Sinclair Broadcast Group, Inc.

Throughout its 33-year history, Sinclair Broadcast Group has demonstrated a proclivity for buying up scads of television stations and attracting controversy. But two key decisions in 2004 on the part of the company’s top management has transformed Sinclair into what one media analyst described as “the new poster child for the ills of media consolidation.”

In April, when the ABC News program Nightline dedicated an entire show to reading the names of the more than 700 U.S. soldiers killed during the Iraq war to that point, Sinclair management issued an order to its seven ABC affiliates: do not air this program. That decision thrust Sinclair into the national and even international spotlight, with everyone from Nightline host Ted Koppel to Sen. John McCain coming out against the move.

McCain sent a public letter to Sinclair’s CEO, David Smith, calling the decision not to air the Nightline tribute “unpatriotic.” But despite that and overwhelming criticism from editorials to protests outside the company, Sinclair stuck to its guns, suggesting that the show was politics “disguised as news.”

That was just a prelude, however, to what happened a few months later, just before the presidential election. Sinclair announced that it was ordering all of the television stations it programs—60 of the 62 in its overall group—to preempt regular primetime programming and air an unflattering documentary about Democratic presidential nominee John F. Kerry’s Vietnam service.

An eruption of criticism—including from many of the company’s own shareholders—followed. The Washington, D.C., bureau chief even spoke out against the decision, and was summarily dismissed. CNN contributor Howard Kurtz coined a slogan for the broadcaster: “Sinclair, we don’t even pretend to be fair and balanced.”

The company had never before received as much attention as it did in April and then in October, but anyone familiar with Sinclair’s history wouldn’t be surprised by the ability of its owners to withstand opposition.

Julian Sinclair Smith started out in 1971 with a single television station in Baltimore, Md., that is now the company’s flagship; Smith’s next acquisition was in Pittsburgh. After years of growth, by 1985, the company’s board of directors tried to oust him. They failed when Smith and his son joined forces with one other board member, whose 10.2 percent stake combined with Smith’s 40 percent to halt the move.

The Smith family then bought out the dissenting board members. In 1988 Smith’s son David took over as chairman and CEO of the newly renamed Sinclair Broadcast Group. He became chairman of the board in 1990.

From there, the company embarked on a mission to get “as many TV stations as we can,” in the words of Smith, and as of 2004 Sinclair owns more television stations than any other company in the United States, reaching nearly 25 percent of all households. The four sons of the company founder still control about 95 percent of Sinclair.

Despite its large collection of affiliates, the company has long had financial problems. The $75 million raised from Sinclair’s IPO in 1995 was used to pay down debt. Three years later, still saddled with most of that debt, Sinclair paid out more than $1.3 billion for a total of 21 additional stations—14 from Sullivan Broadcast Holdings and seven from Guy Gannett Communications—and the company’s debt grew.

During the same period of rapid expansion and escalating debt, Sinclair caught flack for violating the FCC rule against owning more than one UHF station in one market.

From 1999 to 2000, in an effort to recover financially, Sinclair sold all of its radio holdings, including 55 stations, to Entercom Communications for $920 million, thus making the company all-TV. Despite the sale, the company is still wrestling with significant debt. Sinclair is 11th among the top broadcast television companies, despite having 52 stations: revenues of about $756 million for 2002 are a fraction of the $2.3 billion that News Corp., with only 35 stations, pulled in.

As Sinclair has continually added stations, its role has become increasingly that of a content provider rather than a straight distributor. Most significantly, Sinclair reaches 25 percent of the national audience through its 62 stations, and owns more duopolies—two television stations in a single market—than any other broadcaster.

In 2002, Sinclair created News Central to manage news operations for all of its stations from a central location. The company prides itself on being an alternative to mainstream news media, broadcasting its own content under the name “News Central.” The company’s vice president for corporate relations, Mark Hyman, provides daily commentaries during broadcasts.

During the Iraq war, Sinclair dispatched its own reporters to Iraq in order to cover the positive stories coming out of the country that the company said were being spiked by the mainstream media.

But it was the Nightline flap that cast Sinclair as the unsung darling of conservative media. Robert Zelnick, chairman of Boston University’s journalism department and former ABC News correspondent called the company “kind of a Triple-A Fox News,” referring to News Corp.’s conservative cable news channel.

Sinclair has also given more money to Republicans in the form of campaign contributions, proportionately, than even Bush benefactor, Clear Channel Communications Inc. Between 1996 and mid-2004, Sinclair has contributed 89 percent of its $2.3 million in contributions to Republicans. Clear Channel, by comparison, has donated 65 percent of its $10 million in contributions to Republicans, according to a Center for Public Integrity analysis.

—Robert Morlino

October 20, 2004

Sources: Company Web site, Hoover’s Online, The Hollywood Reporter, The Baltimore Sun, The Post and Courier, Television Week