Diamond Sports Group is making another cut to its portfolio of pro teams, just weeks before a crucial court hearing, as the bankrupt Bally Sports parent continues its efforts to tailor its operations to a fast-changing market reality.
The regional sports network operator has petitioned the U.S. Bankruptcy Court to drop the final year of its contract with the NHL’s Stars. DSG had been tied to the Stars in this current deal since 2014, when Bally Sports Southwest was still Fox Sports Southwest, but concluded that continued coverage of the team would be unprofitable.
“The debtors have determined that the costs associated with performing under the Stars agreement for its remaining term, including payment of substantial rights fees, outweigh the revenues the debtors are able to obtain through broadcasting Stars games,” DSG said in a court filing. “The associated costs are an unnecessary and unproductive use of estate assets.”
Unlike some of DSG’s initial, more chaotic rejections last year of teams such as MLB’s Padres and Diamondbacks, this situation does include mutual consent as the Stars have agreed to the move.
Following the Champs
The split between DSG and the Stars closely follows the Stanley Cup champion Panthers, which have departed DSG for a new deal with Scripps Sports to air games on over-the-air broadcast television. Like that team, the Golden Knights, and Utah Hockey Club, the Stars could ultimately make an embrace of over-the-air TV.
The long-term future of Bally Sports Southwest, meanwhile, is perhaps now more uncertain with the departure of the Stars. The network is 90% owned by DSG and 10% by MLB’s Rangers, whose rights deal with the company expires after the current season. The NBA’s Mavericks, meanwhile, have been openly considering alternate options for its rights as well.
DSG now has rights to nine NHL teams, down from a prior set of 12.
Rising Drama
The Stars decision also arrives as DSG intends to bring its reorganization plan up for formal approval at a confirmation hearing starting July 29. But MLB, the NHL, and the NBA have each expressed doubt about DSG’s ability to emerge as a viable company, and formal objections to the plan remain possible.
While that hearing approaches, DSG also remains locked in bitter carriage disputes with both Comcast and Altice USA’s Optimum, and is not airing on either system.
