Diamond Sports Group, which operates regional sports networks that televise nearly half of all MLB, NBA and NHL games, filed for Chapter 11 bankruptcy protection Tuesday.
Diamond is owned by Sinclair Broadcasting Group Inc. SBGI, +1.67%, and operates its networks under the Bally Sports name.
In a statement Tuesday, Diamond said it was finalizing a restructuring agreement to eliminate over $8 billion in debt and strengthen its balance sheet. The company said it will continue to operate during the proceedings, and will continue to broadcast games.
Under the pending deal, Diamond will split off from Sinclair and become a standalone company.
“The DSG Board of Managers has been evaluating strategic opportunities with the support of its advisers and in coordination with creditors to position the company for long-term success and has determined that the best path forward for the company and its stakeholders is to restructure through a Chapter 11 process,” Diamond Chief Executive David Preschlack said in a statement. “DSG will continue broadcasting games and connecting fans across the country with the sports and teams they love. With the support of our creditors, we expect to execute a prompt and efficient reorganization and to emerge from the restructuring process as a stronger company.”
Diamond operates 19 regional sports networks and broadcasts games for 14 MLB, 16 NBA, 12 NHL and five WNBA teams, in major markets such as Southern California, Atlanta, Dallas, Detroit, St. Louis, Miami, Phoenix and Minneapolis.
In February, Diamond skipped $140 million in interest payments on debt and said it would use a 30-day grace period to reorganize its finances.
Regional sports networks have been bleeding money in recent years, as viewers have dropped their cable TV subscriptions in favor of streaming. That has led to slumping revenue and shortfalls against the massive, long-term broadcasting deals networks have made with pro sports leagues.
Sinclair bought the regional sports networks from the Walt Disney Co. DIS, +0.82% in 2019 for about $1 billion, as part of Disney’s merger with 21st Century Fox.
With roughly $1 billion in broadcast revenue at stake, Major League Baseball has expressed alarm over Diamond’s financial struggles. In February, MLB Commissioner Rob Manfred said the league was prepared for any eventuality, including potentially taking over local broadcasts and eliminating blackout rules.
Sinclair shares are down 6% year to date, and have fallen 44% over the past 12 months, compared to the S&P 500’s SPX, +1.65% 2% gain in 2023 and 8% decline over the past year.
This article was originally published by Marketwatch.com. Read the original article here.