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MPR: Money Public Radio
Taking the public out of public broadcasting | 2002 City Pages
You've got to hand it to the folks over at Minnesota Public Radio's KNOW-FM (91.1) and KSJN-FM (99.5): Not only have they cultivated a highly educated, well-heeled audience, they have managed to convince those listeners that they are the sole reason the station stays on the air.
Take the network's tri-annual radio membership campaigns, one of which begins today. From a financial standpoint, there would seem to be no reason for the fund drives, which are pitched to listeners by on-air personalities as a civic duty. After all, the network has primary access to endowments and investments totaling more than $130 million that, in 2000 alone, generated $8.5 million in revenue. Throw in another $4.3 million in state and federal aid and MPR ends up with a whopping $12.8 million in annual income, just standing still. To top it all off, in fiscal year 2000 MPR took in $7.4 million more than it spent, which, coincidentally, is almost the exact amount it received from listeners. Yet MPR still comes around three times a year, hat in hand, begging for contributions.
The core problem for public broadcasting has always been funding, since it has no ongoing method of financing--like public broadcasters in Europe who are funded by various fees and taxes. Public Television has eased its financial burden by watering down content to attract corporate underwriting. MPR has taken a more nuanced approach: They've cultivated a moneyed audience and set up a complex corporate structure that mixes nonprofit and for-profit companies, then shares member lists and resources. Both strategies have created a sort of independence--but at a price. Public television, for example, is rarely worth watching anymore. And for those of us who are not part of its target demographic, listening to MPR has become an increasingly underwhelming experience.
Of course, unlike most commercial broadcasters, MPR actually works to objectively report the day's news and put it into context. That higher journalistic standard goes a long way toward explaining why MPR has become a national media juggernaut that raised more than $41 million in revenue in 2001 and controls more than 30 broadcast licenses. Still, there is a gaping distance between the kind of radio that people need to function in a democracy, or even would just like to listen to, and what is available from commercial broadcasting. MPR's standards would have to drop exponentially for most listeners to observe its shift away from the sort of populist programming most assume public broadcasting was designed to deliver. It seems those running the show hope that by the time people do notice, they'll have ceased to care.
MPR's Web site (www.MPR.org) advertises its success in audience cultivation, boasting that its listeners possess an annual "spending power" of $4.1 billion, that they are "110% more likely to have $100,000 or more in securities than the average Twin Cities adult," and that 50 percent have incomes greater than $50,000. A section called the "Appeal of MPR" highlights its audience's "High Discretionary Spending" and the fact that "43% travel internationally at least once per year."
These promotional talking points have started to influence the network's direction, on and off the air. Flip on the station anytime during the day, and chances are better than ever that the topic will somehow involve money, how to invest it, and where. One of MPR's longtime syndicated programs is Sound Money, an hourlong Saturday-morning show, repeated on Sundays, that focuses on personal finance. (Chris Farrell, the star of Sound Money, is the second-highest-paid journalist--the first being Bill Buzenberg, senior vice president of news--at the network. His $130,000 in compensation as "chief economics correspondent" dwarfs that of morning host Katherine Lanpher, who emcees two hours each weekday on Midmorning for the still eyebrow-raising salary of $90,000.)
Then there's MPR's Marketplace, a half-hour show on weekdays about, well, the marketplace. The show is such a franchise that it is spliced up and splashed throughout MPR's broadcast schedule. And no news report on MPR or NPR would be complete without an accounting of the day's stock-market action, sometimes played to the strains of "We're in the Money," replete with moral assessments about whether it was a good or bad day for the index.
Marketplace was purchased in 2000 from the University of Southern California in a package deal that also gave MPR Savvy Traveler, a one-hour show aired on weekends and aimed at listeners who travel internationally. These two new syndicated programs complement other MPR programming that targets well-to-do listeners, such as The Splendid Table, a cooking show aimed at gourmets, and Future Tense, a show that follows the tech industry.
Meanwhile, MPR's flagship talk shows, Midmorning and Midday, are frequently used to cross-promote the network's stars and their upscale appeal. Farrell occasionally gives investment advice on Midmorning, and Splendid Table host Lynne Rossetto Kasper frequently joins Lanpher to give advice on the joys of gourmet cooking (Lanpher also shows up on Kasper's radio show and Farrell's public TV program on personal finance). And if that's not enough fine dining for you, there's always the Winemakers' Dinner (part of the Twin Cities Food & Wine Experience), a yearly black-tie fundraiser for MPR hosted by Minnesota Monthly where, for $200 a head, supporters can rub elbows with the local glitterati.
The cultivation of this golden audience would all be for naught if MPR's corporate relatives could not capitalize on it, paying for the content itself and justly rewarding those who made it all possible. In this regard the executives at MPR are geniuses and have actually been called just that in the popular business press.
