Diamond Sports Group, which owns 19 regional sports networks (RSNs), has ventured into bankruptcy, a predictable development that will nonetheless have a major impact on the way fans watch games and the way teams profit off them.
Diamond, a Sinclair subsidiary that is known to viewers as Bally Sports, stands as the largest distributor of live sports within the United States — and it is in serious financial turmoil. The company took on $8 billion of debt to acquire the RSNs in 2019, watched as the rate of cord-cutting accelerated throughout the country and was forced to file for a Chapter 11 restructuring last week.
It’s a situation that promises to have wide-ranging effects, particularly, given the timing, within Major League Baseball. What does it mean for fans? For the future of live programming? For sports? Answers to some of the most pertinent questions — including, yes, blackouts — are below.
Which teams does this affect? Will fans be able to watch their games?
Diamond Sports Group runs the RSNs for 42 teams across MLB (14 teams), the NHL (12 teams) and the NBA (16 teams). The latter two leagues are navigating the tail end of their respective seasons, leaving time for this process to play out. MLB, however, is less than two weeks away from Opening Day, creating a heightened sense of urgency. But both MLB and Diamond Sports Group have been adamant that fans won’t miss any of their games.
Diamond Sports Group’s CEO, David Preschlack, who was hired in December, wrote in a statement last Tuesday that the company “will continue broadcasting games and connecting fans across the country with the sports and teams they love.” MLB, in its own statement, wrote: “Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process. Major League Baseball is ready to produce and distribute games to fans in their local markets in the event that Diamond or any other regional sports network is unable to do so as required by their agreement with our Clubs.”
If MLB needs to take over the broadcasts, how would it work?
Some of the details are still uncertain. Some have questioned whether MLB has the capability to take over broadcasting duties if it comes to that, but MLB appears confident it can pull it off. The details are still a bit hazy, but the league recently started a local media division, fronted by Billy Chambers, Sinclair’s former chief financial officer. The short-term plan would be to offer streaming through its MLB.TV app at a yet-to-be-determined price (it’ll be cheaper than the current price to stream out-of-market games, according to a league source) and also air games on a yet-to-be-determined cable channel.
MLB would have to negotiate deals with cable companies to make the latter happen. That would take time, but a league source downplayed that factor, pointing to how long Diamond’s financial unraveling has been anticipated. Putting together games also requires a lot of employees (producers, camera operators, broadcasters, etc.). MLB, a league source said, might turn to a lot of the people who worked those jobs for Bally Sports in their respective markets, many of whom do so on a freelance basis.
So … what happens next? How long until we know where the 14 teams will end up?
A lot could happen really fast. Between now and April 30, 13 of the 14 teams under the Bally Sports umbrella are owed their rights fees, an industry source said, potentially forcing a lot of quick decisions from Diamond Sports Group and its creditors.
In order to remain in business, Diamond needs to maintain agreements with at least some of its teams. And in order to maintain those agreements, they need to, well, pay them. Skipping payments would allow said teams to break free from their contracts, as MLB commissioner Rob Manfred mentioned last month.
A breach of contract triggers a court hearing, and that process can take anywhere from a few days to a few months. While that is playing out, Diamond would be incentivized to continue airing games because it would be generating subscription revenue without having to pay rights fees.
But there’s a good chance that Diamond’s creditors eventually decide to drop some of the least profitable teams from the portfolio. In that case, MLB would need to step in. A league source anticipates that MLB will handle broadcasting for at least five teams in the very near future. So far, Diamond Sports Group has missed payments to the D-backs and, more recently, the Padres, triggering the contractual grace period that will probably lead to MLB taking over.
Can MLB really get the rights to the Bally Sports teams so quickly?
The answer to that question will be dictated entirely by what Diamond Sports Group decides to do with its portfolio. Long term, the company hopes to build a more stable business by propping up its direct-to-consumer platform, Bally Sports+. But streaming rights are needed. Diamond Sports Group has the right to stream for all 16 of its NBA teams and for all 12 of its NHL teams. But it can only do so with five of the 14 MLB teams — the Royals, Brewers, Rays, Marlins and Tigers, all of which are smaller-market clubs. It wants to acquire streaming rights for the nine other teams and eventually turn its platform into a one-stop shop for fans, where they can also purchase tickets, buy merchandise and place bets.
But MLB, sources said, has been unwilling to provide more streaming rights to a company that has not proved to be financially stable. MLB has no intention of also offering the rights to sell tickets or merchandise to Diamond Sports Group, essentially turning the company into a direct competitor.
The bankruptcy proceedings will turn Diamond’s debt into equity for its largest secured creditors. Those creditors will essentially run the company, and not securing streaming rights is expected to significantly influence which teams those creditors decide to hold onto and which teams they decide to shed. We’ve already seen the beginning of this play out with the D-backs and Padres. Other teams will follow.
Could this ultimately mean the end of blackouts?
Potentially. Here’s how it would work, in an ideal sense: As teams free themselves from their RSN contracts, either intentionally when their deals expire or unintentionally when they’re not paid what’s owed to them, MLB would absorb them one by one. At that point, it can air games, say, on its Extra Innings channel (the long-term plan would be to regionalize MLB Network) and also through MLB.TV for local fans, since there would no longer be a competitor in the local market blocking them from doing so.
It isn’t quite so simple, and it would require making deals with cable companies that also provide internet service. But MLB seems confident it can pull it off. In order to wipe blackouts out entirely, MLB needs to secure the television rights to all 30 teams. At the moment, it has the rights to zero — and that will be the case as long as Diamond continues to meet its contractual obligations. However, several sources within MLB and those knowledgeable on the RSN industry predict that soon teams will start to be shed, with Diamond’s creditors eliminating the less profitable ones.
How will all of this affect the product on the field — revenue, payrolls, etc.?
