Carbondale-Herrin-AAurphysboro-AAarion SOUTHERN ILLINOISAN, SUNDAY, AUGUST 19, 1979 Page Twenty Seven Will proposed TV outlet b mom than 7 r I M M M I -f MM sammmr By Ed Bean Of The Southern Illinoisan Southern Illinois may soon have a new television station. New, but not necessarily different. Evans Broadcasting, the New York firm that owns UHF Channel 30 in St. Louis, was recently granted permission to build a station to operate on Channel 13 in Mount Vernon the last VHF channel available in Southern Illinois. The station would be operated by Southern Illinois Broadcasting Corp., a sister company that Evans Broadcasting formed to acquire Channel 13. SIBC plans for Channel 13 to be a satellite of St. Louis Channel 30. That means 95 percent of its programming would be the same as that of Channel 30 with the remaining five percent set aside for programs with a regional interest. Channel 30's programming already is available to most Southern II-linoisans who subscribe to cable television. Although the programming might be redundant, Channel 13 would help Channel 30 beam its signal to at least several hundred thousand additional potential viewers in Southern Illinois. (Refer to the map which accompanies this article for a view of Channel 13's reception area. ) The significance of that additional audience would not be lost to Channel 30's national advertising accounts. But a middle-aged Salem schoolteacher says she thinks Southern Illinois deserves more than a satellite television station "that will only give us what we already have on cable." Mary Bowers owns a farm near Salem that is considered the ideal site for the television's antenna. She has watched the development of Channel 13 since it was allocated in 1965 and refused to lease the land to SIBC when she learned the company wanted to make it a satellite station for Channel 30. Mrs. Bowers and her Salem attorney, David Garner, recently formed a citizens group to challenge the Federal Communication Commission's decision to allow SIBC to begin construction. Their group, Citizens Committee for Independent Local Television in Southern Illinois, is asking the FCC to rescind SIBC's construction permit and consider new applications for the channel allocation. They hope the allocation can be granted to a group committed to forming an independent station that would gear more of its programming to regional interests. The Citizens Committee is being represented before the FCC by Citizens Communication Center, a foundation-funded Washington public interest law group. The issue before the FCC is whether or not Southern Illinois can support another independent television station. SIBC says the area cannot. The Committee says it can. And two original competitors for the TV station rights a group of Mount Vernon businessmen and Murphysboro WTAO radio station owner Bill Varecha also thought the market could support an independent station. But both groups lacked the financial resources and fell by the wayside. The on-again, off-again story of Channel 13 began in 1965 when a group of 10 Mount Vernon businessmen headed by Dale Rainsberger after two years of preliminary studies, petitioned the FCC to allocate the channel to Mount Vernon. Several area television stations opposed their request and it was 1970 before the FCC finally decided to allocate the channel. By that time the Mount Vernon group, called Soillcom, had spent $350,000 for legal fees and various feasibility studies required by the FCC, and they knew they would have to spend thousands more before the station would go on the air. "We had the money," says Ken Bayer, one of the Mount Vernon businessmen involved in the project. "We weren't really hungry for profit; we just wanted Mount Vernon to have the station. We felt it would be enough if the station would pay its own way and not lose any money." The key to paying its own way they felt was securing affiliation with one of the major networks. No one in the group had any experience in broadcasting though and they didn't realize that networks rarely, if ever, consider granting affiliation to a station until it has been on the air for at least six months. When the group realized they would have to put up $2 million to build the station and another $500,000 in operating capital for the first year without any assurances of network affiliation and the national advertising that comes with it they began to back off from the project. Rainsberger became seriously ill during this time and the group allowed the application to die in 1971. Four years later, Varecha was sitting in his WTAO studio interviewing someone he calls "a fat Daley politician from Chicago. And I begin to think, 4I Business News V SCOTT . , .' r " I J L f j y ( f4 . S MONISOVtH I 13 J HJMStmO I o I I ' rif I I'UNGMAM I I Edardswill'l I fcij J I f Ll"" ' CLINTON j .Salrnn fr I Belleville I .j 'Centralis g 1 M V I WASHINGTON I I I P M .1 I MT Vernon I - l-.J RANDOLPH 1 Pl""V J "Seswr I HAVIi.Tr-. I WHITE MM .e. DuQuom Bentonl I SteeleviHe Jr rANLiN I JL V f Hnrrin 'Johnston City v''' vlorohysooro . I W.LLitMVjN . Hamshurq f Carbondalel f V I I l HABpiNjI A.-j-H i I Effective range of proposed new channel 13 TV station wish the people out there could see this guy's eyes and his face.' " Shortly thereafter Veracha and his wife, Debbie, formed Pyramid Broadcasting. Corp. and began laying the groundwork for an application to operate an independent station on Channel 13. Their hopes were momentarily dashed when they discovered that someone else was preparing an application. "But then we found out the other application was for a satellite station," says Varecha. FCC rules mandate a preference for independent stations, so Varecha breathed a sigh of relief. 