Sinclair Broadcasting Takes $4.2 Billion Hit Over Regional Sports Networks

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Sinclair Broadcasting Takes $4.2 Billion Hit Over Regional Sports Networks

Station group leader bought 21 networks from Disney for more than $10 billion last year

Sinclair Broadcasting wrote off more than $4 billion this morning over its regional sports networks.

The local TV station giant reported a $4.2 billion “impairment charge” due to its RSN business when announcing its third quarter earnings Wednesday.

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Sinclair purchased 21 regional sports networks (RSN) last year from Disney for more than $10 billion and formed a new subsidiary, Diamond Sports Group. In a separate deal, Sinclair took a minority stake in the YES Network. Earlier this year, the company also launched the Marquee Sports Network in Chicago, the new TV home for Cubs games.

The deals gave Sinclair, already the largest owner of local TV stations (170) in the country, local TV rights for 42 professional sports teams across the NHL, NBA and Major League Baseball, in markets including Detroit, Southern California, Dallas, Cleveland and Miami.

The RSN business was hit particularly hard by the 3-4 month sports shutdown by the coronavirus pandemic, which left them without their most prized assets, live games. Even though leagues eventually started back up, the NBA and NHL seasons finished out largely on their national TV partners, which Major League Baseball chopped off nearly 100 games from its season.

Further complicating matters, both YouTube and Hulu dropped carriage of Sinclair’s RSNs from their live-streaming TV bundle offerings.

Two weeks ago, the Wall Street Journal reported that Sinclair’s RSN business and its creditors were “preparing for a possible restructuring of its roughly $8 billion debt load,” amid the loss pay-TV deals and COVID-19 impacts.

Tim Baysinger