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How $50 million in donations led KCET to split from PBS

The grants, including $25 million from BP, caused the station's dues to PBS to skyrocket. Because the donors stipulated they couldn't be used for administrative costs, KCET says it couldn't pay up.

October 22, 2010|By Scott Collins, Los Angeles Times
  • KCET CEO Al Jerome
KCET CEO Al Jerome (Lawrence K. Ho / Los Angeles…)

In 2004, KCET-TV, the PBS affiliate in Los Angeles, enjoyed what seemed like a stroke of unimaginable good fortune. Like most public television stations, KCET struggled for funding, but in that year it began raking in generous grants for preschool programming that would eventually total $50 million.

The gifts were the largest in the station's history, and the programs, "A Place of Our Own" and its Spanish-language companion, "Los Ninos en Su Casa," went on to win Peabody and local Emmy awards and later aired on PBS stations nationwide. The oil giant BP had kicked in half the money, and in gratitude KCET bosses renamed their historic Sunset Boulevard soundstage BP Studios.

But over the next few years, the golden egg hatched an albatross — one that directly led to KCET's surprising announcement earlier this month that it would exit PBS effective Jan. 1, thus leaving the nation's second-largest media market without a flagship public television station and marking the first defection of a major market station from the national network.

As BP was grappling last summer with the Gulf of Mexico oil spill that badly tarnished its reputation, the unintended aftermath of its charitable giving had already begun to engulf PBS and the West Coast pillar of its national system. Under the network's complicated dues structure, which operates similar to a progressive tax, KCET would eventually see its dues to PBS soar more than 40%, from $4.9 million to nearly $7 million annually, in wake of the new grants.

The irony of the windfall is that even though it left the station flush with money, KCET could use none of it to settle its account with PBS. The grants came with the stipulation they could not be used for such administrative costs. And around the time the higher payments came due, KCET's major funding streams began drying up amid the tumbling national economy.

As KCET officials — who appealed to PBS for lower dues — saw it, the station was being penalized for demonstrating programming initiative with the preschool caregiver shows. "When our dues were at the highest, our revenue sources — whether they were from major giving or foundations or corporate underwriters — were decreasing," said Al Jerome, the station's president and chief executive. "So we became increasingly less able to pay" the dues.

But PBS did not back down, arguing that the outlet was asking for special treatment. Network executives pointed out that although the BP grants had hiked KCET's dues, the station had also received a larger appropriation from the federal government.

"I don't think it's a case of being penalized," Paula Kerger, the chief executive of PBS, said in an interview. "Normally what stations do is they anticipate dues are going up and they reserve.

"It was unfair to other stations in the system to strike a separate deal with KCET," she added.

The road to KCET's headline-grabbing split from PBS began in the usually low-profile backwater of educational-TV fundraising. In 2003, KCET was seeking financial support for a series that would offer advice and training for caregivers of preschool children.

Enter BP, the oil company whose corporate foundation has been a longtime educational backer, which included giving scholarships and grants for local schools. BP officials saw unique promise in the idea behind "A Place of Our Own" and stepped up with an initial grant of $10 million.

"There was really nothing out there that was similar to this program … nothing targeted to caregivers," Lucia Bustamante, who handles external affairs for BP, said in an interview.

Hosted by Debi Gutierrez, "A Place of Our Own" was an upbeat talk and advice show that featured interviews with and practical tips for parents, day-care providers, preschool teachers and others who cared for small children. The series began to build an audience after its premiere on KCET in 2004.

When producers proposed rolling out the series nationwide, BP officials were eager to help out. They approved an additional $15 million that would cover not only production costs for "A Place of Our Own" and the Spanish-language edition, but also community outreach efforts and training for caregivers.

KCET executives were exultant. The soundstage on the station's historic lot in Silver Lake — the former home of Monogram Pictures and Allied Artists, which churned out the Charlie Chan B-pictures as well as the 1950s sci-fi classic "Invasion of the Body Snatchers" — was rechristened in honor of the station's oil-company benefactor. Producers churned out 650 episodes of "A Place of Our Own" and "Los Ninos," with production finally winding down last year.

But when the dues bills started arriving, the party abruptly ended.

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