Just days after taking a $1 billion impairment loss on its troubled Bally Sports unit, the board of Diamond Sports Group has voted to block parent company Sinclair Broadcasting from having any further input into the day-to-day operations of the regional sports networks.
David Preschlack, who served as the president of NBC Sports’ RSN division from 2016 to 2021, and joined the Diamond Sports board of directors in May of this year, will oversee the Bally Sports nets going forward. Sources familiar with the move indicated that Preschlack was appointed by the company’s creditors.
Preschlack did not immediately respond to a voicemail message left for him on Sunday night.
“Diamond is uniquely situated to create a differentiated and truly integrated regional sports offering that puts fans first by delivering live local sports in an immersive engagement environment, and I am honored to step into the role of CEO at this important moment,” Preschlack said in a statement released Monday morning. “My focus over the next few months will be on fostering and strengthening the relationships with our league partners and addressing the company’s legacy financial issues, including strengthening our balance sheet, so that we can position Diamond to drive long-term, sustainable value for our stakeholders. I look forward to working closely with my talented and dedicated colleagues to make our vision for the future a reality.”
In a statement to Sportico, Sinclair said, “Consistent with the financing completed in March of this year and the company’s deconsolidation, Diamond Sports Group is continuing its transition to become more independent. A CEO position as been created to help with this effort, and the board’s appointment will be announced on Monday.
“Sinclair will continue to provide management services and maintain representation on the Diamond board. We look forward to our continued partnership with Diamond as they continue their transformation of the regional sports business.”
Preschlack joined the board alongside Randy Freer, former Hulu CEO and erstwhile president and COO of Fox Networks Group and Maryann Turcke, who stepped down from her role as COO of the NFL back in August 2020.
The NBA and MLB have been apprised of Diamond’s decision to distance the 21 RSNs from Sinclair, which in May 2019 paid $9.6 billion for the Fox Sports-branded RSNs. Neither league returned calls for comment on Sunday evening.
When combined with the $4.2 billion charge Sinclair took in the third quarter of 2020, the company has written off 46% of what it originally invested in the RSNs.
Last week, Sinclair CFO Scott Shapiro told investors that an acceleration in cord-cutting trends had led to the latest write-down. “We have seen quite a bit of acceleration [in subscriber erosion] over the year,” Shapiro said during the company’s earnings call. “That’s probably driving, you know, at least 75% of the change to guidance, when you look at the magnitude of where churn expectations were at the beginning of the year, to where we’re projecting for the full year.”
Ten percent of the traditional cable/satellite/telco-TV subscribers cut the cord in the third quarter, bringing the bundle’s overall head count to 62.2 million homes, or just 50% of all U.S. TV households. In the last five years, 31 million subs have opted out of the bundle, which makes for a loss of one-third of the total customer base.
While virtual MVPDs such as fubo TV and YouTube TV have served to somewhat defray the losses in the cable/satellite/telco space, the alternative video services aren’t doing much to bail out the RSNs. Nearly all of the vMVPDs have stopped carrying the regional sports networks in order to keep a handle on escalating sub fees, although these operators find themselves mired in an endless game of Whac-A-Mole, as the costs of carrying basic-entertainment channels are also soaring. For example, in the past three years, fubo TV’s lowest-priced plan has jumped from $45 per month to $70.
During the earnings call, Diamond said it has enough money to power its way through the end of 2023, although it warned investors that its estimates are largely dependent on macroeconomic headwinds.
(This story was updated in the fourth, fifth and sixth paragraphs to add the statement by Preschlack and the statement from Sinclair.)