A week after Diamond Sports Net Arizona, an affiliate of the bankrupt Diamond Sports Holdings, sued Suns Legacy Partners, Gray TV Inc. and Kiswe Mobile Inc. over the Suns’ plan to abandon the regional sports network model for free local TV, Diamond on Wednesday scored at least an interim victory.
How long the win will last remains to be seen.
U.S. Bankruptcy Judge Christopher Lopez, who is presiding over Diamond’s Chapter 11 organization, determined the Suns cannot—yet—enter into a new TV deal.
Diamond contends it has been denied a credible opportunity to invoke a contractual right of first refusal in its deal with the Suns and a right for appraisal of valuation. It also says a new TV deal would violate the automatic stay, which Lopez issued in March and which prohibits creditors from engaging in collection activities. The Suns contend their deal with Diamond expired at the end of the regular season and they have since found a new partner.
Lopez found the Suns, which Diamond concedes in its complaint provided some notice, moved too hastily in publicizing the new TV deal, which requires league approval. He found the Suns must resume talks with Diamond and satisfy contractual obligations before exiting the relationship.
To be clear, the ruling doesn’t mean the Suns will be unable to move their games to a new broadcasting partner. But it does mean the team will need to extinguish remaining duties in its contract with Diamond and comply with Lopez’s instructions.
More broadly, the ruling sends a message to other business partners of Diamond that their ability to swiftly cut ties with Diamond for superior opportunities must be done in a way that doesn’t circumvent the bankruptcy process, which can be deliberate and complicating.
Josh Bartelstein, the CEO of the Phoenix Suns and Mercury, released a statement in wake of the ruling. “The Phoenix Suns and Mercury are excited to continue giving our fans everything they want for the best possible experience and making our games accessible to everyone,” the statement said. “We are committed to working collaboratively on a fair resolution that will be in the best interest of our fans, our community, and our players.”
(This article has been updated in the last paragraph with a statement from Phoenix CEO Josh Bartelstein.)