KUOW’s GM discusses the ‘jaw-dropping’ offer to purchase KPLU

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The past year was a tumultuous one for the two NPR stations serving the Seattle-Tacoma area. Once slated to be sold to the University of Washington, which runs competing station KUOW, Tacoma’s KPLU raised $7 million in under six months and secured its independence from licensee Pacific Lutheran University. On a recent episode of our podcast, host Adam Ragusea talked to leaders from both stations about the lessons they learned from the experience and whether the Seattle area is ultimately better off with two separately operated NPR stations. In the first interview, KUOW General Manager Caryn Mathes gave a behind-the-scenes look at how the potential sale came together. This transcript has been edited for clarity.

Caryn Mathes, KUOW: I remember the exact date: It was late January in 2015 when a representative of the university came to talk to me about it.

Adam Ragusea, Current’s The Pub: And how was it pitched to you?

Mathes: It was pitched to me that they had decided that it was no longer in their strategic aims to have a radio station, and that they wanted to get out of the audio business. I was surprised; that was fairly jaw-dropping because of the conversations that KPLU’s g.m. and I had had prior to this occasion. Joey [Cohn] had approached me about possibly consolidating our development divisions, or maybe even consolidating newsrooms. And my response to him was, “Well, you have to bring your licensee to the table. How do they feel about that? If you bring your licensee, I’ll bring my licensee and we can talk. Otherwise we have nothing to talk about.”

Current: So the university rep who talked to you — did this person just come right out and say, “Hey, you want to buy it?” and then suggest a price to you? What was the conversation about at that point?

Mathes

Mathes

Mathes: It was pretty direct: “We’ve done some vetting on you” — meaning KUOW — “and we think that the service has the best chance of surviving and sustaining under your auspices. We have shopped the frequencies around to other entities, but we think you could maintain the spirit and the values in which we’ve run this service for almost 50 years. Are you interested?” And after that I kind of picked myself up off the floor … because I was very surprised. That was not what I had expected, and I actually asked a couple of probing questions, the gist of which was, “Are you sure?” because it was just surprising to me.

The representative assured me that, yes, they were sure, and that they had talked to the head of their board of regents and their president and some of the president’s senior counsel, and was I interested? I said, “Absolutely I’m interested, but I have other entities to consider. I have to talk to the U-Dub [University of Washington]. We have a separate 501(c)(3) board — Puget Sound Public Radio — and I need to talk to them, and I’ll get back to you.”

Current: Who’s the licensee? Is it the board or the university?

Mathes: The University of Washington holds the license to KUOW, but they are assisted; they have a management contract with a separate 501(c)(3) for Puget Sound Public Radio.

Current: How many months or weeks elapsed between that meeting and when news of all of this finally became public in, I think, November of last year?

Mathes: I talked to U-Dub, my boss and my Puget Sound Public Radio boss, and my U-Dub boss said, “I want to look them in the eye and make sure that they’re serious, because I can’t understand why anyone would want to divest of a public radio station.”

And so we got a meeting together in mid-March, and the representative of Pacific Lutheran University came. The head of KPLU, Joey Cohn, came. And basically they restated in front of me and my boss the same issues: that it didn’t fit their strategic goals and that they wanted out of the business. I had a whole list of questions prepared, and they said, “Nope, nope, nope, we can’t answer any of those questions unless you go under a nondisclosure agreement now.”

And so we set about working on that, because it was obvious we weren’t going to get any more information that we needed to vet the opportunity unless we did that, so we did that. I would say negotiations began in earnest just on the letter of intent; the actual purchase agreement was something different, and that was worked on after the announcement became published.

Current: When was that?

Mathes: It was several months after that March meeting, so the public announcement was in November.

Current: Eight months from when that first meeting happened to when the public first got a whiff of it. I don’t want to talk about whether or not this is a fair characterization, but one of the dominant public narratives came to be, “KUOW is gobbling up the little guy and doing it without consulting the public.” And I wonder if in retrospect there is anything that you or the folks over at PLU could have done to forestall that.

