Bally Sports RSNs Are Reportedly Preparing For Bankruptcy

[NashGuy]

Paramount+ and Peacock have both added linear channels in their services. Of course, the look more like Pluto’s channels and less like a cable channel, but it’s a start. Paramount has the local CBS channel.

Peacock now has the local NBC channel (in the ad-free tier) as well as the three Hallmark cable networks (in both paid tiers).

 

[ncted]

Peacock now has the local NBC channel (in the ad-free tier) as well as the three Hallmark cable networks (in both paid tiers).

Didn't realize they had actually added this already.

 

[glrush]

Diamond RSNs Planning Bankruptcy in Blow to Lucrative Cable Model

Diamond Sports Group, a collection of 19 regional sports networks (RSNs) doing business as Bally Sports, is planning to file for bankruptcy next week, according to multiple people familiar wit…

www.sportico.com

 

[meStevo]

Diamond has $1.8 billion in rights fees due this year to the NBA, NHL and MLB, as well as over $600 million in interest payments on its debt in 2023, according to S&P Global Ratings.​

​

My expectation (unless perhaps these fees are on already-provided services - so they're just more debt) would be that if they can't afford the rights fees they shouldn't be able to use bankruptcy to roll in new / renegotiate new costs - and would instead lose those rights altogether.

If that's the case, and the leagues seize the opportunity to simply move on from these channels, do RSNs recover?

Is this a huge domino falling over, or am I not understanding the potential consequences here? Of course, depends on the contracts, etc.

The blue, that's no-brainer bankruptcy stuff.

 

[Bruce]

Diamond has $1.8 billion in rights fees due this year to the NBA, NHL and MLB, as well as over $600 million in interest payments on its debt in 2023, according to S&P Global Ratings.​

​

My expectation (unless perhaps these fees are on already-provided services - so they're just more debt) would be that if they can't afford the rights fees they shouldn't be able to use bankruptcy to roll in new / renegotiate new costs - and would instead lose those rights altogether.

If that's the case, and the leagues seize the opportunity to simply move on from these channels, do RSNs recover?

Is this a huge domino falling over, or am I not understanding the potential consequences here? Of course, depends on the contracts, etc.

The blue, that's no-brainer bankruptcy stuff.

Just read this-Currently, the company has only $585 million in cash on hand with TV rights payments to sports teams totaling $2 billion.

News: Bally bankruptcy, Big 12, ESPN

Bally Sports' parent company will declare bankruptcy next week. Plus: Texas and Oklahoma finalize an agreement to leave the Big 12 early; ESPN becomes its

www.sportsmediawatch.com

I do not believe Chapter 11 will work, with advertising down, per sub fees decreasing every year, they need to have a solid business plan to propose to the court for Chapter 11.

If a lot of the teams try/want to get out of the Contracts ( which they should be able to do since Diamond cannot honor them), there is no plan, no way to make money if they have no teams.

And it is not up to the Courts to make deals , that would be between Diamond and the Teams, the court just has to approve the deals.

Only way this can work is if the teams take a substantial less deal, like 75% less based on only 48 Million paying for RSNs ( I have no idea how many pay for Bally’s, just the total number of Live TV subscribers).

Edit-I looked up How many Pay Live TV Subscribers in Metro Detroit
Since I know that area better than Florida, I was going to use Bally’s Sports Detroit as a example.
It is worst then I thought-

• Statewide, 37.5 percent of households now have cable TV
• That's down from 62 percent in 2009 and mirrors a national trend
• Cable companies are pivoting to internet

---

The number of households breaking away from cable television in Michigan accelerated in 2022, with over 151,000 households dropping the service, a 9 percent drop, the biggest one-year decline.

During 2022, there were a total of 1,477,20212 video/cable customers reported for Michigan. This is a decrease of 151,218 customers compared to the number reported in 2021. Figure 5 shows the evolution in video/cable subscribership since 2018.

Now that does not include DirecTV, but I doubt that would matter much since they are now under 10,000,000 Satellite Subs, maybe a few hundred thousand at the most .

Dish, YTTV, Hulu Live are also not included, but they do not have Bally’s, so a moot point.

https://www.michigan.gov/mpsc/-/media/Project/Websites/mpsc/regulatory/reports/video-comp/2022_Status_of_Video_Competition.pdf?rev=97b838e4bb9c4aa180e3ab8f65e90ac0&hash=193D2F5627C8E4815490CC13E9A6C538

Michigan viewers cancel cable TV in record numbers in 2022, report shows | Bridge Michigan

State cable subscriptions fell a record 9 percent, as Michigan mirrors a national trend.

www.bridgemi.com

 

[navychop]

13

 

[Bruce]

They missed the debt payment, which starts the 30 day march into bankruptcy.

Chapter 11 will not save them, $585 Million in cash left, cannot make the right’s payments to the teams, $8.6 Billion in debt, they are losing 5-6 Million Homes in per sub fees every year, how are they going to show the court they can turn things around.

