KOCE sale may be sent back to start

Marisa O’Neil

The sale of a local public broadcasting channel that has dragged on

for the past two years may have to start all over again because of a

legal oversight.

Attorneys for Daystar Television Network, a spurned bidder for

KOCE-TV, asked Judge Corey Cramin to stop Coast Community College

District from selling the station to its fundraising arm and name

Daystar the highest responsible bidder. But because it’s unclear if

the district gave proper notice of the sale, the judge could rule to

rebid the station, said Milford Dahl, attorney for the college

district.

“It’s going to be an issue,” Dahl said after testimony had

finished for the day.

According to the state education code, community college districts

may sell property “for cash” to the “highest responsible bidder,”

language which Daystar’s attorney, Richard Sherman, has argued the

district ignored when it chose to sell to the KOCE-TV Foundation.

Daystar bid $25.1 million in cash and the district’s current deal

comes to $28 million with the majority financed over 30 years with no

interest.

The education code also states that districts must post notice of

the sale in three places in the district for the two weeks prior to

the sale or publish an advertisement at least once a week two weeks

before the sale.

Cramin asked attorneys for both sides if that had been done and if

they had any evidence to show it had. Notice was given when the

district initially bid out the station in 2002, Dahl said, but not

when that fell through and the process began again in 2003.

“That doesn’t come as a surprise,” he said of Cramin’s concern. “I

knew [Sherman] wouldn’t push it because it would reopen the bid

process.”

Dahl said he believes that notice was not given in 2003. His law

firm, Rutan & Tucker, was not representing the district at that time

because another client, Chapman University, was involved in the

bidding process.

“We put up notices all over the place [in 2002],” said district

trustee George Brown.

Cramin continued the hearing until next Monday so he could review

the original notice and decide if it was sufficient for the entire

sale process or if a second notice was necessary. If he does decide

to stop the sale to the foundation, he could rule that Daystar is the

highest responsible bidder, that the station must be rebid or that

the district can hold onto it.

“Notice is important, but we are attacking them on other grounds,

as well,” Sherman said.

Pointing to depositions given by district trustees and the deal’s

broker, Sherman argued in court that the district’s main agenda was

selling the station to someone who would keep its PBS format. In a

poll taken last year, Orange County residents voted overwhelmingly in

favor of keeping the PBS format, even if the district had to take

less money.

That, Sherman said, would violate the education code and

short-change students. His client’s bid, he said, would provide

instant relief to a cash-strapped district.

“[Trustees] felt they were the guardians of the community and had

to keep it PBS,” Sherman.

Dallas-based Daystar, the nation’s second-largest religious

broadcaster, has promised to preserve some educational programming

but not the PBS format. The district and KOCE-TV Foundation have

argued that the Corporation for Public Broadcasting will demand a

return of $22 million in grants and equipment if the format changes.

John Casoria, attorney for early bidder Community Educational

Television, was also present at the hearing and argued that Daystar’s

bid tied its own $25.1-million bid as the highest. Community

Educational Television is an educational broadcasting affiliate of

Costa Mesa-based Trinity Broadcasting Network, the nation’s largest

religious broadcaster.

Community Educational Television withdrew its bid before the Oct.

8 deadline.

Casoria told Cramin that he felt the bidding process had been fair

and that the station should go to the KOCE-TV Foundation. If the

station is rebid, however, he said his client would take part.

“We would be willing to go into the process,” he said.

* MARISA O’NEIL covers education. She may be reached at (949)

574-4268 or by e-mail at marisa.oneil@latimes.com.