Collapse of Regional Sports Networks (Diamond Sports Group files bankruptcy, Warner-Discovery looking to leave business, Xfinity drops Bally)

[WeaponOfChoice]

Younger generations think should be free, no blackouts and no cap.

There shouldn't be blackouts. I'm paying for the goddamn channel.

 

[Fish on The Sand]

There shouldn't be blackouts. I'm paying for the goddamn channel.

I've never understood this line of thought. It doesn't make any sense.

 

[KevFu]

I've never understood this line of thought. It doesn't make any sense.

It makes perfect sense... If I'm willing to PAY FOR SOMETHING (I.E. - MLBTV/NHLTV) why am I prevented from seeing it? The idea that it somehow "protects" someone from anything is ludicrous.

The purpose of local blackouts is: You watch the local broadcast, not a national one, so you see local ads and the network that bought the rights from the teams gets more revenue from ads that way. THAT makes sense. THAT is fine.

But the unforeseen side effects of that policy was... people paying extra money for extra games (MLB Extra Innings, Center Ice or MLBTV/NHLTV) were blacked out from all kinds of crazy things.

Can you give me a legitimate reason why I should be blacked out from watching:
- NY Mets local feed at Cincinnati Reds; in the Reds market... when no local feed existed. Just decided not to broadcast that game!
- NY Islanders at Dallas Stars in Austin, TX. Fair to block the stream. Bally's on DirecTV. No game. Black screen. Not available in my area (???)
- All Dallas Stars, Houston Astros and Texas Rangers games in New Orleans. No one is broadcasting those teams in NOLA, but I was blacked out a few times trying to watch the Islanders or Mets.
- Detroit Tigers at NY Mets. Both feeds blacked out. In Dayton, Ohio.

And that's just three places I've lived, not saying anything about the nightmare of being a fan in Las Vegas, Hawaii, Iowa, Oklahoma and Arkansas.

Are fans supposed to DRIVE HOURS to watch their ROAD broadcasts of local teams? Or fly from Hawaii to Los Angeles to watch MLB or NHL at all? Who the hell is being protected by this?

 

[KevFu]

The REAL reasons that you can't stream in market via NHLtv or MLBtv is (a) the nature of tech advancements. They wrote contracts for "LOCAL RIGHTS" when TV was the only form of visual broadcasting that existed. And (b) once streaming existed, they couldn't figure out the advertising piece.

The simple solution was ALWAYS just "show the local feed in market only, blackout the road feed in market; and show the ads in-market; not subject consumers who are willing to pay extra for extra games to the cesspool of blackouts.

 

[patnyrnyg]

The REAL reasons that you can't stream in market via NHLtv or MLBtv is (a) the nature of tech advancements. They wrote contracts for "LOCAL RIGHTS" when TV was the only form of visual broadcasting that existed. And (b) once streaming existed, they couldn't figure out the advertising piece.

The simple solution was ALWAYS just "show the local feed in market only, blackout the road feed in market; and show the ads in-market; not subject consumers who are willing to pay extra for extra games to the cesspool of blackouts.

I understand why they protected the RSN's with the local blackouts. I think the real issue is what actually qualifies as "local". I know in New Jersey there were some what I call dead zones. Towns that were within the radius of MSG to be called local so you could not get Rangers games on Center Ice. However, because it was the Flyers "home market" you could not get the games on MSG Network through a cable/satellite package. You could have MSG Network, but only for the shows, not the actual games.

 

[Golden_Jet]

I understand why they protected the RSN's with the local blackouts. I think the real issue is what actually qualifies as "local". I know in New Jersey there were some what I call dead zones. Towns that were within the radius of MSG to be called local so you could not get Rangers games on Center Ice. However, because it was the Flyers "home market" you could not get the games on MSG Network through a cable/satellite package. You could have MSG Network, but only for the shows, not the actual games.

