Major League Baseball Commissioner Rob Manfred said Wednesday that the league is “prepared” to take back the television rights to 14 MLB teams if Diamond Sports Group fails to pay per their contractual obligations. (Photo by Reece Andrews/Cronkite News)
PHOENIX – Major League Baseball is prepared to take back the television rights to 14 teams if Diamond Sports Group, the parent company of the 19 regional Bally Sports Networks, files for bankruptcy, the sport’s commissioner said Wednesday.
Diamond failed to make a $140 million interest payment on its nearly $9 billion debt Wednesday, and owes more than $1 billion in right’s fees that are due in the first quarter of this year. One of the teams affected is the Arizona Diamondbacks as their television home, Bally Sports Arizona, is one of the networks affected by the financial crisis.
“Obviously we want all of our broadcast partners to be successful,” MLB Commissioner Rob Manfred said at Cactus League media day. “We don’t want them to have financial difficulties. We have been spending a lot of time and effort trying to work with Diamond to figure out exactly where they are.”
While MLB would prefer for Diamond to follow through with the contractual obligations it made to the organizations, time is running out, and Manfred is bracing for the worst.
Diamond purchased the 19 regional sports networks from Disney for $10.6 billion in 2019, when the company was forced to divest in order to purchase 21st Century Fox. As consumers move away from cable television and into streaming, Diamond is losing its main source of revenue, forcing the pivot.
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“Our first choice would be that Diamond pays the clubs what they’re contractually obligated to pay them,” Manfred said. “We are prepared no matter what happens with respect to Diamond, to make sure that games are available to fans in their local markets.”
While the TV rights to Bally Sports Arizona remain in question, the networks hope to continue broadcasting games until a resolution is reached.
However, in Bally’s 2022 third quarter financial report, the company noted a $68 million loss in distribution revenue over a three month period and a $188 million loss over a nine month period that ended on Sept. 30, 2022. With no clear path to a solution, MLB is preparing to take back the ownership of 14 MLB teams streaming rights, using MLB Networks technology to broadcast games locally.
“Our first hope remains that Diamond figures out a way to pay the clubs and broadcast the games like they’re contractually committed to do,” Manfred said. “If Diamond doesn’t pay, under every single one of the broadcast agreements, that creates a termination and our clubs will proceed to terminate those contracts. We would make use of our asset, the MLB Network. We would go directly to the distributors and make an agreement to have those games on cable networks.”
Bally Sports Arizona has a rights deal to broadcast Diamondbacks games until 2035, one of the longest media rights contracts in baseball. However, most of Diamond’s current MLB contracts are unprofitable, including a $60 million yearly contract with the Padres through 2032, the New York Post reported, and MLB owners and executives are left in the dark as to how fans will be able to tune into their games.
“I really don’t have any idea. I think all of our hopes will be to broadcast our games and our fans will be able to not only come out to the ballpark and watch us, but also be able to watch from home,” said Chris Antonetti, Cleveland Guardians president of baseball operations.
Diamond said in a statement that the Bally regional sports networks have been negatively affected by “subscriber erosion” caused by the shift in the media landscape. Many people are currently cutting the cord on cable and making the shift to digital subscriptions.
“These factors are expected to have a negative impact on future projected revenues and margins of our Bally RSNs,” Diamond said in its financial statement for the quarter ending Sept. 30.
Chris Antonetti, President of Baseball Operations for the Cleveland Guardians, said that he hopes fans will be able to watch their games this season, on Bally Sports or elsewhere, but doesn’t know when a resolution will be reached. (Photo by Reece Andrews/Cronkite News)
Bally Sports Networks launched Bally Sports+ in September 2022 to offset financial losses by making games available to consumers directly at home or on the go. MLB games are available only on Bally Sports Detroit, Bally Sports Florida, Bally Sports Kansas City, Bally Sports Wisconsin and Bally Sports Sun at this time.
Bally Sports Arizona reaches 2.5 million homes across the Grand Canyon State and New Mexico, and only 70 million people have cable service in the United States. While most streaming services such as Apple TV+, ESPN+ and Peacock cost an average of $7.32 a month, Bally Sports+ costs $19.99 per month.
The goal is to have Bally Sports Networks continue its partnerships with the 14 MLB teams, but the future remains uncertain for the media conglomerate, and the clock is ticking before bankruptcy becomes imminent.
“We need to deliver products to fans who want to watch on platforms that they can customarily use at a realistic price,” Manfred said. “I think it’s really important for the game to preserve the economics in the remaining RSN cable bundle, while developing a digital alternative that has more flexibility, and gives us better reach in terms of getting the fans who want to watch and don’t have the ability to watch.”
