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Fox Sports and the Los Angeles Dodgers have settled their legal differences, enabling Fox to retain exclusive cable rights to the Dodgers for the remaining two seasons of their contract and removing the final impediment to the sale of the baseball franchise.
The settlement comes 2 1/2 weeks after Fox earned a favorable ruling from a U.S. District Court, overturning a federal bankruptcy court decision that would have accelerated the sale of the Dodgers' post-2013 cable rights.
''We are pleased that these matters between our two organizations have been resolved,'' Fox said in a statement. ''We were never in favor of litigation, but it was imperative that we protect our exclusive media rights. Under the terms of the settlement, Fox's media rights remain in place and we look forward to working with new ownership on future television rights discussions.''
Fox will now have an exclusive window to negotiate for a rights extension with the Dodgers through Nov. 30, well past the sale of the team by Dodger owner Frank McCourt that has a stipulated April 30 deadline.
''This agreement is a significant step towards a successful sale of the Los Angeles Dodgers,'' the bankrupt baseball team said in its statement. ''It resolves all of the parties' differences relating to the telecast rights agreement with Fox. This consensual resolution of all disputes between the debtors and Fox will enable the sale of the Dodgers to proceed forward, free of any uncertainty relating to the various issues under dispute, with the continued objective of maximizing value for the debtors and their estates.'' ...
... That leaves a new owner free to launch his own Dodgers cable channel starting in 2014, or leverage that threat into a bidding war between Fox and Time Warner Cable.
Under the settlement, Fox and the Dodgers agreed to withdraw the lawsuits each had filed against the other. Fox also agreed to end its various legal challenges to the Dodgers, including its motion to dismiss the team from bankruptcy for abusing the process and its claim to damages for the team's alleged violations of the current television contract.
Fox did not, however, release McCourt from his obligation to repay a $30 million personal loan provided by the company in April so that he could meet the first payrolls of the season.
That loan is secured by McCourt's malpractice claim against Bingham McCutchen, the Boston-based law firm responsible for the faulty marital property agreement upon which McCourt relied to establish his sole ownership of the Dodgers. The agreement was invalidated, and ultimately McCourt agreed to settle his divorce by paying his ex-wife $131 million by April 30.
Fox retained the right to challenge any sale of the team, in part or in whole, to Time Warner Cable. The settlement also clarified that Time Warner Cable is bound by a provision of the TV contract that hampers the ability of ESPN, Comcast or Time Warner to hold a share of a Dodgers' cable channel.