A federal judge in Houston on Thursday gave broadcaster Diamond Sports Group the green light to emerge from bankruptcy, wrapping a 20-month saga that roiled the world of sports television.
Diamond, which operates 16 regional sports stations that were recently rebranded with the FanDuel name, is set to leave bankruptcy with a reduced portfolio of 13 NBA teams, eight NHL teams and six MLB teams.
The company is leaning into direct-to-consumer options: any of those teams can be watched in-market via a standalone streaming option that Diamond will sell, and that includes teams that had never been available that way before. One means of subscribing will be through Amazon’s Prime Video, but an additional fee will still be charged. Full pricing hasn’t been announced.
Amidst a drop in traditional TV subscribers because of cord-cutting, Diamond redid virtually all of its most significant contracts, be it with teams or distributors like DirecTV and Comcast. Nonetheless, the possibility Diamond could head for liquidation lingered for most of the proceeding.
“In every case, I’m always thinking about sophisticated parties and debt, but I’m also thinking about other folks,” Judge Chris Lopez said when delivering his ruling. “Today, you’re going to save a lot of jobs.”
“There’s gonna be somebody who’s gonna turn on their television and be able to watch the Detroit Tigers,” the judge continued, “and that’s really important. It sounds not important, but it’s important if you’ve had a stressful day and you want to root for your team and go home and enjoy the game with family. And hardcore fans are hardcore fans, and they want to see their teams play, and rooting for it is just as much as part of the American experience as anything else.”
Diamond said it will carry about $200 million in debt, shedding more than $8 billion. The company acknowledged that it previously had a “materially overleveraged balance sheet with almost $9 billion of funded debt” beforehand.”
Diamond projects that its consolidated earnings before interest, taxes, depreciation and amortization will show a loss of $74 million in 2024, turned around for a $53 million profit next year, $137 million in 2026 and $216 million in 2027.
“I’d love to be able to tell you that I knew with confidence that we would reorganize this business. I thought we would, but I couldn’t tell for certain,” Diamond lawyer Brian Hermann told the courtroom. “We had to not only fix a balance sheet, but we had to fix a business in an industry that is in quite a bit of turmoil.”
Diamond still has skeptics. At times, the proceeding felt like Major League Baseball vs. Diamond Sports Group. MLB was the most critical of Diamond among its three partner leagues — and less than a week ago, the league was hammering Diamond’s financial outlook.
In his remarks Thursday, Lopez reminisced about a point in the case where James Bromley, a lawyer for MLB, told him, “I don’t think this is going to work. I’m just telling you judge, I don’t get it, I don’t see the answers.”
Three formal objections to the plan were filed, but two were pulled Wednesday, on the eve of the confirmation hearing. The withdrawal of an objection filed by MLB and the Atlanta Braves, in particular, lowered the stakes. The judge had carved out two days for the hearing, if necessary, but it wrapped up in just an hour and a half Thursday morning.
“These are incredibly different remarks than I thought I would be making 24 hours ago,” said a lawyer for Diamond, Andrew Goldman. “Over the past 24 hours, the debtors have reached agreement with the Atlanta Braves on revised deal terms, and that agreement allowed the Atlanta Braves comfort in withdrawing their objection to confirmation, which in turn allowed Major League Baseball to withdraw its objection to confirmation.”
All six MLB teams that are staying with Diamond — Atlanta, the Detroit Tigers, Los Angeles Angels, Miami Marlins, St. Louis Cardinals and Tampa Bay Rays — renegotiated their contracts. That includes the Braves, the one team whose contract Diamond had said it intended to move forward with intact. But the last-minute modifications to the Braves’ deal may also have been made at the behest of MLB and the team.
Only one change to their deal was immediately clear: The Braves newly granted Diamond streaming rights.
“Beyond the existing FanDuel Sports Network linear viewing options, fans will now be able to stream games directly from FanDuel Sports Network across a variety of platforms. In the near future, we will also be releasing more ways for fans to find Braves games and content,” Braves President Derek Schiller said in a media release. “With one of the largest territories in professional sports, this agreement is an important step forward in creating more access to our games for our fans who live across Braves country.”
Flexibility could be one of the trade-offs. A big remaining question is whether the six baseball clubs can get out of their deals (or whether their deals simply end) around 2028, when MLB’s national TV contracts are up. That’s the case for the Cardinals, and per the Los Angeles Times, the Angels as well. If MLB wants to sell a national package to a major streaming company at that time, having as many clubs available to bundle is key.
