Back to Year 2004 - Letters [http://www.cde.ca.gov/nr/el/le/yr04ltr.asp]
O'Connell and Westly Joint Letter to Sinclair - Year 2004 [Note, the preceding link is no longer valid.]
Date: October 20, 2004
David D. Smith
President and Chief Executive Officer
Sinclair Broadcast Group, Inc.
10706 Beaver Dam Road
Hunt Valley, MD 21030
Dear Mr. Smith:
We write to you today as individual board members of the California State Teachers Retirement System (CalSTRS). As such, we do not speak on behalf of CalSTRS, but rather in our individual fiduciary capacities. As you may know, the system owns 119,938 shares of Sinclair Broadcast Group, Inc. (SBGI) and two bonds valued at $8,017,175. We are very concerned about the situation arising from your promotion of the program “Stolen Honor: Wounds that Never Heal.” We understand that you are now planning to air only parts of the program. Nevertheless, we feel your continued desire to promote partisan politics is of great concern.
As significant investors in SBGI, we are compelled to ask why you are potentially putting your company (and our investment) in jeopardy to influence the upcoming presidential election. Since your questionable decision has come to light, a nationwide boycott of SBGI stations has been launched, and news reports indicate this boycott is causing SBGI to lose sponsors and significant advertising revenue. In addition, consumer and media watchdog groups are vowing to challenge every FCC license renewal of SBGI-owned stations. We question your decision to expose SBGI to the risks associated with boycotts and lost revenue.
SBGI is one of the largest and most diversified television broadcasting companies in the country today. Sinclair owns and operates programs or provides sales services to 62 television stations in 39 markets. Your television group includes FOX, WB, UPN, ABC, CBS, NBC affiliates and independent stations and reaches approximately 24 percent of all U.S. television households. As such, a significant share of your revenues would be at risk if the FCC takes adverse action against your licenses.
SGBI stock has fallen 53 percent this year and recently closed at a new 52-week low. Your actions are exposing SBGI to possible credit downgrades, shareholder lawsuits, and disciplinary actions by the Federal Election Commission and Federal Communications Commission. Legg Mason concluded that favorable deregulation is at risk due to SBGI actions. Any of these actions taken singularly would be troubling. In totality, they represent a very serious threat to the financial stability of SBGI.
We represent the financial interests of 734,963 members who are mostly teachers and their families. These members have the right to expect the companies in which CalSTRS invests will act with their best interests in mind. CalSTRS is often our teachers’ primary source of income in their retirement years. It appears that your decision to air “Stolen Honor” puts partisan politics above the best interests of your shareholders. We urge you in the strongest way to reverse this highly questionable course of action.
State Superintendent of Public Instruction
California Department of Education
California State Controller