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MSG Networks, the embattled cable TV station that airs New York Knicks and Rangers games, is in talks to reach a deal to avoid bankruptcy as soon as Friday — and insiders speculate that help could be coming from a deep-pocketed media player like Amazon, The Post has learned.
The sports channel controlled by billionaire Knicks owner James Dolan — currently blacked out for about 1 million New York-area subscribers because of a contract dispute with the Optimum cable network — is scrambling to restructure its debt with a group of lenders led by JPMorgan who are owed $829 million.
MSG Networks in October defaulted on its loans but lenders have extended the payment deadline multiple times, most recently from Jan. 10 to Friday at midnight. This time, the aim is to reach a deal rather than simply extend the deadline again, according to sources briefed on the discussions.
“Talks are ongoing,” sources close to the situation said on Friday afternoon.
MSG Networks did not return calls and JPMorgan declined to comment.
To make a deal happen, sources speculate that MSG will take cash from a new, outside investor to refinance the crippling debt load — and hand over a stake in the cable business in return. No deal would impact Dolan’s ownership of the Knicks and Rangers, the sources added.
Chatter is now circulating that one possible solution would be to partner with Amazon, whose Prime video service already has a deal with Diamond Sports, the nation’s largest operator of so-called RSNs, or regional sports networks, to broadcast games for pro sports teams nationwide.
Amazon is also an investor in the YES Network that airs Yankees and Nets games, with Prime now airing weekly Yankees games in the New York City area.
Amazon declined to comment.
Sources said a key benefit in a deal with Amazon would be to give MSG Networks an alternative to Optimum. The carriage dispute with the Altice USA-owned cable provider cost MSG Networks an estimated $10 million in lost revenue in January, according to analysts.
Comcast also dropped MSG Networks in 2021. Meanwhile, MSG Networks’ own streaming service, the Gotham Sports App, charges $29.99 per month and has not attracted a large subscriber base, sources said
As MSG Networks flails, Dolan himself hasn’t signaled any possible move to refinance the debt himself. Indeed, shares of MSG Networks’ parent company, publicly-traded Sphere Entertainment, have risen 7.5% over the last five days, with investors betting that an MSGN bankruptcy will stem losses and improve its balance sheet, according to analysts.
Sphere shares were down 3% in after-hours trading Friday on the possibility that bankruptcy could be averted.
If the latest talks fail and MSG Networks slips into bankruptcy, lenders would likely take over operations and keep airing games, sources said.
A bankruptcy also could raise the odds of a deal with Optimum, since a lighter debt load would enable MSG Networks to charge Optimum lower fees to carry its games, sources said.
Under the deal that expired Dec. 31, Optimum was paying MSG Networks about $10 per subscriber, making it one of the most expensive cable channels, according to reports.
Optimum, which has about one-third of the roughly 3 million subscribers in the New York City area, is looking to put MSGN on a premium tier so there would be far fewer MSGN subscribers and it can lower costs.
Its parent company Altice too is deeply in debt.
Without Optimum’s customers, MSG Networks is losing money even before factoring in its interest payments, analysts said.
“A full drop would ultimately bankrupt MSG Networks,” media analyst Brandon Ross of LightShed Partners wrote earlier this month in a report.
Revenue from cable providers is falling due partly to cord-cutting since there are far fewer subscribers.
MSG Networks contract with Verizon’s Fios expires in September, leading to another potentially difficult negotiation, a lender told The Post.
The cable network is losing money because it is paying $187 million in 2025 to broadcast Knicks and Rangers games as part of a 20-year agreement that ends in 2035, according to public filings.
“The model is upside down,” a source in the RSN industry said, and the prices paid for media rights a decade ago now make little sense.
New MSGN owners in a potential bankruptcy could cancel the Knicks and Rangers media rights deal and negotiate a much lower contract, the RSN source said.
Dolan, who controls the Knicks and Rangers, could lower the rights fees as part of an overall package that keeps MSG Networks out of bankruptcy and puts it on stronger financial ground.