Sinclair Responds to Diamond Sports’ Fraud Lawsuit With Demands for $147M in Unpaid Management Services
The saga of Sinclair Broadcast Group and Diamond Sports Group is getting uglier thanks to new claims levied by the parent company towards its subsidiary. Following DSG’s lawsuit in which the regional sports broadcaster accused Sinclair of draining $1.5 billion from the company — money that DSG could’ve used to get itself out of bankruptcy — Sinclair says DSG owes the company nearly $150 million for “unpaid management services” and other services previously paid below agreed-upon rates.
Sinclair says in a filing that the company “is being forced to shoulder the burden and expense of the [management services] at a significant discount, while effectively subsidizing Diamond’s litigation against Sinclair attacking those very same services.”
Management services, according to Sinclair, cover aspects of the company like affiliate sales, marketing plans, payroll, accounting, insurance, and, most importantly, legal guidance. In a not-so-roundabout way, Sinclair attests that it is helping DSG sue itself — and SBG either wants to stop it or get paid for it. Although Sinclair has had zero input to DSG's day-to-day operations since December, it is still Diamond Sports’ parent company and inherently their operations will be intertwined. There also may have been services rendered dating back to before the acrimonious separation that still need to be paid.
This year has been a rough year for DSG and its Bally Sports regional sports networks (RSNs). The company has had to forfeit the broadcast rights for MLB’s San Diego Padres and Arizona Diamondbacks, and almost forfeited the rights to a collection of other Major League Baseball clubs. Its direct-to-consumer (DTC) streamer, Bally Sports+, clearly did not secure enough subscribers to help the company break even, let alone claim profit.
Then, in March, the company officially filed for bankruptcy, confirming speculation that had been swirling around the media world for months prior. In July, DSG sued Sinclair for allegedly intentionally draining money from the company and says that Sinclair’s executive chairman David Smith told MLB commissioner Rob Manfred he planned to “milk” DSG to recover his company’s investment in the regional sports network operator, then have it file for bankruptcy. Not an ideal year to say the least.
The one winner in all this might be Major League Baseball. Manfred has made it clear on multiple occasions that he is not a fan of DSG or Sinclair — or RSNs in general) and would love to reclaim the broadcast rights to all 30 MLB clubs to handle them in-house. DSG has reportedly had productive talks with NBA and NHL teams recently, but hasn’t had the same luck when it comes to MLB clubs.
Had Diamond originally positioned its business around NBA and NHL clubs rather than MLB teams, it might have been able to come out on the other side. However, an over-reliance on streaming baseball may have doomed the company for good. It is difficult for a sports-focused platform to keep customers engaged and subscribed year-round without new, live sports content in the summer months when basketball and hockey are in their respective off-seasons.
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.