Diamond Sports Group lost the rights to televise San Diego Padres baseball games after its local cable TV channel failed to make a required payment to the MLB team.
(Bloomberg) — Diamond Sports Group lost the rights to televise San Diego Padres baseball games after its local cable TV channel failed to make a required payment to the MLB team.
In a statement, Diamond Sports said that while it has significant liquidity and has been making payments to other teams, the terms of the Padres contract were “not aligned with market realities.”
The broadcaster said Major League Baseball forced its hand by refusing to negotiate direct-to-consumer streaming rights for all the teams in its portfolio “despite our proposal to pay every team in full in exchange for those rights.”
Diamond Sports, the largest owner of regional sports networks, filed for bankruptcy protection in March, a victim of the high debt load taken on by parent Sinclair Broadcast Group Inc. to purchase the business and the shrinking ranks of cable-TV customers.
The company has been trying to acquire the streaming rights to more teams to launch a new online alternative to its traditional cable channels.
Diamond operates local channels under the Bally Sports name. A hearing in the bankruptcy case is scheduled for Wednesday.
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Major League Baseball has been preparing for the moment when Diamond fails to pay a team and relinquishes the broadcast rights.
Starting Wednesday, Padres games will be carried by major pay-TV providers in the San Diego area and will also stream for free online as part of deals the league helped negotiate, according to a person with knowledge of the matter. The league plans to issue a statement early Wednesday morning.
After a few days, the games will no longer be free online and Padres fans will be asked to sign up for a streaming subscription, said the person, who asked not to be identified since the plans haven’t been announced.
A big question is what impact the lost rights payments will have on the team’s operations. Many MLB franchises get a significant portion of their revenue from local TV deals and use that money to pay their players, among other things.
Major League Baseball is hoping to re-create a similar model, driving revenue for the Padres through a mix of subscription and advertising revenue.
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