As the largest owner of local sports channels in the US moves closer to a bankruptcy filing, sports leagues have started making contingency plans to ensure fans can still watch their games.
(Bloomberg) — As the largest owner of local sports channels in the US moves closer to a bankruptcy filing, sports leagues have started making contingency plans to ensure fans can still watch their games.
The National Basketball Association, one of the leagues broadcast by Diamond Sports Group LLC, is prepared to stream games for fans on its own app or on a free broadcast channel if Diamond stops airing them, according to a person familiar with its plans. Major League Baseball is also considering its options.
Diamond, which owns 19 cable channels operating under the name Bally Sports, airs MLB, NBA and National Hockey League games in local markets like Detroit and San Diego. The company, owned by Sinclair Broadcast Group Inc., has struggled under a massive $8.6 billion debt load taken on with its acquisition four years ago.
Shrinking revenue from declining cable-TV subscribers and rising payments to sports teams have crimped profits. On Wednesday, Diamond missed about $140 million of bond interest payments that were due, and the company is weighing a bankruptcy filing in the coming weeks, Bloomberg previously reported. In a bankruptcy, the company would have the option of rejecting contracts with sports teams. That would allow the teams to reclaim their broadcast rights and potentially sell them to another media company, or stream the games on their own app.
In a statement Wednesday, Diamond said it 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.”
Like at the NBA, baseball officials are also considering taking over local broadcasts, if it comes to that.
“I think you should assume that if Diamond doesn’t broadcast, we’ll be in a position to step in,” MLB Commissioner Robert Manfred said after an owners’ meeting last week, the Associated Press reported. “Our goal would be to make games available not only within the traditional cable bundle but on the digital side, as well.”
For the NBA, the negotiations with Diamond are especially tricky because the league’s contract with its national broadcasters, ESPN and TNT, expires soon and it wants flexibility in those negotiations.
The NBA has been giving Diamond the rights to show games on the company’s streaming service on a year-to-year basis. That arrangement goes no longer than the 2024-25 season, meaning those rights would expire at the same time as its national contracts, the person said. That would give the NBA the option to sell its local streaming rights, national rights and global rights to a single company. Major League Soccer just did something like that with Apple Inc.
As Diamond heads toward bankruptcy, the company is also going into a new round of contract negotiations with some teams. If Diamond doesn’t renew those deals, some local broadcast station owners have expressed interest in showing games, including E.W. Scripps, Nexstar Media Group Inc. and Sinclair, according to another person who asked not to be identified because the discussions are private.
Which company acquires the rights from those teams — and how much they’re willing to pay — could be settled soon. Diamond has contracts that expire this year, including with baseball’s Minnesota Twins, a team it was paying about $40 million a year, according to Bloomberg Intelligence.
“Though Diamond’s future is unclear, the industry will be closely watching how the next round of rights negotiations play out,” said Bloomberg Intelligence analyst Geetha Ranganathan.
(Deletes incorrect reference to Miami Heat in second-to-last paragraph)
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