Sinclair Broadcasting Group’s Diamond Sports subsidiary is preparing to file for bankruptcy protection, a move that could decrease some of the payments it makes to professional sports leagues whose programming is carried across its regional sports channels.
On Wednesday, financial news outlet Bloomberg reported Diamond Sports — which operates around two dozen Bally Sports-branded channels — is looking to restructure around $8.6 billion in debt, and could offer equity to its key stakeholders in order to ease its debt burden.
The bankruptcy petition is expected to be filed under Chapter 11 of the federal bankruptcy code, which is considered one of the less-serious bankruptcy moves because it allows a business to remain active while putting in place a plan to pay back creditors over a period of time. It is different from a Chapter 7 bankruptcy plan, which requires a liquidation of assets to resolve debt, and Chapter 13, which requires debt repayment within a three- or five-year period.
According to reports, Sinclair’s restructuring could see Major League Baseball (MLB) negotiating carriage rights with cable and satellite operators for the Bally Sports channels, while Sinclair operates the Bally Sports direct-to-consumer streaming service. Bloomberg said some league officials oppose this plan, and are considering a move that would reclaim broadcast rights to games aired on Bally Sports channels instead.
If MLB did reclaim those rights, it opens the door for the sports league to offer games once aired on Bally Sports channels to other broadcasters, either through a simulcast or an exclusive arrangement. Potential suitors could include Apple, Apple and Comcast’s NBC Universal; all three started offering a limited number of live baseball events last year.