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Pappas Telecasting weighs sale of Los Angeles station

March 27, 2007|Meg James | Times Staff Writer

The fate of a major Spanish-language television station in Los Angeles grew more uncertain Monday when its owner said that it was exploring a possible sale.

Pappas Telecasting Cos., based in Visalia, Calif., announced that it was reviewing strategic options, including a possible sale of KAZA-TV Channel 54, as well as its Spanish-language station in Houston.

Pappas set out in 1999 to build a Spanish-language network in the U.S. with Mexico's second-largest broadcaster, TV Azteca. Pappas launched Channel 54 in 2001 as the foundation for the new Azteca America network.

But the effort fell short of the partners' initial expectations, thwarted by financial difficulties and rivals such as Univision Communications Inc. and NBC Universal's Telemundo that scooped up available TV stations in big markets.

The relationship between Azteca and Pappas deteriorated, and more than three years ago, Azteca took over the operations of Channel 54. TV Azteca says it pays Pappas $9.6 million a year to lease the L.A. station. An Azteca spokesman could not be reached.

In December, Channel 54's broadcast license expired, and its renewal by the Federal Communications Commission remains under a cloud. NBC Universal has challenged the renewal by alleging that Azteca should not be allowed to operate a U.S. TV station. Under federal rules, foreign owners cannot control U.S. broadcast stations.

NBC Universal's complaint is part of a feud with TV Azteca that began soon after the entertainment giant tried to expand its presence in Mexico.

The FCC has not ruled on Pappas' license renewal request or NBC's petition. An FCC spokesman declined to comment, as did NBC Universal.

Bruce Yeager, chief financial officer for Pappas Telecasting, said the company believed the NBC petition was "without merit." He said NBC's complaint did not prompt the strategic review.

"We are looking to maximize the return on the investments that we have made in these assets," he said. "This is an economic exercise to make sure that we are doing everything we can."

Yeager said the strategic review was limited to Pappas' six Spanish-language stations. The privately held company, started in 1971 by three Greek American brothers, owns 27 TV stations.

Julio Rumbaut, a Miami-based media consultant, said Monday's development could open the door for Azteca to find another U.S. partner, perhaps one with deeper pockets.

"Azteca has content that is valuable," Rumbaut said, adding that Azteca should consider teaming up with Telemundo, which has struggled to compete against Univision.

"Even though Azteca and NBC Universal have had a rocky relationship, it would be a prudent course of action," he said.

meg.james@latimes.com

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