How will Bally Sports' bankruptcy shape the future of Red Wings broadcasts on television

Last March, the Diamond Sports Group—purveyor of local Red Wings broadcasts along with those of 11 other NHL teams—declared bankruptcy.  It was jarring, but, at least in the short term, it didn't have a tremendous impact for consumers.  

Local broadcasts on the various Bally-branded and Diamond Sports-owned regional sports networks continued, and they are expected to continue into next season as well.

Nonetheless, Diamond's bankruptcy is symptomatic of broader uncertainties in the future of regional sports television, streaming, and broadcasting, and I believe it's worth zooming in a bit closer to better survey the landscape. 

Plus, it's July, and there's no shortage of time to think about issues that tend to get lost in the day-to-day shuffle of the season.  Without further ado, let's rewind.

The Timeline

To understand the scope of Bally's woes, we have to flash back to December 14, 2017 when the Walt Disney Corporation announced its intention to acquire 21st Century Fox.  

At the time, the deal was supposed to include Fox's robust array of regional sports networks or RSNs, Fox Sports Detroit (which aired and still airs Red Wings, Tigers, and Pistons games) among them.  Those RSNs were to be absorbed into ESPN.

However, the Department of Justice took issue with the deal, believing it to lend Disney an impermissible stake in the world of sports television.  (That this is where the DOJ chose to draw the line could be the subject of his own much longer article about the misbegotten state of American corporate regulation).

Assistant attorney general for the DOJ's Antitrust Division Makan Delrahim said at the time, "American consumers have benefitted from head-to-head competition between Disney and Fox’s cable sports programming that ultimately has prevented cable television subscription prices from rising even higher.  Today’s settlement will ensure that sports programming competition is preserved in the local markets where Disney and Fox compete for cable and satellite distribution.”

To complete the deal to acquire 21st Century Fox, Disney was ordered to sell off the 22 RSNs under Fox's umbrella.  There was essentially only one possible buyer for those properties: Sinclair Broadcast Group, the elephantine media conglomerate, whose own stranglehold on American nightly news and general monstrosity practically begs for further regulation.

In the form of a newly launched subsidiary called Diamond Sports Group, Sinclair completed the deal, acquiring 21 of the 22 RSNs (the arrangements for YES Network, which broadcasts the New York Yankees, were more contractually complicated) for $10.6 billion.  The deal was completed in August of 2019.  

Via a naming rights deal with the Rhode Island-based casino operator the Bally's Corporation, the networks were rebranded as Bally Sports, effective March 31st, 2021.  The casual sports fan experienced this transformation as a re-brand and little more.  

That changed in mid-February of this year, when Diamond Sports failed to make a $140 million interest payment, instead opting for a 30-day grace period.  At the end of that grace period, Diamond declared Chapter 11 bankruptcy with a re-structuring plan.  The company missed payments to the Arizona Diamondbacks, Texas Rangers, Cleveland Guardians, and Minnesota Twins.  On June 1st, a bankruptcy judge gave Diamond Sports five days to make the missed payments.

How Does this Affect the NHL?

The NHL avoided the disaster scenario of being unable to get live games on television as scheduled at the conclusion of last season, and that should remain the case in 2023-24.

There are 12 NHL teams currently partnered with Bally: the Wings, Columbus Blue Jackets, St. Louis Blues, Arizona Coyotes, Anaheim Ducks, Carolina Hurricanes, Los Angeles Kings, Tampa Bay Lightning, Florida Panthers, Nashville Predators, Dallas Stars, and Minnesota Wild.

David Preschlack, CEO of Diamond Sports, announced that the company would continue airing broadcasting games and even went as far to say (via a statement) that he expected Bally to grow as a result: “With the support of our creditors, we expect to execute a prompt and efficient reorganization and to emerge from the restructuring process as a stronger company.”

“Obviously, it’s not inexpensive to run sports channels or [Diamond Sports Group] wouldn’t be in the situation that they’re in. But in a combination of linear carriage and streaming, we can get the games out there,” NHL commissioner Gary Bettman said, back in March. “And listen, we’re in an era where the business model is evolving for local distribution of games in all the sports, and that’s something we’re going to have to address not just on a short-term basis, but on the long-term."  He added that the league had unspecified contingency plans in place should the situation deteriorate.

