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Source: www.nexttv.com, September 2023
‘This is a reorganization that will become a liquidation,’ a source tells the ‘New York Post’
The Bally Sports regional sports network empire isn’t collapsing … yet.
According to the New York Post, Diamond Sports Group, the bankrupt subsidiary set up by broadcaster Sinclair to manage the Bally channels, has reached tentative short-term pay-TV carriage arrangements with Comcast and DirecTV.
“We will continue to deliver these channels under our existing agreement, and will work with Ballys and the MLB, NBA and NHL to ensure fans who want to watch will be able to do so,” DirecTV told Next TV on Friday morning.
Simultaneously, the NBA, which has 15 teams under the Bally Sports umbrella, and the NHL (which has 12 Bally teams) are reportedly near agreements on a Diamond proposal to reduce the combined fees Diamond pays each of their teams for local sports rights by 20%.
Also read: Bally Sports ‘Jenga’ on the Verge of Collapse as Comcast Renewal and Restructuring Deadlines Arrive
Neither league looks poised to prop up individual teams with local TV distribution the way Major League Baseball did for several of its clubs when Diamond forsook them over the summer.
All of this, the Post‘s sources say, will buy the bankrupt regional sports network a year to continue to negotiate its massive debt away and sort itself out. But nobody needs shades for Bally’s bleak future.
“This is a reorganization that will become a liquidation,” an unidentified source is quoted by the paper.
Via text Thursday evening, Next TV reached its own source with knowledge of Diamond’s negotiations. He said the report “looks directionally accurate.”
Reps from Comcast, DirecTV and Diamond didn’t immediately respond to inquiries for comment and confirmation.
If with the Comcast and DirecTV deals confirmed, Diamond still has a carriage renewal agreement pending with Charter Communications — the current deal expires in February, according to Sports Business Journal report from earlier this week.
But getting Comcast to sign an agreement was the most urgent item on Diamond’s to-do list. The current Comcast carriage agreement expires Friday, and the subsidiary’s deadline to present its creditors with a restructuring plan is Saturday. It’s unlikely that those creditors would sign off on such a restructuring plan, even with a 20% discount agreed upon by the leagues, if the top pay TV operator in America had just blacked out the Bally Sports channels.
In this complex bankruptcy story that began unfolding back in March when Diamond filed for Chapter 11 protection, there are a lot of moving parts.
And there was a key development on another part of the Bally Sports Jenga puzzle Thursday, with Diamond and the estranged parent from which it was spun off, Sinclair Broadcast Group, adjourning an Oct. 2 hearing over a separate legal beef and agreeing to enter mediation. Diamond has sued Sinclair, claiming its parent “milked” the subsidiary out of billions of dollars through means including bloated management services agreements.
Sinclair has said that it’s always been in its best interest for Diamond and Bally Sports to succeed, so it had no incentive to undermine the businesses.
Sinclair got into this mess four years ago, as Disney was buying select assets from Rupert Murdoch’s Fox Corp. empire — Sinclair purchased 19 Fox SportsNet channels for $10.6 billion, then stood helplessly as the pandemic and cord-cutting whittled profit margins on those local sports channels, rebranded as Bally Sports, from over 50% to under 15% in some cases.
Sinclair can’t chalk the failure simply just to market forces beyond its control, having engaged in several expensive stock buybacks over the ensuing years instead of paying off its stadium-sized debt load.
In any event, it all wound up with Diamond entering bankruptcy back in March, with what appeared to be a fairly straightforward plan to trade equity for debt relief and renegotiate some individual team deals that were losing money for the RSN.
Six months later, after a summer in which Major League Baseball and its highly skeptical Commissioner, Rob Manfred, largely refused to play ball with Diamond’s restructuring plans, Diamond now appears to be a long-shot to survive past 2024.
Meanwhile, big-league sports is entering a new self-directed paradigm beyond the pay TV ecosystem, re-entering into broadcast distribution deals and starting subscription DTC live-streaming platforms.
With what appears to be the imminent collapse of the Bally Sports empire, that trend should only accelerate.
