Bally Sports RSNs "reportedly preparing to file bankrupcty"

The Gray Eagle

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Bally Sports regional sports networks are apparently heading to bankruptcy court.
The Bally Sports RSNs include broadcasts for 14 MLB teams, 16 NBA teams, and 12 NHL teams.
https://www.bloomberg.com/news/articles/2023-01-25/sports-broadcaster-diamond-faces-8-6-billion-debt-reckoning?sref=W6GJF3MS#xj4y7vzkg

America’s largest owner of local sports channels is heading toward a complex $8.6 billion debt restructuring in bankruptcy court as it stakes its future on a new direct-to-consumer streaming service.

After leveraging up to buy regional sports networks from Walt Disney Co. in 2019, Diamond Sports Group LLC is suffering from a decline in cable-TV subscribers, spurring negotiations with creditors and major sports leagues about its viability as a going concern. The outcome will have serious implications for the $55 billion world of sports-media rights: the company’s channels showcase Major League Baseball, National Basketball Association and National Hockey League games to fans from Detroit and Phoenix to San Diego.

With financial troubles mounting, the Sinclair Broadcast Group Inc.-owned firm will likely skip $140 million in interest payments due mid-February, kickstarting a 30-day grace period, according to people familiar with the matter.
This seems not good for the sports leagues.
How all this goes down matters. If Diamond, which operates under the Bally Sports brand, files for bankruptcy, it could potentially put at risk crucial broadcasting-rights revenue for the likes of MLB.
“You’re looking at a potential rewrite of the entire regional sports business on the other side of this restructuring,” said Davis Hebert, a senior telecom analyst at debt research firm CreditSights.
This seems like it could have a big impact on sports broadcasts around the country. Could the leagues not get huge payments they were counting on?
Diamond’s financial struggles are a bad omen for the industry at large, given the amount of revenue from media rights influences how much players get paid, among other things. As the cable-TV business contracts, some sports and media executives are warning that teams and leagues will need to accept smaller rights payments going forward.
Doesn't seem like good news for any teams, especially ones that just handed out big money long term contracts.
Umm...
In a bankruptcy, Diamond would have the option of ending contracts with teams, potentially cutting off crucial industry revenue while also allowing teams to reclaim their media rights. The company could also halt payments to the teams while keeping the contracts in place. If a deal is not reached, both MLB and creditors are preparing for baseball teams not to be paid, according to two people.
Another person familiar with the matter downplayed the prospect that Diamond would discontinue rights payments in a bankruptcy, adding that the company is open to bringing in teams and leagues as equity partners in any restructured entity.
I've tried watching some stuff on Bally, and the whole operation was trash-- hard to find games, crashing video, etc. Apparently they are hoping that sports fans will subscribe directly for $20 per month, but I'm skeptical that many will pay that much for what they offer.
In an attempt to reach more cord-cutters, Diamond launched a streaming service across all its markets last September that allowed people to watch games online for $20 a month without a cable subscription. It’s now considering a new streaming service that would give fans the option to pay to watch individual games, or just the last few minutes. Diamond would work with teams and league partners, like offering subscribers perks like team merchandise or game tickets.
 

ThePrideofShiner

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Is it just the sports arm that is going bankrupt or is it all of Sinclair? Because if it is all of Sinclair, well, that is pretty fucking funny.
 

nattysez

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Is it just the sports arm that is going bankrupt or is it all of Sinclair? Because if it is all of Sinclair, well, that is pretty fucking funny.
Just the sports arm, unfortunately.

This seems like extremely bad news for the affected teams, as I assume most of them are smaller-market teams.

Even if you use (for a fee) the home-team camera feed and have your broadcasters broadcast from the studio for road games, the cost of maintaining your own home-game broadcast setup is not, I would think, particularly cheap. And what kind of audience numbers can you expect if a team sucks and is likely to suck for a while (as with the DBacks or Reds)? This seems like it could go down a very dark path. Hopefully I'm missing something.
 

Petagine in a Bottle

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Just in general, I wonder what the long term prognosis for the RSN’s are, it can’t be good. The number of cable subs is in precipitous decline and going direct to consumer can’t come close to making the lost revenue back. A world where everyone isn’t subsidizing the 20% or so who watch these channels isn’t good for the sport, is it? It seems like everyone assumes that the TV revenue will just keep increasing because it always has….but isn’t every sport that relies on local rights and revenue (so everyone but the NFL) in potential trouble down the road?
 

