MLB and DirecTV Prepare for Bankrupt Diamond To Cut the Diamondbacks Loose From Bally Sports Arizona

Major League Baseball filed a statement Thursday with the Houston bankruptcy court overseeing the restructuring of Sinclair’s regional sports networks subsidiary Diamond Sports Group, indicating the league is more than OK with Diamond using the flexibility provided by Chapter 11 to tear up the local TV rights contracts with yet another one of its teams, the Arizona Diamondbacks. 

MLB told the court that it is negotiating with pay TV operators covering the Phoenix area and beyond to set up a new channel to broadcast Diamondbacks games locally, much as the league did for the San Diego Padres when Diamond cut them loose from the Bally Sports regional sports networks system in May. 

“As is self-evident, in those situations where the Debtors reject a telecast rights agreement, MLB, and indeed any other post-rejection broadcaster, must contract with the same distributors to ensure the uninterrupted broadcast of MLB games,” the league said.

Separately but relatedly, DirecTV also petitioned the court Thursday. Should Diamond decide to give up on the Diamondbacks, the pay TV operator wants the court to limit the impact of it having to pay carriage fees on two channels at the same time, one being a Bally Sports Arizona network that would be bereft of the Diamondbacks should Diamond’s move come into fruition. 

Diamond currently manages 18 Bally Sports-branded regional sports networks, and a number of its contracts with MLB, NBA and NHL teams are losing money. The subsidiary filed for bankruptcy in March, hoping to shed $8 billion in debt, in part by forcing teams with money-losing contracts to renegotiate. 

With Diamond bleeding money on the 20-year contract it has with the Diamondbacks that pays the team $75 million a year, the subsidiary told the court on June 22 that had planned to cut ties with the club. 

A week later, Diamond asked the court to hold the issue, as it progressed in negotiations with the Arizona ball club. A hearing on the matter is set for July 17. 

Led by commissioner Rob Manfred, MLB seems to want the Diamondbacks cut loose from Bally Sports contract so that it can face the music of the declining regional sports networks business now instead of later. 

While there is the very real possibility that Diamond could cut ties with the Diamondbacks next week, Bally Sports Arizona touted on Twitter Friday its improved ratings performance for this season for the Diamondbacks, who are currently tied for first place in the National League West Division with the Los Angeles Dodgers.