Court Test of KOCE Sale Begins Today

The future of public television in Orange County will be decided not by high ratings or fundraising success, but by a Superior Court judge.

The disputed sale of KOCE-TV moves today to the Santa Ana courtroom of Judge Corey Cramin, who will preside over a lawsuit by a spurned bidder for the TV station and a countersuit by the station’s owner.

Cramin could rule that the Coast Community College District must sell its Public Broadcasting Service station to the Daystar Television Network, the world’s second-largest Christian broadcaster. Daystar argues that it offered the most responsible bid to buy the station, even though the district rejected it.

He could throw out Daystar’s lawsuit against the district and approve the station’s sale to the KOCE-TV Foundation, which is controlled by wealthy Orange County business and civic leaders who have pledged to maintain the station’s PBS affiliation.

The judge could also order the district to put the station up for sale again or hold further hearings, attorneys say.

Depositions indicate district trustees were bent on selling the station to the foundation, even if it meant rejecting more money from a religious suitor.

Cramin must determine if the trustees followed the state Education Code and sold the station to the “highest responsible bidder” when they accepted the foundation’s offer, or whether it was within their latitude to make a sweetheart deal with the foundation to ensure the station remained with PBS and out of the hands of televangelists.

The judge also will consider whether the state law’s use of the word “cash” means a lump sum or if it can include payments, such as those in the KOCE sale to the foundation.

The fate of KOCE affects viewers throughout Southern California. Because of Federal Communications Commission rules, the station is carried on most cable systems in the Los Angeles area.

KCET, KOCE’s big PBS brother to the north and which offers a somewhat different menu of shows, is available over the air and on all cable systems in Orange County.

The lawsuit has not hurt the station’s fundraising. Mel Rogers, KOCE’s president, said that the spring membership drive raised $665,592, up 16.7% from last year.

The trustees of the community college district -- which runs Orange Coast, Golden West and Coastline colleges -- voted to sell the station to generate classroom funds. They also said Channel 50 was costing them $2 million to $3 million a year to operate.

The controversy over the KOCE sale stems from the deal the district cut with the foundation, which for many years was the station’s fundraising arm.

Dallas-based Daystar offered $25.1 million for the station. It bumped its offer to $40 million, but the bid was rejected because it was submitted a day after the deadline.

The foundation won the station in October with a $32-million bid, with $8 million down and the rest paid with interest over time.

But when final terms were announced two months later, the deal had changed enough to raise questions about its legality. The district lowered the price by $4 million, saying that was money it would have to pay the Corporation for Public Broadcasting and PBS if the station were sold to a non-PBS bidder.

The foundation still would pay the $8 million down, but the remainder would be paid over 30 years -- at no interest. No payments are due for five years.

The district also gave the foundation a $2.5-million credit for telecourses and promotional spots the station will broadcast over seven years.

The deal that had been billed at $32 million was valued by experts at $12.5 million to $19.5 million in today’s dollars.

Elliot Evers, who served as the district’s broker but was not involved in final negotiations, said in a deposition in connection with Daystar’s lawsuit that the decision to sell the station to the foundation was a “political decision. I believe that it was, you know, of overriding political importance for the district to sell to the foundation or another entity who would keep it as a PBS affiliate.”

He said that board could have accepted Daystar’s sweetened offer, even if it were late, and he characterized acceptance of the foundation’s offer as “comical.”

“[I]f you have $40 million cash from a qualified buyer, you must have some other reason to sell -- if you are going to dispense with that offer and take a $32-million very-soft-terms proposal,” he said.

The depositions taken by Richard Lloyd Sherman, Daystar’s attorney, show some discord among district officials over the way negotiations were being handled.

Richard T. Pagel, the director of internal audit services, testified that trustee Jerry Patterson “indicated he didn’t care if the foundation ever paid back the note.” Pagel said he then “asked to be excused from further negotiations.”

Patterson said in an interview Friday he didn’t think he made that comment.

Despite the wealth of its board members and supporters, the foundation had not received a loan for the $10 million it needs for the down payment and operating expenses, according to the deposition of foundation President Bob Brown.

George Brown, president of the board of trustees, said the group was told this week that the foundation had received a loan guarantee.

The foundation has until June to come up with the money.