Reds ‘ground zero’ for MLB-Bally Sports fight over TV rights

Diamond Sports Group — which operates Reds TV carrier Bally Sports Ohio — did not pay the club its rights fees Monday, which could result in Reds games moving to a different channel by May 6, according to the Sports Business Journal.

If Diamond does not pay within a 15-day grace period, “MLB believes that the team will get its rights back, expected to happen during its early May series with the White Sox,” according to John Ourand’s Sports Business Journal story headlined “Cincy—Ground Zero for MLB’s RSN fight.” (RSN stands for regional sports networks, like Bally Sports Ohio.)

MLB could take over production of the games when the Reds host the Chicago White Sox at 6:40 p.m. Saturday, May 6, Ourand says. (The Friday night May 5 Reds-White Sox game will be on AppleTV+.)

Diamond Sports Group LLC, a subsidiary of Sinclair Broadcast Group (which owns WKRC-TV and about 200 other stations), filed for bankruptcy protection on March 15 after failing to make a $140-million payment servicing an $8.6-billion debt.

However, Ourand reports that Bally Sports Ohio is not part of the bankruptcy proceedings because the Reds took an equity stake in the regional sports network (then known as Fox Sports Ohio) as part of a 15-year deal running through the 2032 season.

MLB has been preparing to step in and produce the game under this scenario. And dropping the Reds comes as no surprise because the New York Post reported March 12 that Diamond Sports Group could soon cut ties with the Reds, Cleveland Guardians, San Diego Padres and Arizona Diamondbacks.

Commissioner Rob Manfred said after a Feb. 9 owners meeting in Florida that “you should assume that if Diamond doesn’t broadcast, we’ll be in a position to step in. Our goal would be to make games available not only within the traditional cable bundle, but on the digital side as well.”

Viewers would see the same announcers — John Sadak, Barry Larkin and Chris Welsh are employed by the Reds — but on a different channel, the Sports Business Journal says.

“If it gets back the Reds’ rights, MLB’s plan is to use many of the same behind-the-camera crew and trucks that currently work on the games for Bally Sports Ohio. That’s because most of those staffers are freelancers, and Mobile TV Group owns the trucks,” sources told the Sports Business Journal.

“A source said MLB has handshake agreements with distributors like DirecTV and Spectrum Cable, which is the dominant cable system in the Cincinnati market. The cable and satellite providers would carry the games on a different channel than Bally Sports Ohio,” the story continued.

In the March 12 story, the New York Post said that Bally was “expected to use the bankruptcy proceedings to reject the contracts of at least four teams to which it pays more in rights fees than it collects back through cable contacts and ads.” The four teams were the Reds, Guardians, Padres and Diamondbacks, the paper says citing a confidential source.

The Padres, St. Louis Cardinals, Florida Marlins, Los Angeles Angels and Kansas City Royals also hold equity stakes with their Bally Sports regional sports networks and are not part of the bankruptcy proceedings, Ourand reports.

According to Awfulannouncing’s Andrew Bucholtz, “the Cincinnati situation may well be the first case where we see rights actually turned over to teams and MLB, but it may not be the last. The rights of the Guardians and Twins could be turned over as well, but that’s pending a judge’s ruling next month thanks to the 100 percent Diamond-owned nature of their associated networks. However, the Padres, the Kansas City Royals, the St. Louis Cardinals, the Miami Marlins, and the Los Angeles Angels all have some level of equity in their associated networks, so they’re in situations more similar to what’s going on with the Reds. No payments to those teams have reportedly been missed yet, but if they are, analogous proceedings may play out there.”

Sinclair bought the old Fox Sports Ohio and 20 other Fox regional sports networks from Disney in 2019 for $9.6 billion. Disney, which owns ESPN, was required to sell off the Fox sports regionals when it purchased 21st Century Fox’s TV and film assets.

Diamond Sports Group holds the exclusive local rights to 42 professional teams: 14 Major League Baseball teams including the Reds; 16 National Basketball Association teams including the Cleveland Cavaliers; and 12 National Hockey League teams, including the Columbus Blue Jackets. It pays about $1.8-billion in annual rights fees, according to a Feb. 17 Forbes story.

Forbes says that MLB could consider “a direct-to-consumer model via streaming. The league is considered the gold standard for sports streaming with the experience gained from hosting MLB.TV Premium, the league’s out-of-market streaming service.”

MLB produces games for its MLB Network cable channel and its MLB.TV streaming services. Currently MLB offers only out-of-market streaming to protect Bally Sports and other rights holders telecasts on the local team’s regional cable providers. MLB could offer in-market streaming for a higher price, according to reports.

“A potential upside for consumers” would be MLB lifting the local blackout policy, “which according to MLB is their No. 1 customer complaint,” Forbes says.