In its first bankruptcy hearing, the Diamond Sports Group is pointing the finger at MLB for their bankruptcy.
Per Reuters, Diamond attorney Andrew Goldman claimed that the company’s lack of MLB streaming rights pushed the company into bankruptcy, and that those rights were needed in order to recoup lost revenue.
Diamond attorney Andrew Goldman said during the company’s first bankruptcy hearing in Houston that it needs the right to stream MLB games online to make up for lost revenue from declining 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 told U.S. Bankruptcy Judge Christopher Lopez.
This is nothing new. In an ESPN article this week discussing the bankruptcy, Alden Gonzalez reported that the company was looking to acquire the digital streaming rights for the nine teams whose rights it doesn’t have. MLB has been playing hardball with Diamond for months about the streaming rights, with MLB Commissioner Rob Manfred saying in October that the league “never received a coherent response” to how the streaming rights “would solve the company’s financial problems.”
Through attorney James Bromley, MLB reiterated that streaming rights alone wouldn’t make up for lost revenue from cable, satellite, and streaming operators.
MLB’s attorney, James Bromley, responded that Diamond cannot force teams to provide additional streaming rights or make up for declining cable revenue.
“We are dealing with a broken model, and it is not the responsibility of MLB to fix that model,” Bromley said.
As far as I can tell, Diamond has never revealed the amount, or even a range, of subscribers to Bally Sports+. At $19.99 per month or $189.99 per year, it would take a significant amount of new subscriptions to bridge the gap in lost revenue from carriage fees. Would those nine teams alone bridge that gap? It’s tough to determine that without exact information about carriage fees, households and Bally Sports+ subscriptions in other markets.
But consider that one million subscriptions on the monthly plan would bring in around $20 million per month, and that the Padres alone make a reported $60 million per year in rights fees from Diamond. It would take three months of a million subscribers just to cover the Padres for one season! Diamond is still bringing in a significant amount in carriage fees from cable, satellite, and streaming carriers, but if the gap is wide enough for Diamond to file bankruptcy, it’s going to need far more than a million subscribers across the country, which seems like a tough sell – with or without more MLB streaming rights.