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TV Company Takes a Hit on Stock, Ethics

By Jerry Knight
Monday, October 25, 2004; Page E01

The last thing the long-suffering shareholders of Sinclair Broadcast Group needed was a flap over journalism ethics.

Even before the brouhaha over its reported plan to broadcast a film attacking Sen. John F. Kerry (D-Mass.) as a news special, Sinclair was among the worst-performing stocks of companies based in Maryland, Virginia and the District.

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Sinclair stock, which peaked at $15.43 just before New Year's Day, closed Friday at $7.17, down 52 percent from that high. And that was after a strong rebound that began Wednesday following Sinclair's announcement that it wouldn't air the entire anti-Kerry documentary after all. Before that, Sinclair stock fell for nine days in a row in response to the controversy, something the company downplayed Friday.

"Our stock has been hurt by a soft advertising market and a tough economy," said Barry M. Faber, Sinclair's general counsel.

Though not well-known outside Baltimore and the broadcasting business, Sinclair is the nation's largest owner and operator of television stations. Mostly located in medium-sized cities, such as Baltimore, Pittsburgh and Cincinnati, the 62 Sinclair stations reach about one-quarter of the people in America.

Sinclair executives insist the media have misrepresented its side of the story ever since the Los Angeles Times reported Sinclair had ordered station managers to drop their regularly-scheduled programming and run a film in which former American prisoners of war in Vietnam criticized Kerry's anti-war activities.

Sinclair officials note that critics spoke without seeing the program, which hadn't even been completed when the incident began. The show finally aired last Friday night on about 40 Sinclair stations.

You don't have to be a media critic or a political partisan to know that when the talking heads stop jabbering, Sinclair shareholders will be the losers. Even analysts for Baltimore investment firms with long ties to Sinclair warn that the incident is bad business.

"While we will not prejudge the content of the show and its potential long-term implications, we do believe that [fourth quarter] advertising revenue is being impaired due to cancellations," wrote Sean P. Butson and Lamont N. Corprew, broadcasting industry analysts at Legg Mason, in a memo to clients last week.

Burger King was the best known company to announce it was pulling its advertising, saying it would not run commercials that had been scheduled to appear on nine Sinclair stations on the same day as the anti-Kerry documentary. The issue was particularly sensitive for Burger King because the fast-food chain has been running a series of commercials featuring popular musicians urging young people to register and vote.

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