SBJ Media: Creditor chaos at Diamond Sports

I’ve spent a lot of time detailing the slow pace of negotiations between Diamond Sports and the leagues and teams whose games it carries.

There’s another round of negotiations -- one among Diamond’s creditors -- that is not getting as much press. But it’s a process that also is creating headaches and progressing slowly.

Diamond’s next bankruptcy court date comes in the middle of April. Up until that date, creditors will engage in lots of behind-the-scenes discussions to try to reach agreements. But the number of creditors -- and their different aims -- also suggests that the process will see plenty of pitfalls that could cause this plan to be held up in court longer than people expect.

One restructuring plan that has been making the rounds has grouped the creditors into four tiers. There’s the first tier, lien creditors, which holds around $630 million of debt. This is the group that has top priority and the best security in the bankruptcy and would remain unimpaired. As proposed, the plan would keep this group’s debt outstanding. This, seemingly, would be the easiest agreement to get. But this group still has not reached consensus on a deal.

The next class of creditors would convert its debt into 92% of the equity in the company that emerges from bankruptcy. Sources said that this group of creditors has the numbers to support this deal. The third group of unsecured noteholders would convert its debt into 5% of the ownership of Diamond.

The fourth tier is Sinclair, which would provide management services for an undetermined period of time and would keep a 3% stake in Diamond. Sinclair hasn’t signed on to a deal yet.

In short: this process will be a messy one.

YouTube TV dropped MLB Network at the end of January. Do not expect the two to reach an agreement before Opening Day this week. In fact, it appears the channel will stay off YouTube TV for a while, judging by MLB CRO Noah Garden’s response to a question from SBJ’s Terry Lefton on Monday.

Garden: “I’m generally optimistic, but I’m not optimistic [about a deal by Opening Day]. I think it’s short-sighted, and it’s unfortunate. But we’ll continue to work with them and hope that we’ll find a way. ... I will say they’ve been great partners long term. Everybody runs into crunches here and there, so hopefully it’s just a timing thing. Hopefully, we’ll be able to find a solution.”

Range Sports, the management and production company run by Will Funk and Greg Luckman, bought Claygate Advisors for an undisclosed sum.

David Sternberg launched Claygate, a media rights advisory firm eight years ago. Dan Granik joined in 2020. Both now are co-heads of media consulting for Range Sports.

This deal is a way for Range Sports to get involved in the media rights business. The company launched last July as a division of Range Media Partners, which agents from CAA, UTA and WME launched in September 2020.

Funk: “This is a place where we wanted to plant a flag and have a big presence. It's not just about the media rights piece, but it leads to other deal flow off the backs of those deals. Having a bigger relationship with those properties is something that's really interesting to us.” As an example, Funk referenced an unnamed client in the college space that was looking for help with its media strategy. The conversation quickly morphed to include its entire content strategy.

“We see an opportunity to help these properties and leagues and teams grow not just with media rights distribution, but with other divisions of the company,” Funk added. The company plans to target “mid-size properties that have growth potential, but just haven't had the resources.”

Claygate clients include Chelsea FC, the Pacers, Athletes Unlimited, Premier Rugby Sevens, Fresno State and U.S. Ski & Snowboard.

From Claygate’s perspective, this deal helps the company grow. “One of the things that became apparent over the last three years that Dan and I were working together is that we were going to be maxed out doing things as a two-man show,” Sternberg said. “For both Dan and me, this deal was a no-brainer because it gives us the chance to scale up in a way that we wouldn't have been able to do on our own.”

Lots of ink has been spilled on the NFL’s idea of adding flex scheduling to Amazon’s Thursday night package -- most of it negative.

Network and league sources expect to use flex scheduling with Amazon about once a year or less. Owners likely are being told to balance the desires of Amazon, which pays $1 billion per year for rights, with the reality that any flex scheduling will only affect a handful of teams and their fans.

First, the new media deals that begin with the 2023 season cut into the number of games that can be flexed. ESPN added flex scheduling to “Monday Night Football” starting in Week 12. Plus, the Sunday afternoon broadcasters, CBS and Fox, can now protect at least one game per week.

The NFL has used flex scheduling on NBC’s “Sunday Night Football” sparingly since 2006 -- a procedure that the league can now employ starting in Week 5 for Sunday night contests. Since 2014, the NFL has flexed 18 games out of “SNF," averaging two per season. It flexed four last season and one each the previous two seasons.

Remember, flex scheduling is not designed to put the best games in primetime. It is designed to ensure that low-interest, nationally irrelevant games stay out of those primetime windows.

A quick review of Amazon’s Thursday lineup last season suggests that it might have used a flex once from Week 14-17 -- and even that one game is hardly a sure bet.

Week 14: Raiders (5-7) at Rams (3-9): This is the game most likely to have seen flex scheduling, as both teams were well under .500 at the time. Still, the Raiders have a national brand and the Rams were defending Super Bowl champs at the time.

Week 15: 49ers (9-4) at Seahawks (7-6): Two teams battling for playoff positioning. No chance this game gets moved.

Week 16: Jaguars (6-8) at Jets (7-7): Both teams were fighting to get into the playoffs. Highly unlikely this gets flexed.

Week 17: Cowboys (11-4) at Titans (7-8): Even if this game didn’t involve the Cowboys, it’s doubtful that the NFL flexes out of it, as one team had a chance to win its division and the other had a chance to make the playoffs.

I wasn’t expecting a Jimmy Pitaro shoutout when l listened to Bill Simmons interview Matt Damon and Ben Affleck on his pod. But that’s what happened when Affleck spoke about Pitaro’s rise through the corporate ranks at the 41-minute mark.

Affleck: “Jimmy Pitaro, we’ve known for years and years and years and years. First of all, I couldn’t think of a better guy to do that job. He’s an amazing guy. But it does trip me out. Like, Jimmy runs ESPN. He’s the boss. Of ESPN, which just seems like the coolest job in the world. ... He's the nicest guy, but he’s a guy when you’re 29, you don’t think to yourself, ‘This guy is going to run the giant sports network to which I aspire?'"

This coming Wednesday, the latest edition of SBJ Live will feature a panel with key MLB executives looking at new tech initiatives ahead of Opening Day on Thursday. Kicking off at 12:30 pm ET, SBJ’s Joe Lemire hosts Braves VP/Business Strategy Justin Watkins; MLB Chief Product Officer and Exec VP Vasanth Williams and MLB SVP/Product, Ballpark Experience & Ticketing Karri Zaremba.

They’ll dive into innovations teams have in store for 2023 and examine enhancements to digital content delivery, venue operations, maximizing sponsorships, marketing the sport more effectively and personalizing the fan experience. The panel will also examine how vendors and team operators are adjusting to MLB’s 2023 rule changes.

Sign up for the free session here.

• WWE’s media and content strategy puts the company on solid ground as it considers a possible sale and negotiates its next media rights deal, company officials tell my colleagues David Bourne and Austin Karp.

• NBC Sports is expanding its coverage of the Augusta National Women’s Amateur, which tees off with its fourth edition later this week in Augusta, reports SBJ's Josh Carpenter.

• The NWSL is launching its own international streaming service in partnership with Endeavor Streaming that will make every match available for free viewing outside the U.S., reports SBJ's Joe Lemire.

• From SBJ’s marketing department: The Marchand and Ourand Sports Media Podcast is a finalist in the 2023 Sports Podcast Awards for Best Sports Business Podcast. If you’re a fan of the pod, please vote! Go to our category here, login or create an account and VOTE. Thanks for your support!