Lewis, Salyer propose merger of NPR and PRI
Originally published in Current, Nov. 3, 1997
By Jacqueline Conciatore
News of merger talks between NPR and PRI, public radio's two major program providers, surprised many in the system last week. Though the status of discussions is unclear, it's apparent that governance issues could easily halt progress on a merger, if that hasn't happened already.
Both network presidents--NPR's Delano Lewis and PRI's Steve Salyer--about a week ago presented to their boards a broad plan for a possible merger. Each argued that a merger or greater NPR-PRI cooperation could better position the networks economically to compete with commercial broadcasters that they expect will go after the public radio audience.
In response to the pitch, the NPR Board requested more information about prospective benefits to stations and listeners, and directed Lewis to further explore a merger. PRI's board had earlier been less supportive, stating emphatically that it wouldn't consider any setup that didn't preserve its organizational model.
The two nonprofit networks have vastly different governance structures. Though PRI's board has some station representation, its board is self-appointed. As a membership organization, NPR's 10 station-manager directors are elected by its 500-plus stations. The board's five public members are appointed.
The merger could be accompanied by a broader restructuring, according to one report, with spin-off organizations to handle various functions, such as a separate membership-based organization for lobbying purposes.
One highly placed observer thinks the talks are on hold while "the dust settles" after Lewis and Salyer brought their boards into discussions they had begun months earlier.
Public radio managers last week were reluctant to discuss any potential merger, but others said they dreaded seeing the system lose the benefits of PRI-NPR competition. Radio managers created PRI's predecessor American Public Radio in 1982 for that very reason: to give stations, producers and listeners a distribution alternative to NPR.
"Nothing is off at this point"
The Monday after the board meeting October 25-26 in Houston, NPR management briefly mentioned the possibility of a merger in a staff memo that spoke of public radio's need to develop competitive strategies. According to two staff members at NPR, the network had planned a larger announcement, even telling the news division to get ready for a "big story." But higher-ups later said the story wouldn't be coming out.
"We expected there would be some developments on the issue of the merger," says NPR news Vice President Jeffrey Dvorkin. But the progress of merger discussions is often erratic, he notes. Despite Internet gossip that Dvorkin told someone the merger was off, he says: "Nothing is off at this point."
PRI in turn issued a press release about its board meeting that made no mention of talks with NPR, but announced a $1.5 million grant for cultural programming from the Lila Wallace-Reader's Digest Fund and approval of an independent audit for fiscal 1997, which showed $18.5 million in revenues and $18.3 million in expenses. Hours later, however, PRI issued a statement in which it said NPR had approached PRI with a proposal. "PRI's board considered this idea at its fall meeting in New York City on Oct. 23. The board concluded that PRI's philosophy of service to our stations and listeners, our product development strategy, our private nonprofit governance structure, and our strong financial position were essential to PRI's great success and growth. Therefore, PRI was not prepared to consider any arrangement that would not preserve and extend those strengths. This determination was communicated to NPR management on Oct. 24."
NPR's board meeting was the weekend of Oct. 25 and 26.
Salyer did not define the statement as a cut-off. "We were laying out our sense of what would have to be in place and what NPR would need to be willing to pursue for us to talk seriously," he said last Thursday.
He wouldn't elaborate on the vaguely presented talking points or stumbling blocks, whichever they are. "We're sitting tight at the moment," he said. "We like where we are at the moment. We are feeling good about our organizational model, and the leadership we're providing in public radio. But having said that, whatever happens in these current conversations, we are absolutely open to exploring opportunities for collaboration, as we always have been."
Lewis and NPR Board Chair Kim Hodgson said pretty much the same thing, placing the merger talks at the stage of an idea, not an official proposal. "Anybody says 'PRI-NPR merger,' and it's bound be looked at as a big deal," says Hodgson. "But I'm not sure how you talk about strategic issues, how either organization, or organizations working together, might best serve stations and the American public without talking about all the options up to and including merger."
"Let's talk"
Salyer says Lewis approached him about a merger a year and a half ago, after a meeting of the board of the joint NPR-PRI European satellite service, America One. "He said, 'Can the two of us stay and talk further? I've given it a lot of thought, and I see a lot of reasons our two organizations ought to get together.'" After Salyer returned from a sabbatical in Japan late last year, he and Lewis met "a number of times" to discuss the merger idea, Salyer says. "In the course of that, both of us came to feel there were potential benefits to thinking cooperatively. But we also came better to understand each other's strengths and models," he says.
The presentation NPR management made to its board outlined issues that would be central to any real negotiations, and the governance issue loomed largest. Others dealt with the succession of the NPR presidency--if and when Lewis departs--and whether PRI's daily international news program The World would continue and when it would air, according to two NPR sources.
The PRI Board simply isn't interested in any merged organization with a board controlled by elected station managers, one source said. Explains Salyer: "What my board said pretty clearly, is, 'We're open to thinking and talking about forms of collaboration, but we need to build on the strengths of this organization."
Under Salyer, PRI has always had a "remarkably powerful board," not only wealthy, but "powerful in terms of personalities," says Phelps Hawkins, formerly with the Minneapolis-based network and now with New Jersey Network.
