Major League Baseball warned Diamond Sports Group’s Chapter 11 reorganization plan, scheduled to go to a vote next month, is unfeasible given the regional sports channel company’s May 1 loss of coverage on Comcast systems.
Diamond owns the Bally Sports Regional Networks, which televises 12 MLB teams’ games.
The federal bankruptcy court is scheduled to host a hearing tomorrow at 3 p.m. ET to hear concerns raised in March by the NBA, NHL, and MLB about the soundness of the plan, which has been approved by most of the debt holders. But in a sharply worded motion this afternoon, MLB essentially warned the plan may be built on a house of cards, with everything from Amazon’s investment to a recent loan to Diamond all in peril.
“[T]hese chapter 11 cases now hang by the thinnest of threads,” MLB and the 12 clubs wrote. “Unless Comcast and the Debtors can come to a new agreement, it is highly likely that the loss of carriage of the Debtors’ broadcasts by Comcast, and the resulting loss of licensing fees from Comcast, will render the Plan unconfirmable, thereby wasting time and estate resources to the detriment of MLB, the Signatory Clubs, and other interested parties.”
Eighty-one percent of DSG’s revenues come from three cable distributors: DirecTV, Charter, and Comcast. DSG renewed with the first two, though MLB points out the economics of those renewals have not been shared so it is not possible to gauge whether they help or hurt the restructuring.
DSG declared Chapter 11 in March 2023 after years of cord cutting, and steep debt from the 2019 acquisition of the regional sports channels by parent Sinclair. As of early January 2024, DSG plans were to wind down operations after 2024, but a new agreement with Amazon to invest $115 million and offer direct-to-consumer streaming changed the direction of the bankruptcy to a reorganization.
But MLB questions whether the Amazon deal will ever actually occur.
The Amazon investment is “still dependent on, among other things: (1) the Debtors reaching satisfactory go forward arrangements with each of their three largest distributors—Comcast, DirecTV LLC (“DirecTV”) and Charter Communications (“Charter” and together with DirecTV and Comcast, the “Key Distributors”) and (2) the Debtors renewing their telecast rights agreements with NBA and NHL clubs to align with the economics they have assumed in the revenue forecasts underlying the Plan,” MLB wrote.
MLB noted it has served discovery on DSG on issues like the Amazon deal, the economics of the Charter and DirecTV deals, and the Comcast situation.
“Given the need for considerable additional information, including the information sought by the discovery requests which MLB and the Signatory Clubs have already served on the Debtors, and for resolution of these material contingencies, it is difficult to imagine how confirmation can proceed on the current schedule,” MLB and the teams wrote.
Throughout the 13-page motion, MLB gripes its fans are missing baseball, and somewhat humorously lists 11 moments they missed, sports highlights one rarely sees in a legal filing.
Here they are as described in the filing:
- Chris Sale’s nine-strikeout performance (Braves), and Tarik Skubal (Tigers) striking out a career-high 12 batters;
- Elly De La Cruz (Reds) leading MLB in stolen bases and stealing two bases each game for three-straight games;
- José Ramírez (Guardians) hitting a go-ahead home run to surpass Larry Doby for most go-ahead homers in club history;
- The Royals reversing their struggles from 2023, playing terrific baseball and jockeying for their division lead;
- 12-year veteran Kevin Pillar’s (Angels) two-home run, career-high six RBIs game;
- A Marlins’ walk-off victory in a game during which Marlins’ pitchers combined for 16 strikeouts;
- Willy Adames (Brewers) hitting two home runs to record at least four RBIs in a second straight game (marking the 11th occurrence in franchise history and the first by a shortstop);
- Sonny Gray (Cardinals) pitching 7 scoreless innings in a shutout victory;
- A walk-off triple by Jonny DeLuca in a game during which José Caballero stole four bases and scored three runs (Rays) to complete a three-game sweep;
- José Leclerc (Rangers) setting the record for most career strikeouts by a Rangers reliever in club history;
- and The Twins extending their winning streak to 12 games (tied for second longest in club history)
DSG could not immediately be reached for comment, though it has a website calling out Comcast for its failure to reach a deal.
MLB also pointed out that now with fears Bally Sports will collapse, it has had to again begin planning for offering alternate telecasts for the affected teams, the way it did last season for the San Diego Padres and Arizona Diamondbacks when DSG dropped coverage.
“The Debtors’ loss of carriage on Comcast just over a month into the 2024 MLB season has required MLB again to exert considerable time, effort, and expense in exploration of all available alternatives to protect its fans from being deprived of Club game broadcasts. The Debtors should not be permitted to stumble through the restructuring process, inflicting substantial injury upon fans who have lost broadcast access without warning while simultaneously subjecting multiple sports leagues and dozens of teams to significant financial risk.”
The motion appears to be laying the groundwork for tomorrow’s hearing. It asks only that the Comcast situation be discussed tomorrow, which would seem an inevitability, and for MLB to reserve its right to sue to block confirmation. The point of the motion instead is also to once again signal MLB is ready to war with DSG.
As so many times in this skirmish, get your popcorn ready.
