GOING PUBLIC The Story of WNYC’s Journey to Independence
by Peter H. Darrow
GOING PUBLIC The Story of WNYC’s Journey to Independence
By Peter H. Darrow In November 1993, Rudolph Giuliani was elected mayor of New York City in a narrow victory over the incumbent David Dinkins. As a victorious Republican in a city of Democrats and fierce independents, Giuliani claimed a politically conservative mandate for his attack on the problems of the day as he saw them: a $2.3 billion budget deficit, rising crime, soaring welfare rolls, and a deteriorating school system, all managed by a swollen and increasingly expensive bureaucracy. Immediately following the election, 40 working groups coordinated by a 19-member transition council chaired by Richard Parsons, Chairman and CEO of Time Warner, began to poke into every corner of the city’s operating and financial structure seeking ways to streamline management and reduce cost. As part of an effort to reduce the budget deficit as these measures were being put in place, these working teams were specifically asked to seek out city assets for possible sale. Among the assets identified for sale to commercial bidders were the radio and television licenses of New York City’s Broadcast Group, WNYC-AM and FM and WNYC Television Channel 31. Two years later, after much public debate and extensive private negotiations, the television license was in fact sold to a commercial buyer as part of a package deal in which the radio licenses were sold on a discounted basis to a not-for-profit foundation. Today, these licenses form the core of one of New York City’s most vibrant and visible cultural institutions, New York Public Radio. Embedded in this little slice of New York City’s history are a host of broad questions relevant to these political and economic times. What should be the role of government in our civic, social, and cultural life? If available resources or philosophical attitudes change, how should transitions be managed as government shrinks so that the curtailed public service might be maintained or even strengthened in non-governmental hands? What institutional and financial model best serves such a goal? And, given the ideological passions that often surround these questions, how might a pragmatic compromise be arrived at that serves the public good? WNYC’s transformation also illustrates the fundamental change in media and journalism over the past decade and a half. At the very time that New York City’s budget woes were threatening the future of public broadcasting in the city, The New York Times Company was
thriving and growing.1 Sixteen years later, on July 14, 2009, an independent, publicly supported WNYC Radio and a cash-strapped New York Times Company announced a complex three-party transaction as a part of which New York Public Radio would purchase WQXR-FM, The Times’ classical music radio station, for $15 million in cash. How is it that this reversal of fortunes came about? On the one hand, the challenges faced by newspapers are much discussed and well understood, even if the solutions remain elusive. On the other hand, the transformation of New York Public Radio from an under-funded city agency to an independent, influential, broadly supported, financially successful public radio station is largely unexplored and seemingly taken for granted. In fact, that transformation is both a good story in itself and broadly illustrative of the ways in which changes both in the role of government and in the nature of the media might be successfully navigated. As President of the WNYC Foundation Board of Trustees during the years leading up to the privatization of the city’s radio licenses and as the first Chairman of the Board of the newly independent WNYC Radio, I was a direct participant in much of the story that follows. Notwithstanding my own recollection of events, however, I have relied primarily on the extensive WNYC archives (and am indebted to the extraordinary WNYC archivist Andy Lanset for his help) and the papers of the Giuliani administration housed in the New York City Municipal Archives. To the extent there were gaps in the written record, I have relied primarily on interviews with other direct participants. Any errors of fact or interpretation are of course my own.
THE OPENING ROUND TOWARD INDEPENDENCE In early December 1993, members of one of the mayor’s transition working groups arrived at the threadbare offices of New York City’s Broadcast Group in the Municipal Building in lower Manhattan to meet with Tom Morgan, the group’s Dinkins-appointed President. The agenda was said to be a discussion of the prospects of the city’s three broadcast properties, WNYC-FM and WNYC-AM Radio and WNYC Channel 31, a UHF television station. Morgan’s efforts to explain WNYC’s mission and its plans to reduce the city’s share of its operating costs to zero fell on deaf ears. Morgan emerged from the meeting shaken by the realization that the transition group was focused solely on the prospects for selling the stations. A month later, the privatization subcommittee of the transition council formally recommended such a sale, noting that no other city owned broadcasting assets, and that there was no need for New York City to be in the television and radio business in such a large media market.
Its 1992 revenues were $1.8 billion, generated by a portfolio of media properties including The New York Times; 31 regional newspapers; 5 television stations; McCall’s, Family Circle, Golf Digest, and Tennis magazines; a half interest in the International Herald Tribune; and the WQXR radio stations in New York City. A month before Mayor Giuliani’s election, the company added to this portfolio by acquiring The Boston Globe for stock and cash valued at $1.1 billion.
Given the city’s dire financial condition as Mayor Giuliani took office, the sale of “nonessential” city assets had the strong support of many influential New Yorkers. The day after the election, Richard Ravitch, Chairman of the Citizens Budget Commission and himself at one time a Democratic candidate for mayor, wrote a New York Times op-ed piece titled “Mantra for the Mayor: Deficit, Deficit, Deficit, Deficit” urging a number of revenue-enhancing and cost reduction measures, including the sale of WNYC. The history of WNYC over the decade and a half prior to the Giuliani administration made a proposal for its quick sale far more problematic than it was for such other city assets as the UN Plaza Hotel and the Off Track Betting Corporation. During the city’s financial crisis of the late 1970s, the Koch administration had also considered a sale of WNYC, but instead came to embrace a compromise developed by WNYC President Mary Perot Nichols, and a lawyer in New York City’s Department of General Services, Evelyn Junge. In 1979, they formed the WNYC Foundation to raise funding for the stations (thereby reducing the city’s financial responsibility) and to assume governance responsibility for their operations, all under contract with the city. These arrangements provided that the city would retain ownership of the licenses and that the mayor would continue to appoint future presidents of WNYC. The city also provided WNYC with a direct capital grant to fund the Fiorello H. La Guardia Telecommunications Center, a then state-of-the-art set of studios that opened in December 1985. Mayor Koch appointed 13 initial trustees of the foundation, including leaders in the fields of broadcasting, philanthropy, business, finance, advertising, law, and accounting. Future trustees were to be appointed by the mayor or by the then current foundation trustees in proportion to the amount of financial support provided to WNYC by the city and by the foundation. Over the 14 years from its formation until the election of Mayor Giuliani, the foundation had raised over $100 million and had assumed financial responsibility for over 90% of WNYC’s employees. For 1994, the city’s projected contribution to WNYC’s budget of $17 million was $1.6 million. Thus, WNYC ex-President Mary Nichols was able to write to The Times in response to Ravitch’s op-ed piece: Every time there is a mayoral election, little WNYC is hung out to dry, as if its tiny city budget were a solution to the city’s budgetary ills…. Since 1978, in the first Koch term, WNYC started down the road to privatization, at Mayor Koch’s request. Today, it is the most successful example of privatization that I know…. The foundation, led by some of the most distinguished citizens in New York, has, since 1979, assumed fundraising responsibilities for WNYC, while programming has immeasurably improved…. Now is the time for Mr. Ravitch and the Citizens Budget Commission to tell Mayor-elect Rudolph W. Giuliani to reward WNYC for its success at privatization, not by eliminating it, but by setting it free…. The licenses should be turned over to the WNYC Foundation, for a modest consideration, with the mandate to keep the broadcasting stations always public. Behind the scenes, the trustees of the foundation and the staff of WNYC were pressing a more modest approach on the new Giuliani administration. In January 1994, two days after 3
Mayor Giuliani’s inauguration, WNYC President Tom Morgan sent his new boss, General Services Commissioner William Diamond, a memorandum outlining WNYC’s plan to be financially self-sufficient by 1997, the final year of the mayor’s term. Even before the inauguration, WNYC Foundation Chairman Irwin Schneiderman and Chairman Emeritus Billie Tisch, both prominent New Yorkers with distinguished records of philanthropic service (Tisch was also serving at the time as a member of the mayor’s transition council), presented the mayor-elect with a detailed briefing paper on WNYC. The paper described WNYC as a nearly completed successful privatization of one of the city’s valued cultural institutions. The arrangements between the foundation and the city were described as “an effective public–private partnership”; the public was being served as WNYC pursued its mission of cultural and public affairs programming using the city licenses, but at minimal ongoing cost to taxpayers. Shortly after the inauguration, Schneiderman and Tisch met with Mayor Giuliani’s Chief of Staff, Randy Mastro, to convey a similar message and to outline the details of the selfsufficiency plan. It did not include a proposal to transfer ownership of the licenses. Three weeks later, Mastro wrote Schneiderman: As you may already be aware, the mayor’s budget plan contemplated consideration of a sale of all or part of WNYC or, alternatively, improved funding to increase self-sufficiency. When we consider this matter further, we will entertain your request for [another] meeting. The alternatives before Mayor Giuliani involved more than contrasting policies as to how the city should deploy its assets. WNYC, while a city agency in form, had developed since the formation of the foundation in 1979 into a formidable (if still under-funded) institution with a clear sense of mission. It had a prominent and influential board, 53,000 contributing members, and a claimed radio and television audience of more than a million New Yorkers with whom it communicated regularly. In response to its threatened sale, WNYC and the foundation began to present the stations to the city and to the public as a treasured New York City cultural institution, as opposed to a mere broadcaster, and therefore a candidate no more appropriate to be shut down and sold off than Central Park or the Metropolitan Museum. It would prove to be a powerful message.
