Disconnect ’twixt board and manager

Stations struggling with mounting deficits often cut jobs, but the shears rarely lop off the highest rank as they did at WHQR in Wilmington, N.C., a year ago.

In December 2008 the Wilmington station’s board of directors cut staff from the top down, laying off their g.m. of two years, John Milligan, as well as his development director and a reporter. The program director’s post vacated before those layoffs also remains unfilled while a subcommittee of three board members runs the station from day to day.

Board Chair Jeff Hunter hopes that the payroll reduction, plus a recent jump in listener donations and a push for underwriting sales, will soon make the station self-supporting after years in the red. For now, WHQR is one of just two public radio stations that have turned to CPB for emergency financial aid under a new program.

The station, whose budget hovers around $1.1 million, suffered annual losses of 11 percent to 32 percent for the past five years, totalling almost $1 million (chart below). After fiscal year 2008, its net assets would have been wiped out by another loss as big as that year’s.

Five years of annual losses in bar chart Above: WHQR’s audited statements through fiscal 2008 and an estimate of the 2009 loss by WHQR finance chief Barbara Bush indicate the station had losses totalling almost $1 million in five years. Board Chair Jeff Hunter and Treasurer Jeff Hovis did not respond to Current’s requests for FY08 final and FY09 figures. Source: WHQR for FY05-07 audited results and FY08 unaudited.

Station leaders and employees — present and former — disagree about how the music/news station got into its tailspin and whether it could have righted its course sooner. Milligan, the ousted g.m., contends that during his two-year tenure he was guiding the station toward prosperity. Others argue that Milligan’s plan to overhaul WHQR cost too much and worsened its already precarious financial situation.

Several also wonder whether any efforts to significantly grow WHQR’s revenue are realistic. Not quite 100,000 people live in the coastal town of Wilmington, making it the state’s ninth-largest city and somewhat less than a major public radio market. Real estate, a major business in the city, has been hit hard by the economic downturn.

“Maybe there’s just a cap on what can be raised from the community,” says Ann Howard, a former development staffer. “It was my feeling that we needed to stay within that.”

Yet a local supporter of Milligan’s efforts says the former g.m. was attracting a new base of corporate supporters to WHQR who endorsed his desire to raise the station’s profile in the community. Bruce Holsten, a financial strategist and member of the Greater Wilmington Chamber of Commerce, canceled his $300-a-month support for the station this year to register his disapproval of Milligan’s sudden dismissal.

“They’re just paying the price for a small vision, as far as I can see, for the foreseeable future,” says Holsten of the station’s current leadership. “That’s a tragedy.”

Spend more to make more?

Founded by music-lovers in 1984, WHQR for years hewed close to the model of community radio, according to employees. Volunteers hosted shows while a small number of paid staffers handled multiple jobs, says Howard, who worked at the station from 2000 to 2007.

The station had two annual losses before Milligan took over in September 2006. For fiscal year 2006, it had lost $135,851.

Milligan joined WHQR after working as g.m. of public WQUB-FM in Quincy, Ill., and as a marketing executive for IBM. He impressed the Wilmington station’s board with his background and vision, Howard says, at a time when the station needed a strong leader. Also an actor and opera singer, Milligan speaks in a commanding tone colored with the accent of his native New Zealand.

“He could been cast as the g.m. in a movie about a radio station,” Howard says.

Milligan says that as he got to work, he found the station’s financial records in disarray, with no centralized accounting system. “You couldn’t trust the figures that were coming out,” he says. He cleaned up the system, moving it to QuickBooks and consolidating record-keeping.

The station was too timid about raising money, Milligan believed. When he arrived, WHQR had no planned- or major-giving programs and no endowment, he says. He sought to change that and to sell more underwriting.

Milligan estimated that the station would need three years to establish firmer footing. In a 24-page document he distributed throughout Wilmington, he laid out a mission statement for WHQR and a view of the station’s future.

In retrospect, he says, he would not have taken the job of g.m. if he had known what he was getting into.

Before long, Howard and other staffers began to disagree with Milligan’s plans to upgrade the station. Howard felt the station “needed to live within its means” as a modest community station rather than grow too big.

