The parent company of Bally Sports Southwest and Diamond Sports, which owns broadcast rights to games for the Dallas Mavericks, Dallas Stars, Texas Rangers and Dallas Wings, 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’ matches on the channel they are familiar with. But in the long run, the expected bankruptcy of a prominent regional sports network calls into question the viability of the current broadcast rights model.
Outside of the NFL, most major professional sports are broadcast on the regional networks that pay the highest price for the rights to broadcast games. For example, under the current contract, Bally Sports Southwest is paying $100 million for the season for the broadcast rights.
Cable companies that pay to stream games generate most of their revenue from subscription fees. But tens of millions of people have “cut the cord” over the past decade, in favor of a la carte streaming options that, individually, cost much less than cable.
“I think one of the bigger questions is, ‘Is the whole paradigm changing?'” said Maury Brown, who covers sports business for Forbes. “For most people, if they have a cable provider, their sports are interspersed with other things. It’s called a package. It will likely go away.”
“[The regional sports network model] It is only sustainable as long as you have a solid customer base. If you look at linear TV, traditional TV, subscribers are moving away from it in droves. So if you don’t have the subscribers’ money coming in, of course being able to maintain those rights fees for the teams becomes more difficult,” Brown said.
Diamond Sports, a subsidiary of the 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, a 30-day grace period will begin that could eventually lead to him filing for bankruptcy, according to the Dallas Morning News.