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[Update 14th Feb 2014: Following Pando’s exposé, PBS has announced it will return John Arnold’s $3.5m donation.]

With Pando’s exclusive “Wolf of Sesame Street” investigation triggering widespread outrage towards PBS and the Arnold Foundation, and now being picked up by major media outlets, including two hours as the top story on the Huffington Post, the wolf himself is responding – albeit more with bark than bite.

In a statement issued to reporters and tweeted out by John Arnold, the Laura and John Arnold Foundation that is secretly financing the PBS network’s “Pension Peril” series claims Pando’s report “failed to accurately convey (the) information” the foundation provided to us (note: public broadcasting officials have yet to issue any response whatsoever). However, quite notably, the Arnold Foundation statement doesn’t identify a single factual flaw in our original story, nor does it identify any specific way we did not “accurately” convey its response to our questions. Moreover, in continuing to stonewall Pando’s request for all relevant information, the statement actually serves to reinforce the problems that arise when public institutions do business in secret with private special-interests like a billionaire political activist.

As we reported, and the Arnold Foundation’s statement confirms, WNET officials acting on behalf of the PBS system (heretofore “PBS officials”) initiated contact with Mr. Arnold. As an Arnold Foundation spokesperson told us prior to publication, and as the Arnold Foundation’s new statement in response to our reporting doubly confirms, those public broadcasting officials came to Arnold “with the proposal for the series, having become aware of LJAF’s interest” in the pension issue. The type of “interest” is quite clear from the Arnold Foundation’s website. As we reported, the foundation’s legislative goal is to convince policymakers “to stop promising a (retirement) benefit” to public employees.

As we also reported, and as the Arnold Foundation’s new statement confirms, the Arnold Foundation denies it has any editorial control over the “Pension Peril” series now airing on PBS stations without explicit disclosure of their financial ties to Mr. Arnold. What the statement leaves out is what we reported: the Arnold Foundation told us that it reserves “the ability to stop funding” the series at any time “in the event of extraordinary circumstances.” Such a loosely defined term – “extraordinary circumstances” – seems to give the foundation latitude to cut off funding if it does not like the ideological tenor of PBS’s pension coverage. That, by extension, would appear to represent de facto editorial influence, at the very least.

But here’s where it gets interesting: the Arnold Foundation’s new statement insists that under the formal agreement cemented with public broadcasting officials, public television stations would be permitted to “provide fully independent reporting.” The Arnold Foundation also now says “there are no provisions in the LJAF/WNET grant agreement relating to editorial content.” And the foundation in its statement goes on to disclose more explicit terms of the contract it signed with public broadcasting officials.

What’s revealing is that when Pando specifically asked both the Arnold Foundation and public broadcasting officials to let us review the explicit terms of the agreement, both of the organizations categorically refused our request. They did this, even though the agreement is with a taxpayer financed and therefore ostensibly public institution that watchdog groups insist is subject to basic Freedom of Information Act regulations.

Now, though, as our report today prompts much more serious public scrutiny of the deal, the Arnold Foundation is suddenly selectively disclosing some of the granular terms of the agreement, and implying it let us see those terms before publication, when it did not.

Of course, it is worth noting that while the Arnold Foundation is now abruptly disclosing some terms of the agreement which it previously refused to reveal, both the foundation and public broadcasting officials are still not letting Pando or the general public view the entire agreement. The agreement may, in fact, be written in exactly the way the Arnold Foundation suggests – and even if it was, that does not negate the de facto editorial influence or all the potential violations of PBS and FCC rules. However, the question remains: why are both the Foundation and WNET still refusing to release the full terms of $3.5 million agreement?

That is one of the many queries still unanswered from our original report on the wolf of Sesame Street.

A STATEMENT ABOUT LAURA AND JOHN ARNOLD FOUNDATION’S SUPPORT FOR WNET

February 12, 2014

For Immediate Release

Contact: Leila Walsh
 (713) [Redacted]

[Redacted]@arnoldfoundation.org

Today, David Sirota published an article regarding Laura and John Arnold Foundation’s funding of PBS affiliate WNET’s “Pension Peril” series.  In his article, Mr. Sirota made false and incendiary allegations regarding Laura and John Arnold Foundation’s relationship with this grantee.  Prior to the article’s publication, and at Mr. Sirota’s request, LJAF provided Mr. Sirota with information relating to the WNET grant.  We regret that Mr. Sirota failed to accurately convey this information, which we include below.

WNET independently identified retirement security as an area of interest.  It sought funding from a number of sources, including LJAF, for the “Pension Peril” series. LJAF approved a grant to WNET in the amount of $3.5 million. PBS and WNET are known for their in-depth coverage and objective reporting on a wide range of issues.  We were pleased to support their coverage of a critical issue regarding the fiscal health of our cities and states.

From the outset, LJAF has respected and encouraged WNET’s full editorial autonomy.  LJAF has never sought to influence in any way the content of the series, its programming schedule or any other editorial matter.  Our grant to WNET was made with the explicit understanding that WNET would provide fully independent reporting.  There are no provisions in the LJAF/WNET grant agreement relating to editorial content.

The agreement with WNET is in all respects our standard grant agreement, which LJAF has signed with virtually all of our grantees (for a list of such grantees, see www.arnoldfoundation.org/grants).  As we explained to Mr. Sirota, that standard grant agreement provides LJAF with the ability to stop funding in the event of extraordinary circumstances, such as fraud or the change of leadership of a grantee.

The stated purpose of the grant, as set forth in our grant agreement with WNET, was to “educate millions of Americans on the implications of looming debt and the tough choices ahead as these unfunded liabilities threaten to crowd out funding for education, public safety and other essential public services.” The project sought to “raise awareness of which cities and states are in the direst situations and how further crisis and/or bankruptcy might be averted, with a special focus on leaders confronting the issue head-on, proposed solutions and models of reform.”

The grant was explicitly made to further educational purposes only.  As such, the agreement provides that the WNET grant “will only be used for . . . charitable and educational purposes and will not be used to carry on propaganda, influence legislation, fund any political campaign, influence the outcome of any election, carry on any voter registration drives, or violate any applicable local, state, federal, or foreign law.”

We believe the issue of unfunded pension liabilities is of vital importance and will continue to support organizations that seek to raise awareness of the problem and pursue long-term solutions.

[Illustration by Hallie Bateman for Pandodaily]