Raphael Stevens

Diamond Sports, the owner of regional sports networks, moved closer to exiting bankruptcy on Thursday after a bankruptcy judge said he would sign off on its reorganization plan.
The company sought bankruptcy protection in March 2023 as it was toppled by a heavy debt load and the proliferation of consumers leaving the pay TV bundle.
Diamond’s reorganization plan slashes its nearly $9 billion debt load to $200 million.
Recently, Diamond has reached various new agreements, including a deal with Amazon’s Prime Video to stream games.

Jose Siri, #26 of Major League Baseball’s Houston Astros, steals second base as Dansby Swanson, #7 of the Atlanta Braves, is unable to handle the throw from Travis d’Arnaud, #16, in the eighth inning during Game 3 of the 2021 World Series at Truist Park in Atlanta on Oct. 29, 2021.
Daniel Shirey | Major League Baseball | Getty Images

Diamond Sports moved closer to exiting bankruptcy on Thursday after a bankruptcy judge approved its reorganization plan, which slashes the hefty debt load that toppled the company.
The green light is a significant milestone for the owner of regional sports networks, which has been under bankruptcy protection since March 2023. During that time, the company has made dramatic changes to its deals with professional sports teams and leagues, as well as its business model, to prove it can be a viable company in the future.

“This is a pretty significant day for this company. When we entered bankruptcy, I’d love to be able to tell you that I knew with confidence that we would reorganize this business. I thought we would, but couldn’t tell for certain that we could,” a Diamond Sports attorney said in court Thursday.
“We took a pretty twisted journey to get here with potential wind-down as an option, but we are here today to reorganize this business,” he continued.
In the weeks leading up to the hearing, Diamond inked various deals, including an agreement with Amazon’s Prime Video to stream games and a naming rights deal with Flutter’s FanDuel.
Diamond faced recent opposition from Major League Baseball and the Atlanta Braves, but the company managed to resolve those issues prior to Thursday’s court hearing. It presented its reorganization plan to the court with a standing objection from the U.S. Trustee, a watchdog overseeing the case. The judge on Thursday overruled the objection and approved the plan.
The reorganization plan that received court approval on Thursday will see Diamond’s debt load cut from nearly $9 billion to $200 million. The company will emerge from bankruptcy with more than $100 million in cash and cash equivalents on its balance sheet.

“Today is a landmark day for Diamond, as we embark on a new path for our business. Diamond is now unencumbered by legacy debt, financially stable and enthusiastically supported by new ownership,” Diamond CEO David Preschlack said in a release Thursday.

Diamond deals

Throughout Diamond’s bankruptcy process over the past year and a half, the company has seen the status of teams across the MLB, the National Basketball Association and National Hockey League shift, as they decided to either remain on the pay TV networks or exit for new deals.
On Thursday, attorneys for Diamond Sports said it now has the local rights to 13 NBA teams, eight NHL teams and six MLB teams.
Its agreements with MLB have been in particular focus over the past few weeks. In an October court hearing, Diamond said it was planning to drop all of its MLB teams, except the Atlanta Braves, unless it could renegotiate its contracts with them.
Since then, the MLB announced that three of the teams turned to MLB to produce their local games, and the Texas Rangers parted ways with Diamond. The Cincinnati Reds also ended their deal with Diamond and six MLB teams agreed to a deal to stay with Diamond, attorneys said during Thursday’s hearing.
The Reds will also be turning to MLB to produce and air their local games for next season, MLB announced Thursday after the hearing. The league first did this last year when the San Diego Padres exited Diamond.
Attorneys for Diamond on Thursday said there was one other team the company was in negotiations with. Based on CNBC’s earlier reporting that Diamond was working with 12 MLB teams, that leaves the Kansas City Royals as the unnamed team.
The Kansas City Royals did not immediately respond to CNBC’s request for comment.
“The reality is Diamond is a far smaller company than it was when it started this process,” said sports media consultant Lee Berke, noting the teams that have exited the networks.
He added the regional sports network universe in general is getting smaller. Last year Warner Bros. Discovery walked away from the regional sports networks business.
“This model doesn’t work anymore when it’s so dependent on the shrinking number of customers of pay TV distribution,” said Berke.
For decades, the regional sports networks business has proven to be a lucrative business model for the teams and leagues, as the networks pay high fees to air local games that prop up team payrolls. But similar to their peers in the pay TV bundle, while the businesses are still profitable, they have heavily suffered in the wake of cord-cutting.
In the wake of Diamond’s bankruptcy, some teams have opted out of their Diamond-owned networks, and signed deals with local broadcasters and various streaming platforms. While the deals with local broadcasters will expand the reach of the games, they are unlikely to replicate the fees generated by the regional sports network model since they are outside of the pay TV bundle.
While Diamond was in negotiations with lenders and TV distributors, its key discussions took place with the leagues and teams. Some of those conversations are still ongoing, and a Diamond attorney said Thursday that the company is willing to renegotiate with the teams that have already departed.
“Our door remains open, the phone lines remain up, and management is happy to engage those teams if they want to come back into the fold,” a Diamond attorney said in court Thursday.

