Major League Baseball will take over broadcasts of San Diego Padres games beginning Wednesday after Diamond Sports missed a rights fees payment to the regional sports network's parent company and let the grace period expire.
Diamond Sports, which owns 19 networks under the Bally Sports banner, said in a statement that it decided "not to provide additional funding to the San Diego RSN that would enable it to make the rights payment to the San Diego Padres during the grace period and will no longer be broadcasting Padres games after Tuesday."
The Padres RSN is owned by a joint venture of the team and Diamond.
The Padres become the first team that MLB will take over production of its broadcasts. MLB set up a local media department during the offseason to prepare for a bankruptcy filing by Diamond Sports, which took place in March.
"While we're disappointed that Diamond Sports Group failed to live up to their contractual agreement with the club, we are taking this opportunity to reimagine the distribution model, remove blackouts on local games, improve the telecast, and expand the reach of Padres games by more than 2 million homes," MLB Chief Revenue Officer Noah Garden said in a statement.
MLB announced Tuesday night that fans in the Padres' home television market will be able to watch games on DirecTV, Cox, Spectrum, AT&T U-Verse and fubo. MLB will also offer a direct-to-consumer streaming subscription for $19.99 per month or $74.99 for the rest of the season by registering at MLB.TV.
This is the first time MLB.TV is offering a DTC option in a team's home market and also lifts the blackout rules that were in place for games previously distributed on Bally Sports San Diego.
Padres games through Sunday will be available for free with an MLB login at MLB.com, Padres.com and in the MLB apps on mobile and connected devices.
MLB said that the new arrangement expands the reach of Padres' games in its home television market by 189% from approximately 1.13 million homes to approximately 3,264,000.
Padres TV announcers Don Orsillo, Mark Grant and Bob Scanlan will remain in place because they are employed by the team.
There wasn't any mention at the end of the Padres 9-4 win at the Miami Marlins or on the postgame show that Tuesday was the final Padres game on Bally Sports San Diego.
Due to a storm at the ballpark, the broadcast feed for both teams was disrupted during the seventh inning.
The Padres signed a 20-year, $1.2 billion contract with Fox Sports Networks in 2012. Diamond Sports Group and Sinclair Broadcast Group bought the regional sports networks from The Walt Disney Co. for nearly $10 billion in 2019. Disney was required by the Department of Justice to sell the networks for its acquisition of 21st Century Fox's film and television assets to be approved.
Diamond Sports is in Chapter 11 bankruptcy proceedings in the Southern District of Texas. Diamond said in a financial filing last fall it had debt of $8.67 billion.
Despite the Padres having baseball's third-biggest payroll ($257 million) and a roster headed by Manny Machado and Fernando Tatis Jr., Diamond cited the amount of rights payments to the Padres and small market area compared to other reginal networks for why it was backing out.
"We have been preparing for this groundbreaking moment," Padres CEO Erik Greupner said in a statement. "The Padres are excited to be the first team to partner with Major League Baseball to offer a direct-to-consumer streaming option through MLB.TV without blackouts while preserving our in-market distribution through traditional cable and satellite television providers."
Diamond owned 80% of Bally Sports San Diego with the Padres having the other 20%. It was one of six Diamond regional networks where MLB teams are minority owners. The others are the Cincinnati Reds, Kansas City Royals, Los Angeles Angels, Miami Marlins and St. Louis Cardinals.
With the Padres off Bally Sports, Diamond has the rights to 40 professional teams — 13 baseball, 15 NBA and 12 NHL.
A hearing will be held on Wednesday whether Diamond can reduce its rights fees payments to the Cleveland Guardians, Minnesota Twins, Texas Rangers and Arizona Diamondbacks
