Sinclair Broadcasting is seriously unhappy with MLB Commissioner Rob Manfred, who testified last year that the company’s chairman threatened baseball financially during a 2021 meeting. In a deposition shortly after Manfred’s testimony, Sinclair chairman David Smith denied he had done so and was asked by the company’s outside counsel if the commissioner had perjured himself. And in court papers last month the media company charged Manfred had a “vendetta.”
Since December, Sinclair quietly through a federal court has been seeking to force MLB and 14 of its clubs to hand over documents that would in part explain the alleged animus he has for Sinclair. Yesterday the case was approved to move to a Texas bankruptcy court that is overseeing the Chapter 11 of Bally Sports Regional Sports Networks parent Diamond Sports Group, which was overseen by Sinclair until filing for the reorganization.
“Evidence of Manfred’s ill will towards Sinclair and Mr. Smith personally would tend to impeach (his) credibility as he has already admitted that he will hold a grudge and use litigation to pursue a vendetta,” the company wrote last month in a filing in New York federal court. The next few lines of the document are redacted, which presumably explains Sinclair’s contention.
The contretemps stems from Manfred’s testimony in late May during a hearing in Diamond Sports Group’s bankruptcy. Manfred said Smith had told him at a 2021 meeting, “I put $2 billion into the purchase of these RSNs … so what I’m going to do is I’m going to keep this going long enough until I get my $2 billion out, OK? And then I’m going to start squeezing your clubs to take their rights fees down, OK, in order to make sure that I stay profitable in the RSN business. And if they don’t agree to that, I’m going to put the entity into bankruptcy, and then I’m going to selectively reject contracts.’”
And what DSG stood up at attention for was Manfred also claiming Smith said Sinclair planned to continue to “milk” the regional sports outlets for $150 million in management fees. DSG is suing Sinclair for $1.5 billion, alleging the parent company bled its subsidiary dry by overcharging on fees and diverting revenues. The Sinclair legal filings in New York last month are tied to that case.
Manfred’s testimony is important fodder in DSG’s complaint, which mentions the “milk” comment repeatedly in its papers, so much so that in one reply Sinclair’s lawyers mocked the “dairy” inspired arguments. So Sinclair is striving to undermine Manfred’s credibility.
“Testifying on unrelated matters Manfred, largely unprompted, told a tale wherein Sinclair’s chairman Mr. Smith reportedly told Manfred that he intended to use Sinclair’s ownership of Diamond to milk the company through the extraction of management fees and other payments. Mr. Smith denies making these statements,” Sinclair wrote in court papers last month. “Manfred also repeatedly expressed his vitriol for Sinclair and Mr. Smith.”
An MLB source responded, “The exchange absolutely happened. Commissioner Manfred has been telling people about it for months beginning with the day it happened. The league is going to formally respond in detail to all of the baseless claims made by Sinclair soon.”
Sinclair is not suing MLB, rather it is asking the court to enforce its third party subpoenas of MLB and the 14 clubs that were DSG clients at the time of the chapter 11 filing. Sinclair wants any documents related to the Smith-Manfred 2021 meeting, and valuations of DSG that baseball has from their losing bid for the company in 2019. Sinclair bought DSG and its 19 RSNs for $10.6 billion, nearly a billion dollars more than MLB bid.
When Sinclair later asked MLB for digital rights to the DSG teams, MLB said no, a standoff that the media company partly blamed for the DSG bankruptcy (cord-cutting and excess acquisition debt clearly were the primary drivers).
“Manfred’s motivation to fabricate his discussion with Mr. Smith is not limited to his personal ill will but also arises from MLB’s apparent interest in obtaining control of the RSNs in the Diamond bankruptcy,” Sinclair argued in court papers last month.
Smith, in deposition testimony, parts of which were attached to filings as an exhibit, denied the conversation took place the way Manfred said. Asked if Manfred committed perjury, Smith demurred and reiterated he had not said what Manfred alleged (Smith also called Manfred a first class guy and that he would have dinner with him).
But Lauren Cole, an outside counsel for Sinclair, was more forthright. In a November 30, 2023 email to MLB counsel, a copy of which is attached as an exhibit to Sinclair’s filings, she writes,”You have never disputed the relevance of Mr. Manfred’s motivations to testify falsely about his claimed discussion with Mr. Smith, or Diamond’s financial condition.”
One of baseball lawyers, Benjamin Walker, in a November 10 email to Cole and her partners, responded to their contention that Manfred’s testimony was designed to injure Sinclair and that he harbored negative views of the company.
“Setting aside the preposterous sentiment of that statement,” he wrote, “(e)ven if the Commissioner had such a view, that certainly would not mean it impacted his truthful testimony.”
