Capital: With federal aid gone, tech fundraising starts from scratch

The evaporation of the Commerce Department’s Public Telecommunications Facilities Program and the dwindling of other funding sources have created a critical situation at stations needing to purchase or update equipment for broadcasting.

PTFP had provided public stations more than $233 million in capital funds since 2000. The congressional budget ax fell in April 2011, zeroing out PTFP’s annual $20 million allotment for matching grants.

Compounding the problem is the parallel fall-off of state money, which also helped some stations cover equipment costs. At the same time, hardware for the first digital TV installations in the early 2000s is slowly approaching replacement time.

The situation is likely to deteriorate further. Problems created by deferred maintenance, both in public TV and radio, are becoming acute, said Peter Morrill, g.m. of Idaho Public Television. “That’s going to be the big story of the next year or two.”

The complex challenges are sparking unique responses. KUER-FM in Salt Lake City went on the air to explain PTFP’s demise to listeners and discuss the station’s technology needs, generally not the focus of pledge drives, and came away with nearly $200,000, exceeding its goal. In southern Oregon, Jefferson Public Radio is bringing on two new stations by reusing secondhand equipment. Public Radio Capital is exploring the idea of bond-financing a pool of capital money for stations around the country. And a six-hour intensive session at this year’s National Federation of Community Broadcasters conference in June will school smaller stations on the nuances of major capital fundraising, something they’ve never faced before.

“The first things out the window”

The past year was devastating for pubcasters in need of capital. The field lost not only PTFP but also most of CPB’s supplementary appropriation, which originally helped pubTV stations going digital and lately had given CPB a rare pool of another kind of capital — support for R&D of digital services. Congress cut that supplemental appropriation from $36 million to $6 million for last year and to zero for this year.

Since then, CPB has reversed course on several pieces of its American Archive project, which was moving toward digitizing, cataloging and archiving historic public radio and public TV recordings. After two years with CPB, the project’s director left the staff this month.

R&D money has also been going to the planned Public Media Platform for online audio and video, which NPR is developing with CPB funds.

Also trimmed back: funding for digital equipment for rural stations through the Rural Utility Service (RUS) of the Department of Agriculture. Its budget shrank from $4.5 million to $3 million.

Idaho PTV, licensed to the Idaho State Board of Education, provides an example of how this is all playing out. Until the economic downturn, the state had funded replacement of failing and obsolete equipment for the 43 translator stations that help Idaho PTV reach much of its massive coverage area.

“I suspect Idaho is not unique in that respect,” Morrill said. “When states are forced to trim discretionary funds, maintenance and replacement are the first things out the window.”

The state and federal reductions of equipment money come just in time for exciters, key components in digital TV transmitters, to start reaching the ends of their 12-year expected lifetimes. Idaho PTV’s five current digital transmitters were installed between 2000 and 2002.

“I don’t know where I’ll find $50,000 for an exciter for a rural transmitter,” Morrill said. Nearly all of the Idaho network’s translators are located in rural areas, so it’s been able to secure some funding from RUS; in 2006, it received $308,512 to upgrade five rural translator systems. But the grants are available only for areas that meet strict criteria, Morrill said, such as certain percentages of students who qualify for school lunch programs.

On top of his concerns about updating and replacing core capital equipment, Morrill worries about emergencies. “If we had a transmitter hit by lightning, especially one serving a rural area — for the life of me, I don’t have very many options for keeping that service going.” PTFP had been able to make fast-turnaround grants in case of emergencies.

In Rochester, N.Y., WXXI “narrowly avoided” a tower collapse just this month after guy wires failed on one of its AM radio towers, said Norm Silverstein, station president. “We were lucky,” he said, “but the next time, whether it’s here or at another station, the lack of PTFP will really hit home.”

Meanwhile, the situation with WXXI’s TV automation equipment is getting tense. Much of the hardware and software dates to 2001 and 2002, and the software vendor has provided only limited technical support since 2006, Silverstein said. “Our head of engineering notes that this is ‘mission-critical.’ The equipment makes it possible for us to deliver four channels, and it must be replaced soon.”

One bright spot is that WXXI expects to save money by participating in a CPB-backed shared master-control project (Current, Oct. 3, 2011). “The benefit in the future is that stations in the centralcast will be paying for a share of replacing equipment, since we will be operating one master control instead of eight,” Silverstein said. A ballpark figure for replacing a single station’s digital master control would be around $1 million.

