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Scrutiny of KUSF Deal Continues as USF and CPRN Respond to FCC’s Inquiry Letter

FCC Had Some Questions (Photo: J. Waits)

It’s been nearly seven months since the plug was pulled on the University of San Francisco (USF) terrestrial college radio station KUSF, and the FCC is still scrutinizing the pending sale of the 90.3 FM license to Classical Public Radio Network (CPRN). On August 1, USF and CPRN submitted their joint response to the FCC’s June 28 letter of inquiry regarding specific details surrounding the station sale and the public service operating agreement (PSOA) which is allowing CPRN to air classical music programming from formerly commercial classical station KDFC over 90.3 FM.

Not only did the FCC ask for extensive documentation regarding the PSOA, but they also requested a lengthy paper trail of documents related to the station sale. The letter of inquiry stated, “The terms of the PSOA present issues involving the parties’ compliance with Commission rules and policies concerning the operation and control of the Station. Accordingly, we direct Licensee and CPRN, jointly or separately…to provide responses to the following inquiries, within thirty (30) calendar days from the date of this letter.”

In their joint response, USF and CPRN argue that,

“The PSOA and the parties’ actions…were specifically structured and implemented to accord with FCC law, regulations and overwhelming Media Bureau precedent governing approved noncommercial radio operating agreements. The implication that the University has not remained in complete control of KUSF is contrary to the facts. So too is the inference that KUSF has not maintained origination capabilities at its main studio as required by FCC policy; nor is there any credible question concerning the parties’ full candor with the Commission. All pertinent facts about the PSOA and the parties’ performance thereunder have been fully and openly disclosed.”

Despite the argument by CPRN and USF that the PSOA was compliant with FCC rules, within their response they offered to amend their PSOA to address FCC concerns about the compensation being paid to USF during the term of this agreement. The original PSOA stipulates that CPRN would pay USF “for allowing CPRN to broadcast its classical music Programs on the Station by payment on the first day of each calendar month…” CPRN agreed to pay USF $5,000 a month for the first 4 months and $7,000 a month for “the remainder of the first year of the Term.” Following that, the rate was set to increase by at least 5% each remaining year. In addition to the monthly compensation, the PSOA indicates that CPRN will retain all listener contributions and underwriting. In their July 29, 2011 response, USF and CPRN indicate that they will be amending their PSOA and state that, “…given that the Letter has called into question the ‘compensation’ provision of the PSOA, the parties have revised the PSOA in accordance with Section 17 of the document to exclude that provision so as to remove any question of their strict adherence to the rules.”

USF's Phelan Hall under Construction June 8, 2011 (Photo: J. Waits)

In its inquiry, the FCC also raised questions about USF’s ability to generate programming from KUSF’s main studio. As we have reported, the former KUSF studios were recently dismantled, leading to speculation as to whether or not KUSF was compliant with the FCC’s main studio rules. The FCC asked USF and CPRN to “Describe the ability of the Licensee (including availability of necessary personnel and equipment) to originate programming at the Station’s main studio location from the Effective date until the Response Date.” In their response, USF and CPRN argue that,

“The University has maintained the ability to originate programming from its campus main studio, located at 2130 Fulton Street, San Francisco, CA at all times since since the Effective Date.

Specifically: From the Effective Date until Phelan Hall’s long-scheduled renovation began on May 23, 2011, the University retained the ability [sic] originate programming from the studio located in Phelan Hall;

At all times since the Effective Date, the University has continuously maintained the ability to originate programming from its transmitter location in Phelan Hall;

Since June 21, 2011, the University has maintained the ability to originate programming from the Media Studies Lab/Studio in Cowell Hall.

