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MLB, NBA and NHL may buy biggest owner of regional sports TV networks: sources

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MLB, the NBA and the NHL may orchestrate a buyout of the nation’s dominant owner of regional sports TV networks, whose shaky funds pose an increasing threat to their teams, The Post has learned.

The trio of pro-sports leagues are expected to soon begin talks with Diamond Sports, which operates 21 regional Bally Sports networks that account for greater than half the local broadcast markets across the country, sources near the situation said.

A prospective deal is looming as Diamond — owned by Baltimore-based Sinclair Broadcast Group — has been hemorrhaging money and might be headed for a possible bankruptcy filing if it doesn’t discover a white knight in the approaching months, the sources claimed.

Sinclair in early 2019 won an auction to purchase Fox Sports Networks from twenty first Century Fox for $10.6 billion, giving it exclusive rights to broadcast the games of 42 teams. These included 14 MLB teams just like the St. Louis Cardinals and San Diego Padres; 16 NBA teams including the Miami Heat; and 12 NHL teams including the Detroit Red Wings.

Sinclair in early 2019 won an auction to purchase Fox Sports Networks from twenty first Century Fox for $10.6 billion, giving it exclusive rights to broadcast the games of 42 teams. These included 14 MLB teams.Bally Sports

Game between Cincinnati Reds vs. St. Louis CardinalsThe Cardinals are one among the teams broadcast by Bally Sports.AP

But soon after the buyout, cable TV giants including Charter Communications and Comcast began slashing the fees they were willing to pay for sports amid rampant cord cutting. Meanwhile, satellite-TV provider Dish dropped out of regional sports networks altogether, sparking losses for the so-called RSNs that haven’t let up since.

twenty first Century Fox shares a standard owner with News Corp., the publisher of the Recent York Post.

Now, insiders say Diamond might fetch $3 billion including its debt, which is currently trading at a heavily-discounted $2 billion. Sinclair is anticipated to propose giving over Diamond’s equity to creditors who would then sell a lot of the operation to MLB, the NBA and the NHL while Diamond retains a minority stake within the business, the sources said.

“They are going to offer it to all three leagues,” one source near the talks said. “There may be an affordable likelihood this can all occur. That’s where that is heading.”

Sinclair CEO Chris RipleySinclair CEO Chris RipleySinclair Broadcast Group

If a deal isn’t reached in what’s being described as a “grand solution,” there’s a growing possibility creditors — mostly hedge funds which have scooped up Diamond’s distressed debt — could force Diamond and its Bally RSNs out of business in the following three to 6 months, sources said.  

While Diamond does have the money readily available to survive through next 12 months, it’s technically insolvent and creditors could soon force it out of business, sources near the situation said.

“I think Diamond is getting pressure from hedge funds to call the liquidation query early,” a source near Diamond opined.

A source near Sinclair told The Post that creditors are overstating their ability to force a bankruptcy.

Diamond doesn’t control the rights for any of the Recent York City teams. It pays the teams for the local broadcast rights in sometimes 25-year deals after which sells broadcasts to cable and satellite firms on almost an annual basis planning to make a profit.

Diamond has been telling the leagues in recent days if it goes bankrupt it would find a way to maintain broadcasting games, but won’t must pay teams their rights fees as it would have protection from creditors, sources near the talks said.

Rangers vs. Detroit Red WingsDiamond doesn’t control the rights for any of the Recent York City teams. JASON SZENES FOR THE NEW YORK PO

In a bankruptcy scenario, a buyer of the RSNs also could resolve to reject existing broadcast rights contracts which are too expensive and arrange for cheaper deals, sources said. With some teams getting as much as 30% of their revenue from RSN rights, a prospective bankruptcy could hit team payrolls, insiders claimed.

“That’s Diamond’s bargaining chip,” a big debt investor following the situation said.

One league official told The Post the leagues are working on a contingency plan. MLB, for one, is ready to broadcast games in local markets, charging cable firms the same old fees and passing the proceeds to team owners until Diamond emerges from bankruptcy.

“Speculation raised by anonymous sources is just that, speculation,” a spokesperson for Sinclair told The Post on Tuesday. “We enjoy the total support from the teams, NBA and NHL leagues, and sit up for continuing our work with them to rework the RSN model.”

Meanwhile, it’s MLB which in recent months has effectively ended Diamond’s last best hope of surviving by itself, in response to some insiders.

Diamond on Sept. 26 is launching an over-the-top streaming service so consumers pays a roughly $20 monthly fee and watch games of their home markets and not using a cable subscription. Since MLB teams are the one ones playing in the summertime months it’s seen as essential to Diamond’s success.

Nonetheless, MLB has transferred streaming rights for less than five of 14 teams, demanding extra fees at the same time as Diamond has argued those rights needs to be included in its existing contracts with the teams — privately blaming MLB Commissioner Rob Manfred within the dispute, sources claimed.

MLB commissioner Rob Manfred MLB Commissioner Rob Manfred has been blamed within the streaming rights dispute, sources said.Corey Sipkin for the NY POST

“The teams feel Sinclair is being low-cost and using the commissioner as an excuse,” an MLB team owner told The Post.

MLB and the NHL declined comment. An NBA spokesman said the story will not be true, declining to offer any specifics.

MLB, meanwhile, has been considering the launch of its own streaming service that will carry local games as early as next 12 months, The Post reported exclusively in October. Elsewhere, Amazon has the potential now to broadcast local games and air them on a regional basis, sources said. So does Apple, ESPN plus and even NBC’s Peacock.

In early 2019, MLB had teamed up with Liberty Media in an unsuccessful bid against Sinclair for the Fox sports networks Disney was spinning off as a part of its deal to purchase twenty first Century Fox. After Sinclair won the Fox RSNs, it projected their 2019 Ebitda can be $1.6 billion.

St. Louis Cardinals' Albert PujolsDiamond might fetch $3 billion for its regional sports networks, insiders said.AP

It has been a rough ride downhill since. Sinclair’s Diamond reported Aug. 30 that full 12 months Ebitda, or earnings before interest, taxes, depreciation and amortization, would fall to between $183 million and $200 million.

Meanwhile, Diamond has $8.5 billion of debt and pays about $450 million in annual interest payments so it’s spending double what it makes on just the interest on its junk-rated debt. Probably the most junior debt is now trading at around 20 cents on the dollar.

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