Court rules sale of TV station invalid

An appellate court has ruled that the Coast Community College District violated the law in selling KOCE-TV to the channel’s own foundation, but the court stopped short of ordering an immediate transfer of ownership to the Christian network that attempted to purchase it.

In a May 25 ruling, Judge David Sills declared the 2004 sale of the station invalid, saying that the district had violated its own rules by awarding the Huntington Beach-based station to a non-cash bidder and by lowering the price of the sale afterward. However, Sills rejected the Daystar Television Network’s petition to have the station awarded to it, saying an automatic transfer was impossible due to legal technicalities.

For the time being, Sills wrote, the district must void the sale to the KOCE-TV Foundation ? a difficult prospect, since the district has already spent much of the foundation’s $8-million down payment.

“The district’s problems are not over,” said Richard Lloyd Sherman, one of Daystar’s attorneys. “They’re just starting.”

He added that he was disappointed that the court had not ordered that the license be given to his client, but he said the decision was otherwise fair. Dallas-based Daystar has a federal court action pending against the district and its board of trustees.

“I think we’re going to end up with a multimillion-dollar settlement,” Sherman said.

Ardelle St. George, the general counsel for the KOCE-TV Foundation, also expressed disappointment with the judge’s ruling. After the district sold KOCE to the foundation, it reduced the bid from $32 million to $23.5 million, but St. George said the cost was offset by the funds that the district reaped from telecourses broadcast on KOCE. The foundation, since purchasing the station, has continued to air the courses.

“The judge took one interpretation, and we have another,” said St. George, who said the district also saved money by avoiding liabilities in selling the station to the foundation. “We don’t believe we took less.”

Milford Dahl, an attorney for the district, called the judge’s ruling “unbelievable” and said he would meet with the district in the coming weeks to help decide where to go next.

Dahl added that Sills’ latest ruling might help the district in Daystar’s federal case because, he said, the judge had concentrated more on the district’s reducing of the sale price than on the decision to sell to the foundation. Throughout his statement, Sills referred to Daystar’s offer as the “runner-up bid.”

In 2003, the district put KOCE up for sale to bring in academic funds, ultimately selling the station to the KOCE-TV Foundation, a group of community benefactors. Daystar, which made a $25.1-million cash bid, sued shortly afterward, saying it qualified as the highest responsible bidder. The foundation had bid only $8 million in cash, with the remaining $24 million in credit.

In June, Sills issued a decision reversing the sale of the channel to the foundation, accusing the district of deliberately slighting Daystar’s bid. Both the district and Daystar filed appeals afterward ? the district asking the court to uphold the sale, and Daystar demanding immediate ownership of KOCE.

Ultimately, the appellate court ruled against both parties. In his statement, Sills lambasted the district for lowering the price of KOCE after identifying the foundation as the winning bidder. He also rejected the district’s argument that Daystar was an invalid bidder because it applied to purchase KOCE under a different name.

“The District itself understood precisely that Daystar would be the buyer, as evidenced by the District’s summary of bids, which indicated that ‘Community Educators of Orange County’ was an entity subsumed within Daystar,” Sills wrote.

However, the judge also ruled that the district had the discretion not to sell KOCE, nullifying Daystar’s demand to be given the license. Sherman said the most likely actions for the district would be to take back KOCE or auction it again.

The Coast Community College District operates three colleges in Orange County, including Golden West College in Huntington Beach.

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