Raphael Stevens

Moderna’s new Covid vaccine generated a robust immune response against the now-dominant Eris variant and another rapidly spreading strain of the virus in a clinical trial.
The updated shot is designed to target omicron subvariant XBB.1.5.
Moderna’s vaccine and new shots from Pfizer and Novavax are slated to roll out within weeks.

Nikos Pekiaridis | Lightrocket | Getty Images

Moderna’s new Covid vaccine generated a robust immune response against the now-dominant Eris variant and another rapidly spreading strain of the virus in an early clinical trial, the biotech company said Thursday. 
The updated shot is designed to target omicron subvariant XBB.1.5, but the results suggest that the jab may still be effective against newer variants of the virus that are gaining ground nationwide. That includes Eris and another variant nicknamed Fornax, both of which are also descendants of the omicron virus variant. 

Moderna’s vaccine and new shots from Pfizer and Novavax are slated to roll out within weeks, pending potential approvals from the U.S. Food and Drug Administration. 
Meanwhile, Covid-related hospitalizations fueled by Eris and other variants continue to accelerate but remain below the summer peak that strained hospitals this time last year.
Eris, also known as EG.5, accounted for 17.3% of all cases as of earlier this month, according to the Centers for Disease Control and Prevention. 
The World Health Organization designated Eris a “variant of interest,” meaning it will be monitored for mutations that could make it more severe. 
Fornax, or FL 1.5.1, is also beginning to surge in parts of the U.S. It accounted for 8.6% of all cases nationwide as of earlier this month, the CDC said.
A Pfizer spokesperson on Thursday said the company’s own updated Covid shot effectively neutralized XBB.1.5 and Eris, among other variants, in a recent trial on mice. More

Target and Walmart posted sharply divergent fiscal second-quarter results and offered starkly different outlooks for the months ahead.
Walmart’s online sales in the U.S. rose in the three-month period, while Target’s fell.
The contrasting results illustrate some of the companies’ fundamental differences, but also capture how some retailers are having more success than others.

A customer pushes a shopping cart full of groceries outside a Wal-Mart in Rogers, Arkansas, left, and a pedestrian passes a Target store in the Tenleytown neighborhood of Washington, D.C.
Getty Images

Target and Walmart are both catering to thriftier shoppers, but the two big-box retailers have seen very different outcomes when it comes to winning their dollars.
Target missed Wall Street’s sales expectations for the fiscal second-quarter. Walmart beat Wall Street’s revenue estimates for the three-month period. Target slashed its forecast for the year, while Walmart raised its outlook.

The companies’ diverging performances illustrate some of the retailers’ fundamental differences.
Walmart, the nation’s largest grocer, makes more than half of its annual revenue from selling groceries — a category that shoppers buy even when times are tight. Target draws only about 20% of its yearly revenue from grocery, making it rely more on sales of items such as clothing, earrings and throw pillows that customers may skip when feeling frugal.
Target, which tends to draw a more affluent customer than Walmart, may also be seeing a more dramatic swing in spending as consumers shell out on Taylor Swift tickets and European vacations. Those shoppers could also be trying to balance splurging on services with shopping at places perceived to be cheaper, such as Walmart or TJX Companies-owned T.J. Maxx, Marshalls and Home Goods, which posted year-over-year sales and profit growth earlier this week.
Yet Target’s and Walmart’s contrasting results also capture how some retailers are having more success than others catering to fickle consumers and navigating economic headwinds.
Wall Street added to the confusion with its own counterintuitive moves. After earnings reports, it snapped up Target’s stock on Wednesday and sold off Walmart’s shares on Thursday. The potentially surprising moves could reflect the companies’ recent stock performance, since shares of Walmart are up about 10% this year compared with Target shares’ decline of about 13% during the same period.

Despite the differences, the companies showed they still have much in common. Target and Walmart leaders offered similar descriptions of American consumers who now think twice before spending money on nonessential items while paying more for food.
“As we look at the consumer landscape today, we recognize the consumer is still challenged by the levels of inflation that they’re seeing in food and beverage and household essentials,” Target CEO Brian Cornell said on a call with reporters. “So that’s absorbing a much bigger portion of their budget.”
Walmart Chief Financial Officer John David Rainey echoed similar sentiments, describing consumers as “choiceful or discerning” on a call with CNBC.
Yet both executives added that shoppers can be persuaded to spend, with a good deal or when getting ready to celebrate holidays or seasonal events.
Here’s a closer look at three key ways that Target’s and Walmart’s most recent quarterly results diverged:

