Diamond Sports plans to file for bankruptcy; MLB plans to temporarily stream games for free

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

It had been reported for some time that Diamond was in financial trouble and that they had waived interest payments worth around $140 million to creditors last month. MLB commissioner Rob Manfred said at the time that the league was monitoring the situation, hoping Diamond would make his payments but also making contingency plans. It was then reported that the league had hired several former RSN executives for a newly created local media department, reportedly to put themselves in a position to take over broadcast duties if needed.

The problem stems from continued cord cutting, as fewer and fewer customers are paying for cable bundles these days, opting for streaming services instead. This results in decreased revenue from ad sales and cable contracts, creating situations where RSNs pay teams more for rights fees than they can recoup from these revenue streams. According to Kosman’s report, there are at least four teams where Diamond plans to reject contracts through bankruptcy proceedings. The teams in question are the Reds, Diamondbacks, Guardians and Padres, with the San Diego deal currently $20 million in the red on an annual basis.

The report goes on to say that MLB’s plan is to take over these teams’ local TV shows, as well as air them for free in these local markets as they negotiate lower deals with the cable companies. It’s not yet clear if blocked market fans would be able to access these streams in the near term. If deals are struck, the league plans to offer over-the-top service for around $15 a month. As Kosman notes, that’s less than some other streaming deals, with the Red Sox charging $29.99 per month. The league has also previously attempted to acquire the rights to the 14 teams currently controlled by Diamond, but was denied. These clubs are the Angels, Braves, Brewers, Cardinals, Diamondbacks, Guardians, Marlins, Padres, Rangers, Rays, Reds, Royals, Tigers and Twins.

A similar situation occurred with Warner Bros. Discovery, owner of AT&T SportsNet and minority owner of Root Sports. It was reported last month that Warner planned to retire from RSN business, which would have implications for the Rockies, Astros and Pirates, but not the Mariners. Warner only owns 40% of Root Sports Seattle, with the Mariners owning the remaining 60%. Kosman’s report says the league plans to resume those broadcasts as well, but not by opening day.

It’s a fluid situation and many details are still being worked out, but it’s possible a drastic change is approaching in the way Major League Baseball delivers its broadcasts to its fans. Most out-of-market games are available to paid subscribers through MLB TV, though those RSN deals have always prevailed, leading to outages that prevent fans from watching their local club on the platform. Many fans have criticized the way these blackouts are enforced, with some followers claiming their home is covered by various overlapping blackout zones. People in Iowa, for example, have often complained about not being able to watch Cubs, White Sox, Cardinals, Twins, Royals, or Brewers games. It’s an extreme example, but it highlights the kind of problems with the current system. Manfred has expressed a desire to move to a new system that would allow customers to purchase shows wherever they are, although it is unclear how long such a model would take to implement.

Whenever this new system is in place, it will also have implications for team finances. These RSN deals have long been a major source of revenue for clubs which now seems to be drying up. Streaming will introduce new revenue streams, of course, and has already done so. The league has already struck lucrative deals with streaming platforms like Apple and NBC and may strike more deals in the future.

For now, it seems that the immediate concern is to ensure that the broadcasts of the 2023 season are maintained. Kosman reports that the league plans to retain current local announcers for all broadcasts it supports and there do not currently appear to be concerns about missed games. Assuming the league succeeds in all of these plans, fans may not notice much of a difference in their baseball consumption here this year, but the field may be wide open for further changes.

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