Diamond RSN Fall TV Plans in Peril, DirectTV Says
While Diamond Sports Group appears to be making good on its pledge to pay out the remainder of its 2023 MLB rights fees, the proximate cessation of baseball-related intrigue is likely to give way to even greater uncertainties once autumn rolls around. In addition to the coming fiscal arrangements Diamond will have to make with its 27 NBA and NHL franchise partners, the company also faces new challenges on the distribution front.
In a statement filed Tuesday with the United States Bankruptcy Court for the Southern District of Texas, DirecTV warned that Diamond has yet to renew its carriage agreement with the satcaster, which expires at the end of October. With an estimated reach of some 12.8 million TV households, DirecTV is the nation’s third-largest MVPD, accounting for 21% of all traditionally bundled video subscriptions. (Terms of the current distribution deal include provisions for streaming the Bally Sports RSNs via DirecTV Stream.)
More from Sportico.com
NFL Claims Sunday Ticket Suit Will Limit Distribution, Harm Consumers
Alex Rodriguez and Fox Sports Close in on Contract Extension
DirecTV said that while it is “presumably a vital partner for [Diamond’s] go-forward business,” there’s been little or no progress made toward securing a renewed carriage deal. Noting that “renewal discussions … have barely begun,” the distributor went on to suggest that a new deal would be contingent upon a reduction in the monthly fees DirecTV pays Diamond to carry its Bally Sports-branded RSNs.
To DirecTV’s way of thinking, Diamond is on the hook for “cost-based reductions [related to the] loss of specific teams’ rights,” a nod to the recent cessation of the company’s partnerships with the San Diego Padres, Arizona Diamondbacks and Phoenix Suns. Because Diamond has yet to provide its carriers with the sort of “immediate rate relief” commensurate with the losses of the two in-season franchises, DirecTV is now questioning the likelihood of reaching a new deal with the owner of the 19 Bally Sports RSNs.
In the starkest terms, the satcaster declared that it had filed Tuesday’s statement to “make clear that any [forward-looking] business plan the debtors propose should not assume that DirecTV will renew its various distribution agreements with [Diamond].” The language is materially similar to that which tends to be deployed in the run-up to similar distribution haggles, although the fact that the statement has been entered into the court record lends DirecTV’s rhetoric a bit more weight.
While DirecTV’s court filing states it has no objection to Diamond’s petition for a 120-day extension of its deadline for filing a reorganization plan, the satcaster has “concerns regarding the viability of any … plan the debtors may propose, particularly one that assumes a continuation of the status quo.”
Compounding Diamond’s difficulties is the fact that its legacy carriage deal with cable giant Comcast will also expire in the fall. With its base of 15.5 million subs, the largely RSN-friendly Comcast is the biggest player in the pay-TV universe.
All told, the two operators serve 28.3 million video subscribers, or 47% of the traditional bundled universe.
In addition to the fall carriage renewals, Diamond will face yet another round of haggling with a top-tier operator this winter. As of the end of the first quarter, Charter/Spectrum serviced 14.9 million cable subscribers. In a July 11 filing with the court, Diamond stated that the three legacy deals “collectively provide the substantial majority of [its] distribution revenue,” before adding that the third such arrangement “will be up for renewal before the end of February 2024.”
How those carriage deals shape up will have a profound impact on Diamond’s ability to maintain its full stable of NBA and NHL franchises, although at least one of the latter affiliations is already in question. Having split with Phoenix’s MLB and NBA clubs, Diamond is expected to have a parting of the ways with the NHL’s Arizona Coyotes, which in turn would lead to the shuttering of the Bally Sports Arizona RSN. (On July 18, the same day the court relieved Diamond of its obligations to carry on with the D-backs, DirecTV asked that it be relieved of the burden of having to continue making its monthly carriage payments to the Phoenix-based RSN.)
On Tuesday, Diamond made good on its penultimate scheduled rights payment to one of its 12 remaining MLB partners, having transferred the requisite funds to the Cleveland Guardians. That leaves the company with one final outstanding invoice, a Sept. 1 payoff to Cleveland that will slam the door on baseball’s season of uncertainty at the local TV level. When Diamond ended its association with the Diamondbacks last month, the company told the court it planned on “making all rights payments to the remainder of the MLB teams in our portfolio through the end of this season.”
Diamond’s respite may be brief, as the 2023-24 NBA season is set to tip off Oct. 24, just 15 days after the new NHL campaign gets underway. The composition of Diamond’s hoops and hockey coverage will be determined in large part by its ability to nail down those DirecTV and Comcast renewals, while the subsequent Charter/Spectrum arrangement may cast a long shadow over MLB’s next Opening Day.
Best of Sportico.com