On reservations, ongoing needs

One of PTFP’s most vital jobs over the years has been midwifing new stations. “The lack of PTFP is a big concern for stations just getting onto the air,” said Ginny Berson, director of federation services at the National Federation of Community Broadcasters. “They have nothing — there is no place for them to go for the big bucks for the big equipment.”

That’s particularly vital for startup pubradio stations on Native American reservations. In 2008, the FCC granted 40 construction permits for stations, potentially doubling the number of Native stations nationwide (Current, Nov. 24, 2008). One catch: The tribes and other licensees have had to plan, raise money and build their facilities within three years. The recession also presented challenges.

So far, 25 of the 40 planned stations have been licensed, nine of the CPs have expired or will expire soon, four were dismissed by the FCC, and there was no information available about two, according to data from the Community Media Assistance Project in Portland, Ore., which helps noncommercial station startups.

“Basically, I don’t believe we would be on the air right now if it wasn’t for PTFP,” said Brad Walhof, station manager of KOJB-FM on tribal land in Cass Lake, Minn. As part of PTFP’s final round of grants in September 2010, the Leech Lake Band of Ojibwe received $238,046 of the total cost of $317,395 to launch the station, which now provides a first pubradio signal to some 6,430 people on or near the Leech Lake Reservation in north-central Minnesota.

PTFP money helped the tribal group purchase the transmitter (at a cost of more than $60,000), antenna and transmission line (around $14,000) and studio equipment, even the studio building itself. The station has been on the air since Oct. 24, 2011, beating its three-year FCC deadline by about five months.

KOJB carries traditional Native American music, including nearly all the programming from public radio’s Native Voice One satellite network, plus local features such as the popular “Ojibwe Phrase of the Day,” keeping alive a language that is dying with its elders. KOJB covers reservation sports and other events.

“It’s been terrific,” Walhof said. “Everyone loves the radio station. We’re connected to the community. We’re at community events, we’re putting out cultural information that was never available to the people of our area before.”

Walhof also realizes just how lucky KOJB was. “I feel very bad for the people who didn’t make the cut,” he said. “PTFP had been in existence for so long, everybody was thinking, ‘Well, if I don’t get the grant this year, I’ve always got next year.’ And now it’s gone, so what are those communities going to do to get their radio stations on the air?”

Hualapai Community Radio in Peach Springs, Ariz., also received one of the last PTFP grants — $11,000 to pay for a consultant to plan a station to serve the Hualapai Reservation in the northwest part of the state.

“Had PTFP not closed down, the next step would have been to request an implementation and construction grant,” said Terri Hutchens, who oversees the radio project. “Fortunately, our tribe was already moving in that direction.” The tribe has allocated money in 2012 to purchase generators, transmitters, licensing permits and receivers. It has also provided a studio building and two existing towers.

“I had hired a radio engineer to come out and assist us” early in the process, Hutchens said. “He wasn’t even here a month, and we saw that PTFP had been shut down — and he quit. He said, ‘Oh well, this radio station’s not going to happen.’ He didn’t have any confidence that the tribe would fund it.”

Hutchens remembers thinking at the time, “Wow, if we didn’t already have a building that we were utilizing or the tribe didn’t already have a tower, it would not have been able to happen.”

The project is proceeding. “When the FCC opens a window, we will be ready to go forward,” Hutchens said. A terrestrial station is important for the community because more than 50 percent of households do not have Internet access, she noted.

Confronting capital challenges

“PTFP meant a whole lot to us for a very long time,” said John Greene, station manager of KUER, licensed to the University of Utah in Salt Lake City. Over the past decade the radio station obtained PTFP grants totaling $900,000; it maintains 37 translators around Utah, many in mountainous areas. Its most recent major PTFP projects, in 2008 and ’09, changed three low-power translators to full-power transmitters in southern Utah and moved KUER’s main transmitter in Salt Lake City, at a total cost of nearly $300,000.

While those updates helped stabilize station needs, there will be no help from PTFP in the future. So for three days in early December, the station conducted its first on-air Drive for Technology. “We were letting our audience know — this [grant] program is gone,” Greene said. “People have heard us mention our translator system a lot. It gave us an opportunity to say, ‘It takes more than $100,000 just to have field crews doing maintenance out there every year.’”

