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IMG keeps rights to carry WVU games — for now

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MORGANTOWN, WV -

IMG College and West Virginia Radio Corp. each won a round and lost a round as their dispute over who will broadcast West Virginia University football and basketball games moved to court this past week.

For now at least, football games will be on the new network formed by IMG College after it won the Tier 3 broadcast rights in two rounds of bidding earlier this year.

WVRC sued WVU, IMG and others after IMG had won the contract in those two different rounds of bidding. Circuit Judge Thomas Evans, on Aug. 26, denied IMG's motion to dismiss the suit, but he also denied WVRC's request for a temporary injunction, nullifying IMG's contract with WVU and preventing IMG from bidding again.

Listed as defendants in the suit were, among others: the WVU Board of Governors, IMG College and West Virginia Media Holdings. West Virginia Media Holdings is the parent company of The State Journal, WOWK-TV in Charleston/Huntington, WBOY-TV in Clarksburg, WTRF-TV in Wheeling and WVNS-TV at Ghent, near Beckley.

The case could end up in the state's new business court system, as that is where Chief Justice Brent Benjamin has suggested it belongs, Evans said. 

The attorneys for WVU and West Virginia Media Holdings said they would ask their clients for their thoughts on transferring the case. Evans asked the attorneys to have their answers by Aug. 30.

The hearing was well-attended by lawyers. Anywhere from 20 to 28 lawyers were present in the courtroom in the Monongalia County Courthouse at any one time during the hearing.

Their day in court Aug. 26 included an explanation of why WVRC did not cooperate in an investigation of WVU's bidding practices — an investigation it had requested. And the day ended with WVRC making a surprise offer to have some of its stations broadcast WVU games in areas where IMG had not signed affiliates.

No injunction

Evans said WVRC's suit raises "very serious allegations of misconduct." He said WVRC has suffered irreparable harm to its business reputation after losing the broadcast rights it had for more than seven decades, and he said there was a likelihood that the company would succeed in its suit.

"Not all the harm is irreparable, but some of it is," he said.

Evans would not grant the injunction. But he said not granting the injunction is not the end of the injunction issue, either. A court could always find the bidding process was tainted and invalidate the IMG contract altogether, he said.

But if the court were to rescind the IMG contract now, that company could have legal problems with the companies it does business with, he said.

"It would be improvident of the court to issue a preliminary injunction," Evans said. "The amended complaint sets out a course of conduct that cannot be ignored.

"This is not to suggest a permanent injunction would not be adjudicated in this court."

West Virginia Radio Corp. partnered with WVU's Mountaineer Sports Network for more than 70 years. MSN produced the games that were carried over WVRC's network, while WVRC produced pre- and post-game shows.

Last year, WVU issued a request for proposals for what are known as Tier 3 rights. Those are the rights to broadcast games on radio, to produce the coaches' shows and to handle certain sponsorships. Tier 3 rights also include the right to televise one football game per year. Rights to other football games are negotiated by the Big XII Conference.

IMG College handles Tier 3 rights for 205 schools in the United States, including Big XII members Texas, Kansas, Texas Christian and Baylor.

WVRC is asking the court to return Tier 3 rights to the way they were on June 19. At that time, WVRC's contract with WVU had expired and IMG had not signed one with WVU.

Competing offers

Attorney Frank Simmerman, representing West Virginia Radio Corp., called Frederick  "Happy Joe" Parsons, vice president and general manager of WVRC's MetroNews Radio News Network, to the stand. Parsons testified that WVRC produced and distributed MSN broadcasts for WVU but was not paid for it.

In fall 2012, in response to WVU's RFP, WVRC offered to let WVU retain its existing business model. The university had a $5.3 million "book of business," as Parsons called it. About $770,000 in trade accounts brought WVRC's bid up to about $6.1 million a year.

Using the historic rate of 3 percent growth per annum, the WVRC bid was worth more than $72 million over 10 years, Parsons said. The IMG base guarantee for those same 10 years was about $70.76 million, he said.

Parsons produced two maps, one showing the radio stations and coverage areas of the WVRC network. The other map showed the stations and coverage areas of the network IMG has assembled. WVRC stations have 700,000 people in their areas, while IMG has fewer than 300,000, Parsons said.

On cross-examination, Jeff Wakefield, representing WVU, noted that WVRC did not bid on the second RFP but IMG did, offering WVU a minimum guarantee of $86.5 million for 12 years. IMG's bid allowed WVU to retain certain rights, such as the $500,000 Coca-Cola will pay, and it allows WVU to sign direct sponsorship agreements with United Bank, WVU Health System and Nike, Wakefield said.

When Wakefield asked Parsons if WVRC's $72 million bid was a guarantee, Parsons said it was "no guarantee, but based on history, absolutely."

Parsons said on Feb. 21, WVRC owner John Raese told WVU President Jim Clements that he wanted the RFP process rebid. Raese also wanted West Virginia Attorney General Patrick Morrisey to investigate irregularities in the bid process.

