In recent months, the broadcast television industry has been salivating over its desire to pluck play-by-play rights to various professional sports teams away from what has been described as a “troubled” Diamond Sports Group.
Indeed, the future of DSG, the Bally Sports parent, has been in question ever since it filed for Chapter 11 federal bankruptcy protection. As Wednesday began, the independently-managed and unconsolidated subsidiary of Sinclair Inc. revealed that it plans to emerge from bankruptcy as a “going concern” and continue its operations, as a Restructuring Support Agreement (RSA) with Diamond’s largest creditor groups has been agreed upon.
The RSA includes more than 85% of DSG’s first lien debt holders, over 50% of its second lien debt holders, and more than two-thirds of unsecured bond holders.
This is significant, and DSG believes it provides the framework for a reorganization plan preventing Diamond from folding.
Specifically, the RSA includes a commitment from select DSG debt holders to provide $450 million of “junior secured superpriority debtor-in-possession financing.” These dollars will be used to support Diamond’s operations as DSG finalizes its comprehensive reorganization plan — and to repay $350 million of Diamond’s existing first lien indebtedness, which will put its restructuring plan in motion.
For Diamond, it highlights that “key creditors” reached an agreement on financial terms and a go-forward capital structure “that will be the foundation of the reorganization plan to facilitate Diamond’s emergence from bankruptcy as a going concern.” Without naming names, DSG added, “Certain large holders of Diamond’s debt have committed to make a substantial investment in the company and exchange their debt into equity to be issued by reorganized Diamond.”
A BIG TECH GIANT DELIVERS
The emergence from bankruptcy for DSG is also being made possible thanks to the financial support of one “Big Tech” giant.
Amazon has committed to make a minority investment in Diamond and enter into a commercial arrangement to provide access to Diamond’s services via Prime Video.
Under this arrangement, Prime Video will become Diamond’s primary partner through which customers will be able to purchase direct-to-consumer (DTC) access to stream local Diamond channels.
Customers will be able to access all local DTC content, including live MLB, NBA and NHL games, and pre- and post-game programming, for the teams for which Diamond retains DTC rights, through Prime Video Channels.
Additional details regarding pricing and availability will be announced at a later date.
“Diamond looks forward to continuing to partner with its existing MVPD distribution partners to broadcast its MLB, NBA and NHL content,” it said.
DSG owns the Bally Sports Regional Sports Networks; Bally has a naming rights agreement in place, which transformed the RSNs from what had been FOX Sports-branded entities. The roster 18 owned-and-operated RSNs is comprised of Bally Sports Detroit, Bally Sports Florida, Bally Sports Great Lakes, Bally Sports Indiana, Bally Sports Kansas City, Bally Sports Midwest, Bally Sports New Orleans, Bally Sports North, Bally Sports Ohio, Bally Sports Oklahoma, Bally Sports San Diego, Bally Sports SoCal, Bally Sports South, Bally Sports Southeast, Bally Sports Southwest, Bally Sports Sun, Bally Sports West, and Bally Sports Wisconsin.
The Bally Sports RSNs serve as the TV home to half of all MLB, NHL and NBA teams based in the United States, even with defections to broadcast television companies including Gray Television and The E.W. Scripps Co. in markets such as Las Vegas, Phoenix and Atlanta.
Diamond Sports Group also has a joint venture in Marquee, the home of the Chicago Cubs; and a minority interest in the YES Network, the longtime destination for the New York Yankees and Brooklyn Nets.
SINCLAIR LITIGATION CONCLUDES
Diamond Sports Group also announced early Wednesday that it has an agreement in principle with parent Sinclair Inc. to settle the pending litigation between the companies and the other named defendants. The settlement is supported by Diamond’s creditors that are parties to the RSA.
Under the settlement agreement, among other things, Sinclair will pay Diamond $495 million in cash and provide ongoing management and transition services to support Diamond’s reorganization and separation from Sinclair’s operations.
Under the RSA, the proceeds from the Sinclair settlement will be used to support the reorganization plan and fund distributions to certain creditors.
In prepared comments, DSG CEO David Preschlack said, “We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024. We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond’s near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern for the benefit of our investors, our employees, our team, league and distribution partners, and the millions of fans who will continue to enjoy our broadcasts.”
