Fear, personal interests often hinder station mergers

Since retiring as president of America’s Public Television Stations in 2000, David Brugger continues to work behind the scenes as an advisor to public media leaders. His consulting work, most often done pro bono, follows through on his conviction that public media stations must direct as much of their revenues as possible to local programming and services that meet the needs of their communities.

In the early aughts, a wave of public station mergers and consolidations were underway in major markets, and Brugger saw the trend as key to public broadcasting’s survival. Going back to the 1980s, when he worked at CPB as an SVP, “I always thought there were way too many stations and way too much duplication,” Brugger said in this interview with Current Managing Editor Karen Everhart.

In this Q&A, Brugger discusses the obstacles to completing merger agreements and the extent to which personal dynamics, including trust and funder prerogatives, influence outcomes.

Current: Localism is one of the foundations of public broadcasting, yet strategies for how to achieve the Carnegie Commission’s original vision of “vigorous and independent local stations” that are “collectively strong enough” to serve a national audience are constantly evolving.

As much as people like to talk about consolidations or mergers that have strengthened localism — stations like the WNET Group in New York City and Cleveland’s ideastream come to mind — there are so many examples of merger talks that failed.

What are the biggest obstacles for stations to reach agreement?

Brugger: I’ve reviewed all the talks that I’ve been involved with. There are 16 of them, but I can’t say there have been many successes. I asked myself whether there is a common reason for why they fail.

The problem is, a lot of it is very personal. It can come down to individual board members, station loyalties and grieving the loss of localism. I’m not sure technological changes or financing play such big a role when you look at the process.

In one case, it came down to the amount of public radio money that flowed through the university licensee’s foundation. The VP of the foundation blocked the deal because he didn’t want to lose that stream of money — even though he didn’t manage any of it. It would look bad because there was so much public radio money that flowed through the foundation.

There was another proposed merger for stations where both managers were about to retire. The boards had approved a merger, then two weeks after the written resolutions had passed, an issue came up about succession.

One of the managers had promised one of his staffers that they would be promoted into the station manager job. If the merger went through, that wasn’t necessarily going to happen. The board wanted to insert something in the merger agreement about appointment of the next CEO.

Well, you can’t contract the actions of a future board, but that didn’t seem to bother them. The deal fell through, although it was needed.

You say financing isn’t often a deal-breaker, but isn’t the primary benefit of merging or consolidating to eliminate duplication and manage staff and funding more efficiently?

I’ve always approached mergers as a way to achieve financial efficiencies. We had too many stations, too many production facilities, too much duplicate administration. You could become stronger and more efficient because of the expanded coverage and how you can manage your staff. Boards understand that. 

At times I like to talk directly to board members without the station managers in the room. Boards tend to be a little more broad-minded when people with vested interests aren’t present. But in many cases, the conversations never got to that stage.

Sometimes the talks didn’t go anywhere because of personal reactions of individual board members. In one case, the station managers agreed. The deal was certainly going to be profitable for both of them. Even though the boards authorized the negotiations and seemed to think it was a good idea, at the meeting where it came up for a final vote one board member said “No.” It was something to do with some personal attachment to the founding of the station.

It didn’t matter that the agreement made all the sense in the world; it didn’t matter that it was going to be better for their station — financially and from a production and coverage standpoint. None of that made any difference.

How did one person have the power to block it? Did approval have to be unanimous?

Someone with an awful lot of money, who had donated a lot of it to the station, had the influence to stop everything.

It’s frustrating because I invest a lot of time in facilitating these agreements. It’s like leading the horse to water, but not being able to make them drink. And this sort of thing has happened over and over, even where you didn’t really expect it.

There was another situation where a board member had an interest that had something to do with the finances of the station. He did not want to reveal the details, but it would come out of due diligence reporting that had to be done on both stations. So he suggested to members of both boards that they hire their own auditors to report on their own finances and then trade the information. That’s not an independent due diligence report.

