First TV Domino: Texas Rangers May Leave Diamond Sports

As expected, Diamond Sports Group, the owner of 14 Bally regional sports networks (RSNs) that carry Major League Baseball games, filed for bankruptcy on March 15. This filing may immediately affect the Texas Rangers and have implications for how MLB games are broadcast in the near future.

On March 11, the Rangers notified Diamond Sports that they would seek to terminate their relationship with the company in the event that DSN becomes insolvent. According to an article by Daniel Kaplan in The Athletic, the Rangers took the following action:

“On March 11, 2023, Rangers Baseball LLC (Rangers), the owner and operator of the Texas Rangers MLB team, delivered a ‘Notice of Default and Termination,’” in the event Diamond is insolvent, the company’s chief operating officer David DeVoe, Jr. stated in a 35-page declaration filed in court Wednesday.

“In the Termination Notice, the Rangers asserted that an event of default on account of ARC Holdings’ alleged insolvency had occurred under the Rangers Agreement,” he continued, referring to ARC Holdings, the Diamond unit that oversees the Rangers RSN, Bally’s Sports Southwest. “The Rangers purported to terminate the Rangers Agreement, effective March 15, 2023, unless certain conditions were met.

Diamond Sports has reportedly not defaulted on broadcast payments to the Rangers yet, so whether or not the Rangers can end their affiliation with broadcast group remains to be seen. According to the article, DSG is late on required payments to the Arizona Diamondbacks. (They are currently in the grace period for a $30.8 million payment to the team.) Payments to the Rangers by DSG are estimated to be $111 million yearly. Add that to $68 million that all teams receive from national broadcast contracts, plus radio carriage deals, and the Rangers—like nearly every MLB team—will likely make close to $200 million every year before they sell a ticket or jersey.

What Can This Mean For MLB?

If the Rangers successfully end their broadcast relationship with Diamond Sports Group, they may be the first team to work with MLB directly to produce their games. According to Kaplan, MLB wrote in a statement late Tuesday night, “Major League Baseball is ready to produce and distribute games to fans in their local markets in the event that Diamond or any other regional sports network is unable to do so as required by their agreement with our Clubs.”

Should this happen, MLB could re-define how we watch games, first for the Rangers and then more broadly. Blackouts (a source of frustration for many fans) on the MLB.tv service may end, as the blackout is a product of the exclusive geographical broadcast rights that RSNs currently hold. Fans may have the opportunity to purchase the MLB content that they want, rather than content dictated by territorial rights of RSNs. Perhaps packages can be offered where consumers can pick teams or groups of teams, and purchase the rights to watch their games. Other packages may include different combinations of games. Customization of offerings would be a giant step forward for MLB, which has less generalized national appeal than some of the other sports.

It’s unlikely that MLB will take over producing games this year, as DSG asked for and was given until the end of this year to rectify its financial situation. If it does not, the organization may be declared insolvent, opening the door for teams to leave Bally RSNs. This situation may pave the way for an important evolution in baseball coverage. The RSN model does not work in the current environment where consumers are choosing services that allow cherry-picking of viewing content, and, importantly, across a variety of platforms. Baseball recognizes the need to get in tune with the changing desires of consumers and “meet them where they are” with flexible offerings. MLB w0uld also need to find a way to replace the more than $100 million the Rangers (and each other teams who lose Bally as a broadcaster) would lose from this kind of streaming/production situation.

As recently as 10 years ago, an RSN or group of RSNs going bankrupt would have been a huge problem. Fans would not be able to watch their local teams. There really wasn’t a mature backup plan. Now, MLB could theoretically use a potential bankruptcy to launch a service that would enhance the fan experience. The times have changed, and it’s good to see that MLB may change with them.

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