4 4 We figured we'd beat them out of the box," he says. But Varecha didn't know who the competition was. And Tom Mellon Evans, owner of Evans Broadcasting, is a man who doesn't like to lose. Depending on your point of view, Evans has developed a reputation as being one of the most ruthless or most efficient businessmen in the nation. A 1976 Business Week magazine profile commented that he is "hailed as a financial genius and damned as a corporate pirate..." He's called a pirate because the companies for which he serves as chairman Crane Co. and H.K. Porter Co. have made millions swallowing smaller companies. His critics charge that he has little regard for anything but the dollar. In the Business Week article, a banker commented that "stockholders out there could do a lot worse than have Tom Evans mind their money." (Repeated efforts to contact Evans in his Wall Street office proved fruitless, but Evans Broadcasting's views on Channel 13 are articulated in numerous legal briefs the company has filed with the FCC.) Evans' reputation didn't frighten Varecha in 1976. The FCC is bound by its own rules to give preference to applications for independent stations over those for satellite stations. Varecha figured there would be a legal battle, a few thousand dollars in legal fees and then he would get the right to operate Channel 13. Legal battles are expensive, though, and while Varcha may have had a better application, Evans had more much more money to prolong the legal battle. So legal brief followed legal brief, for almost three years. Finally, in December 1978, Varecha withdrew his application after Evans agreed to pay $43,000 of the legal expenses he had incurred and hire him as a 750-hour-per-year consultant for the next five years at $35,000 per year. The FCC questioned that arrangement and Evans and Varecha subsequently amended their agreement so that Varecha was to be paid $20,000 for 1,000 hours of work each year for the next five years. "He ate me up in legal costs," Varecha says. "I owed everyone money and I was facing another $50,000 to $100,000 in legal fees before this thing would be over. There was no way I could continue to fight those people. They're in a different league. I had to give in to them." With Varecha out of the way. and no WANTED SCFtAP ME Car Batteries Copper Aluminum Radiators Air Conditioners Irony Aluminum Transformers PH. 618-985-6931 TAL Brass Lead Starters Electric Motors Painted Siding Scrap Iron & Steel OPEN: 8-5 MON-SAT GARY'S METALS ROUTE 3, BOX 290 - CARTERVILLE. IL 62918 Special Prices on Large Lots (We now have truck scales to better serve you) other applications for Channel 13 on file, the FCC granted a construction permit to SIBC. It was then that the Citizens Committee asked the FCC to rescind SIBC's construction permit and initiate a study to determine if Southern Illinois can support an independent station. Assuming that the FCC determined the area could support an independent station, the Citizens Committee wants the FCC then to accept new applications for Channel 13. And they hope one of those applications would be for an independent station. So far, no group has expressed an interest, but Garner is confident that "if the FCC opens it up, someone will come forward." That optimism is not shared by Varecha. He says he tried for three years to obtain financing in Southern Illinois for his proposal and was turned down everywhere he went. "I went to every bank in Southern Illinois," he says, "and no one would help me." Varecha gets emotional as he tells how he "knocked on every banker's door within 70 miles. But it was a startup operation. There was nothing to prove that it could make money and bankers fear that kind of project. "And it was an intangible," he adds. "Most of the value of a station lies in your ability to operate. There are no assets you can see. If I was a farmer and had two cows and a tractor, they could understand that. It's true too that my resources probably were not strong enough to make them comfortable." Varecha says he did not have the necessary cash to finance his share of the operation but thought he would be able to borrow on the strength of his ownership in WTAO. Garner thinks Varecha's inability to invest more of his own money in the project is the main reason he couldn't find financing. "The problem with Varecha's proposal," says Garner, "is that he had to have 50 percent of the station even though someone else was picking up the tab. He wanted people to carry him and it was an impossible deal. Just because they didn't pick up Varecha's proposal doesn't mean they won't pick up another." Varecha admits it might have been easier if he would have been willing to settle for a minority interest in the station "but that would have defeated the purpose of having a station," he says. He says he was ready to settle for a minority interest when a Carbondale investor offered to provide money for the project if he could get Evans to sell Channel 30. Trade sources indicate that Channel 30 has a market value of close to $14 million and the Carbondale iiH vestor could easily afford that much, Varecha says. "But he (Evans) laughed at me when I offered to buy Channel 30." Varecha finally obtained financing from a New York investor after paying a $20,000 finders fee to a broker. However, the financing was contingent upon Varecha's obtaining a construction permit for the station. That meant Varecha had to bear the burden of all the legal expenses involved in obtaining the permit a burden that ultimately proved too much. But the Citizens Committee is unlikely to give up its case, according to Garner. He says they are ready to take the case