After pledging transparency, PBS hides details of new deal with billionaire owner of NewsHour

By David Sirota , written on March 7, 2014

From The News Desk

“The American public called PBS the most trusted source for news and public affairs programs and the most 'fair' source for news coverage.” - PBS, February 20, 2014
Last month, in response to Pando's revelations that anti-pension mogul John Arnold secretly was financing PBS's "Pension Peril" series, the Corporation for Public Broadcasting issued a scathing report demanding immediate reform. Criticizing "the lack of transparency" at PBS, CPB’s ombudsman Joel Kaplan declared that public broadcasting outlets must let the public access details of their financial dealings.

So how's that new commitment to transparency going?

Here's how: Once again, a PBS flagship station is in the process of negotiating a deal with a politically active mogul. Once again, the deal involves the NewsHour -- the same iconic PBS program that stealthily promoted Arnold’s anti-pension programming. And once again, PBS is refusing to disclose the deal's financial details to the public.

The major difference this time is that this new story of secrecy isn't about who funds the journalism on the NewsHour. It is about who actually owns the NewsHour.

* * * *

Most Americans likely assume that the NewsHour (which, after all, is made with support from viewers like you) is actually owned and produced by PBS. It is an understandable assumption considering PBS's own president declared that the NewsHour "is ours, and ours alone," and further considering that the program receives millions of public dollars every year.

However, since 1994, the NewsHour has been produced and primarily owned by the for-profit colossus, Liberty Media. Liberty, which is run by conservative billionaire John Malone, owns the majority stake in MacNeil/Lehrer Productions - the entity that produces the journalistic content of the show. While other standalone public television projects are often produced by small independent production companies, the NewsHour stands out for being owned by a major for-profit media conglomerate headed by a politically active billionaire.

But now that ownership is about to change. According to an internal memo sent to staff by NewsHour's founders and minority owners Robert MacNeil and Jim Lehrer, ownership of NewsHour will soon be transferred from Liberty Media to Washington, D.C.'s PBS member station, WETA.

We have concluded that the time has come to find a new, long-term home for The NewsHour. The current operation has worked beautifully because our long-time partnership with Liberty Media has been as perfect as any such relationship could be. When Liberty acquired its majority interest in MLP 18 years ago it was done with the agreement that editorial control and management would always rest with us--Robert MacNeil and Jim Lehrer, individually. Liberty has honored that arrangement in such a way that has made it possible for us to have the independence we all have enjoyed all these years.
Despite the chummy nature of the letter, and the apparent generosity underlying the deal - Liberty is handing the NewsHour to PBS! - the deal raises a huge number of questions.

For one thing, why is the for-profit Liberty Media agreeing to transfer ownership of a privately owned, $28-million-a-year asset to a PBS member station? Is it an altruistic move on the part of John Malone or might there possibly be some financial or tax benefit to Liberty? Also, during Liberty's ownership of NewsHour, exactly how much money from "viewers like us" (and taxpayers like us) went from PBS to NewsHour and into the coffers of Liberty? And how much control did Liberty have over NewsHour's journalistic output?

Following Pando's reporting on John Arnold and WNET, CPB ombudsman Joel Kaplan agreed that "without actually being able to examine" the documents involved in PBS transactions, "there is no way to know" if PBS content is being unduly manipulated. Referring to WNET’s move to give Arnold back his money, Kaplan added: "I hope that the decision to return the money was not done to avoid disclosing the original contract between the (Arnold) foundation and WNET - that agreement still needs to be disclosed."

Ultimately, he concluded that "in the interest of objectivity, balance and transparency, such agreements should never be confidential." (Three weeks after the ombudsman published his findings, WNET and the Arnold Foundation are still refusing to release the terms of their multi-million-dollar agreement.)

Despite this new commitment to transparency, it seems nothing has changed at PBS. Over the past month, as part of our continuing investigation of the public broadcasting system, Pando has contacted top officials at PBS, WETA and the Liberty-owned MacNeil-Lehrer Productions requesting basic information about the upcoming transfer-of-ownership transaction.

For example, we asked how much the NewsHour is being valued at for purposes of a potentially lucrative tax write-off for Liberty Media. We also asked exactly how much taxpayers have spent over the years subsidizing a Liberty Media property that now may be transferred to the public, at a potential cost to the public.

Despite the clear transparency demands from the CPB, neither PBS nor Liberty would disclose any details of the deal. Nor would PBS, MacNeil/Lehrer or WETA spokespeople commit to disclosing any details in future. Even the most basic questions about the current funding and editorial direction of NewsHour were met with vague answers, or no answers at all.

Officials refuse to release details of NewsHour's existing financial arrangement

With public broadcasting officials refusing to answer questions about its pending ownership transfer deal with Liberty Media, Pando requested basic information about the existing financial and editorial contract between Liberty Media, MacNeil-Lehrer Productions, WETA and the hundreds of PBS stations that air the NewsHour. More specifically, we asked exactly how much money taxpayers spend each year to subsidize the show's whopping $28-million-a-year budget, and what kind of editorial control PBS has over the Liberty Media property.

