As Cable Model Struggles, M.L.B. Takes Over Padres Broadcasts

In a move that could signify the beginning of a new era in how Major League Baseball games are distributed, the league is taking over production and distribution of all San Diego Padres games starting with the team’s game against the Miami Marlins on Wednesday night.

The move, which was announced late Tuesday night, was made after Diamond Sports Group, a subsidiary of the Sinclair Broadcast Group that operates under the name Bally Sports, failed to make a payment to the team that had its grace period end on Tuesday.

“While we’re disappointed that Diamond Sports Group failed to live up to their contractual agreement with the club, we are taking this opportunity to reimagine the distribution model,” Noah Garden, M.L.B.’s chief revenue officer, said in a statement.

Garden said M.L.B. would remove blackouts of local games and expand the reach of Padres games by more than two million homes. The games will be available free through MLB.com, Padres.com and M.L.B.’s streaming app through Sunday and then will be available to in-market fans for $19.99 a month, a discount from the full price of M.L.B.’s streaming services. The games will also be distributed on television through cable services like Spectrum, Cox and DirecTV.

According to the new arrangement under M.L.B., the team’s primary TV broadcasters, Don Orsillo, Mark Grant and Bob Scanlan, will continue in their roles, as will the team’s radio broadcast crew of Jesse Agler and Tony Gwynn Jr.

M.L.B. had been preparing for this to happen, as regional sports networks across sports have struggled in recent years and Diamond Sports Group, which controls the broadcast rights of 14 teams, declared bankruptcy in March.

At a meeting in April at M.L.B.’s offices in Manhattan, Commissioner Rob Manfred discussed the league’s desire to have Diamond meet its financial commitments, but also made it clear that the league was ready to move on without it. In declaring the league “ready to go,” he said they had prepared “down to details like what’s the graphics package going to look like on the broadcast.”

Part of that was hiring Billy Chambers, a former Fox Sports executive, as executive vice president for local media, a new position. In M.L.B.’s statement about the takeover of Padres broadcasts, Chambers said the league would be able to improve picture quality on the broadcasts and offer better access during games.

“Usually when you have a crisis, there’s also sort of an opportunity attached to it,” Manfred said in April. “The opportunity that I see in the Diamond crisis is the opportunity to rework the media model.”

Manfred said, however, that he believed cable broadcasts would continue to exist in some form outside of streaming because “the Rob Manfreds of the world will go into their coffin gripping their cable remote control.”

“I know where everything is. And you know what, I kind of like that,” he said.

It is unclear whether the Padres are the first domino in a series of league takeovers, but the situation may play out fairly quickly. Diamond has missed payments and not honored its full commitments to four other teams besides the Padres — Cincinnati, Texas, Arizona and Cleveland — and has asked a bankruptcy judge to reduce the fees it owes teams to reflect a changing market, with a decision potentially coming Wednesday or Thursday.

In a statement about the missed payment and the termination of rights, Diamond claimed the company had the cash to honor its commitments but chose not to make the payment to San Diego because “the economics of the Padres’ contract were not aligned with market realities.”

Diamond’s statement said M.L.B. had refused the group’s offer to renegotiate the direct-to-consumer rights for all of the teams in its portfolio, but said the group intended to keep broadcasting games for other teams under contract.