Amazon makes local sports deal, giving broadcaster new life

The deal, subject to bankruptcy court approval, calls for Diamond to emerge from Chapter 11 proceedings with beefed-up finances and Amazon’s Prime Video platform as its main streaming partner, according to a statement on Wednesday.

The company — a unit of Sinclair Inc. — was finalizing a plan to wind down after the 2024 sports seasons when talks with Amazon about a streaming deal began late last year. Now, key creditors have agreed to swap their holdings for stock in Diamond and put in new money. At the same time, Amazon also agreed to make a minority investment in the company, according to the statement.

The deal will allow sports fans to purchase access to local Diamond channels through Amazon’s Prime Video platform and watch live MLB, NBA and NHL games for the sports teams where Diamond holds so-called direct-to-consumer rights. Diamond will also look for a new naming rights arrangement for its channels, which currently use the name Bally Sports, according to company filings.

Some creditors agreed to provide $450 million of new financing, with the proceeds used to repay $350 million to senior debt holders and support continuing operations, according to the statement. Consenting lenders include more than 85% of the first-lien debt holders, as well as more than half of second-lien creditors and around two-thirds of unsecured bondholders. According to company filings, Amazon’s investment would come in the form of debt that it can convert to equity.

Lower-ranking creditors are sceptical about the new, proposed bankruptcy loan that would help fund the case for the next few months, said Scott L. Alberino, a lawyer for the official committee of unsecured creditors. That loan contains huge fees that will benefit senior lenders at the expense of unsecured creditors, Alberino said.

Officials at Major League Baseball were caught off-guard by the proposed deal, MLB bankruptcy attorney James Bromley said during a court hearing held by video on Wednesday. Baseball officials will review the proposal before deciding whether to drop their objections to the bankruptcy case.

The Amazon deal was “a complete shock,” Bromley said. The league needs more time because Diamond is proposing to radically alter the way it does business with MLB and its clubs, he said.

“There’s a lot to digest,” Bromley said.

The broadcaster filed for bankruptcy in March of last year, marking a swift collapse for a company bought from Walt Disney Co. for $9.6 billion in 2019. US regional sports networks have been under increasing financial pressure as more people cancel their cable TV service.

Diamond’s restructuring plan includes a tentative deal to settle outstanding litigation with its parent company, Sinclair.

Diamond had accused Sinclair of wrongly siphoning more than $1.5 billion from the local broadcaster before its bankruptcy. The settlement calls for Sinclair to pay Diamond $495 million in cash and provide ongoing management and transition services, according to the statement. Bloomberg