This is a liquidation , they just do not know it yet.

https://www.bizjournals.com/baltimore/news/2023/02/14/diamond-sports-miss-debt-payment-bankruptcy.html

Missing A Debt Payment, Diamond Sports Is On The Verge Of Bankruptcy; Upending Local Sports Revenue Model

With Sinclair's Bally Sports filing for Chapter 11, will alter the local sports business model that had been in place for decades.

www.forbes.com

 

[dishdude]

They missed the debt payment, which starts the 30 day march into bankruptcy.

Chapter 11 will not save them, $585 Million in cash left, cannot make the right’s payments to the teams, $8.6 Billion in debt, they are losing 5-6 Million Homes in per sub fees every year, how are they going to show the court they can turn things around.

This is a liquidation , they just do not know it yet.

https://www.bizjournals.com/baltimore/news/2023/02/14/diamond-sports-miss-debt-payment-bankruptcy.html

Missing A Debt Payment, Diamond Sports Is On The Verge Of Bankruptcy; Upending Local Sports Revenue Model

With Sinclair's Bally Sports filing for Chapter 11, will alter the local sports business model that had been in place for decades.

www.forbes.com

Amazing how Sinclair can spin off a money losing part of the business and stiff creditors while sitting on a pile of cash.

 

[Bruce]

Warner Bros. Discovery has told teams that it plans to exit the regional sports network business entirely within the next several weeks.

The company, which operates three AT&T SportsNet-branded channels in Denver, Houston and Pittsburgh and has a minority stake in the Root Sportschannel in Seattle, has told teams that they have until March 31 to reach an agreement to take their rights back. If the RSNs can’t reach deals with the teams, the channels eventually plan to move forward with a Chapter 7 liquidation filing.

In a statement provided to SBJ, WBD said, “AT&T SportsNet is not immune to the well-known challenges that the entire RSN industry is facing. We will continue to engage in private conversations with our partners as we seek to identify reasonable and constructive solutions.”

WBD sent letters to the leagues and teams this afternoon informing them of their plans to divest their interest in those four RSNs.

WBD has rights deals with 10 teams across those four networks: four MLBteams (Astros, Mariners, Pirates, Rockies), three NBA teams (Blazers, Jazz, Rockets) and three NHL teams (Kraken, Penguins, Golden Knights).

Warner Bros. Discovery tells teams it is leaving RSN business

www.sportsbusinessjournal.com

 

[Bruce]

From the above link-

This move also comes as another big RSN group is preparing to file for bankruptcy. Diamond Sports Group, which holds the rights to 42 MLB, NBA and NHL teams on 19 regional sports networks, is expected to file for bankruptcy protection in the middle of March. Diamond’s RSNs operate under the name of Bally Sports.

Diamond, which is carrying about $8 billion worth of debt, has told the leagues and teams that it plans to continue producing and carrying games even through bankruptcy.

Doing the math, I just do not see them with a way forward, 68 Million have Paid Live TV ( including all services like YTTV), but 20 million of them them do not have a service with the RSNs.

So rough math, 48 million, then probably 6 Million have a package that does not have the RSN, like Entertainment with DirecTV.

So roughly 42 Million pay the per sub fee for the RSN, that will shrink another, at least, 5-6 million by the end of 2023.

Then another, at least, 6-8 million in 2024, what RSNs are left will no longer be profitable.

 

[glrush]

NBA teams reportedly aren't concerned with Diamond Sports' potential bankruptcy filing

As the RSN market faces an uncertain future and Diamond Sports potentially files for bankruptcy, NBA teams reportedly aren't worried yet.

awfulannouncing.com

 

[SamCdbs]

The story for the NBA and NHL are different. First, simply because of the time of year this is all falling on, but much more so because the %age of total team revenue that RSNs provide is less. And, since both sports have deals with their so-called unions that are based on a %age of the total revenue being what is available to pay the players, if the teams make less, the players make less, and who gives two s***s if some undereducated over-tall millionaire makes another $40M or just has to scrape by with $30M.

The story for baseball is more dire. The RSN money simply is more and more important to the teams. It is a huge %age of team revenue, upwards of half depending on who you listen to (SBJ says its somewhere between 30 and 70% depending on the team, and SBJ is a solid source). And MLB has no real salary cap and a surly out-of-touch union that have been convinced that they somehow are being cheated and there is no end to the ever increasing payrolls.

To the "just end the blackouts and I'd pay darn near $12/month for mlb.tv" crowd, it doesn't work like that. mlb.tv and its poor man's version on ESPN+ is simply a gravy product. Taking games produced for the local market and selling them to the handful of people who want to watch the Twins in Texas or whatever. Gravy. Extra. It is an insignificant source of revenue in the broad scheme of things. The money needed to replace the RSN money for in market games is beyond the level of affordability for most ordinary people in an a la carte model.

