- Sinclair's ransomware attack last week is unfortunate but doesn't alter the company's long-term prospects.
- Far more significant was the report, overlooked amidst the ransomware furor, that MLB is withholding certain streaming rights and bankruptcy for subsidiary Diamond is now openly predicted.
- MLB might successfully stop the service from launching, but it's unlikely. But the withheld rights will reduce subscriber levels and all but kill any meaningful gambling revenue.
- It is almost impossible for the new DTC to reach profitability under these conditions. In fact, it seems very likely that Diamond's losses will increase rather than decrease after launch.
- I am avoiding the stock until I have a better sense of the timing of Diamond's expected filing, which might prompt me to open a short position.
For further details see:
Sinclair Broadcast: Ransomware, If Only That Was The Worst Of It