A BRIEF HISTORY OF WNYC WNYC was the brainchild of the flamboyant 1920s politician Grover Whalen, New York City’s Commissioner of Plant and Structures. The idea of a municipal broadcasting system reflected both the anti-Tammany Hall progressivism of New York City politics in the 1920s and fascination with the possibilities of newly developed “wireless” technology, with a bit of New York City boosterism mixed in. The submission to the Board of Estimate and Apportionment seeking $50,000 to purchase the station’s first transmitter noted that “recent scientific developments have brought about a new medium for the dissemination of information and the transmission to the people of instruction and entertainment upon a vaster scale and therefore of a higher class than has heretofore been possible.” In anticipation of the argument that the city should provide this instruction and entertainment by means of a commercial broadcaster, the submission argued, “the public will be best served if this new field of activity be municipalized. No private corporation should be depended upon to develop … so important a function.” It took two years for Whalen to build studios, assemble a staff, and locate and purchase a suitable transmitter (he finally found a used one in Brazil), but on July 8, 1924, WNYC began regular broadcasting with considerable fanfare. A brass band played on the terrace outside the 26th floor of the Municipal Building, and the letters WNYC, brightly lit and eight feet tall, shone across lower Manhattan. But the station’s initial offerings could only be characterized as “dull” with some quirky bright spots, as WNYC’s official history admits. Programs included speeches by the mayor, reports from the heads of city agencies, police alarms, and health information, with occasional live concerts, including programs by the Police Band and the Street Cleaning Band. Although the “Masterwork Hour,” radio’s first program of recorded classical music, was introduced five years later, no coherent philosophy or schedule of programming would emerge during WNYC’s early years. For several decades, WNYC suffered something of a boom-or-bust existence, depending on the whim of mayors and the financial condition of the city at the time. Some mayors sought to shut the station down or cut its funding, others used it as a personal political platform and supported it financially, and one mayor, Fiorello La Guardia, did both. La Guardia’s 1933 mayoral campaign included a pledge to shut down WNYC and, once elected, he snubbed the station by delivering his inaugural address from the studios of NBC. In the spring of 1934, La Guardia appointed a committee of three prominent broadcasters, including CBS President William Paley, to consider “the present status and future possibilities” of WNYC. The very composition of the committee determined the nature of its conclusion. As radio men, they set out to solve the station’s problems, recommending greater funding, better equipment, more staff, and more effective promotion of programming. It was not in the nature of broadcasters to conclude that a station should go off the air. La Guardia embraced the committee’s report and supported WNYC throughout his three terms. WNYC became part of an independent city agency, the Municipal Broadcasting System, with a director reporting directly to the mayor. Funding was made available to upgrade its facilities and expand its staff, in part by drawing on personnel and financing offered by the WPA 5
and other programs of the New Deal. Classical music became an increasingly important component of the station’s programming and included live broadcasts of concerts from city parks, studio broadcasts of concerts by WNYC’s 35-piece orchestra, and recorded music. WNYC’s extensive programming from the 1939–40 World’s Fair and annual American Music Festival added to its visibility within the city. During the war years of his final term, La Guardia began to deliver weekly talks at noon on Sunday, reporting the latest war news and commenting broadly on New York City life. Among these talks was the iconic “Gather around, children, and I will tell you about Dick Tracy” broadcast on which La Guardia read the comics during the 1945 newspaper deliverymen’s strike, the moment for which both La Guardia and WNYC may be most broadly recognized to this day. In 1943, this period of growth and visibility was capped by the successful application for a broadcasting license on the FM radio band, a license that would come to be WNYC’s most enduring asset. The mayors following La Guardia did not share his interest in the stations, nor did the financial condition of the city permit the kind of financial support La Guardia had been able to provide. While WNYC’s Director Seymour N. Siegel began some innovative programming during the 1950s and 1960s, his efforts were hampered by meager financial support. In 1951, WNYC did obtain a license for a UHF television station on Channel 31, and 10 years later, it began to produce a mixture of civic and cultural programs ranging from live sessions from the UN General Assembly to adult education courses. In 1971, the financial situation of the city deteriorated further, and WNYC was forced to lay off 55 employees. The Save WNYC Committee chaired by Mrs. Marie La Guardia shamed the Board of Estimate into a $600,000 grant to the stations, but the long-term prospects for WNYC seemed bleak. During the administration of Mayor Abe Beame from 1974 to 1977, the city barely avoided bankruptcy. Following the example of La Guardia 40 years before, Beame appointed a committee of broadcasters, led by CBS President Arthur Taylor, to consider the future of WNYC. The Taylor Commission affirmed the value of WNYC to the city but stressed the importance of broadening its sources of funding. In direct response, WNYC held its first onair fundraiser in August 1975, netting $30,000. With the election of Ed Koch in 1977, a mayor with a real interest in WNYC, and gradual improvement in the city’s financial condition, WNYC began to evolve into the public broadcaster that would find such widespread support when threatened with sale a decade and a half later. The formation of the WNYC Foundation made fundraising from sources other than the city a new priority. Listener support slowly began to grow, and WNYC became more adept at attracting a share of the expanding support for public broadcasting from governmental and philanthropic sources. Both the Corporation for Public Broadcasting and the Ford Foundation extended significant grants to WNYC in the late 1970s.2 In the face of this success came a sudden reminder of one of the perils of city ownership, “The John Hour.” In an effort to stem prostitution by publicly shaming those who solicited it, Mayor Koch had WNYC read the names of those arrested for solicitation. Although it lasted only two minutes and was cancelled immediately after a storm of protest, “The John Hour” would be cited repeatedly over the 2