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Adidas has locked in 16-year-old basketball star Kaleena Smith.
The signing represents Adidas’ first signing of a high school female basketball player.
Smith also represents Adidas’ first signing since the brand put Candace Parker in charge of women’s basketball.

Adidas has signed Kaleena Smith as the bradn’s first NIL high school basketball player.
Courtesy: Adidas

Adidas has signed one of its youngest female athletes yet.
The German sports apparel brand on Thursday announced the signing of Kaleena Smith as its first high school girl’s basketball partner under a name, image and likeness, or NIL, deal.

Smith, a 16-year old sophomore in Ontario, California, is the highest-rated recruit in the class of 2027. She has already received nearly 20 college offers from programs including the University of Southern California, the University of Louisville, the University of Connecticut, the University of California, Los Angeles, Louisiana State University and the University of South Carolina.
The young basketball phenomenon represents Candace Parker’s first signing since she took over as president of Adidas women’s basketball in May. Parker, a former first-round WNBA draft pick, played 16 seasons in the WNBA and is a three-time WNBA champion and seven-time WNBA All-Star.
Adidas tapped her to help evolve the company’s women’s basketball business.

Kaleena Smith is Candace Parker’s first signing since joining Adidas in May.
Courtesy: Adidas

“Signing Kaleena as our first high school NIL women’s basketball athlete is a pivotal moment for us as we lead in championing women’s sports and building greater access to and representation in the game that we all love,” Parker said.
Adidas said Smith will represent the brand on the court during all her games with Ontario Christian High School, in addition to her AAU team. She represents one of Adidas’ youngest athletes. The brand signed its youngest current athlete, 15-year-old soccer star Chloe Ricketts, in March.

“I’m blessed to be part of something Candace is creating, and to get to do that with a brand like Adidas who is taking a different approach to play a role to help grow the game for players like me,” Smith said.
The 5-foot-6 point guard was the MaxPreps National Freshman of the Year, averaging 34.9 points, 6.5 assists and 4.2 steals per game.
Smith said she’s looking forward to wearing James Harden’s Adidas sneakers this season.
While Smith is the first girl’s high school athlete to represent Adidas, the brand has signed deals with a roster of women basketball players including Chelsea Gray, Kahleah Copper, Aliyah Boston, Aaliyah Edwards, Nneka Ogwumike, Betnijah Laney-Hamilton, Layshia Clarendon, Sophie Cunningham, Erica Wheeler, Zia Cooke, Alysha Clark and Janiah Barker.
Adidas has been busy in the NIL space recently.
The brand signed Miami quarterback Cam Ward last month to a deal. In August, it announced the signing of six Texas Tech athletes as part of Patrick Mahomes’ NIL initiative with Adidas. The brand also signed 15 female student-athletes to NIL deals in July 2022 to celebrate the 50th Anniversary of Title IX.

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Disney CFO Hugh Johnston told CNBC on Thursday the company doesn’t plan to change its TV network portfolio anytime soon.
The comments come more than a year after CEO Bob Iger opened the door to selling Disney’s linear TV assets, and weeks after Comcast said it was considering the separation of its cable networks.
Disney reported earnings on Thursday, which highlighted significant growth in the streaming business while traditional TV networks’ metrics continue to detract.

Scene from the FX series Shogun.
Source: Disney | FX

Disney has done the math on separating its TV networks business, and it appears too messy to be done — at least for now.
The company’s chief financial officer, Hugh Johnston, said Thursday on CNBC’s “Squawk Box” that the “cost is probably more than the benefit” when it comes to separating its TV networks business, given the “operational complexity.”

The future of the traditional TV network business has been top of mind in the media industry. In late October, Comcast executives said they were exploring a separation of the cable networks business. Executives said the process was in early stages and the outcome was unclear.
The cable news bundle, despite still being a cash cow for companies, is losing customers at a fast clip. The industry overall lost 4 million traditional pay TV subscribers in the first six months of the year, according to estimates from analyst firm MoffettNathanson.
Disney reported Thursday that revenue for its traditional TV networks was down 6% for its most recent quarter to $2.46 billion, while profit in the division sank 38% to $498 million.
Its apparent commitment to the segment seems to be an about-face.

