If Diamond Sports Group LLC emerges from Chapter 11 bankruptcy protection as a going concern, its regional sports networks will likely not show many live MLB games.
At an Oct. 2 hearing, a lawyer for the Sinclair Inc. unit told Judge Christopher Lopez that the company plans to reject 11 of the remaining 12 teams it has or had contracts with. That would leave only the Atlanta Braves on its baseball roster unless it can reach revised contracts with the other MLB clubs.
During the hearing, Diamond also noted it filed an amended reorganization plan, which creditors and other parties can vote for or against by Nov. 5. A confirmation hearing for the nation's largest operator of an RSN plan has been scheduled for the US Bankruptcy Court for the Southern District of Texas on Nov. 14. In the meantime, another hearing is set for Oct. 9.
The amended plan includes a continued relationship with 13 NBA and eight NHL clubs, which have accepted reduced rights fees in exchange for guaranteed funds and telecasts. Diamond, whether it emerges as a going concern or not, said it will televise the teams' games during the 2024-25 season. The NHL season begins Oct. 4, while the NBA season starts Oct. 22. If Diamond succeeds in exiting bankruptcy, those teams' existing contracts will automatically renew. If Diamond does not exit by April 1, 2025, the contracts will terminate.
As for MLB, this is another matter.
Diamond filed for Chapter 11 protection in March 2023 amid declining revenue stemming from the eroding linear TV ecosystem and some $8.5 billion in debt. Since then, it missed some payments to MLB squads and then rejected contracts with San Diego Padres and Arizona Diamondbacks. It also reduced contracts with the Minnesota Twins, Cleveland Guardians and Texas Rangers, all of which terminated at the end of the 2024 regular season last week.
The other contracts Diamond is rejecting are with the Detroit Tigers, Miami Marlins, Kansas City Royals, St. Louis Cardinals, Cincinnati Reds, Los Angeles Angels, Tampa Bay Rays and Milwaukee Brewers.
With the amended plan, "the debtors are assuming a single telecast rights agreement: that of the Atlanta Braves," said Andrew Goldman, a lawyer for Diamond. Outside of the Braves, Goldman said, "All of MLB's other agreements will be rejected under the plan that therefore provides certainty to all of the other teams in the debtors fold that they can, as of the end of the year, begin to make other plans if they haven't already, for broadcasting the 2025 season."
The contract situation aside, MLB and Diamond have long been at odds. MLB bid against Diamond parent Sinclair in 2019 for the RSNs and again made an offer in January 2023.
Questioning
Throughout the proceedings, MLB has questioned the programmer's fiscal and operational capabilities and transparency.
MLB lawyer James Bromley said he only learned about the significant developments 75 minutes before the Oct. 2 hearing.
"This is just another example of being given no information by the debtors and then being greeted with "hurrahs" that everything has changed once again, and we had no information about what is being done," Bromley said. "We don't have any basis to assess anything that Mr. Goldman has said. It's very clear that at least some of our clubs are being left out in the cold yet again."
Goldman said that was not the case. "To be clear, rejecting the other agreements is not our preferred path. As we've told the court and as we've told the teams, and as we've told the commissioner's office directly, our preferred path would be to bring as many teams into the reorganized debtor fold as is possible," he said.
Nevertheless, Goldman noted that Diamond has been directly "interfacing" with its partner MLB clubs, "not through [Commissioner Rob Manfred's] office any longer, but directly with them."
The RSN operator said in a release: "Today marks an important step forward for Diamond with the filing of a baseline plan to enable us to emerge from bankruptcy as a viable, go-forward business before year-end. We have delivered proposals to and remain in discussions with our MLB team partners around go-forward plans. We firmly believe that through our linear and digital offerings, we have created the best economic and fan-friendly engine for all of our team partners."
The plan includes securing a new naming rights partner for the RSNs to succeed Bally Sports. The company is also looking to sign a deal with Amazon.com Inc.'s Prime Video and perhaps another vendor to provide local-market, direct-to-consumer streaming. Earlier this year, Diamond announced that Amazon agreed to invest $115 million for a minority stake in the RSN operator upon its bankruptcy exit. However, the investment was terminated in August.