Most importantly, the success of National Public Radio’s All Things Considered, launched in 1971, and Morning Edition, launched eight years later, provided WNYC with broadly popular anchor programming around which the balance of its programming, while still eclectic, could take on some coherence. The combination of national and international news from NPR, locally produced news, and a wide range of classical and new music programming (such as Tim Page’s innovative New, Old and Unexpected) began to develop a broader and more committed audience.3 Over the decade immediately preceding Mayor Giuliani’s election, WNYC continued to expand its sources of revenue and deepen its relationship with its audience through the quality and diversity of its programming. For the first time, Channel 31 began to play an important role in WNYC’s broadcast day. By 1993, WNYC claimed 1.2 million weekly television viewers for its mix of cultural and educational programming, including some award-winning local productions. Almost half of its broadcast time was leased to 18 foreign and ethnic broadcasters who produced their own programming in 12 languages, generating $6 million of revenue to support WNYC’s own television and radio production. The combination of Italian football produced by RAI and newscasts from around the world made WNYC-TV a fixture in a number of the city’s immigrant communities. While NPR national news programming continued to attract the largest radio audience, the introduction of two locally produced programs strengthened the relationship between WNYC and its local radio audience. Brian Lehrer’s morning show focused on political and social issues while Leonard Lopate’s afternoon program engaged with New York’s cultural and artistic world. The diversity of WNYC’s music offerings also attracted a broad and devoted audience, ranging as they did from Steve Post’s Morning Music programming and commentary to David Garland’s more classical Evening Music program to John Shaefer’s new music program New Sounds. Sprinkled into this mix were a variety of niche programs such as Pipedreams (a program of organ music) and Afropop Worldwide. The quality and diversity of WNYC’s radio programming was reflected in the growth of listening audience and paying membership. By the end of coming years as support for the imperative of the independence of WNYC from city ownership and control. 3
The relationship between public radio stations such as WNYC and National Public Radio (NPR), Public Radio International (PRI), and American Public Media (APM), formerly Minnesota Public Radio, which provide much of public radio’s content, is confusing to most listeners. Unlike commercial network television, where the networks and their affiliated stations share the same brand and where the stations broadcast content only from their affiliated network, public radio stations are, with a few exceptions, independently owned by a not-for-profit foundation or a university. Most public radio stations produce some local programming but also acquire nationally distributed programs from NPR, PRI, and APM. The multiplicity of brands that comprise a public radio station—leading to such statements as “I heard it on NPR this morning” as opposed to “I heard it on WNYC”—is a source of continuing frustration to public radio station managers.
WNYCâ€™s 1993 fiscal year, the AM and FM stations exceeded an average of 600,000 listeners per week and had 53,000 members. As a result of its successful fundraising, the foundation began to assert that with increasing self-sufficiency should come increased self-control. At the end of the Dinkins administration in 1993, the foundation negotiated a revised arrangement with the city under the terms of which it would have a role in the selection of future presidents of WNYC. Pursuant to a directive from Mayor Dinkins, the foundation would nominate its own candidates and would participate in the evaluation of others, although the final decision would continue to rest with the mayor since the city retained the broadcasting licenses.
THE MAYOR DECIDES TO SELL Following Mastro’s terse message to Schneiderman at the end of January 1994, the city and the foundation followed very different paths in planning for WNYC’s future. The foundation continued to focus on self-sufficiency and urged Mayor Giuliani to reappoint WNYC President Tom Morgan, citing the Dinkins directive to support its role in the selection process. A board committee was formed to explore the implications of self-sufficiency on future relations with the city. And, as a part of its effort to cultivate an image as a cultural institution, WNYC began to lobby to be transferred from the Department of General Services to the Department of Cultural Affairs, and, in time, both commissioners acquiesced. Morgan also became the public voice of WNYC, arguing in The New York Times of February 23, 1994, that the sale of the licenses was “unthinkable,” the equivalent of taking the wrecking ball to the old Pennsylvania Station. Five days later, The Times took up the theme in an editorial urging that the stations be transferred to the foundation. The city owns WNYC-AM, WNYC-FM and WNYC-TV. In distinctly different ways, they serve an audience of millions with non-commercial, high-quality news, culture and public service broadcasts that would surely cease if the stations were “privatized.” Instead, they should be “not-for-profitized”—an arrangement for smart lawyers to devise, where the stations would be self-supporting under the control of the not-for-profit WNYC Foundation that does the fund-raising now, or a reconstituted version. At the end of February, WNYC transformed its semi-annual on-air fundraising drive into a mandate for self-sufficiency. The pitch of the frequent interruptions of regular programming was “Send a Message to City Hall.” The results exceeded all expectations by raising over $1.5 million, three times the proceeds of the prior drive in October. But the success of the drive showed City Hall not only that WNYC’s listeners supported the stations, but also that the foundation had the capacity to pay for its future, whatever form it might take. In the meantime, the mayor’s privatization team had assumed responsibility for the future of WNYC and had a very different future in mind. By early February, a plan had been developed internally to sell both WNYC-FM and Channel 31. WNYC-AM, with a non-commercial license, was recognized to be of no commercial value. Even during the earliest stages of the Giuliani administration’s planning for WNYC, however, the foundation had an impact. Contrary to the recommendation of the transition team that the stations be shut down and sold for the value of the licenses, the mayor’s privatization staff recommended selling the FM and TV licenses to commercial buyers, but replacing them with non-commercial licenses. Thus, the plan was to “unlock” the value of WNYC’s two commercial licenses, which were being used non-commercially, by selling them at their commercial value, but substituting non-commercial licenses “in recognition of the value of WNYC’s programming to a significant number of New Yorkers.”
