We may see a seismic shift in sports streaming if Sinclair Broadcast Group ends up liquidating 21 regional Bally Sports networks, with talks between the firm and three major sports leagues, including MLB, reportedly beginning next week.
The New York Post is reporting the possible sale of Diamond Sports and its 21 Bally Sports networks as a way to walk away from what’s clearly a money-losing situation. While there are some corporate mechanisms at play–Sinclair could distribute equity in Diamond Sports to creditors, who would then oversee a fire sale of assets to MLB, NBA and NHL–the Post is quoting plenty of folks who see the sale as an inevitability, not a potential, given Sinclair’s heavy debt load:
“They will offer it to all three leagues,” one source close to the talks said. “There is a reasonable likelihood this will all happen. That’s where this is heading.”
If a deal isn’t reached in what is being described as a “grand solution,” there is a growing possibility creditors — mostly hedge funds that have scooped up Diamond’s distressed debt — could force Diamond and its Bally RSNs into bankruptcy in the next three to six months, sources said.
While Diamond does have the cash on hand to survive through next year, it is technically insolvent and creditors could soon force it into bankruptcy, sources close to the situation said.
When Sinclair purchased the 21 regional sports networks from Disney after its purchase of Fox assets in 2019, analysts noted the the firm was taking on a lot of debt. Then COVID-19 hit, and Sinclair’s bet on traditional cable winning the day became questionable after the new era of sports streaming and cord-cutting rapidly became a reality. For MLB, the acquisition of Bally Sports networks essentially becomes a way for teams to re-acquire streaming rights and launch their own streaming efforts past MLB.com. Some teams, including the Cubs and the Yankees, already control their streaming efforts via Marquee Network and YES Network.
None of this is a done deal, of course. Sinclair could spring another solution onto the market and maintain control of the regionals.
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