This week could turn out to be a major turning point in Diamond Sports Group’s bankruptcy proceedings, one that could significantly influence how baseball games are broadcast — not just now, but well into the future.
Diamond failed to pay the San Diego Padres before the end of its grace period Tuesday, a monumental development that will prompt Major League Baseball to take over the team’s broadcasts moving forward.
Soon, more teams could find the same fate.
On Wednesday in Houston, a bankruptcy judge will preside over Diamond’s claims that it should essentially pay lesser rights fees to the Minnesota Twins, Texas Rangers, Arizona Diamondbacks and Cleveland Guardians to account for market forces that have greatly diminished the traditional cable model in recent years. (Diamond initially missed its rights payments to those four teams and was ultimately forced to pay 50% of what it owes them in the weeks leading up to the hearing.)
The judge’s ruling, which should come by Thursday night at the latest, will play a big role in determining which other contracts Diamond sheds, if any. MLB commissioner Rob Manfred will be among those testifying. With that milestone ahead, here’s a look at the current regional sports networks (RSN) situation of a few other teams across sports.
Why the Padres takeover happened so fast
Diamond, which airs broadcasts under the name Bally Sports, owns the rights to 14 major league teams. Eight of them are included as part of the company’s bankruptcy filing, so their unraveling would likely require weeks in the courts. The six that aren’t — partly because the teams own an equity stake, making them joint ventures that operate as separate legal entities — are the Padres, Cincinnati Reds, St. Louis Cardinals, Los Angeles Angels, Miami Marlins and Kansas City Royals.
Those teams operate outside of the bankruptcy proceedings, so their paths are relatively straightforward — if Diamond misses a rights payment, a contractually agreed-upon grace period is triggered, usually between seven and 15 days. If the grace period expires without a payment being made, those teams can break from their contracts, at which point MLB is expected to take over broadcasts, as they will with the Padres beginning Wednesday.
MLB has taken issue with the delay tactics that have been used throughout this process, alleging that Diamond is capitalizing off teams’ intellectual property — particularly regarding the Twins, Rangers, D-backs and Guardians — without abiding by their contractual obligations. Diamond counters that it is trying to keep all of its options open while the dust settles on bankruptcy proceedings and it gets a better handle on what it will owe and which additional streaming rights, if any, it will acquire. Some much-needed clarity on that front could come real soon.
Separately, Diamond has offered to pay all rights fees moving forward in exchange for the remaining streaming rights, sources with knowledge of the situation said. MLB, leery of giving more rights to a company that was forced into bankruptcy, has not engaged, sources said. Diamond only has the streaming rights to five of its 14 teams — the Kansas City Royals, Milwaukee Brewers, Tampa Bay Rays, Detroit Tigers and Marlins. — Alden Gonzalez
MLB’s New Age of Streaming depends on … the Yankees and Red Sox?
Amid the uncertainty foisted on baseball’s entire economic landscape, the game’s haves — big-marketed and healthy RSN’d — surveyed the fallout and understood that others’ pain could significantly benefit them. The New York Yankees, Boston Red Sox, New York Mets, Chicago Cubs and Los Angeles Dodgers either own their RSNs or receive massive annual payments from them, and as MLB surveys its options going forward, it’s aware that a handful of teams hold a disproportionate amount of power.
MLB’s desire to turn the failure of the RSN model into an opportunity to nationalize a streaming package with all 30 teams hinges on the willingness of all 30 teams to participate. And as one high-ranking official for a large-market team said: “Without us, there’s nobody buying the package.”
What might sound like big-market arrogance is instead a truth that smaller-market owners acknowledge — and fear. An MLB streaming package without the game’s most popular teams isn’t much of a streaming package at all. The larger markets know this, and they are ready to leverage it, with one official saying: “We’ll never give up our rights.”
