Public Radio Network Has a Script for Success

THE PHILANTHROPY 400

No. 311

Miami is a long way from Minneapolis-St. Paul, but that hasn’t stopped Minnesota Public Radio/American

Public Media from buying a Pompano Beach Christian radio station for $20-million.

The Florida station will become the nonprofit radio network’s newest classical-music station.

The news has been greeted enthusiastically in most circles, and the new station, WMCU, is expected to increase the radio network’s ability to recruit new donors and raise money from other sources. But not everyone is happy.

“This is a sad day for Christians in Miami,” wrote one reader in a comment posted online by The Miami Herald, after it published an article about the acquisition. “WMCU was the bloodline.”

The mixed reaction is typical of the way in which bold steps taken by Minnesota Public Radio/American Public Media over the past two decades have been greeted.

For example, when it bought WCAL, another classical-music station in Northfield, Minn., in 2004, and turned it into an alternative music station for young adults, the reaction was swift and sharp.

One blogger, joined by a chorus of others, accused the network of squeezing “every iota of life out of serious music,” acquiring the station simply to eliminate the competition for donations. “Minnesota Public Radio’s classical network is to classical music as Chino Latino is to food: bland and homogenized,” he wrote.

But while the radio network has had its share of critics, with some questioning the motives of its leaders, few can argue with its success. For example, the young-adult music station has proved to be a winner, with more than 150,000 weekly listeners, many of whom now also tune into the network’s other stations as their top source of news and information. And Minnesota Public Radio/American Public Media is one of the fastest growing public broadcasters in the country: Contributions rose to $59.1-million last year, a 46-percent increase over 2005 and the largest percentage gain of any public broadcasting entity on the Philanthropy 400.

National Presence

A big reason for the increase was a two-year capital campaign to raise $50-million, which ended last year with a total of $56-million. But the growth is also the result of a deliberate effort to turn the broadcasting outlet from a group of regional radio stations in and around Minnesota into a national institution with stations in California, Idaho, and Florida.

It is also considering purchasing a station in the Washington metropolitan area, with the goal of transforming it into a news station covering government and politics.

The radio network has become the nation’s leading producer of classical-music shows. Its cultural and news programs include A Prairie Home Companion, Marketplace, Speaking of Faith, The Splendid Table, and Weekend America. Its programs are broadcast on nearly 800 stations nationwide, drawing a weekly audience of about 15 million. Only National Public Radio has a larger audience, with 26 million weekly listeners.

With its increasingly national focus, the radio network has starting appealing to large foundations and corporate donors. Grants from foundations for its nationally broadcast programs have grown from $1.4-million in 2004 to more than $6-million this year, while corporate support has nearly doubled, from $6.5-million to $11.1-million.

“This is an area that is very fertile, it was just waiting for us to focus on,” says Jon Gossett, the network’s chief fund raiser. The organization is also raising an increasing number of annual donations of $15,000 or more from individuals, he says. Such gifts rose by 42 percent to $1.7-million this year. “We’ve made extraordinary progress in major gifts,” he says, “but we’re just now beginning to realize the potential.”

Commercial Foray

Even more unusual — and controversial — than the national expansion has been the organization’s foray into for-profit enterprises. The first such undertaking was the Rivertown Trading Company, which began in a corner of the radio network’s mailroom in the early 1980s, selling products related to the popular program A Prairie Home Companion.

The company grew by offering other products and was eventually sold, netting $106-million in 1998. Most of that money, $86-million, was used to bolster a tiny endowment that has since grown to $170-million, one of the largest in public broadcasting.

Under its for-profit holding company, known as Greenspring, the radio network also owns a publishing company that produces several magazines. Most recently, the company has invested in a commercial social-networking Internet site, Gather.com, that enables the radio network’s members and others to share information on topics of mutual interest. The network will not say how much it spent for a stake in Gather.com.

“The idea was to create a place like MySpace but make it a place for sophisticated people,” says David Strand, an executive at the Cleveland Clinic and the network’s former board chair.

From the beginning, the motivation for going into such businesses was to offset cuts in government aid with new sources of income, says Bill Kling, who has been president of the network for 40 years. “We have very nice, diversified revenues,” he says. “We’ve earned about $275-million from for-profit activities for the benefit of the nonprofit. If you have that kind of boost, it is an extra advantage.”

But, over the years, some critics have believed that it is Mr. Kling himself who has reaped the advantage from the corporate enterprises. He and other executives are compensated by both the nonprofit and for-profit sides of the organization. And until Minnesota passed a law specifically aimed at the public radio network, those executives were not required to report their for-profit pay.

