Bally Sports 'Jenga' on the Verge of Collapse as Comcast Renewal and Restructuring Deadlines Arrive

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Fate is truly at hand this week for the Bally Sports regional channels and the bankrupt subsidiary that manages them, Sinclair Broadcast Group's Diamond Sports.

Diamond faces two absolutely pivotal deadlines: a renewal of its carriage deal with the largest pay TV operator in the U.S., Comcast; and approval of its Chapter 11 restructuring plan by its creditors, which has a Saturday deadline. 

Without securing the first objective, Diamond likely won't acheive the second. And that could set off a huge cataclysmic chain of events that spells the end of the biggest regional sports network. 

And should Diamond clear its big negotiating hurdle with Comcast, it also has to contend with an expiring carriage contract with DirecTV in October, and another expiring deal with Charter Communications in February.

Comcast has a history of drawing a hard line with regional sports networks, as revealed by its years-long refusal to carry Stan Kroenke's Altitude Sports in Denver. 

And as recent live-sports renewal deals have shown, operators are now drawing a hard line on minimum carriage stipulations. 

"Comcast has made it clear that it doesn’t think carrying regional sports networks is essential for them to keep their Comcast subs. And if any of the three big upcoming renewals ends up with fewer homes reached, or smaller payments to teams, the whole Jenga structure looks likely to collapse," said Rick Allen, a veteran TMT executive and current CEO of video tech company ViewLift,  which is creating direct-to-consumer streaming platforms for pro teams including the NHL's Vegas Golden Nights.

Should Diamond be unable to come to terms with Comcast, it would seem unlikely that the subsidiary's creditors would approve the initial licensing fee payments Diamond is very soon due to render for 15 National Basketball Association teams. 

That, in turn, would lead to a major team defection from Bally Sports, with the affected NBA teams scrambling to figure out new local TV arrangements, as several of Bally Sports' former Major League Baseball team partners, the San Diego Padres and Arizona Diamondbacks, did over the summer. 

"I would characterize it right now as not necessarily a black cloud, but a gray cloud hanging over us, without a doubt," Alex Martins, CEO of the NBA's Orlando Magic, told Sports Business Journal. "We're all sort of sitting anxiously to see what happens with the Bally bankruptcy."

As the SPJ also reported, NBA executives' nerves have been somewhat calmed by the fact that Diamond made scheduled payments earlier this month to two of its pro basketball constituents -- its monthly $3 million remittance to the New Orleans Pelicans and its tri-annual $13 million payment to the Milwaukee Bucks. 

Bally Sports' National Hockey League constituents are on edge, too. According to sources familiar with the NHL's contracts, the league won't let Diamond default on a single team contract without all of its NHL deals being taken down with it, an arrangement that clearly wasn't established with Major League Baseball over the summer when Diamond chose to cast off certain individual Bally Sports MLB teams that wouldn't "play ball" with its restructuring plan.

Beyond the huge impact a Diamond default would have on NBA and NHL teams and fans as the leagues' new seasons ramp up in October, there's the immediate consideration of Major League Baseball's current season, a subject of Bally Sports sturm und drang all summer, and now winding down. 

A blackout of Bally Sports on Comcast in Atlanta, for example, would leave local sports fans from watching their National League East champion Atlanta Braves on the cable service that controls the regional cable franchise, at least for a few weeks until the regular season ends and playoff games are nationally televized.

"I don’t see any way that Bally comes through bankruptcy with the same number of teams under contract, reaching the same audience levels as before their filing," Allen told Next TV. "They are more likely to reduce the number of owned and operated RSNs via sale or closure, and perhaps try to reenter the business from that smaller base. But that would require the agreement of the court, the teams and leagues, the creditors, and the MVPDs. That has to be less than a 50% chance."


Daniel Frankel

Daniel Frankel is the managing editor of Next TV, an internet publishing vertical focused on the business of video streaming. A Los Angeles-based writer and editor who has covered the media and technology industries for more than two decades, Daniel has worked on staff for publications including E! Online, Electronic Media, Mediaweek, Variety, paidContent and GigaOm. You can start living a healthier life with greater wealth and prosperity by following Daniel on Twitter today!