MLB takes back broadcast rights for San Diego Padres after Diamond Sports misses payment

Sinclair’s Diamond Sports Group has skipped another sports rights payment, this time to the San Diego Padres baseball team.

Effective Wednesday, Major League Baseball has taken back the broadcast rights for the Padres and will distribute the team’s games on MLB.TV, Fubo, AT&T’s U-Verse as well as on Cox, DirecTV and Charter Spectrum pay TV linear channels. Viewers can only watch the games if they reside in the Padres’ home territory.

MLB will offer Padres games for free on its website, the MLB app and the team’s website through June 4. Afterwards, consumers must subscribe to MLB.TV – which costs either $20 per month or $75 for the season – to continue watching the games. This subscription is a separate service from MLB.TV’s out-of-market package.

Diamond Sports missed its payment to the Padres two weeks ago, and Tuesday marked the end of a two-week grace period.

“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,” said Noah Garden, MLB’s chief revenue officer, in a statement.

Diamond Sports owns the regional sports networks (RSNs) for 42 teams across the country, including 16 NBA teams, 14 MLB teams and 12 NHL teams. Since filing for Chapter 11 bankruptcy on March 14, Diamond has also missed payments to the MLB’s Arizona Diamondbacks, Texas Rangers, Cleveland Guardians and Minnesota Twins.

In April, a federal judge ordered Diamond to make partial rights payments to those four baseball teams. Earlier this month, Diamond made an initial payment to the Cincinnati Reds before its grace period expired, allowing the RSN operator to continue airing the team’s games on Bally Sports.

“While DSG has significant liquidity and has been making rights payments to teams, the economics of the Padres’ contract were not aligned with market realities,” a Diamond Sports Group spokesperson told the San Diego Union Tribune.

The spokesperson added MLB has “forced [Diamond’s] hand” by “its continued refusal to negotiate direct-to-consumer streaming rights for all teams in our portfolio despite our proposal to pay every team in full in exchange for those rights.”

The NBA’s Phoenix Suns is one team that has left Bally Sports, inking a media rights deal last month with Gray Television. For up to five years, Gray will air local Suns games for free under a statewide distribution model.

Meanwhile, the Cleveland Guardians have partnered with Fubo to boost the team’s sports coverage.

A Texas bankruptcy court judge is holding a hearing Wednesday with arguments from MLB and the four teams that received partial payments from Diamond. The teams are asking the judge to either make Diamond pay the full rights payments that it owes or terminate Diamond’s existing contracts.