THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: SUNDAY, June 19, 1994 TAG: 9406180244
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY MARK O'KEEFE, STAFF WRITER
DATELINE: 940619 LENGTH: VIRGINIA BEACH
And Robertson, 64, is not finished yet.
{REST} The June 8 announcement that Dorothy Hamill and her touring figure-skating show are joining Robertson's IFE came amid reports that CBN, his nonprofit religious organization, plans to build a theme park in South Hampton Roads and launch a cable system in Vietnam.
Robertson birthed his empire in 1960, when, for no money down, he bought a Portsmouth TV station that had gone off the air. He gave it an ambitious name, the Christian Broadcasting Network, and said he was ``going to trust the Lord for all the support.'' The stated purpose of CBN was to spread the gospel and prepare the world for the Second Coming of Christ.
That CBN has done, using tax-exempt money to bring the message of salvation to 70 countries. In the past three years alone, ``over 50 million have received Jesus Christ,'' CBN says. Through its outreach to the needy, Operation Blessing International Relief and Development, more than $80 million has been distributed to help the poor since 1978.
What has also emerged is an umbrella organization for 10 business ventures, with plans for more.
The theme park, similar to Universal Studios in Orlando, Fla., is projected to go up in either Virginia Beach or Chesapeake. The ministry owns hundreds of undeveloped acres in both cities.
Robertson is negotiating with the Vietnamese government for CBN to start a 28-channel cable system in that country. He says he has already shaken hands on the plan with the Vietnamese minister of communications.
Other CBN-backed businesses include an airplane charter company, a travel agency, an Oklahoma radio station, a four-diamond hotel, a news service that competes with the Associated Press and a proposed retirement community to open in either Virginia Beach or Chesapeake.
CBN is lobbying Chesapeake City Council members for a tax break on the retirement community, The Founders Village. The other ventures are subject to the same taxes other businesses pay, says the public accountant who audits CBN.
The most successful CBN business, The Family Channel, was sold to a Robertson-led company, International Family Entertainment. Robertson also bought into a vitamin and cosmetics company that was birthed by CBN. Both transactions have gotten considerable scrutiny.
So what is CBN, a religious ministry or a business empire?
The answer is both, drawing criticism from some business and religious observers who say Robertson should choose one or the other and not mingle the two. But for Robertson, business and religion are inseparable.
He sees God's work as transcending the spread of the gospel and the feeding of the poor. Being a true believer means taking risks, making money and influencing the culture, according to Robertson.
As Robertson approaches retirement, the businesses take on more urgency. They are expected to fund CBN after he leaves.
Other evangelists have wedded business and religion, but few to the extent Robertson has. Rex Humbard, one of the first televangelists, put his church in the girdle business in the 1960s. The Christian Science church has published The Christian Science Monitor since 1908. The Rev. Sun Myung Moon's Unification Church owns The Washington Times.
The Business Coalition for Fair Competition, a national group, says businesses bankrolled by Robertson's charity tilt the entrepreneurial playing field against those who don't have monthly, tax-exempt contributions to start their companies.
Others attack on ethical grounds, saying donors think they are supporting a purely religious organization.
``People have given all these years to what they thought was a ministry. Now he's turned it into a business. That's what's wrong,'' said James M. Dunn, executive director of the Baptist Joint Committee for Public Affairs, a Washington group that frequently opposes Robertson's conservative politics.
While Robertson has always been an entrepreneur, a turning point for CBN's business strategy came in 1988.
Robertson ran for president and left ``The 700 Club,'' the ministry's flagship TV show. Donations plummetted 36 percent, according to CBN financial data.
Hundreds of employees were laid off. If it weren't for revenues made by a for-profit company, the Family Channel, the forerunner to International Family Entertainment, the damage would have been significantly worse.
``It was an eye-opener of how dependent we are on Pat and the money he raises for the ongoing ministry,'' said Harold Bredesen, a CBN board member who has been with Robertson from the beginning. ``We realized our need for alternate sources of funding.''
Robert M. Prigmore, CBN's chief financial officer from October 1992 to March 1994, said the strategy is to reduce dependence on donations by creating businesses that will make money for the ministry.
``What are they going to do when Pat Robertson is gone?'' Prigmore said. ``Pat's not going to live forever.''
Assessing the success of CBN's business strategy is difficult.
In the fiscal year ending in March 1993, donations and gifts accounted for $97.1 million - nearly 70 percent - of CBN's revenues. The rest came from investment income, ``broadcasting, programs and other,'' according to CBN's latest annual report. No detailed breakdown is provided.
CBN declined requests for a complete list of its business subsidiaries, the amount of charity money invested in them and their financial return to the ministry.
The annual report does, however, provide partial outlines of the financial picture.
For example, CBN's hotel, The Founders Inn and Conference Center, lost $12.3 million during its first 23 months, ending March 31, 1993.
In its first 11 months, it had $4.2 million in revenues but $7.4 million in expenses; $2.5 million in interest and taxes and other costs and $1.4 million in depreciation and amortization, for a total loss of $7.1 million.
In its second year, it had $6.2 million in revenues, $8.1 million in expenses, $2 million in interest, taxes and other and $1.7 million in depreciation and amortization, for a $5.7 million loss.
In a separate statement, Gene Kapp, a CBN spokesman, said the 249-room, four-diamond hotel will break even financially in 1994.
U.S. Media Corp., a holding company for five CBN ventures, lost $10.9 million during a two-year period ending March 1993. In the fiscal year ending in March 1992, U.S. Media reported revenues of $10.7 million and expenses of $14.4 million, a $3.7 million loss.
