Diamond Sports Planning To File For Bankruptcy; MLB Planning To Stream Games For Free Temporarily

MLB Trade Rumors

Diamond Sports Group, the corporation that owns 14 Bally Sports regional sports networks, is expected to file for bankruptcy March 17, according to a report from Josh Kosman of The New York Post. The timeline will be awkward for Major League Baseball since the 2023 season opens on March 30, but the league plans to step in and broadcast the games themselves.

It had been reported for some time that Diamond is in financial trouble and they forewent interest payments worth roughly $140MM to creditors last month. MLB Commissioner Rob Manfred said at that time that the league was monitoring the situation, hoping that Diamond would make its payments but also drawing up contingency plans. It was subsequently reported that the league had hired multiple former RSN executives for a newly-created Local Media department, seemingly to get in position to take over broadcasting duties where necessary.

The problem stems from continued cord-cutting as fewer customers are paying for cable bundles these days, opting instead to use streaming services. That leads to decreased revenue from ad sales and cable contracts, creating situations where RSNs are paying teams more for rights fees than they are able to make back from those revenue streams. Per Kosman’s report, there are at least four teams where Diamond plans to reject the contracts via the bankruptcy proceedings. The teams in question are the Reds, Diamondbacks, Guardians and Padres, with the San Diego deal currently $20MM in the red on an annual basis.

The report goes on to state that MLB’s plan is to take over the local TV broadcasts of those teams, as well as streaming them for free in those local markets as they negotiate lower deals with cable companies. It’s not yet clear if fans in blacked-out markets would be able to access those streams in the short-term. If deals are reached, the league plans to offer over-the-top service for around $15 per month. As Kosman notes, that’s lower than some other streaming deals, with the Red Sox charging $29.99 per month. The league also already tried to acquire the rights to all 14 teams currently controlled by Diamond but were turned down. Those clubs are the Angels, Braves, Brewers, Cardinals, Diamondbacks, Guardians, Marlins, Padres, Rangers, Rays, Reds, Royals, Tigers, and Twins.

A similar situation has arisen with Warner Bros. Discovery, which owns AT&T SportsNet and is a minority owner of Root Sports. It was reported last month that Warner was planning to get out of the RSN business, which would have implications for the Rockies, Astros and Pirates, though not the Mariners. Warner only owns 40% of Root Sports Seattle with the Mariners owning the other 60%. Kosman’s report indicates the league plans to take over those broadcasts eventually as well, though not by Opening Day.

This is a fluid situation and many of the details are still being worked out, but it’s possible there is a sea change approaching in how Major League Baseball delivers its broadcasts to its fans. Most out-of-market games are available to paying subscribers via MLB TV, though these RSN deals have always taken precedent, leading to blackouts that prevent fans from watching their local club on the platform. Many fans have been critical of the way these blackouts are applied, with some subscribers saying that their home is covered by various overlapping blackout areas. The people of Iowa, for instance, have often complained that they can’t watch games featuring the Cubs, White Sox, Cardinals, Twins, Royals or Brewers. That’s an extreme example but highlights the sorts of issues with the current system. Manfred has expressed a desire to move to a new system that would allow customers to purchase broadcasts regardless of where they are, though it’s unclear how long it would take to get such a model in place.

Whenever that new system is in place, it will also have implications for the finances for teams. These RSN deals have long been a significant source of club revenue that seems to now be drying up. Streaming will present new revenues sources, of course, and already has. The league has previously agreed to lucrative deals with streaming platforms like Apple and NBC and may strike other deals in the future.

For now, it seems the immediate concern is making sure that the broadcasts for the 2023 season are maintained. Kosman reports that the league plans to retain current local announcers for any broadcasts that it takes over and it doesn’t seem as though there are any current concerns of games being missed. Assuming the league is successful in all of these plans, it’s possible that fans won’t notice much difference in their baseball consumption here this year, but the field may be wide open for changes down the line.

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