By Matt Coker
By R. Scott Moxley
By Charles Lam
By Nick Schou
By Gustavo Arellano
By Gustavo Arellano
By Steve Lowery
By R. Scott Moxley
Illustration by Bob AulA recent court ruling could put Orange County's lone public TV station in the hands of a Christian network, one that stands accused of misusing the non-commercial channels it already owns in an effort to amass worldly riches.
In a unanimous June 24 decision, a three-judge state appeals court panel ruled that the Coast Community College District broke the law by selling Huntington Beach-based KOCE-TV to a local foundation rather than accept a higher cash bid from the conservative evangelical Daystar Television Network. The court invalidated the deal, which it said smacked of "the rankest form of favoritism," and ordered a new sale.
Meanwhile, Federal Communications Commission (FCC) officials are investigating whether Dallas-based Daystar, the world's No. 2 religious broadcaster, is violating federal law by hawking airtime and running ads on its eight non-commercial TV stations and its public-interest satellite channels. Doing so is forbidden on these portions of the broadcast spectrum, which are reserved for nonprofit educational programming.
The FCC's smoking gun is a sworn declaration that Daystar owner Marcus Lamb filed in federal court as part of a separate dispute, one that threatened to strip the network of its public-interest slot on Dish Network. "Daystar's exclusion from DISH Network will deprive Daystar of all the revenue uniquely derived from its access of 20 million viewers of the DISH Network, which includes advertising, donations and revenues from the sale of air time," Lamb wrote in the May 27, 2003, document.
The key words: "revenue," "advertising" and "sale of air time."
FCC records also show that Daystar maintains an "airtime sales" office. Daystar charges independent program producers up to $3,696 per half-hour to reach viewers through its non-commercial and public-interest channels, as well as its 41 commercial frequencies and its regular satellite and cable platforms. The network also distributes price lists for 15-, 30- and 60-second spots, lists that resemble commercial networks' advertising rate cards.
The FCC says it has documented a number of cases in which Daystar hosts and their guests used Daystar's educational frequencies to pitch products. The agency is investigating whether Daystar and its clients are offering items in exchange for donations to Daystar and other qualified nonprofits, or simply using non-commercial airtime to promote commercial goods.
The FCC's two-year probe has been hampered by Daystar's failure to respond to requests for information. In some cases, Daystar has ignored FCC inquiries; in others it has provided only partial responses or tortuous legal arguments. In a June 28, 2004, letter to the FCC, the broadcaster's attorneys said Daystar "is not an entity" but a "service mark" and is therefore incapable of committing the infractions the FCC is investigating.
The FCC's impatience is evident in its own documents. "It is highly inappropriate, and unacceptable, for a licensee target of a Commission investigation such as Daystar to unilaterally select what information it will and will not provide through such argument, conclusion and evasion," William D. Freedman, the deputy chief of the FCC Enforcement Bureau's Investigations and Hearings Division, wrote in response to Daystar. "We caution Daystar that it faces the potential imposition of serious sanctions against it, should it continue in its refusal to respond fully to these Commission inquiries." The FCC would not comment on the Daystar probe because it is still open.
"We have been a broadcaster in good standing with the FCC for many years and we have never had any problems," said Janice Smith, Daystar's vice president of programming and sales for the network. "We believe that we are operating within the rules." Smith said Daystar previews all shows for "their non-commercial status" and reviews programs regularly once they're on the air. While Daystar airs advertising and infomercials, she said, it keeps them off its non-commercial frequencies.
Daystar's arguments over airtime sales have shifted over the course of the FCC inquiry. At first it said it was simply soliciting donations from programmers to help underwrite the cost of airing their shows on non-commercial stations. It later said that its fees are lower than the fair-market value for its commercial stations and don't include any charge for airtime on its non-commercial ones.
Daystar and its supporters have argued that local resistance to its purchase of KOCE is rooted in religious bigotry. It has taken a similar tack with the FCC, contending the agency's investigation is motivated, in part, by a "historic institutional antipathy toward religious broadcasters as licensees of non-commercial educational broadcast stations."
