Hitting Sinclair Where It Hurts

via AlterNet

The rapidly growing, aggressive advertising boycott effort of the Sinclair Broadcasting has already had a measurable financial impact on the company, whose stock dropped 10 percent over the past week, closing on Friday at an all-time low of $7.04 ? a $60 million loss in value.

The boycott is just one among Sinclair's increasing list of woes. A financial analyst from Lehman Brothers has warned that showing the film is "potentially damaging, both financially and politically." William M. Meyers wrote in his analysis for the company: "In a best case scenario, we believe that this decision could result in lost ad revenues. In a worst case scenario ... the decision may lead to higher political risk. As management has increased the company's political risk, we are reducing our 12-month price target to $9 (from $10)."

Meanwhile legal experts such as Stanford professor Lawrence Lessig predict that Sinclair shareholders will surely file lawsuits against the company's management. According to David S. Bennahum, Senior Fellow at Media Matters:

[A]s a publically traded company, Sinclair Broadcasting Group directors have a responsibility to ensure that Sinclair takes actions consistent with enhancing shareholder value. Sinclair's decision to air "Stolen Honor: Wounds That Never Heal" places partisan political interests ahead of shareholder value by jeopardizing the renewal of FCC licenses, stimulating grassroots advertiser boycotts and triggering potential investigations into the company's misuse of its licenses to use the public airwaves.

Media Matters is urging anyone who may be a shareholder in one of 20 mutual funds and six pension funds that invest in the company to request that their fund manager immediately divest their funds from Sinclair. Atrios says, "I haven't had this much fun reading a stock message board since Enron was in free fall..."


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