Diamond Sports Group is preparing to file for bankruptcy as its 30-day grace period to resolve its debt is set to expire, according to an Axios report. The company has been working with its creditors and stakeholders on a restructuring plan that includes a debt-to-equity swap, but it has to file for bankruptcy by Friday or risk defaulting on its debt. If Diamond fails to make the deadline, it could lose its rights to local teams, which would have a significant impact on regional sports networks.
The future of these networks depends on Diamond’s ability to emerge from the bankruptcy process without losing its rights to local teams. Any restructuring plan would likely reduce or even wipe out Sinclair’s ownership stake, which would be a significant blow to the media conglomerate. Diamond also has until midnight on Friday to make its first payment to the Arizona Diamondbacks, or risk losing those rights to MLB.
Diamond has been withholding payment to the Diamondbacks in order to get a more favorable deal that includes streaming rights, which MLB owns. However, if it fails to make the payment, MLB has stated that it is prepared to broadcast the Diamondbacks itself, as well as any other team that the sports group can’t afford to pay for anymore.
The fate of Diamond is tied to its ability to obtain streaming rights for the teams it currently airs on TV to prop up its Bally Sports+ streaming service. So far, Diamond has only been able to get rights to some of those teams, while MLB has sought to keep its teams’ digital rights for itself.
The bankruptcy of Diamond would have significant implications for the sports media industry, as regional sports networks have been struggling to maintain their profitability in recent years. The industry has been hit hard by the pandemic, with many live sports events canceled or postponed, and the rise of streaming services has also put pressure on traditional TV networks.
