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The Honolulu Advertiser
Posted on: Friday, July 7, 2006

OHA won't buy KGMB after all

By Rick Daysog
Advertiser Staff Writer

A day after two of its committees agreed to pursue buying local television station KGMB, the Office of Hawaiian Affairs' Board of Trustees voted to abandon the deal.

Yesterday, the board decided 4-2 against acquiring the local CBS affiliate as members expressed concerns about the financial risks.

Trustees, including Chairwoman Haunani Apoliona, also questioned whether the Federal Communications Commission would allow a quasi-government entity such as OHA to acquire a television station.

"In my experience since 2000, when OHA got involved in some sort of business, it failed," said trustee Donald Cataluna. "This could be the biggest failure."

Two OHA committees had voted 4-1 on Wednesday to appropriate $50,000 to conduct due diligence in considering the acquisition of the station.

"I'm sorry we didn't have more time to really discuss this opportunity," trustee Oswald Stender said. "But let's move on. My heart is not broken."

Besides Stender, trustee Rowena Akana voted in favor of exploring a bid for KGMB. Voting in opposition were trustees Linda Dela Cruz, John Waihe'e IV, Apoliona and Cataluna.

Station owner Emmis Communications Corp. of Indianapolis put KGMB up for 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 did not return telephone calls seeking comment.

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

OHA was founded in 1978 and its mission is to help Hawaiians. It receives annual ceded lands revenue, which will total $15 million this fiscal year.

Stender, who was briefed on KGMB's financial situation, said Emmis was asking about $40 million for the station, which generates about $3.2 million in income a year.

He noted that two Mainland investment groups had offered to buy KGMB for $22 million to $25 million but both bids were rejected.

Dela Cruz said OHA's money could be better spent on projects that directly benefit its Hawaiian constituents. Dela Cruz complained that she has had trouble getting OHA's lending program to issue small loans to members of her community.

Local attorney Chris Conybeare, vice chairman of the Ho-nolulu Media Council, said he's not surprised that OHA is abandoning its bid for KGMB.

As a government entity, OHA faced little or no prospect of gaining approval from the FCC, he said. If OHA were to make a passive investment or were to finance the purchase of the station by a separate entity, the deal would come under close scrutiny by the FCC.

"This whole idea of a state agency owning a television station didn't wash," Conybeare said. "I just didn't think that it was an idea that would have proceeded very far."

Reach Rick Daysog at rdaysog@honoluluadvertiser.com.