As a former Coast Guard Recue Center Controller, I can say that it appears that they were involved in a multi-unit, land and sea search and rescue operation. I planned and executed many of these operations. There is supposed to be 500 ft vertical separation as well as horizontal separation by search area. Perhaps, the target was located and the C-130 was directing the helo to the site. That would be the only reason to have both aircraft in the same area. It will be interesting to see the inquiry results.
I also worked as a CG rescue center controller at Corpus back in 1980-82. Did you attend the search and rescue school in NY?