Judge Bolsters Bid to Sell KADY

Five years after setting out to build KADY-TV into Ventura County’s most influential television station, the embattled owners of the financially troubled station said Monday that they are trying to sell it as soon as possible.

And the station’s owners drew some comfort late in the day when their chances of a sale were bolstered by a judge’s ruling against a creditor who had asked that the business be placed under court control.

“My intentions are to market the station and get rid of it as soon as possible,” said station co-owner Erica Huddy at the Superior Court hearing. “My sole concentration is to [care for] my husband’s health.”

Huddy’s husband, station co-owner and General Manager John Huddy, remains hospitalized after a heart attack 10 days ago.

“This increases the ability to sell the station for its fair market value, because you’re not under a distressed-sale situation,” said the Huddys’ lawyer, Anson Whitfield.

Citing KADY’s continuing financial problems and Huddy’s absence, creditors had asked a judge to freeze station assets and turn operations over to a court-appointed receiver.

But retired Superior Court judge Edwin M. Osborne, sitting as a temporary jurist, denied the request without explanation late Monday.

Earlier, he had signaled his reluctance to issue an order taking the station away from the Huddys, saying: “I’m not satisfied that there’s really any imminent danger.”

Prior to Osborne’s ruling, Erica Huddy had made it clear that the effort to sell KADY was well underway.

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She said she is negotiating with three potential buyers, including one she planned to meet Monday afternoon and evening.

KADY’s attorney, Whitfield, also argued that placing the station in receivership--a move that would have kept the Huddys from disposing of equipment and other assets--would lower its value.

“The appointment of a receiver would be disastrous,” Whitfield insisted. “[It] would probably force KADY off the air.”

Unsuccessfully arguing the other side was James C. Fedalen, lawyer for the station’s landlord and its chief creditor, SDS Investments and KTIE-TV. He told Osborne that the court needed to take control of the station now to protect his clients’ $3.9-million investment.

“There’s always been an illusionary buyer in the wings,” Fedalen said. “The buyer always seems to evaporate.”

The Huddys have operated the station since 1988 and owned it since 1991.

They created Ventura County News Network, an ambitious local program that debuted in mid-1993 but has suffered in recent months from fewer reporters and reduced local advertising.

Erica Huddy said she plans to keep the newscast on the air and add more reporters while pursuing a sale.

Monday’s motion was the latest skirmish in a long legal battle between the Huddys and SDS general partner Donald Sterling, a Colorado businessman. Partners in SDS also own KTIE-TV, Fedalen said.

In 1994, their disputes escalated. In May of that year, SDS Investments sued Riklis Broadcasting Corp., the company through which KADY is operated, for allegedly failing to pay the full monthly rent on the television studio. SDS lost the case.

Shortly thereafter, Sterling filed a request with the Federal Communications Commission to transfer the KADY broadcasting license back to KTIE. The FCC denied his request last year.

SDS filed three more lawsuits for back rent last year, including one in which a Municipal Court judge on Monday ordered a $25,000 payment for rent and costs, plus $5,000 in attorneys’ fees.

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Meanwhile, Riklis Broadcasting sued SDS, KTIE, Sterling and another partner, alleging that their application to transfer KADY’s broadcasting license had undermined the station and resulted in reduced income from local advertising. Sterling counter-sued, citing the history of late rent and seeking to take the station’s equipment back from the Huddys.

Osborne heard that case as well; his decision is expected by early March. This history of legal action and ill feeling set the stage for the bitterness that boiled over Monday in Erica Huddy’s testimony.

She accused Sterling of “constantly doing things that created financial problems for us.”

Nonetheless, she said she personally appealed to him in a telephone call in the days after her husband’s heart attack.

“I asked him if he would please lay off and let me sell the station. . . . All I was asking was for him to lay off,” she said.

“Mr. Sterling said, ‘Mrs. Huddy, I hate you, I hate your husband, I have nothing but contempt for the two of you and I wish you nothing but badness.’ ”

Whitfield presented a similar characterization in court filings in which he said Sterling’s actions against KADY “are reminiscent of a stalker awaiting his opportunity.”

Attorney Fedalen countered in an interview that Sterling is anything but the “economic stalker” he is depicted to be by Erica Huddy.

“Sterling has not been paid what he was entitled to when he was entitled to it,” Fedalen said. “From day one, he’s had problems getting paid.”

Fedalen said Sterling asked the judge to strip the Huddys of control of the station because of the station’s financial problems and because it is now without a general manager.

“The basis is their inability to maintain equipment, cash-flow problems and continued delinquencies [on bills],” Fedalen said. “[Huddy’s] heart attack prompted further concerns about the operations.”