KCPW in Salt Lake City is less than two weeks from a loan default that could put it off the air.
The new nonprofit licensee celebrated its purchase of KCPW frequency to maintain the news/talk station in 2008, but it's now struggling to make payments on loans that financed the $2.4 million purchase.
Wasatch Public Media has until Oct. 31  to pay off a $250,000 loan from National Cooperative Bank, and if it fails, the bank will call in a separate $1.8 million loan.
A rescue package put together last week by Salt Lake’s Redevelopment Agency fell through over the weekend. Now General Manager Ed Sweeney is working to secure a direct loan from the city.
“We should have gone to the city in the first place but the RDA invited us to make the application,” Sweeney said in an interview.
The City Council voted unanimously on Oct. 11 to approve the RDA loan, overruling the recommendation of the agency’s loan committee. The committee, comprised of citizen volunteers, questioned whether KCPW would be able to repay the loan, according to Sweeney. On Oct. 15, he learned that the RDA was backing out.
Sweeney predicts the station has a “good shot” at securing financing through the city’s revolving loan account, but he must also persuade National Cooperative Bank to accept debt financing of the $250,000 payment.
NCB also holds the $1.8 million note that the station must pay off next year — sooner if KCPW defaults on the smaller debt.
Sweeney is waiting anxiously by his phone, working to secure all the approvals needed before the next city council meeting Oct. 25, just five days before the $250,000 payment is due.
“It’s right down to the wire,” he said.
Wasatch has been laboring to repay funds it borrowed to buy the station's license in 2008 from previous owner Community Wireless, a pubradio operator in the nearby resort town of Park City, Utah. The $2.4 million price tag was financed largely with loans from the bank and Public Radio Capital's Public Radio Fund.
Donors had pledged to help the station with the debt but the sum of their actual gifts came in $236,000 short. One backer failed to deliver on a pledge of $175,000, according to Sweeney.
KCPW turned to listeners to help cover this month’s payment. It held a 12-day on-air fund drive, upping its usual $200,000 goal to $450,000. Pledges totaling $255,000 set a record, but they weren’t enough to cover both operating expenses and repayment of the loan.
The loan from city government, if approved, would come due in six months. KCPW plans to stage another on-air fundraiser before year’s end, while sending out email blasts and direct mail to reach that goal, Sweeney said.
Even if the station covers its payment, it has another huge financial hurdle ahead. Its $1.8 million loan to National Cooperative Bank must be paid off by Sept. 30, 2012. The station will work to repay as much as it can and try to refinance the rest, Sweeney says.
KCPW has had preliminary talks with Utah Public Radio, licensed to Utah State University in Logan, about collaborating in some way, but no agreement has been reached.
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Park City's Community Wireless scored big in the radio license market, but its later purchases have soured and the licensee began pulling back.
The seller approved an intent-to-buy offer from a new Salt Lake City nonprofit, March 2008.
New nonprofit arranges financing to buy FM channel and maintain news station in Salt Lake, May 2008.
Allocating emergency funding to a public radio station isn’t an appropriate use of city redevelopment funds, in the view of the Salt Lake Tribune’s op-ed writers. “Regardless of KCPW’s value to the community, the City Council has strayed far from the purpose of capital redevelopment.”
A city councilman tells the City Weekly that KCPW is an important part of the Salt Lake’s efforts to revitalize its downtown. “If KCPW were not in one of our city facilities and an integral part of what we are trying to do downtown, we would have to think twice about the loan,” he said.
The city’s financial assistance doesn’t compromise KCPW’s ability to rigorously report on the local government, KCPW’s Eric Ray and Jeff Robinson write in a letter to the editor.