The Diamond Sports Group files for bankruptcy

Diamond Sports Group, the largest owner of regional sports networks, announced Tuesday that it had filed for Chapter 11 bankruptcy. The move comes after it missed a $140 million interest payment last month.

Diamond, which owns 19 networks under the Bally Sports Regional Sports Networks banner, said it had about $425 million in cash to continue operations during the bankruptcy. These networks have the rights to broadcast games from 42 professional teams – 14 baseball, 16 NBA and 12 NHL.

“DSG will continue to broadcast games and connect fans across the country to the sports and teams they love,” Diamond Sports CEO David Preschlack said in the statement.

The company has filed for bankruptcy in the Southern District of Texas and is negotiating a new agreement that will eliminate most of its approximately $8.67 billion in debt, it said. Under the terms of the agreement, Diamond Sports would become a separate company from its current parent company, Sinclair Broadcast Group.

Sinclair bought the regional sports networks from The Walt Disney Co. for nearly $10 billion in 2019. The US Department of Justice forced Disney to sell the RSNs after it acquired a large portion of 21st Century Fox’s film and television assets.

RSNs have been hit hard by pandemic lockdowns

Diamond Sports isn’t the only company struggling financially with its regional sports networks. RSNs have lost millions of customers during the COVID-19 lockdowns as empty local bars and restaurants canceled their subscriptions, The Wall Street Journal reported last month.

Warner Bros. Discovery, which owns three of the AT&T SportsNet networks, has given the Colorado Rockies, Houston Astros and Pittsburgh Pirates until March 31 to reclaim their broadcasting rights. WBD Sports is ending its investments in the networks.

Diamond produces around 5,000 live televised games each year through Bally Sports channels.

Diamond has nearly $1 billion in rights payments, mostly to baseball teams, that are due in the first quarter of this year. The company is on track with payments to hockey and basketball teams, but may withhold payments from some baseball teams as it attempts to renegotiate a better deal.

Major League Baseball has established a local media department in case it needs to cover broadcasts for these teams. The games would then be broadcast locally on the MLB network or streamed live on MLB.TV.

MLB said in a statement Tuesday that league officials expected Diamond Sports to file for bankruptcy soon.

“Despite Diamond’s economic situation, it is expected that they will continue to televise any games they are campaigning for during the bankruptcy proceedings,” the league said.

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