MLB attorney: Loss of Comcast 'devastating'
Attorneys for MLB, the NBA and the NHL expressed strong concerns with Diamond Sports Group's ability to emerge from bankruptcy during a status conference on Wednesday.
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Attorneys for MLB, the NBA and the NHL expressed strong concerns with Diamond Sports Group's ability to emerge from bankruptcy during a status conference on Wednesday, less than five weeks after a scheduled confirmation hearing. Their uneasiness stemmed largely from Diamond's inability to secure a new contract with its third-largest distributor, Comcast, which prompted the carrier to pull Bally Sports channels off the air at the start of May, leaving baseball fans throughout the country -- most notably within the Southeast region of the United States -- without the ability to watch their favorite teams.
"I think it's important, from the perspective of Major League Baseball, to understand exactly how devastating it is to lose carriage on Comcast," MLB lawyer James Bromley said in bankruptcy court.
Diamond has secured multiyear agreements with three of its four other major distributors in Charter, DirecTV and Cox. An attorney representing the company announced in court on Wednesday that it is also "getting very close" to securing a new naming rights deal that would begin in 2025, at which point Diamond's broadcasts would no longer carry the "Bally Sports" branding. But Diamond has yet to secure new linear cable and digital rights deals with the NBA or the NHL, two leagues that saw their contracts expire at the end of their respective regular seasons, and the Comcast uncertainty continues to hang over all of it.
Diamond attorney Brian Hermann acknowledged that the company is "disappointed" by the impasse with Comcast but said it is "optimistic" a new contract will come to fruition before the June 18 confirmation, which would essentially mark the end of Diamond's 15-month-long reorganization phase. But Bromley said "everything is up in the air" at the moment and brought up a lack of transparency, highlighting a continued tension between MLB and Diamond.
"As we stand here today, we are just over a month from the scheduled confirmation hearing," he added. "We have no information with respect to revenue, and we have no information with respect to major expenses. How in the world are we going to be able to have a hearing, which I think is going to be contested, and discovery with respect to the viability of a plan of reorganization when we're just over 30 days and we have simply no information?"
Diamond entered bankruptcy with 14 MLB teams in its portfolio but shed the San Diego Padres and the Arizona Diamondbacks around the midway point of the 2023 season, prompting MLB to take over broadcasts. Uncertainty over regional sports contracts, a major revenue source for teams, hung over the offseason, particularly with regard to the Texas Rangers, Minnesota Twins and Cleveland Guardians, all of whom navigated it unsure of where they stood in their relationship with Diamond. Those three teams have since agreed to new deals that only cover the 2024 season.
A major step in Diamond's desire to emerge from bankruptcy was revealed around the middle of January, when it announced it was bringing in Amazon as a minority investor that would enter into a commercial agreement to provide access to Diamond's services via its streaming arm, Prime Video. But Diamond doesn't currently possess the streaming rights to any NBA or NHL teams and has it only for five smaller market baseball teams, prompting further questions about the company's viability.
Bankruptcy judge Chris Lopez approved Diamond's disclosure statement on April 17, but the company's hopes of emerging from bankruptcy were dealt a major blow on May 1, when Comcast, which operates under the Xfinity brand, pulled Bally Sports channels off its air at the expiration of their contract. The breakdown stemmed largely from Comcast's desire to place Bally Sports channels on a higher, more-expensive tier, sources said. On May 7, Diamond sent what it described as an open letter to sports fans urging them to "raise your voices, let Xfinity know you want your teams back on the air."
Lawyers representing the NBA and the NHL echoed concerns Wednesday about Diamond's ability to produce a viable business plan ahead of the June 18 confirmation.
"We simply cannot afford to have our next season disrupted by the uncertainty as to whether Diamond will or will not have a viable business," NBA attorney Vincent Indelicato said.
Added NHL attorney Shana Elberg: "The day-to-day approach of whether or not a professional sports team's games will be broadcast doesn't work for us and can't continue."
MLB on Tuesday issued a statement in advance of the status conference in which it wrote that Diamond's restructuring plan would "likely" be "unconfirmable" if it can't reach a carriage renewal with Comcast and raised a litany of concerns about its restructuring plans. MLB's attorney emphasized those concerns in court the following day.
"We are sitting here with the nation's pastime in the middle of its season, and we have ... millions of viewers who are simply unable to watch their baseball," Bromley said. "That doesn't seem to be an appropriate thing to be doing to give these debtors optionality for any more time. It's our view that this needs to be solved immediately, and if it can't be solved immediately we are going to have to take steps to put in alternate broadcasting opportunities. That's exactly what we had to do last year, and right now we have to completely ramp up because we don't know what's going to happen with Comcast and we frankly, once again and yet again, don't know what's gonna happen with Diamond."
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