Bally Sports Regional Networks reaching a distribution agreement with Comcast is widely seen as one of the last steps necessary to move the RSN giant out of its 16-month-long winding bankruptcy. And with deals brewing with the NHL and NBA, that may be the case.
But as always with these matters, the devil is in the details. MLB has been hammering Bally Sports parent Diamond Sports Group during the Chapter 11 process , warning since going dark on May 1 on Comcast, the RSN’s plans for financial viability can’t be trusted. So yesterday’s big news solves that concern; right?
Not necessarily. MLB also has been warning that if Diamond caved to Comcast and agreed to put the channels on a pricier tier, provisions would trigger in the RSNs company’s other distribution contracts that allow them to also bump Bally Sports from basic to a premium tier. And Diamond’s Comcast renewal does remove Bally Sports from the basic package.
“ The channels are part of the Xfinity Ultimate TV Package, which is a tier above the basic package,” a spokeswoman for Diamond wrote in an email.
So again, yesterday’s big news then must mean Diamond’s Chapter 11 exit plan is in trouble because now the other carriers can bump the RSNs up to pricer tiers, thereby reducing subscriber fees; right? Again, not necessarily.
“It’s possible that Bally’s got an increased rate to offset the decreased distribution. They also could’ve negotiated more lenient DTC rights in the Comcast territory than they previously had,” said former Fox Sports exec Bob Thompson said, referring to streaming games direct-to-consumer (DTC). “That is important for Bally’s potential partnership with Amazon.
“I would assume that the other distributors have an MFN to whatever Comcast got so they’ll sit back and wait for Bally’s to confirm the terms of the new Comcast deal. After that, they’ll be free to enforce those terms with Bally’s or stand pat with where they are.”
MFN means most favored nation and is the contractual clause that grants equal terms to all of a content company, like Bally Sports’ distribution partners.
Patrick Crakes, another former Fox Sports exec turned consultant, wrote, “Comcast gave on DTC pricing… How much I don’t know yet but it’s worth something, probably, for DSG to be able to price DTC closer to the bundled price.” By that he means the streaming option will not be priced at an absurdly high figure. “As far as the MFN clauses go, there may be one MVPD that executes right away but the others may take some time. For some distributors, like Cox and Charter, RSNs work for their customers. Moving them to exotic tiers may not make sense right away, or for a while. The true impact of all of this remains to be seen. DSG looks to be able to continue.”
“The leagues need to keep connected to Pay TV for a while (maybe longer) to at least generate some type of reasonable local rights. The NBA in particular given they can’t elevate any local games to new national partners as they agreed to not do that in their new deals with ESPN, NBC and Amazon.”
Diamond last week postponed the Chapter 11 approval hearing, known as a confirmation, scheduled for yesterday and today, citing progress on the now executed Comcast deal and new agreements with the NBA and NHL. MLB last month won the right to examine the cable carriers’ MFN clauses, so the league once it reads the Comcast deal should have a good idea of the prospective financial impact of the new contract.
But as Crakes points out, it might not be as simple as assuming all the carriers will now move the RSNs to a paid tier.
MLB has long been concerned that Diamond’s post-bankruptcy financial projections are not tested. Presuming the confirmation hearing is rescheduled shortly, we will find out soon whether the new Comcast deal satisfies MLB, or further fuels its fire. Either way, when that hearing date finally arrives, grab your popcorn.
Diamond holds TV rights to 12 MLB teams. Comcast is most popular in the home markets of the Atlanta Braves , Miami Marlins , Minnesota Twins , Tampa Bay Ray s, Detroit Tigers , and the Kansas City Royals . Starting August 1, fans in those markets can gain access to watching the teams again when Comcast begins airing the games.
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