local fans than a national game transmitted by ESPN. Through his unwired network of regionals, Murdoch could end up more than doubling the ad revenues of ESPN on any given night, Pilson said.