all the way to the Supreme Court if the public interest law group will continue to provide its free legal services. There is a trace of bitterness in Varecha's voice as he laments "I spun my wheels for three years and no one ever offered to help. Wrhere were these people then?" "The man who was running the Mount Vernon Chamber of Commerce wouldn't even talk to me at first. I talked to clubs and groups and they all thought it was a great idea but they didn't want to help." Garner replies that so long as Varecha was pressing his application for an independent station "there wasn't any need for us to get involved." Although he would have no objection to Varecha obtaining the license for Channel 13, Garner says he would rather see an alternative form of ownership where perhaps 60 percent of the stations's stock would be owned by a group of area businessmen and the remaining shares would be sold to individuals in the community. Varecha dismisses that idea as impractical and says Garner "has no idea what it takes to run a television station." . Although the Citizens Committee and Varecha recently have been less than amicable, Varecha has provided the Citizens Committee with its best evidence to support its contention that an independent station would be economically viable. Varecha's original proposal details the economics of the proposed station and the Citizens Committee has continually referred to it in its attempts to refute SIBC's claim that an independent station would be a financial loser. SIBC attorneys maintain that Varecha's proposal was not realistic. A major point of disagreement is how many people the station would serve. Although l.l million people live in the 75 mile radius of Channel 13's signal (according to 1960 census estimates, SIBC says the signal would reach only 165,000 peoDle. SIBC also points out that Mount Vernon, with a population of 18,000, could hardly be expected to provide sufficient advertising revenue. SIBC does not consider the possibility of obtaining advertising from other communities in the station's viewing area. There also is disagreement over the significance of the station's "Area of Dominant Influence." The nation is divided into more than 200 ADIs and St. Louis, the ADI that the station would most likely be placed in, is the nation's 13th largest. SIBC says this would make the cost of programming for an independent station prohibitive since stations pay for programs according to the size of the ADI they fall into. Varecha says that since Channel 13 would not serve St. Louis, the area that provides most of the population in that AD, prices could probably be negotiated for less. Even if programming were more expensive, Varecha says being in the 13th largest ADI would be a boon to the station, since national advertisers typically spend most of their money to buy time from stations that fall into the larger ADIs. SIBC does not address that issue. In his proposal, Varecha outlines plans to put the station on the air for $500,000. The Mount Vernon businessmen had estimated it would cost $2 million to put the station on the air, but Varecha says he could do it for the lesser amount by buying used equipment. Varecha's proposal also uses several accepted industry formulas that indicate the station would gross at least $800,000 in its first year of operation while incurring only $500,000 in operating expenses. Significantly, although Varecha is now in Evans' employ, he says he has refused Evans request to refute the efficacy of that proposal. "I'm still convinced an independent station would work," Varecha says. "As far as I'm concerned, this Citizens Committee is working for me." Varecha says he thinks the Citizens Committee has a shaky legal case "but if they succeed in opening this thing up again I stand ready and willing to put an independent station on the air." . Varecha's contract with Evans contains a non-competition clause, but he says it probably wouldn't be applicable if SIBC lost its construction permit for the station. Although he doesn't think "that woman and her attorney" as he refers to the Citizens Committee, will succeed in -their efforts, he says he suspects that Evans may ultimately sell the station. Under Varecha's agreement with Evans, he has first-refusal rights. Once in operation, Varecha estimates the station would have a market value of $14.5 million. Evans' attorneys admitted to the FCC in legal brief filed in the case that Channel 30 was for sale last year, but they say it is not for sale at present. Under FCC rules, it would be illegal for Evans to be negotiating a package sale of Channel 30 and Channel 13 before the latter is in operation. Varecha speculates that Evans may be tiring of the broadcast business because of all of the regulations that govern the industry. "And there is also the possibility that after he defeats this Citizens Committee, he'll just walk away from the whole thing. He is not the kind of man to back down from a fight, but after he wins he may decide that the station isn't worth it." On Varecha's office wall in his home is a quote attributed to Tom Evans in a June 15, 1977 Forbes Magazine article. "Many takeover values exist because most presidents are afraid of a fight." Garner, who has only recently begun to spar with Evans in the legal arena, is still confident that the FCC will change its mind and rescind SIBC's construo tion permit. He talks of taking the case all the way to the Supreme Court if necessary. But he concedes that it won't be easy. He says a Wall Street Journal editor recently dismissed his story with the comment: "If vou beat Tom Evans, call us back. THAT would be a story." 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