WSEC back from the precipice
Refinancing helps Springfield’s public TV%u2008station survive
On paper, Springfield-based public television is running a deficit.
But tax returns filed with the Internal Revenue Service can be deceiving, according Jerold Gruebel, president and chief executive officer of Network Knowledge, which runs three public television stations in central Illinois.
A more telling indicator may be what is on television, and viewers of WSEC in Springfield may have noticed something missing this summer: Gruebel.
“I was on every single day of the year, just about, until the first of July,” says Gruebel, who has been a near-constant on the air for the past few years, imploring viewers to send cash or risk losing stations with signals that stretch to Missouri and Iowa. “I haven’t been on since then.”
Gruebel’s hiatus from the airwaves coincides with the end of the station’s fiscal year, and for the second year running, the station has balanced its budget, he says.
“I like to believe we’re turning a corner,” Gruebel says.
IRS forms show deficits of nearly $490,000 for 2008, more than $845,000 in 2009 and more than $660,000 in 2010, but Gruebel says that those figures include depreciation. On a cash basis, he says, the station that once feared for its future is fragile but no longer on the brink. In addition to Springfield, Network Knowledge broadcasts as WMEC in Macomb and WQEC in Quincy.
“If you take out depreciation and amortization, we, in fact, have balanced our cash budget – I think we made it by fifty bucks,” Gruebel said.
In 2009, the Corporation for Public Broadcasting said that Network Knowledge needed to come up with a new business plan, which included eliminating local programming and terminating all staff except for technical employees needed to air national programs, Gruebel said. That would have put Network Knowledge out of business, Gruebel said. After all, he reasons, how could a station with no employees save technicians raise money to pay for technicians?
During the past year, Network Knowledge has cut expenses by $200,000, with $90,000 in cuts coming from renegotiating a loan with Bank of America, Gruebel said. Besides lowering principal, the station eliminated a guaranteed interest rate that came with a price, betting that the market rate would remain low, and it won the bet, he said. The station has also cut by not going on the air until 10 a.m. on Sundays in July and August this summer instead of 6:30 a.m.
Employees are taking furlough days, and Gruebel has reduced his own salary. In 2008, he earned nearly $120,000; last year, he was paid less than $106,500. He said he still works more than two days a month without pay.
Although it has never missed a payment, Network Knowledge failed to meet loan covenants in 2006 and 2008 by having insufficient cash reserves, giving Bank of America the right to seize all Network Knowledge equipment and property. The bank, which is owed more than $3 million, has twice extended a note, and Gruebel is counting on another extension.
“At least until now, I have to say that the banks have been reasonable with us,” Gruebel said. “They have a right to be concerned. And we have a right to be in fear.”
On the plus side, Network Knowledge has increased membership by 45 percent over the past five years, Gruebel said, and program sponsorship has nearly doubled in the past year. Memorial Medical Center, for example, has signed on to sponsor Antiques Roadshow, and the deal isn’t entirely altruistic.
“Like any other commercial or media placement, we place value on the demographics of the programming audience,” said Michael Leathers, Memorial spokesman.
Contact Bruce Rushton at email@example.com