Online winners and losers

As shoppers head out into the world again, some retailers have seen double-digit declines in online spending.
Target followed that pattern in the second quarter. Its digital sales dropped by 10.5% year over year.
Walmart bucked the trend. E-commerce sales rose 24% for Walmart U.S. in the second quarter.
Both retailers pointed to curbside pickup as a major driver of online sales — a key differentiator from competitor Amazon.
Walmart chalked up online sales gains to store pickup and delivery, as well as more advertising revenue. It also credited its third-party marketplace, which is Walmart’s take on Amazon’s online business model. The online marketplace is made up of vendors who list items on Walmart’s website, which helps to expand the merchandise assortment and comes with a higher profit margin than selling online items directly.
Customers are also visiting Walmart’s website and app more often, Rainey said. The number of weekly active digital users grew more than 20%, he said on the company’s earnings call. The number of customers buying items on Walmart’s marketplace increased 14% in the second quarter, with double-digit growth across home, apparel and hard lines, a category that includes sports equipment and appliances.
Target has lagged behind in online sales. But it is making moves to try to turn around trends.
The retailer will roll out a remodel of its digital experience in the next three months, Target Chief Growth Officer Christina Hennington said on an earnings call Wednesday. She said the website will “include different landing experiences, more personalized content, enhanced search functionality, ease of navigation and other updates to bring more joy and convenience to our digital guests.”
Walmart, for its part, refreshed the look of its website and app in the spring.
Target will dangle another perk to attract more online business. Starting this summer, it is adding Starbucks drinks to curbside pickup at most stores.

Mixed reads on discretionary spending

For more than a year, Americans have generally shown reluctance to spring for new outfits, gadgets or other items that they can live without.
That’s made life harder for retailers, which rely on big-ticket and impulse-driven purchases to buoy sales. The merchandise tends to drive higher profits than selling the basics such as milk, bread and paper towels.
Rainey, Walmart’s CFO, pointed to signs that may be changing. He said there was “modest improvement” in discretionary goods in the second quarter, even though general merchandise sales still dropped by low double digits year over year. He said sales of blenders, hand mixers and other kitchen tools popped, as some consumers cook more at home.
Target didn’t see the same relief. Sales of frequency categories, such as food and beauty items, weren’t enough to offset weaker discretionary sales at the retailer.
Target’s Hennington said trends in discretionary categories “remain soft overall.” She pointed out some exceptions, including the popularity of a Taylor Swift vinyl and colorful Stanley tumblers designed with Chip and Joanna Gaines.
Both retailers, however, said they’re stocking up on essential items and placing more modest orders for discretionary stuff. Target, for instance, said at the end of the second quarter, its overall inventory levels fell year over year — but it intentionally reduced discretionary inventory even more.

Optimism vs. pessimism about what’s ahead

Retailers have plenty to worry about as food prices remain high, interest rates rise and student loan payments return.
But Walmart and Target struck contrasting tones when speaking about the months ahead.
Target CEO Cornell said sales trends improved in July, but not enough to keep the company from cutting its outlook for the year. When asked about back-to-school shopping, Cornell and Chief Financial Officer Michael Fiddelke stressed it was very early in the season.
Walmart hit a more confident note. On the earnings call, CEO Doug McMillon said general merchandise sales outperformed the company’s expectations. He said the popularity of GLP-1 drugs, medications such as Ozempic that are used for diabetes and weight loss, could also drive foot traffic and revenue going forward.
And, he added, “the trends we see in general merchandise sales make us feel more optimistic about those categories in the back half of the year.”
McMillon said back-to-school has gotten off to a better start than the company predicted. He said that spending tends to correlate with consumer spending later in the year — which could be a positive sign for the critical holiday season.
“Typically when back-to-school is strong, it bodes well with what happens with Halloween and Christmas and GM [general merchandise] in the back half,” he said.
Target shared similar hopes that customers will open up their wallets and reverse the retailer’s sales slump as the season of pumpkin spice and gift-giving approaches. It saw traffic and sales trends improve in July, which it credited in part to spending for the Fourth of July holiday.
“We know our guests want to celebrate culturally and seasonally relevant moments and will be leaning into those moments in a big way in the third quarter and the upcoming holiday season,” Hennington said. More

Blockbuster weight-loss drugs are priced significantly higher in the U.S. than in other large, high-income countries, according to a new analysis.
The analysis from KFF, a health policy organization, comes as many U.S. health insurers balk at the extreme cost of weight loss drugs and drop the medications from their plans.
Novo Nordisk’s Ozempic and Wegovy are listed for about $1,000 in the U.S. but just hundreds of dollars in Germany, for example.

