The Ohio Cup trophy on top of the Bailey Sports logo prior to the game between the Cincinnati Reds and the Cleveland Guardians at Progressive Field on May 17, 2022 in Cleveland.
George Kubas | Images of Diamonds | Getty Images
The on-court atmosphere continues to heat up for Diamond Sports Group, the largest owner of regional sports networks.
On Thursday, Diamond will ask a bankruptcy judge for permission to hire arbitrators as it talks with creditors to reach a reorganization plan. The company said in court papers that it needs to complete “substantial planning progress” before the start of the upcoming NBA and NHL seasons in October.
Last week, Diamond secured court approval to extend the deadline to come up with a restructuring plan.
Diamond sought Bankruptcy protection earlier this year, a debt burden of more than $8 billion and significant headwinds on the regional sports network business as more consumers cancel their cable subscriptions in favor of streaming.
The company and some of its creditors have, at earlier points in the case, including last week’s hearing, “indicated that mediation may help [Diamond] resolve the myriad issues that they will have to face on the way to restructuring.”
Diamond has until Sept. 30 to file a reorganization plan, weeks before the opening of the 2023-24 NBA and NHL seasons. It is important to Diamond to continue to have local games on its network. Since its filing, some teams have already left their Bailey Sports channels due to interference with rights fee discussions.
The prospect of securing local sports rights has attracted broadcast station owners – including nexstar media group, gray television And EW Scripps Company, – CNBC is already considering moving the Games informed of, phoenix suns recently went out A Bailey Sports Network for such a deal.
In addition to reducing its heavy debt load, Diamond is looking at resetting some of its rights deals with teams to reflect so-called market rates.
Last week, a lawyer on behalf of the NHL said the league was in constructive discussions with Diamond, but “timing is of the essence” ahead of the upcoming season.
So far during the bankruptcy process, Diamond has faced a number of struggles — including an ongoing battle with MLB over the teams’ streaming rights. royalty fee that lead to the diamond leaving some of its Bailey Sports channels teams and its recent lawsuit against the parent company, sinclair,
On Wednesday, Diamond revealed the details behind the lawsuit.
In 2019, Sinclair acquired The network’s portfolio—formerly known as Fox Sports—from Disney for $10.6 billion, a necessary divestment that was part of Disney’s purchase of Fox Corp.’s 21st Century assets.
The company said in court papers that Diamond owed more than $8 billion in debt due to the deal, including debt payments of between $400 million and $650 million.
In the years since then, Diamond’s business, pay-TV providers and other cable channels have experienced a rapid decline in their business.
Diamond is now alleging that Sinclair’s ownership has added to its problems.
In court documents, the company said Sinclair has been “milking” Diamond for more than $100 million annually in management fees since the acquisition, despite knowing the poor state of the business. On top of this, Diamond alleges Sinclair, “as part of a nefarious strategy … wrongfully transferred more than $1.5 billion in cash and other consideration to Diamond for the benefit of Sinclair.”
This happened because Diamond alleged that Sinclair knew that the RSN business “was heading for bankruptcy, and continued to do so after Diamond’s undisputed bankruptcy.”
In a statement, a Sinclair spokesperson said, “Sinclair has been notified of the lawsuit filed by Diamond Sports Group in connection with their ongoing bankruptcy proceedings. We firmly believe that the allegations made in this lawsuit are baseless and we look forward to working with them.” intend to defend vigorously against.”
Diamond Appointed A new board and leadership was put in place last year to run its RSN business as it faced an inevitable bankruptcy filing. Diamond is now an unorganized and independently operated subsidiary of Sinclair.