KOCE fans get an okay to buy the station

Originally published in Current, Oct. 20, 2003
By Steve Behrens

By guaranteeing to raise $32 million to purchase KOCE, business leaders and other backers have helped keep the channel for public TV in Orange County, Calif.

The station's financially stressed licensee, Coast Community College District, picked the KOCE Foundation to buy the station last week, rejecting bids from two religious broadcasters and a third company that entered the bidding too late.

"This was seen by the public as a battle to keep our public station," said Joel Slutzky, a foundation board member and chairman of Iteris Holdings Inc., an electronics company based in the county. Since the summer, a team of about eight KOCE supporters took the lead in assembling the guarantee for the bid, collecting multimillion-dollar letters of intent, and meeting nearly every day and often into the night, he said. He declined to name donors or describe pledges made.

When Coast's trustees selected the KOCE Foundation as buyer with a 4-to-1 vote Oct. 15, Slutzky said he was "ecstatic" and found it doubly gratifying to hear dozens of citizens endorse the plan in comments to the trustees afterwards. "Sometimes a crisis brings things to the forefront," he said. The station "just got elevated in everybody's minds. We recognized this is an irreplaceable community asset."

Coast and the foundation will now negotiate terms of the note that will pay off the purchase price, including its interest rate and guarantees, before the trustees sign off on the deal Dec. 10, said Erin Cohn, Coast spokeswoman. KOCE Foundation offered $8 million in cash plus $24 million over a period of more than 10 years, she said.

The foundation's $32 million offer far exceeded the first-round offer of $10 million in August--a joint bid from the KOCE Foundation and KCET, Los Angeles. KCET dropped out of the deal Sept. 29, explaining that it didn't have time to work out plans in time to meet the bid deadline.

The foundation not only had a big offer but also broad political support, including 43 state senators, eight mayors and an impressive array of c.e.o.'s, Slutzky said, plus a unique asset--ownership of many of KOCE's physical assets that it had purchased as the station's fundraising arm over the years.

If the college had gone with a competing bidder, it might have been forced to buy those assets and then wait years as opponents attacked the FCC license transfer, which could have reduced the net price to a negative number, Slutzky explained. In addition, CPB could have demanded that the college pay back the federal investment in KOCE over the years, APTS President John Lawson warned in August.

Slutzky summarized: "We had by far the highest net bid and certainly the highest responsible bid."

"The KOCE Foundation really did it right," said Lawson last week, citing the broad public and business support that it generated. The events would make a great case study of the survival of a locally controlled station, he said. It benefited from the public backlash against media consolidation.

(Coincidentally, Orange County was briefly threatened by the prospect that its major daily newspaper, the Orange County Register, would be sold to a national chain.)

Coast turned down three other suitors. Daystar Television, a big religious broadcaster that agreed to buy KERA's second public TV channel in Dallas this summer, had offered $25 million and tried to get the college to accept a $40 million bid after deadline. Coast trustees also rejected a bid from Almavision, a Spanish-language religious broadcaster that touted a $35 million bid, judging that the company couldn't afford the price. And the trustees spurned Pappas Telecasting, which proposed a Spanish-language noncommercial station, because Pappas missed the bid deadline.

Two other religious broadcasters, Trinity Broadcasting and Indiana's LeSEA Broadcasting Corp., dropped out of the bidding in October. Though it was bidding on the station itself, the locally based Trinity network had publicly endorsed the bid by the KOCE Foundation. Its spokesman, John Casoria, said in August that it submitted a bid reluctantly to prevent the purchase by a competing "clone" of Trinity that would disregard local interests. San Diego public station KPBS and two other bidders dropped out earlier.

The KOCE Foundation had joined with rival pubcaster KCET to bid jointly for the license in August, with each pledging half of the $10 million, but the Los Angeles station did not have time before the Oct. 8 deadline for the second bidding round to work out a complex agreement of both boards for the purchase deal.

KCET President Al Jerome at the time said the deal would have included some kind of cost-saving combination of the two stations, which overlap in the populous county south of Los Angeles. In the meantime, the KOCE Foundation found strong local support to sweeten its bid without KCET's help, KOCE President Mel Rogers said.

The community college system has been trying to unload the station and its costs since spring 2002. When nearby Chapman University dropped out of the bidding, the only remaining bid was KOCE Foundation's offer to assume liabilities but pay no cash, and the college system didn't go ahead with the sale. Early this year, Coast hired the San Francisco firm Media Venture Partners to solicit bigger bids. Coast suffered further state funding cutbacks that forced it to cancel two-thirds of its course offerings this fall.

Posted Oct. 17, 2003
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