Spending on salaries also raised eyebrows, with local news as one area of concern. When Milligan arrived, the station employed two news staffers, with one position funded by a corporate sponsor, according to Howard. When that gift ran out, the station absorbed that ongoing cost.

To some, even a two-person newsroom seemed excessive for a money-losing station in a town of Wilmington’s size and location. The nearest city of comparable size to Wilmington is a two-hour drive away, across a flat and featureless landscape punctuated here and there by the reek of a hog farm.

For a station like WHQR, local news should have been considered a luxury, says Robert Beauchene, whom Milligan hired as development director in August 2007. “You put that on a station that’s doing well,” Beauchene says.

Beauchene says he also clashed with Milligan over the g.m.’s staffing of his development department. When Beauchene joined the station, WHQR employed two underwriting reps. Beauchene found that his staff was too large to match the more modest workload and market size. But Milligan “just did not want to hear it,” Beauchene says.

The board should have kept Milligan under tighter control, says Beauchene. “Milligan did a lot of crazy things,” he says, “but they approved it every step of the way.”

Milligan says the board did indeed approve his hires and supported his underwriting plan. He says the two reps didn’t pad the payroll; they earned only small base salaries and got the rest of their pay from commissions.

Regardless, payroll spending ballooned under Milligan—by 47 percent in two years. The g.m. himself pulled in a salary of $85,000. His predecessor’s salary was not listed on the station’s federal tax filing, Form 990, which requires reporting of salaries exceeding $50,000. However, the station’s board chair says Milligan earned about as much as the previous g.m.

Milligan attributes the payroll increase in part to a large jump in health insurance costs. He notes that the station in fact employed fewer people when he left than when he joined.

Fundraiser Ann Howard resigned in 2007, increasingly unhappy with Milligan’s direction of the station. She says she tried to warn the board about what she saw as his oversized aspirations but got no response. His plans, she says, “were what they wanted to hear—‘Oh, great! More money coming in!’”

A plan derailed

Milligan and his staff did manage to boost revenue during his tenure — by 12 percent, to $1,150,157, according to an independent auditor’s report from 2008. Much of the growth came from an 87 percent surge in underwriting revenue during the year.

But even these gains could not outpace the station’s expanding bottom line, with expenses that rose by 36 percent from fiscal year 2006 to 2008, adding to WHQR’s six-figure deficit. Tensions between the board and management began to grow around August 2008, Beauchene says, with the board threatening cuts and tighter controls on spending if Milligan failed to deliver gains in revenue.

Milligan says he too became concerned that the station’s finances were diving too fast. He gave the board several options. One was merging with another public radio station, such as Charlotte’s WFAE, which despite its distance from Wilmington was receptive to collaborating in some way. Another choice Milligan offered was to cut much of the station’s staff and return WHQR to its grassier roots.

He didn’t anticipate that the cutback would include his own job. The board abruptly dismissed him two months later, along with Beauchene and reporter Marina Giovanelli. The board also said it would eliminate the position of news director but apparently reversed course later — News Director Catherine Welch remains with the station.

Milligan learned of the cuts several days before Christmas, just after returning from an out-of-town trip to his mother-in-law’s funeral. At first, the board only said positions would be eliminated — he employees in those jobs were not immediately dismissed. Regardless, Milligan no longer held the reins.

“Talk about removing the soul, the vision, the know-how and the revenue generating base from the Station!!!”, he later wrote of the cuts in an e-mail to Wilmington associates.

“I think he overestimated his ability to raise money in Wilmington,” says Hunter, the board chair. “I don’t think he had a good understanding of our community. He was from outside, and he just assumed that he could bring in underwriting dollars, and it wasn’t quite that easy.”

Beauchene said he was “pumped” when the board announced the restructuring and was glad that it was finally moving to cut costs. While still working at the station, the development director developed a detailed plan to save it. But his planning was for naught, as the board later dismissed him from the station.

“When they pulled me in and told me I was gone, I was blown away,” he says. “It was a combination of anger and complete frustration — and also being relieved.” No one he spoke to inside or outside WHQR, he says, could understand why a station strapped for cash would dismiss the staffer in charge of raising it.

Milligan, for his part, laments that he was allowed too little time to get the station’s finances in order and complete his overhaul of the station. “We were moving in the right direction,” he says.

