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RIGONOMICS:KOCE-TV Foundation, district's deal done dirt cheap

July 21, 2007|By JIM RIGHEIMER

I have been traveling a lot this week, but I finally got a chance to analyze the latest information about Coast Community College District's supposed sale of the public TV station KOCE to the KOCE-TV Foundation. I say "supposed" because once you talk to all of the players (and I have), and you read all the documents, it is clear KOCE was not sold to the foundation but was given to them in a no-money-down deal.

To understand how this was done, let's go back to 2004. The college district was in a contentious exchange of what should happen to KOCE. Some faculty thought the money used to subsidize the station should be spent in the classroom (in other words, to get them higher salaries). Others understood the station paid for itself with the Tele-Courses and should be left as is. The state was paying close to $2 million a year for students to take the courses, and the actual courses cost 15% of that.

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Some college district trustees, like Board President Jerry Patterson, said they would be just fine with giving the station to the foundation. Others thought it should be sold to the highest bidder and the money put back into the colleges. The trustees who wanted to get the most money for the TV station won out, or so they thought, and a bidding process was set up with an outside media brokerage firm to obtain the highest bids in a closed-bid process.

This is where opinions diverge on what happened next. But here is what we do know: Among several bidders, Daystar Television Network bid $25.1 million. The KOCE Foundation made a winning $32-million bid of cash and terms. Once the bidding was closed, Daystar upped its bid to $40 million. The trustees still chose the foundation as the highest "responsible bidder" and started the process of negotiating the actual terms of the sale. This is where they gave away the station behind closed doors.

Negotiating the final terms for the sale on the district's side of the table was Patterson.

First off, they lowered the price by $4 million. The foundation had 12 million reasons why the price was too high and as Patterson told me, "We negotiated it down $4 million" and lowered the price by the same. Forget the fact that the foundation thought the station was worth $32 million when it made the bid.

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