Confusing, how can it be the Rangers and Flyers home market at the same time, unless they share a market, like Ottawa and Montreal.

 

[patnyrnyg]

Confusing, how can it be the Rangers and Flyers home market at the same time, unless they share a market, like Ottawa and Montreal.

That is why I call it a dead zone. It is part of the philly market for the cable/satellite, but too close to NYC to get the games on center ice/nhl.tv. Last I head of this was a few years ago so not sure if it has been changed.

 

[IU Hawks fan]

It makes perfect sense... If I'm willing to PAY FOR SOMETHING (I.E. - MLBTV/NHLTV) why am I prevented from seeing it? The idea that it somehow "protects" someone from anything is ludicrous.

The purpose of local blackouts is: You watch the local broadcast, not a national one, so you see local ads and the network that bought the rights from the teams gets more revenue from ads that way. THAT makes sense. THAT is fine.

But the unforeseen side effects of that policy was... people paying extra money for extra games (MLB Extra Innings, Center Ice or MLBTV/NHLTV) were blacked out from all kinds of crazy things.

Can you give me a legitimate reason why I should be blacked out from watching:
- NY Mets local feed at Cincinnati Reds; in the Reds market... when no local feed existed. Just decided not to broadcast that game!
- NY Islanders at Dallas Stars in Austin, TX. Fair to block the stream. Bally's on DirecTV. No game. Black screen. Not available in my area (???)
- All Dallas Stars, Houston Astros and Texas Rangers games in New Orleans. No one is broadcasting those teams in NOLA, but I was blacked out a few times trying to watch the Islanders or Mets.
- Detroit Tigers at NY Mets. Both feeds blacked out. In Dayton, Ohio.

And that's just three places I've lived, not saying anything about the nightmare of being a fan in Las Vegas, Hawaii, Iowa, Oklahoma and Arkansas.

Are fans supposed to DRIVE HOURS to watch their ROAD broadcasts of local teams? Or fly from Hawaii to Los Angeles to watch MLB or NHL at all? Who the hell is being protected by this?

It's not about advertising, it's about rights fees.

MLB.TV would not cost what it does if local teams were included. So you're not "PAYING" for something.

The real problem is that the distance teams are able to protect are way to large. Should be 100 miles from their ballpark or something. Giving 6 teams 'the right' to Iowa is ridiculous.

 

[Llama19]

Diamond Sports Group, owner of 14 MLB teams' broadcast rights, files for bankruptcy

www.yahoo.com/sports/diamond-sports-group-owner-of-14-mlb-teams-broadcast-rights-files-for-bankruptcy-023311090.html

 

[Lt Dan]

I am slower than the speed of a Llama, but a hugely important part of that article

Diamond Sports Group, owner of 14 MLB teams' broadcast rights, files for bankruptcy

A big change could be coming to MLB's finances.

www.yahoo.com

"We've been really clear that if Diamond doesn't pay, under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contracts. In the event that MLB stepped in, what we would do is we would produce the games, we would make use of our asset, the MLB Network, to do that. We would go directly to distributors — meaning Comcast, Charter, the big distributors — and make an agreement to have those games distributed on cable networks.

"We would also be seeking flexibility on the digital side, so that when you look at MLB.tv, you'd go in, you can buy your out-of-market package like you've always had, but you would have the option to buy up into in-market games, which I see as a huge improvement for fans."

 

[KevFu]

It's not about advertising, it's about rights fees.

The ads and rights fees are linked: The cost of the rights fees by the RSNs is recovered by the network selling ads. The exclusivity gives the RSNs the ability to charge more for ads.

But streaming and local TV are different.... the league-wide out of market streaming package and cable packages (aka The Package) isn't showing the local ads, because it's FREE ADVERTISING for the companies who bought ads on a regional cable station; not the whole country.

MLB.TV would not cost what it does if local teams were included. So you're not "PAYING" for something.