Rico Guapo

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Diamond may be a unique example in the world of RSNs given the initial transaction was heavily debt financed leaving the company vulnerable to even modest declines in revenues and cash flows.
 

Philip Jeff Frye

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Doesn't this just open the door for Amazon or Apple or whomever to start acquiring local broadcasting rights?
 

nattysez

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Doesn't this just open the door for Amazon or Apple or whomever to start acquiring local broadcasting rights?
This was what I was getting at above - are we sure all of those rights packages are actually moneymakers for the broadcaster? Does paying for the broadcast rights, plus building and maintaining the infrastructure to broadcast 162 games plus pre- and post-game shows, actually make economic sense? Are enough people watching Reds games to make that investment worthwhile?

Amazon's not bidding for Diamondbacks TV rights unless it thinks it's a moneymaker.
 

Max Power

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Just in general, I wonder what the long term prognosis for the RSN’s are, it can’t be good. The number of cable subs is in precipitous decline and going direct to consumer can’t come close to making the lost revenue back. A world where everyone isn’t subsidizing the 20% or so who watch these channels isn’t good for the sport, is it? It seems like everyone assumes that the TV revenue will just keep increasing because it always has….but isn’t every sport that relies on local rights and revenue (so everyone but the NFL) in potential trouble down the road?
Right. This is an obvious conclusion to everyone who pays even a little attention to cable subscriptions and live TV viewing numbers. It seems like professional sports leagues didn't want to believe it and just pretended the money train would keep on rolling.

But even if revenue collapses, team values follow, and salaries go with them, there will still be millions and millions of dollars for everyone involved. If the Red Sox are suddenly worth $2 billion instead of $6 billion and superstar players have to get by on $10 million a year instead of $40 million, I think everyone will be fine.
 

8slim

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This was what I was getting at above - are we sure all of those rights packages are actually moneymakers for the broadcaster?
Nope. For example, Diamond is spending $60 million/year for Padres rights. They're taking a bath, that's a ludicrous amount for that market given it's small size and the rate of cord cutting.

RSNs have really been hurt by most live streamers (YouTube TV, Sling, etc) not picking up the local RSNs. Those services have been mitigating the declines among cable and satellite providers for the national networks, but not for the RSNs.

I don't think any tech company is interested in acquiring local rights on a market-by-market basis. Amazon did that for a small package of games with the Yankees, but it was a test, and the landscape has changed a lot in just the year since that happened.

Ultimately these rights need scale to make them work. Not sure how that happens unless the leagues bundle all "local" rights into one package and license them that way. Basically the MLB.tv approach, but for in-market along with out-of-market.
 

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NBC/Peacock already has this piece of the MLB pie. It's year 2 for Peacock doing MLB Sunday Leadoff. This just announces the 2023 schedule.

Wasn't a Sox game at Fenway the inaugural effort last year for this brunch-fest?
 

Lose Remerswaal

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NBC/Peacock already has this piece of the MLB pie. It's year 2 for Peacock doing MLB Sunday Leadoff. This just announces the 2023 schedule.

Wasn't a Sox game at Fenway the inaugural effort last year for this brunch-fest?
Same day the B’s had a 1pm or noon start. Met a friend at Sonny McLain’s for breakfast. And lunch.
 

The Gray Eagle

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Craig Calcaterra had some interesting info on this on his substack today (this post is free, no paywall):

First he linked this part of an article on Sportico:
While Diamond Sports Group appears set to default on $140 million in interest payments, a move which is expected to trigger a bankruptcy filing in the coming weeks, its 19 Bally Sports properties aren’t the only RSNs feeling a financial pinch. According to multiple league, finance and network sources, the three AT&T SportsNet brands in recent weeks have handed over lighter-than-expected envelopes to their respective MLB franchise partners.
An executive with direct knowledge of the RSNs’ financial dealings confirmed to Sportico that the AT&T outlets in Denver, Houston and Pittsburgh submitted their most recent rights payments to their MLB clubs in a timely fashion, although the disbursements were not commensurate with the contracted rates. The teams impacted by the shortfall are the Colorado Rockies, Houston Astros and Pittsburgh Pirates.
The precise amount of the funds withheld is not known but is said to be significant enough to have catalyzed concerns about the long-term viability of the three networks.
According to Yahoo, these 14 teams have Bally RSNs showing their games:
Arizona Diamondbacks, Atlanta Braves, Cincinnati Reds, Cleveland Guardians, Detroit Tigers, Kansas City Royals, Los Angeles Angels, Miami Marlins, Milwaukee Brewers, Minnesota Twins, San Diego Padres, St. Louis Cardinals, Texas Rangers and Tampa Bay Rays.

