Sinclair decision to pre-empt programming cost shareholders

Common Cause goes to Sinclair annual meeting, urges shareholders to ask tough questions

Sinclair Broadcast Group failed to serve democracy when it preempted in certain markets a Nightline program honoring soldiers killed in Iraq. But Sinclair’s decision put the company in jeopardy as well. As shareholders, you should be aware of the implications of that decision.

Sinclair’s decision subjected the company to a barrage of bad publicity. Since ABC permitted non-ABC affiliates to air its Nightline program in Sinclair communities, Sinclair lost audiences to other competing stations. Nightline’s ratings were up 30 percent for the April 29 program, “The Fallen,” compared to the rest of the week.

Sinclair’s action was the subject of widespread criticism, including a scathing letter from Senator Commerce Committee Chairman John McCain (R-AZ), who called the preemption “unpatriotic.”

The Winston-Salem Journal, in Sinclair’s market area, called it “a shoddy preemption.” “Sinclair Viewers Lost Choice,” stated the Rocky Mountain News. TV columnist Tom Shales called Sinclair “arguably unfit to be a [broadcast] licensee, at least in a democracy with a First Amendment.”

Thousands of Americans flooded Sinclair’s offices with e-mails and phone calls, protesting its decision. Sinclair also might be in the crosshairs of more bad publicity. Senator Frank Lautenberg (D-NJ) has asked the McCain’s Commerce Committee to hold hearings on “a disturbing pattern of politically based corporate censorship of the news media and entertainment industry.”

Common Cause believes that broadcasters have a duty to serve the public. That means providing them with information, a diversity of viewpoints, and a discussion of issues important to a democracy. When Sinclair and other companies fail to serve the public interest, they also fail to serve their shareholders.

Facts for Shareholders:

First, the judgment to forbid airing of the program smacked of a specific political agenda and therefore created a severe public backlash and offended many military families. These events put Sinclair’s reputation at risk.

Second, the Sinclair Broadcast Group lost viewership to competitor stations as ABC was able to secure alternate options for viewers in six of the eight cities affected, including St. Louis, Mobile, Ala., and Columbus, Ohio. Furthermore, ABC News’s “Nightline” scored nearly 30 percent more viewers on Friday night, April 30th than it did the rest of that week, according to preliminary numbers. An average of about 4.5 percent of the TV households in the nation’s largest markets watched the program. The preliminary rating was about 22 percent higher than the show had done the previous Friday in the metered markets.

Third, Sinclair’s decision does not reflect a commitment to the public interest and to a fair and balanced media. Failure to serve the public places Sinclair’s broadcast licenses at risk.

Suggested questions for shareholders to ask of Sinclair management:

1. On Friday, April 30, your stock price dropped 2%. How do you intend to recoup lost shareholder value and corporate prestige?

2. What criteria are you going to use in the future to determine what network programs are “partisan?” Will this criteria be published anywhere so that shareholders can review and vote on these types of decisions?

3. Did you consider the public relations fallout from your actions, and the reaction of local affiliates and the families of deceased soldiers in those communities?

Letter from Sen. John McCain to David M. Smith of Sinclair Broadcasting [released on Friday, April 30th; addressed to David M. Smith]:

I write to strongly protest your decision to instruct Sinclair’s ABC affiliates to preempt this evening’s Nightline program. I find deeply offensive Sinclair’s objection to Nightline’s intention to broadcast the names and photographs of Americans who gave their lives in service to our country in Iraq. I supported the President’s decision to go to war in Iraq, and remain a strong supporter of that decision. But every American has a responsibility to understand fully the terrible costs of war and the extraordinary sacrifices it requires of those brave men and women who volunteer to defend the rest of us; lest we ever forget or grow insensitive to how grave a decision it is for our government to order Americans into combat. It is a solemn responsibility of elected officials to accept responsibility for our decision and its consequences, and, with those who disseminate the news, to ensure that Americans are fully informed of those consequences. There is no valid reason for Sinclair to shirk its responsibility in what I assume is a very misguided attempt to prevent your viewers from completely appreciating the extraordinary sacrifices made on their behalf by Americans serving in Iraq. War is an awful, but sometimes necessary business.

Your decision to deny your viewers an opportunity to be reminded of war’s terrible costs, in all their heartbreaking detail, is a gross disservice to the public, and to the men and women of the United States Armed Forces. It is, in short, sir, unpatriotic. I hope it meets with the public opprobrium it most certainly deserves.