Its pretty plain that its the old blackmail thing.
If they babysit, then withholding that could make life difficult for your friend.
However, I imagine that after some time, the grandparents would come round and start being available for their grandchild.
I sure know that NOBODY would tell me I couldnt see my grandchildren anymore.
Who knows, it could be the start of the road to freedom for everyone in the family.
PS: the only problem eventually is that they might well try preaching to their grandson........