Sinclair Broadcast Group stock dropped 7.3% to close at $14.72 a share Monday following a published report that sports networks are less interested in buying the company’s struggling regional sports networks.
Sinclair incurred about $9 billion in debt when it bought the 19 Fox regional sports networks from The Walt Disney Co. Since then, it has rebranded the channels as Bally Sports.
The regional sports network business has been pressured as cord-cutting has eroded the number of subscribers and the cost of rights to air games continue to rise. Diamond Sports Group, the Sinclair unit that runs the RSNs, reported a $1.124 billion loss in the third quarter. It also cut its guidance for 2022 EBITDA in half.
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To help its RSNs, Sinclair launched Bally Sports Plus, a direct-to-consumer app that allows non-cable subscribers to stream games. That put Sinclair at odds with sports leagues that are eyeing to monetize streaming rights for themselves and their teams.
According to the New York Post, the National Basketball Association, the National Hockey League and Major League Baseball were in talks to buy the Bally Sports RSNs, but in light of the latest financial disclosures from Diamond sports, those talks are faltering.
Without a buyout from the leagues, a bankruptcy filing for Diamond Sports is possible. In bankruptcy, Diamond’s rights contract could be undone, leaving the leagues and teams doing business with Sinclair and Diamond to seek other outlets.
The Post reports that the leagues have hired investment bankers to help in the discussions with Sinclair and Diamond.
The Post quotes a spokesman for Diamond Sports Group, denying that the networks are looking to get out of unprofitable rights deals.
“The idea of rejecting MLB contracts is unequivocally false. DSG is committed to enhancing and strengthening our relationships with the MLB, NBA and NHL by fulfilling our contractual obligations and acquiring more rights,” the spokesman told the paper.
He declined to comment about a potential bankruptcy. ■
