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Nearly a year after Diamond Sports filed for Chapter 11 bankruptcy protection, Diamond Sports, which operates the Bally Sports brand RSN19, has filed a formal filing with the Houston court overseeing the case. A reconstruction plan was submitted.
Diamond's attorneys filed a 91-page reorganization plan in the U.S. Bankruptcy Court for the Southern District of Texas, Houston, for an April 17 hearing before Judge Christopher Lopez. The document was filed late Thursday night along with a 174-page disclosure statement.
As part of the proposed reorganization, Diamond would release itself from its previous naming rights agreement with Bally's, which parent company Sinclair Broadcasting entered into on November 18, 2020. During the transaction, Sinclair received various contracts. Warrants and options on Bally's common stock valued at more than $184 million. Diamond was set to earn him approximately $88 million in naming rights fees over 10 years from Bally's.
Under the terms of Diamond's $495 million settlement with Sinclair, Bally's commercial agreement is “repudiated and Bally is exempt from all claims against Diamond, including any claims for damages for repudiation,” according to disclosure documents. Abandon and renounce.”
However, Diamond may “continue to use the Bally trade name (at no cost to Diamond) until the end of the 2024 MLB season.”
Diamond's decision to exit the naming rights agreement will lead to a major rebranding of the discontinued Bally Sports RSN and streaming platform Bally Sports+, which will launch in earnest in September 2022. It became necessary. In both court documents, successor.
Developing a new naming rights partner is just one of several challenges Diamond faces as it seeks to recover from its bankruptcy, which began on March 14, 2023. One of the most pressing business issues is securing long-term affiliates. works with his three largest distributors: DirecTV, Charter, and Comcast. According to disclosure documents, “approximately 81%” of Diamond's distribution revenue comes from these three companies, which together serve approximately 39.5 million domestic video subscribers.
Two of the three distribution deals are stalled as Diamond is in informal short-term extension negotiations with Comcast and Charter. (The latter's traditional carriage contract expired Thursday.) DirecTV's contract includes an option for an extension starting sometime this summer.
While re-partnering with the Big 3 is clearly a priority, the days of RSNs acting as virtual cash machines are over. As Diamond noted in Friday's filing, cord cutting has cost it 22 million RSN subscribers since 2019, representing 35% of its customer base.
Diamond's contingency plan to complete agreements with 15 NBA team partners and 11 NHL team partners, as revealed in a hearing this week, saw the court approve a $450 debtor financing package. As a result, it became invalid. The company continues to work with both leagues “regarding changes to existing television rights agreements.”
Meanwhile, negotiations with Diamond's 12 MLB partners may prove difficult. Commissioner Rob Manfred not only wants to launch his own streaming service, but he has also been adamant that he does not oppose further reductions in broadcast rights fees. (The Cleveland Guardians, Minnesota Twins and Texas Rangers agreed to a one-time haircut when they signed Diamond to a one-year extension last month.)
MLB's OTC plan is driven by the fact that Diamond is negotiating in-market streaming rights with five MLB teams: the Detroit Tigers, Kansas City Royals, Milwaukee Brewers, Miami Marlins, and Tampa Bay Rays. It can get even more complicated.
Although cited in the disclosure document, evidence related to Diamond's post-bankruptcy financial projections and valuation analysis has not yet been submitted to the court.
(This story has been updated in the eighth paragraph to correct an editorial error. It now correctly states that Charter's traditional carriage contract expired on Thursday.)
