Diamond Sports Group, the largest U.S. operator of regional sports networks (RSNs), on Wednesday unveiled a so-called restructuring support agreement (RSA) with creditors, saying that it “provides a framework for a reorganization plan that would enable Diamond to emerge from bankruptcy as a going concern and continue its operations.” Under the framework, Amazon will make a minority investment in the company, details of which weren’t immediately disclosed, and become its streaming partner, while TV station giant and Diamond parent Sinclair will make a $495 million cash payment to the firm to settle litigation.
The RSA also includes the promise from certain debt holders to provide $450 million in financing to support Diamond’s operations as it finalizes a reorganization plan to emerge from Chapter 11 bankruptcy and to repay $350 million of existing debt.
Diamond operates 19 RSNs under the Bally Sports brand name, with games from more than half of all MLB, NBA and NHL teams.
The agreement in principle with Sinclair is designed “to settle the pending litigation between the companies and the other named defendants,” Diamond said. Under it, Sinclair will also provide “ongoing management and transition services to support Diamond’s reorganization and separation from Sinclair’s operations,” it highlighted. “Under the RSA, the proceeds from the Sinclair settlement will be used to support the reorganization plan and fund distributions to certain creditors.”
Sinclair said that the settlement calls for Diamond’s “withdrawal of its $1.5 billion litigation against Sinclair and all other defendants, along with the full and final satisfaction and release of all claims in that litigation against all defendants, including Sinclair and its subsidiaries.” It said the payment of $495 million is estimated to result in a net cost to Sinclair of approximately $250 million to $325 million “after considering corresponding tax benefits, additional management services agreement payments to Sinclair Television Group and other assets and value to be received by Sinclair in connection with the settlement.”
Meanwhile, Amazon is set to enter a commercial arrangement to provide access to Diamond’s services via Prime Video, making the latter “Diamond’s primary partner through which customers will be able to purchase direct-to-consumer (DTC) access to stream local Diamond channels,” the company said. “Customers will be able to access all local DTC content, including live MLB, NBA and NHL games, and pre- and post-game programming, for the teams for which Diamond retains DTC rights, through Prime Video Channels.” Details regarding pricing and availability will be announced at a later date.
In addition, Diamond said it would continue partnering with its existing distribution partners to broadcast its MLB, NBA and NHL content.
Diamond’s RSA is with its largest creditor groups, including more 85 percent of the company’s first lien debt holders, more than 50 percent of its second lien debt holders, and more than 66 percent of unsecured bond holders.
“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,” said Diamond CEO David Preschlack. “We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond’s near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern.”
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