Diamond Looks to Retain Some MLB Contracts as Chapter 11 Exit Looms (original) (raw)

In the wake of last week’s revelation that Diamond Sports Group was looking to tear up all but one of its extant MLB rights deals, the owner of the Bally Sports-branded RSNs is working to keep at least a few of those team partners for one last go-around.

On Oct. 2, Diamond counsel Andrew Goldman told the U.S. Bankruptcy Court for the Southern District of Texas that the company intends to maintain “a single telecast agreement, that of the Atlanta Braves,” while rejecting the remainder of its active MLB contracts. And while the DSG reveal sent shockwaves through the league—attorney James Bromley objected that MLB had been “sandbagged” by the surprise disclosure—Diamond is in active negotiations with at least seven clubs.

Among the franchises that are discussing a single-season renewal are the Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, St. Louis Cardinals and Tampa Bay Rays. Four of those teams (the Angels, Royals, Marlins and Cardinals) are co-owners of their in-market TV channels, and as such are technically not involved in Diamond’s bankruptcy case. Los Angeles boasts one of the most lucrative RSN deals in baseball, as owner Arte Moreno in 2011 inked a 20-year, $3 billion deal with DSG precursor Fox Sports.

Should any of these teams elect to go forward with their legacy RSN in 2025, they will do so at considerably diminished rates, with sources close to the action suggesting that the rights fees could be slashed by as much as 40%. Diamond’s NBA partners agreed to a similar fire sale reduction in August.

One MLB club that won’t be extending its stay with Diamond is the Texas Rangers, who last month announced they were working on the sort of direct-to-distributor broadcast model that’s become increasingly popular throughout the latter stages of DSG’s journey through Chapter 11. According to two sources with direct knowledge of the matter granted anonymity because the matter is private, the Rangers brass demanded an upfront payment for the entire 2025 season, and when Diamond balked at those terms, Texas walked. (The Rangers’ average annual fee was around $111 million, although Diamond’s offer was well shy of that benchmark.)

Playfly Sports CEO Craig Sloan last week said Diamond’s decision “amounts to a formal rejection of its MLB deals, meaning that all 11 teams outside of the Braves are now free agents and can go anywhere, which really wasn’t the case before today.” As such, the impacted clubs are looking at all their options ahead of next season: “If you’re the St. Louis Cardinals, you can always go back to Diamond, but now you can really go just about anywhere with your rights. It’s going to get interesting pretty quick with some of these other teams.”

And as Diamond attempts to bring at least some of these partners back into a fold, alternative distribution platforms are popping up like dandelions. In Ohio, the new Rock Entertainment Sports Network would seem to have a fighting chance to lure at least one of the Buckeye State’s MLB teams into its free over-the-air play. Meanwhile, MLB Media is also trying to convince the Guardians and Reds to hand over their local TV and streaming rights, although the prevailing sentiment in baseball circles is that most clubs aren’t ready to jump headlong into a league-owned distribution scheme.

ESPN also has indicated that it would like to be in the local media mix. Speaking to reporters in late August, ESPN chairman Jimmy Pitaro suggested that the company’s forthcoming direct-to-consumer service, codenamed “Flagship,” could play a role in sorting out the RSN mess.

“That is a market that is changing very, very rapidly,” Pitaro said during a presentation at ESPN headquarters in Bristol, Conn. “It seems like every day I’m reading about a different team that is changing their approach in terms of local, in-market games. And we want to be at least part of the solution here.”

Given its druthers, ESPN would stream games to hometown fans via its new DTC platform, which is expected to launch early next fall. “I very much believe that Flagship should be part of the solution,” Pitaro added. “We have made that point to the various leagues, the various commissioners, that we are very interested in stepping up here.”

While ESPN is open to negotiating on a club-by-club basis, Pitaro acknowledged that a move into the local media space would perhaps best be achieved through an arrangement with MLB’s front office. “If Major League Baseball is able to put together a group of teams, we would love to … sit down and do a larger deal that, quite honestly, would be simpler than having to do individual team deals,” he said.

However things shake out on the RSN front, the clock is ticking. Diamond has acknowledged that it will also free its NBA and NHL clubs from their extant deals if its reorganization plan is not approved by Dec. 16, while the Braves will be let off the hook on New Year’s Eve. A confirmation hearing is scheduled for Nov. 14.

In the event Judge Christopher Lopez approves Diamond’s re-org, that new lease on life isn’t going to eliminate any of the endemic pressures on the pay-TV model. In the last five years alone, 42% of subscribers to the traditional cable/satellite/telco-TV bundle have cut the cord, with the national base shrinking from 85.4 million homes to 49.8 million. And the churn rate shows no sign of slowing down, as 12% of the bundled subs ditched their traditional video provider over the last year.

Thus, if/when Diamond emerges from Chapter 11—whereupon they’ll have a new naming-rights partner in FanDuel—the prognosis remains bleak. If the current rate of decline holds up through next year, operators could be down to some 42.3 million bundled subs a mere 12 months from now, which would bring overall penetration of the bundle to around 33% of all U.S. TV homes. Ten years ago, nearly 90% of all American households subscribed to the bundle.

For all that, local sports are in no danger of vanishing from the airwaves. The model is rapidly [d]evolving, but hometown consumption remains of singular importance to baseball; in 2023, the RSNs accounted for 82% of all in-season MLB impressions.

“As American sports fans, we’re conditioned to have every single one of our games on multiple devices, so the games will land someplace,” Sloan said. “And Diamond is still the most financially compelling option for teams as of today.”