DIRECTV vs. Diamond Sports: Could The Legal Dispute Affect the Carriage Agreement?

By Phillip Swann
The TV Answer Man –@tvanswerman

TV Answer Man, I read your article today on Diamond Sports saying DIRECTV owes them money. Could this fight lead to DIRECTV not carrying the Bally Sports channels? — Bob, Atlanta.
Bob, that’s a great question, and one that I’ve been asked a few times after publication of today’s article on Diamond Sports’ 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.

DIRECTV is saying that it does not owe any carriage fees to Diamond, suggesting the company is being presumptuous in asking for money for game broadcasts that never occurred. “When (Diamond Sports) 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,” DIRECTV said in a statement. “That makes no sense, and it is not how our agreements with (Diamond Sports) work.”

Diamond, however, says the contract language requires the payments to continue regardless of whether the teams are playing on the Bally Sports channels. We can’t evaluate that because the contract terms are redacted in the Diamond Sports motion, as is the amount of money the company alleges that DIRECTV owes.

But as for the carriage agreement between the two companies, The Wall Street Journal and Sports Business Journal both reported recently that it was extended until the fall of 2024. Sports Business Journal wrote 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.) That would seem to suggest that the agreement is solid for now.

If Diamond continues to have financial issues, which could include not being paid by DIRECTV for past carriage time, it’s possible that the company could wind up in liquidation rather than emerging as a profitable unit following a bankruptcy reorganization. But the legal dispute itself would seem to have no bearing now on the carriage pact between DIRECTV and Diamond Sports.

Bob, hope that helps. Happy viewing and stay safe!

— Phillip Swann
@tvanswerman