King Bee

Bee Broadcasting's legal battle, and plans for Missoula



Benny Bee Sr., the Flathead Valley’s only media mogul, calls it a “coming to Jesus type meeting.” It happened on Nov. 19, 1999, at Christ Lutheran Church in Whitefish. That day, Bee Sr. says he and his long-time friend and partner—Jim Paulson—tried to sort out their differences. Specifically, Bee Sr. says, he wanted Paulson to stop stealing from Bee Broadcasting—a company both men helped build into the most powerful collection of radio stations in Northwest Montana.

By all accounts, the meeting didn’t go so well. Bee Sr. presented Paulson with a list of advertising accounts and trades done off the books. He alleged that Paulson was setting up unauthorized advertising trades that benefited him personally. Paulson admits to many of these trades, but claims that was standard procedure at Bee Broadcasting, which owns four stations and commands 55 percent of the radio market in the Flathead.

A month later, and just two weeks before a contractual option to buy back Paulson’s 5 percent interest in Bee Broadcasting expired, Bee Sr. did something he says he had tried to do before. The veteran broadcaster permanently severed ties with Paulson. He terminated his close friend—a pal he’d had since the 1970s, when Paulson and Bee Sr. worked at radio stations in eastern Montana.

The firing—and Bee Sr.’s reclamation of Paulson’s 5 percent interest in Bee Broadcasting—sparked a teeth-and-claws legal dispute. In January of 2000, Paulson sued Bee Sr. for breach of contract. Bee Sr. then countersued, accusing Paulson of stealing from the company. In both suits, Bee Sr. and Paulson accuse each other of slander. The former friends and business partners fired legal documents back and forth for nearly four years before a jury finally arrived at a verdict in August.

Bee Sr. was found liable of constructive fraud, of breaching Paulson’s employment contract and violating the state’s anti-blacklisting law. The jury also ruled against Paulson, finding that he had breached his contract and owed Bee Broadcasting $63,500 for income lost through unauthorized advertising trades.

The jury awarded $220,000 in compensatory damages to Paulson, and before any additional punitive damages were awarded, the parties settled the case privately. Both sides say they’re satisfied with the outcome, and all told, Bee Sr. will have to pay far less than the $1.3 million claim originally requested by Paulson.

For residents of the Flathead and radio listeners in Missoula, the ordeal has shed light on a company made rich by the formulaic allure of classic rock, modern country, “today’s hits” and conservative talk radio. Each of these formats is programmed with predictable offerings on Bee Broadcasting’s four stations: B98, The Bear 106.3, Mix 96 and News Talk 880.

“To me it’s a puzzle, and each piece of the puzzle is a station,” explains Bee Sr. “Granted, it’s cookie-cutter. But that’s why it’s efficient.”

Testimony during the recently settled lawsuit attempted to peg an exact value on Bee Broadcasting. The estimates ranged from $4.5 million to $14 million. Whatever the amount, the number figured into the proceedings because Paulson alleges that Bee Sr. didn’t want to share any of the proceeds if the company sold. Whitefish attorney Sean Frampton, who represents Paulson, says that was partially why Bee Sr. fired Paulson and took his 5 percent of the company back.

“There have been offers in recent years,” says Frampton. “We feel that was one of the reasons to get that stock back.”

Had Bee Sr. let his option to buy Paulson’s stock expire, Paulson “would have owned that stock forever,” says Frampton. That’s why, Frampton argues, Bee Sr. turned on Paulson and accused him of stealing from the company. “Now that he has all the stock, he can do anything he wants.”

Bee Sr. denies this, but confirms that there have been offers made on his company—and that he’s considered selling.

In 1998, a radio station broker approached Bee Sr., who at the time said he would sell out for $10 million. The value of Bee Broadcasting increased in 1996, thanks to federal deregulation, which allowed Bee Sr. to add KKMT to his lineup of stations. Today, the frequency is home to Mix 96.

Bee Sr. says he fielded a couple of offers in ’98 and ’99, but neither was for more than $5.5 million.

The potential sale of Bee Broadcasting was something Paulson and Bee Sr. discussed at length, says Bee Sr., sometimes during their routine breakfast meetings at Whitefish’s Grouse Mountain Lodge. At the time, both men liked the idea of cashing out, says Bee Sr., though each continued to draw handsome salaries and perks from the company.

Frampton alleged in court that in 1999 alone, Bee Sr. diverted for personal use $900,000 in company revenue. Meanwhile, Bee Sr.’s attorney—Phyllis Quatman—says Paulson was busy making unauthorized trades with station broadcasters. According to court documents, he had carpet installed in his home and a secret allowance at a local sporting goods store. A series of these unauthorized trades totaled “in excess of $125,000,” according to court records.

