Bankruptcy looms for Sinclair

Drop in advertising to blame for company's woes

Shares of Sinclair Broadcast Group plunged 21% on Monday, the first trading day since the company warned that high debt and a weak advertising environment could force it into bankruptcy.

Sinclair, which owns or operates 58 television stations in 35 U.S. markets, said slow political advertising and a drop in auto advertising -- along with a recent downgrade of the company's debt -- will make it difficult to meet certain financial obligations.

The company said that auto ads used to make up a quarter of its business, but that sector dipped to 18% last year and to 14% in the first quarter this year.

Sinclair has $1.33 billion in debt and about $11 million in cash on hand. Last year, it lost $241 million on revenue of $756 million. Sinclair stock sunk 38 cents Monday to $1.46.

"If we are required to repurchase our 3% notes and 4.875% notes, we do not have the cash necessary to meet our repurchase obligations," Sinclair said in its filing.

The company said it will discuss its options during a conference call Tuesday.