National Public Radio's eleventh-hour lifesaving loan of $9.1 million was delayed indefinitely as the board of the Corporation for Public Broadcasting announced late yesterday that negotiations with NPR over the loan agreement had reached an impasse.
"The board met and noted that it was not in a position to conclude a loan agreement with NPR," a statement from the CPB board read.
Ronald C. Bornstein, NPR's acting chief operating officer, said the decision didn't mean that NPR would go under immediately, but that the company needed "at least $1.8 million" extra cash before July 29 in order to stay afloat.
Bornstein said this much was needed to meet a July 29 payroll and pay off the most pressing of the company's many creditors, many of whom have been waiting for months to be paid.
He said he had hoped the CPB board would approve some sort of interim loan to tide the radio network over and that he and other NPR officials were studying yesterday's decision to see if it left room for such a loan.
"Ideally I hoped we would have been able to have some intermediary solution," Bornstein said. Earlier in the week, Bornstein said in an interview that without the $9.1 million loan from CPB, "the organization would not survive."
The CPB board, headed by Sharon Percy Rockefeller, met in Washington in executive session for seven hours yesterday. The board was considering the terms of the loan, among which is a collateral agreement with the 281 member stations to pay the loan out of their federal funds if NPR defaulted. Many of the stations had not returned the agreement as of yesterday. CPB would not release the number of acceptances and rejections.
The immediate impact of the board's action on NPR's viability was not known. Several times in the last few weeks NPR officials, including Bornstein, said that without an influx of cash the network could operate for only a few more days. Bornstein sent a letter this week to Edward Pfister, the president of CPB, reiterating that urgency.
Both Bornstein and the CPB statement made it clear the negotiations would continue.
"The board endorsed management's loan agreement as a framework for continued discussions with NPR and the radio licensees, and urged NPR's full cooperation in further discussions," the CPB statement read. ". . . The board urged NPR's full cooperation and further discussion with CPB management with the objective of concluding an agreement as soon as possible."
The CPB board said it would review "the results of further discussions" on July 28.
The proposal for the loan agreement had generated considerable anger from NPR board members, management and the stations over the terms CPB attached, which were interpreted as a grab for total control of NPR operations, at a time when the network is facing bankruptcy and has little ammunition for a rebuttal. Bornstein said the "wordsmithing" that led to that interpretation was being changed.
At the same time the CPB loan was being negotiated, NPR faced a deadline, which is today, on an offer by one of its venture partners for its share in a satellite data transmission company. NPR officials have declined to comment on how close to an agreement they are with National Information Utilities Corp., which offered $5 million for the network's stake in the satellite company.
If the CPB agreement is signed, CPB apparently will own the network's own satellite system, NPR will have to get CPB's approval for any financial investments, and CPB will have control of its fund-raising and other financial matters. Some NPR insiders believe that the network will be reduced to a production unit for "All Things Considered" and "Morning Edition," the two programs whose quality CPB has pledged to maintain.
This arrangement further solidifies CPB's advantage in the power struggle between NPR and CPB, which has been brewing since NPR's deficit crisis was first announced in March. The House Energy and Commerce Committee, which oversees public broadcasting, has given CPB the responsibility for NPR's fiscal concerns.
And insiders point out that many of the NPR main players in the bail-out have loyalties to CPB, including Bornstein, a former CPB vice president, and Steve Symonds, the special assistant to Bornstein. Symonds is on leave from CPB and is the NPR representative working out the agreement with CPB.
The loan is expected to come from CPB's "float account," the money unspent at the end of the fiscal year. Last year CPB had $15 million left over, said a CPB spokesman. The details of the loan, including its exact amount, length and interest rate, will be worked out by the board. The stations had already approved the loan agreement by a vote of 197 to 10 with three abstentions on June 30 but CPB required a signed agreement.
The NPR board has been debating hotly the extent of CPB's jurisdiction over NPR business. The board held a retreat earlier this week in Long Beach, Calif. Public broadcasting officials, who spoke with NPR board members, reported that some of the seven present board members who are station managers did not sign their agreement or returned it to CPB with a letter expressing their reservations about what they called the "conditions."
Opinions varied among station managers.
Ron Kramer, whose station, KSOR in Ashland, Ore., has one of the largest budgets in the system, did not sign the agreement, expressing reservations about the political implication of the terms. He said, "I am very concerned about that. I am not saying I mistrust anybody's motives. But this is not typical and CPB is not a disinterested third party--it is not the same relationship with a bank. The results would be that they would have more control than desirable."
James Thornton, general manager of WGUL, Cincinnati, signed and returned his agreement but said, "We have a need for more information. Is it still a $9.1 million deficit, or does NPR have an opportunity to capitalize on that $5 million in possible joint-venture funds ?"
In addition, some stations expressed disgruntlement over not only the terms but the short time they were given to sign the agreement. Like many others, Nina Kern, the general manager of WAMU here, asked for and received extra time for the station's owner to examine the document. At the other local NPR station, WETA, officials signed the agreement but struck one clause, said station manager Kim Hodgson, "because we didn't have any idea of what it meant."
NPR is facing a long list of outstanding bills, including payroll withholding taxes, which a recent audit audit put at $800,000; retroactive pay; debts to Western Union and the telephone company; rent; and newspaper subscriptions, wire service fees, free-lance fees and employe expense accounts.