For Variety VIP+ subscribers: A look at global corporate defaults — and why the media and entertainment sector is feeling the most pain
Challenging economic conditions continue to put immense pressure on both global and U.S.-based companies, causing cash flow and liquidity problems. This has prompted corporate defaults to spike, with defaults in the U.S. more than doubling over the last year, according to S&P Global Ratings.
About 75% of total defaults from the media and entertainment sector have been in the U.S. Among some of the most notable media companies to default this year are Diamond Sports Group, an independent subsidiary of Sinclair Broadcast Group. on Feb. 15 due to missed interest payments. At the time, the company had roughly $425 million cash on hand but owed lenders about $8 billion to $9 billion.
Economic uncertainty and worsening operating conditions are expected, as Fed Chair Jerome Powell said the central bank plans to raise interest rates further this year after a short pause in June. As a result, the media and entertainment sector defaults will likely increase.
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