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 might be coming from a deep-pocketed media participant like Amazon, The Submit has discovered.
The sports activities channel managed by billionaire Knicks proprietor James Dolan — at the moment 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 gaggle 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 intention is to succeed in a deal somewhat than merely lengthen the deadline once more, in response to sources briefed on the discussions.
“Talks are ongoing,” sources near the state of affairs mentioned 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, outdoors investor to refinance the crippling debt load — and hand over a stake within the cable enterprise in return. No deal would impression Dolan’s possession of the Knicks and Rangers, the sources added.
Chatter is now circulating that one potential resolution could be to accomplice with Amazon, whose Prime video service already has a cope with 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 mentioned a key profit in a cope with Amazon could be to present MSG Networks a substitute for Optimum. The carriage dispute with the Altice USA-owned cable supplier value MSG Networks an estimated $127 million in misplaced income in January, in response to 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 mentioned
As MSG Networks flails, Dolan himself hasn’t signaled any potential transfer to refinance the debt himself. Certainly, shares of MSG Networks’ guardian firm, publicly-traded Sphere Leisure, have risen 7.5% over the past 5 days, with traders betting that an MSGN chapter will stem losses and enhance its stability sheet, in response to analysts.
Sphere shares have been down 3% in after-hours buying and selling Friday on the chance that chapter might be averted.
If the newest talks fail and MSG Networks slips into chapter 11, lenders would seemingly take over operations and maintain airing video games, sources mentioned.
A chapter additionally may elevate the percentages of a cope with Optimum, since a lighter debt load would allow MSG Networks to cost Optimum decrease charges to hold its video games, sources mentioned.
Beneath the deal that expired Dec. 31, Optimum was paying MSG Networks about $10 per subscriber, making it probably the most costly cable channels, in response to reviews.
Optimum, which has about one-third of the roughly 3 million subscribers within the New York Metropolis space, is seeking to put MSGN on a premium tier so there could be far fewer MSGN subscribers and it may possibly decrease prices.
Its guardian firm Altice too is deeply in debt.
With out Optimum’s prospects, MSG Networks is dropping cash even earlier than factoring in its curiosity funds, analysts mentioned.
“A full drop would ultimately 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 Submit.
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, in response to public filings.
“The model is upside down,” a supply within the RSN trade mentioned, and the costs paid for media rights a decade in the past now make little sense.
New MSGN homeowners in a possible chapter may cancel the Knicks and Rangers media rights deal and negotiate a a lot decrease contract, the RSN supply mentioned.
Dolan, who controls the Knicks and Rangers, may decrease the rights charges as a part of an total bundle that retains MSG Networks out of chapter and places it on stronger monetary floor.
