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Colorado Public Radio on refinancing, fund drive, launch of Open Air

Categories: Media

sean nethery.jpg
Sean Nethery.
Colorado Public Radio has quietly been making lotsa news of late, and almost all of it requires some explaining -- including word that CPR has purchased (for $8.346 million) its flagship station, KVOD-FM/88.1, which most listeners likely believed it already owned. Below, senior programming veep Sean Nethery details this move and comments on a just-completed fund drive and the progress of the new Open Air format.

Since 2008, CPR has been operating KVOD under a local marketing agreement (LMA) with Boulder's Public Radio Capital through a Denver-based subsidiary, PRC Denver. Public Radio Capital helps services like CPR with station purchases and the like -- and so, notes Nethery, "the simplest way of saying this is, we're in the process of refinancing our debt. And we're doing it for the same reason anybody else is refinancing right now: We're taking advantage of better interest rates."

According to Nethery, it's "too early to say for sure" that CPR will save big bucks via this arrangement. "We're not looking for lower payments, per se. But owning the station gives us that asset as part of the other stations we own."

The deal doesn't mean CPR just plunked down more than $8 million. Rather, it simply signals that a banking process is underway. Nethery expects it to be completed by June.

mike flanagan.jpg
Open Air's Mike Flanagan.
In the meantime, CPR is celebrating the successful conclusion of what Nethery describes as a "record-breaking" fund drive -- one that collected more than $1 million from over 8,100 pledges. This performance is something of a trend, Nethery maintains. "It's certainly not just Colorado Public Radio. A number of public-radio organizations have seen really strong support from individuals and businesses. It speaks to the growing importance of public radio in people's lives in the current media world -- especially with news and information, but also classical radio. The last two big classical stations in the country have become public stations, so there's no classical station anywhere in the U.S. on commercial radio."

Moreover, Nethery sees the response as proof that terrestrial radio remains a viable medium. "It's still an important way that people get their news or information or music," he says. "We certainly see the audience growing bit by bit on station websites in terms of use, but it's still dwarfed by the traditional radio audience."

Are the occasional Congressional attempts to ban federal funding of public radio a factor in the rise of donations in what remains a sluggish economy? Nethery doubts it. "I can't say we get an awful lot of feedback about that, and we don't make the point much at all. Already, 94 percent of our funding comes from the community, and we have a growing member base of over 38,000 households, the most members we've ever had. So in an environment where our audience is stable, we're having more people decide individually to take personal responsibility by donating -- that it's important enough to do."

The number of donors who pledged based on their support of Open Air, the new indie-rock format at 1340 AM, was modest; Nethery estimates that "several hundred" people who opened their wallets mentioned their fondness for the outlet, and that Arbitron ratings to date are "measured in the thousands." But the response thus far to the station, which represents what Nethery calls a "mini-trend" toward public radio services offering indie rock, shouldn't cause fans to worry about plug-pulling anytime soon.

"On public radio, we work slowly and deliberately," he emphasizes. "We don't expect to try something for a little while, like in commercial radio, then say, 'It didn't work. We're going to dump it.'" He sees the station as complimentary to Radio 1190, a CU-Boulder station that preceded it, and from whose ranks much of the staff (including manager Mike Flanagan) was culled. "We think Radio 1190 is great, but it's a student station," he says. "We're focusing on a consistent approach throughout the day and the week." As such, "we're looking at a three-year growth plan."

And in today's media scene, that's a long, long time.

Follow and like the Michael Roberts/Westword Facebook page.

More from our Media archive: "Open Air, new CPR station at 1340 AM: Launch emphasizes the safe side of adventurous."


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22 comments
Pete Simon
Pete Simon

Andnow for some good news about the public radio community…yes sports fans thereis life after CPR.  I know, firsthand.

 

TheNews Staff at KUNC (91.7 and 91.5 on your Front Range Radio) is growing andgetting better all of the time with the recent addition of more reporters and anew host for Morning Edition, all the way from one of Kentucky’s mostsuccessful public stations.

 

Aroundthis amazing State, with several vibrant public/community-based stations, KVNF,Paonia stands out.   They were recentlyawarded a national grant to developprogramming for a national audience, with a sense of community in mind. KVNF ISTHE ONLY PUBLIC STATION IN COLORADO (and the only small market station in the entirecountry) TO RECEIVE THIS HONOR.  Thegrant is one of just ten awarded for this effort.    

 

Here’s to hoping that in thefuture Westword will continue with its’ legacy of (usually) championing newand diverse forms of art, media, and expression, including that available overthe public’s airwaves.

 

Pete Simon 

 

Ruby Hill
Ruby Hill

http://www.businesswire.com/ne...

What's CPR's bond rating?  Fitch says it's BBB- which is the lowest of lower medium grade bonds.  Much lower and they'd be in junk bond territory.  The above link from early February 2012 explains all.

C-Spot
C-Spot

Here is some other big CPR news:

The news department is expanding -- again. The jury is still out about whether or not it will result in any more actual news content. For those keeping track, former journalists Dan Drayer, Dan Meyers, and Michelle Fulcher moved on to communication jobs at the University of Denver, the University of Colorado at Denver Health Sciences Center, and the University of Colorado at Boulder respectively.

