To be able to come out of bankruptcy in a position to succeed, the Diamond Sports Group can’t lose carriage on DirecTV. Losing a national agreement with the satellite carrier would be a devastating blow for the company as 2023 comes to a close.
Last month during its bankruptcy hearing, Diamond asked for a 120-day delay (through November 8) to finish its reorganization plan. That plan includes new and extended carriage deals with distributors across the country, including DirecTV.
On Wednesday, DirecTV stated in a court filing that it didn’t object to delay, but that negotiations with Diamond “have barely begun.”
Here’s the key chunk of the filing, via Daniel Kaplan’s Substack.
“Yet, despite the fact that the Debtors’ Distribution Agreements with DIRECTV terminate by their terms later this year (unless DIRECTV opts to extend), the Debtors’ renewal discussions with DIRECTV have barely begun,” the satellite carrier’s motion reads. “Even agreements on preliminary matters related to such renewal discussions, such as alignment on cost-based reductions for loss of specific teams’ rights, have thus far not been reachable.
“DIRECTV has no objection to the extension…at this time, but cautions the Debtors against making any baseline assumptions in their go-forward business plan that any or all (the distributors) would agree to “expand carriage” when their respective existing agreements are up for renewal, especially without addressing the issue of providing immediate rate relief to (the distributors) for the loss of teams from their respective RSNs resulting from the Debtors’ intentional actions.”
Diamond has lost the broadcast rights to three teams since this bankruptcy process started. The Phoenix Suns left on their own accord for a new deal with Gray Television and Kiswe, while Diamond dropped both the Arizona Diamondbacks and San Diego Padres from their RSNs, leading to MLB producing and distributing the teams’ games.
As mentioned in that filing, DirecTV is targeting “cost-based reductions” for Diamond losing those teams’ rights, and agreements on those reductions “have thus far not been reachable.”
Diamond assuming that a deal will get done with DirecTV is foolish and naive. DirecTV knows how much power it has in these negotiations, and knows how much Diamond needs to get a deal done. If Diamond doesn’t budge in negotiations, DirecTV knows that it could cripple the company if it walks away.
DirecTV also knows that there likely won’t be a massive drain of subscribers if it drops the Bally Sports RSNs because fans don’t have many options nationally. Dish and Sling haven’t carried the RSNs for years while streaming companies Hulu Live and YouTube TV dropped them more recently. The best option would be Fubo, which began carrying the Bally Sports RSNs earlier this year while also increasing both monthly rates and RSN fees.
Diamond remains in a tricky spot as the bankruptcy hearing rolls along. DirecTV claiming that a renewal of the rights agreement shouldn’t be assumed isn’t all that surprising, but it’s a warning to Diamond that it might not be smooth sailing once the bankruptcy process finishes.