In suit by religious chain, court voids sale of KOCE

Originally published in Current, June 12, 2006
By Steve Behrens

By selling pubTV station KOCE to its present licensee three years ago instead of a religious broadcaster, the Coast Community College District ran afoul of several major points of bidding law, a California state appeals court ruled May 25 [2006].

The court reheard the case this winter and agreed with its own decision a year ago to invalidate the Coast Community College District’s sale of the channel to the KOCE Foundation. 

The college district “is in a world of trouble,” Daystar Television Network attorney Richard Sherman said in the Los Angeles Times.

What are the college district’s options? Its attorney, Milford Dahl Jr., mentions several:

• Keep and run the station or lease it out on a management agreement.
• Seek bids again and sell to the highest bidder, possibly stipulating that the buyer would carry the college district’s telecourses. The court said the district can specify bidder requirements in an RFP.
• Offer the station for sale but require that the buyer maintain a public TV service with local news.
• Find some way to split the channel’s digital transmission capacity between the competing interests.
• Ask the state Supreme Court to consider the case.

The appeals court pointed to one option that could help retain KOCE as a pubTV station. CPB had threatened to demand reimbursement of past grants if the station did not remain a public broadcaster, and Daystar had refused to indemnify the college district against that risk. The seller could consider that factor in choosing a buyer, the court observed.

Whatever happens, “unwinding” the sale will be horrendous, including retransferring the FCC license, Dahl predicts. Such decisions may still be pending in November when a further complication arises: Three of the five seats on the college district board will be up for election, Dahl notes.

Adding to the pressure is Daystar’s separate multimillion-dollar religious-discrimination suit filed in federal court last July. It charges that the district trustees conspired to “prevent KOCE-TV from falling into the hands of a faith-based broadcasting company.”

What decided the case, the court said, was that the district violated state bidding law by materially lowering the price after picking the buyer. Though the foundation had bid $32 million, the district okayed a reduced price in fall 2003 of between $19.5 million and $23.5 million, mostly on a zero-interest loan. Daystar had bid $25.1 million in cash. In addition, state law and the college district’s bidding terms require that bids be cash, not credit, the court said.

KOCE Foundation Chairman Bob Brown contends the sale terms were changed because the buyer had raised millions for KOCE’s assets and because it had agreed to broadcast telecourses for the college.

Web page posted June 15, 2006
Current
The newspaper about public TV and radio
in the United States
Current Publishing Committee, Takoma Park, Md.
Copyright 2006

EARLIER ARTICLES

Should KOCE be sold to the highest bidder or preference given to public TV? The trustees were split on that issue three years ago.

But the trustees gave the go-ahead to the KOCE Foundation.

Daystar also bought a pubTV channel in Dallas, 2003.

Economics moves educational institutions to sell or give away stations including KOCE, 2004.

The appeals court came down with the same answer but for different reasons a year ago.

LATER ARTICLE

Three months later Gov. Arnold Schwartzenegger vetoed a bill that would have helped KOCE to hold on to the channel.

DOCUMENTS

Texts of appellate court's May 2006 decision and the court's earlier decision, June 2005.

Text of Daystar's federal First Amendment suit against college district trustees.

OUTSIDE LINKS

KOCE President Mel Rogers urges the station's supporters to contact the Coast Community College District trustees and attend their June 21 meeting.