Mykalai Kontilai with NBR-coanchor Susie Gahrib

Kontilai with NBR co-anchor Susie Gharib. (Picture: Adam Jeffery Photography.)

Instructional TV sales exec moves to NBR’s bigger league

Published in Current, Sept. 7, 2010
By Dru Sefton
Copyright 2010 Current LLC

In his career in the media niche of instructional television, Mykalai Kontilai worked with several respected names in public broadcasting as well as parts of Scholastic Inc., one of the world’s largest producers of educational materials for children and classrooms.

Two of these key relationships for Kontilai or Teacher’s Choice, the ITV sales company where he was a major marketing presence, fell apart abruptly and after a matter of months — those with a past education chief of NETA and a former CPB finance exec.

Kontilai finally left the ITV field after Scholastic ended its business relationship in 2006 because, a spokesperson told Current, the company was “dissatisfied with Mr. Kontilai as a distributor of Scholastic product.”

Some of his ITV customers remain strong supporters, nevertheless, while others cut ties with him. Two station executives said they dissolved contracts with Teacher’s Choice early.

Leaving the cloistered and shrinking ITV world opened new opportunities, however, culminating thus far in the announcement Aug. 13 that the for-profit company NBR Worldwide, with Kontilai as c.e.o. and partner Gary Ferrell as c.f.o., had purchased Nightly Business Report, a well-established weeknight show trusted by millions of PBS viewers to provide investment news and advice (Current, Aug. 23).

After leaving ITV, Kontilai and Ferrell, through their company Public Media Inc., have been seeking production funding for an Antiques Roadshow-style pubTV show that would share the show’s brand, Collector’s Café, with proposed retail coffee and collectibles auction businesses.

He also negotiated a contract for Tito Ortiz, an athlete in the Ultimate Fighting Championship (UFC) league, and worked with Ferrell on a pitch to sell public TV underwriting to the makers of the power drink Xyience, a premiere sponsor of the UFC. The Las Vegas company’s marketing team wanted to expand its market beyond the current customer base of sweaty grapplers: “They wanted to soften their image,” Ferrell said. But before that plan got under way, Ferrell and Kontilai “disengaged,” Ferrell told Current, when they became aware that Xyience owner Russell Pike had a criminal record and had served prison time.

Kontilai, c.e.o. of NBR Worldwide, is moving into offices in the Manhattan bureau and Miami headquarters of Nightly Business Report. With him are Ferrell, longtime pubcaster and his partner of six years, who is c.f.o., and Rob Sparks, Kontilai’s attorney, who is c.o.o. and general counsel.

“When we acquired NBR, we brought over the entire existing team,” Kontilai told Current. “We haven’t yet made any decisions about changes in staffing, since we are still evaluating the capabilities of the existing staff with respect to the needs of our new business model,” which includes international distribution, content licensing in schools, online social media and “a comprehensive financial education program.”

Neither NBR Worldwide nor the program’s production site and former owner, Miami pubTV station WPBT, would disclose what the company paid for the 31-year-old program.

Ferrell, a former president of KERA, Dallas, told Current in a statement: “The funding for both the acquisition and growth capital of NBR was provided almost entirely by a New York based institutional investor with an extensive record in the media industry.” That investor does not want to be publicly identified, according to Kontilai’s spokesman, Lewis Phelps of the public relations firm Sitrick and Co. in Los Angeles.

PBS distanced itself from the sale in a statement to Current: “PBS is the distributor of Nightly Business Report and does not have a direct role in the production of the series. PBS’s content is created by a broad range of producing entities. The acquisition of Nightly Business Report was arranged through agreement reached by Mr. Ferrell, Mr. Kontilai and WPBT, which remains the presenting station. PBS was not a party to the negotiations between WPBT and NBRW regarding the ownership of the series.”

Mixed reactions

Kontilai’s rise to ownership of a national PBS program from his beginnings in ITV came as a surprise to at least one public broadcaster who had been active in the small world where classroom video and public TV intersect.

Candis Isberner, a station education specialist who became g.m. of WSIU in Carbondale, Ill., told Current she was stunned when she heard Kontilai had purchased NBR. “My reaction initially was that my jaw dropped,” Isberner said. “I would have bet he would not have been capable of doing it, either financially or managerially. I couldn’t see any evidence of his success in ITV services for schools.”

But Claudine McGee, former v.p. of programming and educational services at Ozarks Public Television in Springfield, Mo., disagreed. In a statement provided to Current through Kontilai’s spokesman, McGee said: “His dedication to providing quality instructional programs for teachers and students was very impressive to me.” She added that she considered Kontilai “a true pioneer in the area of instructional television distribution,” saying his prices and copyright policies “were the most innovative and expansive in the industry.”

Kontilai had been in ITV since 1994. His first venture was Mykalai Kontilai Companies, with offices in San Diego and, briefly, in Columbia, S.C. The South Carolina office opened in 2000 and closed in 2001. Mykalai Kontilai Companies closed altogether in 2006. Phelps said Kontilai sold ITV program rights for Teacher’s Choice starting in 2005. Both businesses distributed Scholastic content educational content to the Scholastic ETV Consortium, a station buyer’s group.

