Sinclair’s play to cash in on the RSN market was doomed from the start, but the TV giant may be saved from potential bankruptcy by the very unions that tried to broadcast it. In the big picture of the Cubs’ Marquee movement, Sinclair — who, not coincidentally, owns the network with Cubs — won the bid to buy 21 former Fox regional sports network from Disney following the acquisition of 21st Century Fox. The debt burden from a highly leveraged $10.6 billion deal has become as unsustainable as Sinclair’s Diamond Sports cash bleeding.
Diamond has rebranded all RSNs with Partnership with gaming giant Bali, which increases the prevalence of gambling in mainstream sports coverage in a futile attempt to generate income. Then they started Launch a standalone app It was supposed to be like Netflix for sports, although the whole thing seemed ill-advised and not nearly enough support from individual leagues and teams.
Would you pay $18 a month to watch five teams from three or four sports? exactly.
I’ve covered all of this extensively over the past three years or so, primarily through the lens of Cubs and Marquee as an interested third party. While there is a clear association with Sinclair, Marquee is clearly separate from those other RSNs – and the same can be said about the Yankees’ Network – and is not lumped with them when it comes to the Application or Diamond (mistake) management. However, Cubs would definitely have an interest if there was a way to extend Marquee’s reach with a bigger play.
It could come as part of a potential purchase of Diamond Sports by the MLB, NBA and NHL. according to Reporting by Josh Kosman From the New York Post, the three sports leagues are expected to start talks to negotiate a purchase deal at a deeply discounted price. Kosman writes that Diamond “may bring in $3 billion including its debt, which is currently trading at a deeply discounted $2 billion.” Yes.
The expectation is that Sinclair will want to hand the equity over to its creditors — primarily the hedge funds that have taken on all that bad debt — who will then sell to the unions. If such a deal is not reached, “technically insolvent” diamonds may have to file for bankruptcy by early next year. This wouldn’t necessarily be the worst thing for Diamond, who would be able to continue streaming games without paying the rights fees to teams due to the registration protection.
Kosman notes that a group that buys RSNs from bankruptcy will also be able to invalidate existing broadcast rights deals and renegotiate cheaper deals. The leagues obviously don’t want that to happen, seeing as how these fees represent a significant portion of the annual revenue. Diamond could try to use that as a bargaining chip, although it’s hard to see a buyer other than the sports leagues having an interest.
MLB has been playing a tricky role all along, and her lack of involvement was a big part of what kept Diamond’s idea from really taking off. Commissioner Rob Manfred has been highly critical of the attempt in the past and may have been watching this end game in some way or form for a while. Without baseball’s help carrying the service into the summer months, the streaming service really doesn’t stand a chance.
I really have no idea where this is headed, but it certainly seems to be in the best interest of all parties involved for the leagues to buy radio. This could result in something like Marquee Mode, which was less than great for Cubs fans, with one big difference. If leagues control the majority of broadcast partners, they can open broadcasts and override blackout rules ostensibly set in place to protect local rights.
We’ll have more on this as the details emerge, particularly as it affects the Cubs and fans throughout the very broad “domestic” market.