Back in 2017, when Disney announced it was going to purchase 20th Century Fox, it was required by the Justice Department to sell the Bally Sports channels, once it completed its acquisition.  Sinclair Broadcasting spent over $10 billion buying the channels and along with Entertainment Studios, created a new company called Diamond Sports Group.

But since then, with the entire linear television business struggling to adapt to changing consumer habits, and shifting to streaming services, sports coverage is going through some major issues, as traditional operators such as Bally Sports struggle to attract viewers.  The sports teams are also in a tricky situation, as they rely on the sports broadcasting rights to help pay for running the team, which includes huge salaries for the players.

Earlier this year, the Diamond Sports Group, filed for bankruptcy, as it tried to restructure in order to provide coverage of 40 major sports teams in the US to cable customers.  Diamond owes money to both the National Basketball Association and National Hockey League, and is due to make a rights payment to them this week, and the existing distribution deal is up for renewal in the next few months.   It also has lots of deals with Major Baseball League teams, which due to the bankruptcy, has resulted in a new deal being made with MLB.TV since Diamond Sports couldn’t pay the teams as required.

Many of the major networks are adjusting their plans for sports broadcasting, as the cable linear system breaks down, the days of sports content being paid for by every viewer, regardless of whether they watched it or not, are coming to an end.  Customers want cheaper entertainment and more choices, so are less likely to want to pay for expensive packages they don’t want.

Diamond is asking for a longer rights deal than it currently has, which runs year to year, and to pay less for those rights.  According to a new report from the Wall Street Journal, Bally Sports is hoping to strike a new deal with YouTube TV and Hulu+Live TV to get the sports channels onto their live-streaming services.

Both YouTube TV and Hulu+Live TV have previously carried the Bally Sports RSN channels, but in 2020, stepped away, when Sinclair wanted over $300 million from these channels and was told they weren’t worth the cost.  Bally Sports wants to sign this new deal in order to get enough money together to secure the rights to the NHL and NBA.     The company is hoping it will be able to offer its own streaming service BallySports+ on YouTube TV and Hulu+Live TV for $19.99 a month to increase revenue.

Diamond Sports is also in negotiations with Comcast to extend their carriage deal, but also isn’t happy signing long-term contracts given the current legal situation.    However, it has recently been able to sign a year extension with DirecTV.   Should Bally Sports not pay the NBA teams on time, the NBA is already making plans to launch content directly through the NBA app and other networks.

Just this week, there has been a two-day mediation meeting between Diamond Sports, Sinclair, its creditors and representatives of the NBA, MLB and NHL, to come to an agreement on how to move forward.  After these meetings, no agreement was made and negotiations continue, but with over $8 billion of debt stemming from the purchase of the channels from Disney, it’s been trying to extend its bankruptcy deals to try to work its way out of the situation.   Some creditors are considering just winding down the company, while others are hoping they can renegotiate their deals to get them out of this situation.

And with other streaming services and broadcasters looking to acquire sports rights, things may get a little more tricky for Diamond Sports. With the bankruptcy still hanging over Diamond Sports, this makes it much more risky for both the clubs that sign deals to distribute their games and for networks to pay out for channels which might not even have the content they are paying for.

With Disney getting ready to launch its new full direct-to-consumer ESPN streaming platform in the next few years, and with its own ESPN channels and ESPN+ app, will Disney want to add Bally Sports onto Hulu+Live TV, plus will Disney want to spend more money out right now on sports rights that it hasn’t had for years, when it’s trying to reduce costs and complete the purchase of Comcast’s stake in Hulu?

Ultimately, we are seeing how the companies are trying to readjust to a change in consumer habits, but do you think Bally Sports will survive?

Roger Palmer

Roger has been a Disney fan since he was a kid and this interest has grown over the years. He has visited Disney Parks around the globe and has a vast collection of Disney movies and collectibles. He is the owner of What's On Disney Plus & DisKingdom. Email: Roger@WhatsOnDisneyPlus.com Twitter: Twitter.com/RogPalmerUK Facebook: Facebook.com/rogpalmeruk

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