US sports broadcaster Diamond begins vote on bankruptcy restructuring

By Thomson Reuters Apr 17, 2024 | 12:54 PM

By Dietrich Knauth

NEW YORK (Reuters) – Regional sports broadcaster Diamond Sports Group received U.S. court approval on Wednesday to begin voting on its bankruptcy plan, allowing it to move ahead with a debt-slashing deal while negotiating longer-term agreements with cable companies and sports leagues.

Diamond, a subsidiary of Sinclair Broadcast Group, is pursuing a restructuring that would eliminate over $8 billion in debt and provide the company with additional funding from Amazon.com as part of a streaming deal signed in January.

Diamond is also negotiating longer-term deals with cable companies, the National Hockey League and the National Basketball Association, Diamond attorney Brian Hermann said at a bankruptcy court hearing in Houston.

Diamond recently signed a new long-term contract with the cable company Charter Communications, and it hopes to build on that success by signing new deals with DirecTV and Comcast, Hermann said. Contracts with those three companies provide more than 80% of Diamond’s revenue, according to court documents.

“We hope to be in a position by the summer to confirm a plan that is underpinned by deals with at least the three big distributors as well as the two leagues that I mentioned,” Hermann said in court.

Diamond, which broadcasts about 40% of regular-season baseball, hockey and basketball games in the U.S. through its Bally Sports-branded television channels, has not reached a bankruptcy deal with Major League Baseball.

The company has cut ties with two baseball teams during its bankruptcy, and it has reached short-term agreements that allow it to continue broadcasting games for 12 more teams at least through the end of the 2024 season.

MLB, which opposed Diamond’s effort to stream more baseball games directly to fans online, said in an April 10 court filing that it has “serious concerns” about whether Diamond can become a sustainable business after its bankruptcy restructuring.

The NHL and the NBA also expressed concerns last week, saying that the uncertain status of Diamond’s negotiations with cable providers made it difficult for the leagues to plan ahead beyond 2024.

Both indicated more willingness to work with Diamond than the MLB in their recent court filings, with the NHL saying it was “hopeful” and the NBA saying it had “worked tirelessly” in support of Diamond’s restructuring.

At Wednesday’s hearing, U.S. Bankruptcy Judge Christopher Lopez approved Diamond’s request to begin voting on its plan, setting a May 22 deadline for votes and scheduling a June 18 hearing to consider final approval of Diamond’s restructuring plan.

Diamond filed for bankruptcy in March 2023, caught between expensive broadcast rights agreements and a drop in revenue due to cord-cutting by sports viewers. The sports broadcaster had been headed toward a liquidation of its business before reaching a restructuring deal in January with its lenders, Sinclair and Amazon.

(Reporting by Dietrich Knauth; Editing by Alexia Garamfalvi and Leslie Adler)