For the past few years, when a radio station in a rated market comes up for sale, the Educational Media Foundation (EMF) shows up with a bushel basket of cash making an all cash offer with no contingencies. That makes the seller happy and other commercial stations less so – along with competing radio ministries and brick and mortar churches. EMF primarily runs two Contemporary Christian national networks – K-Love for adults and Air1 for angst filled teenagers.
Mike Novak is the CEO of EMF. He is 68 years old and has decided to retire.
EMF is a non-profit, non-commercial radio operator that owns 397 FM Stations and 387 FM translators according to my count. Some of those translators are leased to other broadcasters and they also lease stations and translators they don’t own. Brian can attest to how fluid their affiliate list is.
They are the second biggest radio station owner in the United States by FCC license count, yet few people in the commercial radio business know they exist or understand how a non-profit religious operator can be so successful. Do they have a billionaire sugar daddy? or is the funding coming from contributions, or are they borrowing money from Goldman Sachs in order to do God’s work? Countess is very curious and so am I.
The organization is rated with four stars by Charity Navigator and they belong to and support the Evangelical Council for Financial Accountability, an organization designed to keep religious charities honest, or at least transparent.
ECFA has a report on EMF
Accounting for non-profits (and governments) is very different than profit making (and profit taxed) organizations. Typically the financial statements focus on cash balance at the start, revenues and their sources, and expenditures. Less emphasis is put on assets other than when a purchase or sale affects the cash balance. Expenses are broken down to satisfy the IRS 990 filing requirements. Since they pay no corporate income tax, the numbers are there to satisfy the IRS that it is a bona-fide charity.
In 2016, EMF took in $170 million in cash donations (and another $8 million from other sources) and spent $113 million, leaving a surplus of $65 million for the year. They ended the year with $521 million in assets and $47 million in liabilities. Most of the debt was tax exempt bonds due in 2018, which they were redeeming as fast as possible. Around 60% of their assets are FCC licenses, not physical buildings or equipment. Upon buying a commercial FM station (above 92 Mhz), they convert the license to non-commercial, but that is reversible if they want to sell the license.
Note that the auditor is a smaller CPA firm called K*Coe Isom, not a large sophisticated audit firm. The audience is not the SEC or IRS, where errors can have serious consequences. The audience is the people donating money, most of whom do not care and would not understand financial statements. They are giving money to spread the love of Jesus and the tangible proof of their gift is there each time they turn on the radio.
The organization was founded in 1981 by a man named Dick Jenkins to run a 10 watt FM station. According to his LinkedIn profile, EMF has a weekly cum (cumulative audience) Of 13 million and GE capital provided loans after they abandoned seller financing. He went to Portland (OR) State University and studied Broadcasting and Psychology.
Dick Jenkins left in 2007 around normal retirement age and continued his radio career running Catholic Immaculate Heart Radio, and is now doing consulting around the world.
Mike Novak was a commercial music radio guy in the Bay Area before joining K-Love in 1998, and was eventually promoted to CEO in 2007. He was just married in January of 2018. In this 2002 interview, he identifies the founder of K-Love as Bob Anthony Fogal who started K-Love in 1980, which Dick Jenkins also confirms, more or less.
Another important player in the history of EMF is Richard Bushell, who pushed the idea of using low power FM translators and was ready when the George H.W. Bush administration relaxed rules to allow satellite fed religious stations without a local studio or business office. He died recently and his widow has filed a lawsuit over a purported verbal “revenue sharing” agreement.