Diamond Sports Group, LLC is now suing its parent company, Sinclair Broadcast Group, Inc, reportedly alleging that an inappropriate payment was made to JP Morgan Chase & Co. In a separate but related lawsuit, Diamond is also suing JPMorgan.
The details on the lawsuit are extremely limited at the moment and neither Diamond nor Sinclair have issued a statement so far. According to Bloomberg Law, both lawsuits were filed in secret and have been sealed. It would seem that the two lawsuits center around a preferred equity repayment paid to JPMorgan by Sinclair.
In spite of the limited information available, Next TV has looked to provide some additional context on the basis of the lawsuits. Citing “an individual with knowledge of the complaints,” Next TV reports that Sinclair made a payment of $190.2 million to JPMorgan in February, shortly before Diamond filed for bankruptcy.
The timing of this payment appears to be important here, as the suggestion being made is that Sinclair pushed scheduling of the payment forward knowing that Diamond was about to enter bankruptcy. The other suggestion is that the payment essentially allowed JPMorgan to recover nearly all of the initial investment it made in 2019 to help Sinclair purchase the Fox-owned RSNs. It is these RSNs that eventually became Bally Sports RSNs.
According to the report, the main issue Diamond seems to have with Sinclair and JPMorgan is that it has been left dealing with the financial fallout while JPMorgan was largely repaid on its investment and Sinclair profited from a naming rights deal with Bally’s Corp.
Outside of these lawsuits, the Diamond Sports issues continue. After initially losing the rights to San Diego Padres games, Diamond also recently relinquished the rights to Arizona Diamondbacks games as well.
Broadcast rights to both of these teams have now been returned to MLB, who is now offering local broadcast options as well as direct-to-consumer streaming solutions.