The tipping point

It's rare when a nuanced and complicated story gets distilled into a single sentence. But 67 minutes into a July 14 conference call, one arranged by Sinclair Broadcast Group Inc. to address its exposure to a possible default by Cunningham Broadcasting Corp., call participant Peter Reuss nailed it. "Just so I understand this correctly," the financial adviser for Scott & Stringfellow LLC said by way of clearing his throat. "We have a privately held company, Cunningham, with a majority shareholder being the Sinclair family, whose potential pending bankruptcy could send a publicly held company, Sinclair, majority-owned by the Sinclair family, into bankruptcy as well." David Amy, the CFO speaking for Sinclair during the call despite being flanked by chairman, chief executive officer and president David Smith, waited a beat or two before grasping the entirety of Reuss' premise. He then signed off with a well-considered, "Yeah." But his response overlooks that the premise may also have a punch line -- that Sinclair may not be as vulnerable to bankruptcy as it and its reigning Smith family want people to think. As Wells Fargo Securities LLC analyst Marci Ryvicker puts it in her post-call update: "To be blunt, we think management is 'posturing.' We believe that management is painting the most dire scenario in a public forum as part of its negotiations with convert holders."