Diamond lands $115M Amazon investment to help exit bankruptcy
Diamond Sports Group has formalized its plan to exit Chapter 11 bankruptcy later this year in a deal that includes a $115 million investment from Amazon.
Why it matters: This puts the beleaguered RSN giant on a path to continue operating after this year and saves many pro teams from having to find new TV partners.
Details: Wednesday's announcement is part of Diamond's restructuring support agreement (RSA) with its creditors.
- The deal with Amazon will see the tech giant take a minority stake as well as become the streaming home for Bally Sports Networks' games. Bally carries more than 40 teams on its TV networks and has streaming rights for all the NBA and NHL teams that it carries, as well as five of its 11 MLB teams.
- Amazon has an option to invest an additional $50 million.
- The RSA includes an additional $450 million in financing from certain debt holders to support its operations and repay $350 million of its existing debt.
- Additionally, Diamond settled its $1.5b fraud lawsuit with parent company Sinclair for $495 million.
- The agreements still have to be approved by a bankruptcy judge. A hearing will take place Wednesday.
Of note: The RSA overrides Diamond's previous cooperation agreement with its creditors and cancels the amended rights deals the company had struck with the NBA and NHL.
- Diamond will be able to pay all of its rights fees for its current seasons and maintain its TV deals that were set to continue after 2024.
- Those amended rights deals would have seen all of Diamond's TV contracts expire after 2024.
The big picture: The deal marks Amazon's biggest move into the local sports business and makes the tech giant arguably the most important player in whatever future the RSN business has.
- Live sports are becoming more essential to Amazon's streaming ambitions as the company seeks more ad dollars.
- The deal comes after the exit of the streamer's No. 2 sports executive, Marie Donoghue.
- Amazon is expected to bid heavily for NBA rights, which expire in 2025, once the league's exclusive negotiating window expires with Disney and Warner Bros. Discovery later this spring.
Be smart: The RSN business is careening toward extinction amid the rise of cord-cutting and more sports moving to streaming. Diamond's fate would decide just how much life that industry has left.
- Diamond had already walked away from numerous rights deals while it was in bankruptcy as it looked to shore up its balance sheet — it turned away the Arizona Diamondbacks and San Diego Padres. It could still drop more MLB teams before the season starts.
- The high fees paid by Diamond and other RSNs contribute heavily to teams' bottom lines; the uncertain fate of those TV deals has led some teams to cut payroll.