Bally Sports’ parent-company is preparing for Bankruptcy

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Bally Sports’ parent-company, Diamond Sports Group, is preparing to file for bankruptcy. This is after skipping an interest payment that was due to bondholders on Wednesday.

Diamond Sports is an unconsolidated and independently run subsidiary of Sinclair. The company decided to skip out on the $140 million in interest payments that was due to its bondholders and would instead enter the 30-day grace period.

Diamond has been in discussions with creditors in recent months, as it is looking to restructure its $8 billion in debt. It is planning to use its 30-day grace period to continue those discussions. They have been discussing a debt-for-equity swap. Which would see the creditors take some form of ownership over the company. And according to those familiar with the matter, this is a very likely scenario.

Cord-cutting is really hurting regional sports networks

Sports are expensive, and regional sports networks are even more expensive. As they are hosting multiple teams and every game that isn’t on primetime or national TV. Not to mention that they have a smaller audience versus a national game. Which means there’s less money for them to make. And those cutting the cord are helping to accelerate this.

Of course, Diamond Sports Group deciding to remove its Bally Sports networks from most streaming services did not help. As those that had cut the cord had almost no way to watch Bally Sports. Unless they opted to switch to DIRECTV Stream. Which cost Bally Sports a whole lot of money. The group is home to more than half of the MLB, NHL and NBA teams in the US. So they are a pretty big deal.

The leagues have been concerned that Diamond could forego paying rights to the leagues while under bankruptcy protection. Diamond is focused on keeping the networks alive, however. Which does require the rights to the NBA, NHL and MLB.

Sinclair acquired these networks in 2019, after Disney bought FOX. Disney had to divest the sports networks (Fox Sports RSNs), as it already owned the ESPN empire. So Sinclair stepped in and bought them for $10.6 billion. It also included around $8 billion in debt. Now that you look back on it, that was probably not the best idea. But sports are expensive, so to see that kind of debt is not a surprise.

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