Athletes Lawyer

Keeping You In The Game

Regional sports networks are on the ropes

On Behalf of | Mar 16, 2023 | Current Events |

Fans still make it to the stadiums to see their favorite teams play, but television has long been the cash cow that supports teams whose live attendance numbers do not cover operating expenses. So, there was a lot of concern when Diamond Sports Group (DSG), which owns 19 regional sports networks around the country, missed a $140 million interest payment on its $9 billion debt. The company now has filed for bankruptcy protection on Tuesday March 14.

Biggest impact would be baseball

DSG’s 19 outlets are home to most of their region’s sports teams outside of the NFL, including the NBA, NHL and MLB. While the NHL and NBA seasons are nearing conclusions with payments already made through the end of their seasons, the missed payment are a huge disruption for baseball fans nationally and locally — it broadcasts games for 14 teams, including Angels and Padres games. DSG counts on local affiliates to pay to broadcast the occasional game, and cable subscribers pay for regular daily broadcasts that non-cable or national outlets do not pick up.

Corporate interests and casual fans

Media watchers quickly point out that cable television is waning with its astronomical costs for deluxe packages. This trend is terrible news for DSG — local sports networks traditionally counted on fees baked into the customer’s cable bill because it added extra cash to the till from beyond each team’s rabid fanbase. DSG was further squeezed when the Dish Network started dropping local sports from its offerings because it claimed sports weren’t the big draw they once were.

A clandestine arrangement

DSG has been in financial straights since forming in 2019. When Disney agreed to buy most of 21st Century Fox’s assets, regulators required them to sell the regional sports outlets (which were already lower performing) to keep the big networks, movies and popular TV shows. Sports were bought by Sinclair Broadcast Group, which created Diamond Sports Group. The purchase price was $8 billion, which DSG struggles to pay as television revenues decline in many areas.

Worst case scenario?

If DSG can’t get the support to restructure, there could be a fire sale-style bankruptcy where bankruptcy courts step in. Since these regional sports networks are only available to cable providers or as part of a digital bundle (like YouTube TV), fans were traditionally forced to pay for the big package to get the games.

DSG would like to get digital rights at a reasonable price – teams own their broadcast rights, but the league owns digital rights. MLB commissioner Rob Manfred said absolutely not: “If Diamond doesn’t pay under every single one of the broadcast agreements, that creates a termination right and our clubs will proceed to terminate those contracts.”

He went on to say that the league could and would create production crews to cover the games. Whether that happens remains to be seen. As of now, the DSG is under bankruptcy protection and appears poised to broadcast the games. The details of the bankruptcy are still being worked out.

Watch this space.