In a surprising change of fortune, rumors abound that Diamond Sports Group (DSG), a subsidiary of Sinclair Broadcasting Corp. which manages Bally Sports Networks (formerly Fox Sports Networks as YES Network and Marquee Sports Network (co-owned with the Chicago Cubs)) is struggling. It is reportedly on the verge of bankruptcy just a few months after the launch of a streaming service for regional sports networks (RSN) called Bally Sports Plus (BSP).
Just a few months ago, control announced that the streaming service could generate between $1. 3 billion and $1. 9 billion in profit over five years and between $444 billion and $1. 3 billion in EBITDA through 2027.
Management is reportedly in talks with the NBA, MLB and NHL regarding the purchase of a home. Under the plan, creditors would take over the NSRs, give Sinclair $3 billion in money and a minority stake in DSG, and then sell the RSNs back to the leagues. This will be tricky because many RSNs will offer sports.
In addition, MLB has given Sinclair the rights to five of the 14 groups and it is not easy to pay more for the broadcast rights, which DSG is reluctant to do. MLB reportedly proposed a contingency plan if DSG filed for Chapter 11, which would air games. to local markets and tax cable and satellite corporations a payment to transmit them. This would be a short-term plan until DSG emerges from Chapter 11 bankruptcy.
On the front, MLB plans to launch its own streaming service next year. This is partly due to the fact that if DSG were to dive into Chapter 11, the trustee could simply reject some of the sports contracts and fee reduction fees. give MLB and others the ability to withdraw from appointments mid-contract.
Saddled under a mountain of $8. 6 billion in debt, BSP was intended to be the Hail Mary to save the RSN unit. However, initial losses coupled with dwindling money plunged Diamond into currency turbulence.
Sinclair responded to the rumors with the following statement: “The speculations arising through anonymous resources are just that, speculations. We have all of the NBA and NHL teams, leagues and leagues and look forward to continuing to work with them to reshape the RSN version. “»
The fact that Sinclair would possibly end up coming out with $3 billion in coins and still have a stake in DSG, while Diamond’s subsidiary is technically bankrupt and creditors may also force it into bankruptcy, is a testament to the administration’s clever monetary engineering. Structuring Diamond as its own subsidiary and financing it basically with other people’s coins, a brilliant decision.
Obviously, the company is a victim of cable outage (when other people cancel their existing cable, satellite, or telecom video plan) and cable reduction (when other people downgrade to a cheaper multi-channel plan). Fixed prices for sports rights are increasing. , while variable incomes may simply fall as consumers continue to cut the cord.
When Sinclair Broadcasting bought fox sports networks, which were the crown jewels of the cable network industry, the company projected it would generate about $1600 million in EBITDA (earnings before depreciation, amortization, interest, taxes and depreciation) in 2019 when Sinclair proposed $8. 5 billion for the channels.
The fact is that the control recently stated that they expect EBITDA to be just $183 million to $200 million in 2022, illustrating how their fortunes have evaporated. It’s not even enough money to pay the interest on your debt, let’s leave the principal.