The privatization staff’s recommendation to the mayor summarized the competing considerations by saying, “The AM, FM and TV stations of WNYC represent city assets of not only historical and cultural but also financial significance. We believe the city can simultaneously 1) ensure provision of the most popular services, satisfying most of WNYC’s constituencies, and 2) realize in cash virtually all of the asset’s private-market value, which we estimate at $50 million to $100 million.” In the meantime, the mayor selected TV executive Steve Bauman to replace WNYC President Tom Morgan, but the announcement was postponed for several months “due to the sensitivity of Mrs. Tisch’s involvement.”4 The mayor had no intention of consulting the foundation, but as late as the end of March, a week before Morgan was asked to resign, the administration assured the foundation that it would be “in the loop” before any successor was named. On April 7, 1994, the privatization staff recommendation was formally presented to Mayor Giuliani, listing the next steps as approaching the Board of Education to take control of its FM and TV licenses for transfer to the foundation, advising the foundation of the decision, and soliciting the foundation’s cooperation. Subsequently, the decision was made to deal with the FM sale first and postpone the sale of the television license. At the beginning of May, Schneiderman, Tisch, and Bauman were told of the mayor’s decision and summoned to City Hall to participate in the drafting of a press release announcing the planned sale with the foundation’s support. On May 9, City Hall issued a press release that began, Mayor Rudolph W. Giuliani today announced that he is including in his executive budget—to be released tomorrow—a proposal to sell WNYC-FM and, at the same time, to provide a comparable non-commercial facility where the current WNYCFM programming would continue to be available to its full listening audience. The press release went on to cite the foundation’s full support for the proposal, and, in remarks at a press conference later in the day, Schneiderman referred to the proposal as “an elegant solution.” More important over the coming months, however, were the words “comparable” and “full listening audience,” included in the press release by Schneiderman, the ever-cautious lawyer. His caution turned out to be well placed, for, as James Traub was quick to note in the June 6 New Yorker, “There are no other slots on the local FM dial, and the Board of Education is unlikely to give up its FM station, WNYE—which, in any case, has a weaker signal than WNYC.” At the first trustees’ meeting following the announcement of the proposed sale of WNYC-FM and substitution of a non-commercial frequency, Schneiderman and the newly appointed Bauman found themselves on the defensive before a skeptical board. In spite of assurances from Schneiderman and Bauman that the mayor’s word on comparability could be trusted, the board’s secretary candidly recorded the fact that “some board members expressed concern that the city would foist a clearly non-comparable facility on the foundation while claiming it could be upgraded to an equal level.” In response to these concerns, Schneiderman Billie Tisch had been a member of Mayor Giuliani’s transition council, but was also Chair Emerita and an active trustee of the WNYC Foundation. 4
appointed a board committee to work with the WNYC staff in commissioning an engineering study and considering the implications of its results for the size of WYNC’s future audience and the quality of its signal. Two weeks later, armed with preliminary results, Schneiderman wrote to a mayoral assistant that the substitution of an upgraded WNYE would eliminate or compromise the broadcast signal to 20% of WNYC’s existing audience; a loss to 7% and a significant reduction in signal quality to 13%. Thus, he concluded, “I think we should get together and review the numbers before anyone gets too wedded to 91.5” (the Board of Education’s WNYE frequency). The mayor’s staffer kicked the letter up to his bosses, Chief of Staff Randy Mastro, Privatization Advisor Richard Schwartz, and Deputy Mayor John Dyson, asking, “Please advise on our next step” but also stating that the loss was “immaterial.” The comparability conundrum caused both the city and the foundation to reconsider their goals and strategy. On June 21, the mayor announced his proposed budget for the coming fiscal year and confirmed that it did not include the sale of WNYC-FM after all. There simply hadn’t been time to develop a proposal that the foundation would support, and the mayor’s advisors seemed to conclude that the anticipated proceeds weren’t worth a public fight with the foundation trustees. At the same time, the foundation concluded that it must adopt a more assertive approach to dealing with the city by framing its own proposal. The fact that the mayor had appointed a new president of WNYC without consultation and had made the unilateral decision to sell WNYC-FM led many trustees to fear other unilateral decisions to come. Furthermore, the uncertainty surrounding WNYC’s future was beginning to have an adverse financial impact as some foundations became reluctant to extend grants for programming that might never be produced. But at the same time, the WNYC Foundation came to recognize that the mayor’s continuing focus on closing the budget deficit in part through the sale of assets made it unrealistic to expect that the licenses would be transferred to the foundation for nothing. At the foundation’s June 14 board meeting, the trustees voted to approve (in principle) a transaction involving a cash payment for the acquisition of the three WNYC licenses, and Schneiderman appointed a license purchase committee, to be chaired by WNYC Foundation President Peter Darrow, to develop an acquisition proposal for consideration at the September board meeting. Thus, while the city and the foundation continued to pursue very different visions of WNYC’s future, the acceptance by the city of the concept of “comparability” and the recognition by the foundation that it was not going to get the licenses without paying for them significantly narrowed the options of both parties when their negotiations resumed after the summer.
THE FOUNDATION DECIDES TO BUY The license purchase committee and its pro bono advisors from McKinsey & Company spent the early part of the summer developing a financial model of the prospective revenue and costs that should be anticipated if the stations were to be operated without city support. In particular, the committee wrestled with appropriate assumptions as to the ability of the foundation to increase fundraising to cover both the loss of a city subsidy and a substantial purchase price for the licenses. On the one hand, the significant recent growth in on-air fundraising was a basis for optimism. The WNYC audience had responded in significant numbers and with great generosity to the emergency posed by the threat of imminent sale. More important for the long term, the foundation’s effort to cast itself as a cultural institution—as a curator and presenter of news, arts, and culture, and thus just as worthy of public support as a museum or university—was beginning to find acceptance. On the other hand, the committee was concerned that even the most enthusiastic WNYC supporter might balk at making a contribution to WNYC that would end up in the city’s coffers. At its September 1994 meeting, the board approved the recommendation of the committee, an offer to purchase all three stations for a blend of cash and future in-kind services to be paid and provided over a 10-year period with a stated value of $45.6 million. Specifically, the offer consisted of $10 million in cash, the forgoing of future subsidies of $13.6 million over the 10-year period (calculated on the basis of the subsidy for the current year), the continuation of public address services to the city for 10 years with a value of $7 million, and the continued on-air promotion of other New York City cultural institutions and events with a 10-year value of $15 million. While the $10 million cash portion was to be payable in 10 equal annual installments, it was to be prepaid as fundraising success permitted, and the stations’ licenses were to be transferred to the foundation upon final payment. The concepts behind the proposal were to offer the city a significant headline price while satisfying the mayor’s goal of getting the city out of the broadcasting business. The proposal also stated that if accepted, the deal would demonstrate “the city’s capacity to privatize city functions without diminishing the quality of life in the city.” From the foundation’s perspective, the proposal also preserved flexibility as to the timing of its financial obligation in view of the uncertain prospects for the level of future fundraising. The proposal stated “…the financial burden to the WNYC Foundation is substantial (almost $3 million per year) and represents an immediate increase of approximately 20% in our operating budget. Thus, we do not expect to be able to improve the financial terms of our proposal.” The proposal also contained a brief reference to the opportunity provided by the cash purchase price to build fundraising capacity. “The $10 million payment…establishes a one time fund-raising opportunity for a major campaign with our audience and foundations. Such a campaign is necessary not only to fund the payment of the fee, but also to establish the fundraising base we will need to meet our substantially higher future operating costs.” As the coming decade would illustrate, nothing would prove more critical to the future success of WNYC than this passing reference in the foundation’s proposal. Effective fundraising would prove critical to WNYC’s future success. 12
