Every year non-profit foundations like the Foundation for New Jersey Public Broadcasting are required to file a return (Form 990)  with the Internal Revenue Service.  The most recent filing of the Foundation for NJ Public Broadcasting is for the July 1, 2006 through June 30, 2007 period.  The first two pages summarize revenue and expenses.  Schedule III-a lists grants made by the Foundation to NJN (total of $4,095,588.)   Schedule III-b lists services provided by the Foundation for NJN.  The compensation of Foundation Officers can be found in Schedule VII.

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The link below is showing a bill passed unanimously by both the Assembly and NJ Senate at the close of 1981 session.  It’s purpose was to change the NJ Public Broadcast Authority to a “public corporation” which would allow NJN to more easily procure equipment and hire staff.

It also changed the makeup of the NJ Public Broadcast Authority Board.

It was sponsored by then Senator Gordon MacIness.

Governor Bryne vetoed the legislation saying that since his term was about to end, the next Governor (Kean) should decide on the structure of NJN.  Apparently, the approach was never picked up again.

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Debbie Holtz wrote a great article about the value of NJN and the Broadcast Licenses on PolitickerNJ.com:  Click Here to read the article

The link below is a PDF of a letter written by the New Jersey State AFL-CIO to Governor Corzine stating their concern of the NJN Foundation’s plan for Privatization of NJN.

Click here for PDF of letter

New Jersey State AFL-CIO Website

According the Treasurer “the Authority cannot produce an accrual ‘GAAP’ basis balance sheet at any reporting period, nor can it efficiently monitor its fiscal position…”

Click here to open/download the Letter

CWA “News with Views” Newsletter contains various stories about the situation at NJN.  Check it out!

By Dudley Burdge, Senior Staff Representative

First, let me thank you for the opportunity to address you and to explain the position of our members at NJN concerning the fiscal crises and the proposed privatization.

Let me start by discussing those areas of agreement that we share with NJN management.

We agree that the cut in state funding to NJN in the $3 to $4 million range, while only a little above 10% of the total NJN budget of $30 million, is a very tough cut for a small state agency like the NJ Public Broadcast Authority.

We absolutely support restoration of as much of the cut revenue as possible and stand ready to work with you to achieve the restoration.

We also agree that changes are needed in the structure of NJN.   There are problems in the length of time that procurement and hiring take.   The type of leasing arrangement that appear to be a significant source of future revenue could be more readily achieve with a different structure.

We agree that NJN should use the new leasing possibilities to benefit NJN and, as our members say, also the State of New Jersey that has sustained and supported public television for decades and is the owner of the broadcast licenses.

Indeed, we recognize the need to accelerate the leasing opportunities.  We are aware, that most public broadcasters, both non-profit and governmental, have already signed lease agreements concerning the spectrum associate with the Educational Broadband Services.   (Though this delay may accrue to our advantage as the value of this asset has increased.)

CWA and the our members at NJN part company on the issue of privatization/ transfer of assets to a non-profit.

We strongly oppose this initiative.

To understand why, we need to look at a little history and ask a question – why was NJN set up as a state agency?

The reason that it was formed as a state agency was that it was the only way to ensure that NJ news and public affairs received broadcast coverage.

When NJN was formed there was no strong non-profit sector in New Jersey like that in Philadelphia and New York.

There still isn’t.

So NJ joined with some 20 other states to directly run public broadcasting in their states.   In many other states, including NY and PA, publicly owned universities are major players in public television and broadcasting.

So public broadcasters directly run by public agencies isn’t unusual – in fact it’s probably the most common form of ownership.

Our members don’t believe that the Foundation or some new non-profit has the ability and financial wherewithal to effectively run NJN.

In 1995, a non-profit group purchased WNYC-FM from the city of NY for $20 million.  In 2003, a non-profit group purchased KOCE-TV in Huntingdon Beach, CA for $32 million form Coast Community College.

During the last decade quite a number of Public Broadcasting licenses have been sold to non-profits.

But here, the Foundation for NJ Public Broadcasting wants the people of the state to give it the broadcast licenses.

Frankly, we believe that this reflects the financial weakness of the Foundation and the NJ non-profit sector in general.

In strength, NJ non-profits can’t compete in the non-profit marketplace with Philly and NYC, raising concerns with possible dismemberment of NJN if it goes non-profit.

Similarly, our members have not been impressed by the legislative strategy employed by the Foundation and NJ management.   Many legislators have told us that they do not regularly hear from public television supporters in the same way they hear from other groups.

A legislative strategy that has not provided legislators with accurate information about the main objectives of the privatization/change in status has created a well of mistrust in the legislature.

Here are two examples:

In testimony before the Senate Budget Committee, NJN representatives failed to even mention the primary force that would allow privatization with reduced state funding – leasing.   Did NJN managers actually think that the legislators on the budget committee would not figure this out and ask the appropriate questions concerning the transfer of state assets?

When asked in writing by legislators about the value of its licenses, NJN responded with the ridiculous and disingenuous claim that perhaps the licenses might be worth $5- 7 million.

Ridiculous, as the previously mentioned sales indicate a value in the hundreds of millions for NJN licenses.

Disingenuous in that at the time NJN answered the legislatures question it had an assessment of the value of the EBS licenses of $22.5 million – this just for one sub-set of licenses.  Clearly these EBS licenses are worth more now than in August 2007.  We understand that Nextel has offered $110 million over 30 years to lease these licenses.

We also think that the privatization idea will be problematic for the legislature in that many of the potential “customers” for future leasing arrangements are state government agencies such as DOT and OIT.   Would the state give up the licenses it now owns to turn around and lease the licenses?

We in CWA do not foresee a possibility that state Assembly and Senate leadership and members will approve a simple transfer of assets.

