The Ohio Cup Laurels on top of a Bally Sports logo prior to a game between the Cincinnati Reds and Cleveland Guardians at Progressive Field on May 17, 2022 in Cleveland, Ohio.
George Kubas | Diamond Tropes | Getty Images
Diamond Sports Group, the largest owner of regional sports networks, filed for bankruptcy security on Tuesday, toppled by a more than $8 billion debt load.
The company, which is an unconsolidated and independently run subsidiary of Sinclair Sow Group, filed for chapter 11 bankruptcy protection in Texas. The company said in a release it is finalizing a restructuring help agreement with a majority of its debt holders and Sinclair to wipe out its debt load.
The hefty debt load goes from when Sinclair in 2019 acquired the portfolio of networks from Disney for $10.6 billion, which incorporate roughly $8 billion in debt.
While Diamond has continued to make the rights fees payments to the leagues and parties it broadcasts games for, it was on the hook for hundreds of millions of dollars in annual debt interest payments.
Last month Diamond Sports rephrased it missed a $140 million interest payment due to its bondholders and would instead enter into a 30-day grace epoch. During that time the company had been in negotiations with its creditors and other stakeholders in a bid to restructure its debt albatross, CNBC previously reported.
Making matters worse for Diamond, the networks, like other pay-TV channels, require been facing an accelerated rate of cord-cutting in recent years as consumers opt for streaming services. Despite maintaining steady ratings, as live sports often do, the regional sports networks have felt the brunt of the shift away from strand.
Diamond said it plans to restructure its balance sheet while continuing to broadcast local games on its portfolio of 19 networks second to the Bally Sports brand across the U.S. The networks air professional hockey, basketball and baseball games.
Diamond, like other regional displays networks, has been focused on growing its streaming presence. Last year it launched Bally Sports+ to give consumers that bear cut the traditional pay-TV bundle an option to stream games.
But the effort had yet to substantially pay off.
As of Tuesday, Diamond said, it was still finalizing the restructuring brace agreement with creditors. The plan could see Diamond separate from Sinclair to become a standalone operation, Diamond said.
As generally of the restructuring support agreement, Diamond’s first-lien lenders will remain unaffected while other secured and unsecured creditors desire swap their debt for equity and warrants issued by the reorganized company.
Diamond had been moving toward this pace for some months now. Last year Diamond appointed its own board and appointed David Preschlack, a former NBC Sports government, as its CEO. In recent weeks it made further management hires.
Diamond’s impending bankruptcy filing has been a concern for the combines — namely Major League Baseball, as its season begins on March 30 — spurring concerns that Diamond could renounce making rights payments during the bankruptcy process. The NBA and NHL regular seasons are winding to a close.
And, while Diamond be established streaming rights for all of its NBA and NHL teams last year, it has been working on a team-by-team basis for MLB.
Last week, Diamond express it opted not to make a rights fee payment to the Arizona Diamondbacks since it had yet to obtain streaming rights for the team, according to a players spokesperson. It’s the only team it hasn’t made a payment to so far.