AB noted yesterday that some of Sinclair Broadcasting’s shareholders were upset the decision of management to aid the Bush-Cheney ’04 campaign with free air time for another smear of John Kerry. Their stock, which was around $10 a share in early August, is trading now for about $7.30 a share. Kash also gave a list of inside and outside directors.
One might think the shareholders would be demanding a change in management. But a review of the ownership of the stock suggests that this is not likely. Dyson Ehrhardt along with David, J. Duncan, Robert E., and Frederick Smith owns over 42 million in common stock. The latest 10-Q for Sinclair Broadcasting shows 45.8 million in Class A common stock and 39.6 million in Class B common stock.
Ehrhardt and the Smith family apparently control this company and are extracting its ability to generate shareholder income for their own “perquisite consumption” (see Bradford Cornell’s Corporate Valuation, page 244).
I have four questions, which those who might have informed opinion are welcome to help me answer:
Q1: for the financial economists: why would anyone even invest in the shares of a company that is essentially controlled by a family?
Q2: for the securities attorneys: short of selling stock at this depressed price, what are the legal remedies of minority shareholders when the controlling interests extract value for their own perquisite consumption?
Q3: for the eager reporter types: is there other evidence that the Smiths are assisting rightwing Republicans such as Bush-Cheney?
Q4: for those who wish to speculate: are the majority owners of Sinclair Broadcasting going to receive some quid pro quo from the White House if Bush-Cheney are re-elected?
If the answer to my last question turns out to be yes, then this episode combines elements of Russia’s Yukos Oil scandal with good old fashion bribery.