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Broadcasting & Cable
Broadcasting & Cable
Daniel Frankel

Rob Manfred Ready to Block Diamondbacks’ Renegotiated Bally Sports Deal

Major League Baseball Commissioner Rob Manfred

Major League Baseball is prepared to step in and block a renegotiated carriage deal between Sinclair’s bankrupt regional sports networks subsidiary, Diamond Sports Group, and the Arizona Diamondbacks. 

As thoroughly reported Tuesday by the New York Post, under new terms negotiated under the framework of Diamond's Chapter 11 restructuring, the Arizona club would agree to tear up the 20-year, $1.5 billion deal it signed for its linear local TV rights back in 2015 and accept a new pact valued at 20% less per season for five years. It adds up to a haircut of around $15 million per season. 

And in a development that surely irked MLB commissioner Rob Manfred, the Diamondbacks would surrender their direct-to-consumer rights to Diamond for the Bally Sports Plus streaming service. 

Manfred, who has also spoken ruefully about his dealings with Sinclair executive chairman David Smith in the past, has been adamant about MLB teams under the Bally Sports regional sports networks umbrella not giving up their DTC streaming rights. MLB has its own plan to launch a national DTC streaming service. 

Diamond and the Diamondbacks are set to present the renegotiated deal to the Houston bankruptcy court overseeing the subsidiary's restructuring on July 17. But according to the Post, Manfred is ready to block the Diamondbacks' deal. 

And with Diamond also using the flexibility and leverage that comes with bankruptcy restructuring to reset club deals it’s losing money on — cue Yakov Smirnoff's signature phrase here — Manfred could find himself similarly intervening on other proposed rearrangements with MLB clubs including the Cleveland Guardians and Cincinnati Reds. 

As the Post reports, he might not have backing from MLB owners. 

Diamond has already torn up the contract of one Bally Sports tenant, the San Diego Padres, after it failed to reach renegotiated terms with the team in May. 

The Padres quickly launched a new linear pay TV channel on DirecTV and other pay TV platforms in the San Diego region, and the league is streaming their games on DTC-serviced 

But closing the sizable chasm needed to make the Padres whole on their lost $60 million a season Bally Sports San Diego deal falls on other, better-situated MLB teams. 

“I’m not paying past one year,” one MLB owner told The Post. “I don’t believe Rob will reject the Arizona deal. I think it’s a complete bluff."

Diamond filed for bankruptcy in March, looking to shed around $8 billion in debt. This debt was incurred in 2019, when parent company Sinclair paid $10.6 billion for 19 Fox Sports Net local sports channels, beating out a bid from MLB.

Those channels were spinning off margins in excess of 50% at the time. But due to cord-cutting and increased local sports TV rights costs, the average margin for Bally Sports channels has been reduced to less than 15%.

Diamond is now trying to renegotiate contracts among its 42 MLB, National Basketball Association and National Hockey League constituents for which it is losing money. 

Diamond's other goal: eight of the remaining 13 MLB teams in the Bally Sports portfolio haven't given up their DTC rights for Bally Sports Plus, and Diamond wants to fix that, too.

As the Post also reported, MLB’s owners collectively offered over the spring to buy Diamond for $350 million including the estimated $175 million the subsidiary had on its balance sheet at the time. 

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