A box of the diabetes drug Ozempic rests on a pharmacy counter in Los Angeles, April 17, 2023.
Mario Tama | Getty Images

Blockbuster weight-loss drugs are priced significantly higher in the U.S. than in other large, high-income countries, according to a new analysis released Thursday. 
The report from KFF, a health policy organization, comes as many U.S. health insurers balk at the extreme cost of weight-loss drugs and drop the medications from their plans.

At roughly $1,000 per month on average for medications that are typically taken over a long period of time, the drugs are straining insurers’ budgets. But many of the 100 million American adults who are obese can’t afford to pay out of pocket for the treatments, called GLP-1 agonists.
KFF compared list prices — the price a drugmaker sets before insurance or any discounts — available through website searches. 
Some countries negotiate directly with drugmakers such as Novo Nordisk to set lower list prices for medications, according to Krutika Amin, associate director of the Peterson-KFF Health System Tracker. Meanwhile, other countries such as the U.S. do not, contributing to vastly different list prices.
A 30-day supply of Novo Nordisk’s diabetes drug Ozempic, which is used off-label for weight loss, for example, has a list price of $936 in the U.S. That’s five times as expensive as the $168 list price in Japan. 
The list prices are even lower in other countries. Ozempic is priced at $103 in Germany, $96 in Sweden and $83 in France. 

Novo Nordisk’s Wegovy, which has the same active ingredient as Ozempic and is approved for weight loss, has a list price of more than $1,300 in the U.S. Meanwhile, Wegovy’s list price is just $328 in Germany. 
Eli Lilly’s diabetes drug Mounjaro, which is also used off-label for weight loss, has a list price of $1,023 in the U.S. but is just $319 in Japan and $444 in the Netherlands. 
Representatives for Novo Nordisk and Eli Lilly did not immediately respond to CNBC’s request for comment Thursday.
These list prices and the patchy insurance coverage of weight-loss drugs in the U.S. undoubtedly affect accessibility. But a KFF survey released earlier this month suggests that they also affect patients’ overall interest in the medications.
The survey found that nearly half of U.S. adults are generally interested in taking a prescription weight-loss drug, but that interest drops to 16% if the medication isn’t covered by insurance. 
About 80% of adults in the survey said insurance companies should cover the cost of weight-loss drugs for adults who are overweight or obese, while half said insurers should cover the cost for anyone who wants to use them to lose weight. 
New trial data released by Novo Nordisk last week could potentially put more pressure on U.S. insurers to cover weight-loss drugs. 
The Danish company’s trial found that Wegovy slashed the risk of serious heart problems and heart-related death by 20% in overweight or obese patients with established cardiovascular disease. 
The results suggest that Wegovy and likely other obesity drugs have significant health benefits beyond shedding unwanted pounds. But organizations representing insurers have told CNBC that more data is needed before they could qualify for broader coverage. More

As two Hollywood strikes rage on, movie writers and stars aren’t permitted to hype their projects, due to strike rules.
The longer the work stoppages keep going, the more likely it is studios will move releases later as production shutdowns choke the movie release pipeline.
Warner Bros. Discovery, in particular, has a big dilemma with “Dune: Part Two,” a sequel to the 2020 blockbuster Oscar winner that stars Timothee Chalamet and Zendaya.

Timothee Chalamet stars in Warner Bros.’ “Dune.”
Warner Bros.

LOS ANGELES – Warner Bros. has a sandworm-sized dilemma on its hands: Keep the fall release date for its highly anticipated “Dune: Part Two” and risk not having its star-studded cast promote it – or bump it into next year and potentially miss out on a dominant run at lucrative premium movie screens.
As two Hollywood strikes rage on, movie writers and stars aren’t permitted to hype their projects, due to strike rules. The longer the work stoppages keep going, the more likely it is studios will delay releases as production shutdowns choke the movie release pipeline.

