Parent Company Of The Biggest Regional Sports Networks Declares Bankruptcy

Due to its $8 billion debt load, Diamond Sports Group, the biggest operator of local sports networks, declared bankruptcy on Tuesday.

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The Sinclair Broadcast Group's division, which is unconsolidated and autonomously managed, submitted a petition for chapter 11 bankruptcy protection in Texas. In a press release, the document states that it is negotiating a reorganization support arrangement with Sinclair and a significant number of its debtors to pay off its debt.

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The significant debt burden resulted from Sinclair's 2019 acquisition of Disney's network assets for $10.6 billion, along with about $8 billion in outstanding debt.

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Diamond was responsible for hundreds of millions of dollars in annual loan interest charges even while it continues to pay the rights fees to the organizations and leagues it transmits matches for.

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Diamond Sports announced last month that a $140 million interest amount promised to bondholders was delayed and that a 30-day waiting period would be offered in its place. According to a recent report from Trade Algo, the organization had been attempting to reorganize its borrowing costs during that time through conversations with its debtors and other investors.

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The networks, like other pay-TV channels, have been dealing with an extremely high rate of cord-cutting in past years as customers choose online streaming, which has made things worse for Diamond. Although live sports frequently maintain constant ratings, the regional sports networks have been hardest hit by the move away from the television.

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In the United States, Diamond stated it will continue to air local sports on its array of 19 networks under the Bally Sports brand while restructuring its cash flow. Professional baseball, basketball, and hockey games are broadcast on the stations.

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Just like local sports networks, Diamond has been concentrating on expanding its streaming footprint. Bally Sports+ was introduced last year to provide customers who have canceled their usual pay-TV package with a way to stream matches.

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Yet, the effort had not yet produced any discernible outcomes.

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According to Diamond, the adjustment support arrangement with bondholders was still being worked on as of Tuesday. According to Diamond, the strategy might see Diamond break away from Sinclair and operate independently.

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As stipulated in the restructuring support agreement, Diamond's first-lien lenders won't be impacted. Still, other insured and uninsured lenders can exchange their debt for stock holdings and warrants.

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Since a few months ago, Diamond has been making progress toward her goal. A former executive of NBC Sports named David Preschlack as Diamond's CEO and chaired its own board of directors last year. It added more management hires over the last week.

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Major League Baseball, whose season starts on March 30, has voiced alarm about Diamond's upcoming bankruptcy case because it raises the possibility that Diamond may choose not to make rights obligations while the bankruptcy is being processed. The regular seasons of the NBA and NHL are coming to an end.

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Diamond also acquired streaming rights to the entire NBA and NHL franchises last year, but it has been negotiating with MLB teams individually.

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As per a business spokeswoman, Diamond stated last week that it opted out of paying the Arizona Diamondbacks' rights fee because it had not yet secured the team's streaming rights. That is the only team that it hasn't paid yet.