It’s important that the reporting be thorough and look at every policy, every dollar. And it’s usually a side-by-side analysis. Sometimes there’s a problem that’s easily resolved.

But in this one case, that level of due diligence would have highlighted something that this board member did not want other people to know about or deal with. He thought disclosing it would disadvantage whatever his interests were. Now, they eventually merged, but not while I was dealing with them. They had to wait until that board member left.

So some period of time passed until the board membership changed. Did they have to renegotiate the deal?

No, they had already done all the preliminary work, so it was easy to complete the merger. But this is just one example of how people with personal influence or interests can have an awful lot of effect on whether these things succeed.

When I started advising station leaders about this, I visited places like WNET in New York, which was the first big station to complete a merger. I went through every detail that WNET and WLIW on Long Island considered and what issues they had to resolve. It all made logical sense — the competition they faced, changing technology, the fact that it really was good for both stations in terms of their ultimate service to the community.

Looking at that merger after the fact, it appeared to me that one major sticking point had to do with fears about the loss of local programing for Long Island. They agreed to set up a special board committee made up of representatives from WLIW. They were essentially watchdogging whether WNET was making good on its promises about localism. WNET had no reason not to follow through.

My point is, early on, there wasn’t really trust in the relationship. There was a piece of paper with a merger agreement. Eventually, it got to the point where the stations worked so well together that some members of this group were incorporated into WNET’s board. The special committee dissolved when it became obvious that they were no longer needed.

What prompted you to get involved in facilitating mergers? It sounds like a stressful way to spend your retirement.

Around 2000, people started asking me to do things for them. When I left APTS, I wasn’t planning on working, and I wasn’t interested in making money. A lot of the work I’ve done has been pro bono.

I was interested in it conceptually. Going back to my days at CPB, I always thought there were way too many stations and way too much duplication. Regardless of total revenues, stations should maximize the funds they spend on program services.

The first major one that I tracked closely was at KPBS in San Diego. Tom Karlo moved into the top management position, and he really stopped to rethink what business he was in. And he said, “What I’m doing is, I’m running a mall with all these different stores and all these different services. I have children’s programs, science programs” — he just went through all the different kinds of content he had. And he said, “I have a trucking firm that ships content from these stores out to all different places. … I have radio, television, the internet and community outreach services that I could do.”

This wasn’t a merger between stations with different boards, though. He was trying to figure out how to get two stations under a university licensee to work together, right?

Yes — he completely merges the radio and TV staffs and trains them. Their new goal was to produce content based on community needs. “You’re not radio producers, you’re not television producers. You identify the needs of the community and produce content on those things that affect the community directly.”

To start off, the senior staff were assigned to different organizations, including governments and nonprofits. They’d go to public meetings of their organizations, sit in the audience, listen and take notes about the issues they were discussing. They brought all that information back to the station over a period of months and looked for common threads. Are people in this group talking about the same things as people in that group? Is this a larger issue than it may seem within those groups? Is there anything we can do about it from a content standpoint — either to make people more aware of it or help these groups accomplish what they need to get done?

That’s when he started changing his programming and adding things like a prime-time public affairs show.

I looked at KPBS’ financial reports. Before this started, the stations were operating on $4 million or $5 million a year. All of a sudden, there’s a curve going up to like $15 million.

I thought — what the hell’s happening there? I saw a similar pattern with Twin Cities PBS under Jim Pagliarini and at Vegas PBS with Tom Axtell.

Every year, the typical station reports a little gain, or maybe some losses, but very rarely do you see revenues just shoot up like that. So I called the station managers who were doing this and talked with them. When I could, I visited their stations and wrote papers about what they did and how.

What they were doing was community engagement. I called it “back to basics” because the station is doing exactly what your license says you’re supposed to do — serving the community interest.

This isn’t necessarily a merger or just a structural reform. It involves a philosophical shift.

