On MLB’s rejection of the Amazon/Diamond streaming proposal

MLB’s rejection is also them showing their hand on their preference for the future of broadcasting.

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You saw the headline, now let’s get to some background. From me on December 22, at Baseball Prospectus:

We’re at a real crossroads here. A major change is coming to the way local broadcasting of MLB games works, one way or the other. It’s possible that MLB is going to keep clawing back the rights to its teams’ local broadcasting bit by bit as Diamond fails to renegotiate with clubs its under contract with, or as RSNs are unloaded by other entities like AT&T directly to the teams that are broadcast on those networks, eventually allowing them to build up quite the portfolio for a league-owned-and-operated streaming service. Or, it’ll be Diamond that finds a way to evolve, by, say, aligning themselves with a streaming juggernaut like Amazon in order to grow their potential customer base, and not rely exclusively on a model that’s slowly dying via cord cutting.

Nothing is guaranteed here. If Diamond can’t sort things out with Amazon, then maybe they do keep seeing rights go back to MLB as contracts are not renegotiated or renewed. And pay close attention to the rights they have in other leagues, too: If they can’t continue to exist within the RSN model, and can’t find a way out of it, then the NHL and NBA are going to need to find new homes for local broadcasts, too, which is part of why the three entities were discussing a joint streaming venture a few years ago in the first place. Just in case.

Now, back to the present, where MLB has rejected a proposal that would have seen Amazon invest $150 million into Diamond in order to partner with them on streaming. The reason for the rejection? Reportedly, it’s because Amazon and Diamond wanted this to be a multi-year partnership. Per the NY Post:

“They rejected it because Amazon wanted a streaming deal for more than one year,”  the source told The Post.

“Manfred said if you want a digital deal it will be with us.”

MLB and Amazon declined comment.

At the upcoming bankruptcy hearing in Houston, MLB will offer Diamond a deal that reduces the media rights fees it pays for three of the 11 teams in exchange for MLB gaining the digital rights for all Diamond teams in 2025, sources said.

The bankrupt company could reject the MLB proposal and still try to work out a deal with Amazon, a Diamond lender said, but that would be difficult.

Diamond, which broadcasts games under the Bally’s brand, currently has digital rights to five of the 11 teams, aside from the TV rights.

“Diamond was trying to renegotiate with baseball to get digital rights on a long-term basis [for all the 11 teams] so they could bring in Amazon,” the source said

But it seems like MLB wants to cut out Diamond and strike its own streaming deals with Amazon or Apple starting in 2025.

Leaving aside that all of that should have been like, two paragraphs, maybe three max, the source’s reasoning for why MLB would reject this partnership in order to cut out the middleman and make a deal makes a lot of sense given two things: one, what we know about how MLB, the National Basketball Association, and National Hockey League were at one point negotiating a joint streaming service for all three leagues, and two, that the NBA and NHL have already set up the kind of agreements with Diamond that MLB is now attempting to. Per Awful Announcing:

The NBA struck a similar deal with Diamond in November, cutting rights fees this season in exchange for rights being released back to the league after the ongoing 2023-24 season. The NHL followed the same path last month.

In short, some planets seem to be aligning. Though not in bankruptcy court: The Athletic’s Evan Drellich tweeted on Tuesday evening that the Diamond/Bally bankruptcy court hearing that had been scheduled for January 10 will now occur on January 19, while also noting that there has been constant negotiation happening between the league and the current rights holders. Which means even more delays for figuring out which teams Diamond will even still have the rights to in 2024, and which ones MLB will regain a la the Diamondbacks and Padres, but also, they might be figuring all of this out of court, as well.

So, here’s where we are. Amazon and Diamond isn’t happening as a long-term thing, because MLB wants to get their rights back from Diamond and make a deal with someone like Amazon themselves, cutting out the middleman. That deal might also involve the NHL and NBA, but it doesn’t have to, and Apple is another potential suitor, though, one that makes far less sense in terms of an existing subscriber base, given Apple TV is estimated at 25 million subscriptions, and Amazon Prime Video, thanks to being attached to Prime subscriptions, is at 200 million. Still, you want a bidding war if you’re MLB, so of course you’d not reject anyone out of hand, and Apple also has the cash to use MLB (or all three leagues if that dream of theirs ever comes to fruition) as a way to generate subscriptions and give their service a boost it can’t seem to otherwise get, all without even noticing that they could lose a lot of money trying: Apple, as of late last year, has $162 billion in cash on hand. They can afford the risk of a temporary loss leader if they want to.

The NBA and NHL have already gotten their rights back from Diamond with a bit of give and take; MLB can likely do the same if they want to. This doesn’t necessarily have to be figured out right now, since MLB has an entire season to play before they want the rights to go back to them, whereas the NBA and NHL were already in the middle of their final seasons with Diamond when they came to their agreements. It’s a developing story and all that, one that could change the landscape of broadcasting in the next couple of years. What that’ll mean, though, we’ll have to play wait and see on, since how much money we’re talking about depends on whether MLB is successful in their goals, whether they’re flying solo, which entity they partner with, and so on.

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