Diamond Sports Group (owner of Bally RSNs) files for Chapter 11 bankruptcy, MLB to produce Padres games after missed payment

[jsnpritchett]

43 minutes ago, oater said:

 

Thanks for providing the contract—it makes an interesting read.

 

The contract makes reference to a number of other documents which are likely material to the Angels/Fox contract.  This includes a “Disclosure Letter” which may contain disclosures about the Angels contract, and an “Assignment and Assumption Agreement” which may be the contract that transferred the Angels contract.  

 

Regardless, it is pertinent to note the following:

·      Disney is identified as the “Seller.”  Preamble.

·      Disney warrants that it has the authority to enter into the agreement and complete the transactions contemplated under the agreement.  Section 3.02.

·      Disney makes a number of warranties to the effect that it is in material compliance of applicable laws, licenses and “Material Contracts” that pertain to the transferred business.  Sections 3.07 and 3.08.

 

Unless excluded under the Disclosure Letter or other referenced documents, Disney is acknowledging that it was the owner of the Angels/Fox contract and had the authority to transfer title to Diamond.  Since Disney was a party to the Angels/Fox contract, it had the obligation to perform the contract in full, and means that unless the Angels in some manner agreed to release Disney, the Angels have recourse against Disney for any breach of the contract.  Again, this is under applicable general contract law.

 

With regard to your question about Section 6.07 under which Diamond agrees to perform the assigned contracts, this is a standard contract provision for any agreement to transfer an executory contract.  Nobody is disputing Diamond’s obligation to perform—rather the question is that if Diamond fails to perform, what recourse do the contracting parties have against other parties, such as Disney.

 

Under Section 7.07, Diamond agrees to indemnify Disney for any liability Disney incurs as a result of the operation of the transferred business by Diamond.  While this is a standard provision in a contract of this type, it reinforces the concept that Disney may have liability because of a breach of a transferred contract by Diamond.  

 

Disney also obtained a guarantee by Sinclair Group of certain payment obligations of Diamond under the agreement.  Section 4.08.  I can’t tell whether this includes any of Diamond’s indemnification obligations (Section 7.07), but it demonstrates that Disney had some concern about Diamond’s financial stability.  

 

I agree with your presumption that Moreno apparently exercised a put option to divest his interest in FSN West.  Section 6.09(b).  This is another indicator that Moreno was never convinced about the profitability of the restructured Diamond business model (and would be another reason Moreno would not release Disney from liability under the Angels/Fox contract).

 

To clarify my point about any approval of the buyer by DOJ not altering any obligations of Disney under general contract law, please keep in mind that DOJ’s interest is to ensure compliance with antitrust laws.  DOJ has an interest in trying to insure that the transferred business will operate successfully in order to preserve competition in the marketplace.  This is obviously not a perfect process, as many transferred businesses fail notwithstanding DOJ approval.  The main point is that there is no DOJ policy to relieve a selling party from liability under its contracts.

 

Also, keep in mind that only the provisions in the DOJ/Disney consent decree have any meaning or binding effect.  And since the Angels were not a party to that proceeding, they are not bound by the consent decree.

 

Finally, even if the DOJ were interested in relieving Disney from contract liability, such action would potentially expose the government to liability for a taking of property without compensation.  Obviously, I don’t believe this to be factually relevant, but it is another policy reason why the DOJ would not try to alter contract rights as part of a divestiture decree.

 

 

 

I appreciate the effort you put into this reply.  I'm definitely not an expert in contract law, so your interpretations go beyond my knowledge base. Assuming your interpretation is correct, I'm still struggling to grasp why no one is writing about this (even including the financial press) in the articles about the bankruptcy or why Manfred/MLB execs haven't referenced it as a possibility, either, when they've given comments on the situation. 

It's going to be an interesting next year or so as all this plays out.

[oater]

14 minutes ago, jsnpritchett said:

I appreciate the effort you put into this reply.  I'm definitely not an expert in contract law, so your interpretations go beyond my knowledge base. Assuming your interpretation is correct, I'm still struggling to grasp why no one is writing about this (even including the financial press) in the articles about the bankruptcy or why Manfred/MLB execs haven't referenced it as a possibility, either, when they've given comments on the situation. 

It's going to be an interesting next year or so as all this plays out.

Thank you for your comments.  I would not read too much into the fact that Disney's possible liability has not been discussed in the media.  We are all talking about things that may or may not happen in the future.  At present the main topic of conversation is what might happen in a Diamond Sports bankruptcy.  Potential Disney liability is way down the road.

[HaloBronco]

7 hours ago, jsnpritchett said:

I appreciate the effort you put into this reply.  I'm definitely not an expert in contract law, so your interpretations go beyond my knowledge base. Assuming your interpretation is correct, I'm still struggling to grasp why no one is writing about this (even including the financial press) in the articles about the bankruptcy or why Manfred/MLB execs haven't referenced it as a possibility, either, when they've given comments on the situation. 

