RESTRUCTURING DEBT SAVES KCPW BUT NOW CAN THEY COMPETE?

Lauren Colucci with news of the restructuring

Lauren Colucci is General Manager of KCPW located in the very competitive Salt Lake City noncommercial radio market. The 450-watt community station competes with KUER (NPR News), KBYU (Classical) and KRCL (Triple A). Of the four stations, KCPW is number four in almost every metric. However KCPW has the brightest future it has had in years.

KCPW had been struggling to pay off the remaining $1.8 million of a $2.2 million loan that was used to purchase the station in 2008. (We will get to that story later in this post.)

The reason why things look so promising at KCPW now is because of a financial restructuring plan that lifts the burden of long-term debt that threatened to sink the station into bankruptcy. Now Colucci and everyone at KCPW can concentrate on serving listeners, members and the community.

Wasatch Public Media is the current licensee of KCPW. The station had formerly been owned and operated by Community Wireless of Park City until its sale in 2008. Wasatch paid $2.2 million for KCPW. Though the deal seemed to make sense just before the Great Recession, paying the debt took a big bite out of KCPW’s operating budget. Payments to service the loan were roughly $10,000 per month. This was just the interest; the full principal was still due.

When Colucci took the reins in 2014, KCPW’s total secured and unsecured debt with interest had grown to over $3 million. The Board of Directors was hemorrhaging members. The day-to-day operations had long been running at a deficit. Colucci said in an interview with Spark News:

“I seem to like crisis management.”

Although this was the first time Colucci had managed a radio station, she had some non- profit organizational experience. Before moving back to Utah, she worked with arts, conservation and diplomatic organizations doing financial assessments and research among other things. Her experiences took her to both coasts and South America.

Colucci first landed in Salt Lake to attend school at the University of Utah. After spending years away, she returned, eventually landing a part-time producing job at KCPW in 2013. When she was asked to help patch the management transition in 2014 she found herself surrounded by turmoil and frustrated staff members.

With just weeks of operating cash, Colucci went to work on keeping the station afloat while quickly learning the fundamentals of the biz. She and her staff delayed paychecks for the first couple of months before the inevitable layoffs took place. Colucci included herself in those layoffs and continued in her role as a volunteer for the next five months before rejoining as a contractor and then as a staff member once again in 2016.

Marc Hand

It was clear that KPCW had to take care of the long-term debt problem if the station was going to survive. KCPW had a working relationship with Marc Hand, CEO and co-founder of Public Media Company (PMC), a company that specializes in devising plans for public broadcasting organizations to become sustainable.

Hand and his team worked with KCPW to find a solution and initiate a new financing package to pay off the original loan. The keys to making the deal work were: a new loan made by FJC, a foundation in New York; loan guarantees made by two anonymous individuals in Salt Lake City; plus philanthropic funds from local individuals and foundations.

The proposed refinancing was a five-year $420,000 loan that bought out the $1.8 million note and interest.

You read that correctly: $420,000 bought out the $1.8 million long-term debt and interest. That means over $1.7 million was to be forgiven. Incredible!

The lenders said: Yes!

When she heard the news, Colucci said:

“It is a miracle. We are thrilled by what this means for the station’s future. We deeply appreciate the generosity and commitment to keeping local public radio a part of our community. You are heroes all.”

Now the real work begins: Creating success at the number four noncom station in a four station market.

THE MIXED LEGACY OF BLAIR FEULNER

This much we know is true: Blair Feulner founded KPCW in Park City in 1980 and KCPW in Salt Lake City in 1992. Beyond that, the truth depends on who you talk to. Feulner was part visionary and part huckster and his legacy is still debated today.

Blair & Susan Feulner

Blair Feulner and wife Susan Feulner, along with a handful of dedicated volunteers started KPCW in 1980.  The early years were lean and the Feulers spent many, many hours of uncompensated time building KPCW into a much admired community station.

Also in the 1980s and 1990s Feulner was a “license trader.” He spent his time acquiring radio station licenses as cheaply as possible and then selling them for a profit – sometimes a big profit.

During the go-go 1980s big changes were made regarding the ownership of FCC licenses. The Commission had deregulated many aspects of station ownership including the “three-year rule” which required licensees to hold a license for three years before selling. The end of this rule made broadcast licenses more like real estate. 

