By Dietrich Knauth
(Reuters) -Diamond Sports Group, which provides local television broadcasts for nearly half of NBA, NHL and MLB games, filed for U.S. bankruptcy protection in Texas on Tuesday, caught between expensive broadcast rights agreements and sports viewers’ cord-cutting habits.
Diamond Sports, a Sinclair Broadcast Group subsidiary that operates the “Bally Sports” branded channels, listed assets and liabilities between $1 billion and $10 billion each in its Chapter 11 petition.
Diamond CEO David Preschlack said Tuesday that the Diamond “will continue broadcasting games and connecting fans across the country with the sports and teams they love” during its Chapter 11 bankruptcy.
Diamond said that it has $425 million in cash on hand, but it owes $9 billion to its lenders and is weighed down by long-term broadcast rights agreements that make less economic sense as customers move away from cable and towards online streaming options.
Diamond enters Chapter 11 with an agreement that will eliminate $8 billion of the company’s debt by transferring ownership of the company from Sinclair to Diamond’s lenders. A group of Diamond senior lenders will instead be repaid in cash rather than in company equity, according to Diamond.
Diamond broadcasts games for 16 NBA teams, 14 MLB teams, and 12 NHL teams, paying teams for the right to televise their games and charging a fee to cable providers.
Diamond said Friday that it had missed a payment to MLB’s Arizona Diamondbacks, but said it continued to make payments to other teams as scheduled.
Representatives for MLB and NHL could not immediately be reached for comment Tuesday night.
An NBA spokesperson referred Reuters to past comments made by Commissioner Adam Silver, who said in February that the league was “not all that worried” about a Diamond Sports bankruptcy. NBA has the ability to step in and stream games to fans in the short term, and it was already in the process of negotiating longer-term broadcast agreements with Diamond and other broadcasters.
MLB has previously said that Diamond’s difficulties would not impact broadcasts for the baseball season that opens March 30. MLB has staffed up a new local broadcast division to provide replacement broadcasts if necessary, according to an MLB spokesman.
But MLB’s contingency planning for broadcasting games would not replace payments owed by Diamond Sports to the 14 MLB teams who rely on revenue from local TV broadcast deals.
(Reporting by Dietrich Knauth; Editing by Edmund Klamann, Christopher Cushing & Shri Navaratnam)
