Amazon is set to join forces with Diamond Sports in a strategic move that forms part of the latter’s restructuring efforts, marking a pivotal moment for the largest owner of regional sports networks seeking to emerge from bankruptcy.
Diamond Sports boasts ownership of 18 networks operating under the Bally Sports banner, wielding broadcast rights for 37 professional teams across various leagues, including 11 MLB, 15 NBA, and 11 NHL teams.
The journey to this partnership has been traversed through Chapter 11 bankruptcy proceedings in the Southern District of Texas, a path embarked upon by Diamond Sports in March of the preceding year. This financial maneuver was necessitated by a staggering debt of $8.67 billion, as disclosed in the late 2021 financial filing.
The terms of this significant collaboration were unveiled by Diamond Sports on a Wednesday morning, with Amazon maintaining a discreet silence on the matter. The formal approval of the bankruptcy court remains the only hurdle standing in the way of this transformative union.
This strategic alignment with Diamond Sports’ major creditors not only paves the way for the company’s triumphant emergence from bankruptcy but also ensures the uninterrupted continuation of its operations. More crucially, it serves as a safeguard against the potential collapse of the regional sports network system. Without this intervention, the NBA, NHL, and MLB might have been compelled to step in, taking over the production and distribution responsibilities for the majority of their teams.
This move echoes the MLB’s past season experience, where it had to assume control of production and distribution for the San Diego Padres and Arizona Diamondbacks. Diamond’s failure to fulfill rights payments to the Padres and its inability to strike an amended deal with the Diamondbacks compelled the MLB to step in as a last resort.
Under the terms of the groundbreaking restructuring agreement, Amazon is poised to make a strategic minority investment in Diamond. Simultaneously, the tech giant will enter into a commercial arrangement, leveraging Prime Video to provide access to Diamond’s content, thereby marking a paradigm shift in the landscape of American college baseball and sports broadcasting.
Prime Video channels will soon offer viewers access to their local baseball teams’ content, marking a pivotal moment in Diamond Sports’ restructuring efforts. The pricing and availability details for this service will be disclosed at a later date, ensuring that regional sports content remains accessible through traditional cable and satellite providers.
During a court hearing, an attorney representing Diamond Sports Group emphasized the significance of the agreement in the company’s bankruptcy process, labeling it a “watershed” moment. While MLB and NBA attorneys acknowledged the deal, they pointed out that they were still in the process of reviewing its intricacies, a sentiment echoed by an attorney for the unsecured creditor committee.
Assuring the bankruptcy judge of its commitment, an attorney for Diamond pledged to broadcast games for nine teams throughout the entire 2024 MLB season, honoring current contracts. Additionally, talks are underway with three other teams regarding broadcasting their games at a reduced cost, with the reigning World Series champion Texas Rangers potentially being one of them.
A scheduled hearing between MLB and Diamond Sports Group, initially set for Friday and rescheduled from the prior week, has been postponed indefinitely. Despite facing a March deadline for restructuring plans, Diamond has committed to providing details well in advance of the deadline.
Judge Chris Lopez acknowledged the complexity of the situation in his closing remarks, stating, “There’s a lot to take in, a lot to digest.”
Notably, Amazon Prime already carries games produced by the YES Network, featuring the New York Yankees and Brooklyn Nets. Furthermore, Diamond has reached an agreement in principle with Sinclair to settle pending litigation, supported by Diamond’s creditors involved in the RSA.
Sinclair Broadcast Group’s acquisition of regional sports networks from The Walt Disney Co. in 2019, for nearly $10 billion, played a role in Diamond’s trajectory. As part of the settlement, Sinclair will pay Diamond $495 million and continue to provide services to support Diamond’s reorganization, with the proceeds also addressing outstanding creditor obligations.
Expressing enthusiasm for the comprehensive restructuring agreement, Diamond Sports CEO David Preschlack stated, “We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024.”
Recent agreements with the NHL and NBA secured local rights for Diamond through the current season, while discussions with MLB for upcoming seasons continue, with the next court hearing scheduled for Friday.