Sinclair Announces Global Settlement of All Diamond Sports Group-Related Litigation Issues, Including Agreement with Diamond on Management Services Agreement Amendment

Rhea-AI Summary

Sinclair, Inc. (SBGI) has reached a global settlement with Diamond Sports Group, LLC (DSG) to resolve litigation, including an amendment to the Management Services Agreement. The settlement involves a cash payment of $495 million from Sinclair to DSG, with an estimated net cost to Sinclair of $250-325 million after tax benefits and other payments. The settlement is subject to final documentation and court approval, and Sinclair will provide transition services to DSG. If the settlement is not approved, Sinclair will continue to defend against the claims.

Insights

Financial Analyst

The settlement between Sinclair Inc. and Diamond Sports Group (DSG) represents a significant financial event with implications for Sinclair's cash flow and balance sheet. The agreement to pay $495 million, with a net cost of approximately $250-325 million after tax benefits and other adjustments, is a substantial outflow of capital. Investors should consider the impact this settlement may have on Sinclair's financial flexibility and its ability to invest in future growth opportunities.

The funding of the settlement through cash on hand or a loan suggests that Sinclair has sufficient liquidity or access to financing, which is a positive indicator of the company's financial health. However, the long-term cost savings or strategic benefits resulting from the amended Management Services Agreement with DSG need to be assessed to determine the overall financial impact of the settlement. The transition services Sinclair will provide could also entail additional costs or resource allocation that may affect the company's operations in the short term.

Legal Expert

From a legal standpoint, the settlement of litigation is often a strategic move to avoid the uncertainties and expenses associated with prolonged legal battles. Sinclair's agreement to settle without admitting fault or wrongdoing is a common legal practice that allows the company to mitigate reputational risks and potential negative publicity. The requirement for final court approval and the completion of definitive documentation underscore the complexity and legal due diligence involved in such settlements.

The involvement of the U.S. Bankruptcy Court due to DSG's chapter 11 case adds another layer of legal scrutiny, ensuring that the settlement aligns with the interests of all creditors and stakeholders. The legal finalization of this agreement will be critical to Sinclair's ability to move forward without the overhang of this litigation, which can be a positive development for shareholders and potential investors.

Market Research Analyst

In the context of the broadcasting and media industry, the resolution of disputes through settlements can have strategic implications. For Sinclair, the amendment to the Management Services Agreement and the provision of transition services to DSG could reshape the competitive dynamics and operational structure of the company. The ability of DSG to become a self-standing entity may influence Sinclair's market positioning and partnerships.

Analysts and investors should monitor the market's response to this settlement, as it could affect Sinclair's stock valuation and investor sentiment. The potential benefits of reduced legal uncertainty and the strengthening of Sinclair's management services could be offset by the immediate financial cost and the need to effectively manage the transition process. The long-term strategic value of this settlement will depend on Sinclair's execution of the revised agreement and its ability to capitalize on the resulting opportunities.

HUNT VALLEY, Md.--(BUSINESS WIRE)-- Sinclair, Inc. (Nasdaq: SBGI) today announced that it has agreed, subject to definitive documentation and final court approval, to a global settlement and release of all claims associated with the litigation filed by Diamond Sports Group, LLC (DSG) and DSG’s wholly-owned subsidiary, Diamond Sports Net, LLC, in July 2023, which settlement includes an amendment to the Management Services Agreement between Sinclair Television Group, LLC (STG) and DSG.

The settlement terms include, among other things, DSG’s withdrawal of its $1.5 billion litigation against Sinclair and all other defendants, along with the full and final satisfaction and release of all claims in that litigation against all defendants, including Sinclair and its subsidiaries, in exchange for Sinclair’s cash payment to DSG of $495 million, which is estimated to result in a net cost to Sinclair of approximately $250-325 million after considering corresponding tax benefits, additional Management Services Agreement payments to STG, and other assets and value to be received by Sinclair in connection with the settlement. The $495 million cash payment will be funded by cash on hand at Sinclair Ventures, LLC, Sinclair Television Group, LLC and/or a loan backed by Sinclair Ventures, LLC. Under the terms of the settlement, Sinclair will provide transition services to DSG to allow DSG to become a self-standing entity going forward.

The settlement is subject to definitive documentation, including finalization of certain transition terms, and approval by the U.S. Bankruptcy Court in Houston overseeing DSG’s chapter 11 case. A motion for approval of the settlement is expected to be filed with the Court next week.

The Company has entered into the settlement, without admitting any fault or wrongdoing. If the settlement does not receive final Court approval, Sinclair remains committed to vigorously defending against the claims asserted in the litigation.

Forward-Looking Statements

The matters discussed in this press release include forward-looking statements regarding, among other things, future operating results. When used in this news release, the words "outlook," "intends to," "believes," "anticipates," "expects," "achieves," "estimates," and similar expressions are intended to identify forward-looking statements. Such statements are subject to a number of risks and uncertainties. Actual results in the future could differ materially and adversely from those described in the forward-looking statements as a result of various important factors, including and in addition to the assumptions set forth therein, but not limited to, (i) the settlement is subject to definitive documentation, including finalization of certain transition terms, and Court approval; (ii) the timing of any final decision by the Court; (iii) Sinclair’s ability to recognize the intended benefits of the settlement offsetting its cash payment in connection therewith, (iv) the impact of the settlement on Sinclair’s financial condition, business operations, results of operations and liquidity; and (v) any other risk factors set forth in Sinclair’s recent reports on Form 10-Q and/or Form 10-K, as filed with the Securities and Exchange Commission. There can be no assurances that the assumptions and other factors referred to in this release will occur. Sinclair undertakes no obligation to publicly release the result of any revisions to these forward-looking statements except as required by law.

About Sinclair, Inc.

Sinclair, Inc. (Nasdaq: SBGI) is a diversified media company and a leading provider of local news and sports. The Company owns, operates and/or provides services to 185 television stations in 86 markets affiliated with all the major broadcast networks; and owns Tennis Channel and multicast networks Comet, CHARGE!, TBD and The Nest. Sinclair’s content is delivered via multiple platforms, including over-the-air, multi-channel video program distributors, and the nation’s largest streaming aggregator of local news content, NewsON. The Company regularly uses its website as a key source of Company information which can be accessed at www.sbgi.net.

Category: General

View source version on businesswire.com: https://www.businesswire.com/news/home/20240116242855/en/

Christopher C. King, VP, Investor Relations

Billie-Jo McIntire, AVP, Investor Relations

(410) 568-1500

Source: Sinclair, Inc.

FAQ

What is the ticker symbol for Sinclair, Inc.?

The ticker symbol for Sinclair, Inc. is SBGI.

What is the amount of the cash payment from Sinclair to DSG in the settlement?

The cash payment from Sinclair to DSG in the settlement is $495 million.

What is the estimated net cost to Sinclair after considering tax benefits and other payments?

The estimated net cost to Sinclair is $250-325 million after tax benefits and other payments.

What court is overseeing DSG's chapter 11 case?

The U.S. Bankruptcy Court in Houston is overseeing DSG's chapter 11 case.

What will Sinclair provide to DSG as part of the settlement?

Sinclair will provide transition services to DSG to allow DSG to become a self-standing entity going forward.