Bally RSN owner Sinclair looking at bankruptcy

[powergate92]

Day 2 has been scheduled for tomorrow at 9 AM. In addition to MLB, Teams involved, Diamond, Sinclair, and Creditors, I noticed that also on the attendance list of today's hearing are the NBA, NHL, Phoenix Suns, Atlanta National League Baseball Club, Nashville Hockey Club, and Kiswe who were most likely just listening in to see what happens in this case.

 

[powergate92]

The Judge has ruled that Diamond has to pay the MLB Teams full amount, but denied request to lift bankruptcy stay.

https://twitter.com/x/status/1664415262337269760

https://twitter.com/x/status/1664417009126510592

 

[TheBigA]

The Judge has ruled that Diamond has to pay the MLB Teams full amount, but denied request to lift bankruptcy stay.

It's interesting how similar this is to music royalties decisions from judges. They tend to side with the licensees of the content, not the licensors. The owner of the content determines the value. If the market has collapsed, then the licensor (Diamond) can't use the judge to lower the price the team wants for the content.

 

[powergate92]

Court Order has been signed and added to the public docket. Diamond must pay Teams what is owed so far within 5 business days and must pay full amounts when due per contract unless the court orders otherwise.

 

[powergate92]

Looks like Diamond maybe planning to reject some these 4 contracts before the end of the season as they filed an emergency motion for clarification of the court order. As shown below they discuss payments due July 1 that cover games for the remainder of the season for 2 teams and June 15 to another team that covers 75% of the season. They are saying if they were to reject those contracts and stop broadcast on August 1, the MLB would be able to double dip because they were wouldn't be refunding money paid by Diamond and could receive money from a new partner. So Diamond wants a new line to be added to the court order so they will be refunded for money for games they didn't broadcast if they reject the contracts before the end of the season. The line they want added to the order will say the following:

In the event one or more of the Agreements is rejected or terminated and the Debtors cease broadcasting a Club’s games, the respective Club shall pay to the Debtors all amounts previously received by such Club that are attributable to content that would have been received by the Debtors after the effective date of the rejection or termination of such Agreement, calculated by dividing the total rights fees due under such Agreement for the 2023 season by the total number of games that would have been delivered following the effective date of the rejection or termination of such Agreement.

 

[powergate92]

The MLB, Diamondbacks, Guardians, and Twins have filed an Objection this morning to Diamond's Motion for Clarification, MLB says this request should be denied because it does not clarify the order, is not related to anything discussed in the 2 month long court battle, but rather asks for new relief based on a "hypothetical scenario that may never materialize." Status Conference hearing on this motion is set for today at 2 PM.

 

[powergate92]

The Rangers have now filed to join in on the Objection.

 

[powergate92]

Just listened to the hearing. The judge denied Diamond's motion for clarification saying he will not change the order he made last week. He will take up the issue if/when motion to reject is filed. A "very large payment" to the Rangers is due June 15. The other 3 teams have payments due sometime within the next 21 days.

 

[TheBigA]

The judge denied Diamond's motion for clarification saying he will not change the order he made last week.

Yep, he's siding with the rights holders. Backing up from this a bit, it appears to me that Diamond didn't do its due diligence when they bought these RSNs. A prudent buyer would have evaluated each one of these at the time, and only bought the properties that could make money. They bought a pig in a poke, and the judge isn't going to cut them any slack. They screwed up, and it's not the fault of these teams.

 

[powergate92]

Inside MLB Local Media’s Launch of San Diego Padres Productions and What It Means for the Future - Sports Video Group

Largely lost in all the media chatter surrounding the San Diego Padres’ departure from Bally Sports two weeks ago was perhaps the most important factor: Padres fans didn’t miss a...

www.sportsvideo.org

 

[TheBigA]

Inside MLB Local Media’s Launch of San Diego Padres Productions and What It Means for the Future - Sports Video Group

Largely lost in all the media chatter surrounding the San Diego Padres’ departure from Bally Sports two weeks ago was perhaps the most important factor: Padres fans didn’t miss a...

www.sportsvideo.org

The confusing part of this for people in San Diego is there already is a radio owner named Local Media. So this new department within MLB will likely confuse some residents. But the fact is that the teams could have done this a long time ago. There is nothing exclusive about broadcasting. It can be done by broadcasting companies, or it can be done by team owners. The advantage of the RSNs was the paid a set amount, and took the risk that they'd make more than they spent. Once that stopped happening, there was no point in having an outside company represent the teams. Might as well bring it in house and keep all the money.