During the period between the start of the renovation of Phelan Hall (when the Phelan Hall studio was dismantled on May 23rd), and the completion of the new studio in Cowell Hall (just shy of a month later on June 21st), the University retained the ability to originate programming from its transmitter site (also located in Phelan Hall, but not affected by the building’s renovation)…”

Although they argue that they’ve maintained the ability to originate programming from USF throughout May and June, it seems unlikely since the transmitter site in Phelan Hall has been inaccessible due to major construction taking place in the building. In fact, contained within the documents included in the joint response by USF and CPRN is a letter from CPRN’s Managing Director Brenda Barnes dated May 31, 2011 in which she asks for parties at USF to sign an agreement related to moving the transmitter off-campus and points out the lack of access to Phelan Hall:

“This past weekend power was turned off to the entire university and we were unaware so the station as [sic] off the air for a day and a half. It is understandable that no one thought to notify us because the radio station isn’t top of mind but it was a reminder that we need to execute the attached agreement and move to a professional broadcast site as quickly as possible. We also learned in the course of trying to get into the building that it has been condemned. I know you are anxious to move along with your plans for the building. We have ordered equipment for the upgrade and will be able to construct our new site at the end of June or in early July.”

The joint response to the FCC’s letter of inquiry consists of hundreds of pages of email correspondence, contracts, copies of financial information, email newsletters, and other documents. Although CPRN’s lawyer initially argued that the response could approach more than 1000 pages in length, the paperwork submitted appears to be about half of that amount. After wading through the entire response, it’s surprising that more documents weren’t included, although CPRN and USF indicated that they fully and openly disclosed relevant material. The FCC did grant a request by USF to limit the scope of the inquiry, so certain documents were intentionally left out. But that still doesn’t account for missing sections of email strings and the apparent lack of any written communication prior to October 2010, especially considering the FCC requested materials dating back to June 2010.

Despite the missing information, we are getting a glimpse into more details about how the pending sale of KUSF came to be. In USF President Stephen Privett’s declaration, he provides a bit of a the chronology. He states:

“In 2005 the University retained Patrick Communications, a third party media broker, to advise the University with respect to the possible sale and assignment of Radio Station KUSF licensed to the University. These efforts led to  preliminary expressions of interest but did not result in reaching a definitive agreement.

In early 2010, after receiving an unsolicited confidential offer from Patrick Communications, I authorized the University’s General Counsel, the Vice President of Business and Finance, and the heads of the College of Arts and Sciences to further investigate the possibility of such a sale.

In the summer of 2010 the University entered into a Non-Disclosure Agreement with Classical Public Radio Network, LLC allowing negotiations to commence. The negotiations with CPRN regarding the sale of radio station KUSF and the ancillary agreements…including the Public Service Operating Agreement…were handled primarily by our General Counsel, Donna J. Davis, and Charles E. Cross…and to a lesser extent, by Michael E. London, the Assistant Vice-President for Facilities Management, all with the advice and counsel of the University’s outside counsel.

At no time was I personally involved in the negotiation of the terms of the Agreements with CPRN or their implementation.”

January 19, 2011 Meeting with Father Privett (Photo: J. Waits)

Although Privett claimed at a public meeting on January 19, 2011 that it was his decision to sell KUSF, in this declaration, he argues that he had no involvement with the negotiations. Similarly, Charles Cross, USF’s VP of Business and Finance had a huge role in the deal from the very beginning; yet he lied to KUSF volunteers on January 18, 2011 when they arrived at his office and asked him why KUSF was taken off the air. Cross said to the volunteers, “So why are you asking me? What do I have to do with it?” and claimed “it wasn’t me” before he asked a colleague to have public safety called and closed the door to his office. Numerous documents and emails reveal that Cross signed the agreement allowing CPRN to purchase KUSF and that he was well aware of the details behind the station shut-down on January 18.

Even though the station sale had been in the works for nearly a year, the joint response from CPRN and USF does not produce any documents prior to October 2010. One of the earliest documents included was an October 25, 2010 email from Patrick Communications broker Greg Guy to Charles Cross at USF. The email, with the subject heading “KUSF Progress,” indicates that Guy has been working with USF lawyer Robert Trodella on the “KUSF transactions.” Guy writes,

“Gentlemen, I have been working with Robert Trodella at Jones Day and we have been making progress on the KUSF transactions. As we work to finalize the Asset Purchase Agreement and related documents over the next week or two, the buyer has asked about setting up an in-person meeting with you to discuss strategy for the announcement as well as PR issues related to the sale. They have suggested a meeting sometime the week of November 15th for a potential meeting. The documents should be complete by that time. Let me know if you would be open to a meeting. I think this would be positive as it is important to have a plan in place as we prepare to move forward to the next phase of the sale process…”

In a follow-up email dated November 2, 2010 Guy writes to Cross about an upcoming meeting with representatives from University of Southern California (USC is 90% owner of CPRN) and Public Radio Capital (which is 10% owner of CPRN):

“I just got off a call with the Public Radio Capital and have a few updates.

