By Dietrich Knauth and Samrhitha A
(Reuters) -Regional sports programmer Diamond Sports Group, a unit of Sinclair Broadcast, said on Wednesday it has signed an agreement with a group of creditors to emerge from bankruptcy and will get funding from Amazon.com as part of a streaming deal.
Diamond, which operates regional sports channels under the Bally Sports brand, said it will receive $450 million in financing from the creditor group, $495 million from Sinclair and $115 million from Amazon. Diamond will use the funds to pay down older debts and continue operations. Amazon will take a minority equity stake in Diamond as part of the deal.
Shares of Sinclair rose more than 17% on the day, closing at $16.05.
Diamond filed for bankruptcy in March 2023 after getting caught between expensive broadcast rights agreements and cord-cutting by sports viewers.
Amazon’s Prime Video will now become the primary partner through which customers can buy direct-to-consumer (DTC) access to stream Diamond’s local channels, which carry the games of more than 40 major sports teams across the United States. That would give Prime Video viewers access to content including live MLB, NBA and NHL games, and pre- and post-game programming for the teams for which Diamond has DTC rights.
Before the Amazon deal, the company was prepared to wind down its business at the end of the 2024, Diamond’s attorney Brian Hermann said during a bankruptcy court hearing in Houston on Wednesday.
Providing a “lifeline” to Diamond will allow Amazon to “quickly expand its sports streaming options and to develop relationships with local TV advertisers that support regional sports networks,” Insider Intelligence senior analyst Ross Benes said.
Separately, Diamond said it reached a deal with Sinclair to settle pending litigation that alleged the parent company fraudulently withdrew as much as $1.5 billion from the regional sports business.
Under the settlement, Sinclair will pay Diamond $495 million in cash and provide ongoing management and transition services to support its reorganization and separation from the parent’s operations. The bankruptcy deal will also phase out Diamond Sports’ naming rights agreement with Bally’s after the 2024 baseball season.
MLB, which has opposed Diamond’s effort to stream more baseball games online, said that it had expected Diamond to shut down, and would need more time to review the company’s new agreements with Amazon and its creditors.
“All of this came as a surprise,” MLB’s attorney James Bromley said in court.
While Diamond will broadcast 2024 MLB games for nine teams, it has not yet reached a resolution with the Texas Rangers, Cleveland Guardians or Minnesota Twins. Diamond expects to get a decision from those three teams by Feb. 1 on whether they will continue their TV broadcast contracts for 2024, Hermann said in court.
Earlier in its bankruptcy, Diamond stopped broadcasting games for two MLB teams, the San Diego Padres and Arizona Diamondbacks.
(Reporting by Samrhitha Arunasalam in Bengaluru and Dietrich Knauth in New York; Additional reporting by Jaspreet Singh in Bengaluru; Editing by Will Dunham, Shilpi Majumdar and Shailesh Kuber)
