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Scripps Has Contracts Contingent on Diamond Dropping Teams

Diamond Sports Group continues to be embroiled in Ch. 11 bankruptcy and has selectively rejected various rights contracts over the course of the last several months. Major League Baseball, anticipating concomitant issues in advance, established a local media department and duly assumed local broadcasting responsibilities for the San Diego Padres and Arizona Diamondbacks. Other organizations, such as those in the Phoenix, Ariz. locale, split from the Sinclair subsidiary and moved to other broadcast networks. With the recent start of the National Hockey League season and impending tip-off for the National Basketball Association, a disruption to broadcasts could prove tumultuous as the year goes on.

There are several teams that have concern that Diamond may decide to reject their contracts, which would theoretically infringe upon a source of revenue. As a result, some teams have made contingency plans that will permit them to expeditiously pivot should they suddenly find themselves bereft of a broadcast home. Diamond Sports Group owns and operates the Bally Sports-branded regional sports networks, which were acquired by Sinclair in 2021. This occurred after The Walt Disney Company received antitrust approval from the U.S. Department of Justice to divest these properties in its acquisition of Twenty-First Century Fox.

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“Every team associated with Bally is concerned about the future,” E.W. Scripps Sports president Brian Lawlor said in an interview with Broadcasting & Cable. “As a result, they are all doing contingency planning for the short term and the longer-term. We’ve been able to advance discussions about contingency plans all the way to actually written contracts that if Bally were to go away, we have agreements already in place that we would be the partner to be able to take over distribution and production and begin immediately.”

Scripps Sports is in the midst of expanding into the live broadcast space and has secured several media rights contracts over the last several months. The entity has local broadcast agreements with the reigning Stanley Cup champion Vegas Golden Knights, along with the Arizona Coyotes of the National Hockey League. Additionally, Scripps recently reached an agreement with the WNBA to present Friday night basketball games on the Ion network. Those games attained 6 million viewers over 16 weeks, with 30% of viewing taking place over-the-air.

“We’re really excited to continue to build out our visibility and women’s sports,” Lawlor said. “The more people that start to realize that there’s a franchise and a consistent place where they can find women’s sports, I think it’s going to continue to push this success of the league.”

Lawlor acknowledged that he is in constant discussion with the leagues and that he feels none of them want to see Diamond ultimately become submerged by these challenges, although Sinclair has predicted that resolution. Diamond sued its parent company in August and alleged that it received more than $1.5 billion because of misconduct. The claims relate to actions involving the fraudulent transfer of assets, breach of contract and unjust enrichment among other accusations. A resolution has yet to be reached within this lawsuit, nor has Diamond divulged a restructuring resolution with its creditors to end its bankruptcy.

The challenge Scripps is facing has come from distributors in being willing to carry independent and digital channels. Since they are not affiliated with a traditional network per se, content from certain Scripps networks goes against policies that have been implemented by various policies for dissemination within some of these companies.

“We’re saying we understand, but there’s no station in America that looks like our station,” Lawlor explained. “We have a full-powered independent station now in Las Vegas that has the Stanley Cup champions – every one of their regular season games that’s not on a network.”

The Vegas Golden Knights organization recently started its seventh season in the NHL, and the team has burgeoned in popularity from the moment it officially entered into the league. Tickets to see a contest at T-Mobile Arena are among the most expensive in the sport, and the regional games have frequently attained high ratings compared to the rest of the league.

“I think the distributors need to lean into serving the fans and putting these games on their platforms instead of staying with their archaic rules of not clearing a multicast station or an independent station,” Lawlor said. “….Fans are going to demand that they have access to their sports. They need to get on board.”

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