KOCE stays with PBS in settlement

KOCE will remain Orange County’s public television station after its owners announced an agreement Thursday that gives the world’s second-largest religious broadcaster a toehold in Southern California, ending more than three years of legal fighting over the station’s fate.

The KOCE-TV Foundation, supported by some of Orange County’s wealthiest people, will keep the station, but Dallas-based Daystar Television Network will be allowed to use one of the four digital channels it operates, according to a source familiar with the settlement. By 2009, all over-the-air stations will be required to broadcast only in digital.

Daystar will drop its two lawsuits, one challenging the sale to the foundation by the Coast Community College District, and a federal lawsuit charging the district with religious discrimination. The district, which has spent more than $2 million on litigation and sale costs, will be protected from future legal expenses, said Jerry Patterson, president of the community college board.

Neither Daystar nor the foundation would provide details of the settlement, saying it was confidential. The deal was reached after three or four mediation sessions that took place over several months, said Mel Rogers, the station’s president.

Patterson said in a statement that the board was content that KOCE “can continue to serve the public’s interest by providing quality PBS and educational television to our community.”

Rogers said the resolution should help KOCE’s fundraising efforts and boost programming quality. “People would say, ‘Gee, we’d love to support you, but you’ve got that legal thing.’ ... Our future was in question, and now it’s no longer in question,” he said.

Richard Sherman, Daystar’s attorney, said his clients were “very pleased.”

KOCE was seen as a potential trophy for Daystar, the largest religious broadcaster in the world after the Trinity Broadcasting Network of Costa Mesa. Federal regulations require cable systems throughout Southern California to carry the station, along with all other local over-the-air stations.

Although its viewership is dwarfed by KCET-TV, its PBS neighbor in Los Angeles, KOCE officials say it is the nation’s sixth-most-watched public broadcasting station.

The settlement is expected to close an exhaustive saga with more twists than any of the British comedies the station runs on Friday night.

The Coast Community College District, which includes Golden West, Orange Coast and Coastline colleges, decided to get out of the TV business in order to use the proceeds on education and so it wouldn’t have to provide the station nearly $2 million a year.

In October 2003, Daystar offered $25.1 million cash. A day after bidding closed, Daystar raised its offer to $40 million cash, but the district said it came too late.

Foundation officials made an offer they said was worth $32 million, with an $8-million down payment and the rest to be paid over time with interest. But when the sale was completed, the payments were to be made over 30 years at no interest, with no payments for five years. In addition, the district lowered the price an additional $4 million in exchange for running its telecourses on the station.

State law requires community college districts to sell public property to the highest bidder.

Despite having the support of powerful Orange County figures such as former baseball Commissioner Peter Ueberroth, Allergan chief David Pyott and high-tech executives Henry Samueli, John Tu and Dwight Decker, the foundation struggled to raise the $7.9-million down payment.

The district repeatedly extended the deadline.

Daystar sued to overturn the deal, but in 2004, an Orange County Superior Court judge allowed it to stand.

A state appeals court in 2005, however overturned the deal in an unusually stinging decision, calling it “the rankest form of favoritism.” The panel castigated the district for not selling to the highest bidder, saying changes in the deal had lowered the sale price to between $19.5 million and $23.5 million.

The court told the district it could hold a new sale for the station or not sell it if trustees “find the prospect of televangelists eventually acquiring KOCE to be too distasteful.”

A last-ditch attempt to push through legislation in Sacramento last year that would have all but guaranteed the foundation’s continued control of the station.

It passed the legislature but was vetoed by the governor. At the time, Rogers said “we’ll do everything we have to do” to keep the station.

The foundation has said it would increase the amount of local programming on KOCE.

But it may be getting more competition since KCET has said it would launch a digital channel offering Orange County programming. The station is scheduled to launch in the fall.

ashley.powers@latimes.com