Following the Atlanta Braves splitting into its own distinct business entity separate from Liberty Media Corporation, the company reported its Q2 earnings on its most recent investor call. The 1.8 million shares Liberty Media received from Atlanta Braves Holdings common stock in shared, intergroup interest in Braves Group are being exchanged with third party lenders to reduce debt within Liberty SiriusXM Group.
While the bifurcation from the Braves into a new public company, Atlanta Braves Holdings, was completed in July, one aspect of the move that was somewhat ambiguous was if the media rights would continue to be paid for in the same way. Liberty Media CEO Greg Maffei divulged that Bally Sports South, which is a regional sports network under Diamond Sports Group, is still paying its media rights fees.
“We’re blessed to have an incredibly strong territory,” Maffei said. “Fourteen million broadband households, a fan base that is very appreciative of a very successful team and a reasonable deal on what we are paid by Diamond of by Bally.”
Earlier this year, the Sinclair subsidiary filed for Chapter 11 bankruptcy to restructure its business amid carrying over $8.6 billion in debt. The move was presumably made, at least in part, due to Major League Baseball not granting the enterprise coveted direct-to-consumer broadcast rights. In its first full quarter since the filing, Sinclair reported a loss of $89 million – separate from Diamond, which underwent deconsolidation as part of a corporate reorganization last March. Overall quarterly revenue fell by 8% to $768 million, and advertising sales decreased by 16% to $309 million.
Diamond Sports Group neglected to complete media rights payments to the San Diego Padres and Arizona Diamondbacks within the regular season, leading Major League Baseball to take control of television broadcasts under its new local media department. The teams retained their commentary tandems as part of the move, and the league has been able to eliminate blackouts due to adjusted levels of exclusivity – leading to positive feedback from fans.
Despite Diamond affirming that there has been as much of a 30% drop in subscribers and revenue over the last seven years because of cord-cutting, MLB won a bankruptcy court hearing that directed the company to pay the full value of current contacts to four impacted franchises (Arizona Diamondbacks, Cleveland Guardians, Minnesota Twins and Texas Rangers).
As for the Atlanta Braves, its holding group has prepared a contingency plan should Diamond choose not to pay the team in the future. The team’s partnership with the regional sports network operator expires in 2027, a year in which the rights fee elevates to $113 million. For reference, revenue for Atlanta Braves Holdings in Q2 is reported as $270 million, an 8% increase YoY. There is no guarantee the deal may remain intact since Diamond is actively trying to reduce payments and end its bankruptcy declaration.
“I don’t anticipate that will happen for us,” Maffei said, who believes that Bally Sports South is the most profitable of the company’s regional sports networks. “But if it does happen, there will be other alternatives because of the strength of our product and the demand in our territory that will generate for us positive returns.”
