The buyer was Sinclair Broadcast Group, the second largest local TV station owner in the country, mainly known for controversies related to how those stations cover news. (Sinclair also owns cable’s Tennis Channel among other properties.) Sinclair transacted the $10.6 billion Fox Sports purchase with over $8 billion in debt. So disabuse yourself of the idea this financial crisis is about cord-cutting, a corporate parent that doesn’t “get” sports, or MLB’s archaic broadcast blackout maps. It’s about over-leverage, pure and simple. $8.2 billion of it, to be precise. (In case you were wondering, Sinclair sunk $1.5 billion of its cash into Diamond Sports Group (DSG), so it will not walk away from this whole.)
Wait, so you’re saying Bally’s isn’t in trouble?
No, never said that, but it’s not a basket case.
In 2021 and for the parts of 2022 for which financials are available, Diamond Sports had gross profits in excess of $400 million. Meaning it’s not a distressed business when stripped of all that debt. Additionally, it’s continuing to sign market-rate renewals with sports franchises all over the country. Sports Business Journal reported this week that DSG just signed a rights deal with the NHL’s Tampa Bay Lightning and the NBA’s LA Clippers, New Orleans Pelicans, and Indiana Pacers. Additionally, according to Ben Clemens of the respected baseball website Fangraphs, as recently as 2021 DSG signed the Milwaukee Brewers, Kansas City Royals, and Miami Marlins to multi-year rights deals all worth north of $40 million a year, which are “in-line” with rights fees signed by Fox and other RSNs a half-decade ago. If the sky is falling for the value of these rights, it’s not evident.
That said, the RSN business is “significantly challenged,” said one sports executive I spoke to who didn’t want to be named. RSNs are almost exclusively distributed on cable and satellite TV and cord-cutting is a trend that is only growing.
https://tcbmag.com/the-bally-sports-mess-explained/