The Phoenix Suns, of US basketball’s top-tier NBA, have been blocked from moving ahead with their intended new local-area television and streaming rights deal with broadcaster Gray Television and video technology firm Kiswe.
US bankruptcy judge Christopher Lopez yesterday (May 10) ruled that the deal would violate the rights of the Suns' current broadcast partner Diamond Sports Group (DSG), a subsidiary of the Sinclair Broadcast Group currently going through bankruptcy proceedings, and that the team cannot yet move on from that contract.
The Suns, alongside the Phoenix Mercury of the Women’s NBA, became the first US basketball franchises to abandon the regional sports networks (RSN) local media rights format late last month when they announced deals for free Arizona coverage on Gray Television's channels and a streaming service to be created by Kiswe.
Last week, however, DSG, which operates the Bally Sports RSNs, sued the Suns, the Mercury, and their two prospective media partners in bankruptcy court and filed an emergency motion to block the Suns’ effort.
Lopez ruled that the Suns’ scheduled agreement is void because it was set to interfere with DSG’s right to negotiate a contract extension, which is a possibility included in its contract with the Suns.
US bankruptcy law protects debtors – in this case, DSG – from having existing contracts modified or terminated without their consent.
Lopez said that he will consider a DSG request for damages at a later hearing.
While the Suns’ attorney had argued that the DSG tie-up was due to end at the conclusion of 2022-23 anyway, Lopez concluded that “the Suns are saying one thing outside the court and another thing inside it.”
DSG argued that while its deal with the Suns does run out at the end of 2022-23, it is still technically active and that the contract gives DSG the first right of refusal if the Suns attempt to conclude another tie-up with a different media outlet.
The broadcaster’s emergency staying motion last week made the argument: “The Suns’ failure to comply with their contractual duties, and Diamond Arizona’s potential loss of approximately 70 games of NBA content provided by the Suns each season, put Diamond Arizona’s business at significant peril, thereby directly threatening its ability to reorganize.
“The Suns’ deliberate disregard of its contractual duties to Diamond Arizona is specifically the type of action the automatic stay is meant to protect against.”
Josh Bartelstein, chief executive of the Phoenix Suns, said that following the court ruling, the franchise will work toward “a fair resolution that will be in the best interest of our fans, our community, and our players.”
Under the terms of the deal both franchises struck with Gray TV and Kiswe, the KTVK station owned by Gray would have covered 13 regular season games of the Mercury women's team, as well as all necessary post-season games, and a minimum of 40 fixtures for the men's Suns team.
The KPHE channel would have shown all remaining action that is not exclusive to national networks, from both teams.
The Suns agreed to a five-year deal and the Mercury to a two-year tie-up, with the NBA having said the tie-up would make Suns and Mercury action available to over 2.8 million households.
In the months before it filed for bankruptcy in March, Diamond missed payments to the Arizona Diamondbacks, the state's Major League Baseball team, alongside other franchises.
Both the Suns and the Mercury are owned by billionaire Mat Ishbia, who agreed a deal to buy them in December.
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