Why is CapRadio promoting Sac State to get out of debt? Talk about a mixed signal | Opinion
Sacramento State gave its financially troubled CapRadio station nearly $8 million to keep it afloat. Instead of paying the money back now, the radio station promotes the university for 15 seconds every hour of every day.
The unusual arrangement was released last week as part of the station’s annual posting of its finances, which was a mixture of horrible and good news.
Instead of having more than $40 million in net assets as claimed by CapRadio in 2022, the station now says it has net liabilities exceeding $10 million, according to the accounting firm CliftonLarsonAllen. The station says it does not have enough money to pay all its bills for three years.
“There are ongoing investigations that will continue to impact Capital Public Radio, Inc.,” the firm said. “These conditions raise substantial doubt about their ability to continue as a going concern.”
However, this radio station’s loyal listeners keep it alive. Membership support is up 9% compared to the 2022-23 fiscal year.
This is no time to abandon CapRadio or any vital media outlet. The new financial information, however, reinforces that it may take years for the university and its radio station to dig themselves out of the financial hole that they somehow managed to create.
An audit last fall by the California State University system began to unearth a budget disaster driven in part by a fateful leadership decision for CapRadio to leave its long-time campus headquarters and sign two leases downtown, one for a new event center.
A deeper, follow-up audit released this August, suggested a culture of misspending perpetuated by the university’s lack of oversight. More than $460,000 in credit card spending by former general manager Jun Reina (who wasn’t named in the audit) was questioned. The university has repeatedly refused to release more details, saying it could endanger an ongoing investigation, despite Reina being fully aware of both the audit and the same financial information.
CapRadio, as an auxiliary organization of a public university that must comply with state public record disclosure requirements, annually posts its financial statements on its websites. This time, however, things were different. The financials for the 2022-23 year were not completed until this September. The statement for the 2023-24 year was dated as completed last month but only posted last week.
The radio station is more than $10 million in debt, most of that to the university. Annual expenses have dropped from $24 million to $15 million. A downsized staff now has plenty of room in its long-time campus building.
For now, the radio station is whittling away at what it owes the university by promoting it every hour on the hour. Sac State is valuing a minute of praise on the radio at roughly $1,200 based on an agreement reached in April. Every month since promotions, the debt has shrunk by an estimated $220,000.
“This agreement was never intended as a vehicle for CapRadio to pay down all of its debt to Sac State,” university spokeswoman Lanaya Lewis said in an email. “It is, however, a win-win opportunity for both organizations.” Negotiations are underway to potentially extend the promotions through 2025. If this is how CapRadio ultimately repays the debt, at the going rate, it will take more than 25,000 15-second promotions of the university to call things even.
It is ironic that a university that failed to prevent this radio station from lavishly spending its way into deficit now chooses self-promotion as part of the solution. No audit has come close to explaining the university’s role as it and CapRadio got themselves into this mess.
Amid this transition and turmoil, a non-profit that was intended to support the radio station ended up sandbagging it by donating CapRadio’s tower property to KVIE, the Sacramento region’s public television station. Sacramento State insists CapRadio still owns the physical tower. KVIE has sued to clarify ownership, depicting the university as a derelict steward of a poorly maintained transmission facility. CapRadio has countered with its litigation.
Why television station leadership accepted a key radio station asset without talking to CapRadio or the university in advance reflects a spectacular lack of communication by KVIE. This basic lack of due diligence is coming back to haunt the local public television outlet.
Hopefully, the darkest period for CapRadio is behind this vital institution. With continued support from listeners, sound management and a much more transparent university, CapRadio someday can focus solely on the news and not be the news. That day, sadly, is not yet on the horizon.
This story was originally published November 27, 2024 at 5:00 AM.