 

[Bruce]

To the "just end the blackouts and I'd pay darn near $12/month for mlb.tv" crowd, it doesn't work like that. mlb.tv and its poor man's version on ESPN+ is simply a gravy product. Taking games produced for the local market and selling them to the handful of people who want to watch the Twins in Texas or whatever. Gravy. Extra. It is an insignificant source of revenue in the broad scheme of things. The money needed to replace the RSN money for in market games is beyond the level of affordability for most ordinary people in an a la carte model.

While they will be affected by the loss of the RSN, those who subscribes to mlb.tv is more then a handful, in 2020, they had 3.5 million subs to just the online version, I do not know how many subscribe to the extra innings package via DirecTV, Comcast, etc.

So revenue would be, at least , over $300 Million a year, so definitely not a insignificant source of revenue, then of course, the Extra Innings version generates even more,

info from here-

Fans can have voice in MLB lockout by canceling their MLB.TV subscriptions

While it might seem like baseball fans can't do much to channel their frustration into effective advocacy to end the MLB lockout, there is one way to send a message that MLB and its owners should understand.

www.sportingnews.com

 

[ibanez_ax]

The Chicago Cubs Plan to Offer In-Market Streaming of Their Games | Cord Cutters News

Recently regional sports networks have been struggling. Sicnlair’s Bally Sports will soon declare bankruptcy, according to multiple reports. AT&T SportsNets will be shutting down by the end of March. Now the Chicago Cubs and Marquee Sports Network RSN, a joint partnership between the Cubs and...

cordcuttersnews.com

 

[SamCdbs]

While they will be affected by the loss of the RSN, those who subscribes to mlb.tv is more then a handful, in 2020, they had 3.5 million subs to just the online version, I do not know how many subscribe to the extra innings package via DirecTV, Comcast, etc.

So revenue would be, at least , over $300 Million a year, so definitely not a insignificant source of revenue, then of course, the Extra Innings version generates even more,

You can't really have it both ways. First, $300M, divided by 30, or $10M per team, IS most certainly insignificant. This is one mid-level shortstop. The average payroll is $148M, the "competitive balance tax" threshold is $233M.

But you have spent a year telling everyone who will listen that baseball doesn't matter, just watch someone else's team on mlb.tv and save, save, save. Well those games, which are produced by the RSNs, are going away. MLB probably will produce them itself and give them away to DirecTV and cable companies, this year, as well as toss them in mlb.tv with no so-called blackouts. They will just take the soaking this year and look to recoup their losses in bankruptcy court, where they will try to attach the assets of, very profitable, parent companies (Sinclair and WBD). No idea how that would turn out. It is really too late in the game to work out anything else by opening day.

OK, that takes us forward one year. March 24. They have to replace, conservatively, 40% of team revenue. While the local baseball game IS the most popular single thing on most nights all summer, that is still just not that many people, with 1000 other choices. The World Series gets about a 6 rating. If we would assume that every single one of those people would buy a mlb.tv subscription with the local teams included that is not going to get it done.

It is not a problem I have a solution to. I don't know if anyone does. But it seems to me that local baseball (and all baseball is local to somebody) is just the first, of many things, that simply are not going to be produced any more.

 

[BLC1962]

This all seemed to work under the old advertising revenue supported model until everyone got greedy. The only way I see this working for MLB is a new bargaining agreement with salary caps. Reality is, IMO, the massive RSN revenue is going away and try as MLB might I do not think any model they can conceive of will replace it. If they are not careful they will alienate even more fans in the process. The price/value equation is broken.

 

[ncted]

This was illuminating:


View: https://youtu.be/4KR-ESyH_Gg

 

[ncted]

The Way Americans Watch Local Sports Is About to Change

The once-thriving regional-sports TV industry is suffering, and the financial unraveling could hasten a shift to a direct-to-consumer model for live sports.

www.wsj.com

 

[Yespage]

This all seemed to work under the old advertising revenue supported model until everyone got greedy. The only way I see this working for MLB is a new bargaining agreement with salary caps. Reality is, IMO, the massive RSN revenue is going away and try as MLB might I do not think any model they can conceive of will replace it. If they are not careful they will alienate even more fans in the process. The price/value equation is broken.

It was a pyramid scheme once Fox Sports made FSN a must carry to begin with. If memory serves, before '99, you needed to sub to sports channels. The local FSN was more of a overall package carry station, so everyone would get it. I could have this all muddled up and wrong, but this is how I remember it being.

But then it definitely got worse when everyone thought they could have their own network, thanks Yankees! THAT had a decent impact on this downfall. There was one sports network, in general, but then there needed to be two or three.

I would expect to see more ads on the field when watching television. Mini-ads in between batters in some cases. Advertising will need to be inserted into the broadcast of the game itself. As far as the salaries, when billions are squeezed by millionaires that are the product I'm having a hard time getting weepy.

 

[ncted]

I never had access to a RSN until I got DirecTV in 2002. IIRC, they had an add-on package that included a lot of other RSNs from around the country that seemed pricey at the time.