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The Honolulu Advertiser
Posted on: Thursday, July 6, 2006

OHA considering KGMB purchase

Reader poll: What do you think of OHA's plan to study the purchase of KGMB?

By Rick Daysog
Advertiser Staff Writer

An OHA committee yesterday voted in favor of making a conditional offer to buy television station KGMB. Trustee Oswald Stender said the station would be an investment not a soap box for OHA.

DEBORAH BOOKER | The Honolulu Advertiser

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The Office of Hawaiian Affairs is exploring the purchase of local television station KGMB, raising concerns about potential government control over the locally owned media outlet.

Members of OHA's Board of Trustees voted yesterday to make a conditional offer for the local CBS affiliate and authorized its staff to spend up to $50,000 to study the plan.

"It's a huge can of worms. ... To have a commercial broadcast license purchased by a state entity would raise potential censorship questions," said attorney Chris Conybeare, vice chairman of the Honolulu Media Council, a watchdog group.

"If one state agency could do it, I don't think there's anything stopping any other state agency, such as the Department of Transportation, from doing it," he said.

Founded in 1978, OHA is a quasi-state agency whose mission is to help Hawaiians. It receives revenue from ceded lands those lands controlled by the crown and government when the Hawaiian kingdom was overthrown in 1893. That revenue will be $15 million this fiscal year.

Trustee Oswald Stender said OHA's interest in KGMB is largely as an investment and not as a means to communicate a pro-Hawaiian message.

Stender, who was briefed on KGMB's financial situation, said the station generates about $3.2 million in net income a year. Its 41,000-square-foot offices on Kapi'olani Boulevard is located on prime real estate, which could be redeveloped into a high-rise office or condominium building, Stender added.

Trustee Boyd Mossman echoed Stender's contention that the station is viewed solely as an investment opportunity. "You cannot have a Native Hawaiian format," Mossman said. "It's not going to make any money."

Station owner Emmis Communications Corp. of Indianapolis put KGMB on sale last year when it announced that it was getting out of the television business. Emmis sold sister station KHON-TV earlier this year to California-based Montecito Broadcast Group and has said it plans to complete the sale of KGMB by the end of the year.

Emmis spokeswoman Jodi Wright could not be reached for immediate response and Kate Bueker of the Blackstone Group, which is handling the sale for Emmis, was not available for comment.

Stender said OHA is in preliminary discussions with Bueker and KGMB General Manager Rick Blangiardi.

TWO OFFERS REJECTED

Stender said Emmis is seeking $40 million for KGMB, but he believes that the station will likely fetch less than that.

Two Mainland investment groups had offered to buy KGMB for $22 million to $25 million but both were rejected, Stender said.

"They don't run television stations," he said of those bidders. "They buy and fire everybody and bring the bottom line up.

"We should be an attractive buyer because we are the only local group."

Yesterday's vote was conducted by OHA's Asset & Resource Management and Beneficiary Advocacy and Empowerment committees. Committee members voted 4-1 in favor of the plan, with one abstention.

The plan goes before the full Board of Trustees today for a separate vote.

Trustee Rowena Akana, who abstained from yesterday's vote, raised concerns over the costs. Akana said OHA could pay much less to air pro-Hawaiian programming on an Oceanic Cable channel, free of any programming restraints by the Federal Communications Commission or CBS.

OHA Chairwoman Haunani Apoliona, who did not attend yesterday's meeting, also raised concerns in a letter over whether FCC rules allow government entities to own a local television station.

Stender said OHA staffers are still researching whether the agency could own KGMB outright. He said staffers are also looking into setting up a nonprofit or for-profit corporation that would own and run the station independently of OHA. He noted that ownership of KGMB additionally would open doors in the broadcast industry for Hawaiian students.

According to Conybeare, such an arrangement would require that the television station be operated at arm's-length from OHA.

FCC officials could not be reached for immediate comment.

FOREIGN EXAMPLES

Bev Keever, a University of Hawai'i journalism professor, said she's aware of no FCC rules that would bar OHA from owning KGMB.

If OHA could resist the temptation to air political propaganda, the agency can provide quality programming along the lines of the BBC, which is owned by the British government, Keever said.

"If it's a question of somebody who doesn't understand Hawai'i and is just an outside corporate interest, then it would be an advantage for Hawaiians and the state for OHA to invest in this way," Keever said.

Stender said OHA consulted with American Indian tribes in Canada that launched a TV station in 1999. The tribes formed the Aboriginal Peoples Television Network, which now provides native programming to about 10 million homes and businesses in Canada.

Stender said OHA board members met with APTN board members two or three months ago and were encouraged by APTN officials to invest in television and other media.

Critics said OHA has no business getting into the broadcast industry.

Not only is it risky, ownership of a TV station doesn't fit with OHA's mission to improve the living conditions of Hawaiians, said William Burgess, an attorney for local resident Earl Arakaki, who sued to dismantle OHA and the state Department of Hawaiian Home Lands,

"What expertise do they have in running a television station?" Burgess said. "How could they possibly justify that? How is it to betterment of Native Hawaiians to purchase a television station?"

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.