in Houston, Texas

University of Houston practiced deception, cooked up 'cover story' as it closed deal to acquire Rice University's KTRU radio station

Thursday, Nov 11, 2010, 05:20AM CST
By Steve Miller
old time radio

The University of Houston plotted to keep its acquisition of Rice University's student-run KTRU radio station secret as long as possible --- going so far at one point as to encourage lying to Rice students about why an engineering consultant needed access to the station, e-mails obtained by Texas Watchdog show.

 

“The longer we wait (for an agreement) the higher the likelihood of one of the ‘campus constituencies’ causes a problem for Rice, which could disrupt the transaction," reads an April 5 e-mail to UH officials from an agent at Public Radio Capital, which represented the school in the $9.9 million deal signed last month.

 

On April 20, another e-mail from Erik Langner, director of acquisitions at Public Radio Capital, warned UH officials that “University of Houston and Rice should now be working with one another on the transition and public relations strategy. As you know, news of this transition will become public once the asset purchase agreement is put on file with the FCC.”

 

On May 3, with the public still unaware of the pending sale, Langner suggested officials lie to KTRU staff about the reason for a visit and assessment of assets from a consulting engineer, which the University of Houston and its consultant needed to develop a business plan. Fearful of tipping off KTRU staff as to a pending sale, Langner e-mailed a strategy to Greg Guy at Patrick Communicationsa Maryland brokerage which represented Rice in the deal:

“We recognize that Rice is going to have a hard time generating a complete list of assets without some of the station personnel’s input, and we agree that tipping off some of those individuals may not be advisable. ... We request that Rice provide a cover story for an independent 3rd party engineering consultant, to be chosen by UH, to perform an inspection of the transmitter building, transmitter equipment, transmission line, tower and antennae. Rice should actually hire the consultant we specify, so there will be no question as to the source of the inspection, which of course will have to be coordinated with the station engineer somehow. Rice can use any reason it chooses, some of which can include change of insurance, inventory needs, or any other plausible explanation. UH will reimburse Rice for the cost of the inspection.”

The communication records suggest a pattern of secrecy and bolster previous suspicions that the university circumvented public records laws in its effort to get the deal passed, said Joe Larsen, a Houston lawyer and a board member of the Freedom of Information Foundation of Texas.

 

“These add to the speculation that they tried to mislead,” Larsen said. When news of the sale broke in August, Larsen said the UH may have violated the open meetings act because it did not name KTRU as the station in question in Board of Regents agendas to consider the sale.

 

A University of Houston spokesman denied that there was any fear of students finding out about the sale and said the university acted within the law.

 

"In terms of UH, both the Texas Public Information Act and the Texas Open Meeting Law are specific about when transaction details become public,"  spokesman Richard Bonnin said in an e-mail. "UH complied with these provisions."

 

DEVELOPMENT OF A DEAL


E-mails show the purchase of KTRU and its transmitter had been considered at least since early 2009. Rice had wanted to put the radio station up for sale in 2008, but it was delayed, according to the missives.

 

UH came into the picture in the spring of 2009 and with Public Radio Capital clearing the way, got in touch with Patrick Communications. On June 17, 2009, John Proffitt, general manager at KUHF and a major player in the push to secure KTRU, said in an e-mail to UH counsel Ruth Shapiro, “I think the ball is beginning to roll.”

 

Confidentiality agreements were signed by all parties, e-mails show. Proffitt did not return an e-mail seeking comment.

 

In July of 2009, an e-mail from Langner to Proffitt claims that a religious broadcaster was also interested in the station, according to Rice’s broker, an apparent effort to move the process along with UH. A month earlier, Langner wrote to Proffitt: “The seller is anxious to move the property, so it is not clear how long we will be able to limit the field of public broadcasters reviewing this opportunity.”

 

Read more: Call letters 'KTRU' kept out of planning docs, and critics question 'lack of transparency.' On page 2.

 

Editor's note: This story was updated at 4:30 p.m. Nov. 11 to correct the date on the e-mail about "campus constituencies" in the second paragraph.

Comments
A Guy Who Know
Thursday, 11/11/2010 - 09:07AM

Who cares? The fact of the matter is that Rice approached UH for the sale. If your going to be mad at someone look at the Rice Administration.

Who cares
Thursday, 11/11/2010 - 09:29AM

This is really sad. While UT is trying to come up with TV deals to make their school yet more money to improve structure and keep tuition low, U of H is figuring out how to spend more money while at the same time raising tution at many times the rate of inflation and cry that they don't have any choice but to do it. And for what? Another FM radio stations during the time when most people have access to the internet, and HD radio and yet fewer people give a crap about classical music. If they wanted to have just an NPR news station and a separate classical station, they could implement fully what they are doing now with KUHF HD1, and HD2 and use online streaming for people at home. HD radio is standard now in most cars and most new car stereos and it's free.

Shame on you U of H for wasting students' money on such a worthless project.

