Leaders of KDHX pressed pause on their planned sale of the community radio station to Christian radio network K-LOVE, asking a bankruptcy court judge on Wednesday to schedule a hearing for establishing the rules and timeline for a Zoom auction of the station's broadcast license and other assets.
KDHX had filed a motion with the court seeking permission to sell to K-LOVE but shifted tactics in light of a competing bid that arrived Monday from a different religious broadcaster — Gateway Creative Broadcasting, which owns local stations 99.1 JOY FM and BOOST Radio.
Gateway Creative Broadcasting offered $5.5 million for KDHX. The community station previously reached an agreement with K-LOVE for at least $4.3 million and up to $4.8 million if the sale goes through quickly.
KDHX leaders are pushing for a quick sale either to K-LOVE or Gateway Creative Broadcasting, while station supporters asked for more time to come up with a competing offer — coupled with a plan to keep KDHX on the air.
"There are a lot of moving parts here. Things probably need to slow down somewhat, but not slow to a snail's pace," said Judge Kathy A. Surratt-States.
K-LOVE attorney Andrew Magby said in court that KDHX is a "depreciating asset" and that he can't guarantee how long K-LOVE will remain interested in buying. KDHX lawyer Robert Eggman said a quick sale is best for the station, in part, because fees related to ongoing litigation are tapping heavily into KDHX's lifeboat loan from K-LOVE.
"We've been hearing for months, if not years, that this group is going to come in with money and save the day," Eggman said of activists who've criticized KDHX leaders. "We still have nothing. If you have the money, show us the money."
Attorneys for the activist group League of Volunteer Enthusiasts of KDHX argued that any plan to settle the station's $2 million debt while also keeping it on the air is a better service to KDHX's mission than a more financially lucrative sale that would result in a religious broadcaster replacing the community station on the radio dial.
"This whole thing is just being pushed forward at breakneck speed for literally no reason," said bankruptcy attorney A. Thomas DeWoskin. "I can't think of anything that is more contrary to the needs of the business than selling the license. It makes no sense. I do not see sound business judgment behind their plan."
The hearing to set up the timing and rules of a station auction will be on May 13. Any formal approval of the winning bid wouldn't happen until a later date. But first comes a May 5 hearing at which opponents of the sale will seek to lift the stay on a St. Louis Circuit Court case that was automatically paused when KDHX filed its petition for bankruptcy in March.
The Circuit Court suit challenges KDHX's move to dismiss almost all of its associate members, many of whom would have voted against the license sale if they retained the voting rights that came with their membership.
LOVE of KDHX attorney Benjamin Askew argued Wednesday that KDHX failed to follow the organization's bylaws in a rush to sell. Eggmann, the KDHX attorney, said the board acted properly.
KDHX bylaws say two-thirds of voting members must approve any sale of the license. Station leaders dismissed almost all of the station's members when KDHX stopped airing live broadcasts on Jan. 31. Some of the newly dismissed associate members successfully sought a judge's order that allowed them to participate in a subsequent annual meeting, where many expected to field a sale proposal.
Yet board President Gary Pierson and Vice President Paul Devers held the floor throughout the meeting without discussing a sale — despite KDHX at that point having already negotiated a potential sale for months with two Christian broadcasters. Gateway Creative Broadcasting said in a court filing this week that it entered into a letter of intent to buy KDHX in December and was surprised later to learn of KDHX's bankruptcy filing and deal with K-LOVE.
KDHX leaders then held a meeting on March 3 with "the board and associate members" and voted to sell, according to court filings. There were nine eligible voters — eight board members and a single associate member who had not been dismissed.
Pierson declined last week to comment on the crucial meeting, which was not publicized at the time, or to provide meeting minutes or details about the vote to sell. He said the sale to K-LOVE is the best option facing a nonprofit organization that has had financial struggles for years, exacerbated by recent criticism of KDHX leaders from listeners and donors.
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