The Ohio Cup trophy rests above the Bally Sports logo before the game between the Cincinnati Reds and the Cleveland Guardians at Progressive Field in Cleveland, Ohio on May 17, 2022.
George Kuvas | Diamond Images | Getty Images
Diamond Sports Group, the largest owner of regional sports networks, filed for bankruptcy protection On Tuesday, it was brought down by a debt burden of more than $8 billion.
An unconsolidated subsidiary of Sinclair Broadcast Group, the independently operated company has filed for Chapter 11 bankruptcy protection in Texas. In a release, the company said it was finalizing a restructuring assistance agreement with majority debt holders and Sinclair to wipe out the debt burden.
The heavy debt burden came in 2019 when Sinclair acquired the network’s portfolio from Disney for $10.6 billion, which included about $8 billion in debt.
Diamond has continued to pay royalties to leagues and teams that broadcast its games, but has been struggling to pay hundreds of millions of dollars a year in interest on debt.
Last month, Diamond Sports announced that it missed a $140 million interest payment by its bondholders and instead entered a 30-day grace period. Meanwhile, the company was negotiating with creditors and other stakeholders to restructure its debt burden, CNBC previously reported.
To make matters worse for Diamond, the network, like other pay-TV channels, has faced an acceleration of cord cuts in recent years as consumers opt for streaming services. Despite maintaining stable ratings, as live sports often do, regional sports networks have suffered the brunt of the shift away from cable.
Diamond said it plans to continue broadcasting local games on its 19 Bally Sports-branded networks nationwide while rebuilding its balance sheet. The network will air professional hockey, basketball and baseball games.
Diamond, like other regional sports networks, has focused on growing its streaming presence. Last year, it launched Bally Sports+, giving consumers the option to stream games as they ditched traditional pay-TV bundles.
However, the efforts were not yet fully rewarded.
As of Tuesday, Diamond said it was finalizing restructuring assistance agreements with creditors. The plan could allow Diamond to spin off from Sinclair and become a standalone business, Diamond said.
As part of the restructuring assistance agreement, Diamond’s first-tier lenders will remain unaffected, while other secured and unsecured creditors will exchange their debt for shares and warrants issued by the restructured company.
Diamond has been moving towards this step for months. Last year, Diamond appointed his own board of directors, appointing former NBC Sports executive David Preschlack as his CEO. In recent weeks, he has hired more management positions.
Diamond’s impending bankruptcy filing is a concern for the league of Major League Baseball, whose season begins March 30, and has fueled concerns that Diamond may waive its rights payments during the bankruptcy process. The NBA and NHL regular seasons are coming to an end.
Diamond also acquired streaming rights for all NBA and NHL teams last year, but in MLB it works team by team.
Diamond said last week that it chose not to pay rights fees to the Arizona Diamondbacks because the team has not yet acquired streaming rights, according to a company spokesperson. The only team.
