The Ohio Cup trophy sits above the Bally Sports logo before the game between the Cincinnati Reds and the Cleveland Guardians at Progressive Field on May 17, 2022 in Cleveland, Ohio.
George Cubas | Diamond Pictures | Getty Images
Diamond Sports Group, the largest owner of regional sports networks, file for bankruptcy protection On Tuesday, it collapsed with a debt load of more than $8 billion.
The company is an unconsolidated and independently operating subsidiary Sinclair Broadcasting Group, filed for Chapter 11 bankruptcy protection in Texas. The company said in a release that it is finalizing a restructuring support agreement with most debt holders and Sinclair to eliminate its debt load.
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Heavy debt load stems from Sinclair’s 2019 acquired a portfolio Acquired the network from Disney for $10.6 billion, including approximately $8 billion in debt.
While Diamond continues to pay the leagues and teams whose games he broadcasts for the rights, he is paying hundreds of millions of dollars annually in interest on the debt.
Last month, Diamond Sports said it entered a 30-day grace period instead of paying $140 million in interest to its bondholders. During this period, the company has been in talks with its creditors and other stakeholders to restructure its debt load, CNBC previously reported.
Worse for Diamond, those networks, like other pay-TV channels, have faced accelerated cord-cutting in recent years as consumers opt for streaming services.Despite steady ratings, as with live sports, regional sports networks have Bear the brunt Shift away from cables.
Diamond said it plans to restructure its balance sheet while continuing to broadcast local games on 19 networks across the United States under the Bally Sports brand. These networks broadcast professional hockey, basketball and baseball games.
Like other regional sports networks, Diamond has been focused on expanding its streaming business. Last year, it launched Bally Sports+, which offers the option of streaming games to consumers who have cut back on traditional pay-TV bundles.
But this effort has yet to pay off.
Diamond said it was still finalizing a restructuring support agreement with creditors as of Tuesday. The plan could see Diamond spin off from Sinclair as an independent company, Diamond said.
As part of the restructuring support agreement, Diamond’s first-lien lenders will remain unaffected, while other secured and unsecured creditors will have their debt exchanged for equity and warrants issued by the restructured company.
Diamond has been making this move for months. Last year, Diamond appointed its own board and named former NBC Sports executive David Preschlack as chief executive. It has made further management hires in recent weeks.
Diamond’s imminent bankruptcy filing has been a concern across the leagues — namely Major League Baseball, whose season begins March 30 — and has raised concerns that Diamond may forego paying royalties in the bankruptcy proceedings . The NBA and NHL regular seasons are coming to an end.
And, while Diamond acquired streaming rights to all of its NBA and NHL teams last year, it has been working on a team-by-team basis for MLB.
Last week, Diamond said it chose not to pay the Arizona Diamondbacks because it had not yet acquired the team’s streaming rights, according to a company spokesman. This is the only team so far not paid.