Amazon is considering investing in Diamond Sports Group, the troubled regional sports network operator, to enable it to continue its operations beyond this year. The plan needs approval from a bankruptcy judge, which is likely to come no earlier than May or June.
Regardless of the outcome, the Cleveland Guardians, Minnesota Twins, and Texas Rangers are expected to continue with Diamond this season on one-year deals, as per a person briefed on the league’s thinking. To understand the bankruptcy case and the implications of the Amazon-Diamond relationship for baseball, The Athletic interviewed bankruptcy lawyers Brian Davidoff and Bradford Sandler, as well as sports-media rights experts Lee Berke and Patrick Crakes. The Athletic also spoke to two others briefed on the matter who were not authorized to speak publicly. Questions have been modified for clarity.
What is the plan?
Diamond holds the TV rights for 37 teams across MLB, the NBA, and the NHL, broadcasting on its Bally-branded networks. It filed for bankruptcy last year. Before Amazon’s involvement, Diamond was preparing to wind down its operations, with 2024 being its last year. However, Diamond has stated to the court that it can operate beyond this year with Amazon’s assistance and the agreement of various creditors. Amazon is contributing $115 million, in addition to $450 million from creditors. A new company would be formed to manage most of Diamond’s current assets.
Can I watch games on Prime if the plan is approved? What are the implications for in-market and out-of-market viewing?
The plan primarily affects in-market game viewing. Out-of-market viewing remains unchanged: you can subscribe to MLB.tv or MLB Extra Innings. If the plan proceeds, in-market viewing would remain largely unchanged in the short term.
For instance, if you’re a Cardinals fan in St. Louis or its overall market, there are linear/TV rights and direct-to-consumer/streaming rights to consider. Linear rights enable you to watch games when you sign up for cable, satellite, or a digital service like fubo. With the plan, Diamond would continue to broadcast games on TV via Bally channels, provided your cable provider carries a Bally channel in your market.
Streaming rights determine if consumers have an alternative access point to watch games online without subscribing to cable TV/satellite/fubo. Currently, Diamond offers Bally Sports Plus, bundling the teams for which it holds digital rights. The equivalent of this offering would be available under the Amazon-Diamond plan, branded by Prime. However, it would likely come with an added fee, similar to signing up for Max or Showtime through Prime.
How many teams would be included in Diamond’s online package?
Diamond is expected to have the linear rights for 12 teams this season, but only the digital rights for five teams – the Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers, and Tampa Bay Rays. Therefore, the Cardinals, for example, would not be newly included in any streaming package offered via Prime unless a new arrangement is reached.
It’s uncertain if Diamond would carry the three MLB teams in 2024 that it carried in the past: the Cleveland Guardians, Minnesota Twins, and Texas Rangers. However, all three teams are likely to remain with Diamond for 2024 on one-year deals, with no streaming rights included. Diamond aims to finalize these deals by February 1.
What is the likelihood of the plan being approved?
Experts believe the plan has a strong chance of being approved. Given the prolonged bankruptcy process and Amazon’s involvement as the plan sponsor, it is highly likely to be approved, according to Bradford Sandler. Brian Davidoff also indicated strong support from the main parties, suggesting a high probability of confirmation.
Is the plan viable in the long term?
The sustainability of the plan is a subject of debate. Diamond faces significant financial obligations to 12 MLB teams this year, which may exceed $800 million. In contrast, Amazon’s investment could amount to $165 million. There are concerns about Diamond’s financial projections, particularly its direct-to-consumer product, as Diamond anticipates substantial growth in earnings over the coming years.
While Diamond projects significant increases in direct-to-consumer subscribers and revenue, there is skepticism surrounding these optimistic projections. The feasibility of the plan will need to be demonstrated to ensure that it is not likely to lead to another bankruptcy.
Can MLB influence the plan’s outcome?
MLB and the individual teams, as contract holders with Diamond, will play a critical role in the plan’s approval. Their cooperation is essential for the plan’s success, and their perspective will be taken into account by the judge. Ultimately, MLB’s primary concern is ensuring that its teams are paid, both in the short term and over the long term, potentially affecting the league’s stance on the plan.
What comes next?
The plan requires a disclosure statement that provides sufficient information for potential investors to make an informed decision. Following this, all creditors will have to vote on the plan. If confirmed, the plan could come into effect in May or June. In the event of financial instability after the plan’s approval, there is a possibility of a subsequent bankruptcy filing.
