What Diamond Sports’ Missed Payment Drama Means for Bally Sports Networks, RSNs, Sports Streaming
Boardroom drama is never as scintillating as scenes from shows like “Succession” or “Billions” make it out to be, but the stakes can still be quite high. Such is the case today, as Diamond Sports Group (DSG), which owns the collection of 19 regional sports networks (RSNs) from Bally Sports and is owned in turn by Sinclair Broadcasting, is due to miss a scheduled interest payment on its $8 billion debt.
“The Company will not make the interest payments on February 15, 2023,” DSG said on Wednesday. “The Company intends to use the 30-day grace period to continue progressing its ongoing discussions with creditors and other key stakeholders regarding potential strategic alternatives and deleveraging transactions to best position Diamond Sports Group for the future.”
The 30-day grace period referred to is the month-long window in which DSG now gets to determine its next move. A bankruptcy filing will occur at the end of that period if the payment is not made, but before that happens, DSG will have to iron out a plan for climbing out of bankruptcy and back toward financial stability.
The company has been working on such a plan for weeks, and now has an outline in place, according to Business Insider. Its strategy includes potentially offering users a pay-per-game option, the integration of more sports betting, and enhanced ticket and merchandising opportunities.
Now, DSG will have to convince its creditors and major sports leagues — all of whom are owed money by the company — that the plan will be enough to solve its current woes. But that could be a hard sell, especially with Major League Baseball, which already has plans in place to cover local broadcasts of games if Bally Sports RSNs cannot fulfill their contracts to carry them.
But competitors are circling, and they smell blood in the water. E.W. Scripps Company has been in conversations with leagues regarding broadcasting rights to teams since at least December, and CEO Adam Symson thinks the entire RSN model is no longer viable in the age of direct-to-consumer (DTC) streaming.
“At the end of the day, the dilemma here is, even if the RSNs emerge from bankruptcy or there’s a structured bankruptcy, the RSNs’ reach is permanently impaired by what has happened in the pay-TV ecosystem,” Symson told Business Insider. “The business model of the RSN doesn’t make any sense anymore, [because it] was based upon essentially being a middle layer between a cable operator and a satellite operator and a team.”
The fundamental issue is that there simply aren’t enough pay-TV customers left to pay into the cycle that keeps RSNs funded. Less than half of American households now have a pay-TV subscription, and 48% of remaining cable and satellite users are considering cutting the cord. DSG launched Bally Sports+ in June to offer a DTC option, but had to keep the price relatively high to assure cable operators that it wouldn’t lead to a rash of cord-cutting.
The situation will, unfortunately, have to get even more complex before it gets simpler. If other companies do enter the bidding for local broadcast rights to the 14 MLB, 16 NBA, and 12 NHL teams that Bally Sports RSNs currently hold, the situation could dissolve into a mess quickly. Depending on which company emerges with a majority of those rights, a new DTC streaming offering could be made, or the traditional RSN approach could continue.
More clarity on the situation will presumably come in 30 days when DSG officially files for bankruptcy protection. It could mean that more of your favorite teams will be available to stream via the league or another media outlet soon, but it could also mean that the Bally Sports RSN drama will continue to drag on.
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.