Two days ago, Diamond Sports Group, the biggest owner of regional sports networks and a well-known subsidiary of Maryland-based Sinclair Broadcast Group, reported that it has filed for Chapter 11 bankruptcy in the Southern District of Texas.
The bankruptcy decision comes after $140 million in interest was unpaid last month.
Continuation of business throughout bankruptcy:
The US-based media and entertainment company, which manages 19 networks under the banner Bally Sports Regional Sports Networks, formerly known as Fox Sports Networks, said: “We have about $425 million in cash on hand to continue operating throughout bankruptcy.
“Those regional networks have the rights to broadcast games from 42 professional teams – 14 baseball, 16 NBA and 12 NHL.”
In this regard, David Preschlack, Chief Executive Officer of Diamond Sports, said in a statement: “DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love.”
New debt relief deal:
The company is currently in the midst of negotiating a new deal that will remove majority of its approximately $8.67 billion debt, according to company officials.
Under the terms of this new agreement, Diamond Sports would be a separate entity from its parent company, Sinclair Broadcast Group.
Sinclair became the parent company of Diamond Sports after it purchased the regional sports networks from the Walt Disney Co. in 2019 for almost $10 billion. However, the U.S. Department of Justice made Disney to officially sell the regional sports networks (RSNs) after it bought a large portion of 21st Century Fox’s film and television assets.
Regional sports networks heavily affected by the COVID-19 lockdown:
In addition to Diamond Sports and its financial troubles with its regional sports networks, RSNs have lost millions of customers throughout the COVID-19 lockdown as vacant bars and restaurants canceled subscriptions, according to a Wall Street Journal report last month.
In this regard, Warner Bros. Discovery, which has ownership stakes in three AT&T SportsNet networks, has given the Colorado Rockies, Houston Astros and Pittsburgh Pirates until March 31 to regain their broadcast rights. However, it is closing its investments in networks.
Major League Baseball aware of Diamond Sports Group decision:
Diamond produces around 5,000 live televised games every year via the Bally Sports channels. However, that’s not all; as it is also tasked with paying out almost $1 billion in rights payments, mostly to baseball teams, that are due in the first quarter of this year. The company is currently on track with payments to hockey and basketball teams, but may suspend payments to some baseball teams as it attempts to renegotiate a better deal.
In that regard, Major League Baseball has developed a local media section tasked with taking over broadcasts for those teams, if necessary. However, the games would be broadcast locally on the MLB Network or streamed live on MLB.TV if that occurs.
Commenting on Diamond Sports’ bankruptcy, Major Baseball League officials said in a statement Tuesday: “We have expected Diamond Sports would declare bankruptcy soon.
“Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process.”