CapRadio, endowment at odds over proposed PBS KVIE merger

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Marissa Espiritu/CapRadio

CapRadio's studios in Sacramento, Calif.

Sacramento’s CapRadio is embroiled in a brouhaha after the endowment that supports the station pushed for a merger with the local PBS station. 

The situation follows CapRadio, whose license holder is Sacramento State, weathering financial trouble late last year, including layoffs. 

Capital Public Radio Endowment Board members told Sacramento State President Luke Wood in a March 19 letter that they strongly believe the best future for the station is integrating with PBS KVIE. 

However, the university does not intend to transfer its broadcast licenses, said Brian Blomster, director of news and communications for Sacramento State.

“The University worked hard to help CapRadio, a University auxiliary, recover from significant financial and organizational challenges,” Blomster said in an email. “The University will maintain a strong relationship with its auxiliary and support it as it continues toward financial health while serving increasing audiences in Northern California.”

CapRadio has been working to right the ship after financial problems came to light around September of last year, including a $7 million budget shortfall, said CapRadio Chief Marketing and Revenue Officer Chris Bruno.

He added that CapRadio has stabilized its core operations and is in a much better financial position while it continues to address its debt. 

“This feels, in a way, like an unneeded distraction right now,” Bruno said. “We don’t want to be dealing with PR and communications around a public campaign to force a merger. We have many, many other priorities and pressing needs.”

The proposed merger

In its March 19 letter, the endowment board said a merger could lead to cost savings in accounting, marketing and human resources. It also pointed out examples of combined radio and TV operations at stations in San Diego, San Francisco and Oregon.

The board added that the move could galvanize support from listeners and donors. 

“In short, it is a far better choice for the station’s future,” the endowment said. “The CapRadio community is watching, so please do the right thing and meet with KVIE’s [GM] David Lowe with a genuine intention to explore in detail how to make this great plan work.”

Endowment board chair Daniel Brunner told Current that CapRadio needs to look at different ways of doing business in today’s media environment. 

“When we saw what was happening with Capital Public Radio and the financial difficulties and people exiting and people being laid off, those of us on the endowment board who are longtime supporters of the station … were looking to help,” Brunner said. “… We thought, ‘Why not advance this issue and look at this and see if there’s an opportunity there?’”

KVIE’s board does not have a position on the merger as “no substantive dialogue and details have yet been shared,” GM David Lowe said in an email to Current.  

“Management of both KVIE and CapRadio met initially at the request of the Capital Public Radio Endowment, which was interested in having the two organizations explore opportunities to work together when CapRadio’s financial issues came to light,” Lowe said. “If we are asked to continue in conversations about public media’s future in Sacramento, we’ll be happy to be involved.”

Tom Karlo, CapRadio’s interim GM from August until February, initially encouraged discussing a partnership with KVIE for CapRadio. Karlo joined the station after retiring from a long career at KPBS in San Diego, which offers both TV and radio broadcasts.

But Karlo no longer supports such a move, writing in an opinion piece for the Sacramento Bee that a merger would be a “bad business decision” for CapRadio. He cited Nielsen data that showed more than three-quarters of PBS stations’ prime-time viewers are older than 65.

Karlo told Current he wrote the Bee piece to set the record straight on his personal opinion.

“I changed my tune after doing my homework and doing my due diligence and studying audience trends,” Karlo said. 

Lowe said KVIE is focused on serving communities of all ages. 

“We are adapting to the needs of a younger audience and consistently staying on top of emerging technologies in the ever-changing media landscape,” Lowe said. 

Other issues

The endowment also said in its March 19 letter that it was expecting $500,000 in expenses — including for maintenance, insurance and consultants — on the tower in Elverta, Calif., that CapRadio uses for its 90.9 FM broadcast. 

On March 29, the endowment gave the property the tower occupies to KVIE, according to a gift deed signed by Brunner and provided to Current.

“It wasn’t done for any other reason other than to make sure there was an appropriate continued operation of the tower for all the tenants,” said Brunner, who also noted that three other tenants use the tower.  

Ownership of the tower itself is contested. While CapRadio does not dispute the endowment owned the land, it maintains that the station owns the tower itself and that documents support that claim, according to Bruno. One of those documents is a 1990 lease agreement Bruno provided to Current.

Bruno added there are restricted use rights for the land to benefit CapRadio.

The lease agreement said “ownership of the tower is hereby transferred to Lessee.” That lessee was KXPR/KXJZ, which the station calls a precursor to CapRadio. 

“CapRadio owns the tower. That is the position of CapRadio, Sac State and their legal counsel,” said Sacramento State’s Blomster. “Documentation supports that position.”

Lowe said KVIE is doing “due diligence” after CapRadio claimed it owns the tower. 

“​​In the meantime, we continue to provide CapRadio full access to the tower as it has always had and have not asked for any payments for its ongoing broadcast use of the tower,” Lowe said. “The site is now insured at a higher level and secured with centralized fire and burglary monitoring. Maintenance is also underway, which included replacing all the beacon bulbs on the tower to ensure FAA compliance.”

The endowment’s relationship to CapRadio has also come into the public eye amid the proposed merger and tower debate. 

While the endowment has provided financial support to CapRadio for decades, the station has handled the staff work of the endowment. According to a statement on CapRadio’s website, the station has provided an estimated $130,000 a year in staff administration and fundraising support.

But a September California State University audit recommended, among other findings, that the endowment fund be integrated into the campus endowment. 

The endowment’s board declined this proposal, according to CapRadio’s website, and CapRadio’s board voted March 28 to give a 90-day notice to end its operating agreement with the endowment.

While Bruno said coming into compliance with the audit’s recommendation is “non-negotiable,” the station hopes to move past the current impasse with the endowment. 

Brunner, meanwhile, sees common ground among the saga’s main players — the station, the endowment, the university and KVIE.

“We all want the same thing. We all want a thriving public media operation,” Brunner said. “The question is, how do we do that in today’s world?”

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