Already, a handful of titles – including Ethan Coen’s “Drive Away Dolls,” the sequel to “Ghostbusters: Afterlife” and the Emma Stone-led “Poor Things” – have moved to later dates due to the labor disruption. “Dune: Part Two,” a science fiction epic based on Frank Herbert’s seminal novel, could end up the biggest title to move. Speculation has swirled about the sequel leaving its Nov. 3 slot since the Screen Actors Guild-American Federation of Television and Radio Artists went on strike last month.
After the stunning success of “Barbie,” and with doubts growing about December’s “Aquaman: The Lost Kingdom,” “Dune: Part Two” would be a important 2023 release for Warner Bros. Its predecessor excelled at the box office during the pandemic despite being released day and date on streaming service HBO Max (now just called Max). It racked up 10 Academy Award nominations, taking home six trophies.
With pandemic restrictions lifted on movie theaters, expectations are that “Dune: Part Two” would outpace the nearly $400 million the prior film tallied at the global box office in 2021 on a reported budget of $165 million.
“As one of the biggest and most anticipated movies of the all-important and prestigious holiday season, ‘Dune: Part Two’ is one of the crown jewels of Warner Bros.’ end of year lineup and has much riding on its cinematic shoulders,” said Paul Dergarabedian, senior media analyst at Comscore.
Warner Bros. didn’t immediately respond to CNBC’s request for comment.

While the Writers Guild of America has returned to the bargaining table with producers, negotiations are moving slowly.
Meanwhile, the producers haven’t contacted the other striking guild, SAG-AFTRA, to resume talks. SAG-AFTRA has also promised not to grant interim agreements to any WGA-covered productions produced in the U.S., meaning these projects cannot start or continue filming or be promoted by active guild members if they are released.
There’s genuine fear that the labor fight will drag on, as well.
“I think it’s gonna go into next year,” said Steven Schiffman, an adjunct professor at Georgetown University and a former executive at National Geographic. “I think it’s gonna get to a really painful process.”

To ‘Dune’ or not to ‘Dune’

The inability to have actors promote film releases is one of the major headwinds facing “Dune: Part Two.”
Typically, studios will begin marketing their films in earnest, beyond trailers and posters, in the six to eight weeks leading up to a film’s release. These efforts often include late night talk show appearances by cast members, taped interviews and junkets, as well as international promotional trips.
If SAG-AFTRA does not reach a deal by the middle of September, the marketing campaign for the sequel won’t be able to utilize its star-studded ensamble to promote the film.
Alongside industry veterans like Christopher Walken, Stellan Skarsgard, Javier Bardem, Josh Brolin, Dave Bautista and Jason Momoa, the film features four of Hollywood’s most popular young stars.
Zendaya, Timothee Chalamet, Florence Pugh and Austin Butler collectively have more than 200 million followers on Instagram and are trending faces on TikTok, Twitter and other social media platforms.
“Without that, they forgo a huge chunk of Gen Z going to see that movie,” said Alicia Reese, vice president of equity research at Wedbush Securities.
She noted that older moviegoers who are fans of the book and saw the first “Dune” will show up to theaters, but younger audiences might miss out on the flick without promotion from these stars.
“Missing out on that, that’s damaging,” Reese said, “But is it damaging enough to not show the movie at all? Because if they move it, they risk losing that really prime IMAX spot.”
Premium format auditoriums like IMAX, Dolby Cinema and ScreenX are becoming increasingly important for blockbuster features, such as recent hits “Avatar: The Way of Water” and “Oppenheimer.” After the pandemic, audiences have been pickier about what films they leave home to see and have been opting more for screenings with better picture and sound quality, even if the price tag is higher.

In 2022, 15% of all domestic tickets sold were for premium screenings, with the average ticket costing $15.92, according to EntTelligence data. A standard ticket costs an average of $11.29.
If “Dune: Part Two” moves into next year, it runs the risk of not finding a weekend, or multiple weekends, where it will be able to capture a significant portion of premium screens or not be able to hold them for several weeks of its run.
Additionally, if it holds to its current date, other films could move and it could find itself with limited competition and the ability to capture more audience attention.
“Every studio with a film on the calendar is confronting how to deal with similar such dilemmas,” said Dergarabedian.
Yet to come in 2023 are Disney and Marvel’s “The Marvels,” Lionsgate’s “The Hunger Games: The Ballad of Songbirds & Snakes,” Disney Animation’s “Wish,” AppleTV+’s “Napoleon.” Warner Bros. has other big titles, too: “Wonka,” the “Aquaman” sequel and “The Color Purple.”
“There are practical arguments in support of ‘Dune: Part Two’ both moving and staying put,” said Shawn Robbins, chief analyst at BoxOffice.com. “For the health of the industry overall, I think the scales still tip in favor of remaining in November.”
While “Barbie” and Universal’s “Oppenheimer” have injected nearly a billion dollars into the domestic box office’s coffers in the last month, there are few blockbuster releases slated for the remainder of the year, the “Dune” sequel among them.
A depleted fourth-quarter movie slate could hurt exhibition partners like AMC, Cinemark and Regal that are heavily reliant on new content.
Moving “Dune: Part Two” could possibly provoke other studios to delay big releases until next year, according to Robbins.
“Frankly, the back half of this year doesn’t need anymore of a challenge trying to live up to the strong spring and summer we’ve seen at the box office,” he said.
Disclosure: Comcast is the parent company of NBCUniversal and CNBC. More