 

[PTBoardOp94]

But the fact is that the teams could have done this a long time ago. There is nothing exclusive about broadcasting.

I'd disagree slightly. The Padres and Fox Sports made an exclusive agreement in 2012, scheduled to last until 2032. Many of the other rights agreements with the other Fox Sports RSNs were for 10-20 year terms.

The market probably wasn't ready for anyone to go to streaming in 2012.

 

[TheBigA]

I'd disagree slightly. The Padres and Fox Sports made an exclusive agreement in 2012,

My use of the word exclusive was not meant as a legal one. What I meant is that anyone can become a broadcaster if they hire the people to do it. That's what's happening now in San Diego.

I had a friend's son just graduate with a degree in sports broadcasting, and was looking for a job. I told him to look beyond traditional broadcasting, to things like Barstool Sports or Learfield. Now he can add the teams themselves.

 

[powergate92]

Diamond Sports has filed its' first contract rejection, but not one we were expecting, as they reject the Raycom contract for broadcasting ACC games and events effective as of today.

 

[Kelly A]

Yep, he's siding with the rights holders. Backing up from this a bit, it appears to me that Diamond didn't do its due diligence when they bought these RSNs. A prudent buyer would have evaluated each one of these at the time, and only bought the properties that could make money. They bought a pig in a poke, and the judge isn't going to cut them any slack. They screwed up, and it's not the fault of these teams.

Yeah, but it's not unlike the buying frenzy by broadcast groups post 1996. The assumptions were similar; the golden geese would surpass the pigs.

 

[Kelly A]

My use of the word exclusive was not meant as a legal one. What I meant is that anyone can become a broadcaster if they hire the people to do it. That's what's happening now in San Diego.

I had a friend's son just graduate with a degree in sports broadcasting, and was looking for a job. I told him to look beyond traditional broadcasting, to things like Barstool Sports or Learfield. Now he can add the teams themselves.

That's good advise. Steer clear from the 'larger' RSN's, at least until everything eventually shakes out.

 

[powergate92]

So Diamond Sports has requested more time to file its' Bankruptcy plan. Here are a few things in there about the Padres, Diamondbacks, and Suns I think are important.

The Debtors also made the decision, in their business judgment, to not fund a money-losing joint venture with the San Diego Padres to allow that joint venture to make a telecast rights agreement payment to the Padres, resulting in the Padres terminating that telecast rights agreement with the joint venture.

The Debtors also have moved to reject their telecast rights agreement with the Arizona Diamondbacks [Docket No. 921]. Following the filing of that motion, the Debtors and the Diamondbacks have been engaged in constructive discussions on potential consensual paths forward to resolve the motion. Accordingly, the parties agreed to adjourn the hearing on the motion to allow these positive discussions to continue [Docket No. 932]. If the parties are unable to reach a consensual solution, the Debtors are prepared to proceed with the rejection motion, which remains pending as of the date of this motion.

Where necessary, the Debtors have also taken action to protect their rights under their existing telecast rights agreements in these chapter 11 cases. For example, the Debtor successfully prosecuted a motion to enforce the automatic stay against Suns Legacy Partners, L.L.C. (the “Suns”) to compel the Suns to comply with the Debtors’ valuable “back-end” contractual rights. Since the Court’s ruling, the Debtors and the Suns have been engaged in the backend rights process as set forth in the parties’ existing contract, and that process is continuing at this time. The Debtors will continue to evaluate and protect their rights as needed while they determine a value-maximizing path forward for their business.

 

[salemjedi54]

The confusing part of this for people in San Diego is there already is a radio owner named Local Media. So this new department within MLB will likely confuse some residents. But the fact is that the teams could have done this a long time ago. There is nothing exclusive about broadcasting. It can be done by broadcasting companies, or it can be done by team owners. The advantage of the RSNs was the paid a set amount, and took the risk that they'd make more than they spent. Once that stopped happening, there was no point in having an outside company represent the teams. Might as well bring it in house and keep all the money.

The Dallas Mavericks at one time produced and sold their broadcast rights in house. Radio and TV. Sold it as part of a corporate sponsorship package along with in arena signage and exclusive marketing partners, Now they get a straight rights fee from radio and tv.