Sinclair Broadcast Group’s regional sports subsidiary Diamond Sports has filed an emergency motion in federal court asking a bankruptcy judge to nullify its agreement with the Arizona Diamondbacks.
If ordered, the move would allow Diamond Sports to walk away from its telecast agreement with the Major League Baseball franchise, which would become the latest casualty of the Chapter 11 bankruptcy case filed by the regional sports broadcaster earlier this year.
In its emergency motion filed on Thursday, Diamond Sports said it recently analyzed the business deal with the Diamondbacks and found it to be “unnecessary and burdensome.”
“[Diamond Sports] lose significant amounts under the Diamondbacks agreement, and thus have determined that the Diamondbacks agreement no longer fits with [Diamond Sports’] long term plans,” the motion said.
The Diamondbacks are one of Diamond Sports’ largest creditors, with nearly $31 million owed to the team when the bankruptcy case was initially filed, according to a review of documents by The Desk at the time. The Diamondback and Major League Baseball have yet to issue a statement on the matter.
If the court approves the motion, it would be the second Major League Baseball team to lose its distribution agreement with Diamond Sports over fees owed. The San Diego Padres ended its agreement with Diamond Sports three weeks ago, with Major League Baseball taking over production and distribution responsibilities for games from that point on.
Diamond Sports says it has lost around $3 million keeping the agreement with the Diamondbacks in place, and has asked a bankruptcy court to approve its request no later than Friday, June 30. If the court takes that long to approve it, the last Diamondback game produced and aired on a Diamond Sports channel would take place one day earlier; absent any objections from the Diamondbacks or Major League Baseball, the judge overseeing the case could approve the motion earlier.
Sinclair acquired its regional sports channels through a deal with the Walt Disney Company in 2019. The deal, valued at $10.6 billion, satisfied a regulatory requirement imposed on Disney concerning its purchase of certain media assets from Fox Corporation around the same time.
Almost instantly, Sinclair faced an uphill battle with the regional sports business: After demanding high fees for the channels — which were rebranded as part of a licensing agreement with Bally’s — some cable and satellite providers like Dish Network and Disney’s Hulu with Live TV decided to drop them, citing low viewership.
Faced with mounting losses, Diamond Sports filed its bankruptcy petition in March, seeking to restructure more than $8 billion in debt.
The woes facing Diamond Sports are part of a broader trend impacting regional sports broadcasters, which have seen a significant decline in revenue brought on by a lack of distribution and an increase in consumers moving away from pay television. Faced with the prospect of dwindling viewership, some sports franchises have opted for deals with over-the-air broadcasters for the distribution of their games.