Morrisey conducted an inquiry into the first RFP. Parsons testified that he was not interviewed by Morrisey's office and he did not contact Morrisey to offer information. Parsons said he knows of no WVRC employee who supplied information to Morrisey.

As to the coverage areas, Wakefield asked Parsons if his interpretation of the potential audience includes people who would listen to WVU games on satellite and digital transmissions, which IMG will offer. Parsons said he could not answer that, as he does not know how many people in West Virginia have equipment that can receive digital or satellite transmissions.

Attorney Ben Bailey, representing West Virginia Media Holdings and its CEO, Bray Cary, asked Parsons what WVRC's plans are for WVU football game day broadcasts as the situation currently stands. Parsons said the network plans to have pre- and post-game shows along with commentary during the games. Bailey also asked Parsons about the revenue projections for WVRC's football programming this year versus last year. Parsons said the general managers of the local stations have done those projections, but he has not seen them.

"It's substantial, but I do not know the numbers," he said.

No cooperation

Simmerman next called Robert Gwynne, attorney for West Virginia Radio Corp., to testify. Gwynne said he attended the initial meeting with Raese, Morrisey and Assistant Attorney General Dan Greear to discuss the inquiry into the first round of bids. Gwynne said WVRC had requested documents from WVU pertaining to the bid evaluation process.

"They were substantial and let's say overdue," Gwynne said.

Gwynne testified WVRC tried to obtain the information before the meeting with Morrisey, but was unsuccessful. Gwynne also said Morrisey asked him if WVRC would participate in providing materials to the Office of Attorney General.

Gwynne said WVRC's response was that as soon as Morrisey's client — that is, WVU — complied with the Freedom of Information Act and turned over the documents, WVRC would send them along to the attorney general's office.

"The best way to describe it, he got up in a huff," Gwynne said. "He left the room without any further meetings as we suggested."

WVRC would have cooperated with Morrisey's inquiry if WVU had supplied the information the company had requested, Gwynne said.

During questioning by Wakefield, Gwynne said WVU had said it turned down the FOIA request because the RFP process was ongoing.

Gwynne conceded that Raese requested that the attorney general look into the RFP process, but he recognized later "he was wrong in making that request."

Gwynne also said he would not describe what Morrisey's office did as an investigation.

"That was a lawyer reviewing his client's activities," Gwynne said.

The report Morrisey's office issued was not a full disclosure, as some parts were limited by attorney-client privilege, Gwynne said.

Arguments

After Parsons and Gwynne finished their testimony, the attorneys made their cases to the judge.

Simmerman said West Virginia Radio Corp. was not saying it was entitled to the bid, but the court has the authority to set aside the awarding of a bid in the case of "a substantial abuse of discretion."

Wakefield noted that the hearing was held five days before the WVU football season starts. WVRC wanted the court to set aside a contract. Doing so would inflict substantial harm on WVU, IMG College "and any number of third parties who are not in the court this afternoon," Wakefield said. Chief among them are the radio affiliates IMG had signed to carry the game, he said.

WVRC's contract with WVU had expired May 15, so resetting the situation to June 19 as WVRC requested would mean WVU would be without a media rights partner, Wakefield said.

"They want the court to grant them by default that which they did not bid for," Wakefield said.

The temporary injunction, if granted, would amount to a permanent injunction because it would prevent IMG from bidding on yet another RFP, Wakefield said.

WVRC did not file for the injunction until August, at which time there was a contract that WVU and IMG had been operating under for six weeks, he said.

WVU did what WVRC wanted. It canceled the first bids, asked for an attorney general's investigation and rebid. The WVU athletic department stayed completely out of the rebid process, Wakefield said. WVRC has no standing to sue over the second RFP because it chose to not participate in the bidding process, he said.

Then there's another question for the court to consider, he said. If the court were to order a third RFP bid, who would bid on it?

Bailey argued WVRC's request for a temporary injunction met none of the legal requirements for one.

In rebuttal, Simmerman argued that the court could not measure the loss of public confidence in WVU's procurement rules and procedures. WVRC did not bid on the second RFP, but it is exercising its right to protest, he said.

A new proposal

As the hearing neared its end, Simmerman offered a compromise. He said his client — West Virginia Radio Corp. — would agree to an injunction canceling the contract between WVU and IMG while allowing IMG College to keep the football broadcasts if WVRC could have the men's basketball broadcasts for this school year.

WVRC would offer three of its stations for football broadcasts in the Elkins, Romney and Keyser markets under terms of the old contract with Mountaineer Sports Network. It also would offer nine of its stations to IMG for basketball broadcasts under this proposed compromise.

Wakefield said that was the first he had heard of such an offer.

Evans said he was not inclined to agree to it.

"Absent an agreement, I would be very reluctant to do that and cram it down people's throats," he said.

Wakefield said WVRC was trying again to do in court what it did not bid on.

After that, Evans made his ruling to deny the temporary injunction.