The parent company of Bally Sports Southwest, Diamond Sports, which owns the broadcast rights to the Dallas Mavericks, Dallas Stars, Texas Rangers, and Dallas Wings games, is expected to miss a major debt payment this week and file for bankruptcy within the next month.
In the short term, experts predict that fans will still be able to watch their teams’ games on the channel they are familiar with. But long-term, the anticipated bankruptcy filing of a prominent regional sports network calls into question the viability of the current broadcast rights model.
Outside of the NFL, most major pro sports are broadcast on regional networks that pay top dollar for the rights to air the games. For example, under the current contract Bally Sports Southwest pays the Texas Rangers $100 million a season for the broadcast rights.
The cable companies that pay to air the games generate most of their revenue from subscriber fees. But tens of millions of people have ‘cut the cord’ over the last decade, in favor of a la carte streaming options that, individually, cost significantly less than cable does.
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“I think one of the bigger questions is, ‘Does the entire model change?’ said Maury Brown, who covers the business of sports for Forbes. “For most people, if they have a cable provider, they get their sports interspersed with other things. It is called a bundle. That would likely go away.”
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“[The regional sports network model] is only sustainable as long as you have a solid customer base. If you look at how linear television, traditional television is, subscribers have been peeling away from it in droves. So, if you don’t have that subscriber money coming in then of course the ability to sustain those rights fees back to the teams becomes much more difficult,” Brown said.
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Diamond Sports, which is a subsidiary of Sinclair Broadcast Group, is expected to miss a $140 million interest payment on Wednesday. The company is struggling under the weight of $8.4 billion in debt, according to Bloomberg.
Once that payment is missed, it would start a 30-day grace period that could eventually lead to a bankruptcy filing, according to The Dallas Morning News.
