CURRENT ONLINE

There's a dissonance between high pay
and the enduring image of public broadcasters pleading for pledges.
"The public doesn't understand how an institution that begs
can pay salaries four and five times what they would make," says a Dallas broadcaster.

Executive pay erupts as an issue in two metro areas

Adapted from Current, April 22, 1996
By Steve Behrens

High salaries for public broadcasting station presidents made numerous headlines over the past year in the dissimilar communities of Dallas and Minneapolis/St. Paul--with similar results.

Nothing much happened for months.

Then in April [1996], Richie Meyer resigned his $200,000-a-year position at KERA-FM/TV in Dallas.

And in May, the press learned of an investigation by the Minnesota state attorney general into the relationship between Minnesota Public Radio and its very successful for-profit fundraising arm, which altogether pay a six-figure sum to President Bill Kling.

At least initially, however, both metro areas seem to have shrugged off the salary issue, according to the journalists who wrote the stories. In Dallas, KERA went on to set a new pledging record in March, and in the Twin Cities, MPR's recent pledge drive pushed its membership above 90,000 for the first time. Only two MPR members quit, and about two dozen Texans scrawled their objections on direct-mail letters returned to KERA, according to station spokespeople.

The story's a familiar one--it has erupted briefly in other cities during past years. Some portion of the population--and of the press--feels something is amiss when pubcasters are paid well.

In Dallas and Twin Cities, the revelations may have been titillating to readers, but the facts weren't enough to drum up much outrage, and for good reason. Neither Meyer nor Kling was accused of wrongdoing; both are respected senior managers in the field. KERA is financially solid and just moved into a new, fully paid-up building last fall; when Kling is criticized, it is mostly for being too successful.

Meyer's and Kling's take-homes were high by the average Joe's standards, perhaps, but not higher than those of top execs at commercial stations of the same size.

Elsewhere, most chief executives in pubcasting earn considerably less than managers of commercial stations in the same budget range. In public TV, salary surveys indicate that chief execs are paid less on average than their counterparts at commercial TV or radio stations with revenues of similar size, though the public TV c.e.o. earns more than heads of local nonprofit organizations.

In public radio, chief execs likewise earn less than the heads of commercial radio stations with similar revenues, and about the same as the bosses of like-sized nonprofits.

(The figures come from the January 1995 CPB salary survey (the latest available); from 1995 surveys published by the National Association of Broadcasters; and from a March 1995 survey of nonprofit execs taken by the accounting firm Coopers & Lybrand.)

The Sisters of Mercy trap

Why does the executive salary story keep coming back to bite pubcasters? One fundamental reason may be a dissonance between high pay and the most enduring image of public broadcasters: smiling folks pleading for pledges.

"The public doesn't understand how an institution that begs can pay salaries four and five times what they would make," says Bob Ray Sanders, a longtime on-air host at KERA who is now a columnist for the Ft. Worth Star-Telegram.

Some pubcasters perpetuate the Sisters of Mercy image to their disadvantage by pleading like charities at pledge time, says Mark Boardman, former station manager of KERA-FM and now a news consultant at WKSU-FM, Kent, Ohio.

"We were very aware of that trap [in Dallas]," says Boardman. "We emphasized memberships as an investment. We said, 'This is a product that you find value in, that you get something out of.' That's different from, 'Here's poor little us, and if you don't help us out, we're dead.' "

Maybe so, but that rhetorical distinction doesn't come across to the average person, says Sanders. Though pledge emcees at KERA take care to suggest memberships rather than beg for donations, it's all the same in the public's mind.

"I've been doing pledge drives since I walked in the door in 1972," says Sanders. "If I looked at tapes of myself, particularly when the phones weren't ringing, I might as well have been on the corner with a tin cup and sunglasses on."

This unsettling image, of the beggar with a good salary, comes into play in city after city when other disputes put a pubcasting station in the news. At WQED in Pittsburgh, the size of President Lloyd Kaiser's compensation--as much as $277,000 a year, including tens of thousands that had been hidden in undisclosed subsidiary pay--contributed to his ouster, but the main complaint was that he let the station dive into the red. In Dallas as in Pittsburgh, a key issue was that KERA had cut back its local production.

Away for 10 weeks in a year

The dissonance between cutbacks in service and good executive pay was an irresistible combination for the weekly Dallas Observer.

Reporter Miriam Rozen's August 1995 Observer article reveled in the contrasts at the station, which had shut down its studios in May, and had nevertheless paid Meyer $207,345 in fiscal 1994, almost half in expenses including car and housing allowances. The station also let him employ his wife, Susan Harmon, as KERA's v.p. for administration and radio.