Robert
Thursday, 11/11/2010 - 09:37AM

Thank you, Texas Watchdog, for this news storey. As a University of Houston alum, I expected more from UH. The matter regarding KTRU has tarnished UH. It is shameful. I think there needs to be a formal legal investigation to see if any laws have been broken. If UH purposely, systematically deceived, what else has been done that we don't know. What other laws have been broken? KTRU is a great radio station that deserves to be on the air in Houston. Please help keep KTRU on the air: http://savektru.org/

clr55
Thursday, 11/11/2010 - 09:43AM

There is nothing unusual about creating a cover story when performing due dilligence prior to an acquisition. Confidentiality is almost always a key, and a good cover story is the norm.

Chris
Thursday, 11/11/2010 - 09:50AM

I am a Rice alumnus, and a long time KTRU supporter, so I guess I'm biased. When is lying ever right? The Rice administration wouldn't have lied unless they knew what they were doing was wrong. The absolute opposite of the sort of transparency that the administration claims to support. I guess we are supposed to judge them by their words and not their actions.

mfeezy
Thursday, 11/11/2010 - 09:51AM

All this says is that all parties wanted to stay in front of and try to manage the public perception of the upcoming sale, with the most "egregious" foul being to ask Rice to concoct a cover story to lower-level KTRU employees about why an engineer was doing a physical inventory. Not sure I see the sinister plot in this. Keep in mind that Rice was eager to sell the station and obviously knew about everything. I fail to see any wrongdoing, just upset feelings from those who wanted to keep things as is (which never would have happened anyway because someone would have bought the station).

Gary Packwood
Thursday, 11/11/2010 - 09:54AM

Quoting from the article...

...Rice had wanted to put the radio station up for sale in 2008, but it was delayed, according to the missives.

::

And Rice approached UH for the sale.

What else matters?

::

GP

KFD
Thursday, 11/11/2010 - 10:11AM

Who cares? It is radio. Rice approached UH. Watchdog? Give me a break. More interesting news for them to cover would be who's dog keeps crapping in my yard than this story.

dbcsez
Thursday, 11/11/2010 - 10:13AM

Excellent report. I'm one KTRU/Rice alumnus who is upset at the Rice and UH administrations, as well as the directorship and staff of KUHF, some of whom are friends or acquaintances of mine. This deal has been rotten on all corners from day one. The FCC will certainly get my input, and I hope yours as well.

Just as importantly, KTRU has been a tremendously influential presence on the FM band since its genesis in 1971. It has inspired thousands of musicians, hundred of thousands of listeners, and dozens of other college radio stations. Uncounted bands that went on to garner international fame got their first airplay on KTRU and its kindred stations. Confining KTRU to the Internet, where it's rather difficult to listen to it away from home, does a grave disservice to the cultural environment of Houston, paving over history in that way for which our city is infamous.

Marc
Thursday, 11/11/2010 - 10:15AM

mfeezy - the entirety of KTRU's staff was kept in the dark about this deal. That's where the "sinister" portion lies. The Rice administration decided to sell off the station's tower & frequency without consulting either the student population or the [almost entirely volunteer] staff that runs the station. Students built the station from the ground up, and Rice's actions are not only inconsiderate, but a violation of the trust - as they claim to operate in an open and honest manner.

to bad
Thursday, 11/11/2010 - 10:32AM

Deal is done, and almost all big time transactions have the mislead aspect to them. Rice is mad because:

1. they approached UH

2. UH got over

3. Rice students were left in the dark by Rice BOR.

enough said.

mfeezy's wife
Thursday, 11/11/2010 - 10:35AM

Hey mfeezy, I...umm..need to work on a project tonight. I'll be home late. Don't wait up!

(he approached me first, so it's okay, right?)

KUHF fan
Thursday, 11/11/2010 - 10:37AM

I love KUHF and NPR but something has to be done with that corrupt CEO John Proffitt - who doesn't give a damn what the community wants. The man is lacking integrity, and it's bringing the station down, down, down.

-db
Thursday, 11/11/2010 - 10:40AM

The only issue I have with UH is -- why?

Almost $10 mil to purchase a tool for broadcasting more programming they will need to buy.

It's will dilute their current ratings, which mean nothing (no advertising to sell), and make it even more obvious that they create no real local programming of any interest.

KTRU off the dial will be one less station you can tune to that begs for money.

RICE on the other hand should be ashamed.

They are stealing an "asset" from the students who built it with their own minds and hands, selling it off without even the courtesy of asking.

Secrecy during the negotiations is understandable, but not telling the kids at the station that they were even contemplating the sale is underhanded.

RICE hasn't even THANKED the KTRU staff and alums for their almost $10 mil 'donation' to the general fund -- probably the largest individual student donation to the university in it history.

That the funds are needed to pay for the construction of a new student servery is a poor excuse.

Surely there are donors who would pay for naming rights on a building.

I'm not expecting them to call it the "KTRU Memorial Kitchen"...