Within hours of the board meeting, the foundation’s offer was delivered to Mayor Giuliani’s Senior Advisor, Richard Schwartz, and, at Schwartz’s request, the foundation agreed that the proposal would not be announced publicly until the city had had time to consider it and respond. There were, however, continuing public expressions of support from others. Most noteworthy, Richard Carlson, Chairman of the Corporation for Public Broadcasting, wrote to Mayor Giuliani opposing sale of any of the licenses and threatening to reclaim from the city prior grants to WNYC in the event of sale. “US taxpayers, through the Corporation for Public Broadcasting, have invested $19 million in the stations over the years and are, in the best sense, part owners of them…. CPB will take every available legal step to ensure that the people of this country directly benefit from the sale of an asset they helped create.” For the next two months, there was no response to the foundation’s proposal. The city turned the process of dealing with the future of WNYC over to its Economic Development Corporation (EDC) and retained as an advisor a Rothschild Inc. team led by the restructuring specialist Wilbur Ross. The EDC and Rothschild went to work preparing a valuation of the WNYC licenses and offering materials for their prospective sale. In the course of this work, there were extensive requests for information from WNYC and numerous meetings with its senior staff, but no contact with the foundation. When Ross finally did meet with representatives of the foundation in mid-November, it was clear that no attention was being paid to the foundation’s proposal. Recognizing that the delegation of responsibility to the EDC and Rothschild was changing the focus of attention back toward an outright sale, and that adherence to Schwartz’s request for confidentiality was playing to the city’s advantage, Darrow wrote to Schwartz in early November to express his concerns and make an implicit threat to go public. I am increasingly concerned, based on reports of ongoing meetings between Rothschild, the EDC and WNYC senior staff, that a process may be in motion that jeopardizes the foundation’s proposal with respect to the WNYC stations. All of the emphasis in these meetings appears to be the maximization of the market value of the stations; attention to the issue of comparability seems to be scant and to the foundation’s proposal, none. As a consequence of this, morale at the stations is in rapid decline. At the same time, the foundation is under increasing pressure from its members, foundation supporters and listeners to “do something.” We have refrained from disclosing our proposal publicly because you asked for some time to consider it but I fear as a result that an inexorable process is in motion to defeat our proposal. I hope I am wrong. Please give me a call. Schwartz did call and invited representatives of the foundation to meet with the EDC and Rothschild. When they did, in mid-November, they were met with news that fundamentally 13
altered the prospects for their proposal. Rothschild’s valuation work suggested that the offer of the WNYC-TV license was expected to attract bids in excess of $75 million (it eventually sold for $207 million). It thus became clear to the foundation that, even at a steep discount, its current proposal with a $10 million cash purchase price could not include the TV license. The city had become too focused on the potential substantial proceeds of an outright sale. Darrow quickly confirmed to Schwartz that the foundation recognized that “the television license is worth far more than you and we had anticipated” and that “inclusion of the television license in our proposal as currently structured is inappropriate in view of the estimated value.” Darrow asked Schwartz to meet to discuss “alternatives ways of dealing with the television license.” Two weeks later, on December 1, the parties met again. Schwartz formally rejected the foundation’s offer, declaring it to be “interesting, but not sufficiently convincing to be preemptive,” and announced that the city’s immediate objective was the sale of the FM license to realize the “$35 million to $40 million locked up in the license.” Thus, he told Schneiderman and Darrow, the EDC would develop a process to seek bids for WNYC-FM and would simultaneously commission an engineering study of the quality and scope of the Board of Education’s WNYE-FM frequency.5 As to the standard against which WNYE was to be measured, the EDC asserted that the test was “comparability, not equality” with WNYC’s 93.9 frequency. Furthermore, the audience to be measured was only that within the five boroughs of the city, a retreat from the mayor’s commitment declared in May that comparability was to be assured as to WNYC’s “full listening audience.” In the course of the following week, however, the city also reversed its priorities and made the decision to offer the television license immediately and postpone offering FM until an engineering study could be completed. Steve Bauman reported to Wilbur Ross that meaningful engineering tests as to comparability would require field-testing and thus some delay, and potential bidders for FM already contacted were therefore advised that there would be a postponement of the process to early 1995. Schwartz advised the foundation of the city’s new priorities and asked to attend the upcoming trustees’ meeting to present them to the full board. In the meantime, he presented the foundation with a draft agreement by which the foundation was asked to express its “full support and cooperation” with regard to the immediate sale of WNYC-TV. The city would agree that it would not seek indications of interests for WNYC-FM until two weeks after receipt of the engineering study and a “discussion” of comparability with the foundation, with a view toward reaching “a mutually agreeable solution to the transfer of the station’s programming.” Two days before the foundation board meeting, the city issued a press release stating that the foundation and the city had so agreed. While the mayor’s press office immediately told reporters that the release was an error, the foundation pounced on the opportunity to begin
Unbeknownst to the foundation, the EDC had already begun to contact potential bidders.
communicating publicly about its negotiations with the city. Schneiderman and Darrow issued a press release stating, The press release issued by Mayor Giuliani’s office this morning announcing the sale of WNYC-TV with the support of the foundation was incorrect. It apparently was an inadvertently released draft that had been prepared by the mayor’s office in the expectation that the foundation would support the city’s initiative. The foundation board will consider the city’s proposal to sell the TV license at its scheduled board meeting Thursday afternoon. We expect that the board will consider the city’s proposal not in isolation but rather in the context of an overall understanding with the city with respect to the future of WNYC’s television and radio operations.
CONFRONTATION The foundation’s trustees gathered for their December 1994 meeting in the sleek, postmodern midtown office of Darrow’s law firm Cleary, Gottlieb, Steen and Hamilton in a mood of relief, excitement, and anxiety: relief that the months of shadowboxing with the city were over, but excitement and anxiety over what might come next. Part of the anxiety stemmed from emerging disagreement within the board over both goals and strategy. Many trustees remained wedded to the goal of keeping the radio and television stations intact and were pressing for a more aggressive campaign to pressure the city to accept the foundation’s proposal, perhaps at an increased purchase price. Others had always seen radio as the core of WNYC’s mission and were not concerned with the potential loss of the TV license. A third group, including Schneiderman and Darrow, who had been dealing directly with the city, were more focused on seeking the strategy that would get the best result from the city. Their discussions with Schwartz and the EDC had led them to believe that the ever-increasing valuations of the TV license were hardening the city’s view that TV must be sold, and that this in turn might open the door for greater flexibility on the radio licenses. With Schwartz and Deputy Mayor John Dyson waiting in the reception area, Schneiderman opened the board meeting by reviewing recent discussions with the city and asking whether there was a willingness to acquiesce in the sale of TV in exchange for the radio licenses. Jon Rotenstreich, an insurance executive and longtime Wall Street dealmaker, observed that the city had not offered such a compromise, that it was asking for the board’s support for the sale of television in exchange for nothing more than future discussions of comparability. Further, he pointed out, it was clear that the city wanted the foundation’s cooperation with any sale, and that cooperation should only be offered in exchange for a specific binding agreement. The board agreed, and Dyson and Schwartz were invited to join the meeting. Schneiderman welcomed them with the observation that the board had a fiduciary duty to the donors of the millions of dollars raised by the foundation over the years, and that the interest and support of the public must be considered in any resolution of WNYC’s future. Dyson took the floor and responded with an aggressive rebuttal of Schneiderman’s remarks. He asserted that, while the city hoped to deal with the foundation “in a friendly way,” the assets in question belonged to the city, and the mayor had a mandate to sell them that he took seriously. He described the letter from Carlson asserting that the Corporation for Public Broadcasting had an interest in the stations based on prior funding as “fatuous, confused, and unhelpful.” He asserted that the mayor recognized the cultural value of the radio stations and would consider this in his decision about the future of radio, but that in the meantime, the TV license, with little cultural but substantial economic value, should be sold. If the sale went as well as now expected, it would “solve all our problems,” he suggested. As to the question of comparability, Dyson declared that the mayor should be trusted and that future discussion should be based on “facts,” not “histrionics.” Darrow replied that the board was concerned about the “Balkanization” of the WNYC franchise before all the relevant facts were known. Why not complete the engineering study first, 16
