Over the last couple of months I have written here about the looming bankruptcy of Diamond Sports, which operates the Bally Sports regional sports networks. Those channels control the rights to 14 MLB teams. To refresh your memory, this article from January and this one from February have more details.
Commissioner Rob Manfred addressed this issue at his Cactus League media day news conference:
Manfred said, “No matter what happens with Diamond, we want to make sure the games are available.” Pressed further on what that might mean if Diamond was unable to broadcast games at all, Manfred said that it’s MLB’s expectation that Diamond would pay the clubs and continue as they have been, but if not: “We’ve been really clear that if Diamond doesn’t pay, for every single broadcast agreement, that creates a termination right.” The rights would thus revert to the clubs, and Manfred added, “If MLB stepped in, we would produce the games, using MLB Network, and then go directly to distributors like Comcast or Charter. and make an agreement to have those games distributed.”
Now, per Josh Kosman at the New York Post, Major League Baseball is indeed going to start producing and distributing games for six of those 14 teams:
Major League Baseball plans to step up to the plate to broadcast games of roughly a half-dozen teams from a bankruptcy-bound regional sports network provider so that fans don’t miss a single pitch, The Post has learned.
Diamond Sports owns the home broadcast rights to 14 baseball teams, but sources close to the situation told The Post the money-hemorrhaging company is expected to file for bankruptcy March 17 – days before the season opens on March 30.
Diamond, which operates under the Bally’s name, is expected to use the bankruptcy proceedings to reject the contracts of at least four teams to which it pays more in rights fees than it collects back through cable contracts and ads, two sources close to the situation said.
The teams in the red include the Cincinnati Reds, Cleveland Guardians, San Diego Padres and Arizona Diamondbacks, according to one of the sources. Presently, Diamond stands to lose $20 million annually on San Diego alone, the source added.
Since the 1980s, MLB teams have moved from broadcasting their games on over-the-air channels to regional sports networks. The heyday of this form of sports broadcasting was from the 1990s through about 2010, as cable and satellite broadcasting were in their ascendancy.
But with the advent of streaming services and greater ease of accessing streaming through devices from phones to tablets to laptops to smart TVs, many people have “cut the cord” and cancelled those cable and satellite subscriptions. This has led to hemorrhaging of money for RSNs and this bankruptcy filing was inevitable. It was just a question of when, and the “when” is “now.”
Per the New York Post article, here’s how it will likely work:
Manfred will have the league take over the local broadcasts of the money-losing teams and stream them for free in their respective local markets as he negotiates with their cable companies for lower contracts, a source with knowledge of the discussions said.
MLB has not finalized plans for how fans in the blacked-out markets will be able to view the free games. Currently, fans can pay to watch out-of-market games through the MLB.TV app.
MLB declined comment.
A spokesperson for Diamond declined to comment when reached by The Post on Sunday.
Even if MLB reaches deals with cable providers, it will still offer the over-the-top service for around $15 a month, the source added.
What isn’t stated here is the issue of rights fees. That’s how many MLB teams have made their really big money over the last 20 years. Streaming at $15 a month isn’t going to make up for rights fees that are no longer paid. You’ve probably read articles about how streaming services are losing big money — Peacock, Disney+, Paramount+, Apple TV+, I could go on, but you get the idea.
What this is going to do to the future of baseball finances is uncertain. For now, it doesn’t affect the Cubs, because Marquee Sports Network is not part of the Diamond Sports bankruptcy filing. That’s true even though Sinclair Broadcasting, which owns Diamond Sports, owns 50 percent of Marquee, with the other half owned by the Cubs. It’s possible, I suppose, that the Cubs might take over Marquee entirely or find another partner if needed.
I’ve been asked in recent days, and you’re probably wondering, whether Marquee might start a DTC (direct-to-consumer) version of its channel to sell to fans who live in the Cubs market territory and who have cut the cord. The answer is still, “Hope so.” Marquee wants to do this and Cubs management and ownership want to do it. Last month in Mesa, Cubs Chairman Tom Ricketts made these remarks about Marquee going DTC:
“We’re still looking at that,” Ricketts told reporters at the Cubs’ spring training site in Mesa, Arizona. “And I think the most important thing with our direct-to-consumer is we just want to do it right the first time. We want to make sure when we do have it out there, it’s a good value to the fans. We realize that the way people consume the game is changing. We want to make sure we accommodate that. But it’s kind of like a measure-twice-cut-once thing for us. We want to make sure we do it right, and that may mean it’s not 100% ready to go for Opening Day. But we’ll see where it goes.”
So the answer to this is still, “As always, we await developments.”
Beyond that, Major League Baseball has a potential crisis looming as the way local baseball broadcasts are produced and delivered is likely to change significantly over the next few years. As Manfred said last month, MLB could take over, have rights revert to the clubs, and produce and distribute the games themselves. That isn’t difficult to do from a technical standpoint.
But would it produce the same revenue that clubs have been accustomed to receiving from RSNs? That’s the multi-billion dollar question MLB and its teams are going to have to answer.