Why Local Sports And News Provider Sinclair Shares Are Jumping Today

Sinclair, Inc. SBGI has reached a preliminary agreement to settle the lawsuit filed by Diamond Sports Group, LLC (DSG) and its subsidiary Diamond Sports Net, LLC in July 2023. 

DSG will retract its $1.5 billion claim against Sinclair and other defendants as part of the settlement. In return, Sinclair will make a $495 million cash payment to DSG. 

The settlement is subject to definitive documentation, including the finalization of certain transition terms and approval by the U.S. Bankruptcy Court overseeing DSG’s Chapter 11 case.

The amount is expected to yield a net expense of about $250-325 million for Sinclair after accounting for tax advantages, additional payments under the Management Services Agreement to Sinclair Television Group, LLC (STG), and other assets and values acquired in the settlement.

Sinclair’s $495 million payment will be financed through existing funds at Sinclair Ventures, LLC, Sinclair Television Group, LLC, or a loan secured by Sinclair Ventures, LLC. Additionally, Sinclair will offer transition services to DSG, aiding its development into an independent entity.

Sinclair has agreed to this settlement without conceding any fault or liability. Should the court not grant final approval, Sinclair affirms its readiness to defend against the allegations in the lawsuit.

In addition, Sinclair said agreed to a multi-year renewal of all FOX Corporation FOXA FOX FOX affiliations in Sinclair markets.

Sinclair partners also renewed FOX affiliations in markets where Sinclair provides sales and other services under a joint sales agreement or master service agreement. The 41 renewed markets serve approximately 19 million TV households.

Price Action: SBGI shares are trading higher by 14.8% at $15.64 on Wednesday. 

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.