As Diamond Sports Group’s bankruptcy restructuring enters its eighth month, one of its key Bally Sports distribution partners weighed in Friday on the Sinclair subsidiary's request for yet another extension on a restructuring plan for its creditors.
DirecTV said it “does not object” to a 60-day extension that would give the bankrupt regional sports network operator until late November to come up with a plan, but the pay TV operator added that it does have "concerns" about where Diamond is headed.
"Despite more than seven months in Chapter 11, the debtors seem to have failed to shore up both the supply (team rights) and revenues (distribution) sides of their business," DirecTV said in a statement filed to a Houston bankruptcy court.
Diamond lawyers, DirecTV added, “devoted most of their resources during the first few months of the cases to waging a costly battle with Major League Baseball and its teams only to lose in court and alienate MLB, one of their most important business partners, dimming their prospects for a successful reorganization.”
Diamond recently pursued a “similar tactic” against DirecTV, the pay TV company said, filing a motion seeking to make it pay full rate for channels including Bally Sports Arizona which had lost key pro team constituents in the restructuring process.
Further, DirecTV contended, Diamond has “hardly engaged” in negotiations with DirecTV for a long-term renewal of their distribution arrangement. (DirecTV recently agreed to carry Bally Sports for another year under terms of an expired deal.)
Diamond’s “lack of progress” and the resulting “continuing uncertainty,” the satellite TV company stated, is putting “undue pressure” on leagues and pay TV partners.
“At a bare minimum, the parties in these cases deserve to know the intended and viable outcome, reorganization or liquidation, at this stage and specific path to get to any outcome and the timeline for doing so,” DirecTV added.
Major League Baseball filed an objection on the matter of the extension two weeks ago, stating that Diamond has already had enough time to come up with a plan.
Diamond Sports Group was set up as a subsidiary after Sinclair Broadcast Group outbid MLB and paid $10.6 billion to acquire the 19 channels that became the Bally Sports regional sports network.
With those channels subsequently losing profitability through cord-cutting and the pandemic, cash-strapped Diamond, which was set up to manage the RSNs, entered bankruptcy in March looking to shed around $8 billion in debt.
The subsidiary’s plan to use the leverage of Chapter 11 to force MLB, NBA and NHL teams to renegotiate their local TV licensing contracts, and in some cases give up direct-to-consumer streaming rights, has been far more challenging than anticipated.
Separately, Diamond has sued Sinclair, looking to claw back over $1 billion it claims was “milked” from the subsidiary by its parent via mechanisms including bloated management services contracts. Diamond also objected to the repayment made to preferred equity provider JP Morgan, which is also named in the suit.
Last week, Diamond filed a 68-page motion, objecting to JP Morgan’s attempt to have the suit dismissed.
Also of note: Bally Sports Arizona, which lost the NBA’s Phoenix Suns, WNBA’s Phoenix Mercury, MLB’s Arizona Diamondbacks and the NHL’s Arizona Coyotes, has officially departed the programming grids of affiliated pay TV platforms over the weekend.