In response, a MacNeil-Lehrer Productions spokesperson revealed that "PBS funding represents roughly half the PBS NewsHour revenue budget." By that count, every year approximately $14 million of public money goes to the for-profit Liberty Media's subsidiary through the non-profit PBS. However, the spokesperson provided no documentary evidence of that, nor did she even permit Pando to review the existing contract between WETA and Liberty Media. When asked how that squares with the CPB's demands for transparency, the MacNeil-Lehrer Productions spokesperson said: "Contracts between funders and producers are not public."

Similarly, Pando asked how much - if any - profit Liberty Media takes every year out of PBS's multi-million-dollar public subsidies to the NewsHour. We also asked for documentation showing whether or not the tax-deductible contributions the show solicits from "viewers like you" are actually being used to subsidize the private profits of Liberty Media. And we asked for financial documents showing whether or not the NewsHour's recurring deficits - which it has cited to get more public subsidies - factors in profit margins for Liberty Media.

A MacNeil-Lehrer Productions’ spokesperson asserted only that the for-profit Liberty Media "takes no profit from the ongoing operation of the PBS NewsHour program."

If it is in fact true that Malone and the publicly traded Liberty Media takes no profit from its $28-million-a-year property, this would seem to violate Liberty's fiduciary responsibility to maximize profits on behalf of its shareholders. It would also run counter to sentiments expressed by those with knowledge of the Liberty-NewsHour relationship.

For instance, in 1994, Variety cited a "source familiar with the negotiations" between Liberty Media and MacNeil-Lehrer Productions saying that John Malone "may want the good-will this buys him, but he is also in this to make money."

Likewise, in contrast to MacNeil-Lehrer’s “no profit” assertion, just months before his company purchased its controlling stake in MacNeil-Lehrer Productions, Malone himself publicly declared that “Nobody wants to go out (and) invest hundreds of millions of dollars of risk capital for the public interest.” He added: “One would be fired as an executive of a profit-making company if he took that stance.”

Again, MacNeil-Lehrer Productions refused to provide any documentation outlining the current financial arrangements between WETA and Liberty Media. Thus, as the CPB ombudsman said in his recent report, "without actually being able to examine" such financial documents "there is no way to know" if any of MacNeil-Lehrer Productions' “no profit” assertions are accurate.

Officials refuse to provide evidence of guarantees for editorial independence

As mentioned above, the NewsHour was the program that broadcast the infamous “Pension Peril” segments without explicitly disclosing that anti-pension billionaire John Arnold was funding the series. In light of that being discovered during the “Wolf of Wall Street” investigation, Pando requested information from WETA, PBS and MacNeil-Lehrer Productions about editorial control, and whether Liberty and/or Malone have been exercising such control over the NewsHour.

In response, a MacNeil-Lehrer Productions spokesperson told Pando that the letter from MacNeil and Lehrer announcing the transfer of ownership “makes it clear that Robin and Jim have editorial and management control, and that Liberty Media has honored this agreement.” The spokesperson also forwarded two 20-year-old press releases in which Liberty Media and MacNeil-Lehrer Productions rhetorically promised to preserve editorial independence.

Yet, when asked for proof that such independence is contractually guaranteed and protected in Liberty Media’s original agreement to purchase the NewsHour, the spokesperson declined the request.

This is particularly relevant not just because of the NewsHour’s role in the recent “Wolf of Sesame Street” scandal, but also because of the long-term political activism of both Liberty and Malone.

According to the Sunlight Foundation, Liberty Media employees have spent roughly $2 million on campaign contributions in the last 20 years. Most of that money has flowed to Republican candidates. That includes top Liberty executives like Greg Maffei being major financiers of the Republican Party’s national campaigns. Meanwhile, the Public Accountability Initiative's LittleSis reports that in the same time period, Malone spent almost $200,000 on campaign contributions, mostly to Republicans. Malone also sits on the board of the right-wing Cato Institute, whose employees are periodic guests on the NewsHour.

At the same time, studies suggest that the NewsHour has often artificially narrowed the terms of the political discourse that it permits in its broadcasts - and, perhaps not so coincidentally, in ways that seem congruent with Malone's conservative politics.

In a 2006 analysis of PBS programming, the watchdog group Fairness and Accuracy In Reporting found that "Republicans outnumbered Democrats on the NewsHour by 2-to-1" and that "public interest groups accounted for just 4 percent of total sources." Similarly, in a 2010 analysis of PBS programming, FAIR found that "Republicans outnumbered Democrats among live (NewsHour) guests by a 3 to 2 ratio" and that overall, the show’s "sources (are) drawn largely from a narrow range of elite white male experts."

When asked why Pando's request for public information about editorial independence on public broadcasting’s flagship news program was being declined, the MacNeil-Lehrer Productions spokesperson insisted that the public broadcasting agreement between Liberty and MacNeil-Lehrer Productions "is a private partnership.”

In other words: this deal is between PBS, WETA and Liberty Media. Viewers like you should keep their noses out -- but keep the donations flowing.

As of publication time, Liberty Media had not returned a call for comment (our initial attempt to reach them was ~2 weeks ago). We'll continue to push PBS and Liberty for answers on the details of the NewsHour deal, and will update this article with any further comment we receive.

Letter from Robert MacNeil and Jim Lehrer

[Illustration by Joren Cull for Pando]