We think its time for this board to assume leadership form the Foundation and craft a “plan B” to address both the current financial crisis and the need for structural changes.

CWA and the NJN staff are ready to help in that effort.

We believe that any solution needs to address the following:

Slim down the Foundation and transfer resulting savings to support NJN broadcasting.    We don’t understand why the Foundation needs four high dollar vice presidents and a large personal staff for the Executive Director.

Why is money being spent on glossy, expensive mailings to thousands with no clear fundraising focus in the midst of a fiscal crisis?

Within the state structure, find a way to facilitate leasing arrangements perhaps by granting autonomy to NJN to more easily enter into leasing arrangements and streamline procurement and hiring.  Another route could be to amend state bidding procedures to facilitate leasing arrangements.

Use current NJN licenses and potential licenses to ensure that basic wireless broadband services are available to all state are available to all state residents regardless of location, income, or status.

NJN broadcast licenses and potential licenses can and should be the background for data and broadband services needed by state and local government.

We hope these comments will start a discussion on a realistic plan to help NJN achieve a better financial base for the future.

Dear Senator:

I write to you as a retired employee of New Jersey Public Broadcasting Authority, (NJN) having served there for 27 years including 10 years in management. I write in opposition to any privatizing plan for NJN that would transfer the FCC broadcast licenses out of state control.

In the 1960’s, Governor Hughes commissioned a study of television coverage in New Jersey. At the time, and to this day, most TV coverage in the state comes from stations located and licensed to communities outside of New Jersey. Then, as now, New Jersey is largely neglected by these stations. Programming from these “foreign” stations, largely located in New York and Philadelphia, fails to address the unique needs of New Jersey and its people. Governor Hughes’s report concluded that there was a need for New Jersey based television coverage.  The Legislature’s creation of the New Jersey Public Broadcasting Authority NJN was the outgrowth of that study.

Other states have privatized their Public Television entities however New Jersey is in a very different situation than any of these other states. These other states have viable commercial television stations within their respective states that do address the needs of their residents. As I mentioned above, this is not the case in New Jersey. All of the best and certainly most of the commercial TV Licenses were issued long ago to New York and Philadelphia. Even the few New Jersey commercial TV stations licensed within the state cater to these two large cities and seek to tap into their financial benefits.

The Legislature has made a significant investment in NJN over the past 40 years. I believe this has been a wise and prudent investment. To be sure it has guarantied that New Jersey’s citizens can get TV coverage for and about them.

Letting go of these valuable FCC broadcast licenses is absolutely the wrong thing for the state to do. Once out of the states hands these licenses are lost forever. They can be bought and sold to any number of other entities. The argument is often made that the licenses have little value since they are reserved by the FCC for Public TV use only. That is not necessarily the case. The FCC in the last ten years permitted the conversion of a public TV station in Pittsburg to commercial status and that station was sold for millions of dollars ($165 million I believe). Can you imagine the value of such a conversion in New Jersey which falls in the New York and Philadelphia First and Fourth Neilson TV Markets? What a tragic loss that would be in dollars to the citizens of New Jersey. Simply stated, any privatization of NJN should be done at fair market value where the state can recover the maximum value of its assets. The City of New York did this when they privatized their Public Radio station a number of years ago. I recall that the radio station was sold by the city to its own foundation for some 20 million dollars. One can only imagine the value of NJN. Remember though that the real significant value is in the FCC Licenses and not the physical assets themselves.

The NJN Foundation is not the best choice for privatization either. Over my time at NJN I watched the Foundation grow and consume its resources to a far greater degree that it was supposed to do. The NJN Foundation was supposed to raise funds and awareness for NJN. Instead it has withheld millions of dollars from the operation of the network. Were not these funds raised for the network?

During my time at NJN I wrote the federal matching grants for the conversion of NJN to Digital TV (DTV). The match for these funds came from state appropriations. I do not recall any funds for DTV conversion coming from the NJN Foundation and yet DTV conversion has been the single largest cost in the TV industry in this country for the past 10 years. All the while the Foundation maintained balances in its accounts of several million dollars.

Even if the State wishes to privatize NJN, it should retain the FCC licensees and hence ultimate oversight of NJN for no other reason than to insure that New Jersey continues to get TV service that is relevant to the state. Any privatized entity will surely follow sources of funding in order to be viable. I believe that the majority of such funding would come from New York and Philadelphia. Over time the TV programming would obviously shift to serve those constituencies leaving New Jersey where it was in the mid 1960’s when it comes to real TV services.

NJN is uniquely “New Jersey” because it is owned by the state. Perhaps the wiser course of action would be to give NJN the type of latitude and freedom from state regulations that the Sports & Exposition Authority enjoys.

NJN has certain assets that include EBS licenses (Educational Broadband Service) and DTV multicasting capabilities over its TV channels that can be leased for significant dollars thereby freeing up the need for large state appropriations. Leasing of the EBS licenses alone would generate several million dollars per year in revenue to NJN. When I was preparing to retire last fall, significant offers, in the tens of millions of dollars, were being made by wireless companies to lease these EBS licenses from NJN. State regulations hamper the ability of NJN to do so. These regulations should be changed with regard to NJN in order that it may further reduce its dependence on state appropriations.

Senator, please do not let the privatization of NJN happen to the people of New Jersey. I remember with pride my service to the people of New Jersey for over a quarter of a century. I remember traveling from one end of the state to the other as part of my work for NJN. I remember setting up equipment to broadcast from many places throughout the state over the years. I even remember being sent to your campaign headquarters as an engineer to cover your victory Live on NJN in November of 1993. Television like this can only happen when the station owner (in this case the State and its People) make it happen.

Best Regards,

Charles W. Loughery