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Diamond Sports Balks at Padres Payment, Won’t Air Team Games

2023-05-31 20:26
Diamond Sports Group lost the rights to televise San Diego Padres baseball games after its local cable TV
Diamond Sports Balks at Padres Payment, Won’t Air Team Games

Diamond Sports Group lost the rights to televise San Diego Padres baseball games after its local cable TV channel failed to make a required payment to the MLB team.

In a statement, Diamond Sports said that while it has significant liquidity and has been making payments to other teams, the terms of the Padres contract were “not aligned with market realities.”

The broadcaster said Major League Baseball forced its hand by refusing to negotiate direct-to-consumer streaming rights for all the teams in its portfolio “despite our proposal to pay every team in full in exchange for those rights.”

Diamond Sports, the largest owner of regional sports networks, filed for bankruptcy protection in March, a victim of the high debt load taken on by parent Sinclair Broadcast Group Inc. to purchase the business and the shrinking ranks of cable-TV customers.

The company has been trying to acquire the streaming rights to more teams to launch a new online alternative to its traditional cable channels.

Diamond operates local channels under the Bally Sports name. A hearing in the bankruptcy case is scheduled for Wednesday.

Read more: Watching Your Favorite Team Could Cost More

Major League Baseball has been preparing for the moment when Diamond fails to pay a team and relinquishes the broadcast rights.

Starting Wednesday, Padres games will be carried by major pay-TV providers in the San Diego area and will also stream online as part of deals the league helped negotiate. In a statement Wednesday, the league said fans in the Padres local market can see the team by buying a streaming subscription for $19.99 a month at MLB.TV.

The new distribution arrangement would expand the reach of Padres games by more than 2 million homes, according to the league.

“While we’re disappointed that Diamond Sports Group failed to live up to their contractual agreement with the club, we are taking this opportunity to re-imagine the distribution model,” said Noah Garden, MLB chief revenue officer.

A big question is what impact the lost rights payments will have on the team’s operations. Many MLB franchises get a significant portion of their revenue from local TV deals and use that money to pay their players, among other things.

Major League Baseball is hoping to re-create a similar model, driving revenue for the Padres through a mix of subscription and advertising revenue.

(Updates with statement from MLB executive in tenth paragraph)