Disney to Buy KHJ Channel 9 for $320 Million

Walt Disney Co., flush with cash and eager to build or buy new entertainment assets, announced today that it has agreed to buy independent KHJ-TV Channel 9 in Los Angeles for $320 million.

If completed, the deal will mark Disney’s debut in the TV station business and settle a 22-year dispute over the station’s ownership.

Under terms of the deal, Disney will pay most of the purchase price, or $217 million, to station owner RKO, a subsidiary of Gencorp Inc., a diversified manufacturer in Akron, Ohio. An additional $103 million would be paid to Fidelity Television, a competing applicant for KHJ’s station license.

Until six weeks ago, the station was earmarked for sale to Westinghouse Electric. But Westinghouse pulled out of its 15-month agreement when it became evident that federal regulatory approval would not be secured by Jan. 31.

Although most independent stations have recently suffered a loss in value, Disney has agreed to pay at least $7 million more than the purchase price negotiated by Westinghouse in 1985.

“It’s a case where Disney needs and wants that market so badly that it really is worth the stretch,” said one industry broker, noting that no other significant TV stations are available in New York or Los Angeles. In the nation’s largest markets, the broker said, “The rules go out the window.”

MCA, another entertainment giant, agreed last year to pay $387 million to acquire GenCorp’s WOR-TV, a New Jersey independent station serving the Manhattan market.