Diamond Sports Group is in the midst of waiting to discover whether or not its request for an extension to file a restructuring plan under Chapter 11 bankruptcy will be approved by a U.S. bankruptcy court, a decision that could prove pivotal in the survival of the Sinclair subsidiary. The entity previously declared bankruptcy in March 2023 after it threatened the proposition to Major League Baseball as it implored the league to grant it expanded direct-to-consumer (DTC) broadcast rights. MLB Commissioner Robert D. Manfred Jr. refused to acquiesce to Diamond’s demands and instituted a local media department, headed by Billy Chambers, set to take over regional broadcast responsibilities if Diamond decided to selectively reject existing rights contracts.
Diamond previously received an extension to file a restructuring plan on Sept. 30 and enlisted the help of a mediator leading up to that time. The company now hopes to be able to file that plan on Nov. 29, which would give the entity an additional two months to compile and receive feedback on a potential resolution. At the moment, creditors are deliberating the best path forward to reorganize itself amid over $8 billion in debt, largely due to its acquisition of regional sports networks from The Walt Disney Company in an antitrust-related divestiture outlined by the U.S. Department of Justice in 2019.
“The debtors’ Chapter 11 cases are tremendously complex and are occurring while the cable industry is rapidly changing due to subscribers’ persistent ‘cord cutting’ as they move away from traditional cable and satellite multichannel video distributors,” the company said in a court filing. “Navigating these choppy waters requires discussions with, and cooperation from, many parties, including multiple creditor groups, sports leagues, teams and MVPDs.”
As the MLB season continued, Diamond terminated its agreements with the San Diego Padres and Arizona Diamondbacks, leading MLB to assume control over those media rights. With seasons for both the National Hockey League and National Basketball Association quickly approaching, both leagues are reportedly in discussions with the outlet. While there were reports about the leagues agreeing to a deal that would result in less remuneration doled out to its teams, no such compromise has been reached. John Ourand of Sports Business Journal reports that if Diamond is able to emerge from its bankruptcy, both leagues would expect those rights fees to be slashed on a team-by-team basis.
Diamond recently came to terms on a one-year rights renewal with DIRECTV, ensuring that the Bally Sports-branded regional sports networks stay on the air for the next 12 months. DIRECTV had a provision in its existing contract that would have allowed it to renegotiate the RSN deal, but it decided to neglect the use of that so it would not have to renegotiate Sinclair local broadcast channels as well.
The subsidiary’s deal with Charter Communications expires on Feb. 29, which could end up being a monumental negotiation based on how the next several months go for the company. Diamond is reportedly in active negotiations with Comcast to renew that carriage agreement, which comes shortly after a public strife between Charter and The Walt Disney Company that resulted in somewhat of a stalemate.
Through it all, Diamond is suing Sinclair, its parent company, alleging that it received more than $1.5 billion due to misconduct. Some of the claims brought forth by Diamond relate to the fraudulent transfer of assets, breach of contract and unjust enrichment, practices that it believes have harmed its creditors. In response, Sinclair denied these allegations and stated that it believes that Diamond will not emerge from its ongoing bankruptcy.
