Diamond Sports Group, the Sinclair Broadcast Group subsidiary that runs the troubled Bally Sports regional sports networks, said that rather than pay $140 million in interest due Wednesday, it will enter a 30-day grace period.
Diamond said it will use the flexibility provided by the grace period to spend the next 30 days in discussions with creditors and other key stakeholders “regarding strategic alternatives and deleveraging transactions to best position Diamond Sports Group for the future.”
The alternatives include bankruptcy and a structured reorganization. In a bankruptcy, Diamond could get out of contractual obligations and renegotiate others, including its rights deals with the teams whose games the RSNs carry.
In the meantime, Diamond Sports Group said it “expects that its business will continue as usual, and it will keep broadcasting quality live sports productions for fans while it addresses its balance sheet.”
The grace period will end just before the start of the Major League Baseball season.
The financial troubles at Diamond and the Bally RSN could have a profound effect on the future of local sports on TV.
Sinclair borrowed about $9 billion to buy the Fox Sports regional networks from The Walt Disney Co. after Disney bought 21st Century Fox. In a deal with Bally, Sinclair rebranded the RSNs in 2021.The debt load became more burdensome as cord-cutting eroded the number of pay TV subscribers and the amount of distribution revenue the RSNs could collect as sports rights fees continued to rise.
Last year, Sinclair separated itself from Diamond financially — Diamond’s financials were no longer in Sinclair’s quarterly earnings — and in December, Diamond hired former ESPN and NBC Sports executive David Preschlack as CEO to operate independently from Sinclair.
The leagues have been monitoring the situation and Major League Baseball is considering taking back Bally Sports’s rights to games should Diamond attempt not to pay the fees agreed in to the teams’ current contracts.
Standing on the sideline waiting to get into the game, are Apple, Amazon and Alphabet, which have been getting deeper and deeper into the sports streaming business, as well as broadcasters including Nexstar Media Group and E.W. Scripps, which could air local sports on their stations. Scripps has already formed Scripps Sports, a new division looking to secure sports rights. ■
