The Ohio Cup Trophy on high of a Bally Sports activities emblem previous to a sport between the Cincinnati Reds and Cleveland Guardians at Progressive Subject on Could 17, 2022 in Cleveland, Ohio.
George Kubas | Diamond Photos | Getty Photos
Diamond Sports activities Group, the biggest proprietor of regional sports activities networks, filed for chapter safety on Tuesday, toppled by a greater than $8 billion debt load.
The corporate, which is an unconsolidated and independently run subsidiary of Sinclair Broadcast Group, filed for chapter 11 chapter safety in Texas. The corporate stated in a launch it’s finalizing a restructuring help settlement with a majority of its debt holders and Sinclair to wipe out its debt load.
The hefty debt load stems from when Sinclair in 2019 acquired the portfolio of networks from Disney for $10.6 billion, which included roughly $8 billion in debt.
Whereas Diamond has continued to make the rights charges funds to the leagues and groups it broadcasts video games for, it was on the hook for lots of of tens of millions of {dollars} in annual debt curiosity funds.
Final month Diamond Sports activities stated it missed a $140 million curiosity cost resulting from its bondholders and would as a substitute enter right into a 30-day grace interval. Throughout that point the corporate had been in negotiations with its collectors and different stakeholders in a bid to restructure its debt load, CNBC beforehand reported.
Making issues worse for Diamond, the networks, like different pay-TV channels, have been going through an accelerated price of cord-cutting in recent times as shoppers go for streaming providers. Regardless of sustaining secure scores, as dwell sports activities typically do, the regional sports activities networks have felt the brunt of the shift away from cable.
Diamond stated it plans to restructure its steadiness sheet whereas persevering with to broadcast native video games on its portfolio of 19 networks underneath the Bally Sports activities model throughout the U.S. The networks air skilled hockey, basketball and baseball video games.
Diamond, like different regional sports activities networks, has been targeted on rising its streaming presence. Final 12 months it launched Bally Sports activities+ to provide shoppers which have reduce the normal pay-TV bundle an choice to stream video games.
However the effort had but to considerably repay.
As of Tuesday, Diamond stated, it was nonetheless finalizing the restructuring help settlement with collectors. The plan might see Diamond separate from Sinclair to develop into a standalone operation, Diamond stated.
As a part of the restructuring help settlement, Diamond’s first-lien lenders will stay unaffected whereas different secured and unsecured collectors will swap their debt for fairness and warrants issued by the reorganized firm.
Diamond had been transferring towards this step for some months now. Final 12 months Diamond appointed its personal board and appointed David Preschlack, a former NBC Sports activities govt, as its CEO. In latest weeks it made additional administration hires.
Diamond’s impending chapter submitting has been a priority for the leagues — particularly Main League Baseball, as its season begins on March 30 — spurring issues that Diamond might forgo making rights funds through the chapter course of. The NBA and NHL common seasons are winding to an in depth.
And, whereas Diamond obtained streaming rights for all of its NBA and NHL groups final 12 months, it has been engaged on a team-by-team foundation for MLB.
Final week, Diamond stated it opted to not make a rights payment cost to the Arizona Diamondbacks because it had but to acquire streaming rights for the workforce, based on an organization spokesperson. It is the one workforce it hasn’t made a cost to to date.