In Pittsburgh, a broker turns operator

Jazz station WDUQ sold to Public Radio Capital and local partner

By Karen Everhart

News/jazz WDUQ-FM will be sold to a joint partnership between another Pittsburgh pubradio station, WYEP, and a new local nonprofit established by Public Radio Capital.

Left out of the sale are Scott Hanley, g.m. of WDUQ, and his staff and supporters, who mounted a bid to preserve jazz music programming. Their aspirations conflicted with those of local funders who pushed for greater emphasis on news.

National + local team buys WDUQ: PRC co-chief Harmon and WYEP chair Cardamone announced the deal. (Photo: Taylor Tobias.)

The $6 million deal, announced Jan. 14, opens a new chapter for WDUQ, established by Duquesne University in 1937 and put up for sale a year ago.

It also introduces a new playbook for Colorado-based Public Radio Capital, created a decade ago to expand the public radio family. PRC now tries its hand at station management and operations after serving as a broker and fiscal consultant to expanding licensees. PRC recruited Ken Ikeda, executive director of San Francisco’s Bay Area Video Coalition, to help run its new operating arm called Public Media Company.

WDUQ’s staff, jazz fans and Hanley are still standing on the sidelines. Their acquisition vehicle, the nonprofit Pittsburgh Public Media, agreed to pay Duquesne $6.5 million for the station in November, according to Chairman Joe Kelly. “We were in negotiations with the university and thought we were going to get the station,” Kelly said. It was a surprise to lose the competition to a joint venture that included their former financial adviser, Public Radio Capital, he said.

PRC represented the group early in the bidding but dropped it in June. Despite the setback, Pittsburgh Public Media continued to pursue the license with a new agent, Kelly said. Its plan was to continue airing NPR News and jazz music, a service that reflects the city’s jazz heritage and attracts a sizable audience of African American listeners.

Foundations favored news format

Pittsburgh’s community foundations weren’t interested in backing the status quo. They paid Duquesne for a purchase option to freeze the bidding for 60 days last spring and hired Pittsburgh nonprofit media and arts executive Charlie Humphrey to explore the possibilities for creating a next-generation public media service focused on news.

Those talks, which involved all three local pubcasting outlets including WQED-TV/FM, ended without consensus after just 30 days. (Current, May 17 and June 21, 2010.)

“We went through plans A, B, C and D before we got to plan E,” Humphrey said. “This outcome is the exact same one we were fighting for. I was very involved in pushing it through.” Plan E also appealed to the university, which agreed to transfer the station to Essential Public Media, a startup community licensee jointly controlled by PRC’s Public Media Company and by independent Triple A music station WYEP.

The $6 million sale price is roughly half the value appraised by Duquesne’s broker Roger Rafson when the bidding started last year and includes an as-yet-undisclosed amount of noncash consideration. “It’s a market issue,” said Dr. Charles Dougherty, president, during a Jan. 14 news conference unveiling the deal. The university started with the “highest possible asking price,” as any seller would do.

“We wanted to find a buyer with an established track record of independent station operation and solid financial strength,” Doughtery said. The contract with Essential Public Media, approved by the executive committee of Duquesne’s board, he said, “meets all of those objectives.”

Essential’s bid fits the funders’ objectives, Humphrey said, because it establishes “an NPR station with emphasis on rigorous regional reporting and puts it in the hands of a very capable new entity” — PRC’s new nonprofit — along with local broadcaster WYEP. The two Pittsburgh stations will share space in WYEP’s four-year-old, green-certified building.

Essential also has a better chance than PPM “of raising the capital and sustaining the project,” Humphrey said, because some Pittsburgh foundations are prepared to back the startup.
Details of the sale contract are incomplete and remain confidential at the request of the university, according to Lee Ferraro, g.m. of WYEP. Essential has 90 days to fundraise and secure financing, he said.

Decisions about programming and staffing also are months away, but WDUQ’s staffers will lose their university jobs when the sale closes.

It’s unclear how much jazz will be heard on the new WDUQ, although the partners “respect the legacy of jazz in the community and on the air” and will work with jazz lovers to preserve it, Ferraro said. “That’s another thing we haven’t resolved — we’ve put all our energy into looking at how to preserve the service first.”

