If Sinclair Broadcast Group’s purchase of Tribune goes through, Sinclair will become one of the nation’s biggest players in local-TV news. Only what they do isn’t news, it’s propaganda, and the people who run Sinclair are not, to say the least, public-spirited journalists. Here’s a deep dive I originally did in October 2004 for my then-work blog, “The Lex Files,” now cross-posted from the Internet Archive (The Wayback Machine) ….
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Sinclair Broadcast Group has grown into a major story not just among bloggers but in the mainstream media, darned fast. It's worth a review, not necessarily because of the partisan political implications for the 2004 presidential election but because of the implications for all of society.
First, some background: Maryland-based Sinclair Broadcast Group is the nation's largest TV chain, with 62 properties encompassing affiliates of all six broadcast networks, including two here in the Greater Lex-Files Metropolitan Area: WXLV-45, an ABC affiliate, and WUPN-48, a UPN affiliate. It doesn't get as much media attention as you might expect because it owns no affiliates in the nation's largest media markets, particularly New York and Los Angeles.
Here at the N&R, we started paying serious attention to Sinclair when it killed its local-news operation at WXLV in early 2002. About 16 months later, Sinclair started a local-news operation at WUPN and then later announced plans for a new local-news program at WXLV, relying on WUPN staff as well as content centrally produced at Sinclair's "News Central" operation at its Maryland headquarters. Our 2003 story announcing WXLV's plans noted that Sinclair planned to introduce local news at all of its stations that didn't already have them.
In hindsight -- and I say this as the guy who then was supervising our coverage of local broadcasting -- I wish we had examined the ramifications of those plans in more detail.
Fast forward to this past April, when the ABC network announced plans for Ted Koppel, the anchor of its long-running, late-night news show "Nightline," to read the names of American service people killed in Iraq.
Sinclair ordered its ABC affiliates, including WXLV locally, to pre-empt the broadcast. The reason, its corporate counsel said, was that "we find it to be contrary to the public interest."
The word choice was interesting because it clearly was intended to suggest that the company was complying with the terms of the licenses held by its various broadcast properties, all of which, under the Federal Communications Act of 1934 and subsequent revisions, are required to operate "in the public interest as a public trustee." Which was nice, except that operating in the public interest as a public trustee went out the window a generation ago, when the government began to deregulate broadcasting -- under Jimmy Carter, then faster during the Reagan administration, when the Federal Communications Commission under chairman Mark Fowler began loosening restrictions on station ownership and easing license renewals.
But, unfortunately for Sinclair, there was a public-interest issue: The public was interested in deaths in the Iraq war. One way it demonstrated its interest, about the same time as the "Nightline" broadcast was being debated, was by bombarding The Memory Hole with hits after it posted about 300 photos of U.S. war dead being returned to the United States in defiance of a government ban on access to those photos. Decent traffic for a medium-sized media-outlet Web site is a million hits a month. The Memory Hole drew 4 million hits in one day before collapsing.
With "public interest" looking like dangerous grounds for its plans, Sinclair issued a slightly longer statement: "Despite the denials by a spokeswoman for ["Nightline"], the action appears to be motivated by a political agenda designed to undermine the efforts of the United States in Iraq." The statement didn't say what led the company to think that.
The statement continued, "While Sinclair would support an honest effort to honor the memory of these brave soldiers, we do not believe that is what 'Nightline' is doing. Rather, Mr. Koppel and 'Nightline' are hiding behind this so-called tribute in an effort to highlight only one aspect of the war effort and in doing so to influence public opinion against the military action in Iraq. Based on published reports, we are aware of the spouse of one soldier who died in Iraq who opposes the reading of her husband's name to oppose our military action. We suspect she is not alone in this viewpoint. As a result, we have decided to preempt the broadcast of 'Nightline' this Friday on each of our stations which air ABC programming."
The statement also asked why "Nightline" had never read the names of victims of terrorism. (In fact, it had, on Sept. 11, 2002.)
The statement included an assertion of a political motive without any evidence to support the assertion, although I'll grant for the sake of argument that the occasion -- the first anniversary of President Bush's carrier landing and "end of (major) hostilities in Iraq" speech aboard an aircraft carrier -- might well have been selected for purely political reasons.
Certainly, the program indeed was going to "highlight only one aspect of the war effort," but that was never a real issue for two reasons. First, a lot of individual news stories do that; the body of coverage is what's intended to give the reader/viewer the big picture. Second, of all the aspects of the war effort, the deaths of U.S. service people almost certainly was the aspect the public cared about most. Might this aspect "influence public opinion against the military action in Iraq"? Maybe. Would it do so more or less than the then-current revelations that U.S. soldiers had been abusing Iraqi prisoners at the Abu Ghraib prison? Again, maybe.