1. The meeting is set for November 17th at noon…Marc Hand…and Brenda Barnes…will be attending…I believe the thinking is we will have all of the documents completed and announce the sale on or around December 1st.

2. The buyer asked if USF would require any board approvals, etc. before signing the Asset Purchase Agreement…

3. The primary purpose of the meeting…is primarily to discuss an operating agreement and the PR aspect of the sale. We expect there will be a vocal minority who will be unhappy with the sale. Both Public Radio Capital and Patrick Communications have experience in dealing with these announcements. Because of this, we would recommend taking the station dark once the Asset Purchase Agreement is signed and then starting an operating agreement shortly after. This prevents any comments from being made on the air about the sale and also brings a sense of finality to the decision while the approval process takes place at the FCC…”

The email string ends here, so we don’t get a chance to see any more details about that November 17 meeting. However, it’s interesting to note that the broker and Public Radio Capital predicted protests and recommended that KUSF be taken off the air when the sale announcement was made. Not only were they afraid of on-air comments about the sale, but they also wanted the appearance of “finality” surrounding it.

By November, 2010, preparations for the sale of KUSF were underway. On November 29, 2010 a letter from the Metropolitan Opera to KUSF General Manager Steve Runyon stated, “This is to confirm the Metropolitan Opera’s agreement that if, during the course of the 2010-2011 Broadcast Season, KUSF-FM is sold by the University of San Francisco…the Met will permit the station not to broadcast whatever opera Programs remain in the Season. In other words, you may terminate the contract with the Met dated December 2010 at any time during the season without penalty.” By December 2010, lawyers for USF began working on termination agreements for KUSF programmers and by early January, 2011, tentative dates for the station shut-down (proposed dates included Friday, January 14 and Saturday, January 15, 2011) were discussed and members of the USF public relations team were active in these conversations.

Although Privett was asked to provide copies of all correspondence related to the sale and operating agreement, he surprisingly claimed that he had no such correspondence to submit to the FCC because he does not keep copies of his emails. He states in his declaration:

“I was informed of the progress of the negotiations with CPRN at various times but I was not given written status reports. I may have been copied or included in e-mail correspondence regarding the negotiations of the Agreements, but…as is my custom I do not retain e-mails and after diligent search and inquiry I have been unable to locate any that relate to the negotiations of the Agreements.”

Within the hundreds of pages of documents included in the response, there are a handful of these alluded to documents in which Privett was CC’d. Casting even more doubt on his claim is Privett’s additional statement that, “I kept the Executive Committee of the Board of Trustees apprised of the status of negotiations, as well as the full Board and ensured that reports were made to the University Leadership team at their monthly meetings as necessary and appropriate.” It’s hard to believe that no emails, Powerpoints, or other documents can be found related to Privett’s communication with his VP of Business and Finance and with his Board of Trustees, especially in this day and age when no email or document is ever really deleted from one’s hard drive or back up server.

Similarly, the response only includes a few emails sent to the USF Board of Trustees related to the sale of KUSF, although the FCC had asked for USF and CPRN to “Provide a copy of all Documents from June 1, 2010, to the present, presented to, prepared for, or issued by the Licensee’s Board of Trustees concerning the proposed sale of the Station, the PSOA or CPRN.” Among the small number of included emails is one from June 7, 2011 in which the secretary of the Board of Trustees reports that,

“The USF Board of Trustees met on Tuesday, June 7, 2011, for its quarterly Summer Meeting and approved the following resolutions: Executive Session – Allow USF to sell, license and execute any document required at escrow or by the FCC to finalize the transfer of KUSF to the new owner.”

KUSF Supporter Outside Board of Trustees Meeting June 7, 2011 (Photo: J. Waits)

Although the Board of Trustees is the legal owner of the KUSF 90.3 FM license, it’s surprising to me that their approval of the KUSF sale wasn’t official until the June 7 meeting. In a sad note, Save KUSF supporters waged an informational picket outside that very meeting, hoping to convince the members of the Board of Trustees to break their contract to sell the college radio station frequency.

