Facing the most pivotal week of its fraught bankruptcy, Diamond Sports Group is looking to punt its fate into 2024.
The Sinclair Broadcast Group subsidiary, which manages the troubled Bally Sports regional sports channels, has asked the Houston bankruptcy court overseeing its restructuring for another extension to file a restructuring plan for creditors.
Judge Christopher Lopez already extended that deadline back in August to Saturday. The new deadline, requested by Diamond's lawyers on Friday, would move the filing date to Nov. 29. And Diamond would have until Jan. 29 to solicit approval of the restructuring plan from its creditors.
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"The Debtors’ chapter 11 cases are tremendously complex and are occurring while the cable industry is rapidly changing due to subscribers’ persistent 'cord cutting' as they move away from traditional cable and satellite multichannel video distributors ('MVPDs')," the request reads.
"Navigating these choppy waters requires discussions with, and cooperation from, many parties, including multiple creditor groups, sports leagues, teams and MVPDs," the filing adds. "With the NBA and NHL seasons almost here, and a key MVPD contract up for renewal, the Debtors realize that time is short and each day matters."
Diamond and Bally seem to have staved off one jam this past week, when DirecTV agreed to a short-term extension that will keep the Bally Sports channels on its pay TV systems. According to a Sunday Wall Street Journal report, Comcast and Diamond are still negotiating a deal, with the cable operator preferring a short-term arrangement. A renewal of Bally's Charter Communications deal is still pending, with that carriage contracted expiring in February.
According to the New York Post, Diamond also issued "take-it-or-leave-it" proposals to the NBA and NHL, demanding that the leagues trim the local TV rights fees Diamond is contracted to collectively pay them by 20%.
It's unclear as to whether the leagues have agreed to this.
In any event, an extension might prove problematic for constituencies including the NBA and NHL, which have 15 and 12 teams, respectively, with local TV rights tied up with Bally Sports regional cable channels.
Back on August 11, when Judge Lopez granted the first extension (80 days), a lawyer for the National Hockey League gave a polite heads-up to the court, telling the judge the NHL might consider alternative local broadcast mechanisms for its dozen Bally Sports teams if clarity can't be had soon.
"It’s critical that we have certainty as we prepare for the 2023 24 NHL season," outside league counsel Shana Elberg told the court.
However, there was some indicator two weeks ago when the NHL's Los Angeles Kings agreed to re-up their Bally Sports contract.
Extension or no, the narrative around the Bally Sports case has grown grim, with a consensus emerging that after this complex matter is adjudicated, Bally Sports will end up liquidated, not restructured.
“This is a reorganization that will become a liquidation,” a Post source said.
