ATLANTA -- For media conglomerates, owning a sports franchise canhelp build interest in other divisions, particularly fledgling cablechannels. Once that goals is achieved, there's not much reason tohold on to the teams.
Such is the case, analysts say, for AOL Time Warner, the latestindustry giant to seek a buyer for its sports teams. The company saysit wants to sell the Atlanta Braves, Hawks and Thrashers to help paydown $25.8 billion in debt.
'Owning a team is a very effective way to gain ratings, gaincoverage, but I think it's mission accomplished,' said Merrill Lynchentertainment analyst Jennifer Reif Cohen.
A handful of individuals and investment groups have expressedinterest in buying the teams during the past two months. The interesthas been described as serious, but there is no specific timetable fora deal, according to people familiar with the discussions.
The company won't reveal the names of those interested in theteams or its asking price, but analysts say the teams together areworth about $750 million. Selling them individually could raise morecash, analysts say, and the price tag could go even higher if thebuyer takes over AOL Time Warner's operating agreements for PhilipsArena and Turner Field.
Among those mentioned as possible suitors are the teams' formerowner, Ted Turner, and former New York sports executive DavidChecketts.
The possible sale of the Atlanta teams is part of a trend at largemedia and entertainment companies. Rupert Murdoch's News Corp. hasexpressed interest in selling the Los Angeles Dodgers and the WaltDisney Co., which owns ABC, has said it wants to sell the AnaheimAngels and Mighty Ducks.
'They're properties. They're businesses,' said Tom Wolzien, amedia analyst at Sanford C. Bernstein & Co. 'Either it's core to youroperations or it provides you with some strategic rationale or it's agood financial investment. As the other needs get resolved, then it'ssomething that you sort of move on from.'
In AOL Time Warner's case, owning the Atlanta sports teams hashelped it boost its cable stations that carry many of the teams'games, including TNT, TBS and Turner South. Fewer local games haveappeared on the channels in the last couple of years, and thestations carry more programs such as popular dramatic shows andmovies.
'When Ted Turner bought the teams originally, the reason was theyprovided content for the then fledgling Superstation TBS,' Wolziensaid. 'He was basically in a position where he bought teams thathelped fill out his television schedule. As the needs of the cablenetworks change, the reason to own the sports teams are not ascompelling.'
Analysts say many sports teams are not as profitable these daysbecause of higher player salaries and less television revenue to goaround.
The Braves have one of the highest payrolls in baseball -- it isexpected to be about $91.2 million this season.
The Dodgers have lost nearly $100 million over the last two years,and, despite the fact that Anaheim won the World Series last year,Disney loses $16 million annually on the Angels and $9 million on theMighty Ducks, analysts say.
Profitability is especially important for AOL Time Warner becauseit has said it wants to focus on paying down debt. The companyreported a massive $44.9 billion loss in the fourth quarter.
Besides the sports teams, AOL Time Warner also is consideringselling other noncore assets, including its book division.
Analysts say the music division also is expendable.
Spokeswoman Tricia Primrose would not discuss specific assets upfor sale, but said the company is committed to reducing its debt to$20 billion by the end of 2004.
Andrew Zimbalist, an economist and sports marketing expert atSmith College, said AOL Time Warner's decision to sell its sportsteams is a sign of the times and changing priorities.
'One of the things that's happened to all of these megacorporations is the sports properties are a small part of thebusiness, and they've found themselves spread too thinly and theywant to focus more on their core business,' Zimbalist said.
