A Houston bankruptcy court judge on Wednesday approved Diamond Sports Group’s broad, 174-page outline for exiting Chapter 11 restructuring (aka a “disclosure statement”), an outcome that could occur as soon as June 18, when a confirmation hearing is set.
Also Read: Everything You Need To Know About the Bally Sports Bankruptcy
U.S. Bankruptcy Judge Chris Lopez gave all interested parties until May 22 to file any objections to the confirmation plan.
“Approval of the disclosure statement is another important step forward in our restructuring and we are working toward confirming our plan and emerging as a sustainable, go-forward business,” Diamond said in a statement. “We are focused on reaching long-term agreements with our partners to enable us to continue serving fans across the U.S. and delivering meaningful value to distributors, teams and leagues.”
Earlier in April, Diamond, the Sinclair subsidiary that oversees the Bally Sports regional sports channels, announced a renewal of its carriage agreement with the top U.S. pay TV operator, Charter Communications, a development that seemed to assure Diamond's likely escape from what had once felt like near-certain liquidation.
This came after Diamond announced in January that it had secured $450 million in debtor-in-possession financing, as well as a $115 million investment from Amazon.
But trouble bubbled up again last week, when Major League Baseball, the National Basketball Association and the National Hockey League each filed motions with the court, expressing, in the words of the NBA, that they are “deeply concerned” about Diamond's trajectory.
Not only does Diamond still have pivotal long-term renewal deals with DirecTV and Comcast to nail down, but Lopez has just approved Diamond’s request to extend the final deadline for finishing its restructuring plan to November 14, the maximum time frame allowed under U.S. bankruptcy law.
The NBA and NHL both expressed consternation that the leagues could once again start their new seasons in October amid the specter of a major TV distribution partner in bankruptcy.
According to Penske trade Sportico, Diamond lawyers said Wednesday that the leagues are overreacting. The November date, Diamond attorneys said, is merely a “prophylactic motion,” protecting the company from in the unlikely event that a rogue third party files a competing reorg plan.
So June 18! Book it.
The Sad (Boilerplate) History
Sinclair Broadcast Group purchased 21 Fox SportsNet channels for $10.6 billion in 2019, as Disney was absorbing Rupert Murdoch's U.S. entertainment assets, branding them as "Bally Sports" under a just-abandoned 10-year, $85 million deal with Bally Corp., and establishing a new subsidiary, Diamond Sports Group, to manage it all.
But spiraling team licensing costs, cord-cutting and ill-fated stock buyback decisions (well, ill-fated for everyone not in Sinclair's C-suite) conspired to eat away at the RSN's margins.
By March 2023, Diamond was in bankruptcy court, fighting with its parent company over hundreds of millions of dollars in "management fees" and looking to renegotiate unprofitable deals with MLB, NBA and NHL teams.
