Amazon.com Inc. (NASDAQ: AMZN) is a leading online retailer and web services provider. It sells items in various categories, including industrial, auto, health and beauty, grocery, electronics, kid products, music, tools, and books. It has recently emerged that the company is considering buying out bankrupt Diamond Sports Group.
Amazon’s Diamond Sports Group Buy Out
According to recent media reports, Amazon and Diamond Sports Group (DSG) are engaged in talks for a buyout. Diamond Sports Group is the largest regional sports TV chain. If successful, it could see the network’s games from 40 teams come to Amazon Prime Video. It would represent a significant expansion by Amazon into the live sports industry. Diamond is currently struggling to stay afloat after filing for Chapter 11 bankruptcy.
If successful, Amazon would invest in the regional sports network, giving it a vital lifeline. The deal would see Amazon Prime Video get streaming rights for all DSG games. DSG currently owns streaming rights for over 40 NHL, MLB, and NBA pro teams. The terms of the deal have not been disclosed, and it would need to be approved by a bankruptcy judge.
Diamond is a subsidiary of Sinclair Broadcast Group. If successful, the company would still operate its Bally Sports network. However, the game would, in the future, be brought to Amazon Prime Video.
In its bankruptcy filing, Diamond stated that it owed $9 billion to lenders. The company plans to slash it by $8 billion via ownership transfer to the lenders. A deal with Amazon would help to save Diamond from falling subscriber numbers as cord-cutting gains momentum. Additionally, it would mitigate the risk of falling revenue in the era of streaming services.
Stock Performance
Following the release of the WSJ report, Sinclair Inc. (SBGI) stock spiked by 7.6% during trading on December 18, 2023, before closing 2.1% higher. In early morning trading on December 19, 2023, the stock is up 0.75%. Amazon stock ticked up 3% at the close of trading on December 18.
How Could the Deal Affect the Future of AMZN Stock?
No matter how the deal pans out, it is a win for Amazon. Diamond will have little leverage during the negotiations, while Amazon will gain new subscribers for its Amazon Prime Video service. While it will not have a monumental impact on the future of AMZN stock, it is a great business move by the online retailer.
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