Once headed for what seemed like certain liquidation, bankrupt Diamond Sports Group may very well still have a future in the fast-declining regional sports networks business.
On Monday, the Houston bankruptcy court overseeing the subsidiary's restructuring approved a proposed $450 million debtor-in-possession (DIP) financing package for Diamond. The court also approved its $495 million settlement with estranged parent company Sinclair Broadcast Group.
The court's approval of these motions, according to Diamond, over-rode agreements made in more desperate hours of the restructuring process for the company and two of its league partners, the NBA and NHL. These short-term agreements freed league teams flying under the Bally Sports RSN umbrella from their local TV contracts after the current season in exchange for concessions on their contracted local TV fees.
Back in mid-January, as we reported on Diamond's restructuring support agreement (RSA), Next TV noticed language in the company's court motion indicating that its contingency proposals with the NBA and NHL become moot upon approval of the RSA.
"The Cooperation Agreement Order shall not have become effective, the terms of the NBA Term Sheet and the NHL Term Sheet conditioned on the effectiveness of the Cooperation Agreement Order shall not have gone into effect," Diamond said.
That means that local linear TV rights for 15 NBA teams and 11 NHL teams will remain under the Bally Sports umbrella after the current pro basketball and hockey regular seasons end in late spring.
After the Jan. 17 filing of the RSA, Diamond also carved a one-season cooperation agreement with Major League Baseball to keep a dozen MLB teams on Bally Sports channels through the league's 2024 regular season.
As Sportico noted, that cooperation agreement is also moot, although the Texas Rangers, Minnesota Twins and Cleveland Guardians retain their local TV rights when the regular season expires in September.
So yes, Diamond's future looks a lot brighter today than, say, Nov. 15, when Sinclair outside counsel David Seligman told Judge Chris Lopez that Diamond would almost certainly have to "shut down."
But a lot still has to be decided.
For one, digital rights remain a conundrum for Diamond, which will obtain $115 million in convertible notes from Amazon upon final approval of its restructuring plan.
Amazon wants to resell direct-to-consumer streaming of Major League Baseball on Bally Sports Plus via Amazon Prime Video Channels. But Diamond only has DTC streaming rights to five MLB clubs.
Meanwhile, MLB Commissioner Rob Manfred -- who has notoriously had little nice to say about Diamond and Sinclair -- has talked openly of late about starting a league-owned local DTC streaming platform.
Manfred already has three MLB teams under his DTC auspices, and the Rangers, Twins and Guardians would deliver him three more.
Then there are NBA and NHL local streaming rights. According to Sportico, while Diamond will hold onto linear rights to affected NBA and NHL clubs after the current 2023-24 seasons, digital rights are negotiated on a year-to-year basis.
And there are pay TV contracts. Last fall, Diamond was able to keep Bally Sports channels on Comcast and DirecTV with short-term arrangements. It also has an ongoing renewal discussion going with top pay TV operator Charter Communications.
Moving forward post-restructuring will require difficult negotiations with these traditional operators on longterm deals, with Diamond offering fewer teams under its Bally umbrella, while potentially spreading rights into the DTC bucket with Amazon.
