Amazon will invest in Diamond Sports as part of a bankruptcy restructuring agreement
Amazon will partner with Diamond Sports as part of a restructuring agreement as the largest owner of regional sports networks looks to emerge from bankruptcy.
Diamond owns 18 networks under the Bally Sports banner. Those networks have the rights to 37 professional teams — 11 baseball, 15 NBA and 11 NHL.
Diamond Sports has been in Chapter 11 bankruptcy proceedings in the Southern District of Texas since it filed for protection last March. The company said in a late 2021 financial filing that it had debt of $8.67 billion.
The terms of the agreement were announced by Diamond Sports on Wednesday morning and then presented before Judge Christopher Lopez at an afternoon hearing in Houston.
"There's lots to digest, especially when you consider where things were the fourth quarter of last year," Lopez said at the end of the hearing. "It is certainly a very interesting development to say the least. The thought the company is moving in this direction is a positive development."
Diamond Sports had been negotiating deals with all of the leagues, which would have been completed by the end of the coming baseball season.
The NBA and NHL both said they have received the documents and were reviewing them before discussing next steps with Diamond. Major League Baseball was more pointed in its evaluation.
"There is a lot to digest. It is unable to be digested because it hasn't been purchased, cooked or served. When we get to that point, we will look at it and figure out whether it is able to be digested," MLB lawyer James Bromley said during the hearing. "We will refrain from adding congratulations until such time that something is actually delivered."
Amazon had no immediate comment. The agreement remains subject to approval by the bankruptcy court.
The agreement with Diamond Sports' largest creditors allows it to emerge from bankruptcy and continue operations and prevents a total collapse of the regional sports network system where the NBA, NHL and MLB would have to step in to take over production and distribution of most of their teams.
Last season, MLB had to take over production and distribution of the San Diego Padres and Arizona Diamondbacks games after Diamond let rights payments to the Padres lapse and was unable to agree to an amended deal with the Diamondbacks.
Under the terms of the restructuring agreement, Amazon will make a minority investment in Diamond — expected to be initially $115 million — and enter into a commercial arrangement to provide access to Diamond's content via Prime Video.
Customers will be able to access their local team's content on Prime Video channels where Diamond has rights. Pricing and availability will be announced at a later date, but it is unlikely that this content would be available as benefit included for current Prime subscribers. Regional sports content will also remain available on cable and satellite providers.
Amazon Prime already carries some New York Yankees and Brooklyn Nets games produced by the YES Network.
Due to the complexity of this bankruptcy case, though, it could take a while before games become available on Prime Video.
Diamond also has an agreement in principle with Sinclair Broadcast Group to settle pending litigation between the companies.
Sinclair bought the regional sports networks from The Walt Disney Co. for nearly $10 billion in 2019. Disney was required by the Department of Justice to sell the networks for its acquisition of 21st Century Fox's film and television assets to be approved.
Even before Sinclair bought the regional networks, the business was in a downturn due to cord-cutting and declines in advertising revenue after entering into exorbitant long-term deals with some teams.
Under an agreement with creditors last year, Diamond Sports Group became a separate company from Sinclair.
As part of the settlement, Sinclair will pay Diamond $495 million and provide ongoing services to support Diamond's reorganization. The proceeds from the settlement also will pay off some creditors.
"We are thrilled to have reached a comprehensive restructuring agreement that provides a detailed framework for a reorganization plan and substantial new financing that will enable Diamond to operate and thrive beyond 2024," Diamond Sports CEO David Preschlack said in a statement. "We are grateful for the support from Amazon and a group of our largest creditors who clearly believe in the value-creating potential of this business. Diamond's near-term focus will be on implementing the RSA and emerging from bankruptcy as a going concern for the benefit of our investors, our employees, our team, league and distribution partners, and the millions of fans who will continue to enjoy our broadcasts."
Diamond recently reached agreements with the NHL and NBA to keep local rights through the end of this season.
It remains in discussions with MLB on reworked agreements. Diamond has not reached amended terms with the defending World Series champion Texas Rangers and Cleveland Guardians, while its contract with the Minnesota Twins expired at the end of last season.
Amazon, though, has acquired direct-to-consumer rights for the Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays.