By Jim Schutze
By Rachel Watts
By Lauren Drewes Daniels
By Anna Merlan
By Lee Escobedo
By Eric Nicholson
Strange stuff struts across the stage of life every once in a while. There just isn't time to stop and figure it all out. Like the oddly recurring story in Dallas every two to three years: "Proposed WRR Frequency Swap."
It's like clockwork. Every few years somebody wants the city to sell WRR-FM, the city-owned classical music radio station.
Nobody ever wants the city to sell sewage treatment plants or solid waste transfer stations. Is it because WRR is a big mess, costing the city all kinds of money, and we need to find a way to stop the hemorrhaging? No, that would be just about everything at City Hall other than WRR.
Get this. WRR makes money. It is owned by Dallas City Hall, and it makes money. I know. It's amazing. You'd think the entire rest of the city staff, led by the city council, would gather on the lawn outside the station's modest little headquarters at Fair Park at dawn every year on the vernal equinox and chant praises. But, no. People just want to get rid of it.
Gregory Davis, general manager of the station, really did not want to talk to me about this latest proposal to mess up his station. But I sent the station an open records demand anyway for its financial numbers. When I got them, it was hard to see what Davis was being so shy about.
In the last five years, WRR has posted profits averaging more than half a million bucks a year. In the best year in that period, WRR earned a profit of more than $1 million on revenues of $4.7 million.
So this is where we begin to see why this story keeps coming back. The WRR radio station is a very lucrative piece of property that we citizens of Dallas just sort of inherited when nobody was looking. There's an attitude out there--even among the so-called "Friends of WRR," and we'll get to that particular oxymoron in a moment--that WRR is just too good for City Hall to own.
It's the second-oldest commercial radio station in the country, according to some histories. WRR is not a public non-commercial radio station in the sense that KERA is. That has to do with the way radio signals are licensed by the federal government. KERA is licensed as a non-commercial station. It can't sell regular ads and must raise its money instead from fund drives and those strange half-ad/half-public service announcements it runs.
Even though WRR is owned by the city, it is licensed as a commercial station. That means it can and must go out into the commercial radio market, just like any other commercial for-profit station, and sell regular ads.
For a station that plays only classical music, WRR does pretty well. It was 22nd of 49 radio stations in the Dallas market measured by Arbitron last May--not too shabby.
So here's the deal on the table now. Salem Communications Corp., a giant Christian broadcasting conglomerate headquartered in California, wants to swap a radio tower it owns in Dallas for WRR's tower. From Salem's point of view, the motivation is obvious. WRR broadcasts from a 100,000-watt tower in the center of the North Texas market, reaching as far south as Waco and as far north as Sherman.
Salem wants that tower and the commercial signal that goes with it. Whether Salem keeps the tower or flips it to somebody else for a hip-hop station, once the tower and signal are out of city hands and in play in the private market, people out there stand to make a ton of money on WRR.
The deal would work like this: Salem swaps the city a tower owned by a non-commercial station. In trade, the city gives Salem the WRR tower and its commercial signal, which carries a license to sell regular ads.
Salem gets a very valuable commercial tower and commercial signal. The city gets a non-commercial tower and signal, worth much less because now the new WRR can't sell ads.
But--and this is supposed to be the gleam in everybody's eye--Salem gives the city an additional $50 million or so, which the city can sock away as an endowment to support the arts.
Less valuable radio station. But $50 million cash.
Marty Greenburg, the broker representing Salem, says the coverage area reached by the tower the city would get in the swap is pretty close to being the same area reached by the WRR tower now.
"My view is that this is a no-brainer for the city."
With the new tower, he said, "The city can provide the same service for Dallas-Fort Worth listeners of great classical music." And, he said, the city would have the option of operating WRR like KERA, with fund drives and so on, or without any fund-raising at all, relying on the endowment fund created from the extra $50 million.
But I told him I wasn't so sure about that. I'm still looking at these numbers I got from WRR. Their operating expenses every year are between $3 million and $4 million. Let's say the city puts the $50 million fund into something that returns 5 percent earnings every year. That's $2.5 million. By itself, that's not enough to keep the station afloat.
Greenburg said he thinks the station could be run more efficiently. Maybe. But it seems to me they must be pretty efficient already to be a city department and show a profit every year. The other thing I see in the numbers I got from WRR is that the station is sitting on a cash surplus of about $6.7 million right now.
A city agency with a surplus? Why would we mess with that? Why not leave WRR alone, exactly the way it is? It's working. It's profitable. Why screw with it at all?
One answer the proponents give when I ask them that question is fairly amazing. Clayton Henry, president of the Friends of WRR, told me that the only way to protect WRR from these recurring takeover attempts is to make it worth less.
"Every three years, we seem to be a target," Henry said, "and we spend a lot of time talking about this subject. There's a lot of time being wasted on this thing."
Soooo...let me follow this. If WRR had a little bit beanier-weenier tower and a different kind of license so it would have more trouble making money, people would stop trying to take it over.
"It would make us less of a target," Henry said, "because we would be a non-commercial station. Does it still have value? Yeah, sure, it's got value. But it's a lot less of a target."
OK, now, and tell me again: These are Friendsof WRR? Well, that gets us into a whole 'nother topic that I don't have enough room for here. But according to their own publicly available IRS statements, the Friends raise all kinds of money from members. And yet I can't see that they give a nickel of it to WRR.
Henry confirmed to me that the Friends buy airtime on WRR so they can broadcast their own programs about the arts. But so what? That just makes them one more commercial customer for the station. Given the profits the station makes, I have to assume if the Friends of WRR stopped buying time from the station, somebody else would buy it.
And in fact they sort of have stopped. I did a little spreadsheet for myself which showed that five years ago the Friends were spending 130 percent of their annual fund-raising--going in the hole, in other words--to buy time on WRR. In the most recent report, that was down to 5 percent.
Plus this: A couple years ago somebody dumped 200 grand on the Friends. Henry couldn't remember who when we spoke. "Some estate, I think," he said.
The $200,000 is just sitting there as a big cash surplus now. So the Friends don't really do much that's friendly to WRR anyway. Then somebody gives them 200 large. They can't remember who. Now they're out plugging this deal where the city should protect WRR from the unwanted advances of strangers by making her more ugly.
The ultimate reason why the city should peddle part or all of WRR, according to the proponents, is that the tower and signal are just too good to be wasted on a city-owned station for classical music listeners.
Larry Davis, chairman of the city of Dallas Commission on Productivity and Innovation, an appointed body, is the main champion of this swap proposal. He told me it's not even necessary to go to the uglier daughter strategy to see why the city should do the swap.
"I think the equation is even simpler than that," he said. "If you have a dump truck and you're hauling dirt in Dallas, and you have no job that's bigger than an eight-yard dump truck, you don't need to buy and own a 24-yard dump truck, and that's what we're doing."
The last wrinkle is this: Some other arts groups were frank with me in saying that they would like to get a slice of that $50 million endowment if it ever comes into being. So let's say there's a fund. Let's say some of the swankier, more politically muscular arts groups are able to bite off mouthfuls. Now there's even less endowment money for WRR. Plus it can no longer sell ads.
Great! We've taken the one successful, profitable city agency we could find and screwed it up and hobbled it so that ultimately it will die. And somebody outside City Hall will make a whole lot of moolah on the deal.
Does that sound like public stewardship to you? Come to think of it, could this be why we don't see more city agencies that come out ahead?