Sinclair Broadcast Group Inc. wrongfully drained at least $1.5 billion from its regional-sports-network subsidiary in the years leading up to its bankruptcy, a new lawsuit alleges, MarketWatch.com reported. In a lawsuit filed last month but made public Wednesday, Diamond Sports Group — which broadcasts nearly half of all Major League Baseball, National Basketball Association and National Hockey League games — accused its parent company of a “nefarious strategy” that sent it “careening toward bankruptcy.” According to the lawsuit, which was filed in U.S. Bankruptcy Court for the Southern District of Texas, Sinclair took more than $100 million a year in management fees from Diamond after acquiring the sports network for $10.6 billion from the Walt Disney Co. DIS, -0.82% in 2019, loaded it with billions in debt and funneled resources from the company while its business was left to languish. According to the suit, MLB Commissioner Rob Manfred testified that Sinclair Executive Chairman David Smith told him in late 2021 that he intended to “continue to milk” Diamond out of hundreds of millions in management fees along with “whatever else” he could take from the company until Sinclair’s original investment in the regional sports network was recouped.
