MSG Networks, the embattled cable TV station that airs New York Knicks and Rangers video games, is in talks to succeed in a deal to keep away from chapter as quickly as Friday — and insiders speculate that assist may very well be coming from a deep-pocketed media participant like Amazon, The Publish has discovered.
The sports activities channel managed by billionaire Knicks proprietor James Dolan — at present blacked out for about 1 million New York-area subscribers due to a contract dispute with the Optimum cable community — is scrambling to restructure its debt with a bunch of lenders led by JPMorgan who’re owed $829 million.
MSG Networks in October defaulted on its loans however lenders have prolonged the cost deadline a number of occasions, most lately from Jan. 10 to Friday at midnight. This time, the purpose is to succeed in a deal slightly than merely prolong the deadline once more, based on sources briefed on the discussions.
“Talks are ongoing,” sources near the scenario stated on Friday afternoon.
MSG Networks didn’t return calls and JPMorgan declined to remark.
To make a deal occur, sources speculate that MSG will take money from a brand new, exterior investor to refinance the crippling debt load — and hand over a stake within the cable enterprise in return. No deal would influence Dolan’s possession of the Knicks and Rangers, the sources added.
Chatter is now circulating that one doable answer can be to companion with Amazon, whose Prime video service already has a take care of Diamond Sports activities, the nation’s largest operator of so-called RSNs, or regional sports activities networks, to broadcast video games for professional sports activities groups nationwide.
Amazon can be an investor within the YES Community that airs Yankees and Nets video games, with Prime now airing weekly Yankees video games within the New York Metropolis space.
Amazon declined to remark.
Sources stated a key profit in a take care of Amazon can be to offer MSG Networks an alternative choice to Optimum. The carriage dispute with the Altice USA-owned cable supplier price MSG Networks an estimated $127 million in misplaced income in January, based on analysts.
Comcast additionally dropped MSG Networks in 2021. In the meantime, MSG Networks’ personal streaming service, the Gotham Sports activities App, expenses $29.99 per 30 days and has not attracted a big subscriber base, sources stated
As MSG Networks flails, Dolan himself hasn’t signaled any doable transfer to refinance the debt himself. Certainly, shares of MSG Networks’ guardian firm, publicly-traded Sphere Leisure, have risen 7.5% during the last 5 days, with traders betting that an MSGN chapter will stem losses and enhance its steadiness sheet, based on analysts.
Sphere shares had been down 3% in after-hours buying and selling Friday on the likelihood that chapter may very well be averted.
If the most recent talks fail and MSG Networks slips out of business, lenders would possible take over operations and hold airing video games, sources stated.
A chapter additionally might increase the chances of a take care of Optimum, since a lighter debt load would allow MSG Networks to cost Optimum decrease charges to hold its video games, sources stated.
Below the deal that expired Dec. 31, Optimum was paying MSG Networks about $10 per subscriber, making it one of the vital costly cable channels, based on studies.
Optimum, which has about one-third of the roughly 3 million subscribers within the New York Metropolis space, is trying to put MSGN on a premium tier so there can be far fewer MSGN subscribers and it could decrease prices.
Its guardian firm Altice too is deeply in debt.
With out Optimum’s clients, MSG Networks is dropping cash even earlier than factoring in its curiosity funds, analysts stated.
“A full drop would in the end bankrupt MSG Networks,” media analyst Brandon Ross of LightShed Companions wrote earlier this month in a report.
Income from cable suppliers is falling due partly to cord-cutting since there are far fewer subscribers.
MSG Networks contract with Verizon’s Fios expires in September, main to a different doubtlessly troublesome negotiation, a lender advised The Publish.
The cable community is dropping cash as a result of it’s paying $187 million in 2025 to broadcast Knicks and Rangers video games as a part of a 20-year settlement that ends in 2035, based on public filings.
“The mannequin is the wrong way up,” a supply within the RSN business stated, and the costs paid for media rights a decade in the past now make little sense.
New MSGN house owners in a possible chapter might cancel the Knicks and Rangers media rights deal and negotiate a a lot decrease contract, the RSN supply stated.
Dolan, who controls the Knicks and Rangers, might decrease the rights charges as a part of an general package deal that retains MSG Networks out of chapter and places it on stronger monetary floor.