[opendtv] SINCLAIR-- Risks Seen for TV Chain Showing Film About Kerry
- From: Bill Hogan <billhogan1@xxxxxxxxxxxxx>
- To: OpenDTV <opendtv@xxxxxxxxxxxxx>
- Date: Mon, 18 Oct 2004 01:32:55 -0700
The following is from Today's New York Times... Regards, Bill Hogan
Risks Seen for TV Chain Showing Film About Kerry
October 18, 2004
By BILL CARTER
Senator John Kerry could find his presidential hopes
damaged this week when the 62 television stations owned or
managed by the Sinclair Broadcasting Group carry a
documentary about his antiwar activities 30 years ago.
But the Democratic nominee for the White House may not be
the only one adversely affected.
Sinclair - the nation's largest owner of television
stations, many of them in electoral swing states - is
itself running a significant financial and political risk
by telling its stations to pre-empt regular programming and
carry the film. Already, Sinclair's decision has alienated
some advertisers; enraged consumer and media watchdog
groups, who are vowing to challenge its station licenses
when they come up for renewal; and given pause to some
analysts and investors considering the company's financial
outlook.
Representatives of Sinclair did not return repeated phone
calls seeking comment. But the company, whose executives
have been among the largest media contributors to President
Bush, has said the documentary deserves to be seen because
it is news, and as such does not fall under federally
mandated equal-time provisions for political candidates.
In the film, "Stolen Honor: Wounds That Never Heal," former
prisoners of war in Vietnam call Mr. Kerry's 1971 Senate
testimony a betrayal that prolonged their captivity. In
that testimony, Mr. Kerry quoted other veterans talking
about American atrocities.
The Kerry campaign has called the film a politically
motivated attack that is unfair and inaccurate.
Last week, the Kerry campaign formally asked Sinclair for
equal time to respond to the film, a move that could lead
the Federal Communications Commission to consider whether
to order the stations to allow a response.
Sinclair is no stranger to political controversy. In April,
its eight ABC affiliates pre-empted the "Nightline" program
in which Ted Koppel read aloud the names of American
soldiers killed in Iraq. Sinclair declared the show
"unpatriotic" and harmful to the war effort, adding that
"Nightline'' was motivated by an antiwar agenda; it instead
offered its ABC affiliates a special that debated the
issue.
Earlier this year, Mark Hyman, the vice president for
corporate relations at Sinclair who doubles as a
conservative commentator on the company's newscasts, took a
crew to Iraq to find what he called the untold positive
news of the war. And after the attacks of Sept. 11, 2001,
Sinclair ordered newscasters at its Fox affiliate in
Baltimore to read patriotic statements praising President
Bush.
But the furor over "Stolen Honor'' appears to be affecting
Sinclair in ways these previous actions did not. In some
cities - among them, Portland, Me.; Madison, Wis.;
Springfield, Ill.; and Minneapolis - local advertisers,
including car dealers, furniture makers, supermarkets and
restaurants, have taken their commercials off the company's
stations.
"I've decided I don't want to advertise on them," said Adam
Lee, the president of Lee Auto Malls, which owns 10 auto
dealerships in Portland Me., and has ordered its
advertising off the CBS affiliate, WGME. "It's a public
trust. It seems they're abusing it. If it were a news show
and they were really trying to do a fair and balanced story
on both sides, that would be a different matter. I don't
think they are. That's not their intention.''
Groups, including Common Cause, the Alliance for Better
Campaigns, Media Access Project, Media for Democracy and
the Office of Communication of the United Church of Christ,
are putting together a database listing all Sinclair
advertisers and will try to persuade others to withdraw
their commercials. Among those on the list are chains like
Applebee's International, Best Buy, Chili's, Circuit City,
Domino's Pizza, Lowe's, Papa John's, Subway, Taco Bell and
Wal-Mart Stores.
The groups are also vowing to find groups in cities with
Sinclair stations who will challenge the broadcast licenses
of every Sinclair-owned station over the next several
years. Such challenges almost never result in lost
licenses, but they often result in heavy legal costs for
the station having to defend them.
In addition, some analysts said Sinclair might have hurt
itself in the continuing battle over loosening media
ownership rules, a fight in which Sinclair has been a
leader. Efforts at further deregulation were stalled this
year when the United States Court of Appeals for the Third
Circuit, in Philadelphia, ordered the F.C.C. to reconsider
its relaxation of such rules.
A report issued by the firm Legg Mason last week cited the
controversy over the film and asked the question, "Is this
good for investors in terms of increasing the odds for
favorable deregulation?" The conclusion: "We think not."
Blair Levin, the managing director of Legg Mason and a
former F.C.C. official, added in a telephone interview,
"Deregulation usually happens when you do it quietly."