Salyer himself calls his board "the strongest nonprofit board in America." It helped raise $18 million in the last three years for program development (namely the The World), he notes, and "brings perspectives from the fields of technology, arts, business, marketing, [and] gives us enormous assistance as we think about strategy and approach. ... They add value--do they ever add value. And not just in raising money. They're also good door openers [and] strategic thinkers. They are thinking big about public radio's future."
Putting the two organizations together would require some compromise on governance, says Lewis. He stresses that NPR's membership model has its advantages, as demonstrated when NPR mobilized effective grassroots support against congressional threats to zero-out CPB. "When you talk about coming together, you come together with organizations that have value, so I'm not making a judgment on one or the other [governance structure]," he says. "If things go forward, we'll have to see how it all plays out. That decision has definitely not been made."
About Lewis' successor as c.e.o., PRI wanted assurances that Salyer would be first in line, according to the two upper-level NPR sources. Though such guarantees are fairly standard in business-world mergers, "Del and our board, everyone, was pretty unanimous in thinking we can't tie future boards in that [way]," said one source. Salyer would not discuss the matter.
About The World, Salyer says that naturally PRI would want assurances that it would continue. "We wouldn't go anywhere with World or any of our other major programs [like] Marketplace and A Prairie Home Companion where we didn't have a robust future for them."
One of the NPR sources says management presented to the board a possible program schedule that included World at noon.
"I wonder about all this"
Where Salyer and Lewis come together is on the issue of competitive threat. As an example, Lewis cites the plans of all-news radio station WTOP to move into FM in the Washington, D.C., market. Both executives expect that a combination of NPR and PRI could attract more private-sector dollars than the companies could separately. "The system needs to develop a much larger vision for the future," says Salyer. "We're thinking too small in public radio right now. We've got to adopt strategies to get a much higher level of performance out of our collective system resources--PRI, NPR, stations, producers, all of us ... I think there's every reason for public radio to be thinking and talking about opportunities for collaboration." Neither offered projections of potential income gains.
Concerns about losing the benefits of competition in the program distribution marketplace are legitimate, says Lewis. "But if you're in a competitive mode, you sometimes forget the real object. The competitive mode is to ... win. Not to serve, to win. My objective in public radio is to serve. It's a whole different ball game. So, PRI can say, 'I'm going to compete. If it means paying more for a product to get at NPR, I win.' I win the 5 o'clock [a.m.] slot? Competitive! Important to do. I beat Salyer there! 5 a.m! Is that the best for the listener? I think on balance, yes. But was that my motivation? Those are things you have to answer. I've been sitting back and saying, 'You know? I wonder about all this. Are we really serving the listener? Are we really giving the best quality programs to the listener? That's our mission! Not to say, 'I beat up on PRI.'"
Minnesota Public Radio President Bill Kling founded American Public Radio, PRI's predecessor, after NPR refused to give national distribution to a local variety show called A Prairie Home Companion. "[APR] started because stations and Mr. Kling were so pissed off at [NPR President] Frank Mankiewicz and the unbelievably exclusionary approach to everything outside the Beltway," says former PRI executive Hawkins. Thus, APR's original mandate was to ensure a diversity of programming to stations, he says.
For NPR, the resulting competition had all the usual energizing benefits, and, according to stations, forced the older network to provide better service and more responsive programming. "It created a different environment at NPR in terms of how programs are thought about," says Leslie Peters, former marketing director at NPR, now with Audience Research Analysis. The competition also kept a lid on program prices and gave station and independent producers two choices for distribution outlets.
PRI has also served as more of a program clearinghouse than NPR, because it never produced its own shows until it launched The World in 1995. "Until PRI came along, NPR tended to look internally for programs," says Kling. "Now, both are pretty aggressive about seeking out ideas."
While a merger could bring short-term gains for audiences in the way of more efficient program scheduling and administration, Kling says, he doesn't know how a united network could keep the benefits of competition. "How do you design an organization to maintain competitiveness, outside of the good intentions of the people currently in the jobs?," he asks. The system could end up with a single program entity "that doesn't have many incentives to look beyond its walls," he says.
A clear benefit to a PRI-NPR merger would be the end of wasteful head-to-head competition, says Wisconsin Public Radio chief Jack Mitchell. He and others disapprove of NPR's development of a Saturday quiz program, given the success of the WPR-produced, PRI-distributed Whad'Ya Know?. Others question PRI's wisdom in going after an afternoon drivetime audience for The World, when All Things Considered is so firmly established in that slot.
But an end to such direct competition doesn't require an all-out merger, and it is possible there will be more modest cooperation between the two networks if a merger doesn't happen. "It's entirely likely that whatever happens in this current discussion, that the system will continue to talk about the questions [of external competition]," says Salyer. "As we look to the future, how do we best collaborate to our mutual advantage? How do we leverage the resources we have within the system to be a more vital competitive force? That's the goal."
Sources say Lewis and Salyer are scheduled to meet next week.
Earlier news: American Public Radio refocuses as Public Radio International, 1993.
Web page created Nov. 1, 1997
Revised March 30, 1998
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Later news: By early '98, nothing's happening on the proposed
NPR-PRI merger, though conflicting reports confuse the scene.