Relations between Sinclair Broadcasting Group (SBG) and its regional sports network (RSN) subsidiary Diamond Sports Group (DSG) are about as bad as they can be. DSG filed a lawsuit against Sinclair in July, alleging that its parent company had improperly funneled $1.5 billion away from it and that Sinclair executive chairman told MLB commissioner Rob Manfred he was going to “milk” Diamond for cash before putting it into bankruptcy.
According to NextTV, Sinclair filed a motion in court this week, calling DSG’s claims “lactose-infused rhetoric” and asking to have the suit tossed out. JP Morgan joined Sinclair in the motion; that firm is also being sued by Diamond for essentially cutting in line to be paid back by the broadcaster when other debtors had better claims to be paid first.
In its filing with the court, Sinclair wrote, “The debtors’ complaint strains to portray a nefarious plot by Sinclair at Diamond’s expense. Beneath the overheated rhetoric, however, the debtors’ own allegations present a series of ordinary business transactions and extraordinary efforts by Sinclair to support the Diamond enterprise, including in the face of a global pandemic and unprecedented business disruption.”
DSG owns and operates 19 RSNs under the Bally Sports brand, as well as their companion streaming platform Bally Sports+. Sinclair bought the channels in 2019, and unprecedented rates of cord-cutting have caused their value to crator since then. Their distribution has dwindled, and upcoming carriage negotiations with Comcast and DIRECTV could exacerbate that problem if either of those providers decides not to continue carrying the channels.
Corporate relations between Sinclair and Diamond have been frosty, to say the least. Sinclair has been blocked from having any say in day-to-day operations at DSG since December and is also claiming that Diamond owes over $100 million in unpaid management fees.
DSG has been in bankruptcy court since March, and has until Sept. 30 to produce its final plan for restructuring its $8 billion+ debt load. The company surrendered the rights to the Arizona Diamondbacks and San Diego Padres over the summer, and may do likewise with NBA teams as the season goes along if it can’t make agreeable deals with those teams.
Depending on how events transpire over the next couple of months, it could be a long, dark winter for DSG. The company’s very existence seems in question at the moment, as it tries to convince its partners and a bankruptcy court judge that it has a viable plan to keep its channels and its streaming service in business.
Bally Sports+
Bally Sports+ is a direct-to-consumer streaming service that offers live games for those who want access to your local Bally Sports RSN without subscribing to a cable or satellite package.