America’s largest owner of local sports channels is heading toward a complex $8.6 billion debt restructuring in bankruptcy court as it stakes its future on a new direct-to-consumer streaming service, Bloomberg News reported. After leveraging up to buy regional sports networks from Walt Disney Co. in 2019, Diamond Sports Group LLC is suffering from a decline in cable-TV subscribers, spurring negotiations with creditors and major sports leagues about its viability as a going concern. The outcome will have serious implications for the $55 billion world of sports-media rights: the company’s channels showcase Major League Baseball, National Basketball Association and National Hockey League games to fans from Detroit and Phoenix to San Diego. With financial troubles mounting, the Sinclair Broadcast Group Inc.-owned firm will likely skip $140 million in interest payments due mid-February, kickstarting a 30-day grace period, according to people familiar with the matter. A stark divide is emerging between would-be winners and losers: its $630 million first-lien loan is trading at 92 cents on the dollar, while nearly $5 billion of lower-ranked bonds change hands for under 10 cents — signaling a near-total wipeout for subordinated creditors. The restructuring plan favored by many creditors and the company itself would see the largest lenders becoming owners, turning much of its debt into equity through a pre-arranged chapter 11 process, according to people with knowledge of the matter, who declined to be identified citing the private nature of the talks.
