If a proposed deal goes into place as currently planned Amazon will be getting an ownership stake in a major Regional Sports Network operation. Amazon is investing 115 million dollars into Diamond Sports to help is avoid liquidation. Once the deal is final it will give the online retailer and streamer 15% ownership in the company with an option to invest 50 million more within 9 months of the deal being approved by courts. The move changes Amazon from simply being a customer for sports league rights as it is with the NFL and its Thursday Night Football deal to having a stake in the successes of a service in the same way it does Prime and Freevee.
What is Diamond Sports
Diamond Sports, is a subsidiary of broadcaster Sinclair and the cooperate arm of Bally Sports a group of 22 regional sports networks or RSNs. The company was born when Disney merged with 20th Century FOX and was forced to spin off multiple sports channels owned by the conglomerate for antitrust reasons.
Otherwise, Disney would have owned ESPN and then a few dozen other sports channels nationwide.
Unfortunately for Sinclair, this move also coincided with the continued erosion of cable subscriptions leading many providers to drop coverage of many of the channels in the group. RSN’s command a high price from providers like Dish, DirecTV and cable companies and over time as subscribers have fallen have provided a smaller return on the investment. Why? Because sports channels are only typically popular with people who are specifically fans of a team or two. Just like if there were a channel on cable that only and only broadcasted Dr Who. Yeah it has its fans, but not enough to command more money than a general network like The Food Network. Even ESPN features multiple sports leagues and multiple teams every week. These networks are just for say one NBA team. So a major NBA fan may be happy to have TNT or ESPN but have no interest in paying for access to The Minnesota Timberwolves.
What does this mean for Diamond Sports and Amazon?
It would be worth it to pay attention to this. Diamond Sports has been a disaster since its launch. The company has few major TV partners and only 2 agreements with cable replacement streamers. Those are Fubo TV and DirecTV Stream. It offers a direct-to-consumer product for 19.99 per month that provides access to people on a purely regional basis, meaning unlike something like Disney+ or Amazon Prime Video it is not a nationally available service. If you are a Brewers fan in LA, you can not sign up for Bally Sports and watch your favorite team. With Amazon, Bally Sports+ will have a powerful platform to push the service to fans regionally and the power of Amazon’s analytics to target customers effectively.
Watch for that further investment
If Amazon does invest another 50 million dollars into Diamond Sports you can expect that it will continue to grow its stake over time. It may be trying to position itself as the eventual owner if the current ownership gives up on it. Being able to grow a regional sports offering would give Amazon great tool to promote the Amazon Prime service especially if it can grow its scope.