In the mid 1980s the FCC had approved a plan to increase the number of FM stations called “Docket 80-90.”  Hundreds of new frequencies were opened for new stations, investment money was available from Savings and Loan companies (also deregulated) and the elimination of the three-year ownership rule meant licenses could bought one day and sold the next day.

Blair Feulner took full advantage of the situation. On behalf of Community Wireless, Feulner obtained a new FM license for Salt Lake City in 1992 and built KCPW as a sister station of KPCW.

Then he struck gold.

In 2004, Feuler and Community Wireless bought a failing commercial FM station in Coalville, Utah for $50,000. Coalville is a tourist town 20 miles as-the-crow-flies east of Salt Lake City. However, the station could not put a signal into Salt Lake because of terrain shielding.

Feulner knew a secret about the Coalville FM. Because of its location and frequency, it blocked several big Salt Lake City stations from expanding their coverage. This fact was of tremendous strategic importance.

Feulner leveraged the Coalville license and sold it to one of the commercial broadcasters for $3.6 million. This was an amazing windfall for Community Wireless.  The board was thrilled.

To show their gratitude for the deal, the Community Wireless’ Board of Directors voted to pay the Blair and Susan Feulner $895,000. That became a public relations nightmare.

Word of the transaction and the payment to Feulner traveled quickly in Utah and throughout the public broadcasting industry. There was outrage because Feulner was making big bucks off of a non-profit public enterprise. The deal was completely legal but ethically it stank.

Things got even worse when The Salt Lake Tribune reported in 2005 that Blair Feulner was being paid $150,000 per year and Susan Feulner was being paid $45,000 per year for part-time work.

Members of KPCW and KCPW were outraged and fundraising slumped.

Politicians used the Coalville deal as “proof” that public broadcasting did not need federal support. Feulner spent less and less time at the stations. By 2008 both KPCW and KCPW were operating at a loss. Relations between Feulner and Board grew tense.

Blair Feulner 2008 SLC Weekly

By early 2008, Feulner and Community Wireless were at odds over Feulner’s employment contract. Feulner had been working on applications for several open FM licenses, including Moab and Nephi. The Board told Feulner he could not use Community Wireless money to apply for them.

Feulner was furious. He took his complaints to the press where he was quoted saying:

“I don’t know why you would want to give up on millions of dollars worth of free frequencies.”

By July 2008, the Board felt it had to act. Feulner was fired on July 15, 2008. Around the same time, Community Wireless sold the license for KCPW in Salt Lake to Wasatch Public Media for $2.2 million.

Today Blair and Susan Feulner reportedly live in Park City. KPCW is now considered one of the best small market public radio stations in the nation. KCPW in Salt Lake City did not fare so well, accumulating a substantial operating debt. Then Lauren Colucci became GM in 2014 and she led the station to solvency with the recent financial restructuring plan.

Now the “real work” begins: Turning the #4 station in a four-station noncommercial radio market into a successful public radio station.

MEET KCPW TODAY

Colucci has brought new optimism and vigor to KCPW after completing the financial restructuring plan. Time that went to resolving the historic issues that plagued the station is now available to invest in station development. But KCPW still faces tough odds.

The chart on the left shows the vital stats for all four of Salt Lake City’s CPB-qualified public radio stations.

KCPW has an alternative-to-NPR news format, with some Jazz for spice.

Classical and Triple A music are well established in the market at KBYU and KRCL. KCPW’s main competition is KUER.

Let’s look at how the schedules for the two stations compare. The two charts on the right show programs for the hours when the most people hear radio.

During the weekdays, KUER has what many observers would consider to be the "standard" NPR News station schedule. Radio West, KUER’s local talk and interview show, is considered one of the best of its type in the public radio system. 

Q is a very good choice for 11:00 am. I like that KCPW has the first local play of The Takeaway.

KCPW's local shows are signature programs for the station. Behind the Headlines, a weekly examination of local news with Salt Lake Tribune reporters, is produced in association with the Tribune. Both Sides of the Aisle is a point-counter point look at local issues. The Bottom Line is a close look at business in Utah. In the Hive is a look at the issues and ideas that shape the greater Salt Lake valley.

Saturday 7am – 3pm offers several opportunities for KCPW. Freakonomics is an excellent choice for 8am – 9am.

The Hinckley Institute program is obviously a relationship issue. But, 11am – Noon on Saturday is the prime-est of Saturday prime time, so a stronger program during that hour could stimulate pledging.