Diamond Sports Group has been within bankruptcy proceedings for over a year as it looks to restructure its debt, but received news on Wednesday that could potentially point in a positive direction. Judge Christopher M. Lopez has approved a disclosure statement that will help guide Diamond out of the bankruptcy, which includes $450 million of debtor-in-possession (DIP) financing, $350 million of which will pay its first-lien debt holders. The plan Diamond outlined within its DIP approval was that the remainder of the funding would be transferred to the company’s balance sheet concurrent with broadcasts of National Basketball Association, National Hockey League and Major League Baseball games.
The Sinclair subsidiary, which was created upon the acquisition of the then-FOX Sports-branded regional sports networks as part of a $10.6 billion deal with The Walt Disney Company so it could complete its acquisition of 21st Century Fox, currently serves as the broadcast home for 38 professional sports teams. Junior creditors are expected to assume operations of the subsidiary should it be able to successfully emerge from bankruptcy and enact its restructuring support agreement (RSA).
“Approval of the disclosure statement is another important step forward in our restructuring and we are working toward confirming our plan and emerging as a sustainable, go-forward business,” a Diamond Sports Group spokesperson said in a statement. “We are focused on reaching long-term agreements with our partners to enable us to continue serving fans across the U.S. and delivering meaningful value to distributors, teams and leagues.”
A hearing to determine the confirmation of the plan will take place on Tuesday, June 18 at 10 am. CST, and objections to which must be filed by Wednesday, May 22 at 4 p.m. CST. Lopez will also take the results of a forthcoming creditor vote regarding the plan into account in his decision. The company recently reached a multi-year distribution deal with Charter that would come to fruition if it is able to emerge from bankruptcy. Diamond has yet to come to agreements with Comcast or DIRECTV on new deals, creating ambiguity surrounding revenue that comes from retransmission and advertising fees. John Ourand of Puck News reports that Diamond is closer to reaching a deal with DIRECTV than Comcast.
The NBA will reportedly not consider a long-term renewal with Diamond until its national media rights deals are in place, according to Anthony Crupi of Sportico. The expiration of its exclusive negotiating window with The Walt Disney Company and Warner Bros. Discovery closes on Monday, April 22, which will then allow other interested parties to bid for media rights associated with the league.
Earlier in the week, the NBA and NHL communicated concerns about the ongoing process because of the ambiguity it has engendered for planning its broadcast scheme after the year. Ahead of the hearing on Wednesday, Lopez had approved an extension that delayed the deadline to solicit acceptance of the company’s reorganization plan through and including Thursday, Nov. 14.
As part of the restructuring, Amazon will invest a reported $100 million in Diamond Sports Group that will have Prime Video become the primary streaming partner of the regional sports networks. Diamond owns digital rights to the NBA and NHL teams it carries; however, it does not have all of those rights for teams in MLB. Nine months after the restructuring plan is complete, Amazon will reportedly have the option to invest an additional $50 million into Diamond Sports Group.
Diamond claims that approximately 81% of its revenue is attributable to its deals with national multichannel video programming distributors (MVPDs) Charter, Comcast and DIRECTV. Furthermore, it stated that its subscribers have dropped by 35% from 2019 until the petition date in late-February of this year.
The company has been broadcasting Major League Baseball games as scheduled throughout the year following a season in which it terminated agreements with the San Diego Padres and Arizona Diamondbacks. Recent court filings revealed that Diamond Sports Group and the San Diego Padres agreed to a settlement worth approximately $79 million. It remains unknown if Diamond discussed and/or reached a deal with the Diamondbacks or if the organization is in active litigation with the regional sports network operator.