The next year, it had revenues of $13.6 million and expenses of $20.8 million, including the donation of a radio station and other one-time charges totaling $3.5 million. That's a loss of $7.2 million.
Start-up losses for hotels and media companies are common. The hope is they will become big moneymakers, like The Family Channel.
Launched in 1977 under the name CBN Satellite Service, the Family Channel boomed as the nation's first satellite-based basic cable network. After 13 years, it became so large and lucrative it risked the wrath of the Internal Revenue Service, which prohibits business operations from becoming bigger than their nonprofit parents.
So in 1990, CBN sold the network to a company headed by Robertson and his son, Tim, for $250 million. CBN remained a stockholder. Two years later, Robertson took the company public.
For its part, CBN says it has received $600 million in cash, notes, stock, debt assumption and guaranteed air time for ``The 700 Club.''
With that money, CBN gave Regent University, also founded by Robertson, a $117 million endowment, the largest gift ever given to a private school. Proceeds from the Family Channel deal have also been used to invest in more businesses, including Kalo-Vita, the vitamin and cosmetics company that Robertson bought into, with CBN as his partner.
Art Davis, executive director of the Business Coalition for Fair Competition, said the board of his Alexandria-based organization opposes such arrangements.
Davis said CBN can use tax-exempt donor money to secure ``venture capital'' when other entrepreneurs have to turn to more difficult sources, like banks.
``It's the ability to underwrite a venture for a longer start-up time and to devote more resources than the competition can,'' Davis said.
About $10 million of the initial Founders Inn price tag of $36 million came directly from CBN donors, said CBN officials when the hotel opened in 1991. Much of the rest of the money came from the sale of the Family Channel and other investments, according to CBN.
Prigmore, the former chief financial officer, said no ``donor money'' has been used for the CBN businesses that are for-profit subsidiaries, like U.S. Media Corp. Instead, money comes only from profits made on previous ventures, like the Family Channel, he said.
The great risk in all this is losing the trust of donors, said Arthur C. Frantzreb, a management consultant to hospitals, universities and other nonprofit organizations for 46 years. He said most of the people who give to CBN think the charity is devoted exclusively to religion and would be upset to discover resources are going into businesses.
``Poor Little John Q. Public who is sending them $100 or $1,000 a year isn't able to digest consolidated financial reports they send out,'' said Frantzreb, who is based in McLean. ``I think there will be a real problem coming up.''
CBN fundraising appeals emphasize the religious work of the ministry and rarely, if ever, mention the business strategy. For example, in an ``urgentgram'' mailed to CBN donors just before Easter, Robertson asked for a gift of ``$100 or more over and above your regular giving'' to air a Hanna-Barbera animation, ``The Easter Story,'' in media markets covering 70 percent of the nation.
``Millions of young people will hear the gospel, and we're believing for tens of thousands of decisions for Christ!'' the letter said.
In fine print, at the bottom of the letter, is the statement made on all written appeals: ``All funds are used for designated projects and for the world-wide ministry of CBN in accordance with Ezra 7:17-18.''
Ezra was a Jewish prophet, whose writings can be found in a book of the Old Testament.
Ezra 7:17-18 (New International Version) says, ``With this money be sure to buy bulls, rams and male lambs, together with their grain offerings and drink offerings, and sacrifice them on the altar of the temple of your God in Jerusalem. You and your brother Jews may then do whatever seems best with the rest of the silver and gold, in accordance with the will of your God.''
CBN would not elaborate on the meaning and application of those Bible verses.
Frantzreb said that if ministry money is being invested into businesses out of fear that donors will not sustain CBN, that's ``a vote of nonconfidence'' in the religious mission of the organization.
Many nonprofit organizations have prospered after the departure of their founders without relying on businesses to fund them, said Frantzreb, citing the Boy Scouts.
But TV-based religious ministries are unique, said Quentin J. Schultze, an expert on televangelism and a professor at Calvin College in Grand Rapids, Mich.
History shows that those who rely solely on donors risk extinction.
Schultze sees CBN's business ventures as not only wise, but ``very ethical.'' He said critics of Robertson's motives have ``too limited a notion of ministry.'' Robertson's theology, he said, considers investing as much a part of God's work as preaching.
Statements and writings by Robertson support Schultze's view.
In his 1982 book, ``The Secret Kingdom,'' in which he lays out his principles of life, Robertson wrote about the responsibility to invest, calling it ``the Law of Use.'' He based his law largely on Christ's parable in which a shrewd investor was praised and a timid one condemned.
``Despite our preconceived attitudes toward social justice,'' Robertson wrote, ``God's Law of Use controls the ultimate distribution of wealth. We must be willing to take the world as He made it and live in it to the fullest. For He says, in fact, that if we are willing to do that - if we are willing to use what He has given us - we will have more. But if we are not willing to use what He has give us, we will lose it.''
In a 1993 interview with Investors' Business Daily, Robertson said, ``I am by nature an entrepreneur and have enormous faith in God and in the future.''
He also told Cablevision magazine last year that ``my special skill is with stocks and bonds and financial deals.''
In a sense, CBN's burgeoning business empire may be ``the most important aspect of what Mr. Robertson has been doing,'' Schultze said.
When Robertson ran for president, he said he was not a ``televangelist,'' but a Christian businessman.
``People laughed at his comment,'' Schultze said. ``But in retrospect, it was truthful.''
{KEYWORDS} CHRISTIAN BROADCASTING NETWORK PROFILE BIOGRAPHY
by CNB