Bidding Process at Issue in KOCE Sale Challenge
The sale of Orange County's public television station may hinge on a judge's interpretation of simple phrases and words such as "cash." Does it mean greenbacks, or would a promissory note count?
It could make a difference, as a Christian broadcaster challenges the Coast Community College's sale of KOCE-TV to a foundation controlled by local business executives who have promised to keep the Public Broadcasting Service affiliation.
Among the points of contention is the state education code's definition of cash. Daystar Television Network offered an all-cash deal, but lost the bidding to the foundation, whose offer includes a promissory note. The religious group is crying foul.
Semantics aside, legal experts said that changes made after KOCE-TV Foundation's bid was accepted may be so extensive that a judge could overturn the deal.
"If this were a publicly held corporation, it would be ripe for a lawsuit in which those who control the company are playing favorites with the bidders," said Eric Talley, a professor at USC Law School.
After losing its bid for KOCE, Daystar, the nation's second-largest religious broadcaster, threatened to sue unless it was allowed to buy the station.
The Dallas-based broadcaster offered $25.1 million cash for the station. A sweetened offer of $40 million was rejected because it was submitted a day after the deadline.
The foundation offered what was characterized as a $32-million bid when it was announced as the winner in October, with $8 million down and the rest to be paid, with interest, over time.
But when final terms of the deal were announced two months later, they had substantially changed. The district had lowered the price by $4 million, costs that it said it would have had to pay had the station been sold to a non-PBS bidder. The deal still includes the $8-million down payment, but the rest is to be paid over 30 years -- with no interest. And no payments will be made for five years.
Daystar's attorney argued in his letter that his client's offer was far more valuable in today's dollars than the foundation's. Experts interviewed by The Times agreed, saying that what was characterized as a $32-million deal was worth $12.5 million to $19.5 million.
District trustees have argued that they sold the station to the "highest responsible bidder," as the law requires.
