Diamond Sports Group (DSG), the subsidiary of Sinclair Broadcast Group that operates the Bally Sports regional sports networks (RSNs) in the US, has filed for Chapter 11 bankruptcy.
Announcing the news yesterday (March 14), DSG said it is in the process of finalizing a restructuring support agreement with its creditors to “eliminate over $8 billion” of its $9 billion outstanding debt.
This will see DSG will separate its business from Sinclair and become a standalone company.
The move will also provide further protection for first-lien lenders and see the debts of other secured and unsecured creditors equitized in exchange for equity and warrants.
It has been expected for some time, with reports as far back as January that DSG was planning to miss a $140-million interest payment in mid-February and subsequently file for Chapter 11.
DSG confirmed on February 15 that it would miss the payment, due the same day, and that it would use a 30-day grace period to “continue progressing its ongoing discussions with creditors and other key stakeholders regarding potential strategic alternatives and deleveraging transactions …”
The company now says it intends to use the Chapter 11 process – a form of bankruptcy for reorganizing a debtor’s affairs – to “restructure and strengthen its balance sheet, while continuing to broadcast quality live sports productions to fans across the nation.”
DSG added that it expects its Bally Sports RSNs to continue operating during the process, noting that it has approximately $425 million of cash available to fund its business and restructuring.
DSG operates 19 RSNs and broadcasts games for 16 National Basketball Association (NBA) teams, 14 Major League Baseball (MLB) teams, and 12 National Hockey League (NHL) teams. In total, it provides regional broadcasts for nearly half of the games across the NBA, NHL, and MLB competitions.
Sinclair bought the RSNs (21 of them at the time) in 2019 from Disney in a deal worth $10.6 billion. The channels were put on the market by media giant Disney as a condition of regulatory approval for its deal to buy multiple assets of the 21st Century Fox media and entertainment conglomerate.
However, DSG has since struggled under the weight of its huge long-term broadcast deals as viewers have moved away from cable subscriptions in the US towards streaming platforms.
David Preschlack, chief executive of Diamond, said: “The DSG Board of Managers has been evaluating strategic opportunities with the support of its advisors and in coordination with creditors to position the Company for long-term success and has determined that the best path forward for the company and its stakeholders is to restructure through a Chapter 11 process.
"We are utilizing this process to reset our capital structure and strengthen our balance sheet through the elimination of approximately $8 billion of debt. The financial flexibility attained through this restructuring will allow DSG to evolve our business while continuing to provide exceptional live sports productions for our fans.”
“DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love. With the support of our creditors, we expect to execute a prompt and efficient reorganization and to emerge from the restructuring process as a stronger company.”
“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. We look forward to working constructively with our team and league partners and all DSG stakeholders throughout this process and beyond.”