National Public Radio announced yesterday that it would receive $5.5 million as early as September in exchange for its share in a future satellite data delivery system. However, the network, which was described by its interim chief officer this week as "running on empty," has not found a solution to its immediate cash shortage problems of $1.8 million.
The network agreed to relinquish its 20 percent ownership in INC Telecommunications, a joint venture that NPR formed with National Information Utilities Corp. (NIU) in 1982. In return for giving up its equity, NPR will receive $5.5 million, which includes approximately $500,000 for its investments over the last two years, plus 5 percent of INC's domestic gross income annually for 10 years.
NPR has also agreed to acquire leases from NPR stations for the company, which will deliver electronic data services over its transmission system to subscribers.
"While all of this is encouraging," said E. Richard Hodgetts, NPR Ventures president, "it does not solve the needs of the corporation during the latter part of July and the month of August. I anticipate these funds wouldn't flow until September."
The station is still looking for a way to meet its next payroll July 29, as well as to pay creditors that include the government, the telephone company and its free-lance employes.
Last week the Corporation for Public Broadcasting refused an NPR request for an interim loan but pledged to continue what have been described as "round-the-clock" negotiations with CPB for a loan that would help solve its projected fiscal l983 deficit of $9.1 million. The negotiations, which were expected to be completed last week, reportedly reached an impasse over several CPB conditions and the lack of a formal counterproposal from NPR.
"They are proceeding and they are constructive," said Steven Symonds, who is handling the negotiations for NPR.
CPB had little to say about yesterday's announcement.
"We are pleased NPR has managed to acquire this funding but we will have no comment until we see the documents," Edward Pfister, the president of CPB, said yesterday.
Hodgetts said the deal was not a way to avoid CPB's demand that NPR turn over ownership of distribution equipment to CPB as a condition of the loan.
Also, Hodgetts said he did not think the agreement could be used as collateral for an emergency loan.
"People for the most part are not in business of giving money without getting something in return. By the time the bank could put a value on that particular asset, you would have your cash, so why would you borrow against it?" said Hodgetts.
The restructuring of INC was proposed by NIU chairman Jack Taub and Maurice Mitchell, a former chairman of the NPR board of directors and a present director of the Annenberg Schools of Communication office here.
Taub, the former chairman of Source Telecomputing Corp., was involved in tangled litigation over the sale of The Source, a home computer network now owned by Reader's Digest Association. The litigation, which has been settled, involved questions over business practices, including handling of a multimillion dollar government-guaranteed loan.
Hodgetts yesterday cited two deals, including the Reader's Digest deal, as examples of Taub's successes, and added, "If you are asking if we were defensive or apprehensive about our relationship with Taub, the answer is absolutely no."
Payment of the $5.5 million depends on completion of the registration process at the Securities and Exchange Commission (INC filed June 8), successful underwriting and successful formation of a network of carriers. NIU has retained Rooney-Pace, a New York brokerage house, to assemble the $15 million needed for start-up finances for INC. Roger Faherty, a senior vice president of Rooney-Pace, said yesterday, "The registration will be amended to include the $5 million for NPR. We are currently on schedule for the registration process and probably will conclude the process in August. We as the underwriters are comfortable that the investors are optimistic."
NPR also must deliver, in three different installments, leases in which NPR network stations agree to allow INC to use their equipment to deliver data such as stock market reports.
"We are still negotiating, but in the first group, out of 20 identified markets, we will have to deliver 12," said Hodgetts. Those 20 markets are all big public radio stations, he said.
Despite all the contingencies, Hodgetts said he was optimistic. "If I were a betting person, and I am not, money will come to NPR in September, and that puts it in our fiscal year."
Trying to find a solution to the overall problems of NPR continues to be a concern on Capitol Hill. Sen. Barry Goldwater (R-Ariz.) had suggested hearings before the Senate Communications Subcommittee that would have been held yesterday, but according to sources, Ronald C. Bornstein, interim chief operating officer of NPR, requested a delay. He told Goldwater, according to a source, that if he didn't take off from his job at the University of Wisconsin, he would forfeit his vacation time.