Bruce Holsten of the Chamber of Commerce worked closely with Milligan on his plans for the station and agrees that WHQR was on the right track. “He attracted a lot of people at the corporate level who were not traditional NPR supporters,” he says. “They would have gotten behind this bigger view and this bigger opportunity.”

Both Milligan and Holsten believe that the g.m. fell prey to a clash of personalities. “As the British say, John did not suffer fools gladly,” Holsten says. “He did not really ever connect with the Southern small-town and, in some cases, small-minded community…. You’re talking about someone coming in from the outside — let alone a foreigner, but a New Zealander — and telling the station how to survive.”

Board now in charge

Today WHQR continues to chase after financial stability. By giving up the g.m. and other positions, it reduced payroll costs by half. It now employs the minimum of five full-time employees required to stay eligible for federal aid through CPB.

Hunter, the board chairman, says the board is looking to hire a manager at half Milligan’s salary — a more hands-on leader rather than a CEO type. “We realize that a station being run by three board members is not ideal,” he says.

The board’s present relationship with the station mirrors some of the issues faced by other community-licensed stations, says DEI President Doug Eichten.

Tight board oversight and control of a station is usually ill-advised and “a tough thing to break out of,” Eichten says. He adds that public radio as a whole pays too little attention to improving station boards and developing best practices for them.

“The board certainly has to have a distance from the professional staff it hires,” Eichten says of WHQR. “So it sounds as if they’re going to have an interesting challenge as they continue and transition to a manager who has room to pull them back to where they need to be.”

Several months ago, WHQR’s board and staff met with Steven Lassiter of a Minneapolis consulting group called Strategeries (yes, its name comes from a TV parody of George W. Bush’s malapropisms). The station had applied to CPB for financial aid under its Stations in Severe Financial Distress program, which has primarily aided public TV stations. CPB dispatched Lassiter to the scene.

WHQR’s board is now weighing whether it can afford to employ Lassiter on its own dime and take the much bigger step of adopting one of his recommendations for the station’s future.

Hunter, Lassiter and CPB all declined to say what the possible steps could be.

“The recommendations are far-reaching,” Hunter says, “and they would change the nature of the station.”

Milligan replies to the story

Published in Current, Jan. 11, 2010

To the editors:

With reference to your article on WHQR there are a few points that I sincerely feel need to be corrected or clarified.

You report quite in-depth the thoughts of Ann Howard. This is interesting since — as Ann Berry — she resigned of her own free will only three months into my tenure.

Further, the reappointment of the News Director position as well as the appointment of a second full-time reporter was made before I took over the reins of the station. During the reorganization in December 2008, Catherine Welch’s position as News Director was also cut. However Welch later convinced the “coup” leaders to let the second reporter and the Morning Edition host (who left in February 2009) go in return for saving her own position.

Finally, you report that “Not quite 100,000 people live in the coastal town of Wilmington, making it the state’s ninth-largest city and somewhat less than a major public radio market.” WHQR in fact broadcasts at 100Kw from a 1400-foot stick to an audience reach of 685,000, making it around [Market No.] 160 in the Arbitron ratings. Coverage extends from Jacksonville (and Camp LeJeurne) in the north; I-95 in the west; and Myrtle Beach (on a good day) to the south.

Despite this coverage and after consultation with some highly respected pub radio peers, I wrote to the Board earlier in 2008 and to the membership:

“So the question has to be asked: Can WHQR remain economically viable in this market? Are the communities, including the business community, prepared to support it? Does the current Board appreciate the economic challenges that the station faces, and are they prepared to throw in their support? The answers to these questions are complicated yet essential.”

Maybe this was just one of the “crazy things” I did, which along with an AQH of 6.0 and a cume rating of 11.7%, prompted Wilmington Mayor Bill Saffo to say at a public forum, “Since John arrived WHQR has never sounded as good or accomplished so much in the city — we need WHQR!”
Sincerely,
John Milligan

Current‘s editor replies: We stand by Mike Janssen’s story, which is consistent with what you’re saying: You saw the opportunity for growth at WHQR and at least a few key people inside the station didn’t, including two development officers who left, plus the board, which remained after you left. In both the text and the chart, we tried to make it clear the deficits had begun before you arrived.
— Steve Behrens

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