By Phillip Swann
The TV Answer Man –@tvanswerman
A bankruptcy court judge last night ruled against Diamond Sports’ motion to reduce the payments it makes to four MLB teams (Twins, Guardians, Rangers, Diamondbacks) for the rights to carry their games.
The decision is a major blow to Diamond Sports, the owner of 18 Bally Sports regional sports networks. If it had won the case, Diamond Sports could have used the ruling as precedent to seek reduced payments to other teams whose games it carries. (The Bally Sports channels have 13 MLB teams, 16 NBA teams and 12 NHL teams.)
ESPN reports that the judge did not say when Diamond Sports, which declared bankruptcy in March, must make its full payments to the four teams. (The company previously paid them 75 percent of their regular payment in accordance with a temporary ruling by the judge in advance of the final verdict.) But the company at some point will have to decide to pay up or give up their TV rights.
Diamond on Tuesday decided to no longer pay the San Diego Padres, transferring their broadcast rights back to the league. MLB began broadcasting the Padres games on Wednesday night. It’s possible that Diamond will make a similar decision on one or even all four of the teams now in question, which could force MLB to become the primary broadcaster of five teams.
In his verdict, Judge Chris Lopez did not agree with Diamond Sports’ argument that the payments should be reduced because the company is receiving smaller carriage fees due to shrinking cable and satellite subscriber numbers.
“Profitability is certainly decreasing for each team,” Lopez said, according to ESPN. “But again, this doesn’t mean that the contract rate and those fees under those contracts is not reasonable.”
MLB had contended that Diamond Sports should honor their contracts regardless of the new economic conditions. The league last night issued a statement thanking the judge for his decision.
“MLB appreciates the ruling from the federal bankruptcy court in Houston requiring Diamond to pay the full contractual rate to clubs,” the league stated. “As always, we hope Diamond will continue to broadcast games and meet its contractual obligations to clubs. As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”
Diamond Sports has yet to issue a statement on the verdict.
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— Phillip Swann