MLB: Comcast breakup a blow to Bally Sports' bankruptcy plan – St. Louis Post-Dispatch

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ST. LOUIS — Two weeks ago, when Comcast abruptly dropped broadcasts for the St. Louis Cardinals and other teams aired by Bally Sports, local baseball officials said they were “disappointed.”
This week, attorneys for MLB were more blunt. They cast the Comcast breakup as a setback to Bally’s efforts to emerge from bankruptcy.
“The weather is getting warmer. The teams are out of spring training, and the races are beginning to develop. And we have multiple teams who are facing substantial problems — that are appearing on the front pages of their local papers, on their local news — because their fans are unable to watch these games,” said James Bromley, an attorney representing Major League Baseball, during a Wednesday court hearing in Houston.
Diamond Sports Group — the parent company of Cardinals and Blues broadcaster Bally Sports Midwest — has been in Chapter 11 proceedings for the past year, a product of years of declining cable subscribership. The company is now pushing forward a plan to inject money into the business and emerge from bankruptcy in the coming weeks.
But attorneys for baseball, hockey and basketball leagues criticized Diamond for failing to reach a renewal agreement with Comcast, which dropped Bally Sports games this month after talks broke down.
The change annoyed Cardinals fans, mainly central Illinois (subscriptions to Comcast’s Xfinity aren’t available in the St. Louis market). And the baseball league argued in court filings this week that if Diamond can’t reach a deal with Comcast, the company’s plan to emerge from bankruptcy and continue broadcasting games will be “unconfirmable.”
Diamond relies on three distributors — Comcast, DirecTV and Charter — for the majority of its revenues, and Comcast is now the last one without a renewal agreement.
An attorney for Diamond said the company has reached renewal agreements with Charter, DirecTV and Cox — the company’s first, second and fourth-largest distributors, respectively. And it is still working toward a deal to get Comcast back, and restore games for fans in the affected areas.
“We remain optimistic that we can resolve this,” said Brian Hermann, an attorney representing Diamond in the case.
Bromley, the baseball league’s attorney, acknowledged Diamond’s intent to “keep feet to the fire” in talks with Comcast. But, he added, “I’m not sure that there’s a fire, and I don’t know where Comcast’s feet are. They simply don’t have any obligation to do anything, with respect to these debtors.”
In the court filings, the league’s attorneys listed 11 recent performances that Comcast-reliant baseball fans missed, including a sequence of seven scoreless innings pitched by Cardinal Sonny Gray. And they again raised concern that they lack detail on the terms of Diamond’s renewal agreements with Charter and DirecTV.
“We have, simply, no information,” Bromley said. “Everything, right now, is up in the air.”
Diamond’s attorney pushed back the deadline by two weeks, until June 5, for creditors and other stakeholders to cast votes in favor or against the company’s bankruptcy plan, and file any objections to it. But he said the company wants to keep a June 18 date in place for a confirmation hearing — when the judge could, potentially, approve the plan.
Hermann said Diamond is getting close to a naming rights deal, which would provide “another significant source of revenue.”
Decisions made in the Houston bankruptcy court in the coming weeks are of existential concern for Diamond, which, as recently as winter, was expected to eventually wind down operations. But the approval or denial of the plan will also determine how teams like the Cardinals reach their fans in the coming years, and whether those teams can continue to expect the broadcast rights payments they have historically received from Diamond.
Depending on the team and the agreement, experts say broadcast rights are often the top source of teams’ revenues — larger, even, than ticket sales and corporate sponsorships.
Near the end of the Wednesday hearing, the judge who has shepherded Diamond through Chapter 11 proceedings expressed sympathy for the sports leagues. There are, indeed, some serious questions that Diamond must answer, he said.
But, he added, he suspects that the company understands that it has work to do.
“I’m not going to say anything more at this time,” said Judge Christopher Lopez, of the Southern District of Texas Bankruptcy Court. “Let’s just continue down the path. There’s been a lot of good work done, and I don’t want to lose sight of it.”
“I know everybody’s got a real stake in where we are. And I get it.”
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