Bettman's observation about the expense of broadcasting live television is the rare insight from the NHL's big boss.  In the world of streaming, it must be tempting for teams to launch their own streaming services to air games, but the cost of doing so is great enough that such a move doesn't make much sense without a partnership in place with an experienced television broadcaster.

Preschlack and Bettman's words are the sole assurance NHL fans have about the future of their local broadcasts, which is to say we are devoid of both clarity and certainty.

A Preview of one Possible Path Forward

One NHL team, which endured an even more extreme version of Bally's bankruptcy, might just be carving out a path toward the future of local sports broadcasts: the Stanley Cup champion Vegas Golden Knights.

Vegas was one of two NHL teams (the other being the Pittsburgh Penguins) partnered with AT&T SportsNet for its RSN.  In January, Warner Media (owner of AT&T SportsNet) announced its intention to get out of the regional sports game entirely and offered to return the Knights their rights.

The Golden Knights' search for a new partner ended with the EW Scripps Company, originally founded in Cincinnati in 1878 as a chain of local newspapers.  Some 150 years later, Scripps is wading into the sports broadcasting business on the back of its deal with Vegas and a separate deal with the WNBA.

The new arrangement makes Knights games in the preseason, regular season (with the exception of games that will be broadcast exclusively nationally), and the first round of the playoffs free for all residents of Vegas' television footprint.  

That footprint includes the state of Nevada and extends out into Idaho, Montana, Utah, and Wyoming.  Here, the geography of the American West becomes a point of interest in that, while we might not think of them that way, the Knights are the "local" team for numerous states beyond just Nevada in a way that wouldn't be possible along the more densely populated (with people and professional sports franchises) East Coast.

The partnership represents a bet from Vegas management that reimagines the value of broadcasting games on television.  Vegas isn't after the lofty RSN fees that are driving many Americans to cut the cord and give up on paying for cable in the first place.  Instead, the Knights see the value in getting their games to as many fans as possible, fans who might not have been willing to cough up a monthly fee for AT&T SportsNet Rocky Mountains but who might stick around when they come across a game as they scroll through the channels.

At a time when corporate cynicism and profit-chasing abound and when consumers grow increasingly vexed at the sense that streaming has somehow only increased the exorbitant fees they already paid to watch television, the move was shocking in its consumer friendliness. 

Access is as important an issue as any to the long-term growth and success of hockey in the United States.  The sport is expensive and exclusive, and it has a serious problem with attracting new fans.  As any hockey fan would tell you, there is no better advertisement for the NHL than the game of hockey itself, so getting those games in front of as many eyeballs as possible looks like an obvious way to pull new people into the hockey silo.

An important qualifier here is that Vegas' contractual situation with AT&T SportsNet (along with the company's complicity) allowed for this overhaul, so it's not as though any of the dozen Bally-bonded NHL teams could launch copycat deals of their own on a whim.

The Red Wings aren't at liberty to just pull the plug on Bally, and it would be near impossible to imagine them doing anything without the Tigers (also owned by the Ilitch family) along with them.

As it stands, cord-cutting Red Wing fans can subscribe to Bally Sports Detroit+ for $19.99 a month or $239.99 a year.  For that fee, you get Red Wing, Tiger, and Piston games (with the exception again of those broadcast nationally) as well as whatever ancillary programming Bally Sports decides to air.

That offer is only available to residents of the Wings' television footprint (as determined by the billing zip code on customers' credit cards), so if you are a non-local cord-cutting Red Wing fan, your best bet is ESPN+, which is available from $9.99 a month (though that figure continues to climb).

Even with those two options, a fan who wants to make certain they have access to all 82 regular season games can't stop there.  Either a cable subscription or a live TV streaming service like YouTube TV or Sling TV would be necessary to secure a means of watching whatever TNT or ESPN national broadcasts the Wings take part in this season.

In other words, the cost of being a sports fan (and in particular, a finely attuned one) is only climbing.  NHL fans are in a gentler spot than fans of more de-centralized sports like college football or soccer, where the list of streaming services and subscriptions necessary to see all the games is even longer.

In October 2021, Bally Sports Detroit, the Red Wings, and Tigers announced a "multi-year" extension to their existing contract, but the precise terms of that deal weren't released.

If the situation with Bally/Diamond Sports worsens, perhaps the two teams would be liberated from those deals, but barring that, it appears unlikely either team will opt for a Knights-style free-to-air approach to local broadcasts any time soon.