Judge rules that Diamond Sports must pay teams despite bankruptcy.

     

    Diamond Sports Group, the beleaguered operator of multiple regional sports networks across the country, must pay out its contracts to four Major League Baseball teams in full, according to media reports. 

    Judge Chris Lopez, a United States bankruptcy judge in Houston, declared that the owner of Bally Sports must pay the Minnesota Twins, Texas Rangers, Cleveland Guardians and Arizona Diamondbacks the agreed upon rates for the rights to broadcast games for those teams. Diamond had paid 75% of their fees to those teams but had argued that current economic conditions made it difficult to pay the remaining 25%.

    The decision from Judge Lopez comes just two days after Diamond's board announced that it would not make its monthly rights payment to the San Diego Padres, which is the majority owner of Bally Sports San Diego and is independent of Diamond's bankruptcy process. The nonpayment triggered a clause that reverted the broadcasting rights back to the team, leading MLB to produce the Padres' game broadcasts starting this past Wednesday.

    With the ruling in its favor, MLB expressed hope that Diamond would make their payments, as told by ESPN's Alden Gonzalez.

"MLB appreciates the ruling from the federal bankruptcy court in Houston requiring Diamond to pay the full contractual rate to clubs," the league wrote in a statement. "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."

    The joint venture between Sinclair Broadcasting and Entertainment Studios had filed for bankruptcy in April, citing the impact of cord cutting and the inability to negotiate with MLB over streaming rights as reason that it could not pay the full amounts to those teams. Diamond was born from the two companies as they came together to purchase the former Fox Sports regional sports channels from Disney, which acquired them and other assets from 20th Century Fox back in 2019. 

    Sinclair and Entertainment Studios took on more than $8 billion in debt in order to make the deal, which included broadcasting rights to over 40 MLB, NBA and NHL teams. Diamond believed that the high demand for local sports would reap huge financial rewards, but cord-cutting continues to lead to a decline in traditional cable and satellite subscriptions.