While that’s the public posture, the reality is that there’s a price on everything — and the Yankees and Red Sox have established that with their own direct-to-consumer streaming services. New York’s YES Network is charging $24.99 a month or $239.99 annually, while Boston’s NESN 360 costs $29.99 and $329.99, respectively. The teams are targeting customers who are blacked out from watching games, and the success will offer a sense of fans’ willingness to stomach a price point higher than almost every streaming service, including those beyond sports.
Successful launches by the Yankees and Red Sox would make the difficulty for MLB — which is seeking streaming rights for all 30 teams so it can offer a blackout-free package — that much greater. As long as the 30-team package is MLB’s goal, the big-market teams will maintain their posture, the small-market teams will brim with frustration that the game’s already hefty financial chasm may yet grow and the league will grapple with the herculean task of trying to satisfy everyone. — Jeff Passan
Heaven is the end of blackouts in Iowa
“Is this purgatory?”
“No, it’s Iowa.”
Doesn’t have the same ring to it, does it? Yet that was the analogy made by a friend from my hometown in Iowa when we got together after a recent Chicago Cubs game. He was in Chicago with his daughter to see the club their family has worshiped for generations. This club, incidentally, can rarely be watched back in southwest Iowa since the Cubs brought their television production in-house three years ago.
During the years in which we grew up, the Cubs were omnipresent via WGN on basic cable in Red Oak. Now, in order to get the Cubs there, you have to buy an expensive satellite service and add the option that includes the Cubs’ network. For many baseball fans living in rural areas, it’s not a viable path.
The thing is, with six MLB teams bordering the state, Iowa should be a baseball heaven, in reality and not just fiction. That should be true whether you live in northern Iowa and root for the Minnesota Twins, in southwest Iowa and like the Kansas City Royals, live on the Mississippi River in Keokuk and love the St. Louis Cardinals or perhaps live in the northeastern part of the state and have thrown in with the Milwaukee Brewers, Cubs or Chicago White Sox.
Instead, most sports fans in Iowa can find Royals — three hours from Red Oak — and Cardinals — 315 miles away — games on basic cable. But if a baseball enthusiast is looking for others — including games at Wrigley Field, 400 miles away — good luck.
All six MLB teams in the states bordering Iowa have long been blacked out in the Hawkeye State. It’s enough to wonder how anyone could possibly be a baseball fan and live in Iowa.
Despite it all, there are plenty of baseball fans back in Iowa, and they would love to see more. And thus my friend made another analogy when asked about the RSN crisis possibly hastening the demise of baseball’s blackout guidelines, finally making all teams available to stream. He described it as like being in East Germany, circa 1989, with the wall about to go down. — Bradford Doolittle
Will the Suns set the standard for local TV — and could anyone else follow?
The Phoenix Suns announced in late April that their games will be broadcast for free on over-the-air channels and streamed online on a new direct-to-consumer service for in-market fans, prompting speculation about whether other Diamond-owned teams could follow a similar path.
At the moment, though, they seem to be an outlier.
First, it’s important to note that the plan might not even get off the ground. Earlier this month, a U.S. bankruptcy judge blocked Phoenix’s attempt to move ahead with the deal, saying the team couldn’t yet move on from its existing agreement with Diamond.
The judge, Christopher Lopez, ruled that the new deal was void because it interfered with Diamond’s contractual right to negotiate an extension to its current deal. The Suns, on the other hand, argued that their deal expiring after the 2022-23 season meant that they could go ahead with the agreement now.
Recently hired Suns CEO Josh Bartelstein told reporters after the hearing that the Suns would work toward a way of resolving the dispute “that will be in the best interest of our fans, our community and our players.”
In the NBA and elsewhere, it’s important to understand the uniqueness of the Suns’ situation — on an expiring contract, with a relatively small RSN deal that paid them about $40 million a year, and a new, aggressive owner, Mat Ishbia, with enough liquidity to absorb financial losses in an effort to expand his team’s brand. This model, if it ultimately comes to fruition, can increase the Suns’ reach from 800,000 viewers to 2.8 million. But it is unclear how Ishbia — also owner of the WNBA’s Phoenix Mercury, who are also part of this venture — will ultimately make money.