I understand the confusion, but there's really 2 or 3 different convos regarding blackouts. Forget streaming for a second, just consider the RSN vs the cable Package (Extra Innings, Center Ice).

The expectation is that games are on your local RSN/cable... OR The Package. So buying both, I should be able to see EVERYTHING. That's what we're paying for.

Games NOT available on EITHER cable subscription OR the Package is the problem that most people are talking about when they say "end local blackouts." Fans saying "I paid for it" mean that every game needs to be on one (a cable subscription) or the other (The Package). But it's not.

THAT is hurting business and everyone knows it. That's what MLB has been meaning when they say "end local blackouts."


Now, the whole "Streaming Package is out-of-market only" and not local is a whole different kettle of fish. While I understand the how/why, I once again disagree with THE EXECUTION of the policy.

The Streaming Package is viewed as a "different product" of only Out of Market games instead of what it's become and truly is: A different DELIVERY SYSTEM of content than cable. It never should have been that hard to figure out. And the leagues/teams are paying the price for their short-sightedness.

 

[eddygee]

I am slower than the speed of a Llama, but a hugely important part of that article

Diamond Sports Group, owner of 14 MLB teams' broadcast rights, files for bankruptcy

A big change could be coming to MLB's finances.

www.yahoo.com

Said this before MLB can say alot of things but it's mainly posturing. Its the Bankruptcy courts that have the final say. My take is Diamond isn't dumb they know they have court protection under this type of Bankruptcy filing where they can cut underperformed market contracts and redo other's to become a stable whole company.

Take MLB or any leagues Saber rattling no more serious than you would the side or a team or players case thar has been sent to the court of arbitration. In this case it's Diamond making the first move. They have some protectorate under Chapter 11 to do somethings that leagues won't like. MLB at heart knows this and this is a threat. They can't stop Diamond or a court approved rearranged contract under Chapter 11 Bankruptcy. John Ourand of SBJ had a detail breakdown of the playbook from his investigative sources on this.

The thing Diamond has to keep in mind though is what happens after these contracts are up. If you piss off MLB so much with severing under perform annual contract deals in the 50-60m yr range. Will MLB say next deals we're forbidden teams from doing deals with Diamond?

 

[Lt Dan]

Said this before MLB can say alot of things but it's mainly posturing. Its the Bankruptcy courts that have the final say. My take is Diamond isn't dumb they know they have court protection under this type of Bankruptcy filing where they can cut underperformed market contracts and redo other's to become a stable whole company.

Take MLB or any leagues Saber rattling no more serious than you would the side or a team or players case thar has been sent to the court of arbitration. In this case it's Diamond making the first move. They have some protectorate under Chapter 11 to do somethings that leagues won't like. MLB at heart knows this and this is a threat. They can't stop Diamond or a court approved rearranged contract under Chapter 11 Bankruptcy. John Ourand of SBJ had a detail breakdown of the playbook from his investigative sources on this.

The thing Diamond has to keep in mind though is what happens after these contracts are up. If you piss off MLB so much with severing under perform annual contract deals in the 50-60m yr range. Will MLB say next deals we're forbidden teams from doing deals with Diamond?

It's not posturing.

The MLB has been ready to do this for a while

MLB prepared to take over local TV broadcasts from Sinclair

About $1 billion of Major League Baseball’s revenue is at risk if a cable television company fails to make payments for local broadcasting rights to 14 teams, and the sport is preparing to take over telecasts.

www.ksat.com

From the article

Our goal would be to make games available not only within the traditional cable bundle but on the digital side, as well.”

The MLB has been unhappy with Sinclair since they bought the regionals and began terminating streaming deals and made it harder for their fans to watch the games.


They see the big picture and also want that money for themselves

Sports fans are being sidelined as local hoops and hockey networks fight the decay of pay TV

Regional sports network owners Sinclair, Comcast and AT&T are charting a path for survival as the digital future looks murky

www.cnbc.com

Comcast wants to sell its RSNs. Comcast shut down its NBC Sports Northwest RSN on Sept. 30, after losing the broadcast rights to air games from the NBA’s Portland Trail Blazers. AT&T considered selling theirs before agreeing to merge WarnerMedia with Discovery earlier this year.

