Diamond Sports sues Phoenix Suns, Mercury to block efforts to form new media outlet – The Athletic

Diamond Sports, the bankrupt regional sports channel giant, sued the Phoenix Suns and Mercury and their two media partners in bankruptcy court Wednesday morning, seeking to block the teams’ efforts to form a new media outlet. Diamond also filed an emergency motion for a stay to prevent the Suns’ efforts. Here’s what you need to know:
“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, puts Diamond Arizona’s business at significant peril, thereby directly threatening its ability to reorganize,” Diamond wrote in the emergency motion for a stay. “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.”
“Nobody is surprised by this lawsuit and it will not stop the Phoenix Suns and Mercury from making our games available to as many people as we possibly can,” Mat Ishbia, owner of the Suns and Mercury said via a statement.  “The fans, players, and everyone in our organization knows this is how all of us win together, on and off the court.   I firmly believe the future success of the NBA and WNBA is about getting our product to everyone who wants it versus just the people who pay for it.”
The reference to the “automatic stay” is the freezing of all contracts and pending litigation that occurs in bankruptcy. Diamond is not just asking the court to void the Suns’ new deals, but is suing the team and its two partners as well. In bankruptcy court, these are known as adversarial proceedings, and if not settled, can lead to a bench trial.
The Suns could not immediately be reached for comment. Last week, Suns and Mercury CEO  Josh Bartelstein, responding to Diamond then, said in a statement, “Diamond’s position is totally inaccurate. We are moving forward with this deal and could not be more excited about what it means for our fans and our future.”
According to Diamond, while the Suns’ contract runs out after this season, it is still technically in place. And the contract gives Diamond the right of first refusal if the Suns agree to another deal. The details of those rights are redacted in Diamond’s filings with the court.
The week before the Suns announced the media deal, Diamond sent a letter to Gray and the Suns “demanding (a) that the Suns and Gray immediately cease and desist from entering into and announcing a new deal and (b) that the Suns comply with their obligations under the Agreement,” according to Diamond’s court filing. “Diamond Arizona made it clear in both letters that it viewed the actions of the Suns and Gray as a willful violation of the automatic stay, breach of contract by the Suns, and in Gray’s case, also a tortious interference with Diamond Arizona’s Agreement with the Suns.”
The Suns deal is viewed by many as a prototype of the next wave of team media deals, combining local TV stations (Gray) and streaming (Kiswe) with a potential for keeping an RSN option.
(Photo: Kate Frese / Getty Images)

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Daniel Kaplan spent 21 years at SportsBusiness Journal, helping create before the magazine even launched the leading industry publication for sports business news. He left in May 2019 to join The Athletic. He writes primarily for the NFL vertical but also contributes stories in other sports. Follow Daniel on Twitter @KaplanSportsBiz


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