Shameless in Seattle

A breach-of-contract lawsuit dogs A.H. Belo's bid to join the media big leagues

The morning of February 19 will bring more than business as usual at 400 South Record Street. In the cavernous lobby of the A.H. Belo Corporation's downtown Dallas office building, freshly brewed coffee and orange juice will flow for a crowd of very happy, mostly rich people. A group of sober-suited executive officers--led by boyish Belo chairman, president, and chief executive officer Robert W. Decherd--will descend from their upper-story offices and convene a special meeting of company stockholders.

Ever since Decherd, at the tender age of 30, helped take his family's button-down media company public in 1981, the Belo boss and his inner circle have set about building a media juggernaut, carefully picking the choicest properties to add to Belo's holdings. The company's reach now stretches to both coasts, with ownership of television stations in some of the country's largest markets, including Houston, Seattle, Sacramento, and New Orleans.

Most likely, the special shareholders' meeting will be a lovefest. On that particular morning, investors will be asked to approve Belo's merger with The Providence Journal Company. First announced last September, the merger offers succulent additions to Belo's media empire--the Providence (Rhode Island) Journal newspaper, nine network-affiliated television stations, and four more independent television stations, all of them in top-60 U.S. markets.

Shareholders are expected to handily approve the $1.5 billion deal, adding the Providence holdings to a Belo chain which already includes four daily newspapers--most notably the company flagship and Dallas' only daily, The Dallas Morning News--as well as WFAA-Channel 8 and six other stations. Belo will also gain the Providence Journal's embryonic cable channel operations.

Smiles and good cheer will abound. And why not? As of September 30, 1996, according to the company's proxy statement, A.H. Belo Corporation had total assets of $1,209,589,000. During the past decade, Belo--thanks in no small part to the savvy, preppie Decherd--has cannily bought up broadcast stations in growing markets that could no longer stave off the invasion of media conglomerates. The Providence acquisition--fueled by the approval of an unprecedented $1 billion line of credit for Belo last summer--will finally, truly, vault the homegrown, increasingly ambitious Belo company into the lower echelon of the media big leagues.

The Providence Journal acquisition will make Belo the country's eighth-largest television group by revenue and 10th-largest in audience size, according to an October 17 Morning News story. A Broadcasting & Cable story during the same week predicted that Belo will be the nation's 11th-largest TV group owner.

At least one man, however, will not be sharing in the general glee. Charles A. Dunbar, 72, with dual residences in Grand Prairie and Lake Clarke Shores, Florida, believes he has seen the darker side of doing business with Belo and Decherd.

Dunbar is waiting for a different date to come around. On March 10, he expects to be sitting in state District Judge David Godbey's courtroom, hoping to convince a Dallas County civil jury that Belo's touch--and Robert Decherd's--isn't always so golden.

Dunbar, president and sole officer of Dunbar Media Group Inc., is suing A.H. Belo Corporation for breach of contract over a business transaction with Decherd which took place nearly three years ago. In the summer of 1994, Dunbar, a longtime broker of TV and radio company sales, approached Decherd with the makings of a sweetheart deal. For the sum of $160 million, Dunbar told Decherd, he could broker Belo's purchase of two major-market television stations. If the sale succeeded, according to an initial agreement both men signed, Belo would pay Dunbar a commission of 1 percent on the final sale price--$1.6 million.

But the deal ended far off the mark. In the end, Decherd paid $162.5 million for just one of the stations--KIRO-TV in Seattle. KIRO's owner, the Mormon Church-owned Bonneville International Corp., decided against selling the second station in question, KSL-TV in Salt Lake City.

After agreeing to pay $160 million for just one station, Decherd learned that KIRO would lose its valuable CBS affiliation. And indeed, a few months later, KIRO became an affiliate of the United Paramount Network--land of the slap-dash syndicated sitcom and Star Trek retreads. Belo, with big plans to upgrade KIRO's local news programming, was left with a mere rhinestone to add to its diamond-studded crown.

There would be a price to pay, and, Dunbar is arguing in his lawsuit, Decherd decided that Dunbar would bear it. In court documents, Dunbar argues that Decherd decided to slash in half the commission Belo owed Dunbar for bringing the deal together.

After deciding to chop Dunbar's commission, Dunbar's suit alleges, Decherd set out to convince the broker of the wisdom of that change--whether Dunbar liked it or not.

In the ensuing argument, Belo came down on Dunbar like a size-15 Doc Martens boot on an ant. Dunbar claims he never agreed to a revised contract which would have cut his commission, never signed a new contract, and never even spoke to Decherd after September 1994.

Belo wired a check for $812,500 to Dunbar's bank account and now argues that Dunbar's failure to return the money or to voice any displeasure with the agreement implies that he accepted the cut in his commission.

The allegations in Media Brokers Inc. vs. A.H. Belo Corporation have not been reported in Dallas' only daily, or by any other Belo-held newspaper or TV station. Nor did Belo mention the lawsuit in its most recent quarterly Securities and Exchange Commission report. In the mandatory filings, corporations must disclose legal actions pending against them if the outcome could substantially affect the company's bottom line.

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