Apr 8, 2023; Dallas, Texas, USA; A view of the Bally Sports logo and a Dallas Stars fan with a sign for left wing Jamie Benn before the game between the Dallas and the Vegas Golden Knights at the American Airlines Center. Mandatory Credit: Jerome Miron-USA TODAY Sports

Diamond Sports Group, parent company of Bally Sports Regional Networks, brushed aside concerns raised about its ongoing bankruptcy process and said it was in talks with the NBA and NHL about next season’s broadcast and digital rights.

At a bankruptcy hearing today, lawyers for the bankrupt DSG described the NBA and NHL’s concerns as “confused” and pledged the company is well on its way to emerging from Chapter 11.

The two leagues argued that DSG’s motion–since approved–to extend by four months to November the period where third parties are disallowed from offering competing plans of reorganization (known as the exclusivity period) threatened the ‘24-’25 seasons for the 26 teams in the NBA and NHL under contract with Bally Sports.

“With respect to exclusivity, Your Honor, again, thank you for entering that order…as you know, but perhaps others may have been confused,” said DSG outside counsel Brian Herman. “That was really a prophylactic motion and now a prophylactic order in the sense that we’ve already filed our (reorganization) plan. And we’re obviously pursuing it aggressively. So that’s not an issue. And we have a timeline that we’ve laid out. So that’s pretty clear. The whole purpose of that motion was just to make sure that we didn’t have the distraction of somebody else filing a competing plan.”

That plan is teed up for confirmation in the summer, Herman said, suggesting the NBA and NHL would not enter the fall not knowing the terms of their broadcast deals with DSG.

The NBA had legal representatives at the virtual hearing but they did not speak. No representative from the NHL was identified.

MLB has expressed its own concerns about the economics of DSG, even as the court today affirmed DSG’s disclosure statement, which includes a series of economic projections. While Bally Sports recently inked a new distribution deal with Charter, it still hasn’t with Comcast and DirecTV. Those three are the principal distributors of DSG’s 17 RSNs.

And MLB said at the hearing it has received no data as to the economics of the Charter deal.

“There’s been no information as to what substance of that transaction, the economics,” said James Bromley, outside counsel for MLB. Like the NBA and NHL, MLB reserved its rights to sue DSG during the Chapter 11.

However, neither of the leagues objected to the approval of the disclosure statement today, noted DSG outside counsel Alice Nofzinger.

“The disclosure statement has been subject to extensive review and comments by our various stakeholders over the last several months, and in particular, to highlight for your honor, a draft of the disclosure statement was shared with the NBA, the NHL and MLB in advance of filing,” she said. “The debtors have not yet completed certain key commercial negotiations in connection with their go forward business plan. As demonstrated by the recently announced multi year renewal of Charter, debtors have been hard at work negotiating these go forward contracts. And we’re going to continue to work with counterparties, including our league and team partners to finalize these negotiations in advance of confirmation.”

That includes retaining digital rights to the NBA and NHL teams for next season and beyond, and renegotiating contracts for linear distribution.

“On the league and team front, we have proposals in front of both the NBA and the NHL for longer term rights deals involving both linear rights fee modifications as well as digital rights,” Herman said.

“A few weeks ago, the company announced a milestone transaction with Charter, which is one of the three largest distributors, which is a multi year deal that would take effect once the company were to emerge from bankruptcy. And that is a hugely important step for the company in terms of taking another big step forward towards implementing our plan of reorganization. discussions continue with the other two big distributors, which are DirecTV and Comcast and we remain optimistic and confident that we will be able to reach agreements with both.”

DSG did agree to a joint status conference in early May before the court with the leagues to assuage their fears of DSG being able to deliver the broadcasts.

DSG filed Chapter 11 in March 2023 after years of cord cutting, and steep debt incurred from the acquisition of the RSNs by Sinclair. Even with the reorganization, DSG projects revenue will continue to decline. In 2024 linear revenues are projected to be $2.16 billion, falling to $1.65 billion in 2026. DSG also envisions negotiating lower rights fee payments, projected those expenses to be $1.65 billion this year and $1.42 billion in 2026.

About Daniel Kaplan

Daniel Kaplan has been covering the business of sports for more than two decades. A proud founding reporter of SportsBusiness Journal, he spent the last four years at The Athletic.