KUER set a drive goal of $150,000 and brought in nearly $200,000. “We have so many technology needs, we’re going to have that drive every winter,” Greene said, although its length may vary and the drive could be moved to the Web.

A capital drive would be tough for Jefferson Public Radio. The regional service based in Ashland, Ore., runs 33 translators covering 60,000 square miles of southern Oregon and northern California, Many communities in the area are small, with households of below-average income. “And we just don’t have a bank or large foundations in the areas we serve, or corporate headquarters,” said Ron Kramer, executive director. “Most of our underwriters are mom-and-pop businesses. They’ll help, but the scale of what they’re able to do is proportionately less than in a bigger market.”

When Jefferson recently received FCC permits for two new stations, Kramer didn’t have the money for new transmitters. “We’re having to build them essentially out of stuff we have lying around” — equipment that technicians kept “just for the heck of it,” he said, including pieces dating to the early 1980s. So the new stations, in Coos Bay and Chemult, Ore., will depend on old hardware.

“A new analog transmitter is $20,000; a new HD transmitter is up in the $30,000s,” Kramer said. “We just don’t have that. So we’ll put them on the air with something from our storeroom. Hopefully that will buy us a few years, and we’ll deal with it then.”

Potential power in numbers

Public Radio Capital recognizes that disbanding PTFP has created a big gap in station funding. PTFP “was a tried and true resource that stations could go to,” said Marc Hand, managing director of the Boulder, Colo.-based nonprofit created to find channels and financing for new pubradio stations. Now that PTFP is gone, “if stations have to go to local banks and try to explain their need for a loan, my guess is that half the time the bank will say, ‘We’ll need to put a lien on your license’” — but that’s against FCC noncom regulations.

Hand’s response is to try creating a national pool for equipment financing. Combined bond financing for several local replacement projects could result in favorable deals, he said. “In doing this, the overall costs are reduced, terms are better, and it replicates the concept of building on national expertise in the same way that PTFP could.”

Public Radio Capital is now pulling together a multistation tower project with a single source of financing; it’s too early to discuss details publicly, Hand said. But the strategy is showing promise.

While the challenges of a post-PTFP pubcasting system are daunting, opportunities exist. Kay Sprinkel Grace, a fundraising consultant whose nonprofit advocate Transforming Philanthropy is based in San Francisco, will present a capital campaign primer on “Bringing in the Big Bucks” at the NFCB convention at Houston this June.

“There are very few ways that public radio engages people other than through membership drives,” Grace said. “This offers listeners an opportunity to make a larger investment, a lasting investment.”

It’s also a time for public radio “to really restate what it is, and that is the voice of the community,” she said. “Our covenant with the public is huge. Larger media outlets have succumbed to commercial and political influences; they’re not relevant in local markets. Public radio has this huge chance to market itself as the single source for superior local news and information.”

Grace said she will advise stations that the worst thing they can do is “put out pitiful messaging: ‘Our federal funding has been taken away.’ Nobody is in the mood for that. A lot of people have lost a lot of net worth. That doesn’t resonate. Organizations that see an opportunity to really serve their communities can better resonate with them.”

Larger policy questions remain. Since it was established in 1962 as the first federal assistance to public broadcasting, PTFP had a role in meeting the core federal objective of bringing public station signals to all American households. At recent count, public TV had reached more than 98 percent, and public radio, more than 93 percent.

“Does that remain a federal objective and mandate?” asked Jefferson Public Radio’s Kramer. “At some point, all this equipment turns into dust, and the community doesn’t have public radio service, or some other funding mechanism needs to be developed.”

EARLIER STORIES

PTPF officially succumbed on April 15, 2011, when President Barack Obama Public Law 112-10, the Department of Defense and Full-Year Continuing Appropriations Act of 2011, which eliminated the equipment subsidies that dated back to the 1960s.

Starting as far back as 1998, PTFP money was vital in enabling public TV stations’ transition from analog to digital transmission, which finally occurred in 2009.

RELATED LINKS

A final look at PTFP projects, dating to its inception in 1994. Its predecessor, the Educational Television Facilities Program in the Office of Education, was authorized by Congress in 1962.

KOJB in Cass Lake, Minn., put on the air with PTFP assistance in October 2011, says its mission is “to enhance the history, language, and way of life of the Anishinaabe people as well as airing national Native American media and noncommercial programming.”

Public TV station KAWE in Bemidji, Minn., covers the first broadcast of KOJB from the reservation in October 2011.