Shares of CVS Health plunged after Blue Shield of California said it will drop the company’s pharmacy benefit management services.
Blue Shield will instead partner with Mark Cuban’s Cost Plus Drug Company and Amazon Pharmacy to save on drug costs for its nearly 5 million members. 
The announcement hints at the potential for health insurers to abandon the traditional pharmacy benefit management system and sent shares of other companies that offer the services lower.

A woman walks past a CVS Pharmacy in Washington, DC, on November 2, 2022.
Brendan Smialowski | AFP | Getty Images

Shares of CVS Health plunged 8% on Thursday after Blue Shield of California said it will drop the company’s pharmacy benefit management services and instead partner with Mark Cuban’s Cost Plus Drugs company and Amazon Pharmacy to save on drug costs for its nearly 5 million members. 
The announcement hints at the potential for health insurers to abandon the traditional pharmacy benefit manager, or PBM, system and sent shares of other companies that offer PBM services lower.

Cigna and UnitedHealth Group dropped about 6% and 2%, respectively. 
PBMs maintain lists of drugs covered by health insurance plans and negotiate drug discounts with manufacturers. But they have recently come under scrutiny from lawmakers for their role in inflating drug prices and causing health-care costs to skyrocket. 
CVS Health’s Caremark has been Blue Shield’s PBM partner for more than 15 years. 
Blue Shield will now work with five different companies to provide “convenient, transparent access to medications while lowering costs.”
Blue Shield CEO Paul Markovich said the plan, which is scheduled to fully launch in 2025, could save the company up to $500 million annually. 

Close-up of logo for health insurance company Blue Shield of California on light wooden surface, San Ramon, California, September 16, 2020.
Smith Collection/gado | Archive Photos | Getty Images

Amazon Pharmacy will offer at-home drug delivery. Cuban’s Cost Plus Drug Company will provide access to low-cost medications through retail pharmacies. Another company, Abarca Health, will process drug claims.
Blue Shield will retain CVS Caremark for its specialty pharmacy services, which provide specialized therapies and counseling to patients suffering from complex disorders. 
“We look forward to providing care for Blue Shield of California’s members who require complex, specialty medications — as we have for nearly two decades,” said Michael DeAngelis, a spokesman for CVS Health, in a statement to CNBC.
Still, the loss of Blue Shield’s PBM partnership is another blow to Caremark, which is also set to lose a contract with Centene next year. More

SpaceX turned a profit during the first quarter due to surging revenue, The Wall Street Journal reported.
For the full year 2022, Elon Musk’s rocket company roughly halved losses while doubling what it brought in during 2021.
The rare look at SpaceX’s financials offers a clue into how the company is faring while it ramps up its Starlink internet satellite service and races to get its monster Starship rocket delivering payloads to space.

A Falcon Heavy rocket launches the USSF-67 mission from NASA’s Kennedy Space Center in Florida, Jan. 15, 2023.

SpaceX turned a profit during the first quarter due to surging revenue, The Wall Street Journal reported Thursday, citing documents detailing the privately held company’s quarterly and annual results.
The Journal reports that SpaceX posted a first-quarter profit of $55 million on revenue of $1.5 billion. For the full year 2022, Elon Musk’s rocket company posted a loss of $559 million on revenue of $4.6 billion, the report says. It roughly halved losses while doubling what it brought in during 2021.

The rare look at SpaceX’s financials offers a clue into how the company is faring while it ramps up its Starlink internet satellite service and races to get its monster Starship rocket delivering payloads to space.
Starship is key to SpaceX’s success moving forward. It will allow the company to add more satellites to its Starlink network more quickly and will unlock a new avenue for commercial rocket service as SpaceX brings on launch clients.
The company is spending heavily to advance its projects. SpaceX tallied $5.2 billion in total expenses last year, up from $3.3 billion the year earlier, according to the Journal.
SpaceX didn’t immediately respond to CNBC’s request for comment.
Read the full report at The Wall Street Journal. More

Diamond Sports is calling mediators into its discussions with creditors as it tries to push toward a reorganization plan.
The owner of the largest portfolio of regional sports networks is looking to solidify a plan ahead of the upcoming NBA and NHL seasons.
Diamond has also filed a lawsuit against parent company Sinclair for allegedly “milking” Diamond for billions of dollars while knowing the sports channel business was distressed.

