Diamond Sports Group has made a call to the bullpen.
The troubled subsidiary of Sinclair Broadcast Group, which runs 19 regional sports networks formerly owned by Fox and now branded Bally Sports, has recruited former Fox Sports and Hulu boss Randy Freer to serve on a new board of managers. Freer will serve as chair and Sinclair CEO Chris Ripley will be one of the five managers. The other three are all pedigreed sports figures: David Preschlack, the former president of NBC’s RSNs who was also an exec at Disney and ESPN; Maryann Turcke, a senior adviser to NFL Commissioner Roger Goodell and the league’s former COO; and former senior NBA and NFL exec Bob Whitsitt.
The new board, which replaces three prior directors, is being put in place after the company closed a $635 million financing arrangement, which it plans to use in large part to fund its streaming ambitions.
Sinclair clarified that it owns “nearly 100%” of the sports entity, with Byron Allen retaining a small stake. Private equity firms and other investors were involved in the $10.6 billion acquisition of the RSNs, which closed in 2019 and was set in motion by Disney’s purchase of most of 21st Century Fox.
Along with the 19 RSNs in Diamond, Sinclair also has positions in New York’s YES and Chicago’s Marquee, two other RSNs. During an earnings call this morning, Sinclair announced it has separated the financials and commentary around Diamond and its core operations, which include the No. 2 U.S. local TV station group and assets like cable’s Tennis Channel. The separation took effect March 1, making comparisons between the first quarter of 2022 and the prior-year period inexact. A $3.4 billion non-cash pre-tax gain on asset dispositions was recorded in the 2022 quarter, but revenue fell 15% 14.8% to $1.288 billion.
Ripley said plans remain in place to soft-launch streaming versions of a handful of the RSNs, which will be a significant paradigm shift. Because of longstanding business models surrounding RSNs as well as a tug of war over streaming rights with various leagues, it hasn’t been possible to just throw a switch and put linear signals into the cloud without a pay-TV subscription. As in the rest of the media ecosystem, traditional RSN broadcasts (especially baseball) still generate considerable free cash flow.
Pricing is an important consumer consideration, with the monthly tab for Diamond’s RSNs likely to fall at the high end of the spectrum in a marketplace teeming with more than 300 subscription streaming outlets. Sinclair has not revealed pricing plans, but in announcing the new board signaled it will be at “an attractive price point.”
Ripley argued Diamond is well-positioned to make the leap from linear to streaming. “We’ll be the first mover,” he said. While Diamond struggled mightily during the worst of Covid and spilled red ink on Sinclair’s balance sheet, Ripley said it now has “ample liquidity” as it looks to transition to streaming.