MLB’s Takeover Of Padres’ Rights Is First Reckoning For RSNs

After months of tension, Major League Baseball’s day of reckoning with regional sports networks has arrived — which could have seismic effects on one of the sport’s key revenue streams.

Since early this year, MLB has been actively preparing to take over the local TV rights of 14 teams served by Bally Sports and its bankrupt parent, Diamond Sports Group. Now, Diamond has officially missed its rights payment to the San Diego Padres, prompting the league’s immediate takeover of the team’s local rights.

Starting Wednesday, MLB will distribute Padres games on DirecTV, Cox, AT&T U-Verse, fuboTV, Spectrum, and MLB.TV, dispensing with blackouts typically shutting local fans out from watching their teams. 

With these changes, the ballclub’s local footprint grows from about 1.13 million homes to around 3.26 million.

“While we’re disappointed that Diamond Sports Group failed to live up to their contractual agreement with the club, we are taking this opportunity to reimagine the distribution model, remove blackouts on local games, improve the telecast, and expand the reach of Padres games by more than 2 million homes,” said Noah Garden, MLB chief revenue officer.

But as the league and newly hired executive VP of local media Billy Chambers implement this plan, uncertainty abounds. Local media is typically one of the top three revenue streams for any MLB club. The Padres — who are paying a club-record $250 million player payroll this year — are looking to replace the annual $60 million received from Diamond.

More missed payments are expected as Diamond wrestles with more than $8 billion in debt. Diamond has only paid half what it owes to Arizona, Cleveland, Minnesota, and Texas — and will attempt to lower those fees in a bankruptcy court hearing Wednesday.