By Catherine Cuellar, KERA 90.1 Reporter
Dallas, TX –
Catherine Cuellar, KERA 90.1 Reporter: Since 9/11, KERA has faced falling revenues and increases in expenses. The broadcast organization has run an operating deficit over the past four years. To maintain a cash flow, KERA took out a line of credit and now has four million dollars in debt. President and CEO Gary Ferrell says revenues have been flat.
Gary Ferrell, President and CEO, KERA: In a very difficult economic environment it's been difficult to grow our revenue.
Cuellar: Last year, the company sold Channel 2 for $20 million. The proceeds were invested, and 4% of the interest funds TV and radio content. KERA also created a for-profit high-tech subsidiary called The Digital Network to transmit educational information. That company is now separate from KERA and is raising its own money to pay for expenses. The situation seemed to look up with a projected $61,000 annual budget surplus, but it didn't materialize. Eventually KERA faced a $1.3 million deficit.
Kevin Martin, Chief Financial Officer, KERA: We've needed to borrow money.
Cuellar: Kevin Martin is KERA's chief financial officer.
Martin: We set up a line of credit last year to make sure we can keep our bills current. We're in the process of restructuring the debt, and we're going to pay it off in five years or sooner.
Cuellar: Layoffs and program changes announced yesterday at KERA will help pay that debt. KERA laid off 13 employees and eliminated five staff vacancies to reduce expenses by $1.1 million a year. Channel 13 was hardest hit, with the loss of five jobs. The station also will cancel its only local public affairs program, On The Record, this week. Instead, Channel 13 will produce quarterly documentaries on statewide issues, which will air next year. Sylvia Komatsu is KERA's Senior Vice President for Television Content.
Sylvia Komatsu, Vice President for Television Content, KERA: With a reduction in force, we won't be able to do as much, which is why we're having to cancel the weekly On The Record series. But we believe these documentary specials, which we have an excellent track record in producing about issues which are important to this community, are helping to fill a real vacuum.
Cuellar: As for radio, 90.1 is experiencing growth in audience and membership, but accounts for only 23% of KERA's total revenue. To help with cost savings, 90.1 eliminated one staff position and is making programming changes. Beginning today, The People's Agenda will be replaced with a second hour of The Diane Rehm Show. Next week, BBC News Hour will replace The World each afternoon, and an hour of The Glenn Mitchell Show will be re-broadcast in the evenings. This is the second round of layoffs in two years at KERA. CFO Kevin Martin says more layoffs are possible, but hopes the station's frugality will persuade audiences to continue to support the station.
Martin: The layoffs actually help meet debt payments going forward. I think what the community will see and hopefully feel good about is we'll be meeting all our debt obligations through operating revenue. I think that's the beginning of a sound practice and good stewardship of the community's dollars.
Editor's note: After this story originally aired, KERA 90.1 station management was able to negotiate an arrangement with the producers of The World that will allow us to keep the program on the air. As a result, the 90.1 afternoon and evening lineup will remain unchanged, with The World at 2pm and 9pm and The Tavis Smiley Show at 8pm.