9:50am: Josh Kosman of The New York Post reports that Amazon is giving Diamond roughly $100MM for the streaming rights of the Tigers, Royals, Marlins, Brewers and Rays. That money and the Sinclair settlement money could be presented to a Houston bankruptcy judge as early as today.
8:45am: Diamond Sports Group announced that is has a restructuring support agreement in place that will allow it to emerge from bankruptcy and continue operating, as relayed by Brendan Coffey of Sportico. It apparently has approval from most of the company’s debt holders and also features an investment from Amazon. It also has a $495MM deal from Sinclair Broadcasting Group to settle outstanding litigation.
“We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024,” Diamond CEO David Preschlack stated. “We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond’s near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern for the benefit of our investors, our employees, our team, league and distribution partners, and the millions of fans who will continue to enjoy our broadcasts.”
As noted by Coffey, Diamond is in Chapter 11 bankruptcy, which means that any deals will have to be approved by the court. But Diamond also says they have a deal in place with some debt holders to raise $450MM of “junior secured superpriority debtor-in-possession financing.” If the company can wriggle out of bankruptcy or get the court’s approval, this has the potential to be a significant development for them and for baseball.
Cord cutting in recent decades has led to significant challenges for the regional sports network (RSN) model, wherein RSNs pay millions of dollars to clubs for their broadcasting rights. The ongoing bankruptcy of Diamond Sports Group, which owns Bally Sports, has impacted the roster moves of several clubs. The company dropped its contracts with the Padres and Diamondbacks last year, with Major League Baseball stepping up to take over local broadcasts. Their contract with the Twins expired after 2023.
The Padres and Twins have each been operating with lower payrolls this year compared to last year, with the loss of RSN revenue a clear factor. There are 11* other teams that still have deals with Diamond but the uncertainty around how things would proceed has seemingly impacted some of them as well. For example, the Rangers are one of those 11 clubs and they have been acting with less aggression this winter, despite having just won the World Series. It has been speculated by some observers that their desire to re-sign Jordan Montgomery, or to make other theoretical moves, might hinge on the development of this bankruptcy and their broadcast situation.
Part of the proposal will see Amazon make a minority investment and offer direct-to-consumer services on their Prime Video platform. That will apparently include games from MLB, NBA and NHL, including pre-game and post-game content. The full details of those offerings aren’t fully clear at the moment. It was reported back in December that Amazon was discussing a streaming deal with Diamond but the latter company only had streaming rights for five clubs: the Tigers, Royals, Marlins, Brewers and Rays. Reporting from last week suggested that MLB shot down the discussions between the two companies, perhaps with the intent of negotiating a deal with Amazon directly.
In addition to the impact on clubs and their finances, it’s also possible this will have an impact on fans. The RSN model involved widespread blackouts, as those RSNs wanted to ensure customers were watching on cable on not on a streaming service like MLB.TV. These blackout areas have often been frustrating for fans due to some absurd overlap, such as the fact that the people of Iowa couldn’t stream games featuring the Cubs, White Sox, Cardinals, Twins, Royals or Brewers.
Things have been gradually shifting towards a direct-to-consumer model, with MLB having expressed a desire to embrace that path forward. When the league took over the Padres’ broadcasts in May of last year, they announced that people in the San Diego area could stream games blackout-free for $19.99 per month or $74.99 for the remainder of the season.
As for Sinclair, they bought Diamond in 2019 but the companies began operating independently after Diamond accused Sinclair of siphoning funds from the subsidiary.
Many of the details are still to come and there are still hurdles to clear but today’s news is a notable development for many facets of the baseball world.
* Those clubs are the Angels, Braves, Brewers, Cardinals, Guardians, Marlins, Rangers, Rays, Reds, Royals, and Tigers.
