Diamond Sports Group, the owner of Bally Sports regional sports networks, has obtained an extension for its bankruptcy process as it faces the upcoming seasons of the NBA and NHL. The company, which broadcasts the games of 42 teams across the two leagues, is seeking to reduce its debt and renegotiate its contracts with the teams and leagues.
The bankruptcy background
Diamond Sports Group filed for Chapter 11 bankruptcy protection in March 2023, after failing to make a $140 million interest payment due in February. The company, which is a subsidiary of Sinclair Broadcast Group, had accumulated about $8 billion in debt from acquiring the regional sports networks from Disney in 2019. The company blamed the COVID-19 pandemic, cord-cutting trends, and changing consumer preferences for its financial troubles.
The company entered bankruptcy with a prepackaged plan that would cut its debt by $4 billion and give the senior lenders a majority stake in the reorganized company. However, the plan faced opposition from some creditors, teams, and leagues, who argued that it did not adequately address the long-term viability of the business model and the value of the sports rights.
The extension agreement
On Friday, August 11, 2023, Diamond Sports Group reached an agreement with its creditors and lenders to extend its exclusive period to file and solicit a bankruptcy exit plan by 80 days. The new deadlines are September 30 and November 29, respectively. The agreement was approved by U.S. Bankruptcy Judge Christopher Lopez during a hearing in Texas.
Brian Hermann, an attorney representing Diamond Sports Group, said that the company was facing a “challenging situation” and needed more time to work out a feasible plan that would satisfy all parties involved. He said that the company was aware of the urgency of resolving the issues before the start of the NBA and NHL seasons in October, and that it intended to broadcast all the games as scheduled.
The league perspectives
The NBA and NHL, which have contracts with Diamond Sports Group to stream their games on Bally Sports platforms, expressed their concerns about the uncertainty of the bankruptcy process and its impact on their business and fans. Shana Elberg, an attorney for the NHL, said that the league had been having “constructive discussions” with Diamond Sports Group, but that time was running out. She said that if no deal was reached soon, the league might ask for relief from the court to terminate its contracts with Diamond Sports Group and reclaim its media rights.
The NBA did not speak at the hearing, but it had previously renewed its streaming deal with Diamond Sports Group through the end of the 2024-25 season, under certain conditions. For instance, if Diamond Sports Group failed to pay any of its NBA affiliates, the NBA could take over the media rights of all 16 teams serviced by Bally Sports. The NBA could also launch a competing streaming service in those local markets.
