BUT MORE PROTESTS EXPECTED : KMEX SALE CLEARS ANOTHER HURDLE

The controversial sale of KMEX-TV in Los Angeles and nine other Spanish-language outlets to Hallmark Cards Corp.’s and First Capital Corp. of Chicago cleared another hurdle this week when a Los Angeles federal judge reaffirmed her decision to select their $301-million bid.

In August, Latino-owned TVL Corp., an unsuccessful bidder for the Spanish International Communications Corp. (SICC) stations, filed a motion in federal court in Los Angeles in an attempt to halt the sale of the stations to the Hallmark group. TVL claimed that Hallmark and the selection committee “compromised” the fairness of the bidding contest.

“We view the decision as rejecting the claims of impropriety and the other charges that were raised against the sale of the SICC stations,” Charles Hucker, a Hallmark spokesman, told The Times after the hearing. Hucker predicted that the decision should help the Hallmark group secure Federal Communications Commission licensing.

U.S. District Judge Mariana Pfaelzer’s Monday ruling follows an FCC Review Board decision last week to approve the court-monitored settlement agreement that put the stations up for sale.

But the Kansas City, Mo.-based firm still faces formal protests filed with the FCC by a variety of Latino organizations and unsuccessful bidders, including TVL.

The sale of the stations was prompted by a bitter 10-year battle among Spanish International Communications Corp. stockholders along with the FCC’s refusal earlier this year to renew the stations’ licenses because they were under the indirect control of Mexican media baron Emilio Azcarraga Milmo. Pfaelzer issued a preliminary ruling last year sustaining many of the allegations against Azcarraga and his associates, but refrained from making a final judgment while both sides negotiated the terms of sale.

Brian Lysaght, an attorney for TVL, argued during the hearing Monday that Spanish International station managers and others associated with the firm may have informed Hallmark of TVL’s July 14 decision to raise its $311-million bid to $320 million. Lysaght told the court that Hallmark unfairly used this information to pressure the committee appointed to select a winning bidder by setting a July 18 deadline, after which it would walk away from its offer.

Attorneys for Hallmark acknowledged in court that the firm was informed of a revised offer that was higher than Hallmark’s, but argued that receiving such information did not give the firm an unfair bidding advantage.

James Berry, an attorney for Hallmark, said at the hearing that TVL’s claim of unfair dealings between Hallmark and Spanish International station managers was irrelevant because the winning bidder was selected by Pfaelzer, not the selection committee.

Agreeing with Hallmark, Pfaelzer said during a detailed explanation of her decision that she could not risk losing Hallmark’s offer because TVL had not secured the necessary financing by the July 18 deadline. Although she said she would have preferred selecting the highest bid, she did not want to risk leaving Spanish International without buyers.

Lysaght told the court that TVL received the financing commitment early the following week, and might have been able to secure a commitment by July 18 had it learned of Hallmark’s “drop dead” offer in time.

Although the judge’s decision was not improper given the information she was provided, Lysaght told the court, he suggested that Pfaelzer may have been influenced by Hallmark’s last-minute demand. The only way to determine the fairness of Hallmark’s actions, Lysaght said, was to cross-examine Hallmark’s representatives and members of the selection committee.

“We are not going to do that,” Pfaelzer answered, adding that a reconsideration of her decision was unlikely.

“The ruling on Monday was a small battle in what Hallmark will come to realize will be a long war,” Lysaght said after the hearing.