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Westinghouse Drops Out of Deal to Buy KHJ : Cites Delays, Complexities in FCC's Approval Process; Plans Other Acquisitions

January 29, 1987|AL DELUGACH | Times Staff Writer

Westinghouse Electric said Wednesday that it is terminating its $313-million deal to buy KHJ-TV Channel 9 in Los Angeles, which has been tangled in federal licensing proceedings.

The station's Akron, Ohio-based owner, diversified manufacturer Gencorp, said it was disappointed by Westinghouse's decision to exercise its right to abort the 15-month-old purchase agreement if federal approval was not given by Jan. 31.

Westinghouse observed that the Federal Communications Commission approval process has been "extraordinarily complex" and has been delayed by a number of challenges to various broadcasting licenses of Gencorp's RKO General subsidiary.

In its announcement from its Pittsburgh headquarters, Westinghouse said it "intends to continue its active pursuit of other properties to complement its five television and 13 radio stations."

Softening Prices

Westinghouse spokesman Paul Jones, in response to a question, said he was unaware of any contribution to the decision by the fact that prices paid for television stations have softened considerably since the deal was struck in November, 1985. Values have been pushed down by a softening advertising market and higher programming costs for independent stations such as KHJ-TV.

Among other Gencorp/RKO sales pending is the $387-million deal last February to sell the big WOR-TV "superstation" in New Jersey to entertainment giant MCA.

In its response to the Westinghouse announcement, Gencorp noted that FCC approval of the sales agreement on KHJ-TV would have settled 20-year-old litigation with a group of Southern California investors who have tried to wrest the broadcast license from RKO General.

However, Gencorp pointed out that the FCC had suspended consideration of the settlement agreement pending discussions relating to settlement of other RKO contested licenses.

Last April, an FCC administrative law judge ruled against the proposed KHJ-TV settlement, saying it would delay proceedings to determine RKO General's qualifications to hold licenses for 13 other broadcast properties. The full commission subsequently decided to delay the KHJ-TV matter pending settlement discussions relating to the owner's other broadcast licenses.

Under the agreement that Westinghouse is terminating, Westinghouse was to buy out the 52 shareholders of Fidelity Television Inc., the entity that has tried through the years to obtain the Channel 9 license. The deal called for Westinghouse to pay $95 million to Fidelity shareholders and $215 million to Gencorp.

As an indicator of the rapidly softening market in television station sales, Culver City-based Lorimar-Telepictures last November blamed the troubled ad market as it announced its decision to back out of a planned $1.4-billion acquisition of six television stations.

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