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Paying $3.3 million a year to buy the radio stations
will require extraordinary fundraising.
The foundation now raises about $4 million a year from members.

Compromise at WNYC: radio stays public, TV goes commercial

Originally published in Current, April 3, 1995

By Steve Behrens

New York City will sell its TV station to the highest bidder but let go of its two public radio stations at a bargain price to the foundation that already covers most of their costs.

"They were willing to be very generous in terms of the ... discount [for radio] because it would leave them free to go off and sell television," said Peter Darrow, president of the WNYC Foundation and a Manhattan attorney.

The compromise agreement between the city and the foundation, announced March 21 [1995], came together because the city expected WNYC-TV to sell for much more than its sister AM and FM stations, Darrow said, and because radio is the foundation's "fully developed franchise" in terms of membership.

The pact secures public radio's major outlet in the nation's largest city. WNYC-AM and FM drew their largest audiences in history during the fall 1994 Arbitron measurement period. The combined weekly audience of 850,000 listeners was up 25 percent over the 1993 level. Pledging on the radio stations in February raised $1.1 million.

"As a city, New York performs a great number of necessary functions," said Mayor Rudolph Giuliani in a press statement last month, "but running two radio stations and a TV station is not among them."

Giuliani told reporters, however, that selling WNYC-FM to a commercial broadcaster could deprive the city of one of its two classical music stations, according to the New York Times. "I happen to be one of those people that believes that New York City needs more than two classical music stations. We could really use three or four."

Foundation Chair Irwin Schneiderman congratulated Giuliani for "an elegant solution that benefits both the city and our WNYC listeners." "Unfortunately, purchasing the television station was not within our means, keeping in mind the needs of the city," he said.

The city's broker, Rothschild Inc., has begun receiving commercial broadcasters' offers for the TV station, which operates on Channel 31. Brokers estimate it's worth $75-80 million. The sale will displace a unique mix of programs including a daily block of foreign-language broadcasts, specialty movie festivals, and WNYC productions such as In the Mix for teenagers.

Under the agreement, the foundation will pay the city $20 million, divided into equal annual installments over six years--a total far lower than the $35-50 million market value put on the radio stations.

Though the selling price may be a bargain, it is higher than the foundation originally offered to pay. Last fall the city rejected its offer of $10 million cash plus in-kind services for all three stations, to be paid over 10 years, according to Darrow.

Paying $3.3 million a year for the next six years will require extraordinary fundraising efforts by the WNYC Foundation. The radio-TV operation now raises about $4 million a year toward operating costs, said spokesman John Platt, and will have to make up the loss of the municipal subsidy of $1.1 million.

Major foundations already have expressed interest in helping, but listeners will have to contribute several millions a year, he predicted. "When you approach a foundation, you need to say the board and the public are being asked to do 'X,' and we'd like you to do 'Y.' "

The Republican mayor was persuaded by the argument that listener donations are a signal that the market supports WNYC, according to Darrow. "He's very much enamored of the notion that markets need to decide the direction of government. ... Selling to the highest bidder [wouldn't] permit public broadcasting to show you the public wants it and supports it." [Strong fundraising in 1994 may have impressed the mayor.]

First and last muni station

WNYC-AM was the first municipal station to sign on in 1924--before the BBC began broadcasting--and will be the last to leave city control, according Platt. Sale of the stations had been proposed periodically in recent years as mayors struggled against crushing budget deficits. Since Giuliani took office in January 1994, he has proposed variously selling one or all of the stations, as well as several hospitals and other municipal assets. He pledged last May not to sell the FM station without finding a comparable frequency for WNYC to continue operating, but that option didn't pan out.

Negotiations with Giuliani privatization advisor Richard Schwartz and Deputy Mayor John Dyson settled on the basic agreement during the week of March 6, according to Darrow, and the city gave it a "handshake" March 21 just before it was announced. The foundation board, which had previously opposed the sale of the TV station (though it couldn't block the sale), confirmed the arrangement on the 21st.

As part of the deal, the city will let the radio stations keep their facilities in municipal buildings for at least six years. "We will live rent-free, just the way the Metropolitan Museum lives rent-free in Central Park," said Darrow. The city's commissioner of cultural affairs, Schuyler Chapin, will join the foundation board as an ex-officio member.

In earlier talks, the foundation offered in-kind contributions such as public service announcements for city cultural events, as well as continued technical services for City Hall events, but the city didn't "attach importance" to either, according to Darrow. He was not certain whether those obligations will figure in the formal agreement yet to be drawn up.

The TV and FM stations could be sold freely because neither operates on a channel reserved for noncommercial use. The FCC restricted the AM station to noncommercial use several years ago when it extended the station's broadcast day, but the license didn't have great market value, according to WNYC.

The city's school board still owns Brooklyn-based WNYE-FM and TV, which have escaped the auction block in recent years.

 

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Message sent to City Hall
Callers triple pledges in support for WNYC

Originally published in Current, March 14, 1994

Faced with the well-publicized risk that New York City will sell WNYC-AM/FM/TV, the stations have tripled their previous pledge record.

In an eight-day drive ending March 2 [1994], the stations drew $1,435,045, compared to the previous eight-day record of $450,902 set last October.

"The drive is a revelation that the vast majority of our listeners and viewers treasure these stations and strongly oppose the idea of selling them," said WNYC President Thomas Morgan.

"That was our pitch," said William Mullahy, managing director of membership: "'Ladies and gentlemen, it is important to send City Hall a message.'"

The number of pledges also tripled, from about 9,000 in the usual February drive to more than 27,000, Mullahy said. And the number of new members nearly tripled from about 5,000 to 14,552.

It was the first pledge drive for new WNYC-AM afternoon talk host Curtis Sliwa--a supporter of new Mayor Rudolph Giuliani--whose sudden hiring last month touched off a barrage of newspaper stories and editorials highlighting WNYC's precarious position [Earlier articles].

A committee advising Giuliani has recommended sale of the stations to help relieve the city's budget squeeze, though the mayor has also put forth the option of maintaining the stations if they will become completely self-sufficient. Morgan has suggested that the WNYC Foundation will reach that goal by the end of 1997, eliminating the $1.7 million subsidy now paid by the city.

City officials periodically consider selling the stations. The FM and TV licenses, which are not reserved for noncommercial use, could bring the city a substantial one-time gain. The AM license would have limited dollar value; it was converted to noncommercial status when it went from daytime-only to 24-hour broadcasting in 1992, according to Managing Director for Radio Larry Orfaly.

Even the pledge drive's "resounding response" doesn't guarantee that the mayor won't eventually choose to sell the stations, Mullahy said. The city's budget for next year will be completed next month, he said.

Mullahy wouldn't comment on pledging during Sliwa's program or any other time period. Critics of Sliwa's hiring said they'd donate only if he is pulled off New York Beat, but Mullahy said few callers had attached such conditions to pledges. Besides, he said, there are always conditional pledges like that. "Somebody hates every show we have."

 

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To Current's home page

Earlier news: WNYC hired a supporter of Giuliani as a talk show host in 1994, but the decision did not ultimately protect the stations from sale.

Earlier news: Previous WNYC chief, Thomas Morgan, was appointed by a friend, the previous mayor, 1990.

Later news: Ethnic programmers on WNYC-TV try in vain to prevent sale of station to ITT/Dow Jones, 1995.

Later news: With a big mortgage and a new president, Laura Walker, WNYC radio begins a new life, 1996.

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