At least some of the six MLB teams took hits to their rights fees. Goldman said Diamond couldn’t move forward “without modifications to those teams’ agreements, so that the amount we were paying those teams fit within our business model and fit within our cash flow projections.”
The Cardinals’ reduction was around 25 percent for 2025 compared to what they were expecting to make under their old deal.
A lot of the work came down to the wire, and some of it is still ongoing. Diamond is continuing to negotiate with the Kansas City Royals over a potential return.
“The Detroit Tigers and their management team and outside advisors were literally around the clock this past weekend to get to a deal with us before we headed down to Houston to start prep for these confirmation hearings,” Goldman said.
Another six teams are not returning to Diamond after last season. One of them, the Cincinnati Reds, announced a couple hours after the hearing Thursday that they’re going to be the seventh team in MLB’s in-house broadcasting portfolio.
The one objection that remained Thursday was from the U.S. Trustee, a representative of the Department of Justice that oversees bankruptcy cases. The U.S. Trustee argued that Diamond’s plan included releases that were too broad in the wake of a U.S. Supreme Court decision from the summer. Lopez said the releases were appropriate.
In a filing Thursday, Diamond told the court it sees huge growth in its direct-to-consumer, or streaming business in coming years: a $19 million consolidated EBITDA projection this year that grows to $117 million, $283 million and $422 million in the following years, respectively.
On the linear side, though, Diamond sees a steady downward trend continuing: $1.4 billion in 2024 drops to $776 million in 2027.
Diamond’s arrival in bankruptcy arguably began the moment the company was created.
In 2018, Disney bought 21st Century Fox, but the Department of Justice stepped in because Disney, which already owned ESPN, was newly acquiring 22 sports stations. Disney agreed to sell the channels.
The next year, the broadcasting company Sinclair bought the networks in a deal that valued the networks at $10.6 billion with an aggregate purchase price of $9.6 billion. At the time, the collection of networks was branded as “FOX Sports” and carried 42 professional teams among them: 14 in MLB, 16 in the NBA and 12 in the NHL.
The deal was heavily leveraged. Sinclair put in $1.4 billion in cash, and at least $8.2 billion in borrowed money was used. A new company was started: Sinclair subsidiary Diamond Sports Group.
In a sliding-doors moment, MLB also bid on the networks. Commissioner Rob Manfred has said he believes things would have worked out better had the league bought them.
“People often say to me: ‘Aren’t you glad you dodged that bullet?’ And, not so much, not so much,” Manfred said in 2023.
Asked then whether he would go back in time and make that $9.6 billion bid again, Manfred said he would.
“We thought that Major League Baseball was best positioned to manage through what we realized was a coming period of change,” Manfred said. “Our bid was really very, very different than the Sinclair bid. They put $8.5 billion dollars of leverage on the $10.5 billion dollar bid, I think I’m right about those numbers. We had some leverage, but it was $3.5 billion. We had a major media player, Liberty Media, as a partner. … We thought that put us in a much better position to have alternatives in order to distribute games.”
Cord-cutting and Diamond’s debt led the company to file for bankruptcy in March 2023.
In court, Manfred said a Sinclair executive, David Smith, had used the threat of bankruptcy as a way to try to convince MLB to grant Diamond more streaming rights.
“‘What I’m going to do is I’m going to keep this going long enough until I get my $2 billion out, OK?’” Smith said, per Manfred’s court testimony. “And then I’m going to start squeezing your clubs to take their rights fees down, OK, in order to make sure that I stay profitable in the RSN business. And if they don’t agree to that, I’m going to put the entity into bankruptcy, and then I’m going to selectively reject contracts.’”
Diamond in 2023 sued Sinclair, accusing Sinclair of draining the company of $1.5 billion. The two companies agreed to split, and Sinclair agreed to pay $495 million to Diamond in a settlement.
On Thursday, Diamond and MLB were playing nice.
“Despite the acrimony that we and Major League Baseball have had at times during these cases, we do look forward to working collaboratively with the Commissioner’s Office,” Goldman said.
The NBA teams carried by Diamond are the Atlanta Hawks, Charlotte Hornets, Cleveland Cavaliers, Detroit Pistons, Indiana Pacers, Los Angeles Clippers, Memphis Grizzlies, Miami Heat, Milwaukee Bucks, Minnesota Timberwolves, Oklahoma City Thunder, Orlando Magic and San Antonio Spurs.
The NHL teams are the Carolina Hurricanes, Columbus Blue Jackets, Detroit Red Wings, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues and Tampa Bay Lightning.
(Photo: Joseph Weiser / Icon Sportswire via Getty Images)
