ST. LOUIS — Diamond Sports Group — the parent company of Cardinals and Blues broadcaster Bally Sports Midwest — was dealt another setback this month in the company’s efforts to emerge from bankruptcy.
The MLB, NHL and NBA have been pressing Diamond for detailed financial information to prove that if the company emerges from bankruptcy as planned later this summer, it will do so on solid footing.
But according to court filings, those requests include information about Diamond’s contracts with cable distributors like DirecTV and Charter, and an agreement with Amazon — information, Diamond said, that it legally can’t release without those companies’ permission or a court order.
Cox Communications filed a letter with the court Monday raising alarm about the “confidential and highly competitively-sensitive†information the leagues have requested. Diamond’s attorneys convened an emergency hearing before the bankruptcy judge in the Southern District of Texas to address the dispute.
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During the Tuesday hearing, an attorney for MLB argued that the league needs access to fuller financial and contract information in order to decide whether MLB will support Diamond’s business plan.
Lawyers for the cable companies, meanwhile, made the case that the details are trade secrets, and their release could hurt the companies in contract negotiations.
“We think we’ve offered what the debtors need to make their case for confirmation. ... We think we’ve offered what MLB needs, in order to test those projections,†said Stuart Lombardi, an attorney representing Cox. “That’s information that Cox guards closely. It would cause significant competitive harm to Cox if it was known to the league.â€
Diamond, meanwhile, is “stuck in the middle,†said Ross Firsenbaum, an attorney representing Diamond.
According to the filings, the cable companies have offered to let the leagues see some aggregated financial figures, but won’t give permission for Diamond to release other details that the leagues want. Amazon consented to sharing some redacted details about its agreements, and Diamond has shared a two-page summary of one contract to the leagues.
Diamond is now less than six weeks away from a key hearing when the court will consider whether to approve its plan to end its Chapter 11 proceedings. Judge Christopher Lopez said he fears that if someone objects to Diamond’s bankruptcy plan during that hearing, Diamond will be incapable of defending itself because it can’t release financial details.
The company’s proposed turnaround plan includes new financing from deals with Amazon and Diamond’s parent company, Sinclair. Under the terms of the Amazon agreement, Amazon Prime Video would become Diamond’s main streaming partner.
Diamond’s future is of concern to the teams and leagues, which rely on the company to produce broadcasts of games — and to pay them fees for the rights to do so. Depending on the team and the agreement, those broadcast rights can provide 20% to 30% of a team’s annual revenues.
Lopez signaled, at the end of the hearing, that he is in favor of releasing certain aggregated financial details. But he said he would take the next few days to consider another part of the leagues’ request, related to specific contract language, and issue a decision Friday.