I'm surprised to see the Padres on that list. They are throwing around a lot of money lately for a team whose local TV revenues are up in the air. Most of the others are "small market" teams whose owners don't try that hard to win.

Add in the AT&T teams-- Colorado, Houston and Pittsburgh-- and that's 17 MLB teams whose TV coverage and revenue is up in the air right before spring training.

In response to this, Rob Manfred said yesterday that, “we are prepared, no matter what happens . . . to make sure the games are available to fans in their local markets.” He added that If Bally’s doesn’t make the required payments — which it almost certainly won’t — clubs will terminate their contracts with it and that MLB would produce games and would try to arrange for cable and satellite distributors to air them.
The apparent plan mentions cable and satellite distributors carrying the games, with no mention of streaming. And if this happens, local blackouts will surely continue.

This plan to maybe suddenly produce games and also suddenly try to get cable and satellite companies to pay to air them seems like... wishful thinking. Unless they are already working on this plan and making progress. But even if they are, surely there will be a big loss of revenue from this? That's what Calcaterra suggests, and Manfred apparently agrees:

Which is to say that (a) it will be a mess, and people will have a hard time watching their teams in the short term; and (b) even if MLB does arrange for alternatives, there will be a really big hit to revenue in the short term and possibly longer. Indeed, Manfred admitted that if Bally files for bankruptcy, he does not expect that the clubs and the league can simply replace the lost RSN revenue currently owed in the short term.
This seems like a massive problem that will cause tremendous disruption in both business terms and in the fan experience. I have no idea why it still remains a story that, basically, only sports business people are covering. I predict it will be national news, like, beyond the sports page, within a couple of months at the outside.
Hey maybe this is a short term revenue advantage for the Red Sox. And the Yankees, Dodgers, Mets, and the other teams who have stable local TV revenues. Even so, it can't be good for MLB overall.
 

ifmanis5

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Commish today: If it all goes to shit, we'll do it ourselves.
View: https://twitter.com/dannyfrankel/status/1626331687629225984

Rob Manfred effectively outlines "next steps"
MLB's Rob Manfred: If Bally Sports Doesn't Pay, We'll Terminate the Teams' RSN Agreements and Broadcast the Games Ourselves
"We've been really clear that if Diamond doesn't pay, under every single one of the broadcast agreements, that creates a termination right, and our clubs will proceed to terminate those contracts," the commissioner said.
"In the event that MLB stepped in, what we would do is we would produce the games, we would make use of our asset, the MLB Network, to do that. We would go directly to distributors -- meaning Comcast, Charter, the big distributors -- and make an agreement to have those games distributed on cable networks," Manfred added.
 

nattysez

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This plan to maybe suddenly produce games and also suddenly try to get cable and satellite companies to pay to air them seems like... wishful thinking. Unless they are already working on this plan and making progress. But even if they are, surely there will be a big loss of revenue from this? That's what Calcaterra suggests, and Manfred apparently agrees:
Agreed - this seems like an incredibly tough lift, even if they were able to buy all of the equipment from Sinclair and somehow quickly enter new contracts with all the necessary personnel.
 

mauidano

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If this leads to the ridiculous nature of blackouts going away I am all for it. Blackouts are the stupidest thing ever in 2023. Even stupider when you live in the middle of the freaking Pacific Ocean.
 

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Harry Hooper

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From Jon Couture:

All amid a new schedule with less divisional play and more interleague, with every team facing every other, every season.

Brief aside: That last one has its reasons, but more than anything, it’s a big step toward Rob Manfred’s long-desired destination of adding two teams and a geographic realignment of a 32-team MLB that’ll destroy the last vestiges of the American and National Leagues you grew up with. Can’t wait for the quickly expanding implosion of the regional sports network model to be cited as a reason he had to do it.

It’s a lot, and that’s just for those of us who see it coming. Jayson Stark recently reported one word kept coming up in talks about the sport’s short-term future: [Expletive] show.
 

Petagine in a Bottle

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It's a short-term advantage but the same dynamics will be hitting the Red Sox, Yankees, etc. sooner rather than later.
I am sure it already is. The number of NESN subs clearly isn’t what it was 5-10 years ago.

All these teams with huge long term deals are anticipating revenue growth…with cable subs declining (which isn’t going to reverse), how does that happen?
 