he asked, so that the discussion could be based on facts, as Dyson had argued should be the case. Dyson replied that he was being asked to negotiate with people who were not owners, and that he would not do so. The mayor, he asserted, was not prepared to foreclose any of his options. Schneiderman pressed the point again, asserting that the sale of TV was premature in the absence of an agreement on radio. Dyson responded by renewing his attack on the CPB letter, referring to it as a silly “meddlesome act.” “Sort of like the city’s leaked press release?” shot back Rotenstreich. Dyson turned to Rotenstreich, raised his voice, and threatened, “We’ll go sell ’em if you don’t want to work with us.” With that, Lally Weymouth, a Giuliani-appointed trustee and the mayor’s good friend, intervened to say that she found Dyson’s approach “confrontational” and Dyson, taking the hint, replied that the city “did not want a fight.” When Dyson and Schwartz left, the board quickly resolved not to support the city’s proposed sale of the TV license and issued a press release to that effect. In the meantime, Weymouth, who was still distressed by the tone and substance of the meeting, called the mayor to say so. “You can’t let these people be treated that way,” she told him. “Now you have to meet with them yourself.” He agreed to do so and, with the holidays intervening, a meeting was finally arranged for six weeks later on February 2, 1995. In the meantime, the foundation was succeeding in persuading its audience to think of WNYC more as a cultural institution than as a broadcaster. Shortly after the board meeting, the foundation issued an extensive background brief outlining its proposal to the city to purchase the licenses and concluding, The city would never consider selling other cultural assets, such as the New York Public Library, Central Park, or the Metropolitan Museum of Art. All these are being run successfully as public/private partnerships, and—unlike WNYC—with substantial city funding. WNYC serves larger number of individuals on any given day than any of these other institutions. The message was getting through. As Bauman reported to Deputy Mayor Dyson in his monthly report for December, an Ogilvy & Mather study of the WNYC Radio audience had found: WNYC has an extremely strong relationship with its listeners. They are not bound together by a love of art or literature, or interest in science or music, or by views on politics. Rather, they are bound by a desire to explore aspects of all these and to expose themselves to things they agree with and things they don’t. The greatest common desire of the WNYC audience seems to be that this medium provide an intellectual exploration of many subjects, ideas and people from as many perspectives as possible. 17
The foundation was also having success in developing funding for a purchase price for the licenses, although this progress too was dutifully reported by Bauman to Dyson and reinforced the city’s position that the foundation should pay a substantial price for the licenses. Bauman wrote: With regard to the foundation’s proposal as an alternative to a commercial sale, their initial offer was made … based on anticipated funding thought to be readily achievable without the need for debt financing. Several major foundations and donors have indicated the willingness to contribute $5 million to $7 million toward the proposed purchase price with another $5 million coming from the board. An internal foundation analysis has concluded that the operations, with some programming and structural changes, could support a debt financing toward a purchase price. However, this assumes the radio and TV stations’ operations continue over a period of time, since the immediate loss of either would significantly reduce revenues and economies of scale.
COMPROMISE On the morning of February 2, 1995, foundation trustees Tisch, Schneiderman, Darrow, Weymouth, and Keith Thomas gathered in the mayor’s conference room at City Hall to present their case to Mayor Giuliani and his advisors, including Richard Schwartz. After introduction of those who did not already know each other, the mayor thanked the trustees for coming and invited them to open the meeting. Tisch began with an apology for speaking from notes, observing that the topic was too important to risk overlooking anything, and presented a detailed summary of WNYC’s mission and the foundation’s history. She stressed in particular the importance of a comprehensive agreement with respect to all three licenses, and noted that the foundation concurred with the mayor’s stated goal of getting the city out of the broadcasting business. Schneiderman followed with a point-by-point recitation of the history of the city’s commitment to comparability as it related to the FM station. The mayor politely but forcefully asserted that the licenses were city property, that he had a mandate to sell them, and that “the marketplace” must determine the value of the licenses through an open auction. Darrow responded that this approach made the foundation a disadvantaged buyer in two respects. First, unlike a commercial buyer, the not-for-profit foundation could not just dip into its treasury for the cash to make the purchase. It needed an understanding with the city on price followed by time to raise the funding from its audience and other supporters. To hold an auction was therefore to reject the foundation as a buyer. Second, while agreeing that the marketplace had a role to play in determining value, Darrow asserted that the calculation should take into account something other than the level of commercial bids. Since the WNYC licenses had been used historically to broadcast non-commercially in the public interest, the relevant question for the city should be whether there was broad and substantial financial support from the public for the foundation’s purchase of the licenses. It was this public that was the mayor’s constituency, not commercial bidders. Thus, the relevant market involved the intersection of historical, political, cultural, and commercial considerations, not merely the level of commercial bids. After another half hour of back-and-forth on these and related points, the mayor announced his decision. While continuing to believe that the marketplace should be the starting point for a transaction, he also accepted that a discount from full financial value was appropriate in view of the public service provided by the foundation. Thus, he agreed that he would consider the city’s position further with Dyson, Schwartz, and Bauman, with a view toward developing a process by which a transaction might be agreed upon with the foundation. With that the meeting adjourned and the City Hall photographer was invited into the conference room to record the moment.
First Row: Richard Schwartz, Lally Weymouth, Billie Tisch, Mayor Giuliani, Irwin Schneiderman, Peter Darrow, Schuyler Chapin. Second Row: Keith Thomas, William Diamond. Photo Credit: Diane Bondareff, Mayor’s Photo Unit As a result of the meeting, it became clear to the city that the foundation “wasn’t going away” (to use the mayor’s words), and that it made sense to seek a compromise that avoided what The New York Times described as “pitting prominent patrons of the arts against the mayor.” Furthermore, some longtime friends and supporters of the mayor had begun to weigh in privately in support of a compromise. At the same time, the negotiators for the foundation, led by Schneiderman, Tisch, and Darrow, had their view confirmed that there was no prospect of purchasing the TV license as part of a transaction that the foundation could afford, and that, as a result, its value was as a bargaining chip to get the radio licenses at the lowest possible price. After a month of meetings and phone calls during which neither side was willing to offer a price, Darrow and Schwartz agreed to have an off-the-record telephone conversation during the first weekend in March. Three days before the scheduled call, Schwartz’s office called Darrow to ask that a copy of the foundation’s September 1994 proposal be faxed, suggesting that Schwartz would use the proposal as a starting point for further discussions. On the morning of Saturday, March 4, 1995, Darrow called Schwartz at home. Each indicated to the other that the call would be exploratory only, as neither had authority to agree to a specific transaction. Notwithstanding this tentative opening to the call, the interchange that followed would provide the basis for the agreement between the city and the foundation that was ultimately concluded.
