MEDIA : USIU Aims to Sell KUSI, but It’s Easier Said Than Done

Officials of financially troubled United States International University have listed the sale of the school’s interest in KUSI-TV (Channel 51) as a key to raising badly needed capital. Last week, they optimistically declared that they had a $47-million offer for the independent station.

However, behind the scenes, things are far more complicated.

Michael McKinnon, majority owner of three stations in Texas, owns 26% of University Television Inc., the company that owns Channel 51. USIU owns 74%. McKinnon controls two seats on the company’s board of directors; USIU six.

According to the company’s articles of incorporation, an agreement of 81% of the shareholders is necessary to make major decisions affecting the station’s future, which gives McKinnon extraordinary control of the station’s fate.

The Oakland-based Western Assn. of Schools and Colleges has threatened to revoke USIU’s accreditation, primarily because of its financial problems. A team from the association is due to visit San Diego this week to conduct a further review.

The sale of its interest in the station is an “important component in the university’s plan for refinancing,” according to university spokesman Kenneth McLennan. Money generated from the sale, he said, would help pay off debt and establish an endowment for financing future programs. It would also help appease the accreditation review.

McLennan acknowledges that the tentative $47-million offer was for 100% of the station. But 100% is not available. McKinnon, brother of Dan McKinnon, former owner of radio station KSON and ex-chairman of the Civil Aeronautics Board, flatly says he doesn’t want to sell his shares, and that $47 million is a “very unrealistic price” for the station.

McKinnon was brought into the station after the Federal Communications Commission granted USIU an operating license in the early 1980s. Besides buying shares in University Television, he lent the company money and leased the station the equipment it needed to go on the air in 1983.

As part of his deal with USIU, McKinnon has the right to match any offer to buy the university’s shares of the company. (USIU has a similar option for McKinnon’s stock.)

In fact, McKinnon said Thursday that he has made several offers to buy USIU’s shares, most recently three weeks ago.

He said his offers were rejected and that he is no longer pursuing USIU’s interest in the station, although he would still consider buying it.

Industry sources say it might be difficult to find a buyer for 74% of the shares of a television company structured the way KUSI is, especially considering the numerous conditions in the articles of incorporation.

“As far as I know, there have been no bona fide offers on 74%,” said station manager William Moore.

The market for television stations isn’t what it was a few years ago. The price of a station is usually based on the strength of the local economy and the cash flow of the station. A station’s value is generally set at 10 times the annual cash flow. Based on that, the $47-million figure would seem high, since, industry sources confirm, it is unlikely that KUSI generates more than $4 million a year.

“In general, the television market is fairly weak now,” said Chris Dixon, who tracks the industry for Kidder, Peabody, a New York-based brokerage firm.

University Television still owes McKinnon money, and, under the provisions of past agreements, it is likely that USIU would have to repay him before it was able to sell its shares. McKinnon also owns much of the station’s equipment. The station’s leases on that equipment, including the transmitter, have expired in recent months and have not been renewed.

McKinnon’s consulting agreement with the station, which pays him a base annual salary of $125,000, expires in January.

USIU spokesman McLennan said the university and McKinnon have a “business relationship, with each side with their own interests to guard.”

When weekend anchor and reporter Kim Devore gave five months’ notice last week by tactfully leaving a memo in News Director Don Shafer’s office mailbox, it simply added to the image of the KNSD-TV (Channel 39) newsroom as the TV news equivalent of the San Diego Chargers--a last-place organization that nobody wants to play for.

Devore, who still hadn’t talked to Shafer about her departure as of Friday morning, joined ace reporter Bill Ritter, who resigned last week, on the rapidly expanding list of ex-Channel 39 reporters, along with longtime reporters Cathy Clark and John Britton, both of whom were fired within the past week.

But events are not necessarily related. Clark and Britton were both on their way out, reflecting the desire of management to bring in new faces. Neither Clark nor Britton was in favor with Shafer, who took over the station earlier this year.

Ritter quit to take a job with KTTV (Channel 11) in Los Angeles, where his longtime girlfriend lives. Devore, who was not the most popular person in the newsroom, reportedly is in line for a job in a major market and had personal reasons for quiting.

But timing is everything. These are not happy days in the Channel 39 newsroom.

In Ritter, Clark and Britton, the station lost more than 50 years of journalism experience in San Diego. People in the newsroom expect more staff changes, although Shafer denies it.

There is a perception, propagated by media reports, that the financial problems of Gillett Communications are behind the recent moves. More likely, the firings were simply a reflection of management’s dissatisfaction (perhaps fueled by consultant reports) with certain reporters. Both Clark and Britton certainly commanded relatively high salaries, due to their long tenures with the station, but Shafer denies that there were any financial considerations in the moves.

Certainly, with its new format of two early-evening half-hour newscasts, the station’s news hole is much smaller, leading to speculation that there is little need for a large reporting staff. But Shafer said all of the reporters will be replaced. He already has hired Bryan Gresh, a reporter with a station in Las Vegas.

Shafer still expresses nothing but enthusiasm for his news product and his staff.

“There is no way in the world I think Channel 39’s news product is the third best newscast in the market,” he said.

Former Padre Tim Flannery is expected to start his new career with KFMB-TV (Channel 8) in January. He will do reports and community appearances, primarily working with “Eight Cares,” the station’s community service department. . . .

Although ex-Channel 39 reporter Cathy Clark’s name is often mentioned, don’t be too surprised if presidential son Michael Reagan is named the new afternoon talk show host at KSDO-AM (1130). After all, he is under contract. . . .

Channel 39 reported Thursday night that the state attorney general’s office is investigating Steve Garvey’s finances. . . .

Members of the the local chapter of the Newspaper Guild are scheduled to meet Thursday night. One of the topics of discussion will be whether or not to continue the byline strike against the Union-Tribune. The success of negotiating meetings scheduled for early this week will certainly be a factor in the decision.