One of the more exciting streaming products to hit the video business, Bally Sports Plus, officially launches Monday across the national footprint of Sinclair Broadcast Group’s 19 Bally Sports-branded regional sports networks.
But as the Sinclair subsidiary that runs the RSNs, Diamond Sports Group, looks to expand beyond the five-market test run of its DTC subscription service first hoisted back in June, it's reportedly having fire-sale discussions to save its own hide.
According to the sometimes-accurate New York Post, Diamond Sports has had talks with its big-league constituents — the NBA, NHL and Major League Baseball — regarding a possible buyout.
Diamond is facing debt of $8.6 billion as of the second quarter, along with the cash-flow problems that come with paying $450 million in annual interest alone. The subsidiary is close to bankruptcy, the Post said.
Through Diamond, Sinclair wants to offload its RSNs to its creditors and reportedly walk away with as much as $3 billion in cash in its pocket. The lenders would then sell the channels to the three pro sports leagues.
Also read: What Does the Return of the Clippers to Broadcast TV Mean to the RSN Business?
“They will offer it to all three leagues. There is a reasonable likelihood this will all happen,“ an unnamed source “close to the negotiations” said to the Post.
The Post article follows another report in the Sports Business Journal from late August noting that Sinclair had hired investment bank LionTree and Moelis to negotiate a possible sale of its RSNs.
Diamond has the cash needed to keep operating through 2023, the Post added, but it is technically insolvent. Creditors could force it into bankruptcy if they chose to.
“I believe Diamond is getting pressure from hedge funds to call the liquidation question early,” a source close to Diamond said to the paper.
Sinclair responded with this statement: “Speculation raised by anonymous sources is just that, speculation. We enjoy the full support from the teams, NBA and NHL leagues, and look forward to continuing our work with them to transform the RSN model.”
The 19 Bally Sports channels, which were acquired in 2019 with the $10.6 billion purchase of the Fox Sports RSN empire, include 14 Major League Baseball franchises, 16 NBA squads and 12 NHL clubs.
Beyond the Bally channels, Sinclair's RSN portfolio also includes the YES Network, the regional sports network jointly owned with Amazon and the New York Yankees, and Marquee Sports Network, which is co-owned with the Chicago Cubs.
Amid the already intractable issue of cord-cutting, Sinclair and Diamond have faced distribution challenges, with Dish Network demurring on Sinclair's RSNs last year when it re-upped its retrans agreement for Sinclair broadcast TV channels.
The Bally Sports Plus DTC play, meanwhile, was pitched to investors and creditors as an accretive mechanism for unlocking value in the Bally Sports channels by opening them up to subscribers not in the pay TV ecosystem.
But the DTC launch will undoubtedly impact future carriage deals with Comcast, Charter Communications and DirecTV for linear Bally Sports RSNs.
Certainly, the Fox Sports purchase hasn't performed on the field as Sinclair expected it would back in 2019, when it projected they would deliver EBITDA of $1.6 billion.
Diamond said in August that EBITDA would come in at between only $183 million to $200 million this year.
Despite all these issues, starting on Monday, consumers in regions served by Bally Sports channels can sign up for the $19.99-a-month Bally Sports Plus service, even if they don't have a cable TV or satellite TV subscription.
Here in Next TV's home base of Los Angeles, Bally Sports West & SoCal is the exclusive RSN home of the NHL's Los Angeles Kings and Anaheim Ducks, which will be available to stream on the service later this fall via a master DTC deal signed by Sinclair with the NHL earlier this year.
However, while Sinclair was able to sign individual DTC streaming deals with five MLB teams, the Los Angeles Angels — another Bally Sports West & SoCal constituent— wasn't one of them, so Bally Sports Plus subscribers in the region won’t get to see the Angels, who have been out of the postseason race since dropping 14 straight games in July, play out the string this season.
Likewise, they might not be able to watch the NBA's Los Angeles Clippers on Bally Sports Plus. Quietly, the Clippers and Diamond are still negotiating a renewal deal. The team is currently bereft of an RSN arrangement and has chosen to show 15 of its games this season on Nexstar Broadcast Group-owned broadcaster KTLA. ■
