District makes deal with hedge fund group to sell KCSM-TV's public airwaves to wireless companies

Blackstone Group to pay District $900K per year for 3-4 years and will then receive 38% of proceeds from sale of station's "spectrum holdings"

by Tracy Rosenberg, Executive Director, Media Alliance

Time is running out for KCSM-TV. The 5th largest public television station in California, whose license has been owned by the College of San Mateo since 1964, has been placed in the safe-keeping of Locuspoint Networks, a commercial entity founded by former wireless executives. Locuspoint's activities in "spectrum speculation" are described by Ben Mook in an article in the February 26, 2013 issue of Current. Locuspoint, which is a 99%-owned subsidiary of one the nation's largest hedge firms, the Blackstone Group, is described as one of three for-profit firms gambling on the upcoming TV auction to hit the jackpot buying and disposing of television stations around the country, including noncommercial ones like that belonging to the College of San Mateo.

So what does that mean for us here in the Bay Area? Local media watchdog group Media Alliance has observed the transactions surrounding KCSM-TV's demise for more than two years and has filed several public records act requests to get more details on the actions of the SMCCD board. The requests have not always been responded to promptly (one filed in April of 2012 took more than six months to get any response at all), but the most recent one has provided supporting documentation for the Locuspoint deal. If you'd like to look at the documents, they have been posted on the Media Alliance website and can be downloaded.

Disturbing implications

Given the massive amount of lawyers involved, one can assume the legal dots have been connected at a significant cost, but the gist of the agreement has some disturbing implications. Here's a quick version of what we're looking at:

Locuspoint will subsidize the operations of KCSM-TV at the cost of $900,000 per year for the next 3-4 years. The District will operate the station at substantially reduced costs for this period, which indicates a program schedule consisting of a feed from one national program supplier, aired without closed captioning for the hearing-impaired or elderly, to cut station costs. Should the TV auction go forward during this period, on the receipt of a bid at or above the unknown number described as the "minimum acceptable bid" (which is blacked out), the station's spectrum holdings will be surrendered to for-profit wireless companies and broadcasting will cease. The Blackstone Group via their "tactical opportunities division" will receive 38% of the proceeds in a massive shift of millions of dollars in public assets to the private capital firm.

Should the national spectrum auction not proceed within the designated time, then the speculator may exercise an option to sell off KCSM-TV's license to any FCC-qualified bidder of their choice, with no right of refusal from the District. In practical terms, an FCC-qualified bidder can be any California not-for-profit corporation, including national chain Christian broadcasters like Daystar (a bidder in the earlier RFP). The District, in order to meet financial obligations to a hedge firm, has signed away the ability to exercise any discretion over the invasion into Bay Area broadcasting of entities who may not be desired or appreciated by the viewing community. The members of KCSM-TV, past and present, the college community, and the viewers will have no say. It's up to the Blackstone Group.

Loss of airwaves = loss of public expression

This loss of control over college property poses some questions about the District's interpretation of the preamble to their mission statement: "The District actively participates in the economic, social, and cultural development of San Mateo County. In a richly diverse environment and with increasing awareness of its role in the global community, the District is dedicated to maintaining a climate of academic freedom in which a wide variety of viewpoints is cultivated and shared".

The financial pressures on higher education, and the California community college system in particular, are intense and should not be minimized. But by turning down an offer for $6 million dollars received last year, in search of greater short-term riches, the District's Board of Trustee's have brought to the campus community the kind of irresponsible speculation that has defunded public education and a host of services and damaged our economy – all to hand over a piece of the campus for profiteering.

It's a real question whether the campus community, the viewing community and the residents of the Bay Area would have agreed to this if the District had ever asked them.