Shameless in Seattle

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

Dunbar's suit is only for $800,000, mere pocket change, hardly worth mentioning for a company of Belo's girth.

But it's a debt owed as far as Dunbar is concerned, and his lawsuit offers rare insight into Belo's big-footed way of doing business.

Dunbar's Dallas attorney, Jeffrey Tillotson, says the case has become a matter of principle for Dunbar, who declined to discuss the case with the Dallas Observer.

"It's like buying a house," Tillotson says. "If you agreed up front to pay a broker a certain amount for finding you a house, and he delivered, should you suddenly be allowed to cut his fee if you changed your mind? My client figures this is worth fighting for."

The world of media brokerage is small, with few hard-and-fast rules for making contacts and shopping properties around. It's a classic sales hustle, where who you know seems to matter almost as much as what you know. So when Charles Dunbar, through casual conversations with executives at Bonneville International Corp. in Salt Lake City, learned the company might be interested in selling its last two TV stations (Bonneville owns several radio stations, including two in Dallas--KDGE-FM and KZPS-FM), he figured all he needed was an introduction to the top man at A.H. Belo--Robert Decherd.

It was late July 1994, and just a few weeks earlier Belo had acquired WWL-TV, the CBS affiliate in New Orleans, for $110 million. Dunbar reasoned--correctly, as it turned out--that Belo, which hadn't made a major broadcasting purchase for 10 years, was poised for a buying binge. Decherd had told reporters shortly after the New Orleans deal closed that it was "not an isolated acquisition."

Looking for an entree to Decherd, Dunbar turned to his own son, Gregory Dunbar, who was a social acquaintance of the Belo honcho. Though Gregory Dunbar didn't know what specific properties his father wanted to discuss with Decherd, the son set up a meeting of the three men in Decherd's office on July 29, 1994, according to depositions on file with the court.

(Belo representatives, including Decherd and in-house attorney Marian Spitzberg, did not return calls to the Observer for this story. Paul Watler, the lawyer representing Belo in the case, also did not respond to a request for an interview. Ironically, Watler is the current president of the Freedom of Information Foundation of Texas. Consequently, all of Belo's responses in this story are taken from public court pleadings and depositions.)

The men's initial meeting lasted less than an hour. Decherd initially appeared uninterested in acquiring the two stations Dunbar was shopping. "A lot of the conversation was that [Belo] had no particular interest in buying a television station outside of a geographic distance from their existing properties, if they were too far, they would have no interest in [them]," Dunbar recalled in a deposition. But near the end of the discussion, Dunbar named the specific stations in question--KIRO and KSL. Suddenly, Decherd was moved, according to Dunbar's deposition.

Dunbar came to the meeting with rare knowledge of Bonneville International's holdings. A few years earlier, Dunbar had represented Cardinal Communications--his other son Geoffrey's company--in its purchase of KAAM-AM from Bonneville. After the purchase, Cardinal changed the station's oldies format to sports talk, and the call letters to KTCK, The Ticket.

It may have dawned on Decherd that the elderly man sitting in his office had insight into a corner of the business world that Decherd did not: the notoriously private and successful media dealings of the Mormon Church. No one knows precisely the worth of the church's vast media operations--all privately held--but through his earlier negotiations with Bonneville, Dunbar was able to get a fairly good idea.

From his working papers generated through talks with Bonneville senior vice president Bruce Reese, Dunbar determined that Seattle's KIRO was grossing $49 million a year, while Salt Lake City's KSL was grossing approximately $29 million. Reese had optimistic projections for increasing the cash flow for both stations--$14 million more for KIRO and $7 million more for KSL.

At the same meeting, Dunbar presented Decherd with a standard agency contract he had used for years in other similar deals. Using a sliding fee scale based on the sale price of the property, Dunbar proposed receiving 1 percent of the acquisition price up to $160 million; 1/2 percent if the price was $200 million or more; and a pro-rated percentage if the purchase price fell between $160 and $200 million. (Dunbar says the men had discussed compensation of 3/4 to 1 percent.)

Over the next month, the proposed Belo-Bonneville deal churned and changed almost daily. On August 5, Decherd, Dunbar, and Ward Huey Jr., president of Belo's broadcast division, flew to Salt Lake City for discussions with Bonneville executives.

After initial small talk with Bonneville president and CEO Rodney Brady and executive vice president Bruce Reese, the group went to lunch. The Bonneville bosses were apparently none too quick to discuss a deal.

"We concluded on the basis that they were not going to provide us any information about the two television stations, that there was nothing to discuss with respect to KSL or the acquisition of KSL, but that if we wanted to make an offer for KIRO they would entertain such an offer just as a matter of stimulating further discussion," Decherd said in a deposition.

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