The proposed purchase of a commercial television station by the Alabama teachers’ and public-employees’ retirement systems has sparked a major controversy in the state and underscored a political power struggle between the Republican governor and the Democratic head of the Alabama Education Association.
Gov. Guy Hunt has vowed to fight “with everything in our power” to keep the Retirement Systems of Alabama from taking over WSFA-tv, the NBC affiliate in Montgomery and the state capital’s dominant station.
The retirement funds, acting through a subsidiary called rsa Media Corporation, reached an agreement Dec. 15 to purchase the station for $70 million from Cosmos Broadcasting Corporation, based in Greenville, S.C. The sale of the station is awaiting approval by the Federal Communications Commission.
Pension officials last week said they believed it would be the first purchase of a television station by a public pension fund.
“We are not aware of any other pension system that has done this,” said William Walsh, an official of the Alabama retirement systems.
Other public entities own commercial broadcast properties, including the city of New York and a number of state universities, according to Alan E. Glasser, a staff lawyer with the Federal Communications Commission.
But Bruce Hineman, executive secretary of the Texas Teacher Retirement System said he knew of no other state pension plan that had purchased a commercial station.
“It is unique,” Mr. Hineman said. “I think everyone will be monitoring their action closely.”
The proposed sale has drawn opposition not only from Mr. Hunt, but also from the state broadcasters’ association, the state press association, and other groups. They see the move as a potential threat to press freedom because it entails the control of a commercial news outlet’s operations by a state entity.
“We do not believe the purchase of WSFA or any other television station or any other news organization in this state is something that should be done with funds from state government,” the Governor said in a statement. “It’s a constitutional thing. It’s vital to the survival of constitutional government that we maintain the freedom of the press.”
But Mr. Hunt’s opposition seems to some to be rooted in political considerations. The chairman of the teachers’ retirement-system board, by virtue of his position as executive secretary of the Alabama Education Association, is Paul Hubbert, whom political analysts describe as a Democratic powerbroker and leader of a coalition of liberal forces in the state.
The Governor has said he is worried that the retirement system, with Mr. Hubbert’s support, will try to buy other television stations around the state in a grab for media power.
Mr. Hubbert termed the Governor’s charge “ridiculous,” and said the retirement system’s decision to purchase the station was made solely for investment purposes.
“There are very few investments that can be made that are as profitable as a TV station,” Mr. Hubbert said. “It is a cash cow. It just makes money.”
Retirement Systems of Alabama is made up of the teachers’ retirement system, which includes teachers and other education employees and has about $6 billion to invest, and the state employees’ system, which includes other state workers and has some $2 billion in assets.
Each pension fund has its own board of directors, but they have one administrative staff under a single director, David Bronner. The twofunds pool their resources for most investments, officials said.
Mr. Hubbert confirmed last week that the retirement system was looking into the purchase of other stations, including one in Mobile.
“Upon the advice of our investment counsel, we did conclude that the whole communications field was a good area for investment,” he said.
The sale of the station still faces a number of legal hurdles. First, it must be approved by the Federal Communications Commission, a process that an agency spokesman said usually takes 60 to 90 days.
Roland Nachman, a Montgomery lawyer, said last week that he would file a petition with the fcc asking commissioners to deny the sale. Though Mr. Nachman would not disclose who his client was, he said the petition would cite First Amendment concerns over a state entity’s ownership of a major media outlet.
“We feel there are defects in the organization of the station ownership,” he said.
But Mr. Glasser of the fcc said opponents of the sale may not have much legal ground to stand on.
“From the fcc’s standpoint,there is no prohibition of a state’s owning a commercial station,” he said, adding that the agency would not interject itself in any dispute over interpretations of state law.
How much authority Alabama law gives the retirement systems in making investment decisions is a second legal area that has prompted debate.
In an effort to limit political interference, Mr. Bronner, the director of Retirement Systems, has made it his policy to keep investment decisions confidential, bypassing, at least initially, members of the investment committee, a three-member panel of state officials charged with signing off on the decisions.
State Finance Director Robin Swift, a member of the investment committee of the teachers’ retirement board, raised no objections to the station purchase at the time it was announced. But now he refuses to sign the purchase agreement and has gained the backing of Governor Hunt.
In an effort to preempt any lawsuits over the sale, the retirement systems’ board has asked a state judge to decide whether Mr. Swift can block the deal.
State law offers conflicting provisions, stating that the retirement board has “full power” to make investment decisions, while also giving the investment committee veto power; it requires the support of all three members for investment decisions involving more than $500,000.
The state attorney general has issued an opinion siding with the retirement systems’ board, saying Mr. Bronner can make investments within the guidelines set by the board without being vetoed by the investment committee.
But the Governor called the opinion “worthless,” and said the deal for the television station is “completely null and void.”
According to Mr. Hubbert of the Alabama Education Association, the sale did not become a hotly debated issue until former Gov. Fob James, who plans to seek re-election next year, criticized it and urged Mr. Hunt to take action to block it.
The Governor was consulting with a lawyer last week to determine the best course of action for blocking the sale, said Stacey Rimer, a spokesman for Mr. Hunt.