New capital fund helps Colorado network
buy AM outletOriginally published in Current, Oct. 30, 2000
By Mike JanssenThanks to financing from the new Public Radio Capital (PRC) fund, Colorado Public Radio just realized a long-standing goal—buying Denver AM station KVOD, which it plans to program with wall-to-wall classical music.
The Colorado network had been seeking an additional frequency for several years, and relied on PRC, an offshoot of pubradio's Station Resource Group, to broker the deal and arrange financing for the $4.2 million purchase. "[PRC] really is a wonderful new source of financing major projects for public radio," says Max Wycisk, president of Colorado Public Radio.
Station Resource Group founded PRC to help public radio stations initiate and finance expensive ventures, including buying new stations and expanding existing facilities. The tax-exempt company incorporated a month ago in Colorado, in part to take advantage of the Colorado Educational Facilities Authority, which issues bonds for capital use anywhere in the country.
PRC draws on a stable of several advisors to assist stations, including law firm Kutak Rock, financial advisors Public Financial Management, and investment banker Morgan Stanley Dean Witter. It's also seeking a bank to partner with.
PRC Managing Director Marc Hand says PRC's partners are already familiar with the ins and outs of pubcasting, meaning that stations using PRC won't face blank stares when they seek financial backing. That's a frequent problem, as Wycisk learned when his organization sought financing from banks.
"In their eyes, public radio's major income sources—membership and underwriting—didn't count," he says. "Part of what PRC is doing is explaining more clearly to financial organizations how public radio works, so they've got more confidence in a financial sense."
In Wycisk's case, Hand also acted as the broker that put him in touch with Catholic Radio Network, the religious broadcaster that was selling its AM station. With PRC's help, the Colorado network secured a variable rate tax-exempt bond backed with a $4 million letter of credit and bought the station.
Initially, the network will program KVOD with simulcasts of classical music from its FM station, as well as performances by Colorado ensembles and the feed from the Classical Public Radio Network, co-produced by the Colorado network. The new all-classical station also fills a gap left by a commercial classical AM station that recently changed format.
PRC plans to shift into high gear in coming months. Hand says Standard and Poor's is analyzing the public broadcasting industry for the first time to develop a bond rating. CPR will then borrow a pool of money to back new projects for 20 broadcasters. Spreading the risk among many projects improves the overall investment rating.
In May, PRC surveyed 73 pubradio stations and pinpointed over $150 million in current financial needs for equipment, building, and frequency acquisition. Hand expects PRC to extend its services to public TV stations as well.
Web page posted Nov. 2, 2000
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