Could Sinclair be sued by a shareholder because of this??

[private_ryan]

imagine what a boycott and deliberately pissing off 50% of your viewers does to you bottom line. Could they be sued because of this if the stock drops a bit in the next weeks?

any lawyers?

[RedEarth]

1. According to TPM....it sounds like it

http://www.talkingpointsmemo.com/archives/week_2004_10_10.php#003642

A stockholder in Sinclair Broadcast Group can file what's called a "shareholder's derivative action" against the officers and directors of the corporation, which is publically traded, to enjoin the officers and directors from using corporate resources in ways that do not benefit the shareholders. I believe Sinclair is incorporated in Maryland, and if so that's probably where the action should be brought. One stockholder has standing to sue and should request a temporary restraining order before the pseudo-documentary airs to prevent the officers and directors from misusing corporate property to benefit their political agenda. The reason it is misuse of corporate property is because ordering the local stations to air the anti-Kerry propoganda will likely cause a loss of network advertising revenue, may in fact violate the stations' contracts with the networks they are affiliated with, and is almost sure to embroil the corporation in costly legal battles, for example from entities complaining that this is an illegal corporate campaign contribution, or from angry consumers who will contest the stations' license renewals. Against this, there has to be some plausible benefit to the stockholders or the corporate action is unlawful and could subject the officers and directors to personal liability for any damage to the stockholders. They also could be stuck with the legal fees of both the corporation and the stockholders who sued them.
Shareholders derivative actions are fairly complex; we need a Maryland corporate lawyer type. I'm a lawyer in Texas and was thinking to file the suit here but under Texas law, the acts of the officers and directors are governed by the corporate law of the state of incorporation, about which I know little. However, I do know that as a general principle, corporate officials have a fiduciary obligation to the stockholders, and everything they do is supposed to be for the benefit of the same. Normally a court won't second-guess the decisions unless the stockholder can show that there is no plausible benefit to the corporation in the complained-of act. What could the benefit be here?



I'd be curious to hear reactions from readers with relevant legal or business experience how practicable this would be. Of course, I'm curious about everyone's reactions. But in this case I'm particularly interested in hearing with folks with professional insight into how this might work. Of course, the most direct approach -- and I suspect a successful one if done correctly -- is to target Sinclair's advertisers. Another reader writes in the following ...

[cprise]

11. Not so sure about that

"...ordering the local stations to air the anti-Kerry propoganda will likely cause a loss of network advertising revenue..."

We are not talking about social issues here. This is about wealthy corporations enhancing their wealth by propagandizing for Bush. If most of Sinclair's advertisers are large corporations, then they'll stick with Sinclair and let the viewers be mad. Boycotts only occassionally work under competitive conditions, but if Sinclair has monopolies in some of it larger markets, the boycott will fall by the wayside long before Sinclair feels anything on their bottom line.

[RedEarth]

14. According to some folks, local Sinclair stations get the bulk of their

revenue from local advertisers. Boycotting Pepsico products most likely won't have any impact, however, if a local advertiser(Joe's Auto Repair) receives calls from local people stating they plan on boycotting their business then it very well could have an impact.

here are some posts from TPM regarding local advertisers...


A reader gets results...

As suggested in a post you have further down, I just called the Cincinnati station's sales mgr. He was really concerned when I read him a list of local advertisers and said I'd be calling their advertising managers to express my displeasure that they choose to advertise on a Sinclair station. He practically begged me not to, saying "this involves people's livelihoods." And then I did call the local advertisers.
So you are correct. Local stations -- SALES MANAGERS and local advertisers AD MANAGERS are the pressure point.

Please do what you can to get the word out.

and another post from TPM

From a reader ...

I’ve worked in the media business for 30 years and I guarantee you that sales is what these local TV stations are all about. They don’t care about license renewal or overwhelming public outrage. They care about sales only, so only local advertisers can affect their decisions.
Here's how to have an impact on the local Sinclair stations: first, watch the station and make a list of all of the local advertisers. Then, write to the sales manager -- not the general manager, but the sales manager -- and tell him that you're going to contact all of the local advertisers to register a protest about the station airing this program. Be specific -- mention the names of those local advertisers. Then, actually contact them (if you write or email, cc the sales manager). These stations make most of their income (around 60%) from local advertisers and will NOT want to have that income threatened.

This has worked numerous times. A recent example was when a local radio morning show host in North Carolina told his listeners to aim for bicyclists on the road (he was ranting about how cyclists have no right to share the roadways). The station defended him for several days amidst public outcry, until the advertisers, under pressure from outraged cyclists, began to make noise. Suddenly, the station reversed itself, suspended the host for several days, and made him do public service announcements for weeks about sharing the road with cyclists.

This can work! I plan to start tonight!



Sounds right to me.


http://www.talkingpointsmemo.com/archives/week_2004_10_10.php#003648

[proud patriot]

2. also I think Advertisers have a case

if sinclair contracted for ad time
durring period when they will pre-empt
w/o comercials ..

[patrice]

3. You'd think if there is an effect upon their advertisers and, hence,

upon $$$, shareholders might have a "case"?

[kerry-is-my-prez]

4. The board of directors could be voted out because of this also....

You can bet if this causes the company to lose money the shareholders will be p.o.'d whether they are Repub. or not.

[private_ryan]

6. exactly

their duty is to do what's best for their shareholders, not Bush.

[napi21]

10. That won't happen.

95% of Sinclair stock is owned by the 3 brothers who run it. Even if the other 5% were owned by 1 stockholder, there sure wouldn't be enough votes to oust any of the BOD.

There are minority stockholder laws that could be a problem, but very unlikely a big problem.

[dolstein]

12. Only if the insiders can be outvoted

I suspect the insiders control a very large block of shares. It is rare for a board to be voted out by the shareholders.

[burythehatchet]

5. Absolutely. This is probably the most effective course of action

because a D&O action would hold the individual executives liable. Once their personal assets are at risk, although most have an indemnification agreement, the lawsuit itself will have the intended effect.

[autorank]

7. Once a credible group is put together to do a license challenge...

there will be an impact on the stock. The company has no value without the license. Therefore, shareholders can file for lost value prior to any challenge due to Sinclair behavior that is so irresponsible as to encourage the challenge and thus the loss in value. Watch the stock price and institutional investors.

[glitch]

9. love it. nt

[cprise]

8. I don't think so

I thought Sinclair had monopolies in some of its markets. If so, these viewers are a captive audience so Sinclair's market share is protected.

That is what their shareholders have encouraged them to do all along: To monopolize regional markets enough that the company cannot be hurt by management's mistakes.

[Gothmog]

13. Shareholder derivative actions

Such a suit could be fun but there are a number of problems. See
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=104x2480821