Following Pando’s exclusive report on a secret financing deal between public broadcasting officials and the nation’s leading anti-pension activist, officials from PBS have announced they are returning the $3.5 million from the Laura and John Arnold Foundation.

In a breaking-news story published Friday afternoon, the New York Times credited PandoDaily for breaking the original story and ultimately for public broadcasting officials’ decision to return the money:

WNET, the New York City public television broadcaster, said Friday that it will return a $3.5 million grant it received to sponsor an ambitious project on public pensions amid charges that it solicited inappropriate underwriting for the series.

In the absence of the funding from the Laura and John Arnold Foundation, the project, called “Pension Peril,” will go on hiatus…

Earlier, following a critical report on Wednesday by David Sirota on the website PandoDaily, WNET officials said they were comfortable with the foundation’s funding. Mr. Sirota sharply criticized WNET for accepting the Arnold Foundation money because John Arnold, a former hedge fund manager, has financially backed efforts to convince municipalities to cut public employee pension benefits.

Earlier today, Pando reported on WNET and Arnold Foundation officials refusing to disclose the full details of their contract to allow Arnold to fund PBS’s anti-pension reporting. This deal appeared to violate PBS’s own clear conflict of interest rules, as Arnold has been the lead financier of the nationwide political campaign to cut retirement benefits for police officers, firefighters, teachers and other public workers.

Additionally today, public broadcasting officials sent a letter to outraged viewers that they would continue to accept Arnold’s money and continue to promote his anti-pension agenda.

This afternoon’s announcement is a reversal of that decision.

You can read Pando’s “Wolf of Sesame Street” exclusive that broke this story here. It details how public broadcasting officials skewed the series to echo Arnold’s anti-pension message, failed to explicitly disclose the funding arrangement and then refused to release the terms of their agreement with Arnold.

Update: PBS ombudsman weighs in, describing the news as “[a] very positive development… [Pando's story] shines a light, once again, on what seems to me to be ethical compromises in funding arrangements and lack of real transparency for viewers caused, in part, by the complicated funding demands needed to support public broadcasting, and in part by managers who make some questionable decisions.

[Illustration by Hallie Bateman]