I’ve taken some of the most pride in the way both this site and our sister sports site, THEDOUBLEOVERTIME.com, have covered perhaps my personal favorite intersection, sports and media. And this year, it was nay impossible not to pay attention, as the world as we’ve known it pretty much since the mid-1970s was coming to a tipping point, and even as 2023 concludes, that transformation is still evolving.
When Diamond Sports, the entity that emerged out of the odious partnership of Sinclair TV and the Bally’s casino brand, announced it was going bankrupt during spring training, it was big news, and set off a chain of events that already forced the hand of several of the MLB, NBA and NHL teams whose local rights were under its purview. Since overpaying for the remnants of what was once the hugely profitable FOX regional sports networks when Disney wisely chose to unload what they had been stuck with as part of their $70B deal for Twentieth Century Fox (that one hasn’t worked out too well, has it?), Sinclair, a broadcaster who has regularly reneged on payments to content suppliers as they built an empire of duopoly and triopoly broadcast stations with at times a strong right-wing news agenda, used the lame excuse of COVID precaution to scale down their teams’ broadcasts and severely slash their staffing, to this day often still relying on home teams’ video feeds for road games and extending the ban on travel for announcers long after any real worries for their safeties had lapsed. They have also fully embraced the blood money of gambling with liberal partnerships with Draft Kings, turning much of what have been their shoulder programming into barkers that tempt degenerate gamblers with proposition bets, or what they often saw as perhaps the only compelling reason for fans to watch a meaningless game between two non-contenders.
As 2023 unfolded, the story we first reported in mid-March continued, with the San Diego Padres actually pulling the plug on their local Bally’s channel at roughly the same time that their underachieving team had begun their second half no more successfully than they had underwhelmed in the first. With the help of some savvy and opportunisitic MLB executives with previous success running these networks for FOX, not to mention a few hard-working fans and detail workers in distribution and measurement, a new, MLB-owned Padres channel emerged almost seamlessly, with almost everyone who was capable of and choosing to watch unaffected. New opportunities and throwback schedules for other broadcast stations, particularly stations owned by Scripps and Gray, have emerged with the NBA and NHL season, with the Stanley Cup champion Vegas Golden Knights establishing a presence on a new broadcast digital channel that has extensive pre and post-game coverage, ironically centered around news and information rather than lines. The Utah Jazz have returned to their one-time exclusive broadcast home, the eponymous KJZZ-TV, for the cornerstone of their coverage, and while the team’s play and its appeal has been less successful than the era where that station (ironically owned by Sinclair) often led the market in prime time, as the only team in the four “major” team sports with top-tier pro league status, at least more Utahns can see exactly how tradeable Lauri Markkinen is.
As we enter 2024, the saga will apparently continue. Just last week, the ATHLETIC’s Evan Drellich reported on a tentative arrangement that will at least keep games on the air, but as the article warned, the word tentative couldn’t be emphasized more. The end paragraph in particular was particularly foreboding. And as this week began, even more daunting news emerged from SPORTS MEDIA WATCH’s Jon Lewis:
Amazon and Diamond Sports — operator of the Bally Sports RSNs — are reportedly in talks that would eventually result in games being distributed through Amazon’s Prime Video platform. The Wall Street Journal reported Monday that Amazon and Diamond are in active negotiations on a “multiyear streaming partnership” that would see Amazon purchase an as-yet-undetermined stake in the now-bankrupt company and “eventually become the streaming home” of its properties. Amazon, which already owns a stake in YES Network, has previously been mentioned as a suitor for the NBA’s local rights in the league’s upcoming media rights negotiations.
But as any Yankees fan will tell you, Amazon’s stake involved the move of what were the remaining 25 games that allowed the New York Yankees to maintain a broadcast presence on WPIX-TV that began in 1947 and continued (with some stints on FOX-owned competitors) through 2022 exclusively to Prime Video (thankfully, subscibers to MLB Extra Innings packages were still able to see those games on cable and satellite providers, albeit at a steep cost). And as anyone who’s been shipping and receiving Christmas packages of late know, Amazon doesn’t look to keep historic business models intact, they reinvent them.
