MLB is in the process of streaming some games to fans due to Diamond Sports’ bankruptcy
The RSN model is even closer to complete collapse.
Over the past couple of months, I’ve written here about the impending bankruptcy of Diamond Sports, which operates the Bally Sports regional sports network. These channels control the rights to 14 MLB teams. To refresh your memory, this article from January and this one from February have more details.
Commissioner Rob Manfred addressed this issue at his Cactus League media day news conference:
Manfred said: “Whatever happens with Diamond, we will make sure the games are available.” Pressed further on what it might mean if Diamond was unable to broadcast games at all, Manfred said it is MLB’s expectation that Diamond would pay the clubs and continue as they have been, but if not: “We’ve been very clear that if Diamond does not pay, for each individual broadcasting agreement, that creates a right of termination.” The rights would thus revert to the clubs, and Manfred added, “If MLB stepped in, we would produce the games using the MLB Network, and then go directly to distributors like Comcast or Charter. and enter into a deal to have those games distributed .”
Now, according to Josh Kosman of the New York Post, Major League Baseball is indeed going to start producing and distributing games for six of those 14 teams:
Major League Baseball plans to step up to the plate to broadcast games by about a half-dozen teams from a bankrupt regional sports network provider so fans don’t miss a single pitch, The Post has learned.
Diamond Sports owns the home broadcast rights to 14 baseball teams, but sources close to the situation told The Post that the cash-strapped company is expected to file for bankruptcy on March 17 — days before the March 30 start of the season.
Diamond, which operates under Bally’s name, is expected to use the bankruptcy proceedings to reject the contracts of at least four teams to whom it pays more in rights fees than it recoups through cable contracts and advertising, two sources close to the situation said. .
The teams in red include the Cincinnati Reds, Cleveland Guardians, San Diego Padres and Arizona Diamondbacks, according to one of the sources. Currently, Diamond stands to lose $20 million annually on San Diego alone, the source added.
Since the 1980s, MLB teams have moved from broadcasting their games on over-the-air channels to regional sports networks. The heyday of this form of sports broadcasting was from the 1990s to around 2010, as cable and satellite broadcasting were on the rise.
But with the advent of streaming services and easier access to streaming through devices from phones to tablets to laptops to smart TVs, many people have “cut the cord” and canceled those cable and satellite subscriptions. This has led to hemorrhaging of money for RSNs and this bankruptcy filing was inevitable. It was just a matter of when, and “when” is “now.”
According to the New York Post article, this is how it will likely work:
Manfred will have the league take over the local broadcasts of the money-losing teams and stream them for free in their respective local markets while he negotiates with their cable companies for lower contracts, a source with knowledge of the discussions said.
MLB has not finalized plans for how fans in the blacked-out markets will be able to watch the free games. Currently, fans can pay to watch out-of-market games through the MLB.TV app.
MLB declined comment.
A spokesperson for Diamond declined to comment when reached by The Post on Sunday.
Even if MLB makes deals with cable providers, it will still offer the over-the-top service for about $15 a month, the source added.
What is not stated here is the issue of rights fees. That’s how many MLB teams have made their really big bucks over the last 20 years. Streaming at $15 a month will not compensate for rights fees that are no longer paid. You’ve probably read articles about how streaming services are losing big money — Peacock, Disney+, Paramount+, Apple TV+, I could go on, but you get the idea.
What this will do to the future of the baseball economy is uncertain. For now, it does not affect the Cubs, because the Marquee Sports Network is not part of the Diamond Sports bankruptcy filing. That’s true even though Sinclair Broadcasting, which owns Diamond Sports, owns 50 percent of Marquee, with the other half owned by the Cubs. It’s possible, I suppose, that the Cubs could take over Marquee entirely or find another partner if necessary.
I’ve been asked the last few days and you’re probably wondering if Marquee could start a DTC (direct to consumer) version of their channel to sell to fans who live in the Cubs market and have cut the cord. . The answer is still: “I hope so.” Marquee wants to do this and Cubs management and ownership want to do it. Last month in Mesa, Cubs chairman Tom Ricketts made these remarks about Marquee going DTC:
“We’re still looking at it,” Ricketts told reporters at the Cubs’ spring training facility in Mesa, Arizona. “And I think the most important thing about our direct-to-consumer is that we just want to get it right the first time. We want to make sure that when we have it out there, it’s a good value for the fans. We realize that the way people spend the game is changing. We’ll make sure to accommodate that. But it’s a bit of a measure-twice-cut-once thing for us. We want to make sure we get it right, and that might mean it’s not 100% ready for opening day. But we’ll see where it goes.”
So the answer to this is still: “As always, we await developments.”
Beyond that, Major League Baseball has a potential crisis brewing as the way local baseball broadcasts are produced and delivered is likely to change significantly over the next few years. As Manfred said last month, MLB could take over, get the rights back to the clubs and produce and distribute the games themselves. It is not difficult to do from a technical point of view.
But would it bring the same revenue that clubs have been used to receiving from RSNs? That’s the multi-billion dollar question MLB and its teams must answer.