MPR can't just sell commercials to businesses and play them on the air. But it can offer underwriting deals that give companies opportunities to insert messages into the daily broadcast. The fact that many of these spots contain Web addresses and toll-free phone numbers shouldn't confuse you, dear listener. The messages merely give credit to underwriters. They are not actual advertisements. Yet, in fiscal year 2000, underwriters including the drug giant Merck, Northwestern Mutual Insurance, City Business, West Group, and DFL legislator Matt Entenza, forked over some $4.6 million to MPR for access to airtime.
Technically, the network meets the "commercial free" standard that's been set by the Corporation for Public Broadcasting, which is funded by Congress and subsidizes MPR. Earlier this year, however, MPR spokeswoman Marcia Appel--in an effort to explain a $2 million drop in corporate financial support that required MPR to lay off 13 employees--told the Star Tribune that while the network doesn't run traditional commercials, they "do have sponsors and underwriters, and that pool of money is a subset of advertising."
The pursuit of a bigger audience for fundraising has also motivated MPR's recent forays into the Southern California media market, where it just signed a 15-year agreement to run a sleepy public-radio station in Pasadena, requiring an annual $3 million investment for the next five years. A Los Angeles Business Journal story published in January of 2000 reported that "the end goal [for MPR] is to generate programming that can be syndicated nationwide," with the goal of "more revenues for MPR, and the potential to create a new cash-cow series along the lines of Prairie Home Companion." The story also noted that MPR planned to turn the station into a "fund-raising powerhouse." Never mind there are already four public radio stations serving the area, with a combined budget of $15 million. MPR is hungry for listeners who can be turned into both donors and consumers.
Over the years, the network has mastered the art of synergy, hawking trinkets associated with its editorial content. MPR entered this business by marketing novelties associated with Garrison Keillor's aforementioned Prairie Home Companion, then added products associated with the content of other public-radio stations. By 1992 this side of MPR's business was called Rivertown Trading--a catalog company and subsidiary of Greenspring, which manages all of the network's for-profit ventures. At the time, Rivertown Trading was taking in annual revenues of more than $100 million.
In light of Rivertown's phenomenal growth, three of its top executives decided they wanted a piece of the action. By 1998 they had persuaded the board of the Minnesota Communications Group (MCG)--MPR and Greenspring's corporate parent-- to grant them something called "Value Participation Units" (VPUs). These VPUs were to be used to compensate the executives in relation to the growth of Rivertown, and promised them a percentage of any increase in value of the company. In the private sector a comparable arrangement would involve stock options. Bill Kling, the president of MPR and Greenspring; Thomas Kigin, vice president and general counsel for both MPR and Greenspring; and Donna Avery, Kigin's wife and then-president of Rivertown, were granted VPUs. But because there was no such thing as publicly traded Rivertown stock, the executives stood to profit most from the VPU arrangement if Rivertown were sold. This created a tremendous conflict of interest. Should MCG hold on to and operate Rivertown as an asset and revenue producer or should it sell the catalog company and create a permanent endowment? It's a good guess that the executives were influenced by the knowledge that, collectively, they could reap $7.6 million if Rivertown were sold.
This conflict was pointed out in a report by the Minnesota Attorney General's Office in January 1998, which raised concerns about the potential for private profit should MCG decide to sell one of its for-profit subsidiaries. Two months later Rivertown was sold to the Dayton Hudson Corporation for $123 million, which resulted in VPU payouts of $3 million to Kling, $3 million to Avery, and $1.6 million to Kigin. Local and national media questioned the amount of the payouts, but no one looked into the legality of the VPUs.
Normally it probably wouldn't have been easy to get such a scheme approved by a nonprofit board of trustees, but the executives at MPR had eased the way by filling the board with just the sort of people who would understand such a compensation system--executives from the financial industry itself. By 1999, 25 of the 36 members of the MPR board came from the corporate and/or financial world. Many of them were representatives of investment houses and banks, or businesses associated with that industry, including executive headhunters and executives from PR firms. And though MPR has the largest broadcast newsroom in the state, and boasts the call letters KNOW, the only journalist on the board was Bill Buzenberg.
Whether one considers the Rivertown deal and its attendant compensation to top MPR executives right or wrong, there is no denying the financial stability it provided to the network. MPR's large endowments, combined with government monies, conservatively guarantee the network an income of more than $13 million per year. As for pledge drives like the one that got started this week? The truth is MPR really doesn't need your money.
Other public broadcasters do, however. KFAI-FM (90.3), for instance, offers listeners international news and opinion from a chorus of alternative voices, all for an annual budget of about $1 million. And their endowment is worth even less. So unless you really need one of those special gifts they give at MPR for making a monthly pledge (an O Brother, Where Art Thou? CD or the chance to win a trip to Paris), you might think about investing in public radio stations struggling to raise the radio bar in Minnesota. Otherwise, you are simply giving your money to people who want to talk some more about money.