TRENTON — Gov. Chris Christie may be getting New Jersey out of the TV business by signing a deal with WNET Channel 13 to manage the state’s public TV network, but the state could still be on the hook for millions of dollars annually to support the operation. Public Media NJ, the new nonprofit subsidiary created by WNET, is...
New Jersey Network will be run by a newly created subsidiary of WNET, Channel 13 in New York. TRENTON — Gov. Chris Christie may be getting New Jersey out of the TV business by signing a deal with WNET Channel 13 to manage the state’s public TV network, but the state could still be on the hook for millions of dollars annually to support the operation.
Public Media NJ, the new nonprofit subsidiary created by WNET, is allowed to walk away from the deal in the case of "adverse economic change," a review of its contract with the state shows.
The contract, which became public last week, shows for the first time that New Jersey — and not WNET — incurs all the financial risk in this new venture.
What this means is simple: If Public Media NJ doesn’t hit its financial targets, WNET can walk away from a deal that took six months to reach, or state officials can write a check to keep it at the helm.
"They must provide 180 days notice, during which time the state could issue a new request for proposals to find a new partner, or renegotiate the terms of the agreement with Public Media NJ," Treasury spokesman Andy Pratt said. "We could renegotiate the agreement in such a way that they got the revenue they needed. A lot of things can happen in 180 days."
According to WNET president Neal Shapiro, Public Media NJ’s projected $9 million budget is built on three revenue streams: $2.2 million in federal money, $2.7 million in rentals fees from outside vendors, and $4 million in private donations. If those totals fall short of $6.75 million, however, the state could end up making the difference if it wants to keep WNET. And that $2.25 million would be in addition to the $2 million a year New Jersey will spend to maintain the broadcast licenses and transmission towers.
Shapiro said the language is intended to protect the new entity from crisis, such as the elimination of the Corporation of Public Broadcasting, something the Republicans in Washington have often proposed. He also said Public Media NJ doesn’t have to take advantage of the clause.
"If the CPB money went away and a New Jersey philanthropist filled in that money, we’d be ok," Shapiro said.
The newly-released contract reveals Public Media NJ will be a subsidiary of WLIW, the former independent Long Island public broadcaster that is now a subsidiary of WNET. The contract does it include language stipulating that money raised in New Jersey will stay in New Jersey — a phrase Shapiro repeated several times at an Assembly hearing last week.
"I don’t know that it makes a difference," Shapiro said, noting that PMNJ will have its own board of state residents. "There will be built-in oversight."
In addition, there is nothing in the contract requiring Public Media NJ to have a home base in New Jersey.
The contract also calls for Public Media NJ to pay WNET "at commercially reasonable terms" for its assistance in developing and launching Public Media NJ’s website and for other back office services. In essence, WNET will make money from Public Media NJ at the same time that it has a guarantee that it will not lose anything in the deal.
The proposed contract must be vetoed by the Legislature or it will automatically go into effect July 1. The Senate will hold a hearing Thurday, while the Assembly Budget Committee heard testimony for more than five hours June 9.
According to several who testified at that Assembly hearing, the $2.7 million in rental fees for tower space and unused broadband space — money paid to New Jersey that the state will pass along to Public Media NJ — should remain stable. But the $2.2 million Corporation for Public Broadcasting grant will probably decrease dramatically once the management deal is in place.
The CPB grant, awarded to the New Jersey Public Broadcasting Authority, the board that retains ownership of the FCC licenses, is based on New Jersey Network’s $19 million budget. According to CPB spokeswoman Nicole Mezlo, state grants are typically about 15 percent of a station’s operating budget. With a budget half the size of NJN’s, Public Media NJ can expect a significantly smaller grant, she said.
"It is seed money, to leverage other revenues," she said.
Shapiro told lawmakers that there might be additional CPB money targeted to collaborations. Mezlo could not confirm that statement.
"Currently CPB’s primary concern is for continued public broadcasting service for the citizens of New Jersey," she wrote in an email. "Once the state has made a decision about the governance structure, we will then consider the appropriate role for CPB in support of service to New Jersey."
Pratt said state officials recognized the need to protect their potential partner from unexpected financial issues.
"It is in everyone’s interest to make this agreement work," Pratt said.
Many lawmakers have a different opinion.
"I don’t think the deal, as structured, is in the best interest of the state of New Jersey," said Assemblyman John Burzichelli, (D-Gloucester). "I like the people at WNET ... but this operation should be run by New Jersey people, based in New Jersey, for New Jersey."
Assemblyman Paul Moriarty (D-Gloucester) called it "a bad deal."
"It’s an open-ended check that the state will be on the hook for," Moriarty said. "And yet we will have lost an independent news gathering operation that focused on New Jersey issues."