Daystar Makes New Offer for KOCE

The religious broadcaster that was rebuffed in its bid to buy Orange County’s PBS station has offered to drop its lawsuit and set aside part of its digital signal for public broadcasting if it is allowed to buy the station.

While the Daystar Television Network’s offer is fraught with technological problems and regulatory questions, representatives of the Coast Community College District, which owns KOCE-TV, were optimistic that this was a first step toward resolving the dispute with the nation’s second-largest televangelist firm.

“They went so much farther in their letter than I imagine anyone would have gone,” said board President George Brown. “I think it’s at a point where we need to talk seriously.”

Daystar’s offer, contained in a March 8 letter to Brown, is relying on the growth of digital TV, which will enable an over-the-air station to transmit as many as six channels over its signal.

Daystar’s latest offer comes as a deal to sell the station to a foundation supported by some of Orange County’s wealthiest executives, who would keep the PBS affiliation, appears increasingly unlikely.

Marcus Lamb, Daystar’s CEO and president, is offering KOCE a free digital channel it could program or turn over to the KOCE-TV Foundation.

He also offered “to try and work out something” to show “Real Orange,” KOCE’s signature public affairs show, on the over-the air station, along with “a good amount of local programming from Orange County which will help assuage the public.”

KOCE began broadcasting digitally this year, but there are few people who own the expensive TVs that pick up the signals. All stations must convert to digital technology by 2006.

Daystar’s offer may be only a temporary fix.

One problem is technological: When high-definition TV becomes commonplace, a single digital channel may not be sufficient. Television stations will need several digital channels to carry the signal, KOCE President Mel Rogers said.

Another problem is how many cable systems would pick up the station.

At present, the FCC regulations require cable systems to carry all local broadcast channels, which is why KOCE is available throughout the Los Angeles area.

The FCC has not decided how this “must-carry rule” will apply to digital and whether cable operators will be required to carry all of a broadcaster’s channels or just one.

After state budget cuts, the district decided to sell the station to use the money to fund education. District officials also said they were spending $2 million to $3 million to subsidize the station.

Daystar originally offered $25.1 million in cash for the station. Its sweetened offer of $40 million was turned down because it arrived a day after the deadline. Daystar sued the district after trustees accepted what was billed as a $32-million bid from the foundation.

Daystar has asked a judge to block the sale and award it the station, saying it made the best offer.

Experts have valued the foundation’s bid at $12.5 million to $19.5 million because most of the money will be paid over 30 years with no interest.

But the foundation’s deal may be falling apart. Foundation President Bob Brown said his group can’t get a loan unless the district agrees that the bank has first claim on the station’s assets in case of a default.

George Brown said that the agreement would leave the district with too much risk and that it was unlikely the board would approve it.

A vote is scheduled for Wednesday.