Leland Westerfield, a media analyst for Harris Nesbitt
Gerard who has followed Sinclair since 1998, had already
listed the company as an "underperforming" stock. Now, he
said, the company seems to be more at risk.
"The recoil from Democrats at the F.C.C., and frankly
moderate Republicans alike, suggests that Sinclair might be
harming itself short term in revenues and long term in
deregulation tactics," he said. "If the company intends to
curry favor with the Republican free marketers and swing
the scales back toward the deregulation of media, Sinclair
may have harmed its own cause by hardening the resolve of
the consumer advocates."
With the documentary becoming a point of contention in the
presidential race, Mr. Levin said, Sinclair could face a
no-win situation. If Mr. Bush is re-elected, Sinclair has
created a circumstance where the deregulation it wants
would be widely interpreted as what the Legg Mason report
called "the Sinclair payback provision." If Mr. Kerry wins,
he might try to lead the F.C.C. to consider regulations
that could hurt Sinclair's position.
It appears to have only reinforced the opinions of some
F.C.C. commissioners. Michael J. Copps, a Democratic
commissioner on the F.C.C., said last week that Sinclair's
action was "an abuse of the public trust.''
Other F.C.C. staff members said Sinclair might be more
vulnerable than other companies because of the leading role
it has played in exploiting certain loopholes allowing it
to operate more stations in a market than regulations have
allowed. Sinclair has a number of so-called L.M.A.'s, or
local marketing agreements, that permit a company to
program and run a second station in a market even though it
does not own it.
But the F.C.C. officials said Sinclair had L.M.A.'s for
five stations with the Cunningham Broadcasting Corporation;
Carolyn Smith, the matriarch of the family that controls
Sinclair, has an ownership position in Cunningham. The
officials said the commission had been divided over the
L.M.A's originally.
The controversy of the last week comes at a time when
Sinclair's stock, like that of other local broadcasting
companies, has already been hammered by a sluggish
advertising environment and the dashing of deregulation
hopes. It has fallen 53 percent this year. It dropped 7
cents, or 1 percent, on Friday to close at $7.04, near its
52-week low of $6.87. Before The Los Angeles Times first
reported Sinclair's plans to show the documentary more than
a week ago, the stock was at $7.50.
But several of the company's opponents predict that the
comments of analysts and defections by advertisers are not
likely to affect Sinclair's executives. "They don't seem to
mind being criticized or questioned," said Andrew Jay
Schwartzman, the president of the Media Access Project, a
group that advocates greater media regulation. He and other
critics noted that Sinclair has always been an unusual
company, run by a family that pays little heed to
conventions in the business.
Sinclair was begun by Julian Sinclair Smith in 1971 with
one UHF station in Baltimore. His four sons now oversee a
company that operates in 39 markets, from Columbus, Ohio,
to Tampa, Fla., and last year posted net income of $24
million on revenue of $739 million. The chief executive is
David D. Smith.
Mr. Westerfield said Sinclair deserved credit for being
innovative in areas like digital television and for its
aggressive techniques in finding ways to expand despite
F.C.C. hindrances, which have resulted in the company's
owning or managing two stations in 21 of 39 markets
(so-called duopolies).
"I fully credit them for that pioneering spirit,'' Mr.
Westerfield said, "but not for journalistic integrity."
One journalistic flashpoint has been the centralized
newscast operation that feeds many of Sinclair's stations,
always including the conservative commentaries by Mr.
Hyman. "Fox News sells itself as a conservative contrast to
the perceived liberal media," Mr. Westerfield said. But he
added, "The last time I checked, local weather and the
unfortunate news events you see on local television don't
conform with a left or right point of view."
The company has defended its centralized newsgathering
operation in the past, arguing it is an efficient way to
cut the costs of local journalism and brings news to small
stations that otherwise would go without and bolsters
existing newscasts with material they could not afford.
Ultimately, however, most investors care little about the
politics of a company, except when it interferes with
making money. Barry Lucas, senior vice president for
research at Gabelli & Company, a major Sinclair
shareholder, summarized his philosophy as: "Make money, not
news."
"My point of view is simple,'' he said. "I am apolitical on
this, but I don't like to see media companies above the
fold on Page 1."
"You are dealing in a business that people in public office
have some influence over,'' he added. "In this case, we are
talking about a regulated business by parties in
Washington, and in my estimation it does not make a lot of
sense to take a sharp stick and punch it in the eye of
potential regulators. Those guys at Sinclair better watch
out if Kerry is elected."
Geraldine Fabrikant, Jacques Steinberg and Stuart Elliott
contributed reporting for this article.
http://www.nytimes.com/2004/10/18/business/media/18sinclair.html?ex=1099088080&ei=1&en=a4331c47bd9f5a2e
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