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Sinclair Shares Take Hit on Worries About CW Impact

Jan 24, 2006  •  Post A Comment

Shares in Sinclair Broadcast Group tumbled nearly 16 percent Tuesday as Wall Street began speculating about how the shuttering of The WB Network and UPN might affect the Baltimore-based station group.

At the market’s close Tuesday, Sinclair’s shares had sunk $1.40 to $7.51, trading at four times their average volume.

At issue is Sinclair’s high concentration of WB and UPN stations, some of which will lose their affiliation as a result of the shutdown of The WB and UPN to make way for a new network called The CW. The new network, which will launch in September, will be owned 50-50 by WB parent Warner Bros. Entertainment and UPN parent CBS Corp.

According to the company, Sinclair is in four markets where its ownership of a WB or UPN affiliate overlaps with that of WB or UPN stations owned by either CBS Corp. or Tribune Co.-a major WB affiliate that will become a major affiliate of The CW. Those markets are Tampa, Fla.; Pittsburgh; Norfolk, Va.; and Oklahoma City.

In addition, Sinclair operates both WB and UPN affiliates in four other markets-Birmingham, Ala.; Milwaukee; Nashville; and Raleigh, N.C.

“Some of our markets may benefit from the merger, while others may be negatively impacted,” said Sinclair CEO David Smith.

Mr. Smith said a preliminary review of the company’s WB and UPN markets revealed that about 1 percent to 1.5 percent of total net broadcast revenues would be at risk.

The company said it will discuss the impact in more detail during its Feb. 8 earnings conference call.