So enjoy what you got while you still got it, and don’t say we didn’t warn you:
The news was not unexpected. Anyone who has followed sports, media or business knew about this Ides of March was going to be a hallmark day in the history of how and where fans see their favorite teams’ games. Still, the news that reverberated through all of these industries’ publications yesterday was still dramatic, such as the one that Lillian Rizzo dropped on CNBC.com:
Diamond Sports Group, the largest owner of regional sports networks, filed for bankruptcy protection on Tuesday, toppled by a more than $8 billion debt load.
The company, which is an unconsolidated and independently run subsidiary of Sinclair Broadcast Group, filed for chapter 11 bankruptcy protection in Texas. The company said in a release it is finalizing a restructuring support agreement with a majority of its debt holders and Sinclair to wipe out its debt load.
The hefty debt load stems from when Sinclair in 2019 acquired the portfolio of networks from Disney for $10.6 billion, which included roughly $8 billion in debt.
While Diamond has continued to make the rights fees payments to the leagues and teams it broadcasts games for, it was on the hook for hundreds of millions of dollars in annual debt interest payments.
Last month Diamond Sports said it missed a $140 million interest payment due to its bondholders and would instead enter into a 30-day grace period. During that time the company had been in negotiations with its creditors and other stakeholders in a bid to restructure its debt load.
The business rationales, and the necessity for, Sinclair to go through these machinations are obvious. They’re accounting maneuvers, designed to minimize the impact that this will have on Sinclair’s overall value, which is largely driven by the 200-plus over-the-air TV stations they own and operate, often with two or more affiliates in a market. And they’re publicly attempting to reassure nervous fans that life as they know it won’t be changed, as Ben Strauss of The Washington Post reported:
Through Chapter 11 bankruptcy, Diamond said, it will continue to broadcast games as usual as it attempts to restructure some $8 billion in debt that Sinclair took on to purchase the networks in 2019 while also plotting a sustainable way forward for its business.
“We are utilizing this process to reset our capital structure and strengthen our balance sheet through the elimination of approximately $8 billion of debt,” CEO David Preschlack said in a statement. “The financial flexibility attained through this restructuring will allow DSG to evolve our business while continuing to provide exceptional live sports productions for our fans.”
Exceptional productions? Huh?
When Sinclair rebranded the one-time FOX Sports Network outlets with the Bally’s nomenclature four years ago, they replaced a quarter-century legacy of quality sports production honed with the NFL and the genius of the likes of David Hill and Ed Goren with the logo of a company known for running casinos and making pinball machines. It replaced the triumphant FOX music package with an over-the-top pulsing instrumental that punctuates every. single. freaking. break. And even when pandemic protocols otherwise opened up opportunties for broadcasters to travel to their teams’ road games, Sinclair continued to have most broadcast remotely, and relying upon cameras from the home team’s RSN, with one supplemental camera for the visitors added on as a token, still controlled by that team’s production crew.
Honestly, high schools and colleges produced more authoritative, nuanced broadcasts. Watching the way the Angels and Clippers have been covered side-by-side with the way the Dodgers and Lakers, who control their own sports networks, in a market this oversaturated with sports channels is eye-opening.
And despite Sinclair’s optimism, both leagues and teams are exploring other options. And as Strauss added, in the case of Major League Baseball, they are absolutely looking for alternatives:
Major League Baseball issued a more dramatic statement, saying it is “ready to produce and distribute games to fans in their local markets in the event that Diamond or any other regional sports network is unable to do so as required by their agreement with our Clubs.” MLB added, “Over the long term, we will reimagine our distribution model to address the changing media climate and ultimately reach an even larger number of fans.”