ITV sales office in San Diego

Teacher’s Choice, the company that sold rights to ITV programs from Scholastic and other producers, was based in this San Diego office park in the mid-2000s. (Current photo.)

Some of Kontilai’s customers were more than pleased with his service, as testified by several suggested by Phelps, his spokesperson.

Toni Scheflin, senior specialist, education, at WNET in New York, said that Kontilai was “professional, paid attention to detail, and made sure that the programming I purchased was delivered promptly and at the best possible price.” Kontilai “has proven himself to be a friend as well,” she told Current in a statement. “He’s a great person, and a real asset to the world of public broadcasting.”

Likewise, Temple Lymberis, former educational services director for what is now Mississippi Public Broadcasting said Kontilai “did everything in his power to satisfy our needs based on the state curriculum structure,” and his “innovative ideas enhanced our school programming and helped increase classroom usage.”

Men of reputation

Kontilai’s work with Scholastic drew ITV managers into his orbit. In early 2000, Bill Meyers left the National Educational Telecommunications Association and began staffing the Columbia, S.C., office of Mykalai Kontilai Companies. Meyers had been education director of NETA, which at that time operated public TV’s major instructional program marketplace.

Meyers declined to talk to Current about his time with Kontilai’s company, but verified he worked there about six months. With his departure the Columbia office shut down. In March 2001, the South Carolina Circuit Court found Mykalai Kontilai Companies in default in a lawsuit for a breach of lease with TrizecHahn Columbia and awarded the property management firm $105,994.26, according to a court document. Phelps said because the company failed it did not have any funds and so did not make payment on the judgment amount.

In the spring of 2006 Teacher’s Choice got a new president in San Diego: Linwood Lloyd, former chief operating officer of WETA and a former CPB executive.

Lloyd started in that position in early May and resigned abruptly four weeks later, dispatching an e-mail to stations doing business with Teachers’ Choice. When contacted by Current, Lloyd said that there were “immediate, fundamental concerns about business operations that Kontilai and [President Robert] Hoffman would not resolve to my satisfaction.” When asked for details, Lloyd said that he felt his actions spoke for themselves. Susan Botello, the public television station relations manager for Teacher’s Choice, departed at the same time, leaving the company with no staff in early June 2006.

Kontilai responded that he was not responsible for Teacher’s Choice. He and his spokesman are quick to point out repeatedly that the owner was a man named Robert Hoffman. Several former employees recall Hoffman as an older man with a silver mustache.

“The business operations and practices of Teacher’s Choice were entirely at the direction of Mr. Hoffman,” according to Kontilai. “A clear demonstration of that fact is that both Mr. Ferrell and Mr. Kontilai terminated their consulting relationships with Teacher’s Choice at essentially the same time as Mr. Lloyd’s departure, because of their own concerns about Mr. Hoffman’s business practices, including a failure to pay them amounts owed under their consulting contracts.”

Teacher’s Choice is incorporated in Nevada, a common business practice due to the state’s business-friendly regulations. Nevada does not require an owner’s name on incorporation documents. Hoffman is listed in those documents as holding all of the officer positions in the company.

Current asked to speak with Hoffman. “That will be extremely difficult,” Kontilai responded through Phelps. “He died in 2009.”

Many station managers nevertheless came to know Kontilai as the face of Teacher’s Choice. Kontilai told Current that he probably visited some 90 percent of pubTV stations across the country in his ITV marketing work.

Meeting in Springfield

On one occasion five years ago, however, Kontilai didn’t make the station visit himself, and though he spoke to station execs in a phone conference, he presented himself as Hoffman, according to a former Teacher’s Choice employee, Aaron Matthew Kaiser, who was in the meeting at the station.

Kontilai sent Current a statement saying that he had no recollection of presenting himself as Hoffman “in any phone conversation with WSEC or anyone else.” He added: “Mr. Kaiser in my opinion is simply a disgruntled former employee.”

Back in September 2005, Kaiser had been hired just two weeks earlier as marketing manager of the Scholastic ETV Consortium at Teacher’s Choice. He said Kontilai told him to fly to Springfield, Ill., to fix snags in a proposed deal with pubTV station WSEC. The plan was for Kaiser to participate in person with station executives, and Kontilai would call in by phone — identifying himself as Hoffman.
When Kaiser expressed concern and asked why he would present himself as Hoffman, he recalled, Kontilai said that he had Hoffman’s permission to do so.

“I thought, this feels dishonest,” Kaiser told Current. “This is not Robert Hoffman, this is Mykalai. It was a meeting between them and quote-unquote ‘Robert Hoffman,’ with me being a puppet to help them.”

Jerold Gruebel, then and now WSEC’s chief executive officer, does not recall specific details of the meeting five years ago. “All I remember was that Scholastic ETV did a very poor job at both marketing and explaining to us what our role would be in the consortium,” Gruebel said. “We decided to not to participate, although we had been very interested in doing so.”

