LCMS to Sell KFUO

Via stltoday.com:

The Lutheran Church-Missouri Synod will sell its 61-year-old classical music station, KFUO-99.1 FM, to Gateway Creative Broadcasting, the LCMS and Gateway announced today, for $18 million plus $8 million in interest over a 10-year term.

The sale will become final in March, pending the approval of the Federal Communications Commission and transfer of the license.

Des Peres-based Gateway, as Joy FM, broadcasts Christian contemporary music. It presently owns two “rimshot” stations, in Potosi and Bowling Green, that do not penetrate St. Louis County or city.

The LCMS will finance the sale, with a 10-year balloon note. According to sources close to the Synod’s board of directors, Gateway will pay $150,000 immediately, $1.35 million at closing, an additional $1,500,000 in interest and amortization in the fourth year, and the remainder in the tenth year.

Gateway also owes $600,000, due in March 2011, on the two rimshot stations.

The station was never advertised, and the sale was handled in secrecy. LCMS treasurer Tom Kuchta and board member Kermit Brashear, an Omaha lawyer and politician, were behind the sale. Brashear handled the negotiations.

The board reportedly decided it wanted to sell to a Christian organization. However, said the Rev. Dr. Paul Devantier, senior vice president at Concordia Seminary, Brashear refused to acknowledge a Lutheran group which wanted to buy the station and retain the format.

LCMS second vice president Paul W. Maier, a professor of history at Western Michigan University in Kalamazoo, charged that the board had ignored a petition signed by 41 church leaders, and abandoned its responsibilities. At its August meeting, the board turned over full authority to sell the station to Brashear. No discussions within the Synod were ever held.

“That’s difficult to understand,” said Devantier, “why that group or any group within the church was never able to submit a bid to purchase the station.”

Another group, the Circle of Friends headed by Noemi Neidorff and Donna Wilkinson, also sought to purchase the station. According to Neidorff and Wilkinson, Brashear also ignored their requests for a copy of the term sheet for the 100,000-watt station.

Instead, he sought to sell the Friends Gateway’s rimshot stations, an HD channel on KFUO’s signal, and “intellectual property” for $5 million. HD technology requires a special receiver; a radio industry expert, Steve Robinson of WFMT-FM in Chicago, has called it “dead on arrival.”

Devantier questioned the terms of the sale, and what advantage there might be to the LCMS.

“There’s simply not a lot of cash being transferred,” he said. “The church body is making it very easy for (Gateway) to purchase the station, offering to finance it. If that opportunity, if those same terms had been offered to individuals in the (LCMS) and the community, which has been so supportive, the station could have maintained its format, the tradition of the station, and its service to the church, the community and the world.”

Brashear, a former speaker of the Nebraska legislature, has reportedly waived his fees up to $100,000, an amount which informed observers believe has already been passed in the months of negotiations.

After learning of the sale, Neidorff and Wilkinson issued a statement that said “the entire process leaves many questions unanswered.” It also expressed “dismay that Kermit Brashear was not willing to negotiate with the (KFUO) Radio Arts Board or provide us upon our request the terms of any sale.”

Opponents of the sale, both within the LCMS and the Friends, said that they were considering appeals to the FCC and legal challenges to the sale.