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How To Destroy Your Business

For some reason, the most exciting PR disasters always involve the media.

The latest example of a full-blown PR disaster comes courtesy of Sinclair Broadcast Group, a Baltimore-based local television station owner. Sinclair, which owns sixty-two local television stations in thirty-nine markets across America and reaches an estimated 24% of all television viewers, has created a perfect PR storm for itself, and it’s showing no signs of letting down. To trace the roots of Sinclair’s PR storm, we have to go back about six months.

In April, Sinclair refused to air an installment of the widely-respected show Nightline on its ABC affiliates. The Nightline episode in question involved anchor Ted Koppel reading the names of all U.S. soldiers who had died in Iraq. Sinclair claimed the program was “political” in nature, and instead ran its own program debating the merits of Nightline’s program. The company’s decision caused a firestorm of criticism, which Sinclair simply brushed off. This wasn’t the first time that Sinclair had been in trouble.

After the September 11 terrorist attacks, Sinclair drew ire for having newscasters at its Baltimore station read statements supporting President George W. Bush. While the vast majority of Americans undoubtedly supported the President in the days after 9/11, Sinclair was criticized for crossing the line between reporting the news and forcing the political views of its owners on journalists. This is where Sinclair’s current problems come in.

In the days leading up to the Presidential election, Sinclair has told its stations to air a documentary that suggests Senator John Kerry’s testimony to Congress in 1971 hurt Americans being held as prisoners of war in Vietnam. Sinclair will air the program in prime time and commercial-free, which is certainly not normal broadcasting protocol. Sinclair’s decision is seen by many on both sides of the aisle as highly-political, and many in the media industry are questioning whether Sinclair has crossed the line.

Politics aside, Sinclair has crossed a line, and a serious one at that. As a local television station owner, Sinclair is essentially mandated by the Federal Communications Commission to serve the public interest, and partisan politics are certainly not in the public interest. Organizations are already lining up to protest Sinclair’s broadcast licenses when they come up for renewal, and the company’s actions are further stoking the debate over media ownership rules, which Sinclair has manipulated in the past to serve its own interests. Sinclair’s problems could have a trickle-down effect as well.

A handful of local companies have already pulled their ads from Sinclair-owned stations, and there are groups urging boycotts of national companies that advertise on Sinclair. Viewers, especially those who support Senator Kerry, may also choose to boycott Sinclair-owned stations. None of this is helping Sinclair’s stock, which has dropped more than twelve percent since the announcement, and could be in for a bigger fall as analysts question the ramifications of Sinclair’s decision. The media, of course, are loving every moment of this.

Sinclair has erred in a number of ways, and done so under the guise of doing something beneficial to the public (which it claims it is doing). This is the company’s biggest mistake. First, however, let’s take a quick look at where Sinclair has gone wrong:

1. Protecting Shareholders: As a public company, Sinclair has a responsibility to protect its shareholders. Every decision the company makes directly impacts people who have invested their money in the company. By making a decision that would clearly have a negative impact on the company’s stock price, Sinclair has not served its shareholders and has opened itself up to the possibility of lawsuits. New York State Comptroller Alan Hevesi, who controls the state’s pension fund, which has invested in Sinclair, is questioning why Sinclair would do something that is not in shareholders’ best interests.

“Given the stock’s already poor performance, it would seem that any bad news would risk reducing investor interest and, thus, risk a lower stock price,” Hevesi wrote in a letter to Sinclair, according to the Associated Press.

2. Serving Its Customers: Sinclair has three customers: advertisers, viewers, and networks. Sinclair has already lost some advertisers, and other advertisers may see pressure from consumers if they continue business with Sinclair. The last thing a company wants, or needs, is a partner/vendor/customer creating PR problems. As for viewers, if ratings at Sinclair-owned stations drop, this directly impacts advertisers, and the company could find itself unable to meet contracted viewing rates. As to whether Sinclair is really serving the viewer properly, it depends on what you feel a local television station owner’s obligations are. Lastly, Sinclair is running the risk of alienating the networks it is affiliated with. As affiliate contracts expire, Sinclair may find networks uneasy about doing business with the company and could lose lucrative broadcast deals.

3. Is This Sinclair’s Business?: While Sinclair may feel that airing a questionable, politically-charged documentary is its business, the simple truth is it is not. Sinclair is entrusted by the networks to run network programming, to keep their images intact, and to make advertisers happy. By forcing a political stance on its employees, Sinclair is seriously damaging its credibility as an employer, and as a business in general. In the eyes of regulators, Sinclair is risking its status as a true local broadcaster, and without the use of those free airwaves, Sinclair can call it a day.

As I mentioned before, Sinclair’s biggest mistake is claiming that there is nothing wrong with what it’s doing. The problem is that many people, dare I say the vast majority of people, believe this is not the case. A poll on one of Sinclair’s own websites (http://www.newscentral.tv/poll/qod_results.shtml) asks, “Do you think Sinclair Broadcast Group should run the documentary?” Sixty-eight percent of respondents said no.

Make no mistake, while this may be about politics, this is also about a company making a bad business decision, one it knew full well ahead of time would lead to a PR problem. Sinclair doesn’t appear to care about the ramifications of the decision, and you have to give the company credit for that. It’s not often you see a company so determined to destroy value that it’s willing to stand on principle to do it.

What we can learn from Sinclair is simple: don’t mix business and politics. Sinclair may believe what it is doing has some sort of journalistic value behind it, but as a former journalist, I’m comfortable saying that Sinclair’s barking up the wrong tree. The timing of the showing, the nature of the film, the attempted bullying to get Senator Kerry to respond – this all smacks of yellow journalism. By going forward with its plan (and if it backs down, what happens then?), Sinclair is risking doing grievous harm to its business, and the PR will only get worse if the stock keeps falling.

At a time when so much is at stake, and there are so many important issues on the minds of Americans, Sinclair has turned itself into a story – and a bad one at that. This isn’t the role any business should play in an election, much less one whose product is news and information. Sinclair needs more than a good PR person right now; it needs a clue.
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Worth Noting: Sinclair may only have made matters worse for itself on Tuesday when it was learned that Jon Leiberman, the company’s Washington bureau chief, was fired for questioning Sinclair’s decision in a Baltimore Sun article on Monday. Leiberman, the company says, was fired for violating company policy by speaking to the media. The smacks you hear are those of hypocrisy. Someone, quick, get Sinclair the phone number for a good crisis control person.

This article, written by Ben Silverman, originally appeared in PR Fuel (http://www.ereleases.com/prfuel), a free weekly newsletter from eReleases (http://www.ereleases.com), the online leader in affordable press release distribution. To subscribe to PR Fuel, visit: http://www.ereleases.com/prfuel/subscribe/.

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