Sinclair/Diamond Sports bankruptcy watch

[JCA-CrystalCity]

https://sports.yahoo.com/how-the-collapse-of-the-regional-sports-network-is-affecting-mlb-economics-now-and-in-the-future-155227283.html

Hannah Keyser:

article discusses how the league backfilled for the Padres and D-Backs last year when DSG stopped paying the teams for in market broadcast rights. The league took over after guaranteeing the teams 80% of their revenue they were due from DSG.

Although quite literally a stopgap step taken to ensure that San Diego and Arizona fans would not be left totally in the dark, that setup is what MLB would like to recreate across baseball. In the interim, that means MLB funneling local revenue to teams through their own distribution systems. But as part of the ultimate end goal, according to people with knowledge of the league’s thinking, all media revenue would be centralized and distributed more equally, leveling the payroll disparity that is believed to be a detriment to baseball reaching its full business potential.

MLB had seen the writing on the wall for years — dating back to when Sinclair purchased the slate of RSNs from Fox in 2019 — and had been preparing since late 2022 for the possibility that DSG would not be able to fulfill its contracts in 2023. That involved building out a local media department, which was pressed into action first in late May and then in mid-July to take over broadcasts for the Padres and Diamondbacks.

Notes that the Twins contract with DSG expired at the end of the year and that 11 other teams still are under DSG contracts. Speculation is that the Rangers and Guardians are the next 2 teams DSG will drop. MLB's motion in bankruptcy court to have DSG provide the court with a list of the deals they plan on rejecting will be heard this Friday. League says it wants to bring up to 16 teams onto MLB media, but there will be no more 80% guarantees.

Instead, the economics will function as follows: Teams that do not have other RSN deals will be part of MLB Media. The league will broker a deal with local cable distributors, sell advertising against those games and give the advertising money back to the team. Those teams’ games will also be available direct-to-consumer through MLB.tv, as was the case for the Padres and D-backs last year. Revenue from out-of-market subscriptions will belong centrally to the league, as it always has, but in-market subscriptions and in-market advertising revenue will go to the local clubs.

Sounds like the plan is to let some of the powerful RSN, probably the team owned ones like NESN and Yes, stay separate while the rest comes under MLB distribution.

Eventually, MLB would like to have both national and local broadcast revenue run through the league’s media departments. That would be a significant change for a sport that has long been defined by the differing behavior of big markets and small markets and in which the value of the local broadcasts has been a major source of that disparity. Even as an aspiration, it bears paying attention to.

[Five Banners]

Isn’t it great that MLB is reportedly providing straight up subsidy to two markets that had market forces see their TV deals collapse, while after this market is saddled with its unprecedented and ridiculous TV burden, I don’t see MLB fronting the Nationals with what they are owed.

[HalfSmokes]

The next CBA will be interesting. If the majority of owners end up under the mlbtv umbrella, they may turn on better off teams and force though more revenue sharing

[nfotiu]

Isn’t it great that MLB is reportedly providing straight up subsidy to two markets that had market forces see their TV deals collapse, while after this market is saddled with its unprecedented and ridiculous TV burden, I don’t see MLB fronting the Nationals with what they are owed.

MLB is getting some carriage fees for their broadcasts.  I'm guessing they are getting the same or close to what Bally's was, since they usually end up on the exact same carriers.   It's not a full subsidy and I think they only promised that subsidy for last year and maybe this year.  MLB was doing this so these teams weren't pressured to taking less from Bally's or including streaming rights.   MLB wants to cut the ties with Bally's and move on to something more future proof.

MLB did front the Nationals the disputed MASN money, but the Orioles used that against them in court saying it made the MLB have a financial interest, so the Nats paid the money back to the MLB so there would be no conflict of interest.

I don't see MLB seeing MLB.tv and a patch work of mlb produced team channels as the end game.  Selling them as a consolidated package to one of the big streamers is the avenue to a possible over payment that gets them money and exposure.

[HalfSmokes]

MLB is getting some carriage fees for their broadcasts.  I'm guessing they are getting the same or close to what Bally's was, since they usually end up on the exact same carriers.   It's not a full subsidy and I think they only promised that subsidy for last year and maybe this year.  MLB was doing this so these teams weren't pressured to taking less from Bally's or including streaming rights.   MLB wants to cut the ties with Bally's and move on to something more future proof.

MLB did front the Nationals the disputed MASN money, but the Orioles used that against them in court saying it made the MLB have a financial interest, so the Nats paid the money back to the MLB so there would be no conflict of interest.

I don't see MLB seeing MLB.tv and a patch work of mlb produced team channels as the end game.  Selling them as a consolidated package to one of the big streamers is the avenue to a possible over payment that gets them money and exposure.

Ballys dropped the teams because they were losing money on the contracts. Once MLB has to negotiate, the carriers can use the opportunity to push down fees even more

[nfotiu]

Ballys dropped the teams because they were losing money on the contracts. Once MLB has to negotiate, the carriers can use the opportunity to push down fees even more

Yeah, I know.  Just saying they are getting those carriage fees and the $20/month in market mlb.tv fees, so that probably comes close to covering 80% of what they were getting.  Likely not the full amount, but not a full on subsidy either.

