KOCE-TV appeal set to begin

Case marks third time a court may rule on controversial sale of county’s public TV station. The battle over KOCE-TV, Orange County’s only public broadcasting station, will continue in 10 days as the case returns to the courtroom.

On Nov. 22, the California Fourth District Court of Appeals, Division Three, in Santa Ana will hear the cases of the Coast Community College District, the KOCE-TV Foundation and the Daystar Television Network, the three parties involved in a fight about the station. Two years ago, the district sold KOCE to the foundation to help pay for educational expenses, and Daystar filed a lawsuit shortly thereafter, claiming it had been slighted in the bidding process.

One trial court decision, one appellate court decision and many long nights later, the parties will begin the next round of the dispute this month. In a case that has confounded even a number of legal experts, the district and foundation are petitioning to maintain the current ownership of KOCE, while Daystar demands that the court award it control of the station.

“The sale should be voided, and it should be awarded to Daystar because they’re the highest responsible bidder,” said Cameron Totten, one of Daystar’s attorneys. “They can’t just not sell it now. That’s not how auctions work. They lost their opportunity to reject all bids when they accepted the bid of the foundation.”

The Nov. 22 hearing could lead to the third court ruling on KOCE over the past two years -- and whatever the court decides, it’s bound to be a messy outcome. The appellate court ordered in June that the district either keep KOCE or sell it to the highest bidder, but the district has already sold the station and spent much of the foundation’s $8-million down payment.

If the court orders the district to give KOCE to Daystar, the district will have to acquire the station back from the foundation -- and no one is quite sure how to do that.

“Our lawyers are preparing for every eventuality, whatever that may be,” said Mel Rogers, president of the KOCE-TV Foundation.

Rogers also questioned whether any court had the power to overrule the Federal Communications Commission, which awarded the KOCE license to the foundation. He said that if the court ordered a transfer of ownership, the foundation would most likely appeal again.

“This is a critical community asset, and so there’s just no way we’re going to allow something like that to happen,” Rogers said. “Absolutely, we would look at what further remedies there were.”

A LONG ROAD

The saga started in November 2003, when the district named the foundation, which formed in 1978 to support KOCE, as the highest responsible bidder. The foundation had offered $32 million for KOCE, with only $8 million of it in cash and the other $24 million in credit. The district ruled that the foundation was the highest responsible bidder, surpassing Daystar, which had bid $25.1 million in cash.

Daystar sued the district, saying that its cash bid made it the rightful winner. In April 2004, a Superior Court ruled that the district had obeyed the law in awarding the station to the foundation, and the foundation officially acquired KOCE in November.

In June of this year, however, an appellate court ruled in Daystar’s favor. Since then, the district, the foundation and Daystar have all filed additional appeals, with the last briefs coming in Thursday.

The college district and Daystar clashed over a number of points, including whether Daystar was the highest responsible bidder for KOCE, whether selling the station to Daystar would cause the district legal woes and whether the district and foundation were right to revise the terms of the sale after bidding.

In their petitions, the district and foundation argued that Daystar was not a responsible bidder, in part because it filed under the name of a nonexistent entity, the Community Television Educators of Orange County. Totten, however, said it was common procedure for Daystar and others to create a local subgroup to run the station, and that the district had never complained about the name during the bidding process.

“It never gave any notice there was a problem,” Totten said. “This was simply created after the fact by lawyers on the other side in response to litigation.”

THE MEANING OF ‘MAY’

The district and Daystar also fought over a clause in the state Education Code, which states that a community college district “may sell for cash” any property that is not required for school purposes. Daystar said the rule specifically identified cash, not credit, whereas the district said the word “may” provided a loophole.

College district attorney Lisa Neal wrote in her brief that “the phrase ‘may sell for cash’ is permissive in nature and does not confine the District to accepting cash only bids.”

Also coming into question was the fact that the district docked $4 million from KOCE’s price after selling it to the foundation. The district said the $4 million represented money it might have had to pay back to supporters as a result of selling the station to a nonpublic broadcasting corporation. However, Daystar’s attorneys argued that the deduction was meaningless, since the district would have saved the $4 million anyway by giving the station to the foundation.

Milford Dahl, another attorney for the district, said he did not expect the court to order a transfer of ownership to Daystar. The two most likely endings, he said, would be for the judge to uphold the Superior Court’s decision from last year, or to order the district to take KOCE back.

“I feel more optimistic than I did when we got the [appellate court’s] opinion, only because it’s pretty rare to give a rehearing -- and even rarer to have an actual court hearing on a rehearing,” Dahl said. “Here, they actually asked us to brief it some more and show up again in court, so they’ve shown they have an open mind.”