9 August 2006

Investing in public radio possible for first time with $15 million fund to offset impact of overconcentration in radio ownership

Institutional and Individual Investors Focus of Major New Push from Public Radio Capital, Calvert Foundation and Ford Foundation.

(WASHINGTON, D.C., DENVER, CO. & NEW YORK CITY) In a first for noncommercial radio in the United States, three leading groups –- the Calvert Foundation, the Ford Foundation and Public Radio Capital – announced the creation of the “Public Radio Fund” (PRF), which gives individual and institutional investors an entirely new opportunity:  a vehicle for investing directly in public radio stations to promote independent, plural and local public media ownership across the U.S. 

The Public Radio Fund’s target for the next six-12 months is $15 million, starting with $4.5 million in loaned funds already committed:  $3 million from the Bethesda, Md.-based Calvert Foundation (from small individual investors around the country), and $1.5 million from the Ford Foundation, one of the largest philanthropic organizations in the U.S.  

To be housed within Public Radio Capital in Denver, CO., PRF will expand financing for noncommercial radio stations across the U.S., put in place strong community-based nonprofit ownership models, and then recycle the investment capital to acquire new public radio stations and repeat the process.  By leveraging the Fund’s assets provided by loans from investors, PRC will be able to attract tax-exempt bond financing to acquire an even greater number of radio stations.

Most public radio financing arrangements that PRC now works with are in the range of $1 million to $6 million.  With leveraging, the $15 million goal for the Public Radio Fund will allow for the financing of an estimated five to 10 stations.  Through the recycling of loan capital, the impact of the Fund over three to five years could secure financing for 20-30 stations.  All previous financing for public radio in the U.S. has been on a station-specific basis or for a single entity controlling multiple stations.

Calvert Foundation Director of Strategic Development Timothy Freundlich said:  “More public radio in more places in the United States is the goal of the Public Radio Fund. The Public Radio Fund is a rare opportunity for socially aware investors of all kinds to band together behind grassroots, alternative independent media.  This is a major new initiative that brings together the leaders in the world of public radio financing, socially responsible investing and foundations.”  

Public Radio Capital Managing Director Marc Hand said:  “Beginning this fall, the Public Radio Fund will help public broadcasters all over the U.S. gain access to capital on an affordable basis, and move more quickly and aggressively when an opportunity to compete for a valuable channel comes on the market.”

Ford Foundation Program Director Orlando Bagwell said: “The Ford Foundation believes that strengthening our country’s democratic values is vital to the public interest, and that the Public Radio Fund - by helping expand public radio’s role as a national and local forum for public discussion and debate - further supports our vision.”

WBGH Vice President and General Manager/Radio and Television Marita Rivero said: “The Public Radio Fund is a great innovation for public radio, because for a long time public broadcasters have needed access to short-term capital in order to compete against the “overconcentration” in radio ownership by other broadcasters.”

Along with the initial investments from the Calvert Foundation and the Ford Foundation, PRC will work to attract the balance of its initial $15 million goal over the next six months to a year.  Participation is available to institutional and accredited individual investors, for amounts of $100,000 or more, and terms of three or five years. Interest rates offered will be 0-3 percent for three-year notes, and 0-4 percent for five-year notes.  The notes will be collateralized by the stations’ assets and from the proceeds arising from the sale of the station licenses. PRC is also leveraging Calvert Foundation’s analysis and administrative capacity to support the Public Radio Fund.
 
Since its 2001 founding, and working on behalf of local institutions, Public Radio Capital has demonstrated a capacity to deliver specialized financial services at the local level.  Public Radio Capital applies existing tax-exempt public finance tools – a staple for hospitals and large colleges and universities – to a whole new segment of nonprofits in a highly entrepreneurial fashion. For instance, in Colorado, PRC enabled Colorado Public Radio to obtain public radio’s first-ever investment grade credit rating for tax-exempt bonds that brought in $6.5-million to expand CPR’s statewide network.  In Cincinnati, PRC represented Cincinnati Public Radio in the $15 million acquisition of Xavier University’s WVXU, the only news and information public radio station in that market.  The Public Radio Fund will enable investors to participate in the expanding public radio market by supplying PRC with the debt capital critical to structuring a diversified portfolio of radio station deals on an ongoing basis.  

ABOUT THE GROUPS

The Public Radio Fund brings together the biggest names in the worlds of public radio finance, socially responsible investing and foundations. 

The Calvert Social Investment Foundation (http://www.calvertfoundation.org), is home to the industry-leading $100 million Community Investment Note program encompassing 2,400 individual and institutional investors from all 50 states. 

Public Radio Capital (http://www.publicradiocapital.org), a non-profit institution, is public radio’s leading advisor in planning and financing new public radio channels. It has been involved in noncommercial radio preservation since 2001, having done more than a score of transactions for $100 million, effecting more than 22 million people nationwide.

The Ford Foundation (http://www.fordfound.org), one of the largest philanthropies in the US, focuses on strengthening democratic values, reducing poverty and injustice, promoting international cooperation and advancing human achievement.
                                               
CONTACTS

Patrick Mitchell, for Calvert Foundation, (703) 276-3266 or pmitchell@hastingsgroup.com; and Judy Cleary, for Public Radio Capital, (303) 377-9365 or jcleary@publicradiocapital.org.

EDITOR’S NOTE:  A streaming audio replay of the news event will be available on the Web at http://www.calvertfoundation.org as of 6 p.m. ET/4 p.m. MT on August 9, 2006.