For 2006, Minnesota Public Radio/American Public Media reported on its 990 informational tax return to the Internal Revenue Service that Mr. Kling earned $377,463 in salary and benefits. What the return does not say is that Mr. Kling earned another $157,277 from the American Public Media Group, the umbrella entity for the radio network and its commercial enterprises, and an additional $94,365 from Greenspring, the for-profit holding company, bringing his total compensation to $629,105.

Critics have said that is too much even as they applaud Mr. Kling’s entrepreneurial skills in helping his organization thrive in an era of budget cuts and heavy competition for dollars.

Mr. Kling and other officials at the radio network declined to comment on his salary, but they issued this statement: “The compensation of American Public Media/Minnesota Public Radio officers, including the CEO, is set by a compensation committee that is made up of community board members with the advice of an outside compensation consultant. Their positions are evaluated in comparison to the market for positions of similar responsibility in nonprofit and for-profit companies, and the compensation of these individuals is set in fair relation to that market.”

A New Information Age

If salaries are determined by the market, so are other issues that keep broadcasting executives up at night.

Like commercial newspapers, television, and radio stations, Minnesota Public Radio/American Public Media is racing to keep abreast of rapidly changing technologies and predict which ones audiences will prefer as their source of news and other information, whether it be satellite radio, video streaming, or other methods.

“You hear people who work for Time Warner and others talking about the pace of change. They are constantly trying to figure out whether this or that way of distributing content is the right thing,” says Mr. Kling. “The answer is that no one knows where the audience is going to go. There are some people who are scared to death.”

But Mr. Kling says he isn’t one of them. As mainstream papers and news broadcasts struggle with declining audiences, sluggish advertising sales, and other changes that have led to editorial layoffs and cutbacks in news coverage, the radio network and other public broadcasters have benefited from renewed interest in their programs.

Mr. Kling says his organization is obtaining a growing amount of money from grant makers and other donors who believe the news media are essential to ensuring civic participation and the nation’s future as a democracy.

“Newspapers in particular and news on TV and radio are challenged by economics these days,” Mr. Kling says. “You can make more money on Dancing With the Stars than you can with the evening news. CNN is “infotainment” at best. So our audiences grow, and we become increasingly important to our listeners.”

Indeed, the number of individuals in Minnesota who donate to the network has grown. Mr. Gossett, the network’s fund raiser, says that is partly because the local stations last year began stressing the need for more donors rather than more dollars in their on-air fund-raising drives. After hovering around 85,000 donors for several years, the stations recruited 94,000 donors last year.

And Minnesota Public Radio/American Public Media is looking for — and finding — more ways to engage donors and potential donors in its broadcasts and other activities, like in-person gatherings. For example, the radio network holds concerts for families and has a booth at the Minnesota State Fair where it sells memberships and products. A new building, made possible by the recent capital campaign, that includes a studio and auditorium where the network now holds public events like a series of meetings on the state’s economic health.

Among its new efforts is a project called Public Insight Journalism, which has involved local residents in news gathering.

Five years ago, worried that the radio network’s reporting staff of some 60 journalists needed to be 10 times greater to sustain the quality of its news programs, Mr. Kling and his colleagues came up with the idea of getting local residents to join a group whom reporters can turn to in pursuing stories.

Since then, Minnesota Public Radio/American Public Media has spent $2.5-million and won additional grants to compile a database of nearly 40,000 specialists categorized by their area of expertise who have agreed to be available to reporters.

“The first thing we do is set the agenda ourselves and begin a story by saying to these people, ‘Tell us what you know,’” says Mr. Kling. “Now we are trying to get them to tell us what issues they are facing.” That information suggests story ideas that reporters and editors might otherwise miss.

The project, which this year won an award for news innovation from the John S. and James L. Knight Foundation, has helped the radio network come up with new ways to reach and involve listeners.

For example, in conjunction with a story on the state budget, the network directed listeners to an online interactive game called Budget Balancer, in which they were asked to decide which budget items to cut and then were shown online what effects their cuts would have.

“Legislators told us it was the first time they had constituents who understood the budget,” says Mr. Gossett. “This advances one of our most important mission-related priorities, increasing engagement of the public in civil society.”

The journalism project is also helping Minnesota Public Radio/American Public Media raise money, says Karin Larson, a board member and chairman of a Los Angeles investment-research company who contributed $1-million to the capital campaign, in addition to other gifts.

“The reason for the success of their fund raising is the involvement of the community in the stations,” she says. “Public Insight Journalism is part of it. People really feel an ownership of the programs.”