This was Manfred back in November

“We’ve been very clear with [Sinclair] from the beginning that we see both those sets of rights as extraordinarily valuable to baseball, and we’re not just going to throw them in to help Sinclair out,” MLB Commissioner Rob Manfred said last month during the CAA World Congress of Sports. He went on to say that cord-cutting is one problem, but there’s also “excessive leverage” in Sinclair’s Diamond subsidiary.

Not using RSNs allows the MLB to get around local blackouts

While MLB and the NBA already have out-of-market national streaming options — MLB TV and NBA League Pass — blackout restrictions prevent the packages from including local teams. The whole concept of geofencing seems antiquated at a time when nearly every other form of video content is accessible on mobile devices wherever you are.

Greg Maffei, CEO of Atlanta Braves owner Liberty Media, told CNBC earlier this week there will be plenty of ways to get games to fans outside of using RSNs.

“You’ll see a host of new alternatives, whether it be offerings provided by MLB, whether it be over-the-top offerings or whether it be a more a la carte model over traditional linear television,” Maffei said. “Those will proliferate.”

They have been preparing for months for the RSNs to fail

According to a New York Post story last month, MLB, the NBA and the NHL have considered launching a streaming service together that circumvents the need for RSNs. Sinclair would have to either forego its block provision or work with the league to be part of the streaming solution.

 

[Golden_Jet]

The ads and rights fees are linked: The cost of the rights fees by the RSNs is recovered by the network selling ads. The exclusivity gives the RSNs the ability to charge more for ads.

But streaming and local TV are different.... the league-wide out of market streaming package and cable packages (aka The Package) isn't showing the local ads, because it's FREE ADVERTISING for the companies who bought ads on a regional cable station; not the whole country.



I understand the confusion, but there's really 2 or 3 different convos regarding blackouts. Forget streaming for a second, just consider the RSN vs the cable Package (Extra Innings, Center Ice).

The expectation is that games are on your local RSN/cable... OR The Package. So buying both, I should be able to see EVERYTHING. That's what we're paying for.

Games NOT available on EITHER cable subscription OR the Package is the problem that most people are talking about when they say "end local blackouts." Fans saying "I paid for it" mean that every game needs to be on one (a cable subscription) or the other (The Package). But it's not.

THAT is hurting business and everyone knows it. That's what MLB has been meaning when they say "end local blackouts."


Now, the whole "Streaming Package is out-of-market only" and not local is a whole different kettle of fish. While I understand the how/why, I once again disagree with THE EXECUTION of the policy.

The Streaming Package is viewed as a "different product" of only Out of Market games instead of what it's become and truly is: A different DELIVERY SYSTEM of content than cable. It never should have been that hard to figure out. And the leagues/teams are paying the price for their short-sightedness.

Since that’s the way pro sports seems to operate, if they change the RSN and blackouts, that might end up dropping the cap by at least 10 million, due to the dro in HRR.

 

[eddygee]

It's not posturing.

The MLB has been ready to do this for a while

MLB prepared to take over local TV broadcasts from Sinclair

About $1 billion of Major League Baseball’s revenue is at risk if a cable television company fails to make payments for local broadcasting rights to 14 teams, and the sport is preparing to take over telecasts.

www.ksat.com

From the article

The MLB has been unhappy with Sinclair since they bought the regionals and began terminating streaming deals and made it harder for their fans to watch the games.

No I know MLB has a plan of what to do IF they get the rights. The issue is they simply can't just say oh you're dropping some teams because the current deal is overpriced or hey you're reducing rights fees because the deal is overpriced. Well we're unilaterally taking back every teams rights you have. They can't do that despite all the posturing.