Then there's the weight the company's statement gave to a single woman whose husband had died in Iraq and who objected to the broadcast. Assuming for the sake of argument that that claim was true, since when does a company with almost $750M in annual revenues let one person with no ties to the company so strongly influence a major business decision?
Of course, Sinclair was free to make such a decision on such a basis; freedom of the press, or transmitter, belongs to the people who own them. But other people, including the public on whose behalf Sinclair is required by law to act as a public trustee, also were free to act. And once Sinclair announced its decision and pledged to stick to it, some interesting things happened pretty quickly.
First, any number of Americans woke up the next day to read about Sinclair's decision in their newspapers and started calling both the Sinclair ABC affiliates and Sinclair corporate HQ. The affiliates' responses varied, but the corporate response, according to several bloggers and a couple of my friends who tried to call, was simply to let the phone ring.
Then, U.S. Sen. John McCain, R-Ariz., a war hero in his own right, sent Sinclair president David Smith a letter criticizing the company's decision:
... 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. ...
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.
But that was only the beginning.
So far as I know (i.e., if I'm wrong, feel free to correct me but not crucify me), CNN was the first to report that four senior Sinclair executives had donated the maximum allowed, $2,000 apiece, to the Bush-Cheney re-election effort. That article soon disappeared from CNN's site, but it prompted others to look into Sinclair's contribution history. Search results from Open Secrets, a nonpartisan campaign-finance database, turned up more than $19,000 in hard-money contributions to President Bush in the past three election cycles, plus more than $150,000 in soft-money contributions to the GOP, a fact upon which a number of liberal bloggers jumped quickly.
At the very least, these facts cast the company's criticism of "Nightline" in a whole new light. And if the bloggers had stopped right there, it still would've been a decent story. But they didn't, and neither did their commenters.
The pseudonymous blogger "Atrios," whose Eschaton is one of the most-visited liberal blogs, linked to and highlighted a reference page on Sinclair Broadcasting prepared by the liberal think tank Center for American Progress. Some of Atrios's commenters, frustrated that they had been unable to reach anyone at Sinclair by phone, turned up company president David Smith's e-mail address and urged others to contact him through it.
But Atrios wasn't done. He posted news articles from 1996 from the Pittsburgh and Baltimore papers about company president David Smith's arrest for receiving oral sex from a prostitute in his company car. That post apparently prompted his readers to go cyber-Dumpster-diving, so to speak, because soon several of them pointed out that Smith had sold $5 million worth of stock in his company in December, just before the stock price started a long downward slide, and at least one pledged to relay this information to the Securities & Exchange Commission.
The links, just to look at them, didn't scream "insider trading" to me, but God knows I'm no expert. On the other hand, the Sinclair stock price lost 26 cents -- 2.06 percent at the time -- the day this story went national, and I'm sure this kerfuffle was one reason.
This all led me to wonder what, exactly, Sinclair's management was thinking when it decided to pre-empt "Nightline." From "A Modest Proposal" to "Me So Horny," works that authorities have attempted to censor have only done better than they otherwise might have, and anyone who has spent anytime in the communications bidness, even in the business side of it, has got to know that. If there's one thing that could glue a couple million more pairs of eyeballs to the TV to watch an Alfred E. Neuman look-alike read dead people's names for 45 minutes than otherwise would be watching, it's the fact that some Republican-leaning corporate executive tried to keep those eyeballs from seeing the Alfred E. Neuman look-alike read the dead people's names.
Don't believe me? Fine. Believe Fox. Its local affiliate in Greenville, S.C. -- Red State territory if ever there was; Bob Jones University is nearby -- agreed to pick up the "Nightline" broadcast that the Sinclair-owned ABC affiliate there wouldn't carry. Fox's fairness might occasionally come under question, but no one questions that organization's desire to make a lot of money.
That drop in the stock price led me to look at Sinclair's income statements. Keep in mind when I say what I'm about to say that this company's primary business is TV stations and that owning a TV station in this country, particularly a network affiliate, is practically a license to print money. And then reflect upon what I learned: 1) The stock was trading at roughly 85 times earnings; and 2) the station's profit margin in 2003 was only about 23% -- huge by the standards of American industry in general but anemic by TV standards; 3) It actually reported net losses in 2002 and 2001. That almost defies the laws of physics.
In light of the "Nightline" experience, what, exactly, was Sinclair's management thinking when it chose to require its affiliates to air "Stolen Honor," a video critical of Sen. John Kerry, before the election? The video, which MSNBC's David Shuster has analyzed and described as factually inaccurate and clearly biased against Kerry, would be broadcast as "news," the company said -- a designation required for it to avoid the legal requirement that it offer the Kerry campaign equal time.
