Back in 2008, Standard & Poor's lowered the rating on CPR's 2002 series bonds -- the ones used to fund its two-channel, news-and-classical-music network -- to BBB-, from BBB. Then, in January, S&P downgraded the same bonds' outlook to negative. In addition, CPR still can't unload its AM signals, which have been a money drain for well over a year. And the net fell $30,000 short in its most recent fundraising drive.
So why does CPR president Max Wycisk say he's "extraordinarily thrilled" by CPR's fiscal footing? Because a recent $8.3 million refinancing, among other things, has convinced him that the glass is more than half-full.
Regarding the bonds, Wycisk notes that S&P "downgraded the outlook, but they didn't change the bond rating. So, from my point of view, that's a short-term perspective. But CPR finances are in good shape right now thanks in part to the kinds of compensation reductions our employees have taken" -- salaries were reduced by 3 percent, and the organization suspended contributions to staffers' retirement plans. "And membership and underwriting income is actually increasing."
What about the aforementioned shortfall?
"The goal was $830,000, and we had $800,000 in pledges -- so we were very close on that specific campaign," he says. "And overall, in the course of this year, membership income is a little ahead of projections. The on-air campaigns only reflect a part of our funding. A majority of individual contributions come in through the mail -- renewals and that kind of thing.
"With the economics of the media these days, what's been hit for everybody is the advertising side. And the majority of CPR's income comes from listener support, which is a much more stable source."
As a result, Wycisk says, CPR was able to avoid layoffs, and it's even advertising for two existing positions -- a business development manager and a senior producer for the Colorado Matters program -- that have been vacant.
The $8.3 million refinancing -- handled by Public Radio Capital, which specializes in working with organizations like CPR -- makes such steps possible, Wycisk maintains. According to him, "We were able to lower our overall debt obligations over the next three years and allow us to use some money that had been restricted by the former lender. Of the $8.3 million, we had to keep a million dollars in restricted reserves against the loan. For the new lender, that's been reduced by half, so we can have access to more of our own money."
On top of that, the new deal adds wiggle room in respect to the most burdensome of its redundant signals, 1340 AM, which is currently simulcasting CPR's news feed.
"One of the provisions of the refinancing was to remove a provision in the old loan that said 1340 needed to be under contract by X date," Wycick reveals. "That was not a small thing. So the refinancing has given us complete flexibility in time terms."
Lucky thing, because terrestrial radio stations are not attractive investments these days. An example: In February, car dealer Doug Moreland bought Denver's two Jack-FM stations for $5 million, when one of them had gone for $15 million just over six years ago -- and had seemed like a bargain.
Understating the situation considerably, Wycisk says, "The market for media properties of any kind -- newspapers, TV stations, radio stations -- is not as strong as it was three or four years ago. So right now, it makes sense to hang onto the station" as opposed to dumping it at a fire-sale price.
But what to do with the damn thing? Wycisk checks off a number of possibility -- "developing new public-radio programming for it, finding a buyer, or looking to see if we can use the land on which the 1340 tower sits for some sort of real estate development."
Option three is probably as much of a long shot as number two, since big money developments have taken a huge hit during the economic downturn, too. But because of the refinancing, Wycisk stresses that "nothing is in a crisis situation. We have plenty of time to step back and see what would make the most sense." In the meantime, "we are reaching more people, and our listeners are being as generous as ever."
They'll need to keep that up if Wycisk's positivity is to pay off.
