MLB, NBA, NHL Demand Information from Diamond Sports Group in Emergency Bankruptcy Hearing
Diamond’s contracts with cable and satellite distributors are protected by non-disclosure agreements, but they can be overridden by court order.
To the surprise of no one who has been following the company’s bankruptcy case for any length of time, Diamond Sports Group (DSG) needs to head back to court. The broadcaster operates 18 Bally Sports regional sports networks (RSNs) and has run into a wall in its discussions with the NBA, NHL, and MLB, the three major leagues that offer regular season games on Bally Sports channels and the company’s streamer Bally Sports+. The leagues want more information about Diamond’s newly negotiated carriage contracts with Charter Communications and DIRECTV, as well as its financing arrangement with Amazon. The league’s demands have led Diamond to request an emergency hearing on Tuesday to put the issues in front of Judge Christopher Lopez.
Key Details:
- Diamond cannot give the three leagues more information about its contracts without a court order, since they are protected by non-disclosure agreements.
- The NBA, NHL, and MLB are not likely to support Diamond’s bankruptcy reorganization plan without the information they seek.
- A confirmation hearing for Diamond’s plan has already been moved once and was originally scheduled for Tuesday.
The three leagues involved with Diamond have already had reason to grumble about the company in June. The broadcaster originally wanted its creditors to vote on its bankruptcy reorganization plan on June 18, but things haven’t gone according to plan. Diamond failed to reach a new carriage contract with Comcast in time to keep the channels from being pulled off the cabler’s airwaves at the end of April, and that has cast serious doubt in the minds of league executives as to whether the company’s post-bankruptcy plan is viable.
That’s why the MLB, NBA, and NHL are insisting on seeing the new carriage deals that Diamond has with Charter and DIRECTV, as well as Amazon’s pact with the company to provide it funding and potentially stream Bally Sports content on the Prime Video platform. However, those deals are protected by non-disclosure agreements, and Diamond would need a court order to override those clauses. From the sound of Diamond’s communication to Judge Lopez, it would prefer to ask the presiding officer to sign off on such an order and give the leagues the information they want, but first, it needs another hearing.
“The debtors would like to produce information necessary for the leagues to assess the feasibility of the debtors’ plan, but also not to wish to run afoul of applicable confidentiality provisions,” DSG said. “This is especially true given the importance of the debtors’ relationships with the leagues, the distributors, and Amazon alike.”
Is This Diamond’s Last Chance?
MLB has received the most publicity for pushing back against Diamond, but the NBA and NHL have been increasingly unsatisfied with the company for weeks. They have grown tired of delays, and the request to move the confirmation vote for Diamond’s reorg plan raised many hackles, as a postponement to the end of July leaves the NBA and NHL without clarity on the plan until around 10 weeks before their 2024-25 seasons are supposed to start.
Getting the information they want about Diamond’s carriage contracts and deal with Amazon may not be especially helpful either. The real issue for Diamond is its lack of a new deal with Comcast, which wants to move Bally Sports RSNs to a higher-priced subscription tier. Thanks to the “most-favored nation clauses” that are built into carriage contracts, if Comcast gets to move the RSNs to a higher package, other providers will also have that luxury. That could limit Diamond’s ability to generate revenue, even if it agrees to a deal with Comcast, which looks less likely by the day.
Regional sports networks are suffering from the decline of cable, and the old model of forcing viewers who don’t watch said channels to pay for them anyway is no longer sustainable. There simply aren’t enough cable viewers paying into the top of the funnel any longer, and providers know that asking remaining customers to pay for content they aren’t enjoying is a hard ask given all the other reasons viewers now have to cancel cable, including the wide availability of on-demand streamers.
The partner sports leagues could still vote not to confirm Diamond’s reorg plan if they get the information they want. But not knowing the details of the company’s carriage deals — and its agreement with Amazon— would almost certainly guarantee their dissent, and Diamond has to move past this battle if it wants to fight another day.
Bally Sports+
Bally Sports+ is a direct-to-consumer streaming service that offers live games for those who want access to your local Bally Sports RSN without subscribing to a cable or satellite package.