Kaiser returned to San Diego and his supervisor asked him to compose a memo on his trip, which he did on Scholastic ETV Consortium letterhead titled, “Trip Report, Aaron Matthew Kaiser, 9/7/2005-9/9/2005.” An excerpt: “I found it very uncomfortable to be introducing Mykalai as someone else,” he wrote, adding that he felt that “I am deceiving my contacts and that if the truth were revealed, it would reflect poorly on myself and damage my relationships with these stations.”

Two weeks after the trip, Kaiser said, Kontilai fired him for what Kaiser considered to be a routine, unrelated e-mail exchange with a WSEC staffer.

Kontilai said in a statement to Current: “Mr. Hoffman, as sole owner of Teacher’s Choice, made the decision to terminate him. Since Mr. Hoffman was ill and out of the office, he called me and asked me to inform Mr. Kaiser of Mr. Hoffman’s decision. Mr. Kaiser has since that time made unsubstantiated and false assertions about me, even though I was merely a messenger delivering Mr. Hoffman’s decision to him.”

By that time, several station g.m.’s had been encountering problems with Teacher’s Choice and the Scholastic ETV Consortium. Among them was Bill Stotesbery, g.m. of KLRU in Austin, Texas.

“We initially participated in the consortium beginning in late 2004,” Stotesbery told Current, “but had a variety of issues with service and delivery. Other stations told us of similar concerns, and some discussed possible legal action, but to the best of my knowledge that did not occur. Ultimately, we ended our contract relationship early,” in 2006.

Phil Wallace at WBCC in Florida also terminated its contract with Teacher’s Choice early. “They were also supposed to supply additional programming, and they didn’t do that,” Wallace said. “I was at conference talking to other g.m.’s that had the same story.” And those g.m.’s said other managers also had those troubles. “That contributed to our decision to end the relationship with Teacher’s Choice,” Wallace said. The original 2004 deal had been for five years, “and we didn’t get anywhere near that. It was maybe 2006.”

Within the next year, Scholastic ended its relationship with Teacher’s Choice. The firm said in a statement to Current: “Scholastic was dissatisfied with Mr. Kontilai as a distributor of Scholastic product, and we terminated all business dealings with him in 2007.” Scholastic spokesperson Kyle Good confirmed that the statement refers to Scholastic’s relationship with Teacher’s Choice.

Kontilai told Current that his focus since departing Teacher’s Choice in 2006 has almost entirely been on the development of Collector’s Café, his and Ferrell’s production company Public Media Inc., and the acquisition of Nightly Business Report. “We continue to make progress with Collector’s Café and hope to have a formal launch of the project and production sometime in 2011,” he said.
American Public Television has seen a pilot for Collector’s Café and expressed interest in distributing it but has not accepted the planned series for distribution, an APT spokesperson said.

Into business journalism

NBR Worldwide’s acquisition of Nightly Business Report on Aug. 13 came as a surprise in the disparate worlds of public broadcasting and mixed martial arts. USA Today’s MMA Fighting Stances blog ran the story under the headline, “Ex-manager of Tito Ortiz acquires ‘Nightly Business Report’.”

At Miami’s WPBT, which has produced NBR since its start in 1979, President Rick Schneider told Current that the program had not been for sale. Ferrell and Kontilai approached him late in 2009 and the three began exploring a possible acquisition in spring 2010, he said. Kontilai told Current he was interested in the program, carried by some 250 stations, after he “identified the brand as a production that could be propagated and taken to a new level.”

Schneider declined to discuss the deal, including the due diligence process for NBR Worldwide. “I don’t think that’s relevant,” he told Current. “It was determined that [NBR Worldwide was] qualified to make purchase. How the deal was vetted I don’t think is something to discuss in public.”

But in public, Schneider speaks highly of Kontilai and Ferrell, a former president of KERA, Dallas, and past c.f.o. of KCET, Los Angeles. “I am confident that Mykalai Kontilai and his team at [NBR Worldwide] will continue the high standards for objective, unbiased news coverage at Nightly Business Report,” Schneider wrote in a statement posted on a journalism blog that linked to Current’s Aug. 23 story about the program sale. WPBT’s continued production of the show and PBS’s distribution of it, he said, will assure that “the public voice of NBR is well protected.”

“There is a lot of work to be done,” Sparks said. “We’re excited about some really positive things” in the show’s future.

Ferrell, Kontilai’s business partner of six years, still admires what he first saw in Kontilai, “a guy that had big ideas and incredible vision,” as Ferrell told Current. “What I like is his ability to aggressively raise money. ... He has some contacts that a normal public broadcasting station would not have.”

Ferrell disputed aspects of Current’s Aug. 23 story about Kontliai and the NBR purchase. In an e-mail he said the newspaper’s story was “attempted character assassination” undertaken for the sake of “sensational journalism.” Ferrell stood up for Kontilai: “I know him as a man of the highest integrity and commitment to the mission of public broadcasting.... I am proud to be his partner.”

Comments, questions, tips? seftond@current.org

Web page posted Sept. 8, 2010
Copyright 2010 by Current LLC

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LINKS

Nightly Business Report site at PBS.org.

 

Gary Ferrell

Ferrell stands up for his partner in NBR, calling Kontilai “a man of the highest integrity.”

 

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