Diamond Sports to File For Bankruptcy Next Week; Still Plans to Broadcast Games as Scheduled
Diamond Sports Group (DSG), the Sinclair Broadcasting Group subsidiary that owns and operates the group of 19 Bally Sports-branded regional sports networks (RSNs), will file for bankruptcy as soon as March 16, according to John Ourand of Sports Business Journal. That will mark the conclusion of the grace period initiated in mid-February when DSG missed a scheduled interest payment on its debt, and the company will need to have its plan for meeting all its financial obligations in place to receive bankruptcy protections when it files.
Despite this fact, viewers of Bally Sports RSNs shouldn’t expect any big changes initially. DSG will continue to make broadcast rights payments to the teams and leagues that it does business with, and has only missed one payment to a team thus far — the Arizona Diamondbacks, though that specific contract offers them an automatic grace period to pay before the end of next week. The company says it still plans to broadcast all games as normal.
“We’ve been making our rights payments to teams with the exception of the Diamondbacks, where we have exercised a contractual grace period in order to maximize flexibility, especially given that we do not have [streaming] rights,” DSG said in a statement. “We are continuing to broadcast games and are operating our business as usual.”
The team has until the endof Thursday, March 16 to make its payment to the Diamondbacks. If it misses that payment, Major League Baseball may start the process of clawing back the rights to its teams from DSG. MLB Commissioner Rob Manfred indicated in a press conference in February that the league would do exactly that if Diamond failed to meet its obligations.
“We’ve been really clear that if Diamond doesn’t pay under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contracts,” he said.
But that process won’t be immediate. MLB would have to go through proceedings in bankruptcy court to demonstrate its contract with DSG had been breached and begin to reclaim the rights currently owned by the company. Diamond currently holds the broadcast rights to 14 MLB clubs and the streaming rights to five on Bally Sports+.
If DSG misses its Arizona Diamondbacks payment, it would mean that the team’s games would not appear on Bally Sports Arizona until the company renegotiated carriage deals with cable providers. MLB has indicated that it would use MLB Network to show games removed from Bally Sports RSNs, but first, it must go through the process of officially getting that team’s rights back.
One big issue facing DSG is that four of its biggest distribution deals are due to be renegotiated in the next year. That means that DSG will need to have a firm strategy in place to convince pay-TV providers like DIRECTV and Comcast that the RSNs are still worth carrying. If they are eventually dropped by one or more of those distributors, it would accelerate the company’s already-rapid decline.
The NBA is hoping that doesn’t happen. That league recently renewed its rights deal with DSG for one season, despite its current financial issues. Ourand reports that the NBA is looking to keep rights payments for the 16 teams that DSG owns for at least two years, until its national media rights hit the open market after the 2024-25 season.
The NHL may find itself in the best position to thrive if DSG can’t fulfill its contracts and air games as scheduled. The league already shows out-of-market games on ESPN+, and could swiftly negotiate an in-market deal with Disney if the rights to the 12 teams currently owned by Diamond suddenly become available.
The bankruptcy declaration by DSG is another example that the slow, but inevitable, death of regional sports networks will continue to drag on. Teams and leagues will try to wring every last possible penny out of them before they’re gone for good, but there’s no doubting where this saga will eventually end.
Bally Sports+
Bally Sports+ is a direct-to-consumer streaming service that offers live games for those who want access to your local Bally Sports RSN without subscribing to a cable or satellite package.