Disney Receiving Offers to Buy KCAL-TV

At least five groups are interested in buying KCAL-TV Channel 9 in Los Angeles from Walt Disney Co., with at least two of them proposing to target African American viewers. Sources say a large investor group that includes basketball great Magic Johnson and another led by Robert L. Johnson, the head of Black Entertainment Television cable network, are interested in creating what could be the first black-oriented broadcast channel.

Disney put the station up for sale in January as a condition of regulatory approval of its $19-billion purchase of Capital Cities/ABC Inc., which owns KABC Channel 7 in Los Angeles. Laws prohibit ownership of two stations in the same market and the Federal Communications Commission has given Disney until August to sell KCAL.

Neither Disney nor its investment banker Bear Stearns would discuss the bidding. Only Magic Johnson has confirmed his bid, which is thought to include Johnathan Rodgers, the former CBS station group head.

Some potential bidders doubt Disney, which paid $320 million for the station in 1988, will get $300 million for the station, ranked last among seven VHF stations in Los Angeles.

Barry Diller, chairman of Silver King Communications, is said to have passed it up as too pricey. So did John Severino, former head of KABC-TV and the ABC Television Network. KCAL station manager David Woodcock and Randy Reiss, who oversees the station at Disney, had early discussions about buying the station from Disney but are thought to have dropped out.

“If you borrow $250 million to buy it, interest payments would be $25 million a year,” said one TV executive. “The station makes less than $20 million a year in profits, and it would be hard for anyone but a station group to cut costs.”

But few station groups seem to be interested in KCAL, largely because there is no unaffiliated VHF channel to match it up with in New York and Chicago. Conventional wisdom holds that all three major markets are needed for leverage in buying syndicated programming. ITT Corp., which owns a station in New York and was expected to bid, said it will not do so.

Still, a source close to Disney said at least two station groups are interested. Argyle Television is thought to be among them. Blake Byrne, the head of Argyle, was general manager of KCAL when it converted its prime-time schedule largely to news. But sources said Byrne is unwilling to pay any more than $250 million for the station, which has lower profit margins than competitors because of the cost of news and its status as an independent.

Sources say Disney would like to sell the station to a friendly buyer to keep an outlet for its sports teams. KCAL airs some games of both the Mighty Ducks hockey team and the California Angels baseball team.

It is unclear how a black-targeted station might use the sports programming. Some television executives questioned the viability of such a strategy in Los Angeles. Blacks account for only 8% of the Los Angeles market, with 36% Latino and 62% white, according to KNBC estimates.