When the Dallas Morning News picked up the story last fall, it reported that Meyer had been out of the station 10 weeks in 1995--24 days on business travel plus 25 days on vacation. Meyer took his official five weeks vacation; Harmon, who often went along, took her three weeks plus some unpaid leave, according to KERA spokeswoman Jonnie England.

Many of the trips involved KERA's active interest in both the Pacific and Atlantic international coproduction alliances. The station also tends sister-station relationships in Mexico and Taiwan. And Meyer often extends his trips to make time for some scuba-diving.

Meyer's interest in the sport is so well known that at a recent national public TV meeting, which Meyer did not attend, colleagues from other stations joked that he was probably out diving.

The negative press grew out of KERA's cancelation of Between the Lines, a low-budget weekly talk show hosted by Sanders, which last aired in May 1995. The station reallocated the resources into antiviolence outreach and other projects.

KERA spokeswoman Jonnie England says the station will consider starting up a new local series for next fiscal year, but had to stop producing Between the Lines, while the station's headquarters was being rebuilt between last spring and the fall. The studio was used as a staging area for construction, she explains.

The canceled program was the last in a long string of local news and public affairs vehicles going back to Jim Lehrer's Newsroom in the 1960s. Meyer has backed a slate of prize-winning national and local documentaries, but was still remembered for shutting down local production shortly after arriving from Seattle's KCTS in 1982.

"Richie feels comfortable when there is money in the bank," says Sanders, who was a full-time employee from 1970 to 1990. "His predecessor, Ed Pfister, liked spending money to make things happen." But boards of directors prefer having managers who keep some reserves, Sanders notes.

Though the Observer broke its story last August, it was an anonymous letter, critical of Meyer's salary and extensive travel, that prompted a KERA Board inquiry last fall. Chairman Irwin Grossman reported that no irregularities were found.

The only noticeable change at KERA has been that the board invited some middle management to make reports to it, instead of hearing mainly from Meyer, according to a staff member who spoke on the condition of anonymity.

What remains the same, as the headlines fade, is an employee morale problem, the staffer says, based on budget cutbacks by well-paid managers. "It's the perception of lifestyle that's driving a lot of the morale issue. It's taking trips all the time."

Revelation was "a one-day story"

Though Kling and MPR have their share of enemies in Minnesota, they were not the ones who made his pay an issue last year.

That was accomplished by the radio network itself, along with a friendly state legislator, Rep. Matt Entenza of St. Paul.

Last year, Entenza, a former state prosecutor who handled charities fraud cases, was sponsoring what he regarded as a consumer reform bill, requiring the disclosure of secret salaries paid to nonprofit executives by for-profit affiliates of their organizations. Like a lot of the scrutiny given to nonprofits today, the bill was inspired by the offenses of former national United Way of America President William Aramony.

"I never really cared what Bill Kling's salary was," says Entenza. "My goal was to stop the William Aramonys of the world, who are using the veil of secrecy to steal the charities blind," says Entenza.

His bill was backed by the Minnesota Council of Nonprofits and the Minnesota Charities Review Council. The only opponents anywhere to be seen, Entenza said, were MPR and its sister company, Greenspring. Kling is president of both.

With gross sales of $153.3 million--from mail-order catalogs (Wireless and Signals among them), a statewide news service for commercial radio stations, and Minnesota Monthly magazine--Greenspring was "viewed with suspicion and envy by commercial broadcasters," wrote Aron Kahn in the St. Paul Pioneer Press.

The newspaper reported speculation that Kling was making between $200,000 and $500,000.

Skeptics assumed MPR was hiding something. "There were a number of folks who said something must be going on," says Dawn Stockmo, associate director of the Minnesota Council of Nonprofits.

Wayne Eddy, owner of a rock station and president of Kling's longtime opponent, the Minnesota Broadcasters Association, accused Kling of using "seed money from taxpayers to become a wealthy entrepreneur." Kling replied that all investments in Greenspring were generated by product sales.

The legislature voted for disclosure of the salaries, including his. By huge majorities, both houses passed the charities bill last May, though the bill had been amended to apply only to charities that pass money to their for-profit affiliates; that seemed to exempt MPR, but the network wasn't certain.

Then, this March, the legislature threw out the loophole; Entenza's new bill covered the top five salaries (if above $50,000) at all for-profit companies affiliated with nonprofits.

