Diamond Sports Sues Parent Company Sinclair Broadcasting for Funneling $1.5 Billion Away from Regional Sports Network
Diamond Sports Sues Parent Company Sinclair Broadcasting for Funneling $1.5 Billion Away from Regional Sports Network
Sinclair Broadcasting Group (SBG) and Diamond Sports Group (DSG) aren’t exactly the best of friends these days, despite the fact that Diamond is still a Sinclair subsidiary. In fact, a new report from Bloomberg is outlining details about DSG’s current lawsuit against Sinclair, which was first filed last month.
The allegations in the suit were not made public until Wednesday, when it was revealed that Diamond is accusing Sinclair of draining $1.5 billion from it, money that would certainly be helpful to have now as DSG tries to resolve a debt load of more than $8.5 billion in bankruptcy court. The suit also uses testimony from MLB commissioner Rob Manfred which alleges that Sinclair’s executive chairman David Smith told Manfred he planned to “milk” DSG to recover his company’s investment in the regional sports network (RSN) operator, then put it into bankruptcy.
For its part, a Sinclair spokesperson previously said the company was aware of Diamond’s lawsuit, that allegations in the complaint lack merit and that the company intends to vigorously fight the charges in court. This is not at all the first sign that intra-corporate relations between the two entities are far from rosy.
Sinclair has had no day-to-day input on operations at DSG since December, when the latter broadcaster held a board meeting vote to block its parent company from having a say. SBG has owned Diamond since 2019, when it acquired the company from Disney, who in turn acquired it from Fox the same year. Before that, the channels owned by Diamond operated under the Fox Sports RSN brand; they now do business as Bally Sports channels.
Diamond has had to surrender the rights to two MLB teams this season, and it has also lost the broadcasting rights to the NBA’s Phoenix Suns. It was recently granted an 80-day extension of bankruptcy protections in order to help it fulfill its obligations to the NBA and NHL, whose regular seasons are starting up soon and who have 27 teams on Bally Sports RSNs between them.
This week, DSG requested the court assign a mediator to help it resolve its issues with creditors, another sign that things aren’t going so well for the company. It’s clearly trying to do whatever it can to keep its channels, as well as its in-market streaming platform Bally Sports+ afloat, including suing its parent company to try to recoup billions it says were improperly taken.
Bally Sports+
Bally Sports+ was a direct-to-consumer streaming service that provided live, in-market games without requiring a cable or satellite subscription. It allowed fans to watch their local Bally Sports regional sports network (RSN) without a traditional TV package.