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Diamond Sports says MLB streaming dispute contributed to bankruptcy

RSN operator wants to keep streaming games to cover lost revenue and declining cable subscriptions.

17 March 2023 Ed Dixon

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  • DSG filed for chapter 11 bankruptcy this week
  • Sinclair subsidiary says MLB wants to take back streaming rights
  • Texas Rangers first team intending to cut ties with DSG

Diamond Sports Group (DSG) has cited Major League Baseball’s (MLB) desire to stream games to fans itself as a contributor to the regional sports network (RSN) operator’s bankruptcy.

The Sinclair subsidiary, which has local broadcast rights to 14 MLB teams, filed for chapter 11 bankruptcy earlier this week, a move that had first been floated back in January.

DSG, operator of 19 Bally Sports-branded RSNs, said the bankruptcy will be used to eliminate more than US$8 billion of outstanding debt and restructure the company’s balance sheet.

As the fallout continues, DSG attorney Andrew Goldman said during the first bankruptcy hearing in Houston that the company needs to be able to stream MLB games online to cover lost revenue and falling customer cable subscriptions.

“The (MLB) commissioner’s office has made it clear that they want to take back the rights and go it alone, which will effectively drive us out of the market if they are successful,” Goldman said, as reported by Reuters.

DSG’s court filings showed that national cable subscriptions declined to 62 million in 2022 from 83 million in 2019, a trend which contributed to the company’s revenue falling 24 per cent over that period.

In response, MLB attorney James Bromley stated that DSG cannot force teams to provide additional streaming rights or make up for declining revenue from cable subscriptions.

“We are dealing with a broken model, and it is not the responsibility of MLB to fix that model,” Bromley said.

The New York Post had reported that MLB could stream the games of roughly six teams for free should DSG enter bankruptcy. In February, the league’s commissioner Rob Manfred said MLB was prepared to step in and broadcast games, adding that close to US$1 billion in revenue was at risk.

Goldman, though, said that DSG, which also has local broadcast rights for 16 National Basketball Association (NBA) teams and 12 National Hockey League (NHL) clubs, has negotiated additional streaming rights for their games. He added that DSG was “willing to pay fair value” to stream MLB fixtures and had previously reached streaming agreements with five MLB teams.

However, Goldman said MLB has instructed nine other clubs not to allow DSG to stream their games online.

DSG has insisted it will continue to operate while it restructures its debt and has US$425 million cash in hand to fund its business and restructuring. It could also be spun off from Sinclair to become a standalone company. 

One team that could cut ties with DSG ahead of MLB’s 2023 season, which starts on 30th March, is the Texas Rangers. According to The Athletic, the franchise notified DSG last week it would end its media rights deal in the event of the company’s insolvency, which the bankruptcy may trigger. DSG reportedly plans to fight any attempt by the Rangers to end the agreement.

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