Diamond Sports Enters Bankruptcy as Expected; No Further Impact to Sinclair

As expected, Diamond Sports Group, the owner of 19 regional sport networks, declared bankruptcy on March 15, less than one month after not making a $140 million interest payment on its debt. DSG, an unconsolidated subsidiary of Sinclair, despite Sinclair owning most of the equity, has agreed to a restructuring plan with its creditors that will transfer ownership of the firm to its creditors, wiping out Sinclair's equity in exchange for removing $8 billion in debt. While the deal has not been approved by all parties or the court, we view approval as likely given that Sinclair and creditors have been discussing the agreement since November. We expect that DSG will move even further away from Sinclair after emerging from bankruptcy and will no longer use its former parent for any significant services. We are maintaining our $22 FVE as we already assumed no value for Sinclair's equity and little-to-no revenue from DSG in our forecast.