Mathes: If I had been in control of the communications, it would have been handled differently. But I and my licensee and my board were not in control; the seller totally called that tune.

Current: You had signed a nondisclosure agreement, right?

Mathes: Yeah, I think that’s a good question to put to them.

Current: But maybe what you learned is, don’t sign a nondisclosure agreement. Here’s the thing: I’m a guy who’s worked in the system, I had never worked at your level, I have no idea how these business machinations work — and I think a lot of my listeners are like me in this respect. Why can’t it be that you guys have a meeting with PLU, and then you say, “OK, now let’s say something public. Let’s say, ‘Hey, guys in the public, we’re thinking about maybe doing this thing. We haven’t really done much work on it but this is a possibility. Weigh in.’” Why do you think it can’t be like that? Why can’t it be that open?

Mathes: I think a different route could have been pursued, something along those lines, not exactly what you just described. But, for example, they could have asked for requests for proposals. “We’ve decided that this is no longer in the strategic interests of Pacific Lutheran, and for a two-month period or whatever we’re going to accept requests for proposals.” But when you don’t have a fully formed idea of, “Here’s what we’re selling, and here’s what you’re willing to buy,” and you try to do that totally in the light of day, you get disparate disagreement, fear of change, it foments all these false narratives. Inflamed passions fog reason, and pretty soon nobody can tell what the deal actually is.

Current: I hear what you’re saying but, from a PR perspective, could it have gone much worse than it did?

Mathes: It could have gone much worse than it did. Oh yeah, absolutely. We got the letter of intent saying, here’s what they’re selling and here’s what we’re buying. Then, because the University of Washington is a public university, they had to give public acknowledgment that they were authorizing us to go farther to nail down a purchase agreement. Now, after the public announcement, it was 11 more weeks before the purchase agreement was signed, and public questioning and concern did actually modify the purchase agreement. Again, it’s a false narrative that the public was totally shut out of this because, as a public university, the University of Washington had to vote on agreeing to move forward in public.

Current: Yeah, but that’s public input on dotting the i’s and crossing the t’s of an agreement; it’s not public input on whether this thing should happen at all, right?

Mathes: But that’s what happened.

Current: I suppose that’s a good point. That is ultimately what happened, right?

Mathes: I think the system worked. The only unfortunate thing was so many false narratives that surfaced. Early on we were not allowed to say that we were invited in, so the narratives about the gobbling up were unfortunate because this was nowhere on my radar. I’ve got tons of other fish to fry, advancing KUOW to its optimal level. We were invited into this process. When we learned that a sale was going to happen no matter what, and not necessarily to another public entity, that concerned us.

KUOW has stepped up on prior occasions to try to maintain frequencies in the public realm, so that was a natural thing for us to do — although it took several months to convince my 501(c)(3) board that this was prudent from a financial standpoint. But to be denigrated the way we were in the public because of some false narratives — and we were in a situation where we couldn’t defend ourselves and we couldn’t share everything that had happened — that was unfortunate. But other than that, I think the process worked.

Current: So takeaway lesson for your peers, other top executives at stations around the country: Is it, don’t sign a nondisclosure agreement like that? Was that just a bad idea from the start?

Mathes: I wouldn’t say never, because it’s really, really difficult to negotiate delicate, progressive, groundbreaking collaborations in the light of day. Like I said, you get this fog of inflamed passions and fear of change, and just because you know there’s vociferous disagreement with something doesn’t mean that it still isn’t the right thing to do.

Current: I don’t think stations need to openly hash out every time they move Wait Wait from 10 to 11, even though a bunch of people are going to freak out about that. But something as big as this, a merger and acquisition, even if it’s tough, is there not some obligation to discuss even whether or not it’s going to happen with the public who in effect own the institutions?

Mathes: I think there’s no hard and fast rule about that, Adam. Like I said, one method that could have been pursued was to take requests for proposals, and then you get public input, you can calmly read all the proposals, have follow-up questions, whatever you want to do. That was not the route that this seller wanted to pursue.

