Posten on the ACTV (IATV) THREAD
Newsday Article
TV Giants Look to Boost Stakes / Cablevision, Murdoch
reportedly mull deals to up sports coverage
Newsday
[ Cablevision Systems Corp. ] may negotiate a
deal to increase its controlling stake in Madison
Square Garden and the New York Knicks and
Rangers by acquiring the stake held by Rupert
Murdoch's News Corp., the Los Angeles Times
reported yesterday, citing sources close to
Murdoch.
Such a move would follow a deal that Murdoch
has made to buy out cable maverick John
Malone's [ Liberty Media ] in their Fox / Liberty
partnership, the Times said. That deal would give News Corp. control of a
group of regional cable networks, while doubling its stake in the Garden, the
New York teams, Radio City Entertainment and other related holdings
controlled by Bethpage-based Cablevision, the Times said.
Liberty Media would get $1.4 billion of stock in Australia-based News
Corp. in the deal with Murdoch. The deal underscores Murdoch's ambitions
to dominate world sports entertainment.
The Times said the Liberty deal could be a precursor to a similar transaction
between News Corp. and Cablevision, which has been trying to increase its
cable, sports and entertainment holdings in the New York metropolitan area,
where 80 percent of its 3.4 million cable subscribers live. The cable operator
joined the Fox / Liberty family in late 1997, bringing a complement of sports
channels to the partnership needed to achieve the national reach to go
head-to-head with ESPN.
Together, the three partners' 28 regional sports networks have rights to air
games of 69 of the nation's 75 major-league baseball, hockey and basketball
teams.
One source told the Times that Cablevision might be interested in selling
News Corp. its interests in the regional sports networks outside New York
in exchange for gaining more control of Madison Square Garden, MSG
Network, Fox Sports New York, the two professional sports teams, Radio
City Entertainment, a production company and a long-term lease for Radio
City Music Hall. Fox / Liberty and Cablevision jointly own seven regional
sports channels, which the cable company controls.
Cablevision's stakes in the Madison Square Garden and Fox Sports
holdings are worth a total of $4.4 billion, according to Jessica Reif, a media
analyst at Merrill Lynch.
If Murdoch does not drop Fox's expanded Madison Square Garden stake,
the stepped-up ownership of the New York Rangers and New York
Knicks could prevent News Corp. from exercising options to buy stakes in
the Los Angeles Kings and Los Angeles Lakers under National Hockey
League and National Basketball Association ownership rules. The leagues
do not permit ownership in more than one club within a league.
Bob Gutkowski, a former president of Madison Square Garden, told
Newsday a Murdoch-Cablevision deal would make sense for both
companies. "The regional sports channels outside of New York probably
were more important to Cablevision at one point, but its primary
concentration is now in New York," he said.
Alternatively, given the potential conflict with the NBA and NHL over dual
ownership, Gutkowski said, Fox might seek to work out a deal with the two
leagues. "If they can't, and if they could work out something with Cablevision
to assure that Fox is branded in New York and Fox New York is included
in Fox's national advertising, it could work for Murdoch, too," he said.
A Murdoch-Cablevision deal could also fit in with a spinoff of Cablevision's
Rainbow Media affiliate, which analysts say is possible.
Fox / Liberty owns nearly 40 percent of Madison Square Garden and the
related properties, while Rainbow Media owns nearly 60 percent.
News Corp., Liberty Media and Cablevision officials all declined to
comment.
The Murdoch-Malone deal would enable Murdoch to be freed from the
management constraints of the more conservative Liberty Media, sources
told the Times, allowing him to spend more aggressively in building the
sports empire that is a cornerstone of News Corp.'s global expansion.
Last year, News Corp. bought the Los Angeles Dodgers. Murdoch also
obtained options for 40 percent of the Los Angeles Kings hockey club and
10 percent of the Los Angeles Lakers basketball team to prevent his biggest
rival, [ Walt Disney Co. ] 's ESPN, from gaining local programing rights to the
teams.
Under the deal with Liberty, News Corp. would take control of 100 percent
of Fox / Liberty Networks, which was formed in 1995 to challenge ESPN's
stronghold over sports television. The partnership's assets include the FX
entertainment channel, a dozen regional sports networks and interests in
more than 15 additional regional sports channels, as well as in cable
networks including Speedvision, Outdoor Life Network and the Golf
Channel.
Liberty would become one of News Corp.'s largest shareholders, with a 5
percent equity interest, adding to Malone's already significant entertainment
holdings, which include 10 percent of [ Time Warner ] , 21 percent of USA
Networks Inc., 16 percent of United Video Satellite, 49 percent of
[ Discovery Communications Inc. ] and 43 percent of [ QVC Inc. ] |
