BALTIMORE (AP) – Shareholders challenged plans by media giant Sinclair Broadcast to air a documentary critical of presidential candidate John Kerry’s anti-Vietnam War activities, warning Tuesday that the controversy surrounding the broadcast may hurt the value of their investment.

New York Comptroller Alan Hevesi sent a letter to Sinclair on behalf of the state’s pension fund, which he said owns shares in the broadcasting company. San Diego attorney William S. Lerach also said he planned to file suit on behalf of shareholders, alleging that insider trading by top executives and the decision to air the documentary have hurt the company.

Media Matters, a liberal media advocacy group announced that it was underwriting the costs of a shareholder action, demanding that Sinclair provide equal time to those with views opposed to the allegations in the documentary.

A spokesman for Sinclair did not immediately answer phone calls from The Associated Press seeking comment.

The suburban-Baltimore based company has said it plans to air a program containing parts of the documentary “Stolen Honor” in prime time this week on all 62 of its stations. Those stations, which include WGME-TV in Portland, Maine, reach up to 25 percent of U.S. TV households, the company says.

The 42-minute documentary features former prisoners of war accusing Kerry – a decorated veteran who took up the anti-war cause upon returning from Vietnam – of prolonging the war and worsening their plight. Sinclair said last week it hadn’t been decided how much of the documentary would appear in the completed show.

The Democratic National Committee has filed a complaint with the Federal Election Commission contending that airing the film should be considered an illegal in-kind contribution to the Bush campaign.

Critics have also called for an advertising boycott of the company.

The controversy has not set well with investors. In late trading, Sinclair shares were off another 5 percent Tuesday, dropping 34 cents to $6.15 a share on the NASDAQ exchange. Sinclair stock dropped about 8 percent on Monday, and is down from a high of more than $15 a share in January.

In his letter to Sinclair, Democrat Hevesi, the New York comptroller, said the $115 billion New York State Common Retirement Fund holds 256,600 shares of Sinclair Broadcast Group Inc. and questioned the impact that showing “Stolen Honor” might have on the value of the shares.

Among the questions raised in the letter, a copy of which was provided to The Associated Press: the cost of foregoing an hour of commercial time to show the documentary; how many advertisers have pulled their spots from Sinclair stations and how much that has cost the company; and the impact on ratings.

“Given the stock’s already poor performance, it would seem that any bad news would risk reducing investor interest and, thus, risk a lower stock price,” the letter reads.

Hevesi said only three of the company’s directors appear to meet NASDAQ’s independence criteria and notes Sinclair shares have dropped from $15.02 in January to below $7, while other stocks in the sector have increased.

“Some critics suggest that Sinclair management is more interested in advancing its partisan political views than in protecting shareholder value. They say Sinclair’s partisan agenda also risks alienating viewers, advertisers and regulators,” Hevesi wrote.

“By appearing to tie the future prospects of the company so closely to the outcome of a national election, are you adding political risk to the normal economic and business risks that face our company?”

Media Matters said a letter from Glickenhaus & Co., a Wall Street firm with clients who hold stock in Sinclair, was delivered to the Sinclair CEO David D. Smith and the company’s board of directors, demanding that they immediately “provide those with views opposed to the allegations in the film an equal opportunity to respond.”

Smith and his three brothers are on the board of directors of the company, which they turned into the nation’s largest chain of stations after taking over the lone UHF station owned by their father.

Media Matters said it may seek a court order prohibiting the airing of the documentary if an answer was not received by the close of business on Tuesday.

“Our mission is to thwart conservative misinformation in the media and ensure that the media offer the American public fair and balanced access to news and information,” Media Matters President and CEO David Brock said. “We determined a stockholder effort is the strongest remaining course of action to force Sinclair to reconsider its decision to air Stolen Honor.”

Glickenhaus & Co. General partner Jim Glickenhaus said Sinclair’s CEO and directors have a financial obligation to shareholders.

“We are not partisan. We are investors,” Glickenhaus said. “Sinclair’s decision has caused harm to the value of our investment in Sinclair. We believe Sinclair must give equal time to an opposing point of view. Otherwise the company is placing its future and the value of our investment in jeopardy, by putting the renewal of its FCC licenses at risk, alienating local advertisers, and opening itself up to libel suits against the company.”

Lerach said he had sent the company a letter with a list of demands which he expected Sinclair’s board of directors would reject. Once the demands are rejected, the attorney said he planned to file suit.

In the letter, the attorney demanded the company begin legal proceedings against two Sinclair vice presidents, Frederick and J. Duncan Smith, and director Robert E. Smith, for breach of fiduciary duties, causing the company to issue false statements, and insider selling.

Lerach said the Smith brothers apparently took advantage of insider knowledge to sell more than $18.5 million in stock when the company’s shares were trading at this 52-week high early this year. Robert Smith, a Sinclair director, sold nearly 1 million shares, almost all of his holdings, between December and April for $13.2 million, and J. Duncan Smith, nearly 300,000 shares, virtually 100 percent of his holdings, for nearly $4.5 million, Lerach said.

Lerach said he was representing the 1199 SEIU Greater New York Pension Fund, a retirement fund for hospital and nursing home employees, and other unidentified institutional investors and holders of Sinclair stock and debt.

“We are also dismayed at the company’s seemingly politically motivated determination to air a program that from all reports is a politically partisan criticism of one of the candidates for president,” the letter reads. “Our clients are more interested in the success of the company than they are in the political views of Sinclair’s executives or Board of Directors.”

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