Current: Diplomatically put. [Mutual laughter.] Big question: So it’s all said and done, you’re through it. Would public media in your part of the country have been healthier in the long term had your two institutions come together?

Mathes: I cannot say that definitively. There’s a lot of evidence around the system nationally where consolidation of operations, and then clear differentiation of the content services, has been very successful. I believe that of the top 20 public radio entities in the nation, 60 percent of them have done something similar to this. They’ve acquired an additional frequency or frequencies. They fully differentiated between [them] — if they’re going to have a music service, sometimes multiple music services, and then a news service, that differentiation allows each service to reach its maximum potential.

So there is evidence that, sure — Tom Thomas of Station Resource Group, our independent think tank, will tell you that scale matters. And in this disrupted media environment, scale matters more than it ever has before. To give you an example, while all the 88.5 stuff was going on, we were working on our first-ever strategic business plan. Our plan calls for us in the next three years to invest $2 million in totally transforming our digital — our platforms, our tools, our content-making, our publishing. Having that kind of scale to be able to invest $2 million is somewhat of a rare thing in public radio. Consolidation and then differentiation of services into music and news, we think, of course could have had a wonderful effect in improving the service for the people of this community and the region. Is that the only way to do it? I can’t say that.

Current: Yeah, but from where you sit, is the possibility that your two institutions would ever come together — maybe in a true merger or less so than an acquisition — is that just off the table based on this sort of painful year that you have been through? Or could that happen at some point in future?

Mathes: It’s not anything I’m contemplating. I’m not the last word on that. My board would have something to say, my license-holder would have something to say. But KUOW is a very strong station. We have the sixth-largest newsroom in the system; right next to us is WBUR, which is which is twice our size, so scale matters. But I’m about the business of making KUOW Puget Sound Public Radio as strong as it can possibly be to serve the citizens of this community and deal with the crazy tangled balls-of-string of issues that we have to help people navigate as citizens and understand, so we’ve got more than enough to do.

  • Brad Deltan

    I think the flaw here was not that the public should’ve been more involved. The flaw was that, speaking broadly, KUOW and PLU shouldn’t have entered any negotiation without exclusivity. I assume the details about that factor are hidden by the NDA, but that doesn’t mean you don’t do an NDA. It just means that a buyer shouldn’t accept unacceptable terms by a seller…regardless of whether they’re hidden by an NDA.

    Again, this is speaking broadly. The details are hidden by an NDA, but I could easily see a very, very hard decision being made by Mathes to say: “these terms are bulls**t, but the potential upside is too great to walk away from.” Unfortunately, that gamble didn’t work out. It happens.

    As for involving the public as described here, I vehemently disagree with that. It gives ridiculously asymmetrical influence to individual people. Each person of “the public” should only have a correspondingly tiny amount of influence on the project. But that’s not how life works. A small group of a few hundred people can magnify their impact hundreds-fold by leveraging the media, etc. It’s running a company by a mob, which cannot work.

    “The public” already made their decision about who’s actually running things when they made their individual donations to the station/university. Whether they did so consciously or not, they were “voting” to have the existing management structure in place to represent their interests.

    And just like with politicians, you might vote for them but that doesn’t mean they’re going to do exactly what you wanted them to do. You make your vote and then you live with what you get, hoping you voted correctly.

    If “the public” were involved in every one of these deals, none of them would happen because invariably the loudest voices are the ones opposing any change whatsoever. Besides being a tremendous strategic loss, it’s also an illegal abrogation of responsibility as an FCC licensee. “The people” are not the license-holders. The colleges are. Regardless of whether they’re public institutions or not, it’s the designated leaders of the colleges who make the decisions, period. You don’t see “the people” having final say when a new President or Trustee is elected/chosen, or when a new dorm worth tens of millions is committed to being built. Why this obsession with involving “the public” with just another capital asset?