Diamond Sports owns 19 regional sports channels that show the games of 42 NBA, MLB and NHL teams, and supplies these clubs with significant sums that cover most of their players’ salaries.
Time is generally good for the economy of these sports, but hover over these teams and the chances of Diamond filing for bankruptcy are very real. The price paid by Diamond parent company Sinclair for his network of channels in 2019 ballooned to $9.6 billion.
The bad news continued this week as Diamond revealed in its quarterly earnings call that subscriber levels have fallen by 10% so far this year and cash flow measures are half of what they were estimated at the beginning of the year. rice field. Like many traditional TV outlets, Diamond’s business is being eroded by cord cutting.
Scott Shapiro, Sinclair’s Chief Financial and Operations Officer, said in the earnings call: “And that’s probably driving at least 75% of the changes to (cash flow) guidance this year.”
After the game, Bally Sports North’s Katie Storm interviewed Minnesota Timberwolves center Rudy Gobert. Bally Sports broadcasts games for his 42 teams in the NBA, MLB and NHL. (Matt Crone/USA Today)
Diamond on Call said it has enough cash to get through the end of 2023, but that depends on whether the economy doesn’t stall next year (many economists predict a mild recession). Meanwhile, Sinclair CEO Chris Ripley confirmed reports that it had hired two financial advisors from Liontree and Moelis & Co. to advise on the restructuring. .
“There is no sale process,” said Ripley, seemingly refuting speculation that the diamonds will be sold. “But as you know, we are talking to the parties about deleveraging, strategic partnerships, and the nature of that.” Deleveraging is about reducing debt.
Some of these parties are the leagues themselves who reportedly want to buy the diamonds. While Ripley’s comments suggest otherwise, there is no doubt that the NBA, NHL and MLB have a keen interest in the survival of the Diamond, and those close to the situation are actively participating in the debate. Confirmed.
It’s unclear if that includes the league taking a stake or doing some kind of royalties haircut. But what’s clear is that MLB Commissioner Rob Manfred expressed a hardline approach last year when he said the league could go on its own without the Diamonds.
“The league has no exit, nowhere to go,” said Patrick Craigs, a sports media consultant. There is
“It continues to be a big story that the league doesn’t like Sinclair, but now they’re cooling off. They’re not talking about pivoting to DTC here and there.”
DTC is consumer, and in sports media terms, streaming. Media outlets like Diamond are trying to balance the traditional TV world with streaming. Diamond launched its streaming service earlier this year, but declined to give numbers on how well or badly the product performed.
Asked by Wall Street analysts to provide numbers for the service on the earnings call, Ripley said, “It’s too early to estimate. , we’re very happy with the results in terms of app ratings, quality of experience and engagement subscribers.And you know, I think that bodes well for the future. It’s just a guess.”
Hogwash said sports media consultant Lee Burke said: He said that if Diamond has a positive result, he will announce it. The problem is that he has a broken RSN model due to cord cuts, but streaming is generally not profitable.
“We have to rebuild the model,” Burke said. “I think there is still a very strong market for local sports network content.
Local sports are in strong demand and the problem is finding ways to monetize them across different screens. In fact, Krakes said Diamond’s real problem is the amount of debt the company has. Without Diamond, the regional sports network’s brand name, Bally Sports, could have comfortably continued for another decade.
But Bally has more than $9 billion in debt, and there’s all sorts of speculation that the company could file for bankruptcy or be bought out by bondholders. The company is at a standstill for now and may sell its stake to the league to pay off debt.
“We are moving from a single revenue stream, linear pay TV, to a hybrid approach,” said Ripley. “And we have just taken the first steps to do that. We believe it’s going to be something, and you know, we have to bridge that moment.”
However, if Diamond doesn’t get through the moment, it could prove ominous for teams that rely on contractual payments from Barry.
Bally Sports teams include Miami Marlins, Orlando Magic, Florida Panthers, Milwaukee Brewers, Kansas City Royals, Detroit Tigers, Detroit Pistons, Detroit Red Wings, Cleveland Guardians, Indiana Pacers, Phoenix Coyotes, Arizona Diamondbacks, Phoenix Suns, St. Louis is. Cardinals, St. Louis Blues, New Orleans Pelicans, Minnesota Twins, Minnesota Timberwolves, Minnesota Wild, Cincinnati Reds, Cleveland Cavaliers, Columbus Blue Jackets, Oklahoma City Thunder, San Diego Padres, LA Clippers, Anaheim Ducks, Atlanta Braves, Carolina Hurricanes, Nashville Predators, Atlanta Hawks, Charlotte Hornets, Memphis Grizzlies, Texas Rangers, Dallas Mavericks, San Antonio Spurs, Dallas Stars, Tampa Bay Rays, Miami Heat, Tampa Bay Lightning, LA Angels, LA Kings, Milwaukee Brewers, Milwaukee Bucks.
(Photo: Jerome Milon / USA Today)