It's all about the money

A top-secret plan by KPBS, the taxpayer-funded public broadcasting arm of San Diego State University, to buy an additional FM radio station here and devote its current FM frequency to a lucrative classical music format has been killed. SDSU owns and operates a public television station and FM radio station in San Diego; in November 2004 it spent $1.1 million to buy KQVO-FM in Calexico, which later fell dramatically in value. According a document titled “Funding Our News Future: A Case for Purchasing a New Radio Frequency,” obtained from the university under the California public records act, KPBS management contemplated paying $8 million for KPRI, a 30,000-watt FM station broadcasting from Mount Soledad and reaching 2.6 million people. By comparison, KPBS-FM, powered with just 2700 watts, has an antenna on Mount San Miguel in the southeastern part of the county and reaches 2.3 million people.

The current owners of KPRI, who had originally hoped to sell the station for $30 million, according to the proposal, “have controlled the station for more than three decades and are looking to unload the property.” The document says, “If KPBS is successful in purchasing the frequency, we will run a full-service classical music station on 89.5 FM [currently operating as KPBS-FM] and move our news service to 102.1 FM.”

The report notes that, “All things being equal, News and Information services have greater audiences than classical music services.” But though classical audiences are smaller than those for news and talk, the proposal argues, they have more money, and therefore the music-only station would be a cash cow for the university. “San Diego is home to one full-time classical station (XLNC1) that has a weekly audience of approximately 50,000. Their signal is difficult to receive, and their programming strategy has proven to be unsuccessful. In any case, their performance in the market cannot be used as an indicator of future performance.…

“There are untouched philanthropic dollars in San Diego that will be pledged to support a classical music station. These donors are not currently available to us because of our news format. It is advisable that we create a plan that focuses specifically on soliciting major gifts from donors who want to support the Fine Arts.

“A properly run classical music station can generate significant revenue. In fact, this scenario, with a purchase price of $8m and conservative listener sensitive revenue projections, shows positive cash flow after debt service in year #2. We could potentially reach $1.5m cash flow by year #5. These revenues will go toward funding the KPBS News service, which rarely operates with positive cash flow.”

The records show that Erik Langner of Public Radio Capital, a broker based in Boulder, Colorado, specializing in public broadcasting stations, was paid at least $5000 to work on the KPRI deal but was denied additional funding by KPBS general manager Tom Karlo last summer. “A new agreement needs to go through SDSU. At this time with the State of California budget issues, this is something I don’t have the time or energy to pursue,” he wrote Langner in an email dated June 25. Langer agreed to continue working on the proposal under his old contract, but a spokeswoman for Karlo said last week that he had shelved any plans to buy KPRI.