There are not many chief executives of billion-dollar media empires who appear at interviews wearing black leather loafers and no socks. At least not in button-down Baltimore.
And there are certainly not many corporate chairmen who would come to the office in the eye-popping black and white checked sports shirt that Sinclair Broadcasting Group's chairman, David D. Smith, sported recently.
But neither are there many companies that have grown at the rate of Sinclair in the nine years since the down-home Baltimorean and his three brothers took the helm of the family-run television station chain in 1986.
The 44-year-old Mr. Smith might not dress like Ted Turner or savor publicity like Rupert Murdoch, but the 1969 City College graduate said he won't rule out playing in the same league financially with the two famous media moguls.
"We're forever expanding -- like the universe," he said.
If you haven't heard of Sinclair or the Smith family, it doesn't mean you've been asleep for the last decade. The company and its executives keep a low profile. There is no corporate publicity staff. "We would tend to maintain as much anonymity as we can," said Mr. Smith.
C7 And Sinclair's headquarters is a nondescript little
building on TV Hill that it shares with two of its stations, Channel 45 (WBFF) and Channel 54 (WNUV).
"It's a modest little place to hang out and do a little business," said Mr. Smith.
In fact, Sinclair's chain of television stations is doing a bit better than "a little business." Its revenues jumped from $72.3 million in 1993 to $123.5 million in 1994, and 1995 revenues are on a pace to substantially outstrip the previous year's.
Nevertheless, the company has not been getting much respect from Wall Street in recent months. After an initial public offering of 15 percent of its stock at $21 in June, Sinclair's stock jumped to about $30 in July and stayed close to that mark until late September, when the stock began a steady slide to a low of $16.25 on Nov. 16. Only when the company announced a buyback of up to $50 million on Nov. 17 did the stock start to rebound. It closed at $18.25 Friday, up 50 cents.
The stock market slide has meant tremendous paper losses for the Smith family. Their cumulative holdings, worth about $900 million at the stock's peak price, fell to just under $500 million before the stock buyback -- still more than enough to make them one of Maryland's wealthiest families.
But the ups and downs of the stock market have done little to affect the company's basic growth strategy.
Since the beginning of 1994, Sinclair has acquired five additional independent UHF stations to bring its total to eight. It operates five others, including Channel 54, on behalf of the licensees under "local marketing agreements," an arrangement that lets the company sidestep federal restrictions on dual station ownership in a single market. Another license acquisition, in Flint, Mich., is pending, and Sinclair has options to acquire stations in Kansas City and Cincinnati.
Sinclair is poised to become bigger -- much bigger if Congress passes telecommunications legislation that would raise the cap on the number of stations a company can own from the current limit of 12.
The company amassed a bountiful war chest of $105 million through its public offering and added another $300 million through a debt offering in September.
Like many TV broadcast companies, Sinclair has its roots in radio. According to chief financial officer David Amy, it was founded in 1952 by the late Julian S. Smith as the Commercial Radio Institute, which at one time owned WPOC radio in Baltimore.
In 1971, the elder Mr. Smith became one of the first commercial broadcasters to jump into UHF television at a time when the three major networks' dominance was considered almost the law of the land. He later added stations in Pittsburgh and Columbus, Ohio.
In 1986, with Julian Smith's health failing and the company under the threat of a takeover, his four sons took over the operation and kept it in family hands through a leveraged buyout.
David Smith, the second son in line, took over as chairman, president and CEO. Frederick G. Smith, a 45-year-old dentist, is vice president. J. Duncan Smith, 41, holds the title of secretary, while 32-year-old Robert E. Smith is treasurer.
"We only have titles to accommodate the conventions, as it were. As far as we're concerned, we're all the same," David Smith said.
The egalitarian structure is reinforced by the office arrangement. Instead of having individual offices, each of the four brothers has a virtually identical desk in a row along the front window. Mr. Smith said that ensures that each knows what the others are doing.
So why is he the CEO, with the $317,913 salary and $1.3 million bonus last year?
"Maybe it's because I'm the one with the shark and the rattlesnake on his desk," he laughed, picking up a toy shark and pointing to the preserved reptile's head amid the clutter.
Sinclair's management structure is just one reason why Duff & Phelps debt analyst Phelps Hoyt is wary about the company and has recommended that clients sell its notes.
"I would like to see somebody from somewhere else break into the top four positions in management, at least for a sanity check," said Mr. Hoyt, who noted the recent breakup of the Haft family retail empire because of a family dispute.
Mr. Hoyt also noted that David Smith's brothers are all generously compensated, with 1994 salaries ranging from $233,054 to $243,285 and bonuses of $900,000 apiece.
"They can support it, but I don't think it's going to help the stock any," said Mr. Hoyt.
Mr. Smith said he's heard the complaints before and allows that statistics might show that few family firms manage to hang together into a second generation.
"Statistics fail in this instance," he said, contending that the shift between generations at Sinclair had been handled "painlessly."
Mr. Smith also had no apologies about his family's compensation levels, saying the brothers had taken a company worth $40 million in 1986 and built it into a company worth $1 billion today.
How long the company can maintain its present course could be decided by forces beyond its control.
Mr. Hoyt noted that Fox Broadcasting, whose success has contributed greatly to the revenues of six Sinclair-owned affiliates, has abandoned several UHF stations in favor of VHF affiliations and could switch more.
While the Duff & Phelps analyst praised the company's business strategy, cash flow and management ability, he said Sinclair could become a strong candidate for a takeover in an expected industry consolidation.
Mr. Smith acknowledged that the industry is experiencing a slowdown, but he added that he believes Fox has made just about all the switches it can in the top 100 markets.
And as for a takeover of Sinclair, Mr. Smith says no way. He'd rather be predator than prey in a business he loves. "There's nothing I don't like about it. It is a unique enterprise in that it allows you to provide entertainment to a vast number of people."
1991 $45.4 million
1992 67.3 million
1993 72.3 million
1994 123.5 million
9 mo.* 147.1 million
Operating cash flow 1991 $15.5 million
1993 34.9 million
1994 64.1 million
9 mo. 73.0 million
@Net income (loss) 1991 $(4.6 million)
1993 (8.5 million)
1994 (3.5 million)
9 mo. (4.1 million)
* as of Sept. 30