Sinclair buys Fox Sports regional networks

This is pretty funny. They can actually play it like, "Don't worry, MLB has your back. We'll make sure the games are streamed!"

The reality is that MLB is licking its chops right now. They are ready to step in and buy back the rights they had sold. ... at a discount! They are the winners here. Like huge winners, if that happens.

 

The companies going bankrupt right now were victims of the lure of cheap money / private equity financialization. It was a giant game of hot potato where they changed hands several times, and each time it got loaded up with more debt to make a sale possible. That happened because of a decade of artificially low interest rates that blew asset prices higher and higher on the back of mispriced debt that could just be rolled over, over and over again, into a bigger pile of debt. Everyone was getting richer. ... as long as you could refinance debt at no cost and roll it over into an even bigger pile of debt.

That works. ... until the party ends. For a long time, the monetary inflation behind the phenomenon was finding its way into higher and higher asset values, much less so than into things consumer buys.

But when Covid hit, because of the amount of debt monetization they did, they lost control and broad consumer price inflation took off on the back of too much money chasing too few goods (a supply chain problem exacerbated that). So they have been forced to make a show of tightening the insanely loose financial conditions that loaded up those sports networks with an unsustainable level of debt over the course of a decade +. And that caused severe distress, and now bankruptcy, because they can't refinance at no cost anymore. They are drowning in their interest payments with rates just a little higher.

Broadcasting MLB games -- even taking into account the hefty rights fees -- is a cash cow in a normal environment, if it is being done by someone who hasn't been incentivized to eat itself alive the way those RSNs were.

MLB now. ... is going to be a vulture and try to buy back what it sold for a lot of money. ... except at a discount. They win if that happens. But sure, Manfred will do fans the favor of doing something that is going to end up being incredibly financially lucrative for MLB. I'm surprised he didn't burst out laughing when he was saying it.