Update 10 a.m. Monday, Feb. 13: Baseball CommissionER Rob Manfred says that Major League Baseball wants "to be in a position tomake sure our fans are going to get their games” due to Bally Sports shaky financial position.
Diamond Sports Group, the Sinclair Broadcasting Group's regional sports networks doing business as Bally Sports, is considering Chapter 11 bankruptcy restricting while facing a $140-million payment servicing an $8.6-billion debt this month, according to Bloomberg. Diamond holds the TV rights to the Reds and 13 other Major League Baseball teams.
“I think you should assume that if Diamond doesn’t broadcast, we’ll be in a position to step in. Our goal would be to make games available not only within the traditional cable bundle but on the digital side, as well,” Manfred told Associated Press sportswriter Ron Blum after an owners meeting Thursday in Palm Beach, Fla.
“What we do is largely dependent on how Diamond and the creditors play their cards, what they decide to do,” Manfred told the AP. “Our No. 1 goal in terms of preparations is that if for some reason Diamond isn’t broadcasting, that we want to be in a position to make sure our fans are going to get their games.”
Original post 2:47 p.m. Thursday, Feb. 9:
Questions, questions, questions. A recent report that owners of Bally Sports — the regional sports network for the Reds and 13 other Major League Baseball teams — is considering Chapter 11 bankruptcy restructuring raises so many questions.
Will it impact Reds telecasts? Is this the inflection point for moving MLB games to streaming? Could Cincinnati's E.W. Scripps (owners of WCPO-TV), Gray Television (owners of WXIX-TV) or Nexstar (owners of the CW network) jump into the regional sports broadcasting business? What impact will Billy Chambers, MLB's new local media rights guru, have on the Reds and other small-market clubs?
I don't have the answers. I can't even connect the dots at this point. Here's what I know:
The Diamond Sports Group, a subsidiary of Sinclair Broadcast Group (owners of WKRC-TV) that operates the Bally Sports regional networks, is "heading toward a complex $8.6-billion debt restructuring in bankruptcy court," Bloomberg reported Jan. 25.
Sinclair bought the old Fox Sports Ohio and 20 other Fox regional sports networks from Disney in August 2019 for $9.6 billion. Disney, which owns ESPN, was required to sell off the Fox sports regionals when it purchased 21st Century Fox's TV and film assets.
Bally Sports holds the exclusive local rights to 42 professional teams: 14 Major League Baseball teams, including the Reds; 16 National Basketball Association teams, including the Cleveland Cavaliers; and 12 National Hockey League teams, including the Columbus Blue Jackets.
"Considering that Bally Sports televises games for 14 MLB teams, a major shift in the industry may be afoot," SB Nation reports.
Bloomberg reported that "Diamond will probably skip a mid-February $140 million interest-only payment servicing around $8.6 billion in debt as it prepares for a Chapter 11 restructuring that will roil the $55 billion U.S. sports media business." Forbes reports that Diamond has just $585 million cash-on-hand with over $2 billion in media rights fees to pay across the 19 regional sports networks they control."
Bally Sports launched its new Bally Sports+ streaming service for its 19 regional sports networks last Sept. 26 — without the Reds.
At the time, Bally Sports only had streaming rights for five of its 14 cable TV baseball teams (Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays). And Bally Sports didn't have a streaming deal with Major League Baseball for the 2023 season.
Chambers' priority at MLB will be to "play an integral role in how we navigate the rapidly evolving local media landscape in the future," MLB commissioner Rob Manfred said in the Jan. 12 press release announcing the hiring of Chambers, who was the chief financial officer and chief operating officer for the Fox Sports regional networks.
"He will work closely with the 30 clubs on the most effective means to distribute games to fans in local markets throughout the country," said an MLB press release.
Among the options MLB could consider is "a direct-to-consumer model via streaming. The league is considered the gold standard for sports streaming with the experience gained from hosting MLB.TV Premium, the league’s out-of-market streaming service. The league’s technology arm is so good that they spun off an entirely separate company that was sold to Disney and supports Disney+ and ESPN+," Forbes says.
"A potential upside for consumers" would be MLB lifting the local blackout policy, "which according to MLB, is their No. 1 customer complaint," Forbes says.
MLB has created a new economic study committee due to concerns about Diamond's possibly bankruptcy, the Associated Press reported Feb. 3.
The committee also will examine revenue disparity among MLB clubs.
One of the major differences in team revenues is from broadcasting rights. While they equally split national TV revenues from Fox, TBS, Apple+ and other outlets, clubs' local TV revenues for the bulk of their games vary wildly due to the market size.
The Dodgers have a 25-year, $8.35-billion television rights deal with Spectrum that averages $334 million per year through 2038, according to SB Nation. The Angels signed a $3-billion local TV deal for 20 years before the 2012 season.
I don't know how much the Reds get from Bally Sports. I can't find the figure anywhere.
The Reds and other Bally Sports teams could be hurt even more by the regional sports network's financial troubles, the Redleg Nation blogsays.
"When most of these television broadcast deals were made, teams opted for ownership stakes in what was the Fox Sports regional networks alongside these large money deals. Cincinnati was one of those teams. How much stake they got is unknown. Some teams, like the St. Louis Cardinals, got a 30% stake in their local Fox Sports network when they signed their deal that also paid them $67M a season for 15 years. Amazingly, the Cincinnati Reds television deal is the only one in America where we don’t really have solid numbers on," Doug Gray writes for Redleg Nation.
How might Cincinnati-based Scripps, Gray Television or Nexstar fit into the equation? The new Scripps Sports divisionwas created in December.
“We see an opportunity… right now to plant the flag and say, let’s bring some of these sports rights back where 100 percent of the households in a market can see local sports teams,” Brian Lawlor, the former Scripps' Local Media division chief named Scripps Sports president in December, told TVNewsCheck editor Michael Depp in a Jan. 26 story.
Lawlor told me in December that Scripps "primary focus for sports rights will be in markets where we have second stations which are not affiliated with ABC, NBC, CBS or Fox."
Scripps also owns 48 ION stations. Combined with 124 ION affiliated stations owned by others, ION reaches 97% of U.S. television households through over-the-air broadcast and also reaches most of the U.S. through cable carriage, he says. If Scripps Sports acquires rights to a national sports league, those games would primarily be carried by the ION station, he says.
TVNewsCheck says that "Gray Television is interested," noting that its Raycom Sports unit "has long and deep experience in sports production and distribution."
Nexstar, which wants to broadcast the proposed Cincinnati Chili Bowl football game, just acquired TV rights for the CW network to the controversial LIV Golf League funded by Saudi Arabia's sovereign wealth fund. The first of 14 tournaments airs Feb. 24-26 in Mexico.
I don't know how all these dots might be connected in the future. But I agree with Greg Bouris, a veteran of the NBA, NHL, and MLB Players Association, who told SB Nation about the end of huge cable TV revenues:
"It's been a golden goose. You remove cable TV from the scenario, and franchises are worth a fraction of what they are today, players make a fraction of their salaries … This boom has been going on for almost 30 years. But the vast majority of people that pay never watch. That's been the model."
Stay tuned.
