Report: Bally Sports Owners Facing Bankruptcy
New Orleans, La.- Sinclair Broadcast Group, which owns Bally Sports regional channels, is reportedly headed for "the biggest financial disaster in sports media history," according to Bloomberg analysis. Diamond Sports Group, the subsidiary that manages Sinclair Broadcast Group's 19 Bally Sports-branded regional sports networks, is facing crushing debt issues and is headed for bankruptcy.
Bloomberg broke the news that "Diamond will probably skip a mid-February $140 million interest-only payment servicing around $8.6 billion in debt as it prepares for a Chapter 11 restructuring that will roil the $55 billion U.S. sports media business."
Sinclair's third-quarter earnings report in November revealed the struggling broadcaster had hired advisers LionTree and Moelis & Co. to “talk to parties about deleveraging, strategic partnerships and things of that nature.”
Under Bloomberg’s reported plan, Diamond would finish a restructuring in May or June, after any NBA playoff broadcast obligations for the Pelicans. A proposed restructuring of Sinclair Broadcast's Diamond Sports Group would turn over ownership to the largest creditors. Regional sports networks like Bally Sports New Orleans would take the brunt of any financial hits or cutbacks.
Fans of the Pelicans most likely would not face significant in-season changes if those plans work out. However, Bally Sports New Orleans is still not available on YouTube TV, Hulu Live, and a few other popular streaming services. DirecTV and Spectrum remain the only current options but still require purchasing a separate, more expensive subscription.
Diamond rolled out Bally Sports+ application this fall as a $20-plus per month subscription for regional channels and is now reportedly considering new individual game plans or just letting fans pay a smaller fee to watch the last few minutes of a game.
There is doubt those options will change the broadcaster's fate. NBA teams have heard fan complaints about Bally Sports streams not working. That ongoing issue is "hurting the product and unacceptable to our organization” according to Greg Bensel, Senior VP of Communications.
The Pelicans considered broadcasting games themselves after hearing from several broadcast rights bidders, including NBC. Bally Sports won the contract in no small part due to promising to “have a different feel” to the broadcast this season. This preseason, Bensel explained during a media conference call that negotiations included Bally Sports providing “enhancements from a production standpoint” including the camera and graphics packages.
Now those plans have little financial backing. Sinclair reported in late 2022 Diamond was sitting on approximately $585 million in cash. The RSN streaming giant needs to pay team partners around $2 billion this year just to maintain its rights deals. Meanwhile, organizations depending on broadcast revenues will face severe belt-tightening, since rights deals can be terminated amid the restructuring.
Bloomberg detailed how Diamond's $630-million first-lien loan is currently trading at just 92 cents on the dollar. The report explained how nearly $5 billion in “lower-ranked bonds” trading at under 10 cents on the dollar signals “a near-total wipeout for subordinated creditors,” the news service said.
Sinclair wants to explore additional revenue streams using Bally Sports Plus for streaming options that charge customers by the game. However, Bloomberg states, "that kind of new revenue-stream talk is a day late and billions of dollars short."
"When we constructed this new agreement with Bally Sports New Orleans the main priority was distribution and the ability to deliver our games directly to our fans...We are still working on every option with Bally Sports New Orleans to improve the accessibility, ancillary content, and distribution of Pelicans programming to all of our fans across Louisiana and the Gulf Coast region,” Dennis Lauscha, President of New Orleans Pelicans explained before the season.
“We examined a number of options that were taken into consideration, but Bally Sports New Orleans, with its new Bally Sports+ platform and high-quality production, proved best for the Pelicans and their fans," explained Karen Brodkin, Executive Vice President of Endeavor, the consulting group that helped the Pelicans find a broadcast deal this summer.
With just over half of the season already in the books, Bally Sports has fallen short of those expectations and its parent company is lacking operating cash. Now it appears the New Orleans Pelicans will have to go back to the drawing board for next season.
