Sinclair Outlet is Expected to File Bankruptcy This Week

The Diamond Sports Group, a collection of 19 regional sports networks (RSNs) known as Bally Sports, is reportedly preparing to file for bankruptcy. The news comes as a significant blow to the cable network model that has sustained U.S. sports for the past five decades. Diamond, which is owned by Sinclair Broadcast Group, has struggled to find its footing since the company's $9.6 billion acquisition of the RSNs in 2019. The group has failed to keep up with the shift to digital as consumers abandon cable and has $140 million in interest payments due next week, which it plans to pay by filing for Chapter 11 bankruptcy.

The bankruptcy could have significant ramifications for some of the most popular sports teams in the U.S., particularly in the NBA, NHL, and MLB, where local TV rights have been a reliable source of revenue for decades. Teams such as the Miami Heat, St. Louis Cardinals, and Tampa Bay Lightning will be faced with questions about payments owed during the Chapter 11 process and the future of local sports media rights.

MLB commissioner Rob Manfred recently stated that baseball would be prepared to make games available through both digital and traditional cable avenues if Diamond is unable to meet its obligations. The decline of cable subscribers has forced many media companies to shift their business models to include digital options, such as Bally Sports+. The sports network recently launched its first major digital offering, Bally Sports+, which allows fans to stream local games for $19.99 per month or $189.99 per year.

Chapter 11 bankruptcy provides troubled businesses with the opportunity to restructure their financial obligations under court supervision and in coordination with creditors. The goal is for the business to emerge as a viable entity with a manageable financial plan. Diamond, which raised $635 million about a year ago, has a financial obligation of $1.8 billion in rights fees to the NBA, NHL, and MLB this year, along with over $600 million in interest payments on its debt in 2023.

In conclusion, the Diamond Sports Group's bankruptcy filing will be a significant moment for the sports world and raise many questions about the future of local sports media rights. The shift to digital has disrupted the traditional cable network model, and sports leagues like the MLB are preparing to make games available through digital and traditional cable avenues.