Sinclair buys Fox Sports regional networks

Of course nobody is forced to take on $9.6 billion in debt. That isn't the point. That is the incentivized environment, which is why mispriced debt markets ALWAYS lead to the same kind of behavior. It's actually moral hazard in a nutshell, because one of two things happen: You get bailed out by "policy" designed for you to paper over the debt you took on with more debt, or the party ends and it wasn't YOUR money that you were acting insane with.

There is a reason why when the price of money is grossly distorted, you see things like what we are discussing happen to an extreme. The distorted environment destroys price discovery, which is the natural regulator preventing the kind of malinvestment behind this.

They were judging whether they would be able to pay back the debt they took on. But the distorted environment was leading them to make projections based on the distorted environment, not a reality where the party might end someday. The fact that money was essentially made free for more than a decade dragged more and more people into what in hindsight looks like rash behavior. ... but n the moment your choices are: Lose money in real terms by trying to be a prudent saver (saving, not overstimulation, is what feeds more prudent investment). ... or accept that savers are being robbed to reward debt and the speculative environment that debt is feeding.

Asset prices were being blown into bubble territory, and over time the bubble was growing exponentially. All of that mispriced debt is what caused it. In that environment, you buy something is worth say $9.6 billion in bubble terms, and you leverage it to the hilt thinking that the cash you generate can keep you on the treadmill of servicing that debt. You just roll it over at no cost the way everyone has been doing it for more than a decade. And your experience is that asset prices have just kept rising, so you will be able to unload it for more money at some point. ... likely to someone else who loads it up with even more debt to do the purchase.

People have gotten very rich over a very long period of time, basically passing around assets that were being valued at higher and higher prices, based on more and more leverage being what was driving those asset prices higher.

This is the story of every monetary-induced bubble in history (and the bankruptcies or credit crises they lead to).

In this case, they loaded up those RSNs with $9.6 billion worth of debt for a business that is probably now worth $3 billion. Consider that financial conditions are still grossly distorted, so even that $3 billion the assets might fetch now (and someone will pay it, likely the leagues themselves) has the potential to look equally insane at some point in the future if the price of money isn't being distorted to the extent it still is.