Lapse Puts KOCE Sale in Question

As high-priced lawyers offered well-thought-out legal arguments, a Superior Court judge asked a simple question Monday that could unravel the sale of Orange County’s PBS affiliate:

Had the Coast Community College District, owner of KOCE-TV Channel 50, given proper public notice when it decided to sell the station last year? The answer, said Milford Dahl, the district’s attorney, was no.

“A $30-million deal could get hung up because someone didn’t post it on a bulletin board,” Dahl said outside the Santa Ana courtroom.

Dahl said Judge Corey S. Cramin’s question didn’t surprise him. “I’ve known it was there for a long time.”

The revelation came late in the day at a hearing to determine if it was legal for the district to sell the station to a foundation controlled by Orange County business and civic leaders who have pledged to maintain its affiliation with the Public Broadcasting Service. The sale is being challenged by Daystar Television Network, the world’s second-largest Christian broadcaster, which says it offered the best bid.

Cramin continued the hearing to Monday to give the district time to look for evidence it had announced the sale legally.

Dahl said that if the judge determines that the notice was not properly given, the bidding would start over.

Daystar hasn’t pressed the notification issue because it is hoping the judge orders the district to sell KOCE to the Dallas-based company. Richard Lloyd Sherman, Daystar’s attorney, said that if a new round of bidding is ordered, the firm would sue the trustees and the district for its costs and for allegedly not following the law.

Board of Trustees President George Brown has said that if the district were told to put KOCE up for sale again, there was a good chance it would pull the station off the market and run it with a reduced budget.

Trustees decided to sell the station so they could use the money for education. More important, said Trustee Jerry Patterson, a sale would relieve the district of the $2 million to $3 million it gives the station annually.

Cramin’s question moved to the forefront an issue that had been little discussed in the station’s sale. Most of Monday’s three-hour hearing centered on whether trustees were determined from the beginning to sell KOCE to bidders who would stay in the PBS fold, regardless of who offered the most money.

Attorneys argued which side was the “highest responsible bidder,” as state law requires, and whether “cash” means greenbacks, as Daystar argued, or if it includes payments over time, as the district and the foundation contend.

The district’s final deal with the foundation was billed as a $32-million sale, with $8 million down and the rest to be paid over 30 years with no interest. No payments would be due for the first five years. Experts have valued the deal at $12.5 million to $19.5 million in today’s money.

Daystar offered $25.1 million cash. The district rejected its sweetened offer of $40 million cash because it was submitted a day after the deadline.

Letting the public know legally that the station was for sale is a simple process. The education code requires that notices be posted in three public places in the district for at least two weeks, or once a week for two weeks in a newspaper that circulates in the district.

Dahl said the district’s broker and previous attorney had the responsibility to ensure that legal notice was made.

That attorney, Channing Johnson, said his firm “properly advised the client as to what the law required.”