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Sources: Rupert Murdoch's News Corp. Weighing Bid on Rangers

Aug 2, 2010 – 9:01 PM
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Jon Weinbach

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The battle to buy the Texas Rangers may now include Rupert Murdoch (right).

Two people familiar with the situation confirmed to FanHouse that News Corp., the Murdoch-controlled media conglomerate that owns Fox Broadcasting Company, Fox Sports Networks, the Wall Street Journal and numerous other entities, is preparing a bid for the bankrupt Major league Baseball franchise. The Rangers are scheduled to be auctioned on Wednesday at a federal courthouse in Fort Worth, capping a drawn-out sale process that now includes several of the most influential figures in the sports business.

The Fort Worth Star-Telegram first reported News Corp.'s interest in the Rangers over the weekend, and as of late Monday, Fox executives were working the phones in discussions with Major League Baseball and with other prospective bidders for the team, according to a person close to the situation. The company's primary interest is maintaining the club's television rights. The Rangers' TV deal with Fox Sports Southwest, which is owned by News Corp., expires after 2014, and the media giant is concerned that a new owner may utilize the Rangers to launch a competing regional sports network.

A News Corp. bid for the franchise is "a last resort" if the company cannot reach an agreement with the other bidders about the Rangers' TV rights before the auction, according to one person familiar with the discussions. "It's less of a charge and more of an option," said the source.

An individual close to the the club's creditors, who have opposed the sale of the team to a group led by Pittsburgh attorney Chuck Greenberg and Rangers president Nolan Ryan, said late Monday that he sees "no reason why Fox wouldn't bid" on the club. "A lot of people expect [News Corp] to do it," he said.

It's not clear what assurances News Corp. is looking to get from other bidders, or if the company would enter its own bid for the team or join with another prospective ownership group. The expected bidders on Wednesday include Dallas Mavericks owner Mark Cuban, Houston businessman Jim Crane, as well as the Greenberg-Ryan group, which includes billionaire Ray Davis, a retired Dallas natural gas mogul. Jeff Beck, a Dallas real estate executive who was part of a previous group that tried to buy the Rangers, may also join one of the bids.

The last-minute interest from News Corp., which owned the Los Angeles Dodgers from 1998-2004, adds yet another chapter to a saga that has dragged on since last year, when the holding company of former Rangers owner Tom Hicks defaulted on more than $500 million worth of loans. In January, the Greenberg-Ryan group announced an agreement to purchase the team and real estate surrounding its stadium for $525 million, but the club's numerous creditors objected to the terms of the deal and blocked the sale.

The team declared bankruptcy in late May and has been relying on loans from Major League Baseball to cover payroll and day-to-day operations. (Among other debts, the Rangers still owe New Era Cap Company, MLB's official hat supplier, $106,595.64 for the team's 2010 supply of hats.)

Despite the ownership chaos, the Rangers are enjoying one of the best seasons in franchise history -- the club is currently in first place in the American League West and leads the second-place Los Angeles Angels by eight games going into Monday night's games.

In addition to Hicks, Cuban and News Corp., the cast in the Rangers' drama also includes Creative Artists Agency, which advised the Greenberg-Ryan group on the original purchase agreement, as well as influential investment banker Sal Galatioto, whose firm has been involved in numerous high-profile sports transactions. Galatioto's firm, which recently oversaw the $450 million sale of the Golden State Warriors, holds a portion of the Rangers' debt and is part of the bloc of creditors who opposed the Greenberg-Ryan deal.

For News Corp., keeping the Rangers' TV rights is critical to the future of the company's sports networks in Texas. In Houston, Fox's deals with the Houston Astros and Houston Rockets run through 2012 and 2013, respectively, but neither team has indicated whether it will sign a new deal. Fox is also facing in-state competition from Comcast, which already has regional sports networks in the Bay Area, Philadelphia and Chicago, and is looking to expand in Texas.

In late May, reports surfaced that the Astros and Rockets were close to signing a deal with Comcast, which would utilize those rights to create a new sports network in Houston. (The company already has a Houston-area sports network, Comcast Sports Southwest, but that channel owns no pro team's rights and is focused on college and local sports.) A Comcast spokesman told FanHouse the company has "been in discussions" with the Rockets and Astros, but that no announcements are pending about a new channel or TV rights deals.

Fox's Dallas network, Fox Sports Southwest, still has rights to the NBA's Mavericks and NHL's Stars. But looking ahead, the company's Texas channels face an uncertain future if they don't own the rights to three of the state's most prominent pro franchises - so buying the Rangers is the most decisive way to ensure content. That said, the company had a troubled reign running the Dodgers, and even if it wins Wednesday's auction, News Corp. would still have to be approved by 75 percent of MLB owners.

And approval is hardly a formality. MLB commissioner Bud Selig has repeatedly professed his desire for individuals and families -- not corporations -- to control franchises. In 2006, when the Washington Nationals were sold to a group headed by the family of Ted Lerner, Selig told reporters that he preferred individuals making decisions. When families have control, "there's continuity, there's stability," Selig said during a conference call. "You bet that's a very positive thing."
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