“[Paulson] wanted Benny’s money,” says Quatman. “And though he was getting a $140,000 a year salary, it wasn’t enough.”

Quatman believes Paulson felt entitled to more of Bee Broadcasting’s success, and that Benny had promised Jim (or J.P., as he’s known to friends) a larger cut of the profits. He felt like Benny had promised to make him a millionaire, says Quatman, and “that wasn’t happening fast enough.” So, continues Quatman, J.P. started siphoning off company revenue through unauthorized advertising trades.

“He’s getting the goodies and Bee Broadcasting is getting nothing,” says Quatman.

But profiting personally from advertising trades is “what J.P. and Benny did all the time,” insists Frampton.

There were certainly many things—from business deals to barbeques—that Bee Sr. and Paulson did together. Paulson drove the family car at the funeral of Benny’s first wife and served as best man at his second wedding. The Paulson and Bee children grew up together. Now in college, two of them sat at the back of the courtroom during the recent proceedings. One Bee, one Paulson, both philosophy majors; they passed the time in court exchanging books. Bee Sr. offers this anecdote as a contrast to his bitter falling out with Paulson.

“It really was like an ugly divorce,” he says.

During a recent morning interview at Bee Broadcasting headquarters in Evergreen, Benny shakes his head at the turmoil of the last few years. He’s dressed in a Polo T-shirt, running shoes and track pants. He’s relaxed, friendly and upbeat. But, as the recent lawsuit revealed, there is a bare-knuckle businessman behind Bee Sr.’s fatherly smile—one who went after his ex-partner in what Benny describes as an act of self-defense.

The back-and-forth snipping started after Paulson was fired in December of ’99. Bee Sr. alleges that Paulson tried to poison Bee Broadcasting’s client list by approaching advertisers and spreading false rumors about Benny and his company.

“The sales people were coming back saying, ‘We’re getting killed out there,’” says Quatman. Bee Sr. and his sales staff believe a $60,000 drop in ad revenue between January and March of 2000 can be attributed to Paulson’s alleged bad mouthing of the company. And in court documents, Bee Sr. accuses Paulson of threatening to “destroy the Bee radio empire.”

In retaliation, Bee Sr. circulated the contents of his countersuit, which cast Paulson in a very unflattering light. Documents were sent to potential employers, business associates and even Paulson’s mother. The jury found this to be a violation of Montana’s blacklisting law, which is designed to protect ex-employees from the ill will of former employers.

In the eyes of the jury, Bee Sr. may have demonstrated his capacity for ill will when, at one point, he lost his temper on the stand. Bee Sr. blames the outburst on inappropriate questioning from Paulson’s attorneys. He offers no apologies for the incident, but Bee Sr. is contrite about what he describes as his vindictiveness toward Paulson.

“I probably over-reacted,” says Bee Sr. of the blacklisting. And while both Paulson and Bee Sr. now wish to put their differences aside, the friction between them continues through the everyday competition of two rival classic rock stations. Bee Broadcasting’s B98 is currently in a head-to-head battle with the Flathead’s newest station, 103.9 The Monster. Both stations claim to be the home of the valley’s best classic rock, and now, each is trying to out-classic-rock the other.

When Paulson helped launch The Monster for the company that owns KOFI AM, he says he was looking to make an immediate impact on the market by steering advertisers away from B98 and Bee Broadcasting.

The new station is popular, says Paulson, because “Every song is a monster.” And by “monster,” he means classic tunes like “American Pie” and anything by Van Halen. Paulson thinks B98 is turning off advertisers by playing “alternative rock or some of that other stuff that gets out there.”

By Paulson’s definition, Pearl Jam and U2 qualify as alternative rock, as do other contemporary groups found in the rotation at B98. Paulson’s new boss—KOFI General Manager Dave Rae—says B98 is now retreating from these “new” groups in its attempt to compete with The Monster.

“[Bee Sr.] has already adjusted his format,” says Rae, whose company is keeping tabs on a pair of new commercial FM frequencies due to be released in Flathead County by the Federal Communications Commission sometime in the next few years. Bee Broadcasting is also interested in the new frequencies. “I’m in expansion mode,” says Bee Sr., who thinks the FCC should do away with all of its ownership regulations. Once a disc jockey at a little station in Wolf Point, Bee Sr. doesn’t like the Clear Channel practice of piping in DJs from other markets. But like Clear Channel—the nation’s largest radio conglomerate—Bee Broadcasting has a thirst for media consolidation. Bee Sr. says he definitely wants to add another station in the Flathead, and is currently in talks with a New York City investment bank about a potential expansion into Missoula and Bozeman. What formats might Bee Broadcasting bring to Missoula when new FM licenses come up for bid in 2004 or 2005? Bee Sr. smiles, but doesn’t reveal the exact puzzle pieces he has in mind.

Add a comment