DirecTV warns Bally Sports not to assume a renewal is in the offing, another blow in Chpt 11 case

Bally Sports struggling to emerge from bankruptcy

DirectTV warned in a court filing today that it has barely begun renewal discussion with Bally Sports Regional Networks on their deal that expires later this year.

Bally Sports, owned by Diamond Sports Group, which is in Chapter 11 proceedings, last month asked for a 120 day delay through November 8 to complete its plan of reorganization, which includes extending and expanding carriage with key distributors. But DirectTV writes in its motion today that talks have not even begun to address the discounts DirecTV would receive to reflect the teams no longer on the Bally Sports platform (Arizona Diamondbacks and Suns, and San Diego Padres are no longer with the RSN network).

“Yet, despite the fact that the Debtors’ Distribution Agreements with DIRECTV terminate by their terms later this year (unless DIRECTV opts to extend), the Debtors’ renewal discussions with DIRECTV have barely begun,” the satellite carrier’s motion reads. “Even agreements on preliminary matters related to such renewal discussions, such as alignment on cost-based reductions for loss of specific teams’ rights, have thus far not been reachable.

“DIRECTV has no objection to the extension…at this time, but cautions the Debtors against making any baseline assumptions in their go-forward business plan that any or all (the distributors) would agree to “expand carriage” when their respective existing agreements are up for renewal, especially without addressing the issue of providing immediate rate relief to (the distributors)  for the loss of teams from their respective RSNs resulting from the Debtors’ intentional actions.”

That’s a shot across the bow of a floundering ship.  Diamond filed for Chapter 11 protection on March 15, burdened by heavy debt, expensive sports rights deal, and the quickening pace of cord cutting. Initially, it cut off payments to the 14 MLB clubs it had deals with, before a federal judge ordered the company to pay half until he could decide if the full amount should be paid.

Judge Chris Lopez did rule the full amounts were owed, with DSG walking away from the Padres and Diamondback deals. 

DirectTV clearly takes a dim view of DSG’s approach.  On the late 2022 launch of streaming app Bally Sports +, the carrier states in the motion, “they only did so in September 2022, years after the cord-cutting trend had already picked up steam.” On DSG’s battle with MLB, DirecTV writes the bankruptcy’s first four months were “marked by an expensive, and ultimately pointless, dispute with Major League Baseball and the teams that supply content to the Debtors.”

If DSG cannot count on renewing with DirectTV, one of its top distributors, there is little chance they can emerge from bankruptcy. And attention must soon focus on the NBA and NHL and whether DSG will walk away from some of those team contracts.