Major League Baseball continues to cast a skeptical eye toward Diamond Sports Group’s long-term health and the viability of its plan to emerge from bankruptcy. But if any additional fireworks are coming in a long-running proceeding in federal court in Houston, they probably will wait until May or June.
Diamond has the rights to the telecasts of 12 MLB teams in 2024, and a total of 38 teams across MLB, the NBA and NHL. In a quick hearing on Wednesday, Judge Chris Lopez allowed DSG to continue working on an Amazon-backed plan introduced in January, one Diamond believes can save it from liquidation.
Lopez approved what’s called a disclosure statement — an outline, essentially, of what Diamond intends to do, which includes the help of $450 million in financing.
“Approval of the disclosure statement is another important step forward in our restructuring and we are working toward confirming our plan and emerging as a sustainable, go-forward business,” a spokesperson for Diamond Sports Group said in a statement. “We are focused on reaching long-term agreements with our partners to enable us to continue serving fans across the U.S. and delivering meaningful value to distributors, teams and leagues.”
From here, the biggest step is the actual confirmation of the plan. That hearing is scheduled for 10 a.m. CT on June 18. Any objections are to be filed by 4 p.m. on May 22.
Last week, all three partner leagues— baseball, basketball, and hockey — told the court they were reserving their rights, a means of self-protection as the process goes forward.
“MLB and the Clubs have expressed serious concerns to the Debtors and their advisors about the assumptions underlying the Debtors’ business plan,” the league wrote in its filing, adding that “MLB and the Clubs question whether the Debtors will be able to demonstrate to the Court that confirmation of the Plan is not likely to be followed by the liquidation, or further financial reorganization, of the Debtors … ”
One outstanding question centers on future distribution. In its disclosure statement, Diamond said that about 81 percent of its revenue distribution revenue is tied to three companies: Charter, Comcast and DIRECTV.
Diamond recently reached a multi-year deal with Charter that would take effect if the company comes out of bankruptcy.
“Discussions continue with the other two big distributors,” Diamond lawyer Brian Hermann told the judge. “We remain optimistic and confident that we will be able to reach agreements with both of them as well.”
Jim Bromley, a lawyer representing MLB, noted to the judge that the league didn’t know the economics of the Charter deal.
“We do continue to reiterate our requests for information to allow us to review the economics that those deals will deliver,” Bromley said. “We hope the debtors are going to be able to do what they have said they’re going to do.”
MLB declined comment Wednesday beyond what was said in court.
Diamond has told the court that its subscribers dropped by 35 percent from 2019 to late February. Experts in January were dubious of projections Diamond offered as to its potential growth coming out of bankruptcy.
On Tuesday, a court filing in the case revealed financial terms of a settlement Diamond reached with one of two MLB teams it ceased broadcasting in the middle of the 2023 season, the San Diego Padres. The Padres sought at least $162 million, and agreed in mediation last July to a pay out worth roughly $79 million. It’s unknown if a similar deal was reached with the other team DSG dropped, the Arizona Diamondbacks.
Diamond is in talks with the NBA and NHL about longer-term deals. The NBA asked for regular status-conference updates, which Diamond said it can oblige.
Diamond on Wednesday also received approval on a schedule that would make it more difficult for another reorganization plan to be considered by the court.
“We’ve already filed our plan and we’re obviously pursuing it aggressively so that’s not an issue,” Hermann said. “We have a timeline that we’ve laid out, so that’s pretty clear. The whole purpose of that motion was just to make sure that we didn’t have a distraction of somebody else filing a competing plan. Frankly, I’m not sure who that would be or what that plan would say, but we didn’t need to run the risk. … That would be a distraction.”
The dozen MLB teams Diamond carries for 2024 are the Atlanta Braves, Cincinnati Reds, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, St. Louis Cardinals, San Diego Padres, Tampa Bay Rays and Texas Rangers. For the rest of this baseball season, Diamond’s stations continue to be broadcast with the Bally name, but a new sponsor would follow after 2024.
(Photo: David Berding / Getty Images)