Late that month, MPR cut its image losses and voluntarily disclosed Kling's pay from Greenspring, as well as figures for Tom Kigin, who is executive v.p. and general counsel for both MPR and Greenspring. MPR spokesman Craig Shulstad, who is on loan from General Mills, points out that Kling's $291,752 earnings in fiscal 1995 was skewed upward by $72,639 in bonuses earned in fiscal years 1991-93. Kigin took home $160,742, including $28,596 from those years.

Kling's reported combined pay rate would have been among the top 10 for nonprofit executives in the state, according to Corporate Report Minnesota magazine. The top 31 officials on the list run hospitals or health maintenance organizations; No. 32 is the president of the Minnesota Orchestra, at $238,000.

MPR's fight against disclosure "did little but fuel curiosity about its president's salary," the Star-Tribune observed last month. The moment that MPR disclosed the compensation, the salary issue went away.

"As we say in the trade, it was a one-day story," says MPR spokesman Shulstad.

Actually, the issue had hung around for a year, but didn't have to come up at all, Entenza contends. If MPR hadn't opposed disclosure, "only a couple of cranks" would have been interested in Kling's income, he says. But MPR chose to make disclosure into an issue, appeared to be "stonewalling consumer reform," gave ammunition to legislative opponents who want to cut the $400,000 annual state subsidy for its rural transmitters, and may have damaged its credibility in the legislature, Entenza says.

"I haven't heard anyone say they thought the salary was unreasonable," says the legislator. He thinks the pay seems "pretty consistent with the market." As architect of MPR's large network and strong fundraising machine, Kling could easily be paid much more, Entenza adds.

"There are some people who mistakenly believe that when you have a charity, that anyone who works for the charity must be a pauper and wear sackcloth and ashes."

Various theories explain why MPR resisted disclosure. Its stated reason was that Greenspring salaries are sensitive proprietary information for a company in the rugby-like mail-order business.

It was a matter of principle that private companies do not have to disclose internal information, spokespersons said, and Kling wanted to resist any kind of government interference.

"Companies need to be on a level playing field to compete with other for-profits," and must not be constrained by special mandates from government, he told the Star-Tribune. "Once they start down that road, next week they pass a rule that calls for recycled paper. Each one makes Greenspring less competitive."

Requiring disclosure "would make raids on our management team easier," Greenspring spokeswoman Yolanda Scharton told the Pioneer Press. "We think it places unfair advantage to the competition."

But some outsiders believe MPR didn't want to disclose salaries because they could become an image problem. According to the Pioneer Press, Kling had said that publishing pay levels at Greenspring might confuse some MPR donors and cause them to stop contributing.

MPR denies this rationale. "One of the unfortunate aspects of how the media covered the issue was to imply that we were concerned that salaries would be perceived by MPR listeners as being excessively high," says Shulstad. "That was never a concern to us."

Whatever the reason for MPR's reticence about salaries, the network switched directions and released its figures in March. Shulstad says that Entenza's 1996 version of the legislation "resolved our principal objections" to disclosure.

The 1996 law narrows "the number and kinds of employees" whose pay would have to be disclosed, according to Shulstad. However, Entenza says it covers the same employees as the 1995 bill. No matter! Entenza is glad that MPR retreated. "I felt terrible about getting in a fight with MPR, because I'm a big advocate of public radio."

No quarrel with high pay

Not a whole lot happened in Dallas as a result of the press coverage, says Glen Warchol, managing editor of the Observer. "An issue like this would have gotten us an avalanche of letters in other cities I've lived in." KERA-FM's recent switch from daytime music to news/info upset a lot more people, he says.

"In Dallas, as elsewhere, public television is controlled by people with money," Warchol remarks. And Dallas people, especially, have no quarrel with financial success. "These salaries aren't a problem; this is what you pay people."

The general reaction was much the same in Twin Cities, where folks believe in rewarding hard work, though they try not to show off the rewards too much, if you believe Garrison Keillor.

"We're a hotbed of pay-for-performance up here," says Jim Beaton, a St. Paul consultant who does annual surveys of nonprofit exec compensation. "You deliver for the people who are making the decisions, and if they're satisfied, you get rewarded for that."

Salaries at nonprofits are rising, Beaton says, because board members are accustomed to high salaries in the private sector. "They're not excited that somebody is getting $180,000." Nonprofit boards also have little choice but to pay well for money-making talent, when they are being pushed to be more self-supporting, Beaton says. "It's a non-issue, from where I sit."

 

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To Current's home page

Later news: State inquiry revealed in Minnesota.

Later news: Meyer and Harmon leave station in Dallas.

 

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