Duquesne will invest proceeds from the sale in establishing two academic chairs and two endowments, and some of its students will be offered internships and jobs at the station. “This sale not only preserves the public character of the station, it will also allow us to make significant investments in key academic initiatives that are aligned with Duquesne’s strategic plan,” Dougherty said.

Public Radio Capital: catalyst becomes operator

The launch of PRC’s new operating entity, Public Media Company, added complexity to the deal and raised suspicions about the out-of-towners. Both of PRC’s Co-Managing Directors Marc Hand and Susan Harmon will be very involved with the new nonprofit, according to Harmon. Hand is managing director of both PMC and PRC, and Harmon is on the PMC Board. They recruited Ikeda from the Bay Area Video Coalition as managing director, bringing needed digital expertise. Ikeda will play a role in directing strategy, Harmon said.

On its website, PRC describes Public Media Company as a nonprofit delivering “multisourced content to new and younger audiences through collaboration with a variety of public media organizations.” The nonprofit launched with a $500,000 grant from the Wyncote Foundation. It aims to “build capacity for bringing new services into select markets nationwide.”

By partnering with WYEP to create the new licensee, Harmon said, “we’ll be able to stay involved at some level with a project locally,” bringing management and financial expertise.

The unsuccessful bidder backed by WDUQ’s present staff, Pittsburgh Public Media, pointed out that it had “operated in a very open and transparent way” in bidding for WDUQ. “We were successful in having a lively conversation with many in the community,” the nonprofit said. “Our intent from the beginning was to keep the public in public radio.” Kelly, PPM’s chair, said he was surprised to learn from a press release that PPM’s former broker was now a partner in the winning bid.

Harmon said there was no conflict of interest between PRC’s roles as PPM’s broker and a partner in Essential. After PRC ended its relationship with PPM, “We didn’t have a sense of where it was headed at all,” she said. WYEP’s leaders reached out to PRC in this summer; talks of partnership started in the fall, when plans for the Public Media Company started to come together.

In a letter terminating its contract with PPM, Hand cited PRC’s need to talk with local foundations and other public broadcasters if it was to preserve WDUQ’s signal for public radio. Pointing to market conditions and WDUQ’s long reliance on university subsidies, PPM wouldn’t be able to finance the purchase as a loan, he warned.

“[F]rom a financial perspective . . . the only viable strategy for acquiring WDUQ is to work with Pittsburgh’s foundation community to present a credible offer to Duquesne University to consider,” Hand wrote. “PRC’s mission is to do all that we can to preserve public radio service in markets, and in this case working with the foundation community and all of the potential entities, including PPM, is the best way to transition WDUQ from Duquesne University ownership.”

The letter, dated June 2, was written five days before the Heinz Endowment, one of four foundations involved in exploring a bid to strengthen WDUQ’s news service, announced that the talks had ended. At the time, the Heinz Endowments and the Pittsburgh Foundation said they remained committed to preserving the WDUQ for public service.

Ferraro didn’t recall precisely when WYEP decided to pursue the license, but said it became clear last summer that “public radio had to put something together,” he said. WYEP Board Chair Marco Cardamone became involved, and the entire board backed the decision to save the station and “not let it go to religious broadcasters.”

“One of our strengths is we’ve got a great board of directors,” Ferraro said.

EPM, the new licensee for WDUQ, will establish its own board of directors and hire a manager for the station, Ferraro said. “Our goal as a public broadcaster has been to be open and transparent,” he said. “This thing has happened so quickly. We are six days out from the announcement, and there are still things we’re working through.”

“We intend to communicate regularly with interested parties, but some things will have to wait until the 90-day period when we have the whole deal put together.”

EARLIER STORIES

Foundations buy time for rethinking the WDUQ sale, May 2010.

Funders, WDUQ managers aim to bid again for station, June 2010.

EXPANSION ELSEWHERE IN JANUARY

San Francisco’s classical station adopted by KUSC from Los Angeles.

Cincinnati-area WNKU triples its reach with two station purchases.

RELATED LINKS

Pittsburgh Post-Gazette reports: Sale signals end of era for Duquesne’s WDUQ-FM, Jan. 15, 2011.

Essential Public Media is soliciting feedback on its pending purchase of WDUQ.

Release from Public Radio Capital announces station purchase.

Disclosure: Wyncote Foundation provided funding for Current’s transition to operation by American University, Washington, D.C.

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