Diamond Sports, the owner of regional sports networks, has been ordered by a bankruptcy judge to make full media rights payments to four Major League Baseball teams. Diamond Sports filed for bankruptcy in March, seeking to not only restructure its debt load but also reset some of its media rights deals with teams to reflect market rates in the wake of rampant cord-cutting.
The Battle in Court
Diamond Sports was looking to cut down the payments owed to four MLB teams, the Arizona Diamondbacks, Cleveland Guardians, Texas Rangers, and Minnesota Twins. This caused Diamond Sports to go toe-to-toe with MLB officials in bankruptcy court. Diamond Sports had already paid the teams up to 75% of the payments owed earlier in its bankruptcy, court papers show. If Diamond Sports fails to make the remainder of the payments owed to the teams, those teams can walk away from their contracts with the company, a judge ruled.
The decision comes after MLB earlier this week announced that it would begin producing and distributing San Diego Padres games on pay-TV bundles and its MLB.TV streaming service after Diamond Sports stopped making payments to the team. The in-court matter didn’t affect the status of the Padres situation.
MLB Responds to the Ruling
“MLB appreciates the ruling from the Federal Bankruptcy Court in Houston requiring Diamond to pay the full contractual rate to Clubs,” an MLB spokesperson said in a statement on Friday. “As always, we hope Diamond will continue to broadcast games and meet its contractual obligations to Clubs. As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”
The judge’s ruling came after a two-day hearing that included testimony from MLB Commissioner Rob Manfred and showcased the tensions between the league and Diamond Sports.
Diamond Sports’ Response
A Diamond Sports spokesperson said in a statement on Friday that, in keeping with the bankruptcy judge’s orders, “we look forward to engaging with MLB and our team partners to negotiate a go-forward rights package that works for all parties and positions Diamond for long-term success.”
In particular, Diamond Sports has been pushing to hold the direct-to-consumer streaming rights to all MLB teams that air on its networks. Currently, Diamond Sports has deals with all its NBA and NHL teams, plus a handful of MLB teams for the streaming rights.
The Impact of Streaming Services on the Regional Sports Network Business
The proliferation of consumers cutting their traditional pay-TV bundles in favor of streaming services has weighed on the regional sports network business. Last year, Diamond Sports launched its streaming response with Bally Sports+. Diamond Sports pays fees to 42 teams across the MLB, NBA, and NHL to broadcast the bulk of the local games in their markets. During the hearing, a Diamond Sports executive said Bally Sports+ had 203,000 subscribers, representing 55% of the subscriber goal for the company, The Athletic reported.
Diamond Sports is also facing a more than $8 billion debt load, stemming from Sinclair Broadcast Group’s $10.6 billion acquisition of regional sports networks in 2019. Diamond Sports is now an unconsolidated and independently run subsidiary of Sinclair.
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