The Ohio Cup Trophy on top of a Bally Sports logo prior to a game between the Cincinnati Reds and Cleveland Guardians at Progressive Field in Cleveland, May 17, 2022.
George Kubas | Diamond Images | Getty Images

The courtroom continues to heat up for Diamond Sports Group, the largest owner of regional sports networks.
On Thursday, a bankruptcy judge approved Diamond’s request to bring in mediators as it is negotiates with creditors to reach a reorganization plan. The company said in court papers it needs to meet “substantial plan progress” ahead of the start of the upcoming NBA and NHL seasons in October.

“I think sports are part of the fabric of America, and many fans out there from day one want to know how and when their teams are going to play,” said Judge Christopher Lopez during Thursday’s hearing, adding all parties should participate in the discussions to reach a resolution.
Two judges from the U.S. Bankruptcy Court in the Southern District of Texas — Judges David Jones and Marvin Isgur — will preside as mediators.
Last week, Diamond won court approval to extend the period of time it has to come up with a reorganization plan.
Diamond sought bankruptcy protection earlier this year, burdened by more than $8 billion in debt and the significant headwinds hitting the regional sports networks business as more consumers cancel their cable subscriptions in favor of streaming.
The company and some of its creditors at earlier points in the case, including during a hearing last week, “have indicated that mediation could help [Diamond] sort through myriad issues they must confront on the path toward reorganization.”

Diamond has until Sept. 30 to file a reorganization plan, weeks ahead of the opening of the 2023-24 NBA and NHL seasons. It is vital for Diamond to continue carrying local games on its networks. Since its filing, it has already seen some teams leave its Bally Sports channels due to a breakdown in rights fees discussions.
The prospect of local game rights being up for grabs has attracted broadcast station owners – including Nexstar Media Group, Gray Television and E.W. Scripps Co. – looking to carry the games, CNBC previously reported. The Phoenix Suns recently exited a Bally Sports network for such a deal.
Besides shedding its hefty debt load, Diamond is looking to reset some of its rights deals with teams to reflect so-called market rates.
Last week, a lawyer on behalf of the NHL said the league was in constructive discussions with Diamond, but that “time is of the essence” ahead of the upcoming season.

Sinclair tension

During the bankruptcy process so far, Diamond has faced numerous conflicts – including an ongoing battle with MLB over teams’ streaming rights and rights fees that has led to Diamond dropping some teams from its Bally Sports channels and its recent lawsuit against parent company, Sinclair.
On Wednesday, Diamond unveiled the details behind the lawsuit.
In 2019, Sinclair acquired the portfolio of networks – previously known as Fox Sports – from Disney for $10.6 billion, a required divestiture that was part of Disney’s buyout of Fox Corp.’s 21st Century assets.
Diamond’s more than $8 billion debt load stems from the deal, which also imposed between $400 million to $650 million in debt payments, the company said in court papers.
In the few years since, Diamond’s business, pay-TV providers and other cable channels have experienced accelerating deterioration in their business.
Diamond is now alleging that the ownership of Sinclair only exacerbated its problems.
In court papers, the company said Sinclair has been “milking” Diamond for more than $100 million annually in management fees since the acquisition, despite knowing the dire state of the business. On top of this, Diamond alleges Sinclair, in a “nefarious strategy … wrongfully caused Diamond to transfer more than $1.5 billion in cash and other consideration for the benefit of Sinclair.”
This occurred as Diamond alleges Sinclair knew the RSN business was “careering toward bankruptcy, and it continued after Diamond was unquestionably insolvent.”
“Sinclair has been informed of a lawsuit filed by Diamond Sports Group in connection with their ongoing bankruptcy proceeding. We firmly believe the allegations in this lawsuit are without merit and intend to vigorously defend against them,” a Sinclair spokesperson said in a statement.
Diamond appointed a new board and leadership last year to run its RSN business as it faced an inevitable bankruptcy filing. Diamond is now an unconsolidated and independently run subsidiary of Sinclair. More