Murdoch unit makes push into sports arena.

Idea behind venture is to compete with ESPN 

Rupert Murdoch continued his long march into the world of sports programming last week, announcing a joint venture with cable television giant Tele-Communications Inc. to create a global sports programming service to compete with ESPN.

The deal brings together two media powerhouses: Murdoch, whose News Corporation Ltd. owns Fox Broadcasting Co., and TCI Chairman John Malone, whose 12 million cable television subscribers can often make or break a cable network launch.

The idea is to license rights to sporting events worldwide and to create sports programming, then plug that into each company's existing distribution pipeline worldwide. Besides their respective U.S. operations, TCI has cable holdings in several foreign countries, while News Corp. has built up a powerful satellite TV delivery business in Europe, Asia, South America and Australia.

The move represents what Mike Adler, entertainment attorney with the Century City-based law firm of Mitchell, Silberberg & Knupp, called the "shelf space strategy" employed by both Murdoch and Malone.

The distribution pipeline is in place, Adler said. Now is the time to start bringing products through it, and sports is a good product in the international market.

Sports: Growth business

"The number of sports seems to be expanding," Adler said, "and sports is an international thing. It is not a language-driven as other types of programming.

"Murdoch, probably better than anyone else, has built that pipeline up. That will give him an advantage because he will be able to control both the content and the distribution."

Domestically, that distribution infrastructure will include TCI subsidiary Liberty Media Group's 15 regional sports networks, which currently operate under the Prime Sports label and reach some 35 million subscribers. Included in that group is Los Angeles-based Prime Sports West, formerly Prime Ticket.

The Prime Sports label will now be dropped from all 15 regional networks, which will operate under the new Fox Sports name.

Another U.S. outlet for the new sports programming will be Los Angeles-based cable network fX, part of the Fox family. With 24 million subscribers, fX is a general entertainment cable network, which has a mix of original and acquired programs.

Sports programming will now be inserted into that mix as well, though it is unclear at this time how much of a role sports will play in the network's overall programming.

News Corp. and TCI termed the co-venture a 50/50 partnership with total assets of $2 billion. TCI's contribution comes through its inclusion of the Prime Sports systems. Fox is contributing the fX network and an undisclosed amount of cash.

David Hill, president of Fox Sports, was named CEO of the new venture. Anne Sweeney remains CEO of the fX network, and the two will report to the new venture's board of directors, comprised of members of TCI/Liberty and News Corp.

Ed Frazier, CEO of Liberty Sports, will continue oversight of the regional sports networks in the deal.

But where the Fox/TCI venture is really looking to score is in the overseas marketplace, where both companies will provide already established distribution systems via cable and satellite.

Sports triumph

"In a business that has become increasingly driven by worldwide growth, sports represents a force in the media entertainment business that is second to none," said Chase Carey, chairman and CEO of Fox Television.

"News Corp. now has the opportunity to align with a partner with a partner with tremendous strengths which will enable us together to establish Fox, the Fox brand and this new joint venture as the worldwide leader in the presentation of premiere sports events and programming," he said.

Ultimately, the service is seen as a direct competitor with ESPN, which has some 67 million domestic subscribers and interests in global sports programming services that reach 150 countries.

ESPN, owned by Capital Cities/ABC Inc. and soon to become a part of the Walt Disney Co. family as well, has been able to use its cable/broadcast connections to help win sports licensing deals in the past, including current contracts for professional football and collegiate basketball.

Murdoch has recently focused much of his efforts on making Fox -as well as his international holdings - a player in the sport world as well. In the past several years, Fox Broadcasting outbid rival networks for professional football and hockey packages, and it is currently negotiating to get major league baseball rights as well.

Though these rights currently do not affect the new joint venture, providing top-quality sports programming will be key to making the cable service a success.

It can be done, Adler said, though it will be a slow, expensive and difficult process - much in the way it was when ESPN got its start.

After all, Adler pointed out. "ESPN started off showing a lot of Australian rules football and cricket, which wasn't very popular with American audiences."