Blizzard of 1978

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If Bally Sports San Diego goes tits up can we get Don Orsillo back?
Maybe. I don't remember where I read it, but it was reported that the Padres get paid $60 million a year from Bally Sports until 2032. That might explain why they been signing all these big contracts.
Also on a non- baseball note this bankruptcy will affect about over 20 NBA and NHL teams. This could end up a major disaster for a lot of sports teams and their fan bases. Looks like Boston, NY and Philly teams will weather this storm better than most.
 

Ale Xander

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I am sure it already is. The number of NESN subs clearly isn’t what it was 5-10 years ago.

All these teams with huge long term deals are anticipating revenue growth…with cable subs declining (which isn’t going to reverse), how does that happen?
Stadium, gaming, and uniform ads?
 

John Marzano Olympic Hero

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I am sure it already is. The number of NESN subs clearly isn’t what it was 5-10 years ago.

All these teams with huge long term deals are anticipating revenue growth…with cable subs declining (which isn’t going to reverse), how does that happen?
Pro teams are still going to be profitable. They are just not going to be stupid profitable. Like Ale said there’s uniform ads, gambling money, teams are buying real estate around their stadia, there’s national TV money and a bunch of revenue sources that I’m not thinking of right now.

Not to mention the free money municipalities, other than Oakland, fall over themselves to give to billionaires.

Having said this, I cynically assume that a majority of owners will use this as a way of trying to roll back payroll now and in the next collective bargaining discussions. Because that’s what these dudes do.

“If this continues, I’m going to be broke,” says the person worth billions of dollars.
 

Buster Olney the Lonely

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Diamondbacks become second MLB team to leave Diamond Sports Group RSNs

The Arizona Diamondbacks of Major League Baseball has had its contract with Diamond Sports Group (DSG), the owner and operator of Bally Sports regional sports networks, rejected by a bankruptcy court overseeing DSG's Chapter 11 bankruptcy proceedings.

It means the Diamondbacks become the second MLB team to leave a Bally Sports RSN during this season after the San Diego Padres were dropped by DSG at the end of May, resulting in MLB taking over production and distribution of the Padres rights. MLB also pays the Padres 80 per cent of what DSG owed them.
https://www.sportbusiness.com/news/diamondbacks-become-second-mlb-team-to-leave-diamond-sports-group-rsns/
 

The Gray Eagle

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The Glob has an update on some of the effects of the Bally/Diamond Sports RSN fiasco:

https://www.bostonglobe.com/2023/12/19/sports/diamond-sports-group-mlb-broadcast/
MLB is pressing Diamond Sports Group to live up to the financial and broadcasting commitments its 11 regional sports networks have made to more than a third of MLB’s teams for 2024, or else leave it to the league to take over broadcasting duties and try to make good on most of the revenues the teams are counting on.
A January settlement is in sight, with Amazon a possible savior of DSG according to the Wall Street Journal, but uncertainty persists until a deal is struck.

This past season, MLB took over the broadcasting of two former DSG teams, the Diamondbacks and the Padres, at a 20 percent discount of what they usually received from their RSNs. If it has to, MLB is preparing to take over broadcasting and distribution duties of anywhere from 5-16 teams this coming season, according to a source familiar with the league’s thinking.
As much as NESN frequently sucks to watch, at least it's stable and local fans watch enough so that the Red Sox are in good shape with local revenues. Could be a lot worse.

The importance of a stable, well-run RSN can not be understated. Baseball’s RSNs paid more than $2.3 billion to teams in 2022, accounting for 22 percent of the sport’s $10-plus billion in revenues, according to Forbes.
Local media rights agreements are supposed to provide a lucrative and guaranteed annual revenue stream that teams count on to calculate payroll commitments, court free agents, and make trades. Without those guarantees, teams are left in limbo.

The Red Sox do not have such worries. They will receive their customary full share of revenues from NESN, which was estimated at $97 million in 2022 by Forbes.
FSG's ownership of the Pittsburgh Penguins could help Red Sox revenues due to the local RSN:

Back in November, the Pittsburgh Penguins — the NHL team owned by Fenway Sports Group, which also owns the Red Sox and NESN — became the owner of SportsNet Pittsburgh, the Pittsburgh RSN that had broadcast both Penguins and Pittsburgh Pirates games through last season.
After last month’s owners meetings in Texas, there was still uncertainty on whether MLB or SportsNet Pittsburgh would take over Pirates broadcasts in 2024. The answer came when the team announced they had entered into a joint ownership agreement — a 50-50 split, according to an industry source — of SportsNet Pittsburgh.
NESN, which began managing the production of Penguins games this season, will add on Pirates production responsibilities. That means the Red Sox, via their Penguins-FSG connection, will benefit from another MLB team’s broadcasts. (What they do with those extra revenues is a topic, and story, for another day.)
The Twins and Guards are two teams who are not sure how much local broadcast revenue they will be getting, and it's impacting their payroll plans.

