2024-01-18 18:12:00
Diamond Sports Group, the regional sports operator of 37 MLB, NHL and NBA teams, dropped a bombshell early Wednesday by announcing a partnership with Amazon that, if approved in court, would put local games on Prime Video and would allow the company to emerge from bankruptcy in a reinvented state.
Diamond revealed that it had secured $450 million from creditors to fund a reorganization plan, plus an additional $115 million provided by a new minority investor in Amazon. In exchange, Amazon would have access to all the MLB, NHL and NBA teams for which Diamond owns streaming rights, giving fans in nearly two dozen markets direct-to-consumer access.
It’s a surprising turn of events for a company that initially took on more than $8 billion of debt and appeared headed for liquidation, but much remains to be resolved. Below we address some of the most pressing questions.
In mid-December there were reports about the possibility of Amazon investing in Diamond to essentially secure its streaming rights. But according to comments from lawyers representing MLB and the NBA in bankruptcy court on Wednesday, league officials were not involved in those conversations and learned the details of this deal along with everyone else.
In fact, the deal has the potential to undo previous deals the leagues had negotiated with Diamond. Last fall, Diamond secured settlement plans with the NBA and NHL in which it would broadcast the teams in its portfolio for the 2023-24 seasons and then revert the rights to those leagues. MLB had the framework in place for a similar deal. This Amazon deal could change everything. Lawyers for the NBA and MLB said in court Wednesday that they still had a lot to digest.
What teams are part of the new agreement?
Diamond owns the linear television rights to 15 NBA teams, 11 NHL teams and 11 MLB teams. But what matters here are the broadcast rights. Diamond has the broadcast rights to every NBA and NHL team in his portfolio, but only five MLB clubs: the Miami Marlins, Tampa Bay Rays, Detroit Tigers, Milwaukee Brewers and Kansas City Royals. .
These are the 15 NBA teams under Diamond: Atlanta Hawks, Charlotte Hornets, Cleveland Cavaliers, Dallas Mavericks, Detroit Pistons, Indiana Pacers, Los Angeles Clippers, Memphis Grizzlies, Miami Heat, Milwaukee Bucks, Minnesota Timberwolves, New Orleans Pelicans, Oklahoma City Thunder , Orlando Magic, San Antonio Spurs.
Y estos son los 11 equipos de la NHL: Anaheim Ducks, Carolina Hurricanes, Columbus Blue Jackets, Dallas Stars, Detroit Red Wings, Florida Panthers, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues y Tampa Bay Lightning.
What would happen to that settlement plan that Diamond negotiated with the NBA and NHL?
This deal, if ultimately approved by a federal bankruptcy judge, could replace previous agreements, which were viewed by Diamond executives as something of a placeholder while the company hammered out an established restructuring plan.
Between now and the end of the regular season, nothing will change for either league. But if this deal goes through, a source familiar with the deal said, the rights would no longer revert to the NBA and NHL. Diamond would keep its portfolio, although the company could then negotiate different deals with some of those teams or abandon some entirely, a decision that will have to come before the predetermined March 22 deadline to provide specific details of its restructuring plan in the bankruptcy court. The company’s lawyers said in court Wednesday that they hope to have it confirmed well before the deadline.
NBA and NHL officials, however, were hesitant to say anything with much certainty. Representatives from both leagues spent the day analyzing the intricacies of the Diamond-Amazon deal. The NBA was eager to regain its teams’ broadcast rights, especially since the league’s national television contracts expire after the 2024-25 season. The NHL could wait to see how open Diamond is to renegotiating some of the longer-term deals in place before the original bankruptcy announcement.
What happens to MLB in 2024 and beyond?
A lawyer for Diamond claimed in bankruptcy court that the company will broadcast all games and pay all rights to nine of the teams in its portfolio: the Tigers, Marlins, Royals, Brewers, Rays, St. Louis Cardinals, Cincinnati Reds, LA Angeles and Atlanta Braves. There are three others, the lawyer said, in talks about contract restructurings. The names were not revealed, but those three, according to sources, are the Texas Rangers, Cleveland Guardians and Minnesota Twins (the Twins are essentially free agents; their contract with Diamond expired at the end of the 2023 season).
