Sinclair Notes CW Risk

Sinclair Broadcast (SBGI Quote) said it believes 1% to 1.5% of its broadcast revenue will be "at risk" as a result of the shutdown of the WB and UPN broadcast networks.

The Baltimore-based company, which operates a number of WB and UPN affiliate stations, saw its shares fall 16% Tuesday in the wake of the announcement that the two will be merged into a new network called the CW. CBS (CBS Quote) and Time Warner's (TWX Quote) Warner Bros., which owned the failed networks, will operate the new one as a 50-50 joint venture that names Tribune (TRB Quote) as a 10-year affiliate.

"We are not surprised with the news of the WB and UPN network merger as both have struggled to achieve meaningful ratings success," said CEO David Smith. "We believe CBS's vested interest in the television station business bodes well for the long-term success of the venture. For Sinclair, this announcement will create greater programming opportunities in terms of serving the local viewer, in areas such as sports and locally produced events. ...