It's going to be an interesting next year or so as all this plays out.

Agree with you on this, can’t believe this isn’t a bigger story either other than on this board. This could have huge implications. 

(I'm still struggling to grasp why no one is writing about this (even including the financial press) in the articles about the bankruptcy or why Manfred/MLB execs haven't referenced it as a possibility, either, when they've given comments on the situation). 

[Angels 1961]

Stock up on 9-volt batteries. I'm getting my transistor radio out. Go back in time and listen to games that way. 

[Revad]

1 hour ago, Angels 1961 said:

Stock up on 9-volt batteries. I'm getting my transistor radio out. Go back in time and listen to games that way. 

I used to listen to games under the covers well past my bedtime, and my Dad knew it.  He would be in his den listening and my bedroom was next to it, and sometimes when the Angels would make a good play or hit a home run he would come into my room and make a comment.  I don’t believe he ever told my Mom about it,

Edited February 4, 2023 by Revad

[Angels 1961]

I remember those days. Games in late 50's (Dodger games) and early 60's started  at 8 so be tired at school next day.

[jsnpritchett]

Just in time for the bankruptcy! And Fubo has raised prices up to $15/month for people in areas with RSNs.

 

 

[Revad]

Only $80/month (close to $1,000 per year), that’s why I cut the cord!

[HaloBronco]

9 hours ago, Revad said:

Only $80/month (close to $1,000 per year), that’s why I cut the cord!

Might as well go back to cable TV, cord cutting has creeped up in the same price range as cable.

[TempeAngel]

6 hours ago, HaloBronco said:

Might as well go back to cable TV, cord cutting has creeped up in the same price range as cable.

This is true.

[gotbeer]

On 2/6/2023 at 1:10 PM, jsnpritchett said:

Just in time for the bankruptcy! And Fubo has raised prices up to $15/month for people in areas with RSNs.

 

 

 

Lol at people paying money to stream things on the web.  - @Lou

[Hubs]

On 2/4/2023 at 10:03 AM, Angels 1961 said:

I remember those days. Games in late 50's (Dodger games) and early 60's started  at 8 so be tired at school next day.

Aha! so you're in your 80's? Late 70's?

[Angels 1961]

6 minutes ago, Hubs said:

Aha! so you're in your 80's? Late 70's?

No I'm not in my 80's or late 70's

[Angels 1961]

6 minutes ago, Hubs said:

Aha! so you're in your 80's? Late 70's?

I do remember draft Angel's had December 1960. My big disappointment of Eli Grba being pick number 1

[Amazing Larry]

17 hours ago, Angels 1961 said:

No I'm not in my 80's or late 70's

90's? Congrats!

[Angels 1961]

1 minute ago, Lhalo said:

90's? Congrats!

 

1 minute ago, Lhalo said:

90's? Congrats!

no, not 90's please do not use your public school math!

[Taylor]

5 minutes ago, Angels 1961 said:

 

no, not 90's please do not use your public school math!

Angels 1961 is Lou's alt confirmed. 

[Revad]

1 hour ago, Taylor said:

Angels 1961 is Lou's alt confirmed. 

That makes sense to me.

[mmc]

 

[mmc]

Manfred says MLB is ready to take over

 

[Blarg]

Yay?

[Stradling]

It would end black outs for those markets. But where does the revenue come from for the team?

[jsnpritchett]

23 minutes ago, Stradling said:

It would end black outs for those markets. But where does the revenue come from for the team?

I'm sure there's probably something obvious that I'm missing, but I'm not entirely following what Manfred even means by MLB being able to step in and provide the broadcasts.  I could see them doing it online fairly easily, but who would be carrying it on cable/satellite?  Doesn't seem to make much sense to have Bally Sports carry broadcasts that are financed/produced by MLB if BS can't make the payments--but from a logistical standpoint, maybe that's the easiest plan??

In terms of revenue, I imagine that what would happen is that the shared revenue from the local rights payments would just be lower to every team.  I've read various numbers on what % the team keeps of their own deal, but there's still a pool of roughly half of the total money in local rights fees that gets re-distributed back to all teams equally.  So, in theory, if the Bally Sports RSNs don't make any of their payments this year, then a team like the Angels would get $0 from their own portion of the local rights fees, but they'd still get 1/30th of the total local rights fees paid across baseball (that number would obviously be much smaller this year, since about half the teams have rights deals with a BS RSN). 

They could make up a fraction of that revenue (again, in theory) if MLB lets teams affected by the bankruptcy to sell direct-to-consumer streaming packages for their games.

[Taylor]

The CEO should have billionaired better.

 

[Ace-Of-Diamonds]

On 2/6/2023 at 10:51 PM, HaloBronco said:

Might as well go back to cable TV, cord cutting has creeped up in the same price range as cable.

Tmobile offers free MLBtv to subscribers and for ~$9/mo a VPN allows me to watch all games including the Angels