The Twins received $42 million in payments from Bally Sports North in 2022. With their deal with Diamond just expired, the Twins have no certainty on how much local TV revenue they will receive this coming season. It’s one reason why the team’s payroll, at a record $156 million last year, will drop.
“It creates a little bit of uncertainty around the revenue stream . . . that’s just really being direct about it,” said Twins president of baseball operations Derek Falvey. “It impacts your planning to some degree and how it impacts your overall budget, but that’s something we’re going to have to navigate through.”
The Guardians are unsure if Bally Sports Great Lakes will pay them the $55 million owed for 2024.
“One of the historic benefits of having cable deals in place is it’s a fixed and predictable form of revenue that we know and we can then plan around,” said Chris Antonetti, president of baseball operations for the Guardians. “Over the last couple of years and now specifically, there’s uncertainty around what had been a relatively stable revenue source for us.”
There’s somewhat of a leap of faith involved as the Guardians plot their offseason team-building strategy and how they will afford it.
Baseball's RSN setup likely will change by 2025:
Some sort of hybrid broadcast solution could take shape, with some (but not necessarily all) local TV rights of the 30 teams consolidated into an MLB-run model. There also could be a solution where MLB joins other leagues in owning a multi-sport streaming platform where the leagues directly control distribution and broadcasting.
The appetite for the unscripted content of sports in the entertainment industry is massive, and the more than 2,400 games in an MLB regular season elevates its role in delivering that content. Nielsen estimates the audience for MLB games in the 2023 season was 407 million people, more than twice the NBA (122 million) and NHL (77 million) combined.
No mention of the blackouts, which infuriate many fans across the country. I would really hope that the blackout issue would be resolved with any new system, but who knows?
Sam Kennedy hints that that is the intention:
“The end goal is to make it as fan friendly as possible, where it’s easy to find your game of choice and wherever you are in the world, you have access to it,” said Sam Kennedy, president and CEO of the Red Sox. “How you get there is going to take awhile. There has to be a lot of analyses, but those conversations are starting.”
 

nattysez

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No mention of the blackouts, which infuriate many fans across the country. I would really hope that the blackout issue would be resolved with any new system, but who knows?
Sam Kennedy hints that that is the intention:
The idea that the Sox or MFY are going to give up NESN/YES in favor of some kind of shared-revenue MLB-run enterprise is hard to believe unless TV ad rates are crashing so precipitously that it's a better deal for them to let the league handle their broadcasts.
 

Harry Hooper

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NYPost: Major League Baseball rejects Amazon’s $150M bid to bail out bankrupt Diamond Sports:

MLB Commissioner Rob Manfred is pitching around Amazon’s deal to invest in Diamond so MLB can possibly strike its own deal with Amazon in 2025. “Manfred said if you want a digital deal it will be with us.”

MLB and Amazon declined comment.

At the upcoming bankruptcy hearing in Houston, MLB will offer Diamond a deal that reduces the media rights fees it pays for three of the 11 teams in exchange for MLB gaining the digital rights for all Diamond teams in 2025, sources said.
...
Sinclair has made its own offer to buy Diamond in exchange for the RSN dropping a $1.5 billion lawsuit against the parent company for saddling it with debt and charging excessive fees, as The Post reported exclusively,
Article also describes the emerging YES Network/MSG streaming entity that could factor into all of this.
 

John Marzano Olympic Hero

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Can you a la carte stream MSG/Yes out of market and how much does it cost?
Obviously this might be a little different, but with my cable provider (Fios) I can get YES for a price (don't know what it is, I haven't looked into it) and I live in Mass.
 

Harry Hooper

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From the NYPost:

It would also include the rights to stream all 162 games of the Detroit Tigers, the Kansas City Royals, the Miami Marlins, the Minnesota Twins and the Tampa Bay Rays as Amazon looks to expand into the lucrative sports market — on the heels of the success of last weekend’s streaming-only NFL playoff game between the Chiefs and Dolphins.
...
Fans of the five baseball teams would have to get an Amazon Prime membership, which costs $14.99 a month, to stream their games. It is not clear if fans in those markets would need to pay more than the Prime membership to get access to those games.
 

Ale Xander

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How soon will you be able to watch non-local MLB games on amazon?
Can you watch out of market or only in-market?