Streaming giant Amazon is poised to offer a clearer signal for some Major League Baseball clubs and fans, with an investment in Diamond Sports Group that helps the largest provider of regional sports programing restructure from bankruptcy and continue to broadcast games.
Diamond Sports Group, the parent company of Cardinals broadcast partner Bally Sports Midwest, announced early Wednesday morning the details of a restructuring agreement forged in the past month.
The restructuring support agreement (RSA), which must be approved by the bankruptcy court, includes an immediate infusion from Amazon in exchange for featuring Diamond’s channels like Bally Sports Midwest on Prime Video, as well as the streaming rights for a few MLB clubs, according to an official.
The Cardinals are not in that group of five, and they are approaching this season expecting status quo for their broadcasts — but change is coming and up for negotiation.
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An executive described Wednesday’s announcement by Diamond Sports as a “curveball for the industry.â€
Major League Baseball’s representative in Wednesday’s hearing echoed that sentiment, saying the agreement and its details came as a surprise to them. The judge postponed Friday’s scheduled hearing so the parties would have time to research the details of the RSA.
In the short term, broadcasts of Cardinals games and Blues games will remain as they are currently and have been for years through their cable partner. Bally Sports Midwest has pledged to pay the Cardinals their full rights fee for the 2024 schedule, and the Cardinals plan to have their games on Bally Sports Midwest through the 2024 season.
With Wednesday’s agreement approved to end the bankruptcy turmoil, Diamond would keep a grip on existing rights deals with major league clubs, and that would include the Cardinals and, in the NHL, the Blues.
Beyond this season has been an open question as Cardinals ownership said this past weekend at the Winter Warm-up. Wednesday’s agreement suggests Diamond intends to prevent collapse, emerge from bankruptcy and maintain its profitable rights agreements going forward, even after the 2024 season. The Cardinals are in the middle of a 15-year, $1.1 billion deal with Bally Sports Midwest, and their annual payments have not yet reached the average annual value of that contract.
The Blues are among the NHL teams that reached agreement with Diamond Sports Group for a reduced rights fee this season and the return of their rights at the end of the 2023-24 schedule. NBA teams had also reached a similar agreement with Diamond. MLB explored negotiating the same outcome.
Those deals would likely vanish if Wednesday’s RSA is approved, and Diamond would maintain, not shed, its existing rights fee contracts.
Pending the approval of the bankruptcy court for the proposed deal, Diamond stated it intends to broadcast sports beyond 2024 — and that is a radical change from the dismantling that appeared possible just weeks ago.
The details of the agreement and how it reached the leagues Wednesday invite questions throughout the industry on what this now means for local rights and which teams will be left looking for a broadcast distributor, especially with Amazon’s presence.
Amazon’s role
Amazon’s investment is $115 million, and it comes with a stake in Diamond, according to a presentation by attorneys in bankruptcy court Wednesday morning. Amazon will have an opportunity to increase its investment after the deal is finalized.
Amazon previously made a bid for streaming rights to all 11 of the major league clubs to which Diamond owns the broadcast rights. The catch with the offer was Diamond Sports did not own the streaming rights to all 11 teams; it owned only five. The Cardinals are one of the 11 teams, but they also reflect why that initial attempt by Amazon was rejected: The Cardinals maintain control of their streaming rights and are part owners of Bally Sports Midwest.
It is possible that the restructuring agreement, once finalized, provides a model for Amazon to then negotiate with other Diamond teams such as the Cardinals to provide a direct-to-consumer channel for games.
Cardinals ownership sees that as one possible solution to its “eyeball problem.â€
There are fans who wish to watch Cardinals games but cannot due to unbundling of cable channels, cord-cutting or the blackout policies that Cardinals ownership has called “archaic.†A goal of the organization has been to use the current uncertainty to organize a new broadcast model that erases blackouts and provides a direct-to-consumer model such as a streaming subscription.
“We’re looking at all the other team models,†club president Bill DeWitt III said Monday. “If you’re a free agent with your rights, like we might be in 2025, there are multiple ways that could go. We could do our own network. We could work with MLB and have that MLB-led effort with a basket of MLB teams that are out in the marketplace getting distribution collectively. There could be a third party that emerges. There have been rumors of the big boys in the bankruptcy court auction, right?â€
Amazon is one of those “big boys.â€
In an attempt to reorganize and prevent the complete collapse of their current regional sports broadcast model, Diamond reached an agreement with its largest creditors to emerge from Chapter 11 bankruptcy. As part of the agreement, Amazon is making a minority investment in Diamond. In exchange, Amazon will be able to put some of Diamond’s sports content on Prime Video as it has done with a few New York Yankees games. All teams involved in the streaming agreement would remain on their local cable or satellite channels as well.
The reigning World Series champion Texas Rangers have been one of the teams actively involved in the current bankruptcy hearings because they did not have a certain broadcast home for 2024 once Diamond Sports told them their rights fees would not be paid. Representatives for the Cleveland Guardians were also involved in the hearings, and attorneys for the Detroit Tigers, Atlanta Braves and Milwaukee Brewers signed a recent request to delay a hearing so that negotiations toward an agreement could be reached.
This past season, Major League Baseball took over the production and distribution of games for San Diego and Arizona. The Twins’ broadcast rights deal with a Diamond Sports affiliate expired at the end of this past season.
Diamond Sports stressed in court that it did not want to “unwind†or vacate the sports broadcast business entirely.
During a virtual hearing with the bankruptcy court judge on Wednesday, an attorney for Diamond Sports outlined how a part of the agreement also secures the naming rights for networks and gives the company a chance to monetize those for another revenue source. The “Bally Sports†banner may fly over telecasts through the 2024 season, but afterward, Diamond could sell rights to rebrand the RSNs.
Diamond also announced Wednesday it has reached an agreement in principle with Sinclair Broadcast Group to solve litigation between the two companies. As part of that agreement, Sinclair will pay Diamond $495 million — “in cash,†says the news release — and also “provide ongoing management and transition services to support†the reorganization of Diamond and ultimately a “separation from Sinclair’s operation.†Some creditors will receive a portion of that “cash†payment.
Sinclair purchased regional sports networks (RSNs) from Disney in 2019. The deal was reportedly for around $10 billion. This past spring, Diamond Sports filed for bankruptcy, and its representatives have argued in court that was necessary due to substantial debt and, in its initial filing, claimed $8 million in debt.
Under the Bally Sports umbrella, Diamond Sports owns 18 networks, including Bally Sports Midwest. That gives Diamond the rights to 11 major league clubs and, currently, 37 professional sports teams in total.
“We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024,†Diamond CEO David Preschlack said in a statement from the company. “We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond’s near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern for the benefit of our investors, our employees, our team, league and distribution partners, and the millions of fans who will continue to enjoy our broadcasts.â€