Last summer CEO Bob Iger opened the door to the sale of its TV assets. Iger had recently returned to his post as chief executive, instituted a vast restructuring of the company and was facing down an activist investor.

Johnston said during Thursday’s earnings call that soon after he joined Disney a year ago he began evaluating divestitures. He noted that after “playing around with spreadsheets” there was no clear path to value creation after divesting the networks or other businesses.
“I like the portfolio the way it is right now. I wouldn’t change anything,” Johnston said Thursday on CNBC.
Similarly, Fox Corp. CEO Lachlan Murdoch earlier this month noted the complexity of separating the company’s cable TV networks — albeit a much smaller group of networks than its peers.
“From my perspective, I don’t see how we could ever do that. I think breaking apart part of the business would be very difficult, from both a cost point of view and from a revenue and a promotional synergy point of view,” Murdoch said on Fox’s earnings call.
Warner Bros. Discovery CEO David Zaslav noted during that company’s earnings call last week that despite challenges of the bundle, it is “still an extraordinarily important part of our business.” He added it is “a core vehicle to deliver WBD storytelling.”
Iger, on Thursday, echoed those comments, touting the content that stems from the traditional TV business and its integration with streaming, which remains front and center for Disney.
Iger particularly highlighted Disney’s acquisition of Fox’s entertainment assets in 2019 as providing the content to help propel the streaming business. Activist investor Nelson Peltz slammed the deal last year, saying it contributed to eroding shareholder value.
“We specifically mentioned that we were doing so through the lens of streaming, we saw a world where streaming was going to proliferate and we knew we needed not only more content but more distribution,” Iger said Thursday.
He noted the 60 Emmy Awards Disney received this year for content including FX’s TV series “Shōgun,” “The Bear” and “Fargo,” which also appear on Hulu.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC, and is a co-owner of Hulu.

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Tapestry and Capri have mutually agreed to call of their merger.
The parent companies behind Coach and Michael Kors saw their proposed merger blocked by the Federal Trade Commission.
In October, Tapestry said it would appeal the ruling.

Pedestrians walk past a Michael Kors store on August 10, 2023 in Chicago, Illinois. 
Scott Olson | Getty Images

Capri and Tapestry called off their merger on Thursday after the Federal Trade Commission successfully sued to block the megadeal.
The two U.S.-based luxury houses “mutually agreed” that terminating the merger was in their best interests as they were unlikely to get regulatory approval before the deal was set to expire in February, according to a news release.

“With the termination of the merger agreement, we are now focusing on the future of Capri and our three iconic luxury houses,” Capri CEO John Idol said in a statement. “Looking ahead, I remain confident in Capri’s long-term growth potential for numerous reasons.”
The $8.5 billion acquisition, originally announced in August 2023, would have married America’s two largest luxury houses and put six fashion brands under one company: Tapestry’s Coach, Kate Spade and Stuart Weitzman with Capri’s Versace, Jimmy Choo and Michael Kors. 
In April, the FTC sued to block the deal, saying the tie-up would disadvantage consumers and reduce benefits for the companies’ employees. Last month, a federal judge ruled in the FTC’s favor and granted its motion for a preliminary injunction to block the proposed merger.
At the time, Tapestry said it would appeal the ruling.
In its own news release Thursday, Tapestry said it doesn’t need Capri to continue growing and will use the cash it’s freed up to fund an additional $2 billion share repurchase authorization.

“We have always had multiple paths to growth and our decision today clarifies the forward strategy. Building on our successful first quarter, we will move with speed and boldness to accelerate growth for our organic business,” CEO Joanne Crevoiserat said in a statement.
Tapestry plans to fund the stock repurchase through a combination of cash on hand and debt. 
The company said Thursday “there is no break fee associated with the transaction,” but under the terms of the merger agreement, Tapestry had agreed to pay Capri for its expenses if the deal failed to earn regulatory approval. Tapestry said it will reimburse Capri around $45 million.

Jimmy Choo, Michael Kors, and Versace stores on Rodeo Drive in Beverly Hills, California, US, on Thursday, April 18, 2024. 
Eric Thayer | Bloomberg | Getty Images

Recently, Wall Street analysts had begun to sour on the merger, saying Tapestry was poised to overpay for Capri considering the lengthy approval process and how much Capri’s business had declined.
In the initial aftermath of the judge’s ruling, shares of Capri plunged around 50% while Tapestry’s stock surged about 10%. On Thursday, Tapestry shares were more than 7% higher in premarket trading while Capri’s were down around more than 5%.
Capri is slated to have a call with analysts at 11 a.m. ET to discuss the decision and its strategies to return to growth and fix its most important brand, Michael Kors, which has been grappling with a long decline in sales.
“Given our Company’s performance over the past 18 months, we have recently started to implement a number of strategic initiatives to return our luxury houses to growth,” Idol said in a news release. “Across Versace, Jimmy Choo and Michael Kors, we are focused on brand desirability through exciting communication, compelling product and omni-channel consumer experience. While our strategies are tailored uniquely for each brand, our overarching goals are similar.”

