Another big broadcaster may be on the verge of bankruptcy.
Sinclair Broadcast Group Inc., which is controlled by David Smith and his family and operates 58 television stations, said that if it couldn't restructure its heavy debt load, it would have to file for bankruptcy protection.
The Baltimore-based company, which has about $1.3 billion of debt, is trying to negotiate terms on notes of $500 million that are coming due in the next 18 months.
If Sinclair files for bankruptcy, it would be bad news for Hollywood, which counts on the company to spend heavily on programming for its stations. Sinclair is one of the biggest buyers of reruns and movies. It also is the latest broadcaster to be feeling the pinch of a poor economy and a changing media landscape. In a filing with the Securities and Exchange Commission, Sinclair said auto advertising used to represent 25% of its ad revenue and now accounts for only about half that amount.
Other broadcasters who have filed for bankruptcy this year include Young Broadcasting Inc. and ION Media. Tribune Co., which owns the Los Angeles Times and a major group of TV stations, has been operating in bankruptcy since late last year.
Also darkening Sinclair's prospects is Cunningham Broadcasting Corp., a small broadcaster that is operated by Sinclair and owned by trusts established by Smith's mother, Carolyn. Cunningham, Sinclair said, is at risk of defaulting on its loans at the end of the month. If Cunningham has to file for bankruptcy, that would mean the loss of $77 million in revenue it kicks back to Sinclair on an annual basis.
Sinclair has gained some notoriety in the industry. Smith is a colorful and aggressive executive who with his brothers inherited Sinclair from their father and built it into one of the nation's biggest broadcasters.
Smith made national headlines in April 2004 when his stations that were affiliated with the ABC network refused to air a "Nightline" broadcast featuring then-anchor Ted Koppel reading the names of U.S. service members who had died in Iraq. Later that year, Sinclair aired a controversial documentary challenging the war record of presidential candidate Sen. John F. Kerry (D-Mass.).