(For what it's worth, two things have happened this week that tend to support the idea that the film is indeed propaganda: 1) Sinclair fired its D.C. bureau chief for telling the Baltimore Sun that "Stolen Honor" was propaganda -- if the video really were news, the bureau chief wouldn't have been complaining, right? -- and 2) a former Marine has sued the makers of the video for libel, claiming that the video makes it appear as if he and other Marines shown had fabricated their stories of atrocities. As of Wednesday afternoon, that former Marine was considering whether to sue Sinclair, as well.)
I'm not privy to what management thought would happen, but I can tell you what didhappen, particularly after Sinclair VP Mark Hyman, the same guy who does political commentary on Sinclair affiliates' news shows, likened Kerry supporters to "Holocaust deniers" on CNN.
The liberal portion of Blogworld quickly determined, with the help of anonymous but sympathetic employees of Sinclair affiliates, that the best way to put pressure on Sinclair was to put pressure on its affiliates' local advertisers. And about as quickly as you can say "Web log," a boycott of those advertisers was organized. Within days, almost 80 advertisers had pulled their ads from Sinclair stations.
Moreover, an effort arose to challenge the renewal of federal broadcasting licenses for Sinclair stations whose renewal dates were upcoming (including those here in North Carolina). Such renewal is normally routine, but when a significant challenge is mounted, the license holder's legal fees related to the renewal go up.
Suddenly, even the mainstream and business media started paying attention. The New York Times reported. TheStreet.com named Sinclair's decision one of the "Five Dumbest Things on Wall Street This Week" for the week ending this past Friday. It was the kind of publicity of which advertisers live in fear.
The market reacted the way you would expect markets to react when a significant threat to a company's profit outlook materializes suddenly: It cut the value of Sinclair stock. Drastically.
The stock closed Tuesday at $6.26, which means close to $140 million in market value has disappeared since Oct. 9.
On top of that, a lot of liberal bloggers made it their mission in life to try to turn up unflattering information about the company and/or its officers. One of the more noteworthy was that a Sinclair subsidiary had gotten a nice government contract in September, leading to speculation that airing the Kerry video was supposed to be payback. Less conspiracy-minded folk simply noted that the company balance sheet was so debt-heavy that it needed further loosening of ownership restrictions to be able to make serious money anytime soon ... something that would be far less likely under a Kerry administration. Regardless of the motivation, however, the move has been shaping up, from a business standpoint, as a blunder of monumental proportions.
I'll grant you I'm no financial genius, but I did spend several years in broadcasting. What little I do know suggested to me that the company's management was a bunch of morons, a bunch of thieves or up to something totally different from what they were supposed to be up to, which was running the company in the best interests of allshareholders.
One blogger leaning toward the latter hypothesis is the pseudonymous economist PGL, who speculates that the Smith family members who own most of the Sinclair Broadcasting Group's stock might be engaged in an interesting little game with their defense-contracting subsidiary that would allow them to 1) profit off taxpayers AND their minority shareholders while 2) helping the Bush-Cheney effort by broadcasting the anti-Kerry propaganda.
But Jay Rosen, dean chairman of the journalism school department at New York University, suggested that Sinclair might be trying to turn itself into something totally new -- not a broadcasting company involving itself in politics but a political empire that just happens to own a lot of TV stations:
In a commercial empire it makes no sense to invite a [publicity] storm like that. But what if a company were built for that sort of storm? A lot depends on how we define Sinclair Broadcast Group: as a media company with a political agenda, or a political actor that's gotten hold of a media company and is re-shaping it for bigger battles ahead.
There are plenty of signs that Sinclair is a different animal. Supporters and critics of showing Stolen Honor should both understand that. ...
A political force in broadcasting is something intrinsically different. It seeks dynastic ends, goodies greater than ownership: power, influence, reputation, a booming voice, or even a political destiny, merging with national destiny, as with Italy's Prime Minister Silvio Berlusconi. ...
Sinclair's decision to acquire Stolen Honor is consistent with a series of prior moves. These include:
- Developing at the company's Maryland offices a capacity to speak to national issues through the stations. That means one big microphone at Sinclair headquarters, with 62 local amplifiers around the United States in 39 markets. You have to visualize that mike to understand what CEO David Smith and company are up to.
- To go with the added capacity to speak nationally, Sinclair has a coherent political message. It is pro-Bush, pro-war, conservative and sometimes populist, Republican, hyper-patriotic, resentful of liberal elites-- a familar mix. This comes from the Smith family itself, which controls Sinclair.