A lot depends on the manager. In Jack Galmiche’s work at Nine Network [now Nine PBS], they went out and found multiple organizations who all said they were doing the same thing.

And he realized, “If all those people worked together, they would be much more effective.” His station became a convener.

Jack would bring the organizations together to talk, and he would tell them what his staff had learned from listening to the separate conversations within the individual groups. He said, “I can help you be more effective, but you have to help yourself. You all want to accomplish the exact same thing. You have to join together and do a little more than any one of you is doing. And if you do that, I will help you in any way that the station can.”

Several stations went through the same thought process, but it ended up taking them in different directions. In Las Vegas, Tom Axtell looked at training and education because Vegas PBS is part of the Clark County School District. His staff already considered themselves educators.

They discovered that the governor wanted to set up workforce training in-state and pay for it because there was a great need for certain skills. So Tom started setting up certificate and credit programs to train people for different jobs in Las Vegas and the surrounding communities. And he tracked proof of performance to show that the training and the education the station provided prepared people to do their jobs.

The point is, once these stations started a trajectory, it completely changed their revenue paths and their successes in engaging the community.

All of these examples of community engagement collaborations involve public TV stations. Are there any radio stations that have taken this path, to your knowledge?

Public radio managers feel they do this through their news coverage. Stations like ideastream show what’s possible with the combined resources of public TV and radio.

 You have to remember — public radio has always been wary of public television. In my whole experience at the regional and national level, people who worked in radio felt that television used them and, where they were under a joint licensee, took advantage of them.

Why?

Because in some joint licensees where the radio station was very successful and bringing in money, the TV station would take radio’s money. The radio station got sparse resources, and television, which was underperforming, would just live off of them. There was always internal resentment between television and radio managers, with radio feeling like the poor stepchild.

Earlier in my career I added an FM to the public broadcasting station in Gainesville, Fla., which didn’t have an NPR station. When I started recruiting people to run the radio station, they had been in that kind of situation. They wanted to create some sort of wall between radio and television.

Do these resentments still affect how collaborations or consolidations come together — or not — today?

It’s hard to say. There’s definitely been a shift. Once television got hit with so much competition — from cable, streaming and everything else — TV people realized that affiliation with a radio station was important to their growth. Radio was so successful, and television was struggling under so much competition for audiences.

Television and radio have come together in Pennsylvania’s Lehigh Valley, but not through a merger.

Tim Fallon, who’s now running Lehigh Valley PBS, wanted an NPR station. He used proceeds from the FCC spectrum auction to set up a huge 14-county news operation. And he made a deal with Lehigh University to manage their student-operated station as an NPR affiliate. So the Lehigh Valley now has its own NPR station.

Tim understood the need for radio, and he found a way to get radio. And it wasn’t just about having an NPR station. He set up a huge news operation that covers local news in Allentown, Bethlehem, Easton — what they call the Lehigh Valley Area.

Fortunately, of course, he had the money to do it.

To your question about tensions between radio and TV, I think that’s less of a problem because radio has been very successful — and television has actually been doing quite well itself lately.

Most of the managers I’m talking about aren’t in public media anymore. That’s the way it was in 2012, which was, I think, my last involvement with an agreement between television and radio.

How would you describe the operational and strategic considerations that are shaping merger talks now? Have they changed from what you’ve experienced?

They are to a certain extent driven by finances. In some communities, the stations just can’t seem to raise money beyond a certain level. They’re in cities that are big enough, but they don’t have the staff or resources to take it to the next level. These tend to be places where the old industrial economy has declined. The stations can’t get the money to do what they need to do for great growth.

I talk to station managers about the success models and encourage them to talk to the station   managers who’ve built them, or visit their stations with their board members and senior staff. “Talk to the people there, talk to the people who work there, and you’ll become a believer.”

Nearly all of the examples we’ve talked about are stations in big cities. What are the options for stations in small or rural markets to pursue these kinds of strategies?

