Diamond Sports Group, the Sinclair Broadcast Group unit that runs the Bally Sports regional sports networks, is planning to file for bankruptcy during the week of February 13 when a big interest payment is due, according to a published report.
Sinclair borrowed about $9 billion dollars when it bought the 19 Fox regional sports networks from The Walt Disney Co. in 2019. Sinclair rebranded the networks after making a deal with Bally’s Corp.
Since doing that deal, cord cutting has eroded the number of viewers subscribing to the networks and the price of sports rights has climbed, putting the RSN business in a financial bind.
On Friday (February 10), Sinclair said it agreed to pay $190.2 million for preferred stock units of Diamond Sports Group from JPMorgan Chase Funding Inc., according to a filing with the Securities and Exchange Commission.
The Preferred Units accrued paid in-kind dividends at a rate of more than 12% and were subject to another 50 basis-point increase in August 2023.
In a bankruptcy, the RSNs could drop its contractual responsibilities to the teams whose games they carry or try to renegotiate the terms. That could shake up the teams that depend on the revenues generated by broadcast rights.
The Bally Sports networks hold local TV rights to about 40 Major League Baseball, National Basketball League and National Hockey League teams.
Front Office Sports reported that MLB was considering taking back the TV rights to games in the event of a bankruptcy.
According to Sportico, the bankruptcy would be timed to a $140 million interest payment that is due next week.
Bloomberg previously reported that Diamond Sports would use the bankruptcy to restructure its debt.
In the restructuring, debt would be turned into equity, and Diamond's largest creditors — Prudential Financial, Fidelity, Hein Park Capital Management and Mudrick Capital Management — would become owners of the Bally Sports RSNs, Bloomberg said. ■
