Ethics CasesSport

Cases · MLB / NBA / NHL · 2019–2026

When the Local Channel Goes Dark: Diamond Sports and the Collapse of Regional Sports Networks

Regional sports networks paid teams for local rights and recovered the money from cable fees charged even to households that never watched. Diamond Sports Group, owner of 19 Bally Sports networks, filed for bankruptcy in March 2023 under about $8 billion of debt as cord-cutting accelerated. It stopped paying some teams, and MLB took over their broadcasts. Diamond emerged in 2025 as Main Street Sports Group, but in 2026 it wound down, leaving 13 NBA teams without a local home. Some moved to free over-the-air TV; others to streaming at lower fees. The case asks what leagues and teams owe fans when a media model collapses.

By Tanner Simkins, editor

Timeline

  1. Sinclair buys the former Fox regional networks from Disney for $10.6 billion, including about $8 billion of debt.
  2. Diamond misses a $140 million interest payment.
  3. Diamond files for Chapter 11 in Texas.
  4. The Phoenix Suns leave Bally Sports Arizona for free over-the-air TV.
  5. MLB takes over Padres broadcasts after Diamond stops paying, removing local blackouts.
  6. The bankruptcy court confirms Diamond's restructuring plan.
  7. Diamond emerges as Main Street Sports Group with 16 FanDuel-branded networks.
  8. Main Street says it will wind down after the NBA regular season unless it finds a deal.
  9. The 13 NBA teams sign free-TV, streaming and team-run deals, often at lower fees.

The ethical issues

  • Fans paying for channels they do not watch.
  • Access for fans without cable.
  • Risk-shifting from investors to teams and fans.
  • Leverage in bankruptcy over streaming rights.
  • Competitive balance when local revenue falls.

Stakeholders

StakeholderInterests & obligations
Local fansAffordable, reliable access to games.
Non-sports cable subscribersNot subsidizing channels they do not watch.
TeamsRights revenue and reach.
LeaguesStable media income and audiences.
Creditors and ownersRecovering their investment.
Broadcasters and streamersProfitable rights deals.

The case

Background

For decades, regional sports networks (RSNs) were the main television home for local professional teams. They paid teams for broadcast rights, then earned money from advertising and from fees charged to cable and satellite providers [4]. One analyst told TheWrap that distributor fees made up 80% or more of revenue at some RSNs. Those fees were collected from many households “that rarely watched their games,” and streaming subscriptions cannot easily replace them [4].

In 2019, after Disney acquired Fox’s entertainment assets, it had to sell the Fox regional sports networks. Sinclair Broadcast Group bought them for $10.6 billion, a deal that included roughly $8 billion of debt [1][2]. The networks, renamed Bally Sports, were held by Diamond Sports Group, an unconsolidated, independently run Sinclair subsidiary [1]. Cord-cutting then accelerated. Ratings for live sports stayed stable, but fewer homes paid for the bundle [1].

What happened

In February 2023, Diamond missed a $140 million interest payment to bondholders. On 14 March 2023, it filed for Chapter 11 bankruptcy protection in Texas. It said it would keep broadcasting games on its 19 networks and planned to swap much of its debt for equity [1]. MLB called the filing “unfortunate, but expected” [1].

Bankruptcy gave Diamond leverage. It had streaming rights for all its NBA and NHL teams, but it negotiated with MLB clubs one by one. It skipped a payment to the Arizona Diamondbacks, saying it had not yet obtained their streaming rights [1][2]. At the end of May 2023, it dropped the San Diego Padres. “MLB has forced our hand by its continued refusal to negotiate direct-to-consumer (DTC) streaming rights for all teams in our portfolio,” a spokesperson said [2]. MLB took over production from 31 May. It removed the local blackout on its MLB.TV app, which it priced at $19.99 a month, and said it would expand the reach of Padres games from about 1.13 million homes to about 3.3 million [2]. MLB’s revenue chief said Diamond had “failed to live up to their contractual agreement with the Club” [2]. A court had earlier forced Diamond to make partial payments to teams it had stopped paying [2].

Teams began to leave. The Phoenix Suns, under new owner Mat Ishbia, left Bally Sports Arizona in 2023 for Gray’s local stations, putting every locally televised game on free broadcast TV [4][5]. “You can’t be a fan of a team you can’t watch,” Ishbia later said [5].

The rules and governance

Local rights belong to teams, within league rules. National deals are negotiated by the leagues [3]. The U.S. Bankruptcy Court for the Southern District of Texas confirmed Diamond’s plan on 14 November 2024. Diamond emerged on 2 January 2025 as Main Street Sports Group, saying it had cut “approximately $9B of pre-petition debt to $200M” [3]. It entered 2025 with 16 FanDuel-branded networks carrying 13 NBA, eight NHL and eight MLB teams [3]. The St. Louis Cardinals stayed only after taking a 25% cut in their local rights fee [3]. MLB had begun producing games for the Diamondbacks and Padres in 2023 and added the Rockies, Twins and Guardians [3].

Aftermath

The restructuring did not last. In April 2026, Main Street said it would carry games through the end of the NBA regular season and then wind down unless it reached a sale or another deal. Neither happened, leaving 13 NBA teams without a local TV home before the 2026–27 season [5]. CableTV.com counted 20 NBA and NHL teams affected by the FanDuel networks’ closure [7].

