Late yesterday, Diamond Sports, the entity that owns Bally Sports, filed for Chapter 11 bankruptcy protection in the Southern District of Texas. Bally Sports has a number of Regional Sports Networks that it operates, including Bally Sports Southwest, which televises the Texas Rangers (as well as the Dallas Mavericks and Dallas Stars). Diamond Sports is a subsidiary of Sinclair Broadcast Group, which purchased Fox Sports Networks in April, 2019, and rebranded them as Bally Sports.
This filing isn’t a surprise, as it had previously signalled that Diamond Sports would likely be seeking bankruptcy protection. Diamond Sports was saddled with a significant amount of debt in connection with Sinclair’s $10.6 billion purchase of FSN, and reportedly is currently carrying over $8 billion in debt. Diamond Sports reportedly failed to make a $140 million interest-only payment in February, and once that happened, a bankruptcy filing seemed like an inevitability.
MLB released a statement indicating that it was prepared to step in if need be to ensure that games would continue to be broadcast, though it appears as of now that Diamond Sports is planning on continuing to operate the RSNs and broadcast the games for the time being.
Per this article from Reuters, “Diamond said that it has $425 million in cash on hand, but it owes $9 billion to its lenders and is weighed down by long-term broadcast rights agreements that make less economic sense as customers move away from cable and towards online streaming options.” While that is likely true, it leads one to ask why, then, they borrowed almost $10 billion to buy FSN in the first place?