Sinclair said this week it has inked a financing deal with its bankrupt Diamond Sports Group that would allow the RSN to continue operations.
The “Restructuring Support Agreement” will see Sinclair pay $495 million to Diamond—which declared bankruptcy in 2023 with more than $9 billion in debt spread across its 19 Bally Sports regional sports networks. The payment will settle a $1.5 billion lawsuit filed by Diamond against Sinclair last summer in which the company was seeking to retrieve up to $1.5 billion in management fees it paid to Sinclair following Sinclair’s acquisition of Fox’s 19 RSNs (under the “Bally Sports Group” brand) from Disney.
Sinclair said that $496 million payment could result in a net cost to Sinclair of $250 million to $325 million.
The new agreement includes a $115 million minority investment from Amazon whose Prime Video streaming service will become the new home to Diamond’s “Bally Sports Plus” D2C apps. The cash infusion will allow Diamond to pay $350 million to its creditors, emerge from bankruptcy and continue to operate the RSNs independently.
David Preschlack, CEO of Diamond stated: "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," Preschlack continued. "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."
The agreement—which is subject to court approval—is a sign of the new reality in which regional sports networks, which have suffered declining ratings due to the increase in subscribers cutting the pay TV cord over the years now will operate in a hybrid fashion with Amazon, according to one observer.
“Diamond was paying over $2 billion indeed to the leagues. The RSNs can’t generate enough revenue for the teams only being on cable,” one source familiar with the talks told TV Tech sister brand NextTV. “They definitely can’t go exclusively DTC. Diamond will be able to make money on cable, make money on DTC with streaming and put a number of games on broadcast, some on Sinclair stations.”.