In the short term, it won’t have any impact; payrolls are set, contracts are fully guaranteed.
Long term … well, that’s what’s causing concern.
In the aggregate, major league teams draw somewhere in the neighborhood of 20% of their revenue through their RSN deals, many of which are robust (for example, near the end of 2011, the Angels signed a 20-year deal worth a reported $3 billion with what was then Fox). Diamond’s financial turmoil — and more broadly the continual erosion of the traditional cable model — promises to alter the financial landscape of the sport. Teams are all but guaranteed to generate less revenue because of it in the short term — but MLB is hopeful that the trade-off will be long-term gains.
The league’s ultimate goal is to place broadcasting rights — both through the linear cable model and on over-the-top platforms — under one umbrella. This has long been MLB’s plan; Diamond’s Chapter 11 filing simply put the wheels in motion a little earlier than the league would have wanted.
When all games are broadcast on streaming platforms, which many consider an inevitability, the league would aim to create a direct line to revenue from subscriptions and advertising, while also hoping to strike deals with other streaming companies. Under a model like this, all the revenue would essentially fall in one bucket, and it would be up to the 30 owners — and the MLB Players’ Association is also going to want to be involved — to determine how it gets split up.
A league source, pointing to the rapid rate at which the traditional cable model is deteriorating, predicted that all 30 teams would fall under its umbrella within two to three years. But some league executives believe that highly profitable big-market teams such as the New York Yankees and Boston Red Sox, both of whom own their networks, would never agree to that type of structure.
Speaking of the Yankees and Red Sox, what’s the status of the 16 teams NOT involved with Diamond Sports Group?
Four teams — the Colorado Rockies, Houston Astros, Pittsburgh Pirates and, to a lesser extent, Seattle Mariners — are under Warner Bros. Discovery, which previously revealed plans to shed its RSN commitments by the end of the month, creating a completely different scenario. (The other 12 major league teams are with broadcasting companies that, at least for now, are stable.)
Warner Bros. Discovery announced in late February that it was planning to exit the regional sports business, saying teams had until the end of March to reclaim their media rights or the company would move into a Chapter 7 liquidation. The company, a league source said, has been a cooperative partner through the process. The expectation is that broadcasts for the Pirates, Rockies and Astros will be unchanged in 2023. In 2024, they’ll fold into MLB’s broader strategy. The Mariners, meanwhile, run their own RSN and pay Warner Bros. Discovery a service fee to operate it for them. They are expected to be unaffected.
Hagel will miss Saturday’s Game 3 in Sunrise, Florida. The Panthers lead the series 2-0.
Around midway through the third period of Thursday’s Game 2, Tampa Bay was on the power play while trailing 1-0. Barkov pressured defenseman Ryan McDonagh deep in the Lightning zone. With the puck clearly past Barkov, Hagel lined him up for a huge hit that sent the Panthers captain to the ice and thumping off the end boards.
A penalty was whistled, and the officials conferred before calling a “five-minute penalty.” After review, Hagel was given a 5-minute major for interference. Barkov left the game with 10:09 remaining in regulation and did not return to the Panthers’ 2-0 win.
Lightning coach Jon Cooper said after the game that he didn’t expect Hagel to receive a major penalty for the hit.
“Refs make the call. I was a little surprised it was a five, but it was,” he said.
The NHL ruled that Hagel’s hit made “some head contact” on Barkov.
“It’s important to note that Barkov is never in possession of the puck on this play and is therefore not eligible to be checked in any manner,” the league said.
In the Friday hearing, held remotely, Hagel argued that he approached the play anticipating that Barkov would play the puck. But the Department of Player Safety said the onus was on Hagel to ensure that Barkov was eligible to be checked. It also determined that the hit had “sufficient force” for supplemental discipline.
It’s Hagel’s first suspension in 375 regular-season and 36 playoff games. He was fined for boarding Florida’s Eetu Luostarinen in May 2022.
The Panthers held an optional skate Friday. Coach Paul Maurice said Barkov “hasn’t been ruled out yet” but “hasn’t been cleared” for Game 3.
“He’s an irreplicable player,” Panthers defenseman Seth Jones said of Barkov. “One of the best centermen in the league. He’s super important to our team.”
The Lightning lose Hagel while they struggle to score in the series; they scored two goals in Game 1 and were shut out in Game 2. Tampa Bay was the highest-scoring team in the regular season (3.56), with Hagel contributing 35 goals and 55 assists in 82 games.
Canadiens starter Sam Montembeault was replaced by rookie Jakub Dobes, who made his playoff debut, in the second period. Capitals starter Logan Thompson left late in the third period after a collision with teammate Dylan Strome.
The Canadiens won 6-3 to cut their series deficit to 2-1.
Montembeault left the crease with 8:21 remaining in the second period and the score tied 2-2. Replays showed him reaching for the back of his left leg after making a save on Capitals defenseman Alex Alexeyev. Montembeault had stopped 11 of 13 shots. For the series, he stopped 58 of 63 shots (.921 save percentage) with a 2.49 goals-against average.
Dobes, 23, was 7-4-3 in 16 games for the Canadiens in the regular season with a .909 save percentage. Dobes had a win over the Capitals on Jan. 10, stopping 15 shots in a 3-2 overtime win.
Thompson was helped from the ice by a trainer and teammates after Strome collided with him with 6:37 left in regulation right after Canadiens forward Juraj Slafkovsky made it a 5-3 Montreal lead. Thompson attempted to skate off on his own but couldn’t put weight down on his left leg.
Backup goalie Charlie Lindgren replaced Thompson, who had been outstanding for the Capitals in the first two games of the series, winning both with a .951 save percentage and a 1.47 goals-against average. He made 30 saves on 35 shots in Game 3.