Amazon will acquire Diamond Sports as a component of a bankruptcy transaction.
To avoid bankruptcy, Amazon will form a partnership with Diamond Sports under the terms of a reorganization agreement.
Diamond Sports is the largest owner of regional sports networks. 18 networks are owned by Diamond under the Bally sporting banner.
These networks own the broadcasting rights to 37 leagues, including eleven in the MLB, fifteen in the NBA, and eleven in the NHL.
Chapter 11 bankruptcy proceedings have been ongoing in the Southern District in Texas since March of last year, when Diamond Sports filed for protection.
In a financial filing from late 2021, the organization disclosed that it owed $8.67 billion in debt.
Diamond Sports made a public declaration regarding the terms of the agreement on Wednesday morning. Amazon did not respond. Its approval by the liquidation court is still pending.
By reaching an agreement with its largest creditors, Diamond Sports can avoid bankruptcy, sustain operations, and avert a complete collapse in the regional sports network system.
Such a scenario would have required the NBA, NHL, and MLB to assume responsibility for the production and distribution of the majority of their teams.
MLB was forced to assume production and distribution responsibilities for the Arizona Diamondbacks and San Diego Padres during the previous season due to Diamond’s failure to make payment on let rights to the Padres and its inability to reach an amended agreement with the Diamondbacks.
As part of the reorganization agreement, Amazon will establish a commercial partnership with Diamond and acquire a minority stake in the latter. In exchange, Amazon will grant Prime Video access to Diamond’s content.
Customers will have the ability to view the content of their local team on Prime Video channels in which Diamond possesses rights.
At a later time, pricing and availability information will be disclosed. Moreover, satellite and cable television companies will continue to offer regional sports programming.
Later on Wednesday, at a court hearing, an attorney over Diamond Sports Group referred to the agreement as a “watershed moment” in the company’s bankruptcy proceedings.
The attorney refrained from specifying the names of the final three teams, but one of them is the defending World Series champ Texas Rangers.
However, MLB and NBA attorneys noted that the leagues had only recently been informed of the deal and still had much to sift through; an attorney for the unsecured debt committee later echoed this sentiment.
A Diamond attorney assured the bankruptcy trustee that the company will broadcast all nine clubs from its portfolio for the duration of the 2024 Major League Baseball season and will pay the creditors the amount owed under its current contract.
Additionally, the attorney stated that negotiations are underway with three other teams regarding the broadcasting of their games at a reduced fee.
A previously scheduled hearing between Major League Baseball and Diamond Sports Group, which was rescheduled in last Wednesday to Friday, has been postponed indefinitely.
In the past, Diamond was obligated to finalize a restructuring plan by March. However, the company now asserts that it will furnish comprehensive information regarding its novel arrangement well in advance of that date.
Local team games have long been inaccessible to YouTubeTV users who do not have a subscription to Bally Sports’ streaming service.
Amazon acquired a minority stake within the company, Diamond announced on Wednesday, as part of the company’s bankruptcy restructuring.
More importantly, for sports enthusiasts nationwide, the investment made by Amazon in the organization guarantees that local fans will have access to Bally Sports channel games via Amazon Prime.
Although local television contracts exist between Bally Sports and regional affiliates of nearly 40 teams in MLB, NBA, and NHL, not all television companies have agreements with the Bally Sports networks.
Dozens of professional sports teams nationwide may find respite in an uncertain television world with the agreement with Amazon and other creditors.
In August 2019, Sinclair’s Diamond Sports Group acquired the Fox Sporting regional sports networks after Disney’s divestiture of the networks from 21st Century Fox, which was mandated by the US Department of Justice.
A period of transitioning away from traditional satellite and cable television services was coinciding with Diamond’s acquisition, and companies including YouTubeTV as well as others were unwilling to pay Diamond’s asking price to carry regional sports networks.
Deals with local television networks provide MLB, NBA, and NHL teams with a substantial revenue stream. Local rights are held by Bally networks for 37 teams, including 11 MLB groups, 15 NBA teams, and 11 NHL teams.