BTW -- the students didn't need to be in the dark about the pre-sale inventory process. Only wires leave the station itself - all of the transmission infrastructure is off-campus, and no students ever go there.

Proffitt was a 'major player' in the deal and he came to speak at the protest at RICE with the students? Grrr.

Ahmhip
Thursday, 11/11/2010 - 10:47AM

clr55 thinks it is OK to be crooked, underhanded, sneaky, lying, and fraudulently misrepresenting when running a business. I never ran mine that way, and it was a huge success.

Cort
Thursday, 11/11/2010 - 11:25AM

I'm trying to figure out which part of this depresses me more. the fact that many people are erroneously thinking that the radio and TV stations have any impact on student life (including tuition) at UH, the fact that people still think that "HD radio" is a viable format, or the fact that many of my fellow UH alums apparently can't spell.

KTRU was a vanity project for a bunch of self-absorbed little proles, who thought they were Making An Important Statement by putting the latest avant-garde combo from Reykjavik into heavy rotation. Good riddance to it.

At the very least, having a full-time NPR station in the 4th biggest city in America provides a welcome balance to all that rot going on further down the dial. The classical remains, filling a proven community need. Rice's radio nerds will surely find sanctuary with the Gentle Hippies at KPFT, so everyone's happy.

Now, if the KUHF brain trust could find a way to play jazz and Texas blues late at night, all will be right with the world.

Disappointed Alum
Thursday, 11/11/2010 - 12:00PM

As a Rice alum, I have lost respect for current Rice president Leebron. I now question everything he says. Whether he is getting quoted in the media such as the Houston Chronicle, or he is giving the official party line in Rice University controlled publications that get mailed out to alumni asking for money, he no longer has credibility. Leebron lies.

Gentry
Thursday, 11/11/2010 - 12:01PM

So now administrative staff at both institutions will waste even more time responding to e-mails from torqued off alums and students of both schools. Folks, what it comes down to is that this is the radio business...commercial or nonprofit, it doesn't matter...it's radio. Stations get sold and stations get bought and from my experience in the business there's always a good cover story so that the staff at the station being sold don't complicate the process. Is it right? Who knows. It's the way its done. Get over it. Move on.

Rice Grad
Thursday, 11/11/2010 - 12:04PM

"with the most "egregious" foul being to ask Rice to concoct a cover story to lower-level KTRU employees about why an engineer was doing a physical inventory."

The people at KTRU were not "lower-level employees." They were students operating a student organization that was created and run by students for over 40 years. The relationship of a university to its students is not that of an employer to its employees. The university is supposed to manage student organizations in trust for the students who pay tuition to attend the school, not sell its (donated) assets out from under them.

Foz
Thursday, 11/11/2010 - 03:35PM

you go mfeezy's wife :-)

Action Needed
Thursday, 11/11/2010 - 06:42PM

Khator, Rierson, and Carlucci are three cronies from Univ. of South Florida and they are running UH down by their self-serving and unethical practices. They recruited each other from USF. The BOR members are political appointees with questionable ethics.

There is no checks and balances left in the system...

Get rid of Khator, Rierson, and Carlucci and replace BOR members.

Shem
Friday, 11/12/2010 - 12:22PM

This is much ado 'bout nothing. Confidentiality is part of the process in negotiating such a high profile sale, as are the tactics to handle negative PR. Sorry to say, if you want to be upset, UH is not at fault here. Rice would seem to be more on the hook, and to be honest, not even that much. It is all about business, and nothing was violated in terms of the process.

JC Houston
Friday, 11/12/2010 - 11:07PM

Puh-LEEEZ.... I don't see how this is news, much less a cover story. If there wasn't a level of confidentiality about acquisitions of physical property then competitors/speculators have the opportunity to unfairly drive the price up... I don't see what the problem is. You snooze you loose. If you are interested in protecting taxpayer dollars, why would you advocate such deals be broadcast (no pun intended) to the world prematurely? It's good business practice to discuss such transactions in executive sessions or behind closed doors in accordance with the law, as a matter of due diligence. Let it go.

concerned citizens
Saturday, 11/13/2010 - 03:45PM

As per below link, an Obama commission is now proposing slashing up to $500,000,000 in funding to NPR. Does it really make sense for KUHF to be going into expansion mode in this kind of environment?

/www.radioink.com/Article.asp?id=2018013&spid=24698

Don
Tuesday, 11/16/2010 - 03:19AM

The deal is not wasteful. Here are some facts that may ease the mind of some of you.

http://app1.kuhf.org/houston_public_radio-news-display.php?articles_id=1282158381

not buying it
Tuesday, 11/16/2010 - 12:13PM

to Don: That's re-posting old info from mid August. It purposely goes out of its way to avoid all kinds of issues. Splitting KUHF's current audience across 2 stations, while doubling the operational overhead. The staff cuts and downsizing throughout NPR over the last 2 years. The proposed government de-funding of NPR which obama has put on the table since Nov 2. Its a public relations statement encouraging empire building for the sake of empire.

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