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Broadcasting & Cable
Broadcasting & Cable
Daniel Frankel

Bally Sports Bankruptcy: Summer MLB Drama Gives Way to Fall Pay TV Carriage Wars

Bally Sports

Last week, Sinclair's bankrupt Diamond Sports Group subsidiary continued to make good on its pledge to pay its remaining TV rights contracts for the remainder for the 2023 Major League Baseball season, rendering a penultimate check to the Cleveland Guardians. 

But as Diamond looks to close the books on an a disruptive spring and summer related to its 14 MLB team contracts -- now whittled to just 12, after deals with the San Diego Padres and Arizona Diamondbacks were torn up amid Chapter 11 restructuring -- new challenges await in the fall. 

Also last week, DirecTV filed a petition in the Houston bankruptcy court overseeing the restructuring of Diamond, which manages the 19 Bally Sports-branded regional sports networks. 

The No. 3 U.S. pay TV provider, which controls just under 13 million bundled video subscriptions across its DirecTV satellite TV, DirecTV Stream and U-verse platforms, said it has no problem with Diamond being granted with its request for a 120-day extension on filing a reorganization plan.

However, such a plan should factor in one super-major caveat -- not only does Diamond's distribution contract with DirecTV to carry the Bally Sports channels expire this fall, so does its carriage deal with the nation's No. 1 pay TV provider, Comcast, which controls 15 million pay TV homes. 

And if the fact that Diamond didn't have expiring agreements covering 47% of U.S. pay TV homes wasn't problematic enough, there's also a renewal set for the winter with No. 2 pay TV operator Charter Communications. 

"DirecTV has concerns regarding the viability of any go-forward business plan the debtors may propose, particularly one that assumes a continuation of the status quo under the distribution agreements with DirecTV," the satellite TV company said in its court motion.

Also in that motion, DirecTV said that despite the peril presented by the expiring pay TV carriage contracts, its renewal talks with Diamond "have barely begun." 

DirecTV executives called Diamond's fierce bankruptcy court battle with MLB "stupid and ultimately pointless," and failing to address Diamond's core business issues, namely the impacts of cord-cutting.

Further, DirecTV said it expects a reduction in the rate it has to pay the Sinclair Broadcast Group subsidiary, now that contracts for key pro Bally Sports team constituents -- namely baseball's San Diego Padres and Arizona Diamondbacks, and the NBA's Phoenix Suns -- have either been torn up amid Chapter 11 or have been allowed to expire. 

DirecTV lamented the fact that it hasn't been immediately offered “immediate rate relief” for the loss of the teams from the Bally Sports umbrella. 

Meanwhile, with 27 Bally Sports NBA and NHL team constituents set to start their seasons in about two months, there are plenty of questions now beyond what happens to the Bally Sports MLB team contracts. 

For starters: What does Diamond do with Bally Sports Arizona, now that the Diamondbacks, Suns and WBNA's Phoenix Mercury have all left the channel? Will Diamond continue to honor its RSN agreement with the NHL's Phoenix Coyotes?

Diamond was established four years ago to manage the 19 regional sports networks Sinclair Broadcast Group purchased from Fox for $10.6 billion. 

Since that acquisition, cord-cutting has whittled margins on the channels from an average of around 50% to under 15%. 

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