[JCA-CrystalCity]

https://www.mlbtraderumors.com/2023/12/mariners-to-take-100-percent-control-of-root-sports-northwest-network.html

[imref]

https://finance.yahoo.com/news/amazon-in-talks-over-streaming-partnership-with-bankrupt-diamond-sports-group-report-200421815.html

[Senatorswin]

Looks like Diamond and MLB have come to an agreement:

https://www.yahoo.com/entertainment/tentative-deal-between-diamond-sports-023720346.html

[nfotiu]

Interesting article on how this mess is shaping teams' spending abilities. 

https://www.espn.com/mlb/story/_/id/39146754/mlb-free-agency-2023-24-rsn-tv-diamond-sports

[nfotiu]

MLB rejects Amazon's lifeline to Bally's to do local streaming.   

https://nypost.com/2024/01/08/business/major-league-baseball-rejects-amazons-150m-bid-to-bail-out-bankrupt-diamond-sports-sources/

“They rejected it because Amazon wanted a streaming deal for more than one year,”  the source told The Post.


MLB Commissioner Rob Manfred is pitching around Amazon’s deal to invest in Diamond so MLB can possibly strike its own deal with Amazon in 2025.

“Manfred said if you want a digital deal it will be with us.”

Looking more and more like they see the end game as Amazon or Apple or someone doing local in market broadcasts.  Hopefully they can do this in a way that isn't a klugy geo-restricted way.

I'm curious to see if they can still strike a deal with Bally's to broadcast this season.

[nfotiu]

https://awfulannouncing.com/amazon/diamond-sports-announces-amazon-investment-in-comeback-plan.html

So Amazon has apparently saved DSG from bankruptcy.  I'm not sure how their 100 million dollars was enough to save the day?

The agreements DSG has with the NBA and NHL, and was striving to sign with MLB, end all the team contracts early and in some cases cut the rights fees. MLB could not come to terms, and now it appears the 11 teams will stay under the Bally brand beyond this upcoming season.

It's a very confusing deal.   They end contracts with NBA and NHL after this year, only get 5 MLB teams for streaming on Amazon, and they'll stick with their other money losing MLB deals for their duration?   

[HalfSmokes]

So amazon will have a tile that airs unpopular teams in market only? There has to be something more to it than paying $100 million to air Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays games

[Natsinpwc]

I thought MLB nixed that idea.

[JCA-CrystalCity]

So amazon will have a tile that airs unpopular teams in market only? There has to be something more to it than paying $100 million to air Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays games

well, there's the NBA and NHL.

[nfotiu]

It sounds like this deal takes precedence over the deal to end the nhl and nba rights and those will continue as is except with streaming on Amazon for an added cost.

MLB was talking about putting together a package of all these teams out to bid.   But now that's dead as they are back stuck with all their old deals.   The teams that have left already are in a bad spot now.   Is MLB going to keep paying them?   Will the MLB teams still on Bally's, but not on streaming strike a streaming deal?   Or will MLB and those teams sell off those streaming rights to someone else to directly compete with the cable channels?   Amazon could just be sticking their foot in the door here to try to get a bigger deal.   Like HalfSmokes was saying, 5 crappy MLB teams on a clumsy, expensive geo-locked Prime channel is not going to be worth much.

These existing deals will still all be money losers, and will get worse and worse every year.   They spent 10 billion on these, and they only needed 100 million to get out of bankrupcy?   How does that make any sense?

[JCA-CrystalCity]

These existing deals will still all be money losers, and will get worse and worse every year.   They spent 10 billion on these, and they only needed 100 million to get out of bankrupcy?   How does that make any sense?

The $100 million might cover things like debt to vendors, but it sounds like most of the creditors are taking equity in the new entity. I think for Amazon this is a cheap flyer that could pay off if they can leverage it into a bigger deal.

[HalfSmokes]

The $100 million might cover things like debt to vendors, but it sounds like most of the creditors are taking equity in the new entity. I think for Amazon this is a cheap flyer that could pay off if they can leverage it into a bigger deal.

$695 million from Sinclair probably helps

[HalfSmokes]

well, there's the NBA and NHL.

In market only and the NBA deal has regular outs for the league. Maybe they end up rolling it in with league pass during the next rights deal?

[JCA-CrystalCity]

$695 million from Sinclair probably helps

well, for Sinclair, that gets them out of pierce the veil kind of litigation. I don't know / think they keep any equity in the new entity. The Amazon participation looks like a flyer.

[imref]

FWIW, the WWE just inked a ten-year deal with Netflix to broadcast Monday Night Raw for $500 million a year.

I gotta think the sports leagues will look at that, and the success of the NFL on Paramount+ , and make a major push to get a national streaming deal versus the RSN model.  The Netflix / WWE deal also includes international streaming of all WWE programming and premium live events (formerly PPVs).

[Senatorswin]

Kiki Hernandez said during his free agency most teams told him the uncertainty of the local TV revenue was the reason of the slow free agent market this year.