A bankruptcy judge ordered Diamond Sports Group to pay the Minnesota Twins, Arizona Diamondbacks, Cleveland Guardians and Texas Rangers the full value of their media contracts, handing a big victory to MLB and the four teams. The ruling came at the end of two days of marathon hearings in a Houston bankruptcy court that aired the hard feelings between DSG and MLB. Here’s what you need to know:

• The four teams can breathe a sigh of relief. DSG, which filed for bankruptcy in March, had ceased paying the teams and argued it could stop payments under the bankruptcy code.
• Judge Christopher Lopez, who in April ordered DSG to pay half what it owed, ruled the baseball games were an essential service and DSG was obligated to pay the contract rate.
• DSG now must decide whether to keep the contracts or reject them the way it has with the San Diego Padres. Lopez set no deadline for doing so.
• MLB said in a statement following the ruling it “hope(s) Diamond will continue to broadcast games and meet its contractual obligations to clubs.” The league added: “As with the Padres, MLB will stand ready to make games available to fans if Diamond fails to meet its obligations.”

Backstory

DSG argued relentlessly the last two days that cord-cutting had materially altered the market, and so it was entitled to pay only the market rate as dictated by bankruptcy law. Judge Lopez did not deny the cable ecosystem had changed, but said, “Just because times have changed doesn’t mean the contract price is clearly unreasonable.”

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He also pointed to MLB’s offer to buy out the contracts of the now 13 teams aired by DSG’s Bally Sports Regional Networks in a package that offered that the league would assume the contracts, worth over $1 billion, plus $400 million of value to Diamond. Jim Bromley, an outside counsel for MLB, in fact said there were two offers (he detailed only one) and said they were the market rate bar. Lopez agreed.

“The teams make a good point,” he said. “I think the MLB makes a good point: you can’t overlook that there’s a willing counterparty willing to transact and they’re willing to put money on the table. At least, they’re saying that on paper.”

DSG said it would pay the four teams full market value, but only if they handed over their direct-to-consumer streaming rights. Judge Lopez swiped that aside, noting they were not part of their linear TV contracts.

DSG hasn’t committed to paying full contract value for the 2023-2024 season for the 28 NBA and NHL teams it airs on most of its 18 regional sports channels. But Judge Lopez’s ruling suggested that DSG would now have a hard time cutting those fees.

Judge Lopez nodded to the rancor between MLB and DSG, saying, “There has been some history here,” but then urged the parties to get together. “You have two parties who are willing to talk and regardless of how this decision comes out, I’m asking the parties to talk. I’m not asking the parties to agree, I’m asking the parties to talk.”

Judge Lopez, who noted during the hearings he came from New York and was a fan of its teams, addressed fans at the end of Thursday’s proceedings.

“I’m not really answering questions that real fans have, the folks who come home after work, the family dealing with increased costs that just want to know they can come home and watch their team for the rest of the season, and where they’re going to watch their team play,” he said. “Those issues aren’t being decided and it’s not my decision to make, and I’m careful not to overstep my boundaries. I hope that the debtors and the teams continue to talk.”

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(Photo: Matt Thomas / San Diego Padres via Getty Images)