- Diamond Sports is on the verge of bankruptcy, due to its crippling debt, and the leagues must come to an agreement with the company’s creditors in order to prevent a free-fall bankruptcy.
- Cord-cutting and virtual bundles such as YouTube TV have caused a decrease in the number of people paying carriage fees, leading to a decline in revenue for Diamond Sports.
- The company has not made an operating profit since 2019, and its operating cash flow has been negative for over a year.
- The negotiations are centered around Diamond Sports entering a Chapter 11 bankruptcy with a reorganization plan, in which Sinclair would give up most of its ownership stake in exchange for restructuring or forgiving up to $8 billion of its debt.
- Sports leagues would grant additional rights to Diamond Sports, particularly digital rights, to help put the regional sports network on stronger footing.
- In the event that the parties cannot come to an agreement, the leagues and creditors would be in greater danger of not being paid at all.
- The NBA may seize the opportunity to prioritize their national TV deals and have fewer games, enhancing the value of those that are nationally televised.
Published February 22, 2023
Visit Stratechery to read Ben Thompson’s original post Diamond Sports Misses Interest Payment, Bally’s Dire Situation, Negotiating Bankruptcy
