Streaming Innovations Are A Top Priority Amid Diamond Sports Group Fiasco

The recent news regarding Diamond Sports Group’s decision not to make a $140 million interest payment on February 15th has sent shockwaves throughout Major League Baseball. As they embark upon a 30-day grace period with the hopes of avoiding bankruptcy, anxiety surrounds 14 ball clubs whose broadcast rights fall under Bally Sports, a series of regional sports networks owned by Diamond Sports Group. The missed interest payment on nearly $9 billion in debt must lead to streaming innovations for Major League Baseball, but first they must confront financial complexities and archaic ideologies.

As Commissioner Manfred recently addressed a group of reporters in Arizona at the outset of spring training, he hopes Diamond Sports Group will honor their contractual obligations with the 14 ball clubs and pay what is owed to them in terms of broadcast fees. However, reality paints a vastly different picture for Manfred. Major League Baseball wants all its broadcast partners to achieve financial success, but seismic changes in media consumption have regional sports networks teetering on the edge of extinction. Given the fluid nature of the situation, Major League Baseball must proactively prepare for the worst case scenario.

Manfred is already thinking about contingency plans since he can ill afford any broadcast interruptions. The hope is to have ball games available both in a traditional linear model included in a cable television subscription as well as the league’s digital platforms. At the genesis of these discussions, Major League Baseball knows they are not able to offset the losses in revenues by the ball clubs in the short term if Diamond Sports Group declares bankruptcy.

Assuming Major League Baseball will seek to enact a termination right based on Diamond Sports Group’s inability to make the required payments, 14 ball clubs will proceed to end their contractual relationships. This means Major League Baseball would produce the ball games through the MLB Network and must secure distributors such as ComcastCMCSA
and Charter at an appropriate price. Ideally, Manfred would like flexibility so the ball games could also be available to fans on MLB.TV. Besides the out-of-market package, an in-market package could be created as well based upon the unprecedented circumstances. If Major League Baseball can agree on a distributor who will provide flexibility in terms of access through MLB.TV, the ball clubs will receive revenues generated from both sources.

Manfred knows Major League Baseball needs to aggressively expand its reach through a streaming platform, but the sport’s current economic model is tied to regional sports networks and cable television. A modern alternative is desperately needed that provides accessibility and affordability. Irrelevance far outweighs innovation under the current model as blackout restrictions have simultaneously stunted Major League Baseball’s growth and angered fans who passionately want to support ball clubs outside of their local markets.

Major League Baseball has secured media rights deals with FOX, Turner, ESPN, and AppleAAPL
through the conclusion of the 2028 season for an estimated $1.825 billion on an annual basis according to data collected from Sportico. Don’t forget about an additional $30 million Major League Baseball will earn this season from Peacock as it concludes a two-year agreement with the NBCUniversal streaming service. The only reason why Peacock even became an opportunity for Major League Baseball to explore is because ESPN decreased its ball game inventory.

It is an extraordinary financial commitment to be a baseball fan given the current methods of content distribution. Inflation and economic concerns have put a stranglehold on the finances of families across the country. Difficult decisions are being made regarding subscriptions for sports and entertainment content. Amid the uncertainty surrounding Diamond Sports Group, it is worth reflecting on how out-of-market baseball fans desire accessibility at an affordable price without the presence of the dreaded blackout restrictions.

One of several compelling examples is being a fan of the New York Yankees and living in the state of North Carolina. Two cities within the state have been rumored as potential expansion markets for Major League Baseball, Charlotte and Raleigh. The 168 mile distance between the cities provide a vastly different broadcast experience when it comes to consuming baseball. Fans will either purchase an MLB Extra Innings package through DIRECTV or an MLB.TV out-of-market package. The MLB Extra Innings package from DIRECTV will also include access to the MLB Network, Strike Zone, MLB.TV, and MLB At Bat app.

In terms of blackout restrictions, the city of Charlotte will not see ball games for the Atlanta Braves, Baltimore Orioles, Cincinnati Reds, and Washington Nationals. In Raleigh, blackout restrictions only apply to the Orioles and Nationals. Fans who follow the Yankees while living in North Carolina will also need some form of a cable, satellite, or digital provider to watch ball games on FOX/FS1, ESPN, MLB Network, and TBS while adding streaming services such as Peacock and Apple TV+. Blackout restrictions are implemented to protect exclusive broadcasting rights in a local market for a regional sports network.

Matters become even more complicated when it comes to the YES Network and its relationship with AmazonAMZN
. Last season, the highly successful regional sports network presented Prime Video with exclusive rights to 21 ball games with 19 occurring on Friday evenings. Only Prime members in New York state, north and central New Jersey, and northeast Pennsylvania were able to view the ball games at no additional cost. If fans had an MLB.TV out-of-market subscription, they could have watched the ball games. Fans outside the YES Network’s regional footprint cannot access the innovative app and its diverse content regardless of an MLB Extra Innings package through DIRECTV or an MLB.TV out-of-market package.

The Diamond Sports Group fiasco is providing Major League Baseball with an opportunity to reassess its archaic broadcasting strategies. An emphasis must be placed on innovation through streaming by redefining broadcast exclusivity rights in local markets. As the cable television model continues to shrink in size and relevance, Major League Baseball must make a commitment to accessibility and affordability while allowing fans to cultivate their own allegiances regardless of geography. Fans of a certain age will most likely complain about the intrusiveness of streaming. However, Major League Baseball needs to quickly adapt and develop a streaming platform that reflects the rapidly changing needs of fans in a cord cutting environment.