The struggling subsidiary of Hunt Valley-based Sinclair Broadcast Group, which owns the regional sports network, is reportedly headed for a post-bankruptcy restructuring.
Diamond Sports Group, the nation’s largest owner of cable TV sports channels featuring more than half of all MLB, NHL and NBA teams, plans to restructure $8.6 billion in debt through its Chapter 11 bankruptcy, Bloomberg reports. I am considering.
Sinclair reported on Nov. 28 that it had suffered its second loss since buying Bally Sports Regional Sports Networks from The Walt Disney Co. for $10.6 billion in 2019. Discounting his $1 billion book value of 19 rebranded networks in the recent third quarter, which posted a loss of $1.2 billion, citing heavy losses for cable subscribers.
At the height of the coronavirus pandemic, which has caused national sports leagues to cancel games and shorten seasons, Sinclair has incurred a $4.2 billion charge in goodwill and intangible assets after the pandemic disrupted 2020 sporting events. bottom.
Bloomberg reported that Diamond is expected to miss a $140 million interest payment due in mid-February, citing people familiar with the matter.
A spokeswoman for Diamond declined to comment on Tuesday’s report.
Experts say the potential restructuring results cast doubt on the future of regional broadcasting rights revenues for professional sports leagues.
One alternative is for the diamond’s biggest lender to take ownership through a Chapter 11 bankruptcy restructuring, multiple sources told Bloomberg. Those lenders include Prudential Financial, Fidelity, Hyne Park Capital Management and Madric Capital Management, none of which has commented on the report.
In November, Diamond said Bally’s network was being hit by a decline in subscribers.
With cable subscribers gone, Diamond turned to other revenue streams. For example, last year it launched a new sports streaming service that doesn’t require a cable subscription. Sinclair CEO Chris Ripley said in November that Bally Sports+, a consumer streaming service launched in September on NBA and NHL 14 markets and Roku, sees untapped potential. said to offer.
Ripley said, “As the market gains more awareness and more people stay outside the bundle to watch their favorite home teams, it should definitely make up for some of these losses we’re taking.
He said the streaming service is expected to ultimately generate revenue beyond subscriptions by adding gaming elements, e-commerce components and targeted advertising.
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In a call with analysts at the time, Ripley did not rule out a sale of Sports Network, but said the sale was not underway. He said advisors to investment banks Lion Tree and Moelis “are discussing deleveraging, strategic partnerships and the nature of them with relevant parties.”
Multiple sources told Bloomberg that the streaming effort has been hampered by MLB’s resistance to granting the company additional streaming rights.
MLB said in an announcement earlier this month that it had hired a former Diamond executive Wednesday to oversee the management of the league and the distribution of local media rights. Chambers will assume MLB’s newly created role as executive vice president of local media.
“He will work closely with 30 clubs across the country on the most effective means of distributing games to fans in their local markets,” the league said in a statement.
Baseball Commissioner Robert D. Manfred Jr. added that Chambers “will play an integral role in how we navigate the rapidly evolving local media landscape in the future.”
According to a Bloomberg article, under Section 11 of the Bankruptcy Code, Diamond could terminate its contract with the team, which would allow the team to regain its media rights. About $2 billion is being sought in TV rights to teams and leagues.
Sinclair shares were up 47 cents in Tuesday afternoon trading to $20.72 a share.