That's a knock on effect of filing Chapter 11 it provides protectorate for companies like Diamond that's all I'm saying.

Some people just seem to think welp MLB says this and sports media reports on it so it's law said and done. No the bankruptcy courts Diamond/Ballys filed with do. They'll work out a plan to make sure the company is solvent with a economical sound plan moving forward.

 

[IU Hawks fan]

The ads and rights fees are linked: The cost of the rights fees by the RSNs is recovered by the network selling ads. The exclusivity gives the RSNs the ability to charge more for ads.

To clarify, I'm talking about the rights fees that RSNs charge cable companies for the right to carry the network, that the provider then passes onto the consumer, the subscription fees.

Those should cover the other rights fees paid to the team before an ad is ever sold. That is the primary revenue stream for RSNs, NOT advertising. Advertising is a drop in the bucket compared to the $5-6 a month every subscriber is handing them.

Diamond is going bankrupt primarily because cord cutting has led to less rights fees being collected but the same being paid out.

 

[KevFu]

To clarify, I'm talking about the rights fees that RSNs charge cable companies for the right to carry the network, that the provider then passes onto the consumer, the subscription fees.

Those should cover the other rights fees paid to the team before an ad is ever sold. That is the primary revenue stream for RSNs, NOT advertising. Advertising is a drop in the bucket compared to the $5-6 a month every subscriber is handing them.

Diamond is going bankrupt primarily because cord cutting has led to less rights fees being collected but the same being paid out.

Oh, yes, that's 100% true. The bulk of the money is made from carriage fees because advertisers are paying for 30 second segments shown to the people watching, but the carriage fees are collected from EVERY subscriber whether they watch or not, so they were therefore a lot bigger.

That money is just GONE for the future. That's the shortsighted nature of it all.

My overall point was that it the expectation from customers is that: My carriage fee to subscribe to the RSN on cable gets me the local team broadcast (and national games), and my League Package fee gets me EVERYTHING ELSE. But the blackouts aren't like that, they're set by where the RSNs CAN broadcast to, and not where they ACTUALLY Broadcast to.

 

[KevFu]

The thing Diamond has to keep in mind though is what happens after these contracts are up. If you piss off MLB so much with severing under perform annual contract deals in the 50-60m yr range. Will MLB say next deals we're forbidden teams from doing deals with Diamond?

The cable model will most likely be dead and buried by the time the last contract is up. These deals are super long and are team-by-team. Fangraphs has a chart (that is a little out of date). Detroit was smart and signed a 5-year deal, but some teams are locked in for another 15+ years.

No I know MLB has a plan of what to do IF they get the rights. The issue is they simply can't just say oh you're dropping some teams because the current deal is overpriced or hey you're reducing rights fees because the deal is overpriced. Well we're unilaterally taking back every teams rights you have. They can't do that despite all the posturing.

Correct, but one assumes they CAN take back rights if RSN is in breach of contract. Let's look at the Arizona Diamondbacks. DSG didn't pay them. So... MLB could ask the court to void the contract, right?

 

[Lt Dan]

No I know MLB has a plan of what to do IF they get the rights. The issue is they simply can't just say oh you're dropping some teams because the current deal is overpriced or hey you're reducing rights fees because the deal is overpriced. Well we're unilaterally taking back every teams rights you have. They can't do that despite all the posturing.

That's a knock on effect of filing Chapter 11 it provides protectorate for companies like Diamond that's all I'm saying.

Some people just seem to think welp MLB says this and sports media reports on it so it's law said and done. No the bankruptcy courts Diamond/Ballys filed with do. They'll work out a plan to make sure the company is solvent with a economical sound plan moving forward.

LOL. You are still missing the obvious.


Back to the original article

"We've been really clear that if Diamond doesn't pay, under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contract

I quoted multiple very public statements that they are preparing to go their own direction and bring the NBA and the NHL along with them

 

[mouser]

Correct, but one assumes they CAN take back rights if RSN is in breach of contract. Let's look at the Arizona Diamondbacks. DSG didn't pay them. So... MLB could ask the court to void the contract, right?