According to multiple people familiar with the ongoing negotiations, now that Diamond has filed for bankruptcy, it is examining all of the contracts with teams on its books and identifying any that lose significant money. It already missed one payment to the Arizona Diamondbacks because it deemed the size of the rights fee so unfavorable. One person familiar with the ongoing talks said the San Diego Padres, who have gone on a spending spree to sign a number of expensive players in the past year, also have a deal that will be scrutinized.
A more detailed report from The Athletic, as reported on FanNation by Matthew Postins, added some additional specific team names and details:
Of Diamond’s 19 RSNs, a person close to MLB said the Sinclair Broadcasting subsidiary has indicated to the league that it plans to walk away from the ones that carry the Cincinnati Reds, Cleveland Guardians, Arizona Diamondbacks, and Texas Rangers. In a bankruptcy, Diamond is looking at the RSNs the way a bankrupt retailer would look at store leases: discarding the ones that don’t work economically and keeping the ones that do.
The Rangers, like the Padres, have gone on a spending spree for free agents in an attempt to inject some life into a dormant non-contender. In the Metroplex, as any Cowboys fan or person named Jones can assure you, money talks. No surprise the Rangers are already exploring options beyond Bally’s already. Dallas-Fort Worth has several over-the-air independent TV stations, including duopoly outlets owned by FOX and Paramount Global, respectively, with whom the Rangers have a positive history with, that would be only too happy to use these games to justify their existence and perhaps actually contribute to their conglomerates’ bottom line. Cincinnati and Cleveland happen to be markets where Scripps owns network-affiliated stations; in Cincinnati, its NBC affiliate regularly pre-empted the network even during the days of Must-See TV, and when the 1990 team won a World’s Championship their games would often draw ratings competitive with all but the top tier of prime time entertainment series.
And as for teams affiliated with the RSNs that Warner Discovery inherited from its AT&T deal, the clock is ticking even louder. They’ve already informed the teams they carry that as of the end of this month, teams are free to negotiate their own deals to distribute their games beyond those they are abandoning. In a hockey-passionate market like Pittsburgh, for example, key playoff-implication games for the Penguins could wind up on an over-the-air station, just like they once were in Aprils of the past. The Utah Jazz, clinging to playoff and play-in hope in a wild NBA West, have already been shopping their rights for next year beyond their RSN, and also have several options, including a possible alliance with the Denver Nuggets’ Altitude Sports Network that has worked out well for the current conference leader. The Houston teams are also potentially impacted by the WBD decision, and they are also exploring options. The defending World Champion Astros have value, of course. The last-place Rockets, not so much. And there’s history of how fickle Houston sports fans can be with losing teams on poorly distributed networks, as Matt Snyder of CBS Sports reported a decade ago:
Zero point zero. That level of futility was once brought to us by Mr. Blutarsky. To wit:
The illustrious future Senator was joined Sunday in the 0.0 club by the Houston Astros.
According to Nielsen ratings, the Astros-Indians game drew a rating of 0.0 in the greater Houston area. That means that out of the 2.28 million TV households in the Houston area, an estimated zero were tuned into the Astros game.
That’s about the same rating I’d give the Bally’s RSNs on how well they’ve done with managing and tarnishing what was once a robust and respected business into an ill-branded, cash-bleeding, cheaply produced embarassment. MLB’s bullishness in refusing to sell them digital rights to allow them to attempt a DTC offering similar to those they’ve attempted elsewhere is justified. Their monthly price point of $20/month is overly aggressive, all but assuring only the sliver of fans with high disposable incomes and intense passion will be along for the ride. MLB needs all the fans they can get. And how do you think the Rangers’ Jacob deGrom and Corey Seager, as well as Juan Soto and a whole bunch of shortstop-eligible Padres are being paid? With Michelata sales?
The sooner more competent and nuanced people are in charge of broadcast rights, the sooner the quality of broadcasts can be upgraded, the sooner the stench of AT&T and Bally’s can be removed from the sports and media landscape, the better off their teams, employees and the sports world itself will be.
Let them buy their own peanuts and Cracker Jack with their buyouts.
Until next time…