Sinclair regional sports networks subsidiary Diamond Sports Group filed an emergency motion Thursday in a Houston bankruptcy court, looking to tear up the contract of yet another Major League Baseball club, the Arizona Diamondbacks.
"As a result of this ongoing analysis and other developments, the Debtors have determined, in their business judgment, that the Diamondbacks Agreement is unnecessary and burdensome to the Debtors’ estates and should be rejected," Diamond's lawyers wrote in their emergency motion. "The Debtors lose significant amounts under the Diamondbacks Agreement, and thus have determined that the Diamondbacks Agreement no longer fits within the Debtors’ longer-term plans."
The bankruptcy court still has to rule on Diamond's motion to exit the contract. Diamond wants this breakup to officially occur on June 30. A hearing on the matter has been set for June 29. Diamond has a hard July 1 deadline to make the Diamondbacks their next rights payment.
The Diamondbacks and Major League Baseball have yet to issue a statement.
Diamond's contract with the National League West division leaders runs through 2035 and requires the subsidiary to pay "tens of millions of dollars" each season.
According to court documents, Diamond said it lost around $3 million on its Diamondbacks deal in May alone.
Diamond entered Chapter 11 restructuring in March, looking to shed around $8 billion in debt. Part of that process is using the flexibility and leverage provided by federal bankruptcy protection to exit deals with MLB, NBA and NHL teams that are losing the media company money. Diamond also wanted to use restructuring to leverage MLB teams including the Diamondbacks into giving up their direct-to-consumer rights for streaming service Bally Sports Plus.
With the Diamondbacks exit, there will be 40 remaining teams from these aforementioned leagues served by the 19 Bally Sports regional sports networks.
Three weeks ago, Diamond made a similar move with the San Diego Padres. The team immediately pivoted, in cooperation with MLB, setting up a new channel with distribution via DirecTV, Charter Communications and other top pay TV operators. Major League Baseball, meanwhile, streamed Padres games for free for local fans on MLB.tv.
A source close to one pay TV distributor told Next TV that the Diamondbacks have already initiated conversations about alternative channel distribution beyond Bally Sports Arizona.
Diamond is also pondering the Bally Sports fate of several other MLB clubs for which it has money-losing local-sports rights contracts, the Cincinnati Reds, Cleveland Guardians and Minnesota Twins included. According to the pay TV source, those teams are also talking to operators about setting up new channels.
Before the 2023 pro baseball season started in February, MLB Commissioner Rob Manfred promised to help any of the 14 teams (now 12) in the Bally Sports umbrella broadcast their own games if Diamond failed to pay them.
Meanwhile, Diamond is locked in a bankruptcy court dispute with the NBA's Phoenix Suns, trying to keep the team from exiting its Bally Sports Arizona contract.
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