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Diamond Sports sues Sinclair, hopes to recover more than $1.5 billion
By Sarah Lizee
Olympia, Wash., July 21 – Diamond Sports Group, LLC filed a complaint against parent company Sinclair Broadcast Group, LLC and others, challenging a series of transactions involving the parties since Sinclair acquired the former Fox Sports regional sports networks from Walt Disney Co. in August 2019, according to an 8-K filed with the Securities and Exchange Commission.
The sealed complaint was filed with the U.S. Bankruptcy Court for the Southern District of Texas on Wednesday.
The complaint alleges, among other things, that the management services agreement entered into by Sinclair Television Group, Inc. and Diamond Sports was not fair to Diamond Sports, and was designed to benefit Sinclair.
It also alleges that a transaction in November 2020 through which Bally’s Sports acquired naming rights to some regional sports networks was not fair to Diamond Sports and was designed to benefit Sinclair.
And it alleges that distributions made by Diamond Sports that were used to pay down preferred equity of Sinclair subsidiary Diamond Sports Holding LLC were inappropriate and were conducted at a time when Diamond Sports Group was insolvent.
Sinclair and its subsidiaries (other than Diamond Sports Group and its subsidiaries) received payments of about $1.5 billion because of the alleged misconduct, the complaint states.
Diamond Sports is seeking to avoid the transfers and distributions, as well as unspecified monetary damages.
Diamond Sports Group is an independently managed and unconsolidated subsidiary of Sinclair Broadcast Group. Diamond owns the Bally Sports Regional Sports networks, a provider of local sports. The Baltimore-based company filed Chapter 11 bankruptcy on March 14 under case number 23-90116.
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