Diamond Sports has missed a rights fee payment owed to the Padres, a Major League Baseball source confirmed to the Union-Tribune, triggering the start of a grace period as opening day approaches next week.
Diamond, which operates as Bally Sports, last week filed for bankruptcy protection to eliminate more than $8 billion of the company’s outstanding debt. Diamond attorneys argued in court on Thursday that Major League Baseball’s desire to broadcast games directly to fans has hindered Diamond’s ability to recoup declining revenue during the cord-cutting movement.
Diamond’s court filings said the company has lost 22 million subscribers and $810 million in revenue over the last four years. The 22.6 percent drop is in part due to distributors like YouTube TV and Hulu+ Live TV dropping Bally Sports, Diamond’s attorneys said. The company owns the rights to stream five MLB teams’ games on the Bally Sports+ app, but the Padres are not one of them. Diamond’s attorneys said in court that the company is “willing to pay fair value” for additional streaming rights in order to help bridge the cost of lost revenue from declining cable subscriptions.
However, MLB has instructed nine teams not to allow Diamond to stream games online as the league looks to “go it alone” and “effectively drive us out of the market,” Diamond’s attorney said.
An MLB attorney countered that Diamond cannot force teams to provide additional streaming rights, nor is it the league’s responsibility to fix a “broken model.”
That model, of course, has played a significant role in baseball’s growing economy.
The Padres own 20 percent of the network created in 2012 upon agreeing to a 20-year, $1.2 billion deal with Fox Sports. Diamond parent company Sinclair Broadcast group inherited that deal when it purchased Fox Sports Networks for $10.6 billion in 2019.
Diamond is looking to separate from Sinclair as a standalone company; bankruptcy would help the embattled company strengthen its balance sheet while continuing to bring broadcasts to fans, its attorneys say. Before filing for bankruptcy last week, Diamond had been expected to reject the contracts of at least four of their 14 MLB teams and as of Friday had missed payments to two of them: the Diamondbacks and Padres. The Diamondbacks’ grace period expired Thursday. It was not immediately known when the Padres’ grace period expires.
The San Diego contract alone — roughly $60 million a year through 2032 — is costing Diamond $20 million annually, according to a New York Post report.
Bally Sports San Diego broadcast the weekend’s Cactus League games against the Brewers and Cubs and will air six more spring training games before the March 30 season opener. But with Diamond’s finances in disarray, Major League Baseball has been positioning itself to take over teams broadcasts so fans are able to view games regardless of developments. That could lead to temporary free access to games online should MLB need to use legal proceedings to reacquire rights if Diamond defaults on any of its contracts with MLB teams.
Bally Sports’ broadcast teams would likely remain in place in markets in which they are team employees, as is the case for the Padres’ Mark Grant, Don Orsillo and Bob Scanlan.
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