CPR management is creating more layers inside the organization. Soon, there will be Senior VPs and VPs, in order to distinguish between the CPR "lifers" and "soon-to-be lifers." Also, look for some more org chart machinations at the peon level.

Soon-to-be Senior Vice President Sean Nethery is getting groomed for the big chair. That's quite impressive for a guy who used to manage a pizza parlor. Or, was it an adult video store? I forget. Maybe it was both? And who says throne sniffing doesn't work?

Peter Carsenna
Peter Carsenna

Nethery throw-away lines, and one big surprise...

"We certainly see the audience growing bit by bit on station websites in terms of use, but it's still dwarfed by the traditional radio audience." Proof?

"I can't say we get an awful lot of feedback about that, and we don't make the point much at all." Bridging technique to introduce a bullet-point.

"Already, 94 percent of our funding comes from the community, and we have a growing member base of over 38,000 households, the most members we've ever had." Bullet point from a CPR press release.

"So in an environment where our audience is stable, we're having more people decide individually to take personal responsibility by donating -- that it's important enough to do." So, audience is not growing, but subscribers are? OK, proof?

"But the response thus far to the station, which represents what Nethery calls a "mini-trend" toward public radio services offering indie rock..." What is a "mini-trend?" I guess if OpenAir goes from zero to "thousands," that is what he means. Right?

"He sees the station as complimentary to Radio 1190, a CU-Boulder station that preceded it..." This line is the classic variation on the "more public radio is better for all public radio stations," and it is a favorite CPR bullet point.

+++++

"On public radio, we work slowly and deliberately," he emphasizes." This is the most truthful comment in the entire article.

Peter Carsenna
Peter Carsenna

Nethery by the numbers...

"94% of funding" and "38,000 households" is consistent with most corporatized NPR stations in large market cities. However, the NPR national numbers have leveled. Will Nethery provide content or context with his remarks? Will Roberts require him to do so? From this blog post, it seems not.

NPR Audience Numbers - 2009http://www.slideshare.net/nprr...

NPR Audience Numbers - 2010http://www.slideshare.net/...

NPR Audience Numbers - 2011http://www.slideshare.net/nprr...

Peter Carsenna
Peter Carsenna

Nethery by the numbers...

There are no commercial classical stations on the air due to low audience demand. CPR's national, classical music experiment with KUNC-FM (Los Angeles) called "CPRN" failed miserably. Setting aside whether one believes in the value of music preservation, the classical music format on terrestrial radio isn't thriving, which is why many public radio stations are dumping music formats like classical and jazz or moving these formats to the HD radio channels in order to create more space for news programming. As the classical music audience ages out, look for CPR to introduce a dual-news format.

Peter Carsenna
Peter Carsenna

Nethery by the numbers...

$1,000,000 / 8100 pledges =  $123.46 average pledge. This average amount / pledge is consistent with CPR's historical average. While they may not report it to other news organizations or its audience, the average amount / pledge has probably not changed in more than a decade. So using the term "record-breaking" to describe CPR's success requires just a bit of context; none of which is provided by Nethery. And, public radio -- CPR included -- prides itself on context. Can you tell that Nethery's background is marketing rather than journalism?

Peter Carsenna
Peter Carsenna

Nethery by the numbers...

As for Nethery's "asset" comment; this too is spin. That CPR offered in the neighborhood of $8 million in 2008 to buy KVOD-FM/88.1 is utterly astonishing. First, CPR horrendously overpaid for this under-powered, non-commercial frequency. Second, fair market value for KVOD-FM/88.1 in 2012 is likely 1/3 to 1/2 that price. How doesn't actual ownership of more debt make CPR's balance sheet better, unless Nethery thinks KVOD-FM/88.1 is worth $8.346 million? Substantively, the change from leasing to ownership provides very little benefit to CPR. But, PRC's balance has no doubt improved. Again, Nethery spins. But, that is about what one should expect from a "senior" corporate mouthpiece. Next, Nethery will tell listeners that OpenAir (KVOQ-AM/1340) is worth the $4.5 million it paid for that frequency.

Peter Carsenna
Peter Carsenna

Nethery by the numbers...

CPR had no real choice BUT to lease the station in 2008, because their financial situation at the time wouldn't allow them to buy KVOD-FM/88.1. That is why the PRC LLC was created. PRC, without this other entity, was not legally allowed to own KVOD-FM/88.1 on CPR's behalf in order to lease it back to CPR. In 2008, CPR "re-financed" their debt in order to structure this arrangement. Characterizing this new action as a "re-finance" is simply untrue. Public radio listeners deserve accurate reporting from a company that purports to do "news." And, Westword listeners should expect better from Roberts. Nethery is lying, and Roberts is parroting this talking point.

guest
guest

I'm curious about the CPR/KVOD/PRC deal. It sounds like it was done in 2008, so:- CPRN was dissolved and managing directors Max Wycisk and Brenda Barnes (CPRN/USC)   (CPR) were paid out a couple hundred grand by USC- Wycisk continued work as president of Colorado Public Radio (CPR)- Public Radio Capital's (PRC) managing director Marc Hand replaced Wycisk as the   co-managing director of (new) Classical Public Radio Network (CPRN) - Marc Hand/PRC financed this KVOD deal for his predecessor, Wycisk- PRC used to be called Station Resource Group (SRG) and Wysick was their Board chairman- While everyone thought CPR owned KVOD, the station it matured into an over $8 million   payout to Public Radio Capital-This payout is funded by listener donations?

