Sinclair Broadcast Group’s Diamond Sports, operator of nearly two dozen Bally Sports regional sports networks (RSNs), is reportedly prepping for Chapter 11 bankruptcy.
According to Bloomberg, Diamond is looking to restructure $8.6 billion in debt, and will likely skip $140 million in interest payments due mid-February. But the main question is how a bankrupt Diamond will pay out leagues and teams for broadcasting rights.
Bally Sports RSNs include over 40 teams across MLB, NBA and the NHL. Diamond would have the option to either end contracts with those teams or discontinue payments to the teams while keeping the contracts in place, said Bloomberg. One source told the outlet MLB is exploring taking back its local broadcast rights from Diamond.
Other sources commented Diamond expects to come out of restructuring by May or June, after which the company’s largest owners – likely a group of investment management firms – will seek to sell Diamond.
Reports of Diamond’s mounting financial problems emerged last September, suggesting Sinclair is thinking of divesting its regional sports subsidiary or selling it off to one of the leagues. Later that month Sinclair launched Bally Sports+, a direct-to-consumer streaming service that features 19 Bally RSNs.
Sinclair bought its RSNs for $10.6 billion from Fox in 2019. The networks continued to use the Fox Sports name until they were rebranded to Bally Sports in March 2021. Since then, Sinclair has sought to distance itself from Diamond, and the broadcaster last year decoupled Diamond’s earnings from its financial results.
Further solidifying its independence from Sinclair, Diamond last month tapped NBC Sports veteran David Preschlack as its new CEO. Preschlack at the time stated he plans to strengthen Diamond’s relationships with the leagues as well as improve the company’s balance sheet. As of the third quarter, Diamond Sports reported a net loss of $1.2 billion.
Bally Sports distribution continues to expand, with FuboTV recently inking a carriage deal for 19 RSNs. That addition, however, came with a price increase to Fubo’s subscription plans.
Diamond will likely come out of bankruptcy unscathed, TVREV analyst Alan Wolk said in a recent column, but it may have to sell some of its rights back to the leagues. And league-operated RSNs are easier said than done.
“You’ll need to hire the right people and give them lots of leeway to make it happen,” Wolk wrote. “If you do that, it can be quite lucrative and you can keep all of your rights in-house and not have to share any of the profit.”