In addition to the five teams associated with Diamond, the broadcast rights to the other 25 MLB teams belong to the individual teams and the league, the latter of which has shown no willingness to provide the company with additional rights beyond the season 2024. Diamond’s hope is that Amazon’s presence could ultimately change that, although a person familiar with the deal said Amazon’s involvement is not contingent on gaining additional streaming rights.
In the short term, however, MLB had been working for months to get clarity with Diamond about the 2024 season. Many owners have pointed to that uncertainty (and the uncertainty hanging over the entire regional sports cable business, of which the teams earn a significant amount of local revenue) as a reason to reduce spending this off-season. The deal with Amazon would seemingly give teams remaining under Diamond the cost certainty they have coveted, but would seemingly disrupt MLB’s long-term plan to place all of its rights under one national umbrella.
Does this position Amazon to become the leagues’ primary partner if they look to break away from the old RSN model and work with streaming companies, end blackouts, etc.?
Amazon was in a position to be a major partner before all of this, and it’s hard to say how its partnership helps or hurts its cause at this point. MLB had hoped to land a deal with a major streaming service (Amazon, Apple TV+, Hulu, Netflix, ESPN+, etc.) before the start of the 2025 season. But that was under the assumption that it would have at least 15 teams to offer (the 12 Diamond teams, including the Twins; the San Diego Padres and Arizona Diamondbacks, who canceled their deals last season; and the Colorado Rockies, who are left without a television deal now that Warner Bros. Discovery has left the business regional sports). The calculation would change if the portfolio were not so strong.
It’s also worth noting that Amazon has long been considered a favorite to be part of a new NBA deal, along with at least the two current partners (Disney and Turner Sports). Those negotiations will take place over the coming months. Regardless of how this specific deal plays out, what seems clear is that Amazon will be a major part of the future of NBA streaming. As this calendar year unfolds, we will find out how important it will be.
My favorite team’s RSN is run by Diamond. Will all of my team’s games be on Amazon Prime now?
Only if you are streaming. Essentially, Amazon Prime would fulfill the role Diamond originally envisioned for his Bally Sports+ app: giving local fans ditching their cable subscriptions a streaming option. Funding this deal would allow Diamond to also keep the linear television rights in its portfolio, so fans who stick with cable can maintain their normal viewing habits.
However, it is important to note that location will still be important. Diamond kits on Amazon Prime will be available only to fans of the market. Out-of-market fans could still watch through the leagues’ streaming services, whether MLB.tv, NBA League Pass or, for the NHL, ESPN+. But since those original cable agreements would remain in place, blackouts would likely remain an issue.
How much more is this going to cost me?
A press release from Diamond Sports Group stated that “additional details regarding pricing and availability will be announced at a later date.”
Will the broadcasts still be called Bally Sports?
As part of this agreement, Diamond Broadcasts will continue to operate under the Bally Sports name this year, after which a new partner will be sought.
Is this the end of the ongoing RSN saga?
One of Diamond’s attorneys called this deal, which includes Sinclair, Diamond’s former parent company, paying a $495 million settlement and providing support for the reorganization, “transformational.” Another called it a “defining” moment for a company that finally has a defined path to continue operations beyond the 2024 MLB season.
Diamond shared projections Wednesday showing it expects direct-to-consumer revenue to grow from $49 million in 2023 to $658 million in 2026 under the new deal. (Linear revenue would continually decline, but would still account for the majority of profits; Diamond projected a drop from $2.47 billion in 2023 to $1.78 billion in 2026.)
But Wednesday’s hearing ended when a lawyer for the committee of unsecured creditors found loopholes in Sinclair’s deal and the $450 million financing, raising questions about whether it could ultimately come to fruition. Bankruptcy Judge Christopher Lopez called the deal an “encouraging” development given Diamond’s status at the end of 2023, but added that it still must comply with the bankruptcy code.
“There’s a lot to take in,” Lopez said. “There’s a lot to digest.”
Tim Bontemps and Kristen Shilton contributed to this report.
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