|A still from the movie shows a young Kerry testifying before Congress.
NEW YORK (CNN/Money) -
Sinclair Broadcasting's decision to air a program about John Kerry's antiwar activism has stirred up considerable political controversy, but the planned program may also cause some pain for Sinclair's business.
Sinclair last week ordered its stations to preempt their regular programming and run the special, without commercials, this week.
The planned program, based on the anti-Kerry documentary "Stolen Honor: Wounds That Never Heal," has drawn complaints from the Democratic Party, which filed a complaint with the Federal Election Commission charging that the broadcast would amount to an illegal campaign contribution.
A group of 18 Democratic senators led by Dianne Feinstein of California wrote to Federal Communications Commission Chairman Michael Powell last week and urged him to investigate whether the program was a proper use of public airwaves. Powell said the FCC could not block the program from airing.
Sinclair stands to lose more than $430,000 in ad revenue if it were to replace 90 minutes of prime time programming and forgo ads during the special, based on estimates provided by media cost forecasting firm SQAD and independent media analyst Jack Myers.
That's not quite pocket change, but it won't put a big dent in Sinclair's revenue. The company last year posted a net profit of $24 million on sales of $739 million.
But the potential business costs go beyond that lost ad revenue.
Web logs such as StopSinclair.org and dkosopedia.com are already rife with calls for protests and for boycotts of Sinclair advertisers that they have listed. Public-interest groups have threatened to challenge Sinclair's FCC licenses.
Media consolidation issue
Sinclair also finds itself in the center of a storm regarding media consolidation.
Groups such as Media Access Project and Common Cause have criticized Sinclair's planned program, saying it points to the dangers of big media. Sen. Byron Dorgan, D-N.D., has made known he will again push for passage of a measure limiting media consolidation once Congress reconvenes.
Sinclair has made no secret of its desires to see restrictions on media ownership relaxed. The company began under founder Julian Sinclair Smith as a lone UHF station in Baltimore in 1971. It has grown considerably in recent years under the control of four of Smith's sons, including CEO David Smith, 53.
The company owns and operates 62 television stations in 39 small and mid-size markets, including 20 Fox affiliates and 19 WB affiliates.
In all, its stations reach nearly one in four U.S. households -- and large numbers of potential voters in political swing states.
Sinclair's decision has also alienated some advertisers. Local businesses in Madison, Wis., and Portland, Maine have pulled their ads from area Sinclair stations because of the program or pressure from customers.
Lee Auto Malls, based in Portland, Maine, pulled the two ads it was running on Portland's WGME-TV, a Sinclair owned and operated CBS affiliate. "It seems an unfair use of the airwaves," president Adam Lee, who says he is a registered Democrat, told CNN/Money. "I don't think what they're doing is right so I don't want to spend my money advertising there.
Ed Shinnick, co-owner of restaurants Porta Bella and Paisan's in Madison, Wisc., said the restaurants had gotten several dozen calls and e-mails complaining about the program. Shinnick and his co-owners pulled their commercials from Sinclair's WMSN.
"Advertisers are usually strictly non-partisan and believe in the big tent policy, if not in politics then in consumerism," said media buyer John Rash of Minneapolis-based Campbell Mithun, a marketing firm owned by the Interpublic Group of Cos., an advertising company.
Flap over "Nightline"
Sinclair also courted controversy last April, when it refused to air an ABC News "Nightline" broadcast during which Ted Koppel read the names of American soldiers killed in Iraq.
Sinclair executives, including the Smith family, have been financial supporters of Republican candidates, including President Bush. Contributors affiliated with Sinclair have given more than $309,000 to Republicans since 1993, compared with donations of $42,400 to Democrats, according to PoliticalMoneyLine.com.
So far this election cycle, Sinclair employees have contributed more than $67,000 to Federal political campaigns, with 97% of the money going to Republicans, according to data from the Center for Responsive Politics.
But Rash and other media experts say the brouhaha won't have lasting effects on Sinclair's business. "I don't think it gives them any benefit," said Rudy Baca, media strategist at research firm Precursor Group, "and I don't think there's any long-term negative."
Supermarket chain Hannaford, based in Portland, Maine, had said last Thursday it would pull its advertising from Sinclair-run Portland station WGME-TV before reversing course the next day.
"We recognize that WGME has been placed in an untenable position," a Hannaford spokeswoman said in a prepared statement. "It was never our intention to politicize this issue even more by our action. Hannaford is in the supermarket business, not the political business."
"Most marketers will stick with Sinclair long-term as long as it serves their advertising purpose," said Rash. "But most will wish they hadn't been put in the line of fire."
Sinclair stock has fallen since the company announced plans for the Vietnam special. Its stock has languished this year, falling more than 50 percent. It closed Friday at $7.04, off 6 percent last week.