Suns Free TV Deal Advances After Diamond Declines Deadline Offer
The Phoenix Suns say they’re moving forward with their free-TV broadcast deal, which has been held up in a legal battle with Diamond Sports Holdings.
Suns owner Mat Ishbia said in a statement that he was “excited to be able to deliver” the deal with Gray Television, which was previously paused after a bankruptcy judge said the Suns had to satisfy contractual obligations with Diamond Sports Net Arizona.
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“I am proud that we are at the forefront of this shift to make the game more accessible, which not only serves our fan base, but also helps to build future NBA and WNBA fans,” the statement said.
Diamond had until midnight Thursday night to match the economics of the deal between Gray Television and Ishia’s basketball teams, the Suns and WNBA’s Phoenix Mercury, according to multiple people familiar with the process. The deadline passed without an offer, said the sources, who were granted anonymity because the details are private. A representative for the Suns declined to comment on the deadline; a representative for Diamond didn’t immediately respond to a request for comment.
The two sides have been locked in a legal battle for nearly three months, ever since the Suns and Mercury announced they were moving from a Diamond-owned RSN to Gray Television’s free-to-air channels starting next season. Diamond, which filed for Chapter 11 in March, claimed that it had a contractual right of first refusal if the teams sought a new partner, and its subsidiary Diamond Sports Net Arizona sued just a few days after the announcement.
U.S. Bankruptcy Judge Christopher Lopez, who is presiding over Diamond’s wider Chapter 11 reorganization, initially determined that the Suns couldn’t execute the deal with Gray (or new digital partner Kiswe Mobile) until it had finished negotiating with Diamond.
The legal battle is being closely watched in a sports industry bracing for major changes to its local TV rights. There are more than two dozen MLB, NBA and NHL teams that have local media partnership with Diamond, with the others spread across a wide array of RSNs. Some teams, like the NHL’s Vegas Golden Knights and the NBA’s Utah Jazz, have joined the Suns in moving toward a free-TV model.
The free TV option almost certainly means less money directly from the broadcast partner, but it dramatically widens the number of people that can watch games, and eliminates the economic barriers to entry. In the Suns case, the team said the new agreement with Gray would make games available to 2.8 million households in Arizona, more than triple the reach with Diamond.
The Suns have been a particularly high-profile partner for Diamond. Over the course of the 2022-23 NBA season, Phoenix was the league’s eighth most-watched franchise, averaging 32,692 household impressions per game in the local market. When weighed by market size and duration, not only did the Suns out-deliver the in-market NBA coverage on TNT (14,392) and ESPN (10,755), but the team’s ratings on Bally Sports Arizona also improved by 29% versus the previous season.
The Suns put up even bigger numbers with the addition of Kevin Durant, averaging 47,917 impressions per game after his Feb. 9 acquisition. Per Nielsen, Phoenix-Prescott is the 11th largest U.S. media market, boasting a base of 2.14 million TV homes. That reach goes a long way toward justifying the hefty carriage fee Bally Sports Arizona extracts each month from local cable/satellite/telco-TV operators; at an average rate of $6.29 per subscriber per month, the RSN commands the fourth-highest fee on the dial.
Diamond has suffered other legal setbacks since its bankruptcy filing in March. In April, Lopez ordered the company to pay four MLB teams (including the Arizona Diamondbacks) 50% of what they were owed.
In June, MLB scored an important legal victory when Judge Lopez ruled Diamond had not proved that it ought to pay MLB teams less than stated values in telecast rights contracts. Lopez agreed with MLB that Diamond must either pay what it owes to MLB teams by contracted deadlines or reject those contracts and revert telecast rights back to teams and MLB.
Diamond had argued RSN contract values, which were negotiated years before many sports fans “cut the cord” and dropped cable, were artificially and unreasonably high. Diamond also emphasized Lopez had granted an automatic stay, which is intended to prevent the company undergoing Chapter 11 reorganization from economic damage during the reorganization. But Lopez reasoned there is “market risk in every contract” and that if he effectively rewrites telecast rights contracts for MLB teams, he’d open the door to being asked to do the same in other bankruptcy disputes.
Lopez’s ruling in June did not involve the Suns, Mercury or any team in the NBA or WNBA. But its logic could apply to Diamond’s RSN disputes with teams outside of baseball, thus supplying those teams with confidence they too will prevail.
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