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May 05th
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Rupert Murdoch's News Corp scandal could mean trouble for U.S. sports partners

murdochRupert071811_optBY EVAN WEINER

The National Football League lockout may be winding down but NFL Commissioner Roger Goodell, the 31 franchise owners and the Green Bay Packers Board of Directors may be facing a much bigger problem in the very near future if Rupert Murdoch's media business problems in England spread across the Atlantic and hit News Corp properties in the United States.

Murdoch has taken a financial hit which has forced him to buy back a significant share of his company's stock. In the case of the National Football League and Major League Baseball, he doesn't have cable subscriber fees to help pay off the licensing fees to show games on over-the-air television. His cable TV properties have no such problems in that most of the ones that pay huge rights fees to teams are on the basic expanded tier which means all of the people who get basic expanded are paying for what a few watch. It is cable TV socialism that makes Rupert Murdoch's business work, a cable TV socialism bill in the form of a 1984 piece of Congressional legislation signed into law by President Ronald Reagan allows the bundling of cable channels to be sold as one to consumers.

The 1984 cable television legislation seems to be at complete odds with the free market principles espoused by Murdoch's news and financial channels but Murdoch is all about money, not ideology.

In 1993, Murdoch gave the NFL a huge amount of money after his company won bidding rights for National Football Conference telecasts and the marriage seems to have been a happy one for both sides. So much so that Murdoch agreed to help underwrite the 2011 NFL Lockout and provide the owners with money (along with General Electric's NBC, the Walt Disney Company's ESPN, Sumner Redstone's CBS and DirecTV) to get along if there was no 2011 NFL season.

That seems like gratitude but the NFL made that demand of over-the-air, cable and satellite TV networks in the last television negotiations and got the five TV partners to agree to their demands.

Back in 1993, the NFL got billions and Rupert Murdoch was able to get his FOX over-the-air television network (although technically FOX is a syndication arm) off the ground. The NFL gave Murdoch and FOX credibility and once Murdoch got that street cred, he was able to work on other United States projects including the launch of the FOX News Channel.

There has never been any hint of impropriety in Murdoch's sports businesses whether it was with over-the-air network contracts with the National Football League, National Hockey League, Major League Baseball, NASCAR and other properties including the Bowl Championship Series or his relatively brief ownership of the Los Angeles Dodgers at the turn of the century.

(Murdoch's FOX Los Angeles regional cable sports network recently worked a deal with embattled Dodgers owner Frank McCourt, some of the money would come out of subscribers' pockets would have gone to help pay the divorce settlement between Frank McCourt and his soon to be former wife Jamie. The deal was stopped by Selig but someone will eventually get big money for Dodgers TV rights from someone whether that someone is Murdoch or some other Los Angeles cable TV entity)

But make no mistake, Rupert Murdoch and News Corp is heavily invested in American sports and given his seemingly significant problems in London that include the folding of the News of the World newspaper, numerous arrests of News International employees, the resignation of the top cop at Scotland Yard in conjunction phone hacking scandal that is engulfing Murdoch's empire that could be a problem for Goodell, Major League Baseball Commissioner Bud Selig and others.

Do sports leagues want to be associated anymore with Murdoch and what happens if there are complaints about Murdoch's suitability to own TV stations in the United States? What happens to the rights deals that Murdoch's people have worked out with sports leagues and teams?


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