Major League Baseball continues to take a skeptical look at the long-term health of Diamond Sports Group and the viability of its plan to emerge from bankruptcy. But if more fireworks arrive in a lengthy proceeding in federal court in Houston, they will likely wait until May or June.
Diamond owns broadcast rights to 12 MLB teams in 2024, and a total of 38 MLB, NBA and NHL teams. In a quick hearing Wednesday, Judge Chris Lopez allowed DSG to continue working on an Amazon-backed plan introduced in January, one that Diamond said could save it from liquidation.
Lopez approved what’s called a disclosure statement — an outline, essentially, of what Diamond intends to do, which includes helping with $450 million in financing.
“The approval of the information statement is another important step in our restructuring and we are working to confirm our plan and emerge as a sustainable and forward-looking business,” said a Diamond Sports Group spokesperson. in a press release. “We are working to secure long-term agreements with our partners to allow us to continue serving fans across the United States and providing significant value to distributors, teams and leagues.”
From there, the biggest step is actually confirming the plan. That hearing is scheduled for June 18 at 10 a.m. CT. Any objections must be filed before 4 p.m. on May 22.
Last week, the three partner leagues – baseball, basketball and hockey – told the court they were reserving their rights, a way to protect themselves as the process moves forward.
“MLB and the Clubs have expressed serious concerns to the Debtors and their advisors regarding the assumptions underlying the Debtors’ business plan,” the league wrote in its filing, adding that “MLB and the Clubs are concerned if the debtors will be able to demonstrate to the Court that the confirmation of the Plan is not likely to be followed by a liquidation or a new financial reorganization of the Debtors…”
One outstanding question concerns future distribution. In its statement, Diamond said about 81 percent of its distribution revenue is tied to three companies: Charter, Comcast and DIRECTV.
Diamond recently entered into a multi-year agreement with Charter that would take effect if the company emerges from bankruptcy.
“Discussions continue with the other two major distributors,” Diamond’s lawyer, Brian Hermann, told the judge. “We remain optimistic and confident that we will also be able to reach agreements with both countries. »
Jim Bromley, a lawyer representing MLB, pointed out to the judge that the league did not know the economics of the Charter agreement.
“We continue to reiterate our requests for information to enable us to examine the economics that these agreements will bring,” Bromley said. “We hope that the debtors will be able to do what they have promised to do.”
MLB declined to comment Wednesday beyond what was said in court.
Diamond told the court his subscriber numbers had fallen by 35% between 2019 and the end of February. In January, experts doubted Diamond’s projections about its potential growth coming out of bankruptcy.
On Tuesday, a court filing in the case revealed the financial terms of a settlement Diamond reached with one of the two MLB teams he stopped broadcasting midway through the 2023 season, the San Diego Padres . The Padres were seeking at least $162 million and agreed in mediation last July to a payment worth about $79 million. It’s unclear if a similar deal was reached with the other team DSG abandoned, the Arizona Diamondbacks.
Diamond is in talks with the NBA and NHL about longer-term deals. The NBA has requested regular updates on the status conference, which Diamond said he can oblige.
Diamond also received approval Wednesday for a timetable that would make it more difficult for another reorganization plan to be considered by the court.
“We’ve already filed our plan and we’re obviously pursuing it aggressively, so it’s not a problem,” Hermann said. “We have a schedule that we’ve set up, so it’s pretty clear. The purpose of this motion was simply to ensure that we were not distracted by someone else tabling a competing plan. Frankly, I’m not sure who it would be or what that plan would say, but we didn’t need to take that risk. …It would be a distraction.
The dozen MLB teams Diamond is carrying for 2024 are the Atlanta Braves, Cincinnati Reds, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, the Minnesota Twins, St. Louis Cardinals, San Diego Padres, Tampa Bay Rays and Texas. The Rangers. For the remainder of this baseball season, Diamond stations continue to carry under the Bally name, but a new sponsor will follow after 2024.
(Photo: David Berding/Getty Images)