U.S. sports broadcaster misses payment to MLB team as it nears bankruptcy
A U.S. regional sports broadcaster has failed to make a scheduled payment to Major League Baseball’s Arizona Diamondbacks, a sign that bankruptcy is near for the company that provides local television broadcasts for nearly half of MLB, National Basketball Association and National Hockey League teams, according to Reuters sources.
Diamond Sports, a Sinclair Broadcast Group SBGI.O subsidiary that operates the “Bally Sports” branded channels, said in a Friday statement that it missed a payment owed to the Diamondbacks but continues to pay broadcasting rights fees owed to other teams.
The broadcaster had said last month that it missed a $140 million payment owed to its lenders, which triggered a 30-day grace period on its debt agreements. The company said at the time that it would use the 30 days to pursue restructuring talks with creditors and other key stakeholders.
Sources familiar with the negotiations who asked remain anonymous to speak frankly expect those talks to lead to a Chapter 11 bankruptcy filing next week.
In a response to a Reuters request for comment on the possible bankruptcy, Diamond Sports and MLB have both said that the company’s financial constraints will not impact broadcasts for the baseball season that opens March 30. MLB has staffed up a new local broadcast division to provide replacement broadcasts if necessary, according to an MLB spokesman.
But MLB’s contingency planning for broadcasting games would not replace payments owed by Diamond Sports to the 14 MLB teams who rely on revenue from local TV broadcast deals.
The missed payment amounts to $31 million, according to a source familiar with the matter, which would represent a significant chunk of the Diamondbacks’ payroll.
The Diamondbacks declined to comment on the missed payment and its impact on the team’s finances.
A bankruptcy filing would not immediately interrupt the broadcasting agreements, but could provide Diamond with leverage to renegotiate or terminate the contracts in bankruptcy court.
Diamond owes more than $1 billion in baseball broadcasting fees in 2023, according to a source familiar with the matter. The company also owns the rights to local broadcasts for the Atlanta Braves, Cincinnati Reds, and Minnesota Twins, among others.
Regional sports broadcasts were once seen as a prized offering in cable TV packages, but consumer cord-cutting has made the business model less sustainable. XM