Diamond Sports Group will miss its scheduled rights fee payment to the San Diego Padres on Tuesday, and the franchise has opted to end their broadcasting contract. MLB will step in and assume control of Padres television broadcasts immediately, with a new cable distribution plan to be announced soon.
DSG is a Sinclair subsidiary that operates under the name Bally Sports. The company is going through bankruptcy proceedings after suffering significant financial losses due to the debt it took on when it purchased broadcasting rights for 21 MLB, NHL and NBA teams from Fox in 2019. That initial purchase cost $10.6 billion, but the company incurred roughly $8 billion in debt to make it happen. An interest payment on the debt was missed in February which led to bankruptcy proceedings.
When DSG misses a payment to a team, it triggers an out clause in those broadcast deals. The Padres exercised theirs and will look to find a new partner. The Padres' on-air talent will remain in place as they are employees of the franchise. For now, fans can watch Padres games for free on MLB.TV app until details for a new cable distributor are announced.
At a bankruptcy hearing in Houston on Wednesday, Diamond is set to claim it should be allowed to pay lesser rights feeds to the Cincinnati Reds, Texas Rangers, Arizona Diamondbacks and Cleveland Guardians. The company will claim the lesser payments would be to account to changing market forces that have diminished the power of the old cable model. A judge is expected to issue a ruling on Wednesday or Thursday in the case.
The Padres will also lift local blackouts for games on all platforms beginning Wednesday.