WQEX PITTSBURGH SAYS SALE WAS DELAYED BY MARKET CONDITIONS
More than a year after it won de-reservation of its 2nd channel WQEX (Ch. 16), citing “severe financial distress,” the Pittsburgh public TV station WQED (Ch. 13) has yet to find a buyer, prompting critics to accuse it of “misrepresenting” facts to the FCC. When it petitioned the Commission, WQED said it wanted to sell the station to ShootingStar Inc. for $20 million. In its July 18, 2002, order, the FCC justified its decision to permit WQED to sell WQEX to a commercial entity, citing the station’s severe financial distress that would impair its ability to reduce debt and convert to digital. WQED CEO George Miles denied any wrongdoing and said the sale of WQEX was being held up because of market conditions.
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“Obviously, it is disturbing to those of us in this community” that the station claimed fiscal distress in order to get the FCC ruling and once it obtained it was dragging out the sale, said Jerrold Starr, exec. dir. of the Citizens for Independent Public Bcstg., which fought in vain to block the WQEX de-reservation. Not only was WQED acting as though it had as much time as it wanted to decide on selling the station, but it also was spending money to refurbish WQED and change the station’s name, he charged: “They acted in no way like a corporation that was in any kind of financial distress.”
Starr said that according to his information, WQED had rejected ShootingStar Pres. Diane Sutter’s offer because the company wanted to restructure the deal. Instead of the $14 million up front and $3.5 million paid over 7 years, ShootingStar offered WQED $12 million up front and $5 million paid over 5 years, he said. However, he said, whether Sutter’s offer was “still genuine” or whether she could have raised the money “we do not know. It could have been a performance for the media.” That was because having a network affiliation with Paxson Communications was key to ShootingStar’s plans, he said, and with Paxson deciding to deliver its programming by satellite, it became clear that ShootingStar would have difficulty putting together a full schedule of programming to attract a buyer. “We are left with the puzzle of whether or not her offer to restructure the deal was indeed serious and if so why WQED turned it down because it seems they didn’t have any other options.”
With the channel now being designated commercial, there was no time limit for selling WQEX, Starr said, and “we were hoping that the FCC’s June 2 decision [on raising media ownership caps] would somehow make their station more attractive,” he said: “But that doesn’t seem to have happened.” He conceded that the general climate for media acquisitions had been dampened by the economy. Starr said he had been told by a WQED board member that there were no offers for WQEX on the table.
Miles dismissed such claims. “We are talking with people [on selling WQEX] as we speak,” he told us. The problem, he said, was that the market right now was “really down.” WQED is “obligated to sell it and try to dispose it of in some way and hopefully, we will have something very shortly,” Miles said. As for the effort to sell WQEX, the FCC’s decision to raise the cap on media ownership was a “nonevent,” he said, because it was followed by a court stay. He said he wanted to make sure that in any decision to choose a buyer “we have a strong local base at the end of the day and that WQEX becomes a very strong presence in the local market.” He said the deal with Sutter fell through because “she couldn’t come up with the financing we were looking for.”
Miles said he could easily have sold the station to a religious broadcaster, but “I'm not inclined to do that. I just want to make sure that it’s a very strong local entity. We are obligated to do that.” He said a couple of people “have shown strong interest in the properties,” but negotiations were “slow and tedious.”
Starr alleged that despite financial difficulties WQED had refurbished its building at a cost $1 million and changed its name to WQED Multimedia from WQED Pittsburgh, paying $300,000. “We did not spend a million dollars, that’s an absolute lie,” Miles countered. He said the station was refurbished with grants from the state govt. and foundations. As for money spent on changing the station’s nomenclature, Miles said, “we did a cutback to get that done.”
Asked whether he saw other licensees disposing of 2nd stations, citing financial difficulties, Miles said he was so focused on Pittsburgh that he couldn’t tell what was happening elsewhere in the country. However, he said, the reasons for seeking de-reservation of WQEX still existed. The station had to pay down debt of $7.5 million, complete conversion to digital, invest in local programming and improve station facilities, he said.