MLB/Diamondbacks could ask the court to void the contract. They could likewise ask the court for specific performance--i.e. that the RSN continue to fulfill its contractual obligations.

 

[eddygee]

The cable model will most likely be dead and buried by the time the last contract is up. These deals are super long and are team-by-team. Fangraphs has a chart (that is a little out of date). Detroit was smart and signed a 5-year deal, but some teams are locked in for another 15+ years.




Correct, but one assumes they CAN take back rights if RSN is in breach of contract. Let's look at the Arizona Diamondbacks. DSG didn't pay them. So... MLB could ask the court to void the contract, right?

Which takes me back to my post a month or so ago from John Ourand they can't do that its complicated. From what I gathered Chapter 11 Bankruptcy supersedes previous deals. That's sort of obvious. We make a deal to pay you xyz off then current market going rate, then the market changes were the deal is no longer profitable for one entity thus Bankruptcy court. They then come up/assist with a plan to emerge from unprofitable to profitable and that's law. You break it and fall unto disrepair you're forced to liquidate Chapter 7.

 

[eddygee]

LOL. You are still missing the obvious.


Back to the original article

I quoted multiple very public statements that they are preparing to go their own direction and bring the NBA and the NHL along with them

Nope not at all we're talking in circles. MLB can want to and prepare to do anything they want.

That's not the same as making it happen. The power lies in the court not MLB/NBA/NHL. That's what im trying to say once again. Some ppl get this sense because of MLB PR pieces that they're dictating and in control. The power is in the court, they will give what they deem as fair judgment/recourse and consider all circumstances. As @mouser alluded to they can (ASK) the court to do XYZ and Diamond can also ask the court to do XYZ. Diamond does already have some Business protectorate though through Chapter 11 Bankruptcy law.

It's not just a formality of oh MLB or any affected league can just snap their fingers do their plan they came up with and it's all solved. NOPE not that simple. John Ourand had a thorough sourced report a month ago his sources said this will be a long drawn out process think he said potentially up to 5yrs of what he called the short term pain period. Chapter 11s aren't quick by nature. Sometimes they take years through the restructuring plan. Remember Kmart they had the longest drawn out Chapter 11 restructuring before finally going belly up a few yrs ago.

The best recourse would be both sides coming to some sort of fair agreement. From this case and point that favors Diamond as they are on the losing side currently. So likely result is courts rule in favor of partial payments/reductions while the restructing process occurs.

 

[MMC]

 

[eddygee]

Good find sums it up perfectly. Courts hold all the power here not Leagues or Diamond but Diamond is afforded protections under law aka [a league isn't going to just take back their rights not without Diamond offering to do so or a compelling case for the court to deem a league taking them back.]

Passage from the article

The automatic stay is perhaps the most powerful tool afforded to the bankrupt company. The protection allows Diamond to maintain its assets, most notably its TV sports rights, to keep its business afloat as it attempts to figure out a way to pay its creditors, reduce its expenses, potentially raise more cash, and fulfill, amend, or shed their TV contracts with clubs.

"Once you file bankruptcy, no one can take any action to collect a debt against you unless you go get court permission," Markell said. "The goal of Chapter 11 is for there to be a plan of reorganization, which is a document detailing who gets what, and who does what."

The automatic stay also means that creating that plan takes a while to play out. "Dealing in bankruptcy, a lot of times, is getting used to watching slow-motion crashes," he said.

 

[LadyStanley]

Rangers may cut ties with Diamond Sports

The Rangers become the first team since Tuesday's anticipated Chapter 11 filing to try to break ties with Diamond Sports.

theathletic.com

MLB Rangers threaten to sever relationship with Diamond/Bally over insolvency (read: bankruptcy).