Schwartz began by asserting that the foundation’s September proposal had been unrealistic in that it included the television license, sought a value for future services that the city did not accept, and offered insufficient cash even if television were to be excluded. Darrow replied that he thought he could persuade the foundation trustees to agree to exclude television if the price for the radio licenses reflected such a concession and was realistic in terms of the foundation’s fundraising prospects. Schwartz countered that, given the WNYC-FM license’s estimated market value of $35 million to $50 million, the purchase price would have to be at least twice that previously offered or a minimum of $20 million. Darrow replied that he might be prepared to recommend such a price if the foundation had 10 years to pay it. Schwartz said that he was prepared to recommend an installment purchase, but only if the full amount was payable within the six remaining years of Mayor Giuliani’s anticipated two terms. Darrow said he might consider a six-year payment schedule if there were further concessions from the city and suggested that the deferred installments should be interest free, and that WNYC should have continued use of its facilities in the Municipal Building for six years rent free. Schwartz said he could recommend these terms, and the two agreed to try to gain support for an agreement that reflected them. As the city and the foundation worked toward an agreement in principle on these terms and the number of participants in the discussion expanded, the details of the transaction began to leak out. On March 16, The New York Times printed a long story summarizing the history of the mayor’s proposed WNYC privatization and disclosing most of the proposed terms being negotiated. Two days later, editorial page of The New York Times reviewed some of the issues raised by the mayor’s privatization initiatives, criticized the mayor for the proposed sale of WNYC-TV, and lamented the compromise that the foundation was expected to make. Mayor Rudolph Giuliani is apparently still determined to sell New York City’s public TV channel to a private owner. What a waste. Selling valuable government property for a one-shot revenue boost is, in general, a bad policy. Selling an irreplaceable cultural asset like WNYC-TV is also a sad mistake. But the mayor believes, and has been forthright in saying publicly, that the city should not be in the broadcast business. It owns WNYC-TV and two public radio stations—WNYC-AM and WNYC-FM. They cost City Hall less than $2 million a year, because they raise more than 90 percent of their budgets through over-theair “pledge week” fund-raising and private grants. The WNYC Foundation is the fund-raiser, and has so far opposed commercial sale of any of the properties. But the foundation may be ready to turn over the TV channel to the mayor’s privatization scheme as a way to save the radio stations. The mayor has leverage because he possesses the final authority to sell, with or without foundation approval. But even he can see value in not offending the legions of voluble and politically influential fans of the radio stations’ menu, mainly National Public Radio fare and classical music… The estimated $60 million to $70 million that the city might get from the TV sale is not worth it. Yes, every million counts in a budget crisis, and those tens of 21
millions would spare other city programs for another year. But the city at large would have lost part of its cultural fabric forever, without having solved its longterm budget problems. WNYC-TV does not have the stature or the broad audience of Channel 13, New York’s principal public TV outlet and one of the premier public channels nationwide. But WNYC-TV provides something that stronger channels do not— locally produced programs for teen-agers and minorities, as well as an electronic window for the city’s ethnic communities in their own languages. Mayor Giuliani would point out that there are other public and noncommercial channels in the city where that type of programming could be generated. But WNYC-TV also happens to make a profit—from leasing air time to ethnic groups—that helps support the radio stations. All of that disappears if WNYC-TV becomes just another commercial outlet for old movies. But the mayor’s leverage had long since been exercised over WNYC and the foundation. The mayor had the power to sell the licenses and a well-known willingness to take on those who opposed him. The sale of WNYC-TV was expected to contribute substantially to the reduction of the budget deficit (it eventually sold for three times the estimate quoted in the New York Times editorial). And the diverse nature of its minority and ethnic audience meant that the mayor need not anticipate cohesive political opposition to a sale. Of WNYC’s 53,000 contributing members, fewer than 3,000 were television viewers. Above all, once the foundation accepted the proposition that it would pay for the licenses (albeit at a discount), a purchase that included TV, whose estimated value continued to escalate throughout the negotiations, was simply not feasible. On the other hand, the foundation was not entirely without leverage. From the earliest stages of its planning process, the city accepted Schneiderman and Tisch’s characterization of WNYC’s radio stations as a valued cultural asset, and thus made a commitment to “comparability” that limited its options as negotiations continued. And, even after it became clear that purchase of the television license was financially impossible, the foundation declined to support its sale by the city until a firm radio purchase price was negotiated at a substantial discount from its estimated market value of $35 million to $50 million. Both the foundation and the city approached the privatization of WNYC through experienced and pragmatic negotiators. At the time of Mayor Giuliani’s inauguration, the transition council’s privatization team recommended the closure of the stations and the outright sale of the licenses, while the foundation believed that it should be permitted to work toward financial self-sufficiency and continue both its radio and television programming with the licenses left in place. But the city quickly realized that it would be politically unwise to take on both the foundation’s influential trustees and WNYC’s substantial and devoted radio audience, just as the foundation came to accept the mayor’s firm commitment to selling assets to reduce the city’s deficit. Thus, the negotiators avoided, for the most part, an ideological and political debate in favor of a more transactional approach to which they were all accustomed, using such leverage as they had in arriving at compromise. 22
On March 21, the WNYC trustees unanimously approved the purchase of the radio licenses for $20 million, payable over six years without interest, and agreed to support the sale of the television licenses by auction to commercial bidders. Following the meeting, Schneiderman, Tisch, and Darrow joined Mayor Giuliani’s daily press conference at City Hall to announce the compromise. When pressed during questions as to why the city had agreed to a discounted purchase for radio, the mayor stressed WNYC’s cultural value as a classical music station as well as the importance of gaining the cooperation of the foundation to ensure the ease of sale of “the bigger piece,” the television license.
Peter Darrow, Mayor Giuliani, and Irwin Schneiderman at City Hall Press Conference When Compromise Was Announced. Photo Courtesy of WNYC Archive Collections With an agreement in principle in place, the city’s lawyers and the foundation’s pro bono counsel Wachtell, Lipton, Rosen & Katz began the arduous tasks of seeking Federal Communications Commission approval for the proposed license transfers and negotiating a definitive agreement relating to the license transfer, the six-year payment and lease terms, and the arrangements for the separation and transfer of the radio and television operations. It would be almost two years before formal closing. A part of the agreement in principle between the city and the foundation required the auction of the television license to be completed before the radio licenses could be transferred. On July 1, 1996, the city formally transferred the WNYC-TV license for $207 million to a joint venture between Dow Jones & Company and ITT Corporation. The station was renamed WBIS+ and promised “the most topical, useful and entertaining blend of business, sports and entertainment programming available in the marketplace.” The format did not succeed, and within a year the Channel 31 license was resold to Paxson Communications, which leased the business day hours to Bloomberg Television and filled the rest of its broadcast hours with a combination of infomercials and religious programming. 23
PLANNING AND PAYING FOR INDEPENDENCE At the time the foundation approved the terms of the transaction with the city, the funding for the first installment of $3.3 million was already in hand, thanks to two significant foundation grants, trustee pledges, and the success of the “Send A Message to City Hall” on-air campaign of the previous year. With an agreement with the city now in place, a new fundraising theme was needed, and as the Fourth of July approached, the theme of “independence” became WNYC’s new campaign rallying cry. A four-day on-air independence campaign was kicked off on May 31 with a formal on-air signing of WNYC’s Declaration of Independence, which read, When in the course of human events, the bonds of ownership no longer prevail between a great city and a municipal radio station, then it is time for the listeners of the station to stand up as one and make it a truly public radio station by contributing to the purchase of its license and by ensuring its independent survival. To articulate this new theme of independence as well as the continuing theme of WNYC as a cultural institution, a little star power was invoked. Itzhak Perlman, Bill Moyers, Sarah Jessica Parker, Willem Dafoe, Betty Comden, Lorin Hollander, and Spalding Grey spoke of their love of WNYC and signed the WNYC Declaration of Independence. The ensuing on-air independence campaign, supported by a $1 million challenge from the trustees, raised $1.4 million from 32,000 listeners in four days.
