Judge halts Suns' bid to exit bankrupt Diamond Sports network
A view during the second half in Game Two of the NBA Finals between the Milwaukee Bucks and the Phoenix Suns, Phoenix Suns Arena, July 8, 2021.
The Phoenix Suns' move to exit cable TV is no slam dunk.
A judge Wednesday halted the NBA team's recently inked deal to air regular season games on local broadcast TV and a direct-to-consumer streaming service and exit its agreement with a regional sports network owned by Diamond Sports.
The Suns late last month said they reached a "groundbreaking" deal with broadcast station owner Gray Television to air all their regular-season games, beginning next year, on local broadcast networks available across Arizona. The team also signed a deal with Kiswe, a privately held video technology company, to start its own direct-to-consumer streaming service.
The agreement would have been unique in that a professional sports team was exiting the regional sports business — which has long provided lucrative fees to teams and leagues — in favor of bringing games back to fans through their local TV stations.
The Suns since 2011 have aired their regular-season games on the Diamond-owned and Bally's-branded regional sports network, which was previously under the Fox Sports banner. Diamond filed for bankruptcy protection in March.
Diamond quickly shot back at the Suns, Gray Television and Kiswe in court papers, calling on the bankruptcy judge to uphold the automatic stay placed over all of Diamond's contracts once it was under chapter 11 protection. Diamond has argued the Suns didn't honor the so-called backend rights of its contract, which gave Diamond the right of first refusal and allowed for an appraisal process to see which media rights deal held the better valuation.
On Wednesday, Judge Christopher Lopez ruled the Suns violated a section of the bankruptcy code and must comply with the terms of their current agreement with Diamond. He added the Suns and Diamond must come to a consensual agreement and find an appraiser to move the process forward.
The judge did not find that Gray Television or Kiswe violated the contract.
The Suns argued in court papers the deal with Diamond ended at the conclusion of the regular season and the team had attempted to negotiate a new agreement prior to the expiration.
However, the judge found the Suns moved too quickly to announce the deal in late April without proper communication with Diamond. The Suns added a clause at the end of its April 28 news release that the media rights deal was subject to league approval and "any required resolution with the incumbent regional sports partner."
In a statement Wednesday, a Suns spokesperson said the franchise and the WNBA team Phoenix Mercury — which is also part of the rights deal with Gray — "are excited to continue giving our fans everything they want for the best possible experience and making our games accessible to everyone."
"We are committed to working collaboratively on a fair resolution that will be in the best interest of our fans, our community, and our players," the spokesperson said.
Source: CNBC
