Bankrupt broadcaster Diamond Sports, the nation’s largest regional sports network, has made a take-it-or-leave-it offer to cut rights fees to the NHL and NBA in a last-ditch bid to avoid liquidation, The Post has learned.
The Sinclair subsidiary, which declared bankruptcy in March with $9 billion in debt, owns the broadcast rights to 15 NBA teams and 12 NHL teams as both leagues prepare to open their seasons next month.
Diamond proposed cutting the fees to both leagues by up to 20% ahead of a bankruptcy court-imposed Sept. 30 deadline, a source with direct knowledge of the situation told The Post on Thursday.
Diamond pays NBA teams about $600 million a year in broadcast rights, which could amount to as much as a $120 million discount.
Contract details with the NHL were not available
The NBA and NHL are leaning toward accepting the haircut, which would allow Diamond to survive for another year, the source said.
“This is a reorganization that will become a liquidation,” another source said.
A Diamond spokesman declined comment.
Diamond will shut its doors but not until it makes some money from more profitable contracts so the creditors get some recovery, two sources said.
That also would help the NBA and NHL which are not well prepared for a liquidation, sources said.
Another possibility is Diamond would stop broadcasting games in markets where it is losing money if it cannot reach an overall deal with either the NBA or NHL, according to the first source.
The NBA is prepared to stream games that Diamond drops in their local markets if a deal is not worked out.
The loss of revenue may put a dent the NBA’s salary cap, which is partly determined by media rights fees, an NBA executive said.
Diamond, which sold naming rights to broadcast the games to Bally Sports, pays teams rights fees in long-term deals, and then hopes to make a profit by reaching short-term carriage deals with cable companies.
In recent years, cable companies have been paying less for sports due to rampant cord-cutting.
It has reached an agreement in principle with Comcast on a carriage deal for roughly one year and has just reached a similar contract with DirecTV, sources said.
Negotiations with Charter Communications remain.
Sinclair Broadcasting won an auction in 2019 to buy Fox Sports Networks from 21st Century Fox for $10.6 billion, giving it exclusive rights to broadcast the games of 42 teams across MLB, NBA and NHL, and put the networks in its new Diamond subsidiary.
Diamond is suing Sinclair, alleging it took $1.5 billion in dividends and fees when the company knew Diamond was veering towards bankruptcy.
The creditors might get more money from winning or settling that suit than from re-cutting the remaining Diamond deals, the source with direct knowledge of the situation said.
Diamond has contracts with the Atlanta Hawks, Cleveland Cavaliers, Charlotte Hornets, Dallas Mavericks, Detroit Pistons, Indiana Pacers, Los Angeles Clippers, Miami Heat, Memphis Grizzlies, Milwaukee Bucks, Minnesota Timberwolves, New Orleans Pelicans, Oklahoma City Thunder, Orlando Magic, and the San Antonio Spurs.
The NHL deals include the Anaheim Ducks, Arizona Coyotes, Carolina Hurricanes, Columbus Blue Jackets, Dallas Stars, Detroit Red Wings, Florida Panthers, Los Angeles Kings, Minnesota Wild, Nashville Predators, St. Louis Blues, and Tampa Bay Lightning.
There have been no viable buyers for Diamond in bankruptcy, sources said.
MLB had considered buying Diamond earlier this year.
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