- To deliver the message and put a human face on Sinclair (and the Smiths), the company appointed a grand wizard of communications, one Mark Hyman. He hosts The Point, televised commentaries that run on all Sinclair TV stations and reach a daily audience of more than four million. Hyman, the voice of a company that has chosen to have voice, was front and center this week as Sinclair's plans for Stolen Honor became known. Since he is also a Vice President for Corporate Relations there is no chance he will wander off message. Quick-- name a figure in broadcasting with a job like Hyman's. You can't because there has never been a job like Hyman's. That's a signal to us.
- In earlier action leading up to its Stolen Honor moment, Sinclair created a new national news operation. It's called News Central, and it operates from the Hunt Valley, Md., headquarters. This was part of a strategic decision to turn local news operations into slightly modified versions of a newscast produced at the center. Investment could be withdrawn from the stations, which allegedly had less to do, since more was being done for them (allegedly at lower cost) by News Central.
- By refusing to air on its ABC affiliates Nightline's show ... Sinclair demonstrated that it would invite public controversy and do battle with adversaries -- not only Koppel and ABC, but Senator John McCain. This meant it was willing to sustain public relations losses unthinkable for ordinary commercial broadcasters, who try to avoid upsetting viewers and live in fear of advertisers. ...
When these moves are plotted on a commercial grid, or against the history of station ownership, they make limited sense -- or none. So it's not surprising that market-wise, Sinclair is a poor performer ...
I believe this decision, perplexing perhaps to investors, makes more sense in light of Sinclair's earlier steps to consolidate news control inside the firm itself. The company was being readied as a platform for a new political brand in television news ...
(Rosen further elaborates on this notion here, adding that Sinclair also wants government permission to buy newspapers in towns where it owns TV stations, and suggesting that it is throwing its muscle into this election to try to scare lawmakers and regulators into giving it what it wants.)
It's a grand plan, all right, with one exception: The Smith family apparently didn't clear their plans with the minority stockholders.
Some of those stockholders, including some institutional investors, have sent Sinclair a letter demanding that Sinclair offer Kerry equal time, as it would be required to do under federal law, if it runs "Stolen Honor." Another suit is looming, seeking to get Sinclair officers to return profits they are accused of making in self-dealing since late 2003, when the stock price was much higher. Remember David Smith's late-December sale of stock? They certainly do. And although no word of a shareholder lawsuit over the lost market value has surfaced yet, I'd be stunned if someone, somewhere isn't planning one; Tuesday's closing price appears to have been the stock's lowest level in more than a decade. Shortly after the markets closed, Sinclair announced that it would air only a portion of "Stolen Honor" and that it would air a "special news program" on Friday dealing with criticisms of Kerry's antiwar testimony after his return from Vietnam. The company did not say whether the Kerry campaign would be offered time to respond.
It's not clear, of course, how all this will play out. Sinclair's broadcast, if it ever materializes, might or might not run afoul of the federal law cited above. Its change in plans might or might not head off the lawsuits that loom. And with the Smiths still owning the bulk of the company's stock, a shareholder revolt appears less likely than a simple abandonment.
But the case illustrates the lengths to which some wealthy business people will go to try to use the public's airwaves as a political bludgeon (and it would be just as troubling if billionaire and liberal activist George Soros owned a bunch of TV stations and ordered them to air Michael Moore's anti-Bush screed "Fahrenheit 9/11"). It illustrates the damage that continued consolidation of TV and radio-station ownership can do to national discourse.
And, perhaps most significantly, it illustrates how quickly an Internet movement, particularly one driven by blogs, can grow into a force of real and lasting consequence. The case is less well known than how bloggers called Dan Rather's "60 Minutes II" reporting into question, but long-term, it will turn out to be far more important.
Accordingly, everyone -- businesses, individuals and politicians -- needs to be paying attention to this case.
UPDATE, 10/21/04: Daily Kos has posted a transcript of "Stolen Honor." Also, Sinclair now says it will air only a portion of the video as part of a "special one-hour news program, entitled 'A POW Story:
Politics, Pressure and the Media." The statement also quotes company executive Joe DeFeo as saying, "As with
all news programming produced by Sinclair's News Central, "A POW Story" is being produced with the highest journalistic standards and integrity." I'll resist the urge to snark here, but I will point out that company president David Smith is falsely claiming that people are trying to prevent the show from being broadcast. In fact, they're seeking the legally required equal time for John Kerry and are seeking an injunction against broadcast as leverage toward that end, not as an end in itself.
ANOTHER UPDATE: Jay Rosen, dean chairman of the New York University j-schooljournalism department and author of the PressThink blog, has been following this story closely, and today he brings the pain to Sinclair.