PUBLIC TV WORRIED AT SALE OF STATIONS TO RELIGIOUS BROADCASTERS

Religious broadcasters have made the highest bids for KOCE-TV (Ch. 50) Huntington Beach, Cal., which has been on the market for more than a year. They also clinched a deal for KDTN (Ch. 2) Denton, Tex., the 2nd station operated by N. Tex. Public Bcstg.

The moves come as public broadcasters are seeking to hold up public TV stations as the last bastions of “localism” after the FCC raised the media ownership caps for commercial broadcasters. Public broadcasters want to leverage the sentiment against media consolidation to get Congress to raise the level of federal funding, especially for digital conversion needs of PTV stations.

PTV licensees are faced with general revenue loss as well as the cost of converting to digital, and if they have a 2nd station “they are certainly looking for ways to dump it for money on the premise that in the digital era they will have more channels to broadcast,” said Jerrold Starr, exec. dir. of Citizens for Independent Public Bcstg. (CIPB), which fought unsuccessfully to block the dereservation of WQEX (Ch. 16) Pittsburgh, the 2nd station of WQED (Ch. 13). For some public broadcasters that could make fiscal sense, he said, but for the communities, the 2nd stations have been the ones that have been “locally responsive community stations with alternative cutting-edge programs and documentaries that you don’t see on PBS national programs.” Consequently, there would be not only fewer PTV stations, but also fewer alternative stations, he said: “It will impact localism because the stations that remain would be primary stations and large market stations whose schedules have a larger share of PBS programs and who have less of a connection with their community.”

In an apparent bid to thwart the sale of KOCE to religious broadcasters, Lawson took the unusual step of testifying at a recent public hearing organized by the station’s licensee, Coast Community College Dist. Board of Trustees. He cautioned that any decision to sell the station to a nonpublic broadcaster could have adverse consequences both in Congress and at the FCC. More specifically, Lawson said the licensee would have to return federal funds invested by Congress through the CPB ($22 million) as well Public Telecom Facilities Program grants made available through the NTIA. Referring to the “tremendous grass-roots concern” over concentration of media ownership, he warned the board that turning “KOCE over to a national network, of any stripe, flies directly in the face of this very strong support for locally controlled media that maintains a local focus.” Among the bidders for KOCE are 4 televangelists and a partnership of KCET L.A. and the KOCE-TV Foundation, which raises funds for the station. The nation’s 2 largest Christian broadcasters, the Trinity Bcst. Network of Costa Mesa and Daystar TV of Dallas, reportedly have offered $25 million, compared with the KCET-KOCE Foundation partnership’s $10 million.

KOCE Gen. Mgr. Mel Rogers didn’t seem very hopeful that community pressure would dissuade the board from selling the station to the highest bidder. More than 400 community leaders showed up at the hearing to urge the trustees not to sell the station to televangelists, he told us: “The community is up in arms but the faculty wants them to sell it to televangelists and they are under pressure to get the highest bids.” With L.A. stations uninterested in the affairs of Orange County, KOCE’s broadcast area, his station is producing 12 hours a week of locally originated programming, he said. The station also serves K-12 students in classrooms. “All that will go away” if the station is sold to a televangelist, Rogers said. The Coast Dist. has had to chip in $1.7 million every year to help the station meet its $8 million operating budget, he said, and “the faculty hates that.” The station also has run into debt to comply with the FCC’s digital conversion mandate, he said. Of an estimated conversion cost of $8.5 million, the station had received pledges for $4 million but only $1.5 million actually had been made good because they were 5-year pledges, Rogers said.

If the Coast Dist. decides to sell KOCE to a televangelist, the transaction would require FCC clearance, Rogers said, but no dereservation of the channel would be needed because religious broadcasters come in as nonprofits. KOCE would be only the 2nd PTV station to be acquired by a religious broadcaster after N. Tex. Public Bcstg. decided to sell KDTN to Daystar TV for $20 million. However, KOCE would be the first PTV station that provided sole service in a market to go out of public broadcasters’ hands, he said.

In the debate over the sale of PTV stations to religious broadcasters, what’s unclear is whether there is any provision in the Public Bcstg. Act that would require the licensee of a PTV station that sells it to a nonpublic broadcaster to refund federal investments made over the years in the station. “I don’t know the statutory authority,” Lawson said. A CPB source said the corporation had written to KOCE pointing out that it had clear responsibility to safeguard public funds invested in the station. However, the statute was silent on issue of what happened when a public TV station was sold to a nonpublic broadcaster, the source said. The question was premature for now, the source said, and the CPB would explore all options, if the need arose, to ensure that public funds were safeguarded. Lawson said there had to be some statutory authority for return of federal funds because under current law, federal funds can’t be used to support religious activities. That wouldn’t apply to KDTN, he said, because the station never had been CPB-qualified, meaning it wouldn’t have received operating funds from CPB. As for why APTS wasn’t becoming involved in the KDTN sale, Lawson said that was because the primary station, KERA, already was providing public broadcasting service to KDTN’s coverage area.

Lawson said the fact that licensees operating 2 PTV stations were faced with filling up programs for at least 8 multicast channels was “clearly one of the drivers” for disposing of the 2nd station: “And that’s why I respect what KERA is doing because they are going to take the proceeds from that sale and invest in a programming endowment.” N. Tex. Public Bcstg. was making “a rational decision” that the expanded capacity of KERA would be sufficient to meet the needs of that community, he said. Asked whether he saw a trend emerging, Lawson said the idea of shedding bandwidth wouldn’t be appealing any more when “we figure out what to do with ancillary and supplementary services for making revenues and once datacasting and education models are established.” But right now managers and boards of stations are feeling pressure to create new content and “we have had enough trouble adequately funding one channel so there is a lot of economic pressure to find alternative ways to fill out production budgets.” Despite getting the nod from the FCC in Oct. 2001 to use their excessive nonbroadcast digital capacity to provide ad-based services, public broadcasters have yet to come up with a business model to generate revenue.

As for consolidation in the PTV industry, Lawson said mergers such as that of WNET N.Y.C. and WLIW Garden City, L.I., was one of the models. That merger resulted in reduced operating costs and expanded programming, he said. Other forms of consolidation could be sharing master control and outsourcing back office functions, he said. He said he didn’t see a trend as yet of religious broadcasters’ vying for PTV stations as was the case with public radio: “We have seen a lot more of that on the radio side in competing for new FM channels allocations.”

WQED, which won dereservation from the FCC as its 2nd station for WQEX after a protracted battle in July last year, hasn’t yet been able to sell the station. The proposed sale to ShootingStar Inc. for $20 million fell through because the prospective buyer couldn’t come up with the financing, CEO George Miles told us. Critics such as Starr have accused WQED of “misrepresenting” to the FCC that the dereservation and sale was on account of financial distress faced by the station. Miles said he could have sold the station to a religious broadcaster, but “I'm not inclined to do that.” That was because he wanted to make sure that the buyer was a “very strong local entity,” he said. Denying allegations that there were no offers for WQEX, he said “we are talking with people as we speak.” However, the problem now is that “the market as everybody knows is really down.”