Itzhak Perlman Signs WNYC’s Declaration of Independence. Photo Courtesy of WNYC Archive Collections
These themes of “save WNYC” and “independence” were highly successful in raising both the profile of WNYC and the funding needed to begin to pay the purchase price. More people were listening to WNYC Radio and more listeners were becoming paying members. During WNYC’s 1995 fiscal year, well over 700,000 people listened to WNYC Radio during each week—the most in the station’s history and an increase of almost 100,000 over the prior fiscal year. Paying membership reached more than 75,000 during the 1995 fiscal year, an annual increase of 4%.
Sarah Jessica Parker, Scott Simon, and Brian Lehrer Celebrate WNYC’s Independence. Photo Courtesy of WNYC Archive Collections As the celebration of independence wound down, the board and staff of WNYC began to plan for their longer-term challenges, raising the funding to pay the balance of the purchase price and to offset the loss of city support, while at the same time continuing to fulfill WNYC’s mission to be a significant cultural and civic voice for New York City. It would no longer be sufficient to seek audiences and funding around the threat of sale or the celebration of newly won independence. WNYC would have to appeal to its audience and its funders on the basis of its mission and the quality of its programming. And, since the foundation was no longer the fundraising arm of a city agency with a mayoral appointee as its head, new leadership was needed. Shortly after arriving at the compromise with the city, the foundation trustees began a formal search for WNYC’s first non-political leader. The search firm Russell Reynolds was engaged to seek candidates, and a significant number of prominent New Yorkers threw their hats in the ring. But the board’s search committee was focused on the challenges posed by the job ahead and passed over those candidates offering primarily reputation and status. They selected Laura Walker, a young executive from Children’s Television Workshop, who seemed to the committee to have the passion for radio together with the necessary energy, discipline, and focus 25
to lead WNYC in meeting its challenges. In December 1995, she began her tenure as WNYC’s President. At the same time, these challenges would require a fully engaged board and so, in January 1996, Peter Darrow, Irwin Schneiderman’s successor as chairman, asked for the resignation of those trustees who were not prepared to make the governance and funding of WNYC a significant personal priority. Six trustees did resign, and the board’s nominating committee began to seek new trustees who would actively participate in securing WNYC’s future. With independence negotiated and new leadership in place, WNYC put celebration behind it and began to plan for and manage the consequences of its six-year payment obligation. As Darrow admitted to The New York Times in July 1996, six months before the closing of the purchase, “It’s a staggering set of challenges,” to which Walker added, “This independence is a long-term blessing but a short-term curse. Getting through the next few years is going to be tough.” The initial plan for WNYC’s two-year Independence Campaign called for gifts of $10 million from foundations, $10 million from individual “major donors” ($5,000 or more), $4 million from special one-day on-air fundraising drives, and $3.5 million from the board. In addition, on-air fundraising for annual support was budgeted at $4.4 million per year. The campaign got off to a promising start, and, by the end of 1996, shortly before the formal closing of the purchase of the licenses, $8.4 million had been raised and the Corporation for Public Broadcasting had extended a $500,000 challenge grant offering to match, on a 1:2 basis, new individual gifts of $10,000 or more. Unexpectedly, there turned out to be one more obstacle to be overcome before the foundation could take over the radio licenses. Although negotiation of the formal terms of the purchase, while complex, went smoothly, and Federal Communications Commission permission for the transfer was obtained in October 1996, a group of Spanish-language broadcasters sued to enjoin the sale to the foundation and the foundation’s fundraising on the theory that the transaction between the city and the foundation was a closed-door “sweetheart deal,” whereas city law required open bidding and the sale to the highest bidder. The plaintiffs claimed to be willing to pay $30 million for the stations and offered a plan to maintain the programming of the FM station while leasing time on the AM station to ethnic broadcasters (following the model of WNYC-TV). Lawyers for the city and the foundation successfully argued that the City Charter did not require open bidding, and thus that the city was entitled to take into account the public interest in preserving a “unique municipal treasure” in agreeing to a sale. The case was dismissed. On January 7, 1997, the city formally transferred ownership of the licenses against the payment of the first of six $3.3 million installments.
POSTSCRIPT DEFINING AND BUILDING NEW YORK PUBLIC RADIO Following the closing of the license purchases, the WNYC Foundation renamed itself WNYC Radio, and the staff and board began to define long-term goals and a strategy to meet them. As result of the clarity of mission, strength of leadership, and breadth of public support developed during the years before independence, both the goals and strategy fell quickly into place: 1. 2. 3. 4.
Reposition WNYC-AM and -FM as vibrant, newly independent public radio in New York and as the flagship public radio stations in the country. Achieve operational self-sufficiency. Fund the license purchase price. Position WNYC as a publisher of radio and multimedia content, and as owner, agent, or distributor of content through diverse channels.
For the following decade, with varying degrees of emphasis at different times, these remained the goals of WNYC. At times, the goals conflicted, as the need to finance the purchase price and sustain operations competed with WNYC’s broader mission and programming goals, and the necessary compromises were frustrating to WNYC and its audience alike. While the goal of building audience was consistent both with the mission of serving the public and with the need to increase financial support, some of WNYC’s traditional listeners were sharply critical of the programming changes that followed independence. Those devoted to WNYC as one of New York City’s two remaining sources of classical music broadcasting lamented the increase in programs they derided as “talk,” while others who valued the quirkier and at times iconoclastic side of WNYC saw this same increase in talk as “dumbing down.” Nonetheless, the WNYC audience grew dramatically over the years following independence, from a weekly average audience of 700,000 in 1995 to 1.4 million at the end of 2011. In spite of this growth in its audience and the initial success of its fundraising, in time WNYC began to struggle to meet the financial burden required both to sustain its programming and to pay the remaining purchase price installments. After timely payment of the first five installments, the destruction of WNYC’s World Trade Center transmitter on September 11, 2001, required that the final installment be stretched out. The final payment was made on June 30, 2004. With independence fully secured and the burden of the license purchase price lifted, the renamed New York Public Radio was free to devote its full resources to its mission and to expand both the range of its programming and the breadth of its distribution. The purchase in 2009 of New York City’s sole classical music station, WQXR, from The New York Times Company relieved the long-standing tension between “culture” and “talk,” and thus permitted New York Public Radio to find the full range of its cultural and civic voice.
At the same time, rapidly developing digital technology dramatically expanded potential channels of distribution for programming and freed program production from the limitations of a particular time slot. By August 2013, New York Public Radio had fully realized the promise offered by WNYCâ€™s trustees and staff 18 years before; it was a treasured New York City cultural institution with eight radio stations, a significant newsroom, a vibrant performance space, and a broad array of programs distributed over the air and on the Web to 11.5 million people each month on average. Grover Whalen, Mayor La Guardia, and Mary Nichols would be astonished and proud.
Going Public chronicles the bold moves taken by WNYC Foundation Board of Directors to save public radio in New York City by acquiring the ci...