BALTIMORE—Financial woes in the regional sports network sector escalated this week as Sinclair’s Diamond Sports Group announced this week that it had decided to not to make $140 million interest payment on its debt, a move that will trigger a 30-day grace period during which it can negotiate with creditors.
Diamond Sports Group, an independently-managed and unconsolidated subsidiary of Sinclair Broadcast Group, Inc., owns the Bally Sports, which owns and operates 19 regional sports networks (RSNs).
Sinclair’s financially troubled regional sports network operator said that skipping the payment would “maximize its financial flexibility” and that it would “use the 30-day grace period to continue progressing its ongoing discussions with creditors and other key stakeholders regarding potential strategic alternatives and deleveraging transactions to best position Diamond Sports Group for the future.”
Diamond Sports Group also said that it “expects that its business will continue as usual, and it will keep broadcasting quality live sports productions for fans while it addresses its balance sheet.”
RSNs around the country have been struggling as cord-cutting has accelerated and pay TV operators have looked for ways of cutting programming costs.
This week Sportico reported that the Bally Sports networks weren’t the only ones facing financial woes. “According to multiple league, finance and network sources, the three AT&T SportsNet brands [owned by Warner Bros. Discovery] in recent weeks have handed over lighter-than-expected envelopes to their respective MLB franchise partners,” Sportico reported.
In response to Diamond’s announcement that it will not pay the interest on its senior secured second-lien notes, senior secured third-lien notes, and senior unsecured notes due Feb. 15, 2023, S&P Global Ratings issued a statement saying it “views the missed interest payments as a default. Therefore, we lowered our issuer credit ratings on Diamond Sports Holdings LLC and subsidiary DSG to 'D' from 'CCC-'. At the same time, we lowered our issue-level ratings on DSG's senior secured second-lien notes to 'D' from 'CCC-' and senior unsecured notes to 'D' from 'C'. The company's senior secured third-lien notes are unrated."
S&P also said “We do not expect the company to make its interest payments within the 30-day grace period to preserve financial flexibility. DSG is discussing strategic alternatives with creditors and other key stakeholders, which we believe will likely result in a comprehensive debt restructuring or bankruptcy filing.”
