Diamond Sports Group, the Sinclair Broadcast Group unit that runs the Bally regional sports networks, said it won’t pay the San Diego Padres for its TV rights and will no longer televise the team’s games on Bally Sports San Diego.
Major League Baseball plans to continue to make the games available to fans, producing the games with the team and distributing them through their current outlets including Spectrum, Cox Communications, DirecTV and Fubo, with addition streaming options available, according to a source familiar with the situation.
The expected announcement follows Diamond Sports decision in March to file for bankruptcy court protection while it tries to renegotiate the approximately $8 billion in debt Sinclair took on to buy the RSNs from The Walt Disney Co. in 2019.
The Bally RSNs have been televising Major League Baseball games since the start of the season, often paying fees after they were due but before the end of their contractual grace period. In this case Diamond Sports declined to send funds to pay for the rights fees to Bally Sports San Diego, a joint venture between Diamond and the Padres, which in turn would have paid the Padres.
In a statement Diamond blamed Major League Baseball for the impending blackout.
“While DSG has significant liquidity and has been making rights payments to teams, the economics of the Padres’ contract were not aligned with market realities,” Diamond said. “ MLB has forced our hand by its continued refusal to negotiate direct-to-consumer (DTC) streaming rights for all teams in our portfolio despite our proposal to pay every team in full in exchange for those rights. We are continuing to broadcast games for teams under our contracts.”
Major League Baseball has said it has the wherewithal to make broadcast of teams games available to fans in the event Diamond refuses to pay for the TV rights.
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The San Diego Union-Tribune also reported that the Padres broadcasters are team employees and likely to continue in their current jobs. The team also owns production facilities.
The Padres are scheduled to play the Marlins in Florida on Wednesday and Thursday before a weekend homestand with the Seattle Mariners.
It was unclear if Bally Sports San Diego would continue to operate or what it would show in place of Padres games.
The regional sports network business is under pressure from cord cutting, which is eroding subscribers and viewers and increasing costs for rights fees. Diamond has sought to generate additional revenue via a Bally Sports Plus, a direct-to-consumer app. But baseball has been making securing streaming rights to games difficult.
Broadcasters have been circling the RSN mess, looking to put games on their over-the-air stations. The Phoenix Suns reached a deal to move its games to Gray Television, but Diamond sued and the deal was blocked by the bankruptcy court.
While opting out of televising Padres games, Diamond has made rights payments to teams where televising games is more profitable.
Diamond is also hoping to be able to use the bankruptcy process to renegotiate its right deal. The court ordered Diamond to pay the Twins, Rangers, Guardians and Diamondbacks half of what it owes until a restructuring can be worked out.
Diamond and Major League Baseball are scheduled to appear in court on Wednesday. MLB is expected to argue that its teams should receive full payment for the rights to air games.
MLB contends the rights to the games are as valuable as ever and that Diamond is having financial difficulties because of mismanagement, including losing distribution from Dish and YouTube TV, according to a source familiar with the situation.