What this whole situation says about the state of these discussions across the NBA is that the next few months should be awfully interesting, as the league continues to try to navigate what to do with the 16 teams broadcast by Diamond last season.
MLB, meanwhile, is navigating through this in the thick of its season and holds the long-term goal of fitting streaming and broadcasting rights under one umbrella, seeing that as the best way to eventually maximize revenue.
Though they’ve kept an eye on the Suns deal, major league teams for the most part would prefer to stay with their lucrative RSN contracts for now. Even a team like the Marlins, who consistently field some of the lowest payrolls in the industry, is believed to make more on an annual basis than the Suns did.
Even once some of those RSN contracts are shed, the understanding is that they have a better chance at generating revenue by falling under the scope of MLB than they would by venturing out on their own and incurring the overhead that comes with it. Ishbia’s approach might be attempted by some major league owners — perhaps the higher-revenue Bally-operated teams — but it is not necessarily being viewed as a template. — Tim Bontemps and Alden Gonzalez
What happens in Vegas … won’t just stay in Vegas anymore
In the NHL, like in the NBA, most of the uncertainty around RSN television deals is being put off until the fall. But the Vegas Golden Knights, looking to win their first Stanley Cup, aren’t waiting until then to find out. The Golden Knights, whose deal with AT&T SportsNet ended this season, signed a multiyear deal earlier this month with Scripps Sports that will air all Vegas’ games in Nevada and four nearby states. Not included in the package are Golden Knights’ games broadcast nationally on ESPN or TNT.
That agreement, which includes a direct-to-consumer offer, kicks in for the 2023-24 season. Games will be distributed on cable, satellite and local over-the-air channels in the team’s territory.
This is the first deal Scripps Sports has made with a professional franchise since launching in December; it also launched a multi-year partnership with the WNBA in April.
The Golden Knights previously had an RSN agreement with AT&T SportsNet, owned by Warner Bros. Discovery, which announced months ago that it would be shutting down its local sports division. Vegas’ decision to bypass the RSN route altogether could be the start of a new trend for other NHL clubs looking to get their product in front of viewers for free. Broadcasting over local channels is more cost-effective — and could be more popular with fans — than being locked into a provider that viewers must pay separately to watch. That’s particularly true for teams in markets that don’t get as much national coverage.
Vegas is the perfect example. It’s a popular local club that’s enjoyed significant success since joining the NHL as an expansion team and beginning play in 2017. The Golden Knights can continue to boost their own profile via the Scripps contract and extend goodwill to the fanbase with a legitimate and inexpensive way to keep up with the action. — Kristen Shilton
… but another Finals team is still in the dark
The Denver Nuggets will play in their first NBA Finals beginning Thursday against the Miami Heat (8:30 p.m. ET on ABC). And the team’s arrival on the sport’s biggest stage will also shine a spotlight on the fact that fans within the team’s home market have struggled to watch them for years.
For the past four years, Altitude Sports — which is owned by Stan Kroenke, the owner of the Nuggets and Colorado Avalanche, among several other teams — has been locked in a bitter dispute with Comcast, the largest cable provider in the state.
So while Nikola Jokic has grown into arguably the best basketball player on the planet, he remains hard to find on TV in Denver, where 2019 court filings state 92% of cable subscribers use Comcast. Since Altitude’s deal expired with the provider in 2019, Jokic has won two MVP Awards — and come close to a third — while the Nuggets are tied with the Suns for the most wins in the NBA over the past four years (194). They are one of five teams — along with the Milwaukee Bucks, Philadelphia 76ers, the Suns and the Boston Celtics — to have won more than 60% of their games over that stretch.
Though the playoffs mostly air on national television, even this postseason saw a dustup when Altitude had to lift a local blackout for a game against the Timberwolves airing on NBATV. While the two sides settled an antitrust lawsuit back in March, there still isn’t an agreement in place to air the games on Comcast, and it’s unclear if one will happen before the start of the 2023-24 season. — Tim Bontemps