MLB, NBA and NHL talks to acquire the country’s dominant owner of regional sports networks are on the wane – raising the likelihood of a bankruptcy filing that might speed up a nationwide migration of sports fans away from cable TV, The Post has learned.
As reported exclusively by The Post, Diamond Sports Group – which operates 21 regional sports networks under the Bally Sports or RSN brand, which account for greater than half of local broadcast markets nationwide – was in talks this fall to dump sports leagues for as much as $3 billion, including debt.
But Diamond – a unit of the Sinclair Broadcast Group – surprised investors on November 28 by halving its forecast for this yr’s profitability as cable-cutting continues to haunt the industry. As such, the leagues are not willing to pay a buyout premium and as a substitute creditors are preparing to take a risk in bankruptcy court in the primary half of next yr, according to sources close to the talks.
This implies Diamond’s many unprofitable broadcasting deals are likely to be dropped – and its decades-old cable-based business model will disappear when deals to broadcast live matches online are scrapped, sources say. MLB could potentially step in as a brief platform next yr, however the streaming rights are expected to eventually go to Big Tech firms like Apple, Amazon and Facebook, the sources say.
![Map of Bally's rights to sports teams](https://nypost.com/wp-content/uploads/sites/2/2022/12/bally-sports-map-network.jpg?w=1024)
“Straight away there’s chaos. But we’ll find a way to look back and say that was when a giant tech company really entered the regional sports market,” the MLB team owner told The Post, requesting anonymity. “Straight away there are a whole lot of individuals who don’t see games of their home markets. It is not good for sports leagues.”
Tech firms have invaded live sports broadcasting over the past few years. Amazon Prime, which exclusively hosts a handful of Latest York Yankees games, has struck its biggest deal yet with September’s deal to air the NFL’s “Thursday Night Football” for a complete season. Facebook and Apple TV+ have also acquired exclusive rights to certain MLB games.
But Diamond’s bankruptcy could open the door to new-level dealmaking – and some insiders hope it’s going to change the best way people devour sports for the higher. Many younger fans cannot watch games now because they do not have cable TV, and some cable TV providers don’t even carry sports, the MLB owner complained.
“Ultimately, it’s going to be one device in all places” – predicted the owner of the team. “Twelve years from now, it’s going to be all three sports on a regular basis and on one channel.”
![Juan Soto from the San Diego Padres](https://nypost.com/wp-content/uploads/sites/2/2022/12/padres-cardinals-mlb.jpg?w=1024)
Diamond has the rights to 14 Major League Baseball teams, resembling the St. Louis Cardinals; 16 National Basketball Association franchises, including the Miami Heat; and 12 National Hockey League teams, including the Detroit Red Wings. Not one of the Latest York bands belong to the Diamond network, although Diamond owns a minority stake within the YES network.
Creditors are expected to use the courts to reject Diamond’s many unprofitable contracts with teams where he has long been paying more for media rights than he gets from cable distributors and advertisers to broadcast his games.
For instance, Diamond is currently under a financially loss-making contract to pay the San Diego Padres $60 million a yr until 2032, two sources say. Most of Diamond’s MLB contracts are unprofitable, while according to a source, possibly half of his NBA contracts are loss making and a handful of NHL contracts are within the red.
Insiders warn that if the talks don’t go easily, it may very well be a bumpy spring for teams and sports fans alike. MLB is preparing to make latest media deals with the teams Diamond rejects in bankruptcy and to broadcast their games live in local markets, two sources say. Currently, MLB airs off-market games nationwide, but has no local rights.
“They feel like they’ll start the sport quickly. Nonetheless, they can’t tell us that it’s 100% guaranteed,” said a source close to the situation.
Diamond’s bitter talks with the leagues surprised sophisticated investors, including hedge fund Angelo Gordon, who this fall owned a few of Diamond’s debt and hoped to sell MLB, according to a source close to the situation. He has now sold his investment at a loss and is not any longer involved, the source said.
![Sinclair CEO Chris Ripley](https://nypost.com/wp-content/uploads/sites/2/2022/12/chris-ripley-1.jpg?w=1024)
The leagues have hired bankers to try to steer the discussions. MLB hired investment banks Morgan Stanley and Guggenheim Partners. The NBA has retained Allen & Co. and the NHL is now searching for a banker, sources say.
“We engaged Allen & Co. over a yr ago to higher understand the range of issues facing regional sports networks, including those operated by Diamond Sports,” an NBA spokesperson said.
MLB and NHL declined to comment. Angelo Gordon and the San Diego Padres didn’t respond to requests for comment.
This month, Diamond hired David Preschlak, former president of NBC’s regional sports networks, as its latest CEO. He’s already dating MLB in an attempt to construct a greater relationship with the leagues than his predecessor, sources say.
Paul Caminiti, a spokesman for Diamond Sports Group, said: “The concept of rejecting MLB contracts is unequivocally false. DSG is committed to improving and strengthening our relationship with the MLB, NBA and NHL by fulfilling our contractual obligations and acquiring more rights.” He declined to comment on a possible bankruptcy.
![NHL game](https://nypost.com/wp-content/uploads/sites/2/2022/12/lightning-hurricanes-nhl.jpg?w=1024)
Breakdowns and carriage generally is a risk, and many team owners could also lose lucrative revenue, warns Greg Bouris, Adelphi University’s director of sports management program and former director of communications for the MLB Players Association.
“This diamond bankruptcy could speed up what the long run of the sports broadcasting market looks like, and there could also be hiccups first before a more everlasting solution is found,” said Bouris. “It might be in one of the best interest of the leagues to include players in discussions about this example as there could also be a brief economic hit.”
Nonetheless, he adds that the industry is ripe for restructuring. While sports helped cable firms sell subscriptions, broadcasts increasingly became mired in carriage disputes amid rampant cable-cutting. There’s an increasing risk that younger viewers will hand over sport altogether.
“I feel sports leagues need to recalibrate game distribution, game scheduling and breaks in some games,” said Bouris. “I feel there are solutions for innovation in distribution and production that are based on technology.”