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Diamond Sports Group files for Chapter 11 bankruptcy

MLBAs the inevitable happened with Diamond Sports Group filing for Chapter 11 bankruptcy last night, the broadcast futures of the 14 MLB teams whose rights are held by the Sinclair Sports subsidiary still remains unclear.

With MLB finally acknowledging a backup plan needs to be in place because of the uncertain nature of Diamond Sports Group’s future, the Chapter 11 bankruptcy is just the next expected step toward a resolution. Technically, Sinclair is spinning Diamond Sports Group as a separate entity, and it’s this entity that’s declaring Chapter 11 bankruptcy. For the short term, nothing will happen: Diamond will likely not make upcoming payments on either debt service or fees to the 14 MLB teams whose rights are controlled by Diamond, though we’ve been told as few as four teams (including the Diamondbacks, who have been open about the lack of a payment from Diamond) could actually be impacted. But until then, there’s little for MLB or the 14 teams to do but wait, as acknowledged in this statement from MLB:

“Diamond Sports Group’s bankruptcy declaration today is an unfortunate development that we have been expecting,. Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process.  Major League Baseball is ready to produce and distribute games to fans in their local markets in the event that Diamond or any other regional sports network is unable to do so as required by their agreement with our Clubs. 

“Having streamed live games on MLB.TV for more than 20 years and produced live games for MLB Network since 2009, we have the experience and capabilities to deliver games to fans uninterrupted.  In addition, we have hired additional seasoned local media professionals to bolster our capabilities in anticipation of this development. Over the long term, we will reimagine our distribution model to address the changing media climate and ultimately reach an even larger number of fans.”

Long term is great, but for the short term, those 14 impacted teams–plus the three teams impacted by the shutdowns at Warner Brothers Discovery’s AT&T SportsNet–will need to hang tight to see what Diamond actually does. Will we see some teams go directly to streaming if a Bally Sports network collapses? Sounds like MLB is waiting for that eventuality. But until Diamond Sports Group liquidates its holdings and allows rights to revert back to MLB teams–the next expected event–there’s nothing for fans to do except enjoy the broadcasts already underway.

As we’ve been predicting for two years, the collapse of the RSN economy was an inevitability, and that MLB had plenty of time to plan ahead. It did not. We’re seeing huge changes on the streaming front, largely breaking along generational lines, and the the status quo will not hold. For this year MLB’s mission is to thread the needle by keeping existing cable customers (a shrinking, older demo) and create new streaming services from scratch. Good luck.

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