By Phillip Swann
The TV Answer Man –@tvanswerman
Diamond Sports yesterday filed a motion in bankruptcy court to compel DIRECTV to pay for past carriage fees that Diamond says DIRECTV owes it for carrying San Diego Padres and Arizona Diamondbacks games. The company, which owns the Bally Sports regional sports networks, and declared bankruptcy last March, alleges that DIRECTV stopped paying the fees after Diamond over the summer ended its agreements to broadcast the Padres and Diamondbacks games.
As part of its bankruptcy reorganization, Diamond Sports this year has ended broadcast agreements with a handful of teams, including the Padres and Diamondbacks, because they determined they were unprofitable. (Diamond is attempt to reorganize as a profitable unit, still broadcasting the games of the remaining Bally Sports teams.) However, the company says its contract with DIRECTV requires it to continue paying the carriage fees for the two MLB teams even though Diamond Sports no longer provides their games. Diamond Sports is asking the court to force DIRECTV to pay the fees as well as damages.
“Faced with this reality (Diamond not providing the games), and unable to point to any contractual provision entitling it to relief, DIRECTV instead seeks to resort to supposed ‘equitable’ remedies that would permit it to withhold payments owed under the contract,” Diamond says in the motion. “No legal or equitable principle, however, entitles DIRECTV to re-write its contract with (Diamond Sports).”
DIRECTV has yet to respond to Diamond Sports’ motion, but the TV provider filed a motion in bankruptcy court last August saying the companies hadn’t resolved the issue of possible cost reductions based on the RSN company’s loss of the Padres and Diamondbacks agreements.
Update: DIRECTV has issued a statement in response to the Diamond Sports motion: “When DSG ceases to carry a team, they seem to think we should continue to pay them for the right, even as we need to pay the new rights holders to ensure continued transmission to our subscribers. That makes no sense, and it is not how our agreements with DSG work.”
“Despite the fact that (Diamond Sports’) agreements with DIRECTV terminate by their terms later this year (unless DIRECTV opts to extend), the Debtors’ renewal discussions with DIRECTV have barely begun. Even agreements on preliminary matters related to such renewal discussions, such as alignment on cost-based reductions for loss of specific teams’ rights, have thus far not been reachable,” DIRECTV stated in the motion from last August.
Despite the legal battle, The Wall Street Journal reported this month that Diamond recently was able to extend its Bally Sports deal with DIRECTV until September 2024. Sports Business Journal reported that DIRECTV had an out clause in the contract that would have allowed it to renegotiate the agreement now. But the out clause also would have required the satcaster to renegotiate the local channel pact for Sinclair so DIRECTV waived it. (Diamond Sports is a subsidiary of Sinclair.)
The Diamond Sports motion asking for DIRECTV to pay the back fees says the contract “specifically addresses the situation where the Diamond parties do not deliver games to DIRECTV.” However, further reference to that section in the contract — and the amount of the past fees in question — are blacked out.
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— Phillip Swann