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The Honolulu Advertiser
Posted on: Monday, February 10, 2003

State's public television looks for support

 •  Table (opens in new window): PBS Hawaii revenues and spending

By Frank Cho
Advertiser Staff Writer

Plagued by financing cuts from some of Hawai'i's largest businesses and a costly upgrade in technology required to keep its broadcast license, Hawai'i public television is looking for new sources of revenue.

Mike McCartney, head of PBS Hawaii, is looking for new ways to support the state's public television station.

Richard Ambo • The Honolulu Advertiser

Viewership and program offerings are at all-time highs for PBS Hawaii, formerly Hawaii Public Television. But on the downside, the company's financial situation is more worrisome than ever.

PBS Hawaii said corporate contributions are on the wane and income from its own investments are in steep decline. The future of Hawai'i's public television channel hinges on the success of its producers and fund-raisers to increase viewer support, and yes, corporate sponsors.

"The whole world is changing and it can't be just TV anymore," said Mike McCartney, president and chief executive officer of the station. "We have to find other ways to grow."

To help underwrite its budget, McCartney said PBS Hawaii has to consider partnerships with other stations to share escalating production costs and generate revenues from sales of more commercially viable programming. But because PBS Hawaii's nonprofit status would restrict it from certain money-making activities, the company may create a for-profit subsidiary to seek out commercial partnerships and then share the proceeds with the station.

Hawai'i is not alone. Many public television stations across the country are facing similar budgetary challenges. A sputtering stock market, ballooning state-budget deficits, rising unemployment, and the threat of war in Iraq have many worried about a slowdown in charitable giving that could last until early 2004.

System upgrade planned

PBS Hawaii

• Employees: 34

• Membership: 20,000

• Annual Salaries of PBS Hawaii's Top Executives

President & CEO: Michael J. McCartney, annual compensation $122,132

Senior Vice President for Administration & Finance: Karen K. Yamamoto, $89,477

Vice President of Programming & Production: Edward J. McNulty, 77,908

Vice President of Development: Rebecca L. Dunning, $70,526

All this comes at a time when PBS Hawaii is trying to finance a $6 million upgrade to its broadcasting system and find another $12 million to build a new facility.

The station operated as a state agency for more than 30 years, but in 1998 started to move toward independence as the state's own fiscal crisis worsened. The station eventually converted to a private, not-for-profit organization in 2000.

The station is now supported by a blend of sponsors: foundations, government; individual viewers; corporations; and educational institutions, from school boards to universities. Public television will have to draw more on corporate support and increase cost-sharing for productions with Mainland and Japanese public television stations.

One effort under way is for a for-profit subsidiary to join with Seattle's public television station KCTS and Japan's NHK to produce high definition, prime-time documentaries that could then be sold nationwide or even internationally.

The station is also considering a plan with other public television stations to double the length of the 15-second promotional spot at the end of certain programs reserved for corporate sponsors to increase their value to contributors. PBS Hawaii has already hired a director for corporate community support to help pump up corporate giving.

"What we want to do is refocus corporate support," said Karen Yamamoto, senior vice president for administration and finance at PBS Hawaii. "We don't want a boiler plate approach. The plan is to talk to the corporate leaders in Hawai'i to find out their goals, and then to tailor what we have that would better meet their needs."

But PBS Hawaii will have to walk a fine line because its struggle to offer a distinct service could jeopardize viewer support. Offering selections from outside the mainstream of commercial television, it is vulnerable to charges from across the political spectrum that it is either too liberal or selling out to the business establishment.

Individual contributions

More than 31 percent of PBS Hawaii's budget came from individual contributions last year, according to the company's financial records. In 2003, PBS Hawaii is projecting those contributions to grow slightly to nearly 33 percent of its annual budget.

"We have been very fortunate that our membership has continued to grow despite what the economy is doing," said Rebecca Dunning, vice president for development at PBS Hawaii. She said the average individual donation rose to about $55 per person last year, up from about $35 five years ago. But during much of this time, revenue from the station's $1 million endowment managed by the Hawaii Community Foundation has dwindled from $100,000 a year to just $60,000 annually as falling interest rates pummeled bond investments.

To improve its image with its 20,000-member donor base and potential contributors, the station recently dumped its Hawaii Public Television name as too confusing. It upgraded its programming guide and added some new positions to increase community as well as corporate support.

"People were getting us confused and thought we were Hawai'i Public Radio or 'Olelo," McCartney said. "How well we do in fund-raising has a lot to do with your personal relationship. Now when I say PBS, they instantly know who we are."

Looking for new home

But a name change will probably be McCartney's easiest challenge in the next three years. Under Federal Communications Commission guidelines, PBS Hawaii must upgrade its antiquated broadcasting system to a digital operation this year. The move is expected to cost the organization about $6 million.

McCartney said PBS has already collected about $4 million from federal and state sources and another $1.5 million in private contributions to help pay for the digital upgrade.

PBS Hawaii is also looking for a new home. The lease on the land under the station's Dole Street studio is up in three years.

McCartney said he would like to have a deal in place for a new studio by the end of the year. The price tag is estimated to be about $12 million for the building and equipment. Since the site has not been selected, PBS Hawaii has not yet started fund-raising in earnest. The company expects to finance the project largely through foundation grants and large contributions from private donors.

"The challenge for us is there are a lot more nonprofits out there today trying to get a piece of the same pie we are, and that pie today is a lot smaller than it used to be," McCartney said.