Major League Baseball levied its biggest broadside yet against Diamond Sports Group on Friday, formally objecting to the proposed reorganization plan of the bankrupt regional sports network operator.
Escalating what has already been nearly two years of rising tensions, the league in a filing with the U.S. Bankruptcy Court specifically called into question DSG’s plan to retain its rights contract with the Braves. After failing to receive a wide range of requested financial documents, MLB also still harbors serious doubts about DSG’s ability to become viable.
“Based on the current inadequate record, the Braves and MLB have grave concerns that, if the plan is confirmed, there is a substantial likelihood that the debtors will find themselves once again in financial distress and/or bankruptcy court in the near future,” the league said in its filing.
The objection arrives six days before DSG is due to go before the court for confirmation of its plan to emerge from bankruptcy.
“Neither Braves nor MLB should be compelled to partner with a business that does not have a realistic roadmap to future operations,” the league added.
MLB’s objection comes about five weeks after DSG said it was looking to renegotiate much of its baseball rights, and that it would drop nearly every team it currently has absent a reduction in rights fees. As of now, only the Braves, Cardinals, and Marlins have any assurance of airing on FanDuel Sports Network in 2025. The objection also arrived one day after DSG agreed to a reworked rights deal with St. Louis.
The local broadcast fate of the Angels, Rays, Royals, and Tigers is still uncertain as the situation continues.
The Reds, meanwhile, will be moving on from DSG as a subsequent court filing late Friday indicated the team reached an agreement to sell its equity stake in FanDuel Sports Network Ohio for a “nominal consideration” and the two parties are dissolving their joint venture. The network, however, will continue to show the NBA’s Cavaliers and NHL’s Blue Jackets.
Next Steps
The key question now is whether the league’s stated concerns will have a material impact on DSG’s attempted reorganization. During the prior stages of the bankruptcy case, Judge Christopher Lopez has shown a generally permissive stance toward giving DSG what it wants to aid the company’s restructuring.
That said, MLB still holds some sizable leverage in this situation. Even after DSG’s previously amended deals with the NBA and NHL, baseball still represents the largest share of live content for the RSNs given the number of games involved, and without a critical mass of MLB games, the company will have a gaping hole in its spring and summer programming.
DSG now has five days to formally respond to MLB’s objection. The U.S. Trustee, which oversees the administration of bankruptcy cases, previously objected to DSG’s plan, largely on procedural grounds relating to third-party consent.