Harrisonburg, Va., is one such market. And VPM in Richmond was interested in WVPT, a PBS station housed at the local university. VPM and WVPT both had transmitters in Charlottesville, and those signals were a source of competition.

WVPT just didn’t have growth potential in such a small market. They eventually worked out a deal in 2017. It just took a number of years.

You’ve mentioned a lot of things that inhibit mergers from going forward, like concerns about local programming and personal issues or grievances. How important are funders to making these deals succeed?

There was a situation in one of the top 20 markets where foundations had decided that they wanted an all-news NPR station in their city. The lead station in the market played other things that people in the foundations didn’t like. When the university that owned the station decided to sell it, the foundations had leverage because they also funded the university. And they used that leverage to influence how the university resolved the situation.

Another funder was buying other public stations in town simply because he liked public radio. He wasn’t that interested in running the station the university wanted to sell. But he had the money the university wanted, so they got what they wanted out of it. And the foundations were happy because the lead NPR station went all-news.

Obviously, the NPR station had a huge audience during drive time, but who was listening to the station, or the value of the programming that the station provided to the community, really didn’t factor in the decision-making.

It all had to do with external influences in town, people who had a lot of money and wanted to influence what was going to happen.

There was another licensee in a poor section of the country that simply couldn’t make a television station work. The Public Telecommunications Facilities Program had sunk I forget how many grants into that operation. The board who oversaw it had never hired a strong manager who knew what they were doing. The station never did well.

CPB talked with another public broadcaster in the region about helping them. And no one wanted to get involved because there were so many bad relationships. The place had a reputation for having a bad board.

Someone told the board of the station to call me. I spoke to them for about 15 minutes and asked a lot of questions. Then one of the board members said, “Well, it sounds like you’re just trying to negotiate a higher fee.”

I said, “I do this pro bono. Even if I were interested in a fee, from what I’m hearing, I wouldn’t take the job anyway — no matter what you were offering. Your whole attitude about this is wrong. You’re thinking about how much money you can make. This is a public station. It’s not about money.” That was the end of that conversation.

They ended up actually selling the station. It originally had a license to broadcast on a commercial frequency. So they were able to sell it, and I guess they made a lot of money off of it.

But again — it all comes down to who is in charge and how they relate to all the different special interests that come into play.

That’s not to say I don’t believe consolidation or mergers work — because I know that they do.

I still see it happen — as in what Tim Fallon is doing in the Lehigh Valley. He even brought outside production companies in to work in his facilities — not because he was going to make money off of that. He thought if he could get the best producers in the area working in his space, his staff would learn from them. He would learn from them. And they would learn to work together. They would be stronger together than not.

It comes down to an individual like that.

That’s a unique situation where spectrum money is invested in building a public media service around local news. There are a lot of stations that weren’t able to participate in the auction, and stations where the proceeds were redirected to university priorities.

I’ve had so many conversations with stations that don’t go beyond more than two or three phone calls. A TV station manager says he wants to merge with the local public radio station. When I call the public radio station, they say, “Well, that station always seems to need money, and we’re sitting on $20 million in the bank. It’s a trust fund we’ve built up, and we don’t want to sink that into a television station that always needs money. We’re really not interested.”

It sounds like the tensions between radio and television stations over who earns the money and who needs the money are still a factor.

It’s another example of why consolidation talks only go so far. If they had been able to work something out, both stations would have benefited. Radio and television together in one building in the center of town — that has a way of garnering attention.

I do believe that stations should get together. I see community engagement as key to making the relationship work to the community’s benefit. Look at what Amy Shaw has done at Nine PBS — she’s done so much to make sure that station really does engage the community. If you could get every station to work in that spirit on community engagement, you don’t have to worry about competing for resources.

You’ll be creating programing that people want, and you have so many different ways to deliver it. The focus needs to be on content and services for an engaged community, not an administrative structure.