Future of RSNs hangs in balance as Diamond returns to court, prepares for new on-air branding

Diamond Sports Group, the beleaguered owner of what were formerly the Bally Sports regional sports networks (RSNs), announced a major step forward in its arduous bankruptcy recovery.

The company has agreed in principle with a new naming rights sponsor for its portfolio of 18 RSNs, a milestone as its existing contract with Bally’s Corporation expires.

Word of the pending deal came during a virtual bankruptcy court hearing on June 4, 2024, with counsel for Diamond confirming they have the framework of an agreement in place with an as-yet unnamed third party. While Diamond declined to identify its new partner, Bloomberg has reported that sports betting app FanDuel is waiting in the wings to take over the RSN naming rights from Bally’s.

The sponsorship deal represents a rare bit of positive news for Diamond, which filed for Chapter 11 bankruptcy protection in March after buckling under the weight of cord-cutting losses and billions in debt inherited from its parent company, Sinclair Broadcasting’s ill-fated acquisition of the networks in 2019. The company’s financial woes have been compounded by fractious relationships with its league partners and distributors.

In Tuesday’s hearing, attorneys for Major League Baseball, the National Basketball Association, and the National Hockey League took turns expressing their misgivings about Diamond’s ability to maintain a viable business in the long run. The leagues cited a lack of clarity around Diamond’s financial projections and the terms of its current distribution deals.

Worries are particularly acute around Diamond’s unresolved standoff with Comcast, the nation’s largest cable provider.

The RSNs went dark on Comcast systems in mid-May after the two sides failed to negotiate a new carriage agreement. Comcast angled to bump the networks to a pricier tier over Diamond’s objections. Diamond’s counsel acknowledged the talks remain “at an impasse,” placing the blame on “Comcast’s intransigence.”

The Comcast deadlock is especially troubling given the cable giant’s outsized importance, which represents nearly 16% of Diamond’s overall subscriber base. For a company projecting a $46.5 million cash flow deficit for the May-August period alone, the loss of Comcast’s monthly subscriber fees is a gaping hole that will be difficult to plug.

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Still, there are some hope for Diamond as it works to restructure more than $8 billion in debt.

The company says it has locked in long-term deals with 10 of its 12 top distributors, and the naming rights agreement should bring a welcome injection of cash. Under the terms of a deal reached with creditors, Diamond also stands to receive $450 million in financing from lienholders and $495 million from Sinclair once it exits Chapter 11.

Diamond has managed to push back the deadline for confirming its reorganization plan from June 18 to July 29, allowing more runway to finalize agreements with leagues and broadcast partners before the 2023-24 NBA and NHL seasons get underway.

With much riding on the outcome for Diamond, its employees and the local sports fans who depend on the RSNs for live game coverage, Judge Christopher Lopez urged all sides to keep working toward a resolution before next month’s confirmation hearing.