The deficits are not the reason WRNI is being sold, says a WBUR spokesman, adding that the Rhode Island station was a five- to six-year project.

10:20 AM EDT on Thursday, September 23, 2004

BY DAVID McPHERSON
Journal Staff Writer

PROVIDENCE -- The WRNI Foundation, a nonprofit entity that operates Rhode Island's public radio station, ran million-dollar-plus deficits in each of the station's first five years.

Those deficits totaled more than $9 million as annual expenses exceeded revenues by a ratio of 3:1.

Yet the general manager of WRNI's parent station has said the decision to sell WRNI was not driven by money.

The shaky finances of the local public radio station are outlined in federal tax returns filed with the Internal Revenue Service by the WRNI Foundation.

The returns show local fundraising efforts struggled to top $1 million a year after the station began operating in 1998, while annual expenses reached $3 million or more.

Salaries and benefits consumed more than two-thirds of the budget in the two latest years for which numbers are available, with a Boston-based talk-show host being paid $135,000 from WRNI money in fiscal year 2002.

John Sutton, a public radio consultant, said it is not unusual for a public radio station to run a deficit, but he said they are "very few and not for too long, otherwise they have a new manager or they've been sold."

Based in Maryland, Sutton once worked as a fundraising consultant to WBUR.

"It's surprising to me that one of the leading public radio stations in the industry couldn't make this work," Sutton said.

WRNI's finances are under scrutiny following last week's announcement by WBUR of Boston that WRNI is for sale and could possibly be sold to a commercial operator. WBUR and WRNI are both owned by Boston University.

WBUR general manager Jane Christo last Friday insisted that financial considerations did not drive the decision to sell WRNI. An outside public relations spokesman retained by WBUR stood by that assertion yesterday.

"The plan all along from WBUR's perspective was that this was not a long-term strategy to run and operate a public radio station in Rhode Island," WBUR spokesman Will Keyser said. "The long-term strategy was in essence a five- to six-year plan to build from zero to viability, with the community, a public radio station."

Major donors disagree. Yesterday afternoon, members of the Foundation for Ocean State Public Radio met privately to plot strategy.

"We would not be at this table today if we did not believe Rhode Island could support its own public radio station," said Don E. Wineberg, a Providence lawyer and a board member of the group.

WRNI began broadcasting in 1998, after Boston University struck a deal to acquire former Providence station WRCP 1290 AM. It also bought WERI 1230 AM in Westerly.

The WRNI Foundation is the tax-exempt nonprofit organization that owns the station's assets and holds the FCC license. The foundation is controlled by Boston University, with three top administrators serving as its officers.

The foundation was incorporated in Rhode Island on July 1, 1998, but is based in Boston.

Although tax exempt, the WRNI Foundation is required by law to file annual tax returns with the IRS that detail revenues, expenses, assets, liabilities and salaries of the five highest-paid employees.

Unlike those of a business or an individual, the tax returns of a nonprofit organization are public records. The Journal obtained four years worth of returns for the WRNI Foundation from GuideStar.org, a national database of nonprofit organizations.

Keyser, the WBUR spokesman, provided the latest return, covering July 1, 2002, to June 30, 2003. He attributed the recurring WRNI deficits to a variety of factors, including start-up costs, signal improvements and weak fundraising in the wake of the 2000 to 2002 stock market decline and the 9/11 attacks.

The WRNI Foundation raised $909,000 in its first fiscal year and spent $1.9 million, leaving a deficit of about $1 million.

In the second year, the WRNI Foundation hit its fundraising high, collecting $1.1 million and spending $2.8 million.

Expenses peaked in the third year, fiscal 2001, when the foundation spent $3.3 million, raised just $928,000, and ran a $2.4-million deficit.

Fundraising improved in the fourth year to $963,000 while expenses dipped to $3.1 million, leaving a $2.1-million deficit for that year.

In the fifth year of operations, fiscal year 2003, fundraising at WRNI fell off dramatically, with just $743,000 collected by the foundation, while $2.9 million was spent. A $2.1-million deficit resulted.

The five years of deficits totaled $9.4 million and left the WRNI Foundation, as of June 30, 2003, with a $10-million debt to Boston University.

Also as of that date, WRNI's total liabilities stood at $10.1 million, against just $768,808 in assets.

Keyser said the WRNI Foundation's annual tax return for the 2004 fiscal year, which closed June 30, has not been completed. WBUR projects the WRNI Foundation will finish the year close to the breakeven point, with possibly a small deficit.

The foundation's tax returns do not detail how expenses and revenues may have been split between WRNI and WBUR.

In fiscal year 2002, however, the WRNI Foundation paid $135,000 in compensation to Tom Ashbrook, who hosts the On Point talk show produced at WBUR.

Keyser said Ashbrook was paid out of the WRNI budget because he started out working on the former One Union Station program that was produced in Providence at WRNI.

Ashbrook then started anchoring what WBUR called Special Coverage in the wake of 9/11. That program turned into On Point, and the Providence-produced One Union Station show was canceled, with several WRNI staffers laid off.

Keyser said Ashbrook is no longer paid out of the WRNI budget.

Unlike the WRNI Foundation, WBUR is not a separate nonprofit organization falling under the Boston University umbrella. Therefore, it is not required to file its own federal tax return detailing its finances.

The Providence Journal Charitable Foundation has been a major supporter of the WRNI Foundation, contributing $300,000 from 2000 to 2002. The Providence Journal also provided office space to WRNI prior to the opening of its studio at One Union Station, which is leased from The Rhode Island Foundation, another major donor to WRNI.

Journal staff writer Andy Smith contributed to this report. Contact David McPherson at dmcpherson [at] projo.com