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TV Note: Financing soured WQEX deal

Saturday, November 23, 2002

By Rob Owen, Post-Gazette TV Editor

Diane Sutter's Shooting Star Broadcasting terminated its plan to buy WQEX from WQED Multimedia after the PBS station's board of directors rejected her attempt to modify the terms of the sale.

In the original deal, Sutter was to pay $17.5 million at closing plus a $2.5 million promissory note to be held by WQED for up to 7 1/2 years. With the support of her equity partner, Alta, a broadcast venture capital firm, she had lined up $14 million at closing and a $6 million promissory note that would be paid in five years. The total cost of the station would remain $20 million.

In letters to the station in early October, Sutter attributed the need to change the terms to the "decline in prices for broadcast properties and a difficult financing market."

"Shooting Star has not sought to re-negotiate the purchase price...," Sutter wrote. "The only change requested by Shooting Star, at the insistence of its investors and lenders in light of deteriorating market conditions and a very difficult financing environment, is an increase in the amount of the promissory note to $6 million."

"I came as close as I thought I possibly could with the offer that I made, which was not an inconsequential offer," Sutter said in a phone interview yesterday. "I did not ask them to reduce the price except to carry additional paper at a better time frame that could be looked upon as a way to enhance the dollars put into their program endowment."

WQED president George Miles said it was the reduction in cash that soured the deal.

"We didn't feel we should be financing her deal by doing notes payable. The $2.5 million was the maximum we were going to do. The $6 million is almost one third of the transaction. We were not going to accept more paper. That was the bottom line."

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