By Ryan Bologna
A lot has happened since Sinclaire won the bidding for Fox Sports Networks in 2019. Not everything has gone to plan, and there have been rumors that the MLB, NBA and NHL might but the biggest owner of regional sports networks. Why is that happening and what implications does it have? Let’s take a deeper look and find out.
When the deal went through, Sinclair acquired the networks from 21st Century Fox for $10.6 billion. The broadcasting rights for 42 teams (14 MLB, 16 NBA, 12 NHL) were acquired. There are currently 21 regional networks up and running.
What has happened since then that has changed plans? It relates to the actions of some of the most powerful in the television industry. Charter Communications and Comcast cut down the amount they were willing to pay for sports due to the increase in cord cutting. Dish opted out of carrying regional sports networks in general. As a result, Diamond Sports (owned by Sinclaire) has not seen as much cash come in as it expected.
The rumored solution is that Diamond will offer MLB, the NBA and NHL its equity while retaining a minority stake. With the losses Diamond has experienced, it makes sense that this is being considered.
If this solution doesn’t go through in the coming months, the expectations are that Diamond will be forced to file for bankruptcy. What are the implications of all of this?
If this deal goes through, you should expect to see Bally regional sports networks stick around. The deal is seen as a solution, and it should help the regional sports networks stay afloat. If Diamond has to file for bankruptcy, it is expected that the regional sports networks will continue to be able to broadcast games. So you won’t all of a sudden see these networks go off the air, but that likely means you could see a large number of regional sports networks change soon after that.
The leagues and teams have the incentive to complete this deal as well, as Diamond would not have to pay the teams their rights fees if it files for bankruptcy. That is the leverage that Diamond has at this point. Some leagues are thinking of passing those fees along to cable companies while Diamond is in bankruptcy.
A lot of things are interconnected here, and it will be interesting to see how Diamond and each of the leagues handle things. Diamond has $8.5 million in debt and something needs to happen soon.
Photo Credit: Maxim Tarasyugin