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Disney reported its fiscal fourth-quarter earnings Thursday.
Revenue for the entertainment segment – which includes the traditional TV networks,  direct-to-consumer streaming and films – increased 14% year over year.
Revenue for Disney’s sports segment, made up primarily of ESPN, was flat.

A statue of Walt Disney and Mickey Mouse stands in a garden in front of Cinderella’s Castle at the Magic Kingdom Park at Walt Disney World on May 31, 2024, in Orlando, Florida.
Gary Hershorn | Corbis News | Getty Images

Disney reported its fiscal fourth-quarter earnings Thursday, narrowly beating analyst estimates as streaming growth helped propel its entertainment segment. 
Here is what Disney reported compared with what Wall Street expected, according to LSEG

Earnings per share: $1.14 adjusted vs. $1.10 expected
Revenue: $22.57 billion vs. $22.45 billion expected

Disney’s net income increased to $460 million, or 25 cents per share, from $264 million, or 14 cents per share, during the same quarter last year. Adjusting for one-time items, including restructuring and impairment charges, Disney reported earnings per share of $1.14. 
Total segment operating income increased 23% to $3.66 billion compared with the same period in 2023.  
Revenue for the entertainment segment – which includes the traditional TV networks,  direct-to-consumer streaming and films – increased 14% year over year to $10.83 billion after a hot summer at the box office.
Disney Pixar’s “Inside Out 2” became the highest-grossing animated movie of all time this summer, surpassing Disney’s “Frozen II” at the box office. Meanwhile, its “Deadpool & Wolverine” became the highest-grossing R-rated film of all time, surpassing Warner Bros. Discovery’s “Joker.”
The films added $316 million of profit for the entertainment segment during the quarter. Overall, the entertainment segment reported nearly $1.1 billion in profit.

Revenue for Disney’s sports segment, made up primarily of ESPN, was flat. ESPN’s profit fell 6% due in part to higher programming costs associated with U.S. college football rights as well as fewer customers in the cable bundle. 
Disney’s combined streaming business, which includes Disney+, Hulu and ESPN+, saw profitability improve during the quarter after turning its first profit during the fiscal third quarter, three months earlier than expected. The division reported an operating income of $321 million for the September period compared with a loss of $387 million during the same period last year. 
Disney joined its peers, including Warner Bros. Discovery, Netflix, Comcast and Paramount Global in adding streaming subscribers during the most recent quarter. 
Disney+ Core subscribers – which excludes Disney+ Hotstar in India and other countries in the region – grew by 4.4 million, or 4%, to 122.7 million. Hulu subscribers grew 2% to 52 million. 
Average revenue per user for domestic Disney+ customers dropped from $7.74 to $7.70, as the company had a higher mix of customers on its cheaper, ad-supported tier and wholesale offerings. 
Meanwhile the company’s traditional TV networks business continued to decline as consumers leave pay TV bundles behind in favor of streaming. Revenue for the networks was down 6% to $2.46 billion. Profit for the segment sank 38% to $498 million. 
The experiences segment, which includes Disney’s theme parks as well as consumer products, saw revenue grow 1% to $8.24 billion. 
The domestic parks’ operating income rose 5% to $847 million, helped by higher guest spending at the parks and cruise lines. 
Operating income at the international parks, however, fell 32% due to a decline in attendance and in guest spending as well as increased costs. 
The company said Thursday it’s “confident in the long-term prospects for the business,” and provided an outlook that includes its fiscal 2025, 2026 and 2027.
Disney expects a “modest decline” in Disney+ Core subscribers during the fiscal first quarter of 2025 compared with the prior quarter.
Full-year profit in the entertainment streaming business, which excludes ESPN+, is expected to see an increase of roughly $875 million compared to the prior fiscal year and to increase by a double digit percentage in its fiscal 2026.
Disney also anticipates double-digit percentage growth in fiscal 2025 for its entertainment segment.
The experience segment, however, is expected to see just 6% to 8% profit growth in the coming fiscal year compared to the prior year. Disney noted the fiscal first quarter will see a $130 million hit due to the impact of Hurricanes Helene and Milton, as well as a $90 million impact from Disney Cruise Line pre-launch costs.
During Disney’s fiscal 2025, the company expects high-single digit adjusted earnings growth compared to the prior fiscal year. The company expects double digit adjusted EPS growth in both fiscal 2026 and 2027.
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