Officials at the Coast Community College District (CCCD)—which owned KOCE until late 2004—have long been aware of the FCC's Daystar probe. In fact, it's part of the reason they say they rebuffed the evangelical network's bid in favor of the KOCE Foundation's more modest offer. The foundation offered $32 million to Daystar's $25 million, but Daystar offered cash, while the foundation proposed paying over 30 years. District trustees say their decision to sell to the foundation hinged, in part, on concerns about losing the local programming that airs on KOCE, Orange County's 30-year-old PBS station.
"We're so in the shadow of Los Angeles," explained Jerry Patterson, one of the trustees. "Everything centers around that city. To have an Orange County television station that airs homegrown shows and covers local issues has been a great thing."
During negotiations, Daystar tried to ease these concerns by offering to sell 20 percent of KOCE's airtime back to CCCD for local programs. But CCCD's lawyers warned that it might not be able to hold Daystar to the agreement, given the federal ban on selling airtime on non-commercial stations—and the fact that Daystar was already under investigation for allegedly violating it.
Following KOCE's announcement that it would sell to the foundation, Daystar filed a suit contending that the community college district had broken the law by failing to sell to the "highest responsible bidder." In April 2004, a Superior Court judge ruled against Daystar. Observing that money was not the only criterion to be considered in the sale, the judge allowed the foundation to purchase the station. But on June 24, the appeals court accused CCCD of engaging in the "rankest form of favoritism" by rejecting Daystar's bid and reversed the sale.
Now KOCE is back in limbo, and Daystar is gearing up for the next round of legal battles.
The KOCE scrap mirrors conflicts that have played out in communities across the country, as evangelical networks have snapped up non-commercial broadcast licenses, in many cases squeezing public television and radio stations off the air. Christian broadcasters now control about 1,000 non-commercial television and radio frequencies—roughly the same number that air NPR and PBS programming—and a handful of satellite public-interest channels. This is on top of billions of dollars in commercial media holdings.
Religious broadcasters are attracted to non-commercial frequencies because they carry relatively modest price tags; Daystar made $17 million by selling its commercial Dallas station and buying a non-commercial station with a stronger signal in the same market.
What's more, evangelical broadcasters' financial clout means they are often able to outbid their nonprofit competitors. But in many communities, residents have chafed at the idea of turning their public stations over to evangelical networks, which not only cater to a single faith but also espouse a right-wing political agenda. When Cornerstone TeleVision tried to acquire WQEX, a Pittsburgh public television station, several years ago, it prompted tens of thousands of angry letters and phone calls to local officials and the FCC. Community residents had a similar reaction when Salem Communications, the largest evangelical radio network, made a record-breaking $13 million bid for a Washington, D.C., public radio station in the late 1990s.
In some cases, citizens' groups have tried to argue that religious programming doesn't meet the FCC's long-standing requirement that non-commercial stations serve an educational function. That argument angers evangelical broadcasters, who contend that biblical teaching ranks among the highest forms of education.
The Daystar probe raises additional questions about evangelical networks owning non-commercial licenses, since Daystar's operations resemble those of its competitors.
"There are a lot of practices in the religious broadcasting arena that go close to crossing the line into commercial activity, if they don't cross the line altogether," says Andrew Schwartzman, president and CEO of the Media Access Project, a public-interest law firm. "Daystar's operations aren't unusual, although they may push the boundaries a little harder."
Many in the Christian broadcasting community agree that Daystar's approach is pretty standard. But unlike Schwartzman, they don't believe they're pushing the boundaries of FCC regulation. The problem, they say, is rather that the lines are blurry to begin with.
"The signposts to FCC compliance aren't always that well marked," said Dr. Frank Wright, president of National Religious Broadcasters, a Christian media association. "So the outcome of the Daystar probe could provide us with some valuable guidance—help us tell the lightness from the dark."