S&P Global Ratings downgraded its credit ratings on Diamond Sports Group to D from CCC after the Sinclair Broadcast Group subsidiary announced it would not make a $140 million payment due on certain notes.
Diamond operated the struggling Bally Sports regional sports networks. The payment was due Wednesday. The company is now in a 30-day grace period with its creditors.
“We do not expect the company to make its interest payments within the 30-day grace period to preserve financial flexibility. DSG is discussing strategic alternatives with creditors and other key stakeholders, which we believe will likely result in a comprehensive debt restructuring or bankruptcy filing,” S&P said.
Diamond operates as an independent subsidiary of Sinclair. Its finances are not incorporated into Sinclair's
The D rating applies to Diamond's senior secured second-lien notes, its senior secured third-lien note and its senior unsecured notes. Payment on those notes was not made. S&P also downgraded the ratings on Diamond’s senior secured second-lien notes to D from CCC and senior unsecured notes to D from C. The company’s senior secured third-lien notes are unrated.
A bankruptcy filing could have a profound effect on local sports on TV. In a bankruptcy, Diamond could try to cancel some contracts and negotiate others.
Major League Baseball has indicated that it could take back the TV rights to teams’ games if those teams do not receive the payments called for in their current contracts. ■
