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News: Analysis & Commentary: DEALS
FOR PAT CHOATE, TALK RADIO TURNS TO STATIC
A messy lawsuit against Perot's running mate and his network
Ross Perot's Vice-Presidential running mate, Pat Choate, has battles going on more fronts than the Presidential campaign. An effort by Choate to buy a radio network and use it to promote U.S.-made goods while airing a broad spectrum of political programming has degenerated into a nasty dispute with a popular talk-radio personality. Chuck Harder, founder of Peoples Network Inc., based in White Springs, Fla., has sued Choate and Choate's United Broadcasting Network and its backers, which include the United Auto Workers. Among Harder's charges: that the Choate group has paid up only 10% of the $3.5 million purchase price.
Sound messy? It is, partly because this was one odd alliance from the start. Choate launched the deal with Harder early last year, only to resign as chairman of UBN and put his stock in trust in September, when he became Perot's running mate. An author and economist known for his economic nationalism, Choate had been a frequent guest on Harder's For the People show.
Harder and Choate had common sensibilities. Harder had founded the network in 1989 and built it into more than 280 affiliates in small to medium-size towns, mainly in the South and Midwest. His business-bashing, anti-Washington populism quickly attracted a loyal following. But by 1993, the Internal Revenue Service was questioning Peoples Network's designation as a not-for-profit organization. The IRS's beef: Harder was pitching products such as septic-tank cleaners and bug zappers on the network. The IRS never filed a formal action against him, but Harder agreed anyway to try to find a buyer who would run the network as a for-profit venture. The purchase price would go to Harder's foundation and Harder would keep doing his programs.
PLUGGING PRODUCTS. Choate came up with a novel idea. He and longtime associate Edward A. Miller, former president of the nonprofit National Center for Manufacturing Sciences, wanted to use the network to help small manufacturers sell their U.S.-made products. Company reps would appear on shows to be interviewed and plug their products. United Broadcasting was formed with Choate as chairman and the UAW as its main investor. By last May, United agreed to buy the assets of Peoples Network and associated real estate owned by Harder, including the aging hotel from which it operated.
Harder became a stockholder in United Broadcasting and, for a short time, a network personality. Indeed, Miller says, the price would have been much lower without the popular Harder's participation. Even though the deal hadn't closed, UBN began operating the network and renovating the hotel.
This amicable arrangement soon dissolved in rancor. Harder says Choate and Miller told him to tone down his criticism of President Bill Clinton because of the involvement of the UAW, a Clinton ally, in UBN. He also gripes that longtime employees were fired, that too much money has been spent on miscellaneous items, and that he was expected to spend too much time pitching products. Then there's Harder's claim that UBN has never paid up. Harder has been on leave from the network for two months and now complains UBN won't let him broadcast. "I find it to be untenable that they don't own the network my wife and I built and yet they won't let me on the air," he says.
UBN representatives paint this as a case of seller's remorse and say that Harder is using Choate's notoriety to blow a contract dispute out of proportion. Miller admits that Harder was "reprimanded" in August for remarks that compared Clinton with Adolph Hitler but says the UAW is a passive investor and has never dictated content (the union didn't return calls).
The real fight now, both sides agree, is largely over the terms under which Harder will go his own way. UBN wants him to sign a noncompete agreement that would ban him from virtually all radio broadcast appearances. But it failed to get a court injunction on Oct. 21 that would have prevented Harder from appearing on Talk America 2, a talk show with 150 affiliates, 60 of which signed up recently just to carry Harder's program. Losing Harder could be a tough blow for the Peoples Network. As UBN and the UAW are finding out, in talk radio it's not just the message but the messenger that counts.By Gail DeGeorge in Miami