March 10 (Reuters) – A regional U.S. sports broadcaster has failed to make a scheduled payment to Major League Baseball’s Arizona Diamondbacks, a sign that the company that provides local broadcasts is on the verge of bankruptcy. on television in nearly half of the MLB, National Basketball Association and National. Hockey League teams, according to Reuters sources.
Diamond Sports, a subsidiary of Sinclair Broadcast Group ( SBGI.O ) that operates the “Bally Sports” branded channels, said in a statement on Friday that it has no unpaid debts to the Diamondbacks but continues to pay the bills of the broadcasting rights owed to other teams.
The broadcaster said last month it defaulted on $140 million owed to its lenders, triggering a 30-day grace period on debt covenants. The company said at the time that it would use 30 days to resume talks with creditors and other key stakeholders.
Sources familiar with the negotiations asked on condition of anonymity to speak directly that the talks are expected to lead to a Chapter 11 bankruptcy filing next week.
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In response to a Reuters request for comment on the possible bankruptcy, Diamond Sports and MLB both said the company’s financial constraints will not affect broadcasts for the baseball season that opens March 30. MLB has staffed a new local broadcast division to deliver. alternate broadcasts if necessary, according to an MLB spokesman.
But MLB’s contingency planning for broadcast games cannot replace payments owed by Diamond Sports to the 14 MLB teams that rely on revenue from local TV broadcast deals.
The lost pay amounts to $31 million, according to a source familiar with the matter, which would represent a significant portion of the Diamondbacks’ payroll.
The Diamondbacks declined to comment on the unpaid fee and its impact on the team’s finances.
The bankruptcy filing does not immediately disrupt the broadcasting agreements, but could give Diamond the leverage to renegotiate or terminate the contracts in bankruptcy court.
Diamond is owed more than $1 billion in baseball broadcasting fees by 2023, according to a source familiar with the matter. The company also owns the rights to local broadcasts for the Atlanta Braves, Cincinnati Reds, and Minnesota Twins, among others.
Regional sports broadcasts were once seen as an expensive proposition in cable TV packages, but consumer cord-cutting has made the business model less sustainable.
Reporting by Dietrich Knauth, Editing by Alexia Garamfalvi and Aurora Ellis
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