Bally Sports Regional Sports Networks Go Chapter 11; Here’s What Happens Next

Late on Tuesday evening, Diamond Sports Group, which runs 14 regional sports networks under the Bally Sports branding in the U.S., filed for voluntary Chapter 11 bankruptcy in an attempt to restructure and eliminate approximately $8 billion in debt. The move had been expected before Friday. Diamond is owned by Sinclair Broadcast GroupSBGI
. As part of the restructuring, the plan seeks to have Diamond become its own company.

With MLB, the NBA, and NHL all impacted by the bankruptcy, questions have swirled as to what will happen next. In a statement, Diamond said they would “use the proceedings to restructure and strengthen its balance sheet, while continuing to broadcast quality live sports productions to fans across the nation. They added that they “will continue to operate in the ordinary course during the Chapter 11 process.”

MLB issued a statement shortly after Diamond’s Chapter 11 filing.

“Diamond Sports Group’s bankruptcy declaration today is an unfortunate development that we have been expecting,” the MLB statement said. “Despite Diamond’s economic situation, there is every expectation that they will continue televising all games they are committed to during the bankruptcy process. Major League Baseball is ready to produce and distribute games to fans in their local markets in the event that Diamond or any other regional sports network is unable to do so as required by their agreement with our Clubs.”

The league added that they have streamed live games for 20 years and produced live games for MLB Network since 2009 saying, “we have the experience and capabilities to deliver games to fans uninterrupted. In addition, we have hired additional seasoned local media professionals to bolster our capabilities in anticipation of this development. Over the long term, we will reimagine our distribution model to address the changing media climate and ultimately reach an even larger number of fans.”

While Bally will still be available, the ability to pay rights fees to all their sports partners is unclear. According to a report by the NY Post, Diamond is looking to reject the contracts of four MLB teams as part of the bankruptcy. Those teams include the Cincinnati Reds, Cleveland Guardians, San Diego Padres, and Arizona Diamondbacks who Diamond claims are running in the red. Rights fee payments have been paid in full and on time to all of the Bally partners, with the exception of the Diamondbacks who were paid on time but are in a grace period.

Broadcast Teams On Bally Likely To Remain

One question fans have asked is whether broadcast teams will remain in place as the Bally Sports RSNs go through Chapter 11. While the broadcast teams are not specifically mentioned, it is expected that they will remain. As part of Tuesday evening’s statement, David Preschlack, CEO of Diamond said, “We deeply appreciate the hard work and commitment of our employees, who remain focused on producing high quality sports games that our fans have come to expect.”

For Now, Blackouts Remain An Open Question

While MLB has stated that it ultimately could go direct-to-consumers with streaming, and lift blackouts to reach the maximum audience, for the moment the focus is just on the four clubs Diamond is looking to back away from. While the games are expected to be streamed for free, there is no word on whether blackouts would be lifted for them.

What Happens With YES Network And Marquee?

On top of Diamond outright owning 14 RSNs, they are also involved in two others: YES Network, which airs New Yankees and Brooklyn Nets games, as well as Marquee, home of the Chicago Cubs. Diamond is a 20% minority stakeholder in YES, and is a joint partner in Marquee with a 50% equity stake. Diamond has said that the bankruptcy proceedings to restructure their 14 RSNs is outside these partnerships.

What About The AT&TT
Sportsnet RSNs? Astros And Rockets May Buy One

While the sheer number of RSNs owned by Diamond has grabbed the most attention, Time Warner Discovery has said they are looking to exit the regional sports network business. Currently, three MLB teams are aired on those networks: the Astros, Pirates, and Rockies.

Multiple reports have said that the Houston Astros and Rockets are looking to purchase AT&T Sportsnet Southwest where there are strong distribution agreements with ComcastCMCSA
, AT&T, and DirecTV through 2032.

As for the Pirates and Rockies, all MLB officials have said is that negotiations with Warner Bros. Discovery have gone well. It seems the two are prime to eventually join the four teams being taken over by MLB.

What Happens After This?

With the NBA and NHL seasons winding down, games look to be covered under the Bally Sports RSNs as the restructuring unfolds. For MLB, they will continue to maximize their current contracts. The inflection point will be when the contracts expire or if other RSNs fall under the similar duress as the Bally Sports nets.

Source: https://www.forbes.com/sites/maurybrown/2023/03/14/bally-sports-regional-sports-networks-go-chapter-11-heres-what-happens-next/