Shawna
Shawna

I would also like to point out that KGNU Community Radio is alive and thriving in the Boulder and Denver markets at 88.5 FM and 1390 AM. They offer live, local news every weekday, call-in talk shows and eclectic music ranging from African to Reggae, from Classical to Rock. Also available online at kgnu.org. tune in! 

Peter Carsenna
Peter Carsenna

CPR's bond rating for their 2002 issuance is the same as it was last year, except that is no longer trending negative; rather neutral. That financing was for their AM expansion, acquisition of the stick, building and land at Ruby Hill, the KVOD call letters and music library, etc This next deal will be for $8+ million. Let it ride!

guest
guest

RE: No commercial classical stations

This is a significant point. In fact, KDFC in San Francisco was the last commercial classical station left in a major market when PRC & CPRN acquired it. Just prior,  in January 2011, while still on the commercial band -- KDFC was Top 7 Arbitron-rated and reported their best listener numbers on record.

The "spin" presented to local listeners frustrated by KDFC being moved to the left-of-the-dial which diminished the signal strength significantly; left long-standing local advertisers with no channel, and displaced beloved college station KUSF-FM -- was similar to the points in your post, which mirror PRC's messaging points.

In fact, there is audience demand for classical. Part of PRC's equation is promoting the idea of the threat to substantiate their role as protector, when what they actually do is transactional. Classical music offers a very targeted, affluent donor-base when these stations become non-comm.

So ... the first classical music experiment CPRN tried, in the Wycisk and Barnes era, may have failed -- but CPRN is alive and kicking now being run by Barnes and PRC's managing director Marc Hand. CPRN partnered with USC in 2008 and are now  conferring the University's educational qualifications to amass stations up and down the coast of California. The model is to position themselves as "preserving classical music," while also overly stating that targeting "classical music listeners" to raise 25% of their revenue outside of Southern California will allow them to fund a Classical Online Music Delivery service.

Another example is WDUQ in Pittsburg, which hired PRC to broker their deal to save the beloved local Jazz station. Midway through, PRC switched from broker to buyer, under bid their former client and won.  If these Jazz and Classical stations have such low audience demand, why is buying them so profitable?

Seems as though there are plenty of reasons to raise questions about an $8+ million the KVOD deal -- and also to shine a light on this rather odd syndicate profiting from public airwaves.

guest
guest

- Is $8+ million fair market value, then ... or now?

- According to Marc Hand (PRC/CPRN) --CPRN was the first non-profit/LLC hybrid approved by the FCC to hold an NCE-FM license. Their 990's show this dates back to 2008, although he said as of 2010. Did PRC do this first? If so, did they have FCC approval?

- KVOD & public radio listeners also deserve accurate reporting because this is largely funded by their donations. The deal seems to dovetail back to a handful of people  profiting, in multiple ways, through arbitrage-like manipulation of airwaves protected to provide local public value.

- If PRC owned KVOD ... and CPR is now buying it, how is this re-financing?   Simply because PRC & Wycisk have had their hands in each others pockets for so  long?

Michael Roberts
Michael Roberts

Thanks for the post, Shawna. Keep up the good work at KGNU.

Peter Carsenna
Peter Carsenna

Commercial radio station ownership did indeed destroy a fair amount of commercial classical radio demand. But during the halcyon days of consolidation, classical radio in many markets was allowed to wither and die on the vine.

"Why is buying them so profitable?" In public radio, jazz and classical are two of the least efficient formats. So, I am not sure they really are that profitable for that use. Perhaps investors are betting long on their eventual sale of the spectrum?

Peter Carsenna
Peter Carsenna

$8+ million is astonishing. The dealer who brokered it must still be laughing. It is my understanding that PRC's original purpose was bond issuance, not ownership. Arbitrage is an apt word. Value (public or otherwise), it seems, is in the eye of the beholder. PRC arranges financing. PRC's adjacent entities hold licenses. If CPR is "re-financing" now it's probably because they now qualify for credit sufficient enough to take over the property they had been leasing from PRC-Denver (Public Radio Capital Holdings).

ID Number: 20071311935Name: Public Radio Capital Stations LLCRegistered Agent: Erin MoranRegistered Agent Street Address: 834 Marshall Road, Boulder, CO 80305, United StatesStatus: Good StandingForm: Limited Liability CompanyJurisdiction: ColoradoFormation Date: 07/05/2007Term of Duration: PerpetualPeriodic Report Month: July

In 2007-2008 CPR probably could not qualify to buy KVOD-FM/88.1, especially since they were debt-laden with 1340-AM (Denver) and 1490-AM (Boulder), and because the economy imploded.

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