Fox, TCI Expected to Form Sports Network : Television: The new channel would compete against ESPN. Fox could take a substantial stake in Liberty Media under the deal.

Fox Broadcasting Co. and Tele-Communications Inc. are expected this week to announce a joint venture to create a national sports cable network that will compete against the successful ESPN, people close to the negotiations said Monday.

As part of the agreement, Fox could take a substantial equity stake in Liberty Media, TCI’s programming arm, which has interests in about 15 regional sports networks.

Both Fox and TCI are eager to capitalize on one of the fastest-growing businesses in cable. “Sports are a must-see for men who are otherwise hard to reach,” said Michael Wolf, a partner at Booz, Allen & Hamilton. “Sports are driving the sales of small [satellite] dishes and other alternatives to cable. People are willing to pay top dollar for sports.”

Fox would not comment and Tele-Communications did not return calls seeking comment.

ESPN is the top cable network, with 66.3 million subscribers nationwide, and it is perhaps the most profitable channel, valued at nearly $4 billion. It is worth about as much as its sister network, ABC, and is arguably the biggest prize sought by Walt Disney Co., which earlier this year announced a $19-billion planned acquisition of ESPN’s parent company, Capital Cities/ABC Inc.

That planned acquisition--and the subsequent proposed merger of Time Warner Inc. and Turner Broadcasting System Inc.--are expected to make it harder for sports newcomers such as Fox. Turner’s TNT and TBS networks derive handsome chunks of their revenue from sports programming.

For Fox and Liberty, a partnership means they could bid jointly for broadcast and cable rights to professional and college games, putting them on equal footing with ESPN and ABC and perhaps giving them an edge over Turner.

Fox has been aggressively building its presence in sports since it acquired broadcast rights to National Football League games in December, 1993. While critics said Fox overpaid for those rights, widely outflanking CBS with its offer of $1.5 billion over four years, the winning bid helped the struggling network lure a group of stronger affiliate stations from CBS.

Fox has since signed deals with the National Hockey League, and this week is expected to announce that is will share baseball with NBC. CBS and Fox had been front-runners, but sources said Monday that NBC had emerged during the final hours and that the Fox-NBC package could be worth more than $800 million over four years for Major League Baseball. Sources have speculated that the deal will also call for coverage of the games on cable through Fox and Liberty, although ESPN’s contract with the league runs through the 1997 season and the network has the rights to match any competing offer.

Liberty has been trying to build a competitor to ESPN for some time, although its far-flung collection of regional sports networks has been no match for the larger network in bidding for national sports rights.

“They got some funny looks when they tried to bid, because they just don’t have the coverage,” said John Mansell, an analyst at Paul Kagan & Associates.

In an attempt to improve coverage, Liberty Media has had intermittent negotiations for years with Cablevision Systems Corp., another cable operator, which through its Rainbow Programming arm owns several regional sports networks under the SportsChannel banner, including one in New York.

But the two parties could never resolve the issue of control, and talks dissolved again in September.

However, there are other impediments to superimposing a national network onto a regional sports infrastructure as Fox and Liberty intend to do. For regional sports networks, their bread and butter is in airing games that their local viewers would otherwise not find on a national network. So would the Prime Sports channel in Los Angeles have to drop a Dodgers game if Liberty and Fox felt a New York Yankees game could draw more national viewers?

Sources close to the company say those questions are still being worked out, as is the configuration of the partnership.