Diamond Sports Group has until this Saturday to negotiate a restructuring plan with its creditors that would result in the end to its Ch. 11 bankruptcy it claimed in March. The company has been rejecting media rights contracts throughout the Major League Baseball regular season, resulting in the San Diego Padres and Arizona Diamondbacks to have their games produced and locally distributed by the league’s local media department. The company is also embroiled in litigation against its parent entity, Sinclair, Inc., which it is suing over a claim that it received more than $1.5 billion because of misconduct. In response, Sinclair, which had an 8% year-over-year (YoY) decline in revenue, believes the subsidiary will not emerge from bankruptcy.
Ahead of the start of regular seasons for both the National Basketball Association and National Hockey League – and the local broadcasts of 27 teams – the company is working to catalyze its efforts to reach a resolution. The original deadline was set for this Saturday, Sept. 30, but did not prevent the company from paying two teams that were due rights payments on Sept. 1 – the Milwaukee Bucks and New Orleans Pelicans. Additionally, the Cleveland Cavaliers have been paid and will begin the season on Bally Sports Ohio, although that could change depending on ensuing circumstances. If the mediation were to fall through, however, the company could request teams return the payments.
Diamond Sports Group originally pushed for a Nov. 9 deadline with its creditors to finalize a restructuring plan but was coerced by a bankruptcy court to meet its demands. Earlier in August, the NHL expressed to a bankruptcy court that it may look for emergency relief in order to exit the contracts if a plan is not completed. The league also viewed it as being “critical” that it knew the direction of the company by the start of its preseason.
Before the start of play, the Los Angeles Kings and Diamond Sports Group came to terms on a new, multiyear broadcast agreement; however, it is unknown as to how that could be affected should an outcome fail to be reached. The team enters the 2023-24 regular season with longtime play-by-play announcer Nick Nickson after Alex Faust was let go when the team opted to combine its radio and television broadcasts.
“This partnership furthers our commitment to the Bally Sports West distribution markets and to providing LA Kings fans with in-depth coverage of their favorite team on multiple platforms,” Diamond Sports Chief Executive Officer David Preschlack said in a statement. “Additionally, we are encouraged by the progress we are making in our restructuring process and are hopeful that this agreement can serve as a model for future discussions with our team and league partners.”
The NBA stands ready to produce regional broadcasts itself that would be available to stream through the NBA app, and the league would negotiate linear distribution and sell advertising. Teams receive significant amounts of funding through local and national media rights contracts, the latter of which expires with The Walt Disney Company and Warner Bros. Discovery after the 2024-25 season. Other regional sports networks, such as Monumental Sports Network and MSG Networks, have recently released new direct-to-consumer streaming services to pair with their linear television products, giving viewers new ways to watch their favorite teams.
The Phoenix Suns and Phoenix Mercury terminated its agreement with Diamond Sports Group during the offseason, opting to televise their games on traditional, over-the-air television through Arizona’s Family networks. The team recently gave away free antennas to fans to ensure they would be able to watch the games this season. Owner Mat Ishbia called the local television deal a “no-brainer” and divulged that over 2.8 million households in the state will have access to watch the teams for free. Bally Sports Arizona continues to hold the rights for the Arizona Coyotes; however, that has the potential to be upended depending on the resolution of hearings in bankruptcy court.
Diamond Sports Group is also in the midst of negotiating a carriage extension with Comcast ahead of the expiration of the contract at the end of the week. For those involved, these negotiating sessions represent a perception of the viability of the business and could have an impact on payments for the NBA broadcast deals. If no deal is reached, there is a chance that creditors would opt not to authorize upcoming payments that could halt payments for 15 NBA teams.
