BALTIMORE—Sinclair Broadcast’s Diamond Sports Group filed for Chapter 11 bankruptcy on Tuesday citing $9 billion in debt spread across its 19 Bally Sports regional sports networks. In its filing, it said the RSNs will continue to operate and that it has approximately $425 million in case to finance its operations and restructure.
Sinclair said it plans to spin off Diamond to become a standalone company with ownership going to its creditors and secondary and unsecured creditors.
The filing came as little surprise as warning signs of the RSN’s imminent bankruptcy had been known for months. Sinclair acquired the RSNs from Fox in 2019 for $10.6 billion and $8 billion in debt. But as more consumers cut the cord, cancelling their pay-TV subscriptions and pro sports leagues continue to increase their rights fees, the financial pressure has increased among all regional sports networks, with Warner Bros. Discovery—which operates three RSNs—informing sports leagues last month that it plans to exit the business, according to the Wall Street Journal.
Diamond—which missed a $140 million interest payment last month—owns the rights to broadcast to 14 MLB teams as well as several NBA, NHL and WNBA teams. In a news conference in February, Major League Baseball Commissioner Rob Manfred commented on DSG’s tenuous position.
"We've been really clear that if Diamond doesn't pay, under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contracts,” Manfred said. In the event that MLB stepped in, what we would do is we would produce the games, we would make use of our asset, the MLB Network, to do that. We would go directly to distributors — meaning Comcast, Charter, the big distributors — and make an agreement to have those games distributed on cable networks.
"We would also be seeking flexibility on the digital side, so that when you look at MLB.tv, you'd go in, you can buy your out-of-market package like you've always had, but you would have the option to buy up into in-market games, which I see as a huge improvement for fans."
According to CNBC, DSG has missed only one rights payment to a sports team, the Arizona Diamondback, to which it has yet to secure streaming rights.
David Preschlack, CEO of Diamond, said DSG filing Chapter 11 will allow the company “to reset our capital structure and strengthen our balance sheet through the elimination of approximately $8 billion of debt. The financial flexibility attained through this restructuring will allow DSG to evolve our business while continuing to provide exceptional live sports productions for our fans.
“DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love, Preschlack continued. “With the support of our creditors, we expect to execute a prompt and efficient reorganization and to emerge from the restructuring process as a stronger company.”
