Diamond Sports Must Pay Four MLB Teams in Full, Bankruptcy Judge Says

Diamond Sports, the owner of Bally Sports regional sports networks, has been ordered by a bankruptcy judge to make full media rights payments to four Major League Baseball (MLB) teams. The company, which filed for bankruptcy in March, aimed to restructure its debt and reset its media rights deals with teams to reflect market rates in response to cord-cutting trends.

Diamond sought to reduce the payments owed to the Arizona Diamondbacks, Cleveland Guardians, Texas Rangers, and Minnesota Twins, leading to a legal dispute with MLB officials during the bankruptcy court proceedings. Court documents indicate that Diamond had already paid these teams up to 75% of the owed amounts.

According to the judge’s ruling, if Diamond fails to make the remaining payments to the teams, they will have the option to terminate their contracts with the company. This decision follows MLB’s recent announcement that it would produce and distribute San Diego Padres games through pay-TV bundles and MLB.TV streaming after Diamond stopped making payments to the team. The ruling does not affect the Padres’ situation.

MLB expressed appreciation for the court’s ruling, emphasizing its hope that Diamond would continue broadcasting games and fulfill its contractual obligations. However, if Diamond fails to meet its obligations, MLB stands ready to make the games available to fans.

The ruling was made after a two-day hearing that involved testimony from MLB Commissioner Rob Manfred, highlighting the tensions between the league and Diamond Sports. Diamond, in line with the bankruptcy judge’s orders, stated its readiness to negotiate a new rights package that benefits all parties and positions the company for long-term success.

One specific issue raised by Diamond is its desire to hold the direct-to-consumer streaming rights for all MLB teams airing on its networks. Currently, Diamond has streaming rights agreements with its NBA and NHL teams, as well as a few MLB teams.

The regional sports network business has been affected by the increasing number of consumers switching from traditional pay-TV bundles to streaming services. In response, Diamond launched its own streaming platform called Bally Sports+. The company pays fees to 42 teams across MLB, NBA, and NHL for broadcasting local games in their respective markets.

During the hearing, a Diamond executive reported that Bally Sports+ had gained 203,000 subscribers, representing 55% of the company’s subscriber goal, as per The Athletic’s coverage.

Additionally, Diamond faces a significant debt load of over $8 billion, resulting from Sinclair Broadcast Group’s $10.6 billion acquisition of regional sports networks in 2019.

Following the acquisition, Diamond now operates as an unconsolidated and independently run subsidiary of Sinclair.