Friends of KUSF filed an official reply yesterday with the FCC. Their lawyer Peter Franck told me that the USF/CPRN response seemed to be lacking in information. He said, “We found their response very incomplete, evasive and apparently contradicted by ‘the facts on the ground.’”

It will be very interesting to hear what the FCC says about the USF/CPRN reply and if they are satisfied with the information provided. As indicated in a letter that they sent to USF/CPRN regarding the request to limit the scope of the inquiry, the FCC maintained the right to ask for additional documentation if they believed that the response was insufficient.

***

Complete Radio Survivor coverage about the proposed sale of KUSF can be found here. I also wrote about my reaction to the KUSF shut down and to the Save KUSF Multi-Station Live Broadcast on Spinning Indie.  My article chronicling my KUSF field trip 2 years ago is housed there too. For more on the bigger picture of college radio station sell-offs, see my December 2009 piece “Cash-strapped Schools Turn Their Backs on College Radio“. And, for a quick overview of the situation at KUSF, see my article, “The Story Behind the KUSF Shutdown” on PopMatters.



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4 Responses to Scrutiny of KUSF Deal Continues as USF and CPRN Respond to FCC’s Inquiry Letter

  1. Scott Hayes August 11, 2011 at 5:46 pm #

    Sounds like the FCC ought to be going through the Charlie Cross emails. I call shenanigans!

  2. Brad Stark August 11, 2011 at 8:33 pm #

    So.

    First the FCC asks to see all correspondence regarding the sale sent to or from Fr. Privett, USF Gen. Counsel Donna Davis, VP of Business/Finance Charlie Cross, and KUSF General Manager Runyon. Within days of their original deadline to comply, USF requests permission to instead limit disclosure of such correspondence regarding the sale to that sent to or from Fr. Privett alone, while withholding the requested correspondence regarding the sale sent to/from Davis, Cross, and Runyon. The rationale they offer the FCC for granting this request is the assurance that only such correspondence to or from Fr. Privett would be relevant to the issues, and that any such documentation to or from Davis, Cross, or Runyon would necessarily be irrelevant, extraneous, and unduly burdensome on the Commission.

    Now, in response to the FCC inquiry USF was thereby successful in curtailing, USF tells the FCC that:

    1. Fr. Privett was relatively little-involved in the sale negotiations, and would therefore have little to offer in the way of documentation or correspondence on the subject. After all, he says – he handed off responsibility for those negotiations chiefly to Davis and Cross, whose correspondence USF successfully secured permission to withhold from the Commission…oh yeah, and on the promise that Fr. Privett’s correspondence (though a relative non-participant in negotiation of the sale) would be more relevant to the Commission than that of either Davis or Cross (who Fr. Privett now explicitly identifies as primary among the parties in the negotiations in question); and

    2) As little as Fr. Privett was involved in negotiations compared to, say…Davis and Cross for instance…and as little correspondence as he was likely to have taken direct part in himself…he can’t even provide much of that because, well…he doesn’t save his emails.

    So much for sparing the FCC undue burden. Not only will the Commission now have to spend additional time securing the information originally sought through their investigation, they’ll also have to figure out how to respond to the flagrant bait-and-switch shell-game USF seems to have put over on them, at least for now.

  3. kml August 12, 2011 at 2:08 pm #

    what brad said! requesting modification to remove everyone capable of fulfiling the FCC’s request and leaving only privett really bugs me. they surely knew  he’d say he kept no emails, but did not list “omitting all details of the sale” as a reason. how can that be acting in good faith? why not contact the IT department or submit similar from one of the original listed parties? isn’t that what most reputable Universities would choose to do? USF has a long-standing role acting in the City’s best interest, which is in their own interest, and their own motto. Why undermine this now by participating in this shady business to erode protections on the left of the dial — especially given the $37.5 million in expendable resources they had on hand to buy the Folger’s Building? Makes no sense at all.

  4. good job radio survivor August 17, 2011 at 10:12 am #

    Great summary, Radio Survivor. Saves me gobs of time reading the documents myself. I’ll get to it, but for now your reporting is quite helpful. The devil is in the details!!

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