Teams split into different models:

  • Free over-the-air TV: six teams put every locally televised game on free broadcast stations, among them Detroit, Miami, Milwaukee and Atlanta [5].
  • Streaming: DAZN became the main local home for several teams, charging $119.99 a season for each [5].
  • Team-run options: Oklahoma City and the Clippers created their own arrangements [5][7].

Fees fell. Sports Business Journal reported Cleveland’s DAZN deal at about $20 million a year, down from about $35 million [5]. The Heat had been due about $55 million for 2025–26. Their new deal with WPLG was reported to pay well above the usual over-the-air range of about $10 million, though still far below that figure [6]. Miami’s WPLG had simulcast 12 Heat games the season before, and those games often doubled or tripled normal viewership [6].

Across the industry, S&P Global’s Kagan unit estimated that only 34 U.S.-based MLB, NBA and NHL teams still used a traditional or similar RSN model, down from 83 in 2022. It put RSN revenue at about $6 billion in 2025, roughly 30% below its 2019 peak [4]. MLB now produces local games for 14 clubs. Their combined viewership rose 10% in 2026, but not enough to replace the lost revenue [4].

The core dilemma

The RSN model brought teams large rights fees by charging every cable household, viewers or not. When it collapsed, fans faced blackouts and new subscriptions, and teams faced lower revenue. Who should bear the cost of a broken model, and what do teams owe local fans?

Competing values

  • Access: fans should be able to watch their local team [5].
  • Revenue: rights fees fund payrolls and competitiveness [3][6].
  • Fair pricing: non-viewers subsidized sports through the bundle [4].
  • Contract obligations: Diamond and its successor did not pay teams as agreed [2][5].
  • Innovation: new models, such as free TV, league production and streaming, need room to develop [4][5].

Strongest arguments

The collapse corrected a model that was unfair: the bundle forced households who never watched to pay for sports [4]. Free broadcast TV reaches more homes, as the Padres and Heat figures show [2][6]. And teams are now directly accountable to their own fans.

The collapse harmed fans and teams: the debt-financed purchase and the bankruptcy shifted risk onto teams and fans who had no say [1][2]. Lower fees may widen the gap between rich and poor markets. Streaming fragments access and costs fans more if they follow several teams [5][7].

Applying the frameworks

Utilitarian

The utilitarian question is whether more fans watching, through free TV, offsets lower team revenue and possibly weaker rosters. Early viewership gains are real, but the revenue losses are large [4][6].

Justice

Justice asks who should carry the costs of failure: creditors who financed the purchase, teams who took the fees, or fans who lost access. It also asks whether bundling was a fair way to fund sport.

Care

The care lens focuses on fans who cannot afford streaming or lack reliable internet, such as older and rural viewers. For them, an antenna is the most dependable link to a team.

Walk it through: the Simple Decision Model

  1. Identify the problem: a team’s broadcaster stops paying or shuts down.
  2. Gather the facts: contract terms, the reach of each option, fee offers and fan demographics.
  3. Identify the stakeholders: fans, the team, the league, distributors, sponsors and creditors.
  4. Consider the options: another RSN, league production, free broadcast TV or a streaming partner.
  5. Apply values and frameworks: access, revenue and fairness.
  6. Decide and review: choose short, flexible deals and measure reach and revenue each season.

What’s settled and what’s contested

Settled: Diamond filed for bankruptcy in 2023 and emerged in 2025, and its successor wound down in 2026 [1][3][5]. Teams moved to free TV, streaming and league production [4][5].

Contested: whether lower fees and wider reach are a fair trade, and whether leagues should centralize local rights.

Why this case matters

Media money shapes who can watch and what teams can spend. Compare Paywalls and the Sports Broadcasting Act: The DOJ’s NFL Media Probe and The Seattle SuperSonics’ Move to Oklahoma City.

Key terms

Commercialization
The process of turning sport into a product and a business enterprise, with profit pressures that can compete with principle.
Stakeholders
Everyone with something at stake in a decision: athletes, coaches, parents, officials, fans, employees, sponsors, media, communities and regulators, including the less visible ones.
Distributive justice
Fairness in how scarce opportunities, resources, benefits and burdens are shared.
Principal–agent problem
When those acting on others’ behalf (agents such as executives, officials or agents) have interests that diverge from the people they serve.
Trust
The public’s belief that what they are watching is real. Integrity failures are ultimately failures of trust.

Definitions from the Ethics Cases glossary.

Discussion questions

  1. Was the cable-bundle model fair to non-viewers?
  2. Should teams accept lower fees to restore free access?
  3. Did Diamond use bankruptcy fairly to seek streaming rights?
  4. Should leagues centralize local rights?
  5. Who bears responsibility when local fans lose access?

Sources

  1. Diamond Sports, regional sports network owner, files for bankruptcy — CNBC
  2. MLB to air San Diego Padres games after Diamond Sports stops payments — CNBC
  3. Diamond emerges from bankruptcy with new name — Sports Business Journal
  4. Regional Sports Networks Feasted on Cable Fees. What Happens as They Dry Up? — TheWrap
  5. A Streamer Now Carries 8 of the 13 NBA Teams That Lost Their Cable Home — Sports & Co.
  6. Miami Heat strike over-the-air deal with WPLG for local broadcasts — Awful Announcing
  7. FanDuel Sports Network Replacements for NBA and NHL Teams — CableTV.com