Sinclair Broadcast’s Diamond Sports misses debt payment, setting up potential bankruptcy filing
A struggling subsidiary of Sinclair Broadcast Group that owns regional sports networks has opted to miss a debt payment due Wednesday, setting up a potential bankruptcy reorganization.
Diamond Sports Group, the nation’s largest owner of cable TV sports channels that showcase more than half of all MLB, NHL and NBA teams, said Wednesday it plans to “maximize its financial flexibility” and will not pay the $140 million cash interest payments on its debt.
That gives the network owner a 30-day grace period to work with creditors and other stakeholders. Diamond reportedly had been considering restructuring its $8.6 billion of debt through a Chapter 11 reorganization. Diamond owns 19 Bally Sports Regional Sports networks in states such as Arizona, Florida, Michigan, Ohio and California.
“Diamond Sports Group expects that its business will continue as usual, and it will keep broadcasting quality live sports productions for fans while it addresses its balance sheet,” the company said in an announcement.
Diamond said it plans 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 interest payment was due Wednesday on Diamond’s 6.625% senior unsecured notes due in 2027 and on two senior secured notes, with interest rates of 5.375%, that are due in 2026, the company said.
Sinclair, the nation’s largest owner of local television stations, had reported Nov. 28 that it took a loss on the value of the Bally Sports Regional Sports Networks for the second time since buying them in 2019 for $10.6 billion from The Walt Disney Co.
Diamond, the Sinclair subsidiary created to hold those networks, wrote off $1 billion of the rebranded 19 networks’ book value in the recent third quarter, when it reported a loss of $1.2 billion.
At the height of the coronavirus pandemic when national sports leagues canceled games and cut seasons short, Sinclair took a $4.2 billion charge to goodwill and intangible assets after the pandemic disrupted sporting events in 2020.
Experts have said the outcome of any potential restructuring raises questions about the future of regional broadcasting rights revenue for the professional sports leagues.
In November, Diamond said the Bally networks had been hurt by a heavy loss of cable TV subscribers, “which we believe was influenced in part by shifting consumer behaviors.”
As it has lost cable subscribers, Diamond has looked to other sources of revenue, including last year launching a new sports streaming service that does not require a cable subscription. Bally Sports+, a direct-to-consumer streaming service that launched in September in 14 NBA and NHL markets and on Roku, offers untapped potential, Sinclair CEO Chris Ripley said in November.
Last month, MLB hired a former top Diamond executive to oversee the league’s management and distribution of local media rights. Billy Chambers, formerly chief financial officer and chief operations officer of the Bally networks, became MLB’s executive vice president for local media.
“He will work closely with the 30 clubs on the most effective means to distribute games to fans in local markets throughout the country,” the league said in its January announcement.
Chambers is expected to “play an integral role in how we navigate the rapidly evolving local media landscape in the future,” Baseball Commissioner Rob Manfred had said.
Besides owning 19 networks, Diamond also has a joint venture in Marquee, the home of the Chicago Cubs, and a minority interest in the YES Network, the local broadcaster of the New York Yankees and Brooklyn Nets.
