NBA, NHL Register Concerns After Diamond Sports Group’s Latest Request for Bankruptcy Extension
Diamond first filed the request in late March, and now the sports leagues it partners with are responding.
A new turn in the Diamond Sports Group bankruptcy case has the NBA and NHL a bit miffed at the broadcaster. Those two leagues have a combined 26 teams that broadcast their games on Bally Sports-branded regional sports networks (RSNs), and Diamond — the channels’ parent company — has been operating under Chapter 11 protections for over a year as it tries to settle its long-term future. In late March, Diamond filed for an extension that would push the deadline for soliciting approval of its reorganization plan from its creditors, including its league partners, all the way to November. While there was no immediate public response from the leagues, according to Sportico, the NBA and NHL have now responded to the extension request with statements that are far from unconditional pledges of support.
- The NBA wrote in a court filing that it’s “deeply concerned” with the idea that Diamond won’t be ready to emerge from bankruptcy until the 2024-25 basketball season.
- The NHL is similarly “without any certainty” that Diamond will be able to reach the agreements it needs to become a going concern once again.
- Diamond’s next hurdle to clear is a new carriage deal with DIRECTV.
While the statements filed with the court are not wholly supportive, they are not completely opposed either. Instead, the statements from the NBA and NHL read more as requests for further clarity than they do outright protests. The NBA’s lawyers make clear that they have concerns about the potential for the uncertainty around the broadcaster to bleed into another season, but are not necessarily asking the judge to deny Diamond’s motion for more time.
“While the NBA has been, and remains, supportive of the debtors’ efforts to emerge as a going concern,” the league’s lawyers said, “the … request for another extension—coupled with the significant milestones that still must be completed in connection with the business plan—raise the prospect of disruption and delay continuing into next season.”
The NBA requested a status update regarding Diamond’s new carriage deal with Charter Communications, including payment terms. The NHL is also seeking more information from Diamond before it gives approval for an extension request, noting that the 11 hockey teams whose rights are owned by the company “find themselves in essentially the same position they were in last spring vis-à-vis their respective agreements and potential ongoing business relationships with the debtors.”
In other words, there’s no guarantee that those NHL teams will be on a Bally Sports RSN next season, and the league wants more certainty.
The most unsurprising dissenter was MLB, which has long had a less-than-friendly relationship with Diamond. Its attorneys made plain their worry that there was significant question “whether the debtors will be able to demonstrate to the court that confirmation of the plan is not likely to be followed by liquidation, or further financial reorganization.”
What’s Next for Diamond Sports Group?
Diamond is due in court on Wednesday, April 17 for an important hearing. There, it may learn the fate of its request to kick the deadline for soliciting approval of its reorganization plan until November. When filing, Diamond argued that it likely wouldn’t take that long to win the approval of its creditors for the plan, but that filing one long extension was better than asking for multiple, shorter ones.
Next up on the company’s calendar are carriage negotiations with some of its biggest distributors. Comcast and DIRECTV combine to provide cable channels to more than 27 million customers, and they both must agree to long-term deals with Diamond before it can move on to other matters. DIRECTV and Diamond have clashed in the past regarding carriage fees for channels that see major league teams depart for other broadcasters.
These two distributors, along with Charter, make up roughly 81% of Diamond’s distribution revenue, so its bankruptcy reorg plan must include long-term deals with all three companies to be viable. The Charter deal is done, but the Comcast and DIRECTV negotiations will be crucial. Diamond has also secured financing from Amazon that could see its Bally Sports channels distributed on Prime Video Channels going forward.
There will be more to tell of Diamond this week, as its April 17 hearing with Judge Christopher Lopez could see it win approval for its request to extend Chapter 11 protections until November. That’s the maximum time allowed under United States bankruptcy code, but the request has caused some uneasiness among Diamond’s sports league partners.
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