Back in August 2019, Sinclair shocked many by spending $10.6 billion to buy the Fox Regional Sports Networks or RSNs. These networks have now been renamed to Bally Sports and are in the middle of an extremely messy bankruptcy that will lead to the complete jettison of the business from Sinclair.
The proceedings kicked off in March when Sinclair’s Diamond Sports Group, which runs the regional sports network under the Bally Sports name, declared Chapter 11 bankruptcy protection. As part of the process, Sinclair would restructure the units debt but also turn it into a completely separate entity.
This marks a stunning reversal for Sinclair, which spent a jaw-dropping amount on the regional sports networks — which were spun off by Fox as a condition of its sale to Walt Disney Co. — just four years ago. The sports networks were beset by the pandemic, as well as an increasing number of consumers cutting the cord as things have quickly spiraled.
Then on Monday, Diamond Sports Group sued Sinclair and JP Morgan chase, alleging Sinclair charged too much for management services and arguing that Sinclair is profiting from a licensing rights deal in which Ballys pays Sinclair for the naming rights to Diamond Sports’ regional networks.
Diamond Sports also wants Sinclair to pull back money that was paid to JP Morgan Chase. Earlier this year, Sinclair paid Chase $190.2 million to cover the majority of preferred equity units the bank bought for $1.025 billion in 2019, which allowed for the original deal to create Bally Sports.
“Diamond Sports Group is seeking to vindicate its rights and protect the value of the Diamond bankruptcy estate, including by recovering value from Sinclair Broadcast Group that was improperly transferred from Diamond prior to its filing for bankruptcy in March 2023.” Said a Diamond Sports Group spokesperson.
Now it seems that Bally Sports not only wants to break free from the high costs of its contracts with MLB, NBA, and NHL teams but also could use this lawsuit to fully sever the commitments tangled up in Sinclair’s ownership of Diamond Sports Group.
Diamond Sports operates independently and manages the Bally Sports RSNs. Currently, it manages TV rights for 40 professional teams, including 12 MLB teams, 16 NBA teams, and 12 NHL teams. This lawsuit could be used to fully cut ties between the two companies making Bally Sports.
Recently, Bally Sports has taken a number of hits, including losing TV rights to the Arizona Diamondbacks, Phoenix Suns and San Diego Padres. There is also talk that the Twins will not be renewing their contract with Bally Sports after the MLB season ends. The loss of these networks and the drop in distribution has made Bally Sports a lot less attractive than it was just a few short years ago.
Now we will have to wait and see how the judge rules when it comes to its contracts with its own parent company.
Sinclair Media wasn’t immediately available to provide an update.