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WILMINGTON, DEL. (AP) - A bankruptcy judge in Delaware on Wednesday approved a settlement between the Los Angeles Dodgers and Fox Sports that clears the way for the sale of the team.
The settlement, reached late Tuesday and quickly approved at a brief court hearing Wednesday morning, ends a contentious legal battle between the ball club and Fox.
Fox Sports attorney Greg Werkheiser said Fox was glad to have resolved its differences with the Dodgers, and attorneys for Major League Baseball and the Dodgers' committee of unsecured creditors told Gross they support the settlement.
The settlement was reached with the help of a court-appointed mediator after a federal district court judge said last month that Fox likely would win an appeal of a ruling by Gross that authorized the Dodgers to begin a process to market the media rights to future games starting in 2014.
Under the settlement, the Dodgers will abide by the terms of the existing contract with Fox. That contract gives Fox an exclusive 45-day period starting in October to try to negotiate a contract extension with the Dodgers. The contract also prohibits the Dodgers from talking to other potential buyers of the media rights before Nov. 30 and gives Fox a limited right of first refusal on competing offers received after that date.
Gross had ruled that those “no-shop” provisions were unenforceable in bankruptcy and approved a marketing process that moved up the exclusive negotiating period by about 10 months. That would have forced Fox to try to strike a new deal with the Dodgers this month and made any agreement subject to approval by the successful bidder for the team, a condition Fox said would decrease its leverage in negotiations.
The Dodgers backed away from that position after U.S. District Judge Leonard Stark, granting a stay in an appeal by Fox, indicated that Gross likely erred in approving the media rights marketing process. Stark’s decision threatened plans to sell the team by an April 30 deadline called for in an agreement between the Dodgers and Major League Baseball.
“We’ve learned that the bidders for the team fully appreciate how lucrative the team’s future media rights are in the current market,” Levinson said Wednesday, adding that the Dodgers are far more confident now than they were last year that the full value of the media rights will be reflected in the sale price for the team.
The Dodgers sought bankruptcy protection in June after baseball Commissioner Bud Selig rejected a new TV deal with Fox that team owner Frank McCourt was counting on in order to make payroll and keep the franchise solvent. After the bankruptcy filing, attorneys for Selig successfully fought to force the Dodgers to accept bankruptcy financing from Major League Baseball, arguing at the same time that McCourt had looted more than $180 million from the team for his own use and for business reasons not related to baseball and should be forced to sell the team.
The Dodgers, meanwhile, threatened to seek court permission to sell the media rights in bankruptcy without the approval of MLB.
But after battling for several months, MLB and the team reached an agreement in November that called for a sale of both the team and the media rights. The April 30 sale deadline in the settlement coincides with the deadline for McCourt to pay $131 million to his ex-wife, Jamie, as part of their divorce settlement. The judge also approved the settlement with MLB on Wednesday, with Fox having agreed to drop its objections to it.
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