PBS’s Take On KCET Los Angeles’ Defection

KCET, the major PBS station in Los Angeles, last month stunned the noncommercial TV world when it made good on a threat to quit PBS effective Jan. 1, complaining that the PBS dues structure was an undue hardship.

The station, led by former NBC stations executive Al Jerome, is the primary PBS outlet in the country’s No. 2 TV market. It balked at paying nearly $7 million in dues, up 40% according to published reports. The dues went up largely because KCET had secured a $50 million grant to produce two series, later shown nationwide to great acclaim. PBS treated the grant as revenue and included it in formulating dues; KCET argued that the money was separate from operating revenue and that the grant prohibited spending the money on anything but the series.

Without KCET, there are still three PBS stations serving Los Angeles, which figured into KCET’s argument. With KCET’s defection, KOCE in Huntington Beach will become the main PBS station in the area.

Meanwhile, KCET, which begins life as a noncommercial independent just two months from today, has received a $1 million grant from the Ahmanson Foundation that it can use to acquire or produce new non-PBS programming.

In an interview with TVNewsCheck Contributing Editor P.J. Bednarski last week, PBS President Paula Kerger explained how PBS tried to keep KCET in the fold, and why, ultimately, the public network couldn’t swing a deal.

An edited transcript follows:

Looking at the KCET situation, it seems like a simple disagreement over terms. But it was obviously more than that. In your view what was the major stumbling block?

We worked pretty hard over several months trying to bring the issues to closure. It was our hope that we could come to a resolution with KCET and that they would remain a member of PBS. They were a member for 40 years. The big area that we could not bring to resolution is that they believed the way we calculated dues — and that applies to every station in the system — was not fair, and that they did not want to pay those dues. They thought it was appropriate for us to make a special arrangement. But for us, the basic tenet is equity. They asked for something we couldn’t accommodate.

Los Angeles is different from most other cities because there are several other PBS stations viewers can choose from. Doesn’t that make KCET’s situation special?

The reality in Los Angeles is that KCET was the full PBS station carrying the full complement of programs and taking advantage of national promotion. The other three stations were not full stations and only had access to 25% of the content. That was the basis on which they paid their dues to PBS. And we do have a policy that there needs to be a primary station in every market so that the full range of programming is broadcast.

We had begun working with those stations, along with the Corporation for Public Broadcasting to look to see if there was not a new model for looking at public television in the Los Angeles area. Those conversations, even with KCET leaving public broadcasting, are continuing.

This is a community that is very diverse and has a very large population and I think the idea of having three stations trying to figure out how to serve that area working collectively rather than trying to compete makes more sense. We had hoped … that we could keep KCET involved in that [consortium] process because they obviously would have a role.

But you know it’s unfortunate because a lot of information floating around is that these stations somehow paid significantly less and were on equal footing (with KCET). And they weren’t. They had to make very careful decisions about what they put on the air, recognizing they could only put on a limited part of the schedule.

KCET argues that, yes, it received a $50 million grant to produce new programming, but that that money is specifically earmarked for those productions and shouldn’t be considered ordinary revenue that PBS looks at to determine dues. That seems like a legitimate argument. Why isn’t it?

The fact they got that a $50 million grant also affected their federal appropriation. So they also received more money from the federal government because that grant was factored in. So that’s one thing. The second thing is that any station that raises large amounts for production, those moneys also affect their federal appropriation and their PBS dues. Again, the same premise — any station that produces programming, whether it’s one program or WGBH that produces a lot, their dues are also affected by the amount of production they have.

The other thing I would say is that productions of scale like that are also spinning off the overhead that is helping to pay for the overall organization. So, although it is restricted, it is covering overhead, so it is affecting the overall budget.

The final thing I would say is that when you look at their entire budget, they’re paying somewhere between 11% and 12% of their overall budget for somewhere between 70%-80% of the content they have on the air. Those percentages are in line with every other public television station.

So again, it’s an equity issue. When we came out to talk to them, that’s one of the things we talked to them about. Every station abides by the same dues and the same rules and regulations. That’s really what binds our stations together: the rules of engagement. Those PBS dues are part of what’s accepted by all of the stations. We go through a rather elaborate budget process every year. We put a budget together and we take it out to the stations to get their input before our board approves the budget. We figure in all that system input. This is very much a media organization. But we are not a distant parent.

So again, that’s why when people look at this and people look at the facts, yes, their dues went up, but their federal appropriation went up. Their dues are larger than a station in Wyoming but they’re also getting a larger federal appropriation. Our system is based on the fact that stations that have the wherewithal to raise more money because of larger populations are the ones who pay more than small rural stations.

But can’t PBS make exceptions to its rules, especially in these times?

There are some stations that are having some economic challenges, and we do make allowances, which also were offered to KCET. They could pay dues on a deferred basis. We could spread it out over a long period of time. There are ways we work with stations that are having short term financial issues, as was the case with KCET. We did talk to them over what we could do for them over the short term. So I don’t want you to walk away from this discussion with the idea that we took a really hard line. There were lots of other options that were put on the table that just weren’t acceptable.

What kind of reaction are you hearing from other PBS stations?

I’ve heard from a number of stations, and I’m going out to meet with more, and basically what I have heard is consistent: The stations are supportive of the fact that we do care about equity across the system. The second thing I heard is surprise that KCET would have made this decision.

Even in major markets? Do you think other big market stations will try to go it alone?

No. For one, I haven’t heard from anyone saying, hey, this is a good deal, sign me up. And the reason is the statistic. I gave you. Eleven percent of their budget is providing them 80% of their broadcast schedule. We’re very efficient. We were created by the stations to provide at scale what independent stations couldn’t do on their own.

Do you think that KCET just wanted to go?

I don’t know the answer to that and I’ve thought about it a lot. I’m not really sure what they intended the outcome of this discussion to be. We were in it very much committed to keeping them in. And I was very hopeful, frankly, to the very end that they were going to remain a member of PBS. But I don’t know. I had heard over the past year some discussions about them wanting to do some things that were different. You know, the move to remove Masterpiece off of Sunday night and replace it with a film series was something that preceded their decision to back away from PBS. So I don’t know. 

But they seemed very excited and enthusiastic about becoming an independent station. I do think they would have not been at the table if they did not think being a part of PBS was important. On the other hand, the outcome is the outcome.

On another matter that’s in the news, I want to ask you about the Juan Williams flap. It now has some people calling for the federal government to quit funding National Public Radio. I don’t know if that controversy will continue, but ,if it does, I would assume it would eventually trickle down to PBS, too. How concerned are you?

I always worry about federal funding because from time to time we are a target of those who feel federal money would be better invested in other way. I do worry about that in that regard. Your guess is as good as mine about whether this will continue to be an issue a week from today, but we’re obviously watching it pretty closely.

Even without this particular situation, I always think about it. [Federal funding] is in the aggregate a small percentage of the money that comes into PBS. It is about 15% but it’s a critical 15%. The funds go directly to the stations. At some stations it’s relatively small [compared to the station’s total income]. But for some stations particularly in the smaller rural markets, it can be as much as 40% of their funding. It’s funding that stations use for their power bills and their overall operating expenses. So it is money that is hard to replace. 

But what has happened over the years is that whenever there has been an effort to defund us, it has been the American public that has helped us maintain our funding.  We’re really one of the largest membership organizations in the country when you look at all of our stations’ membership files across the nation.