Sinclair's Diamond Sports Files Bankruptcy *

On Tuesday, Diamond Sports Group, the largest owner of regional sports networks, filed for chapter 11 bankruptcy protection in Texas. The company was toppled by a more than $8 billion debt load stemming from when its parent company, Sinclair Broadcast Group, acquired the portfolio of networks from Disney for $10.6 billion in 2019, which included roughly $8 billion in debt. Despite continuing to make the rights fees payments to the leagues and teams it broadcasts games for, Diamond Sports Group was on the hook for hundreds of millions of dollars in annual debt interest payments.

The networks, like other pay-TV channels, have been facing an accelerated rate of cord-cutting in recent years as consumers opt for streaming services. Despite maintaining stable ratings, the regional sports networks have felt the brunt of the shift away from cable. Diamond, like other regional sports networks, has been focused on growing its streaming presence. Last year it launched Bally Sports+ to give consumers who have 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 finalizing a restructuring support agreement with a majority of its debt holders and Sinclair to wipe out its debt load. The plan could see Diamond separate from Sinclair to become a standalone operation. Diamond said it plans to restructure its balance sheet while continuing to broadcast local games on its portfolio of 19 networks under the Bally Sports brand across the U.S. The networks air professional hockey, basketball, and baseball games.

The impending bankruptcy filing had been a concern for the leagues, namely Major League Baseball, as its season begins on March 30, spurring concerns that Diamond could forgo making rights payments during the bankruptcy process. The NBA and NHL regular seasons are winding to a close. Last week, Diamond said 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 company spokesperson. It’s the only team it hasn’t made a payment to so far.

Diamond Sports Group’s bankruptcy highlights the challenges that traditional pay-TV channels face in today’s streaming era. While Diamond had been focused on growing its streaming presence, it may have been too little, too late. As consumers continue to opt for streaming services over traditional pay-TV bundles, the pressure will mount on other regional sports networks to adapt and innovate to remain relevant in today’s fast-changing media landscape.