Saturday, December 20, 2008

Big Subsidies Required?

It's been a rough year for network programs. NPR recently announced it was pulling the plug on Day to Day and News and Notes. NPR's Bryant Park Project went silent in July. American Public Media just announced it is shutting down Weekend America. Public Radio International cancelled Fair Game back in June. CPRN, the Classical Public Radio Network, shut down earlier this year as well.

All of these programs have something in common besides being cancelled in 2008. All of them received subsidies from the Corporation for Public Broadcasting.

CPB's total investment in these programs from FY 2004 to FY 2007 was $8,200,000. FY 2008 is not included here since CPB's annual report with audited numbers is not yet available.

Subsidizing the start-up of network programs is usually a sound investment of CPB money. Successful network programs, even with budgets in the millions of dollars, deliver significant audience and revenue to stations for less expense than most locally produced programs.

Successful network programs are also supposed to sustain themselves when the subsidies go away. The failure of so many programs should serve as a warning to the entire public radio system that something is seriously wrong with the industry's spending model.

Here are the CPB subsidy numbers for the top two recently cancelled programs.

Weekend America: $4,200,000 (2005-2007)
Day to Day: $2,400,000 (2004-2007)

Day to Day produced five original hours of programing each week. Weekend America produced two original hours of programming each week. The millions of dollars provided by CPB were just a portion of each program's budget.

Both of these programs were designed to grow public radio's audience, attract new donors to stations, and attract new underwriting dollars to the industry. In short, they were supposed to succeed in the open marketplace and could not.

Day to Day was reported to have 2 million weekly listeners. Weekend America had 657,000 weekly listeners. We are now learning that those audiences were not big enough to sustain the costs of producing those programs.

This lesson must be applied to all efforts to attract new audiences. The current public radio spending model is not sustainable.

Getting new listeners is always more expensive than keeping the listeners you have. Getting new listeners requires making new investments in infrastructure and unproven content. Failure has to be funded in order to find what works. That's expensive.

On the revenue side, demographically and psychographically different audiences will not generate as much listener-sensitive revenue as the current audience. Public radio already has the audience most likely to make substantial donations to support programming and operations. The current audience is also probably the only audience for which the public radio underwriting model works well.

The working assumption for serving new audiences has to be "spend less and expect to earn less." Based on events of the last two weeks, it also appears that big subsidies might always be required to keep those new services on the air.

CPB's Annual Reports are here

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Anonymous honeybunny said...

they got me hooked up on those two programs, so now i am two great show less in my weekly radio listening... sheeet... and this after Bryant Park and Fair Game left the airwaves, do they really want to lose me as a listener?

maybe i should start loving diane rehm and her long pauses... thats all i´m left with...

1:39 AM  
Anonymous Julia Barton said...

I knew we had something in common other than just being cancelled. Thank you for laying it out so clearly.

1:06 PM  
Anonymous Anonymous said...

There are a few things I would also look at regarding the failure of these shows....

Station carrage... How many member stations with the approprate format could have picked up these shows yet chose not to?

Weekend America may have had less than 700,000 listeners, but what was their market penetration compaired to This American Life or Prarie Home?

If these shows were designed to bring in new audience and new underwriters, but did not get buy in from program directors - that is something that needs to be looked at.

I use to listen to the Weekend America pod cast - but had I not been an existing pub radio junkie looking for more pod casts, I would have *never* heard of it because it my local station did not carry it for a long time.

When my local station did pick up Weekend America, I did not hear one promo or notice any significant effort to introduce the audience to the show. There was a brief mention in my member email and one day it just appeared on the Saturday line up. Its kind of hard to grow an audience if people don't know who you are.

The biggest problem I have with public radio is that they don't seem to get marketing. While I understand many stations and shows don't have serious marketing budgets - this "if you build it they will come" mentality DOES NOT WORK in today's media landscape, there is just too much noise trying to grab my attention..

To simply say these new initiatives were too expensive and nobody listened may work for network TV, but its too simplistic of an arguement compaired to public radio, where there are many barriers to audience adoption of new content.

8:15 AM  
Anonymous Anonymous said...

It is also worth noting that the funding model will continue to be broken as long as NPR and APM continue to pay some of their employees $200, $300, and $400,000/year.

Unlike many startups that operate on a shoestring, APM and NPR build into their programs some pretty crazy salaries.

Sure, it not every employee (or even most), but listeners and perhaps the pubcasting world in general would be shocked by how much money some of these folks make.

I feel bad for the staff of Day to Day -- the real fault lies in DC and the crazy salary structure that has made funding pubradio more and more difficult.

8:13 PM  
Blogger RadioSutton said...

Actually, I'm making the point that Day to Day had two million listeners, which places it high in the audience rankings among public radio programs and that wasn't enough to sustain the program. If two millions listeners isn't enough, what is?

Here's the problem with new program development. When multi-year plans for new programs are developed they include subsidies to help start the program. Those subsidies are supposed to be replaced by station fees and corporate underwriting as the program gains audience and becomes more valuable to listeners and business supporters.

I've seen lots of those multi-year plans and the new revenues are always grossly over-estimated. It's easy to justify a big budget when the revenue projections aren't real.

The other problem comes from competition for space on station schedules. Here and Now is a less expensive alternative to Day to Day and it generates similar audience response. There are cheap, even free, alternatives to Weekend America for weekends. I'm not suggesting they are better programs, but stations on tight budgets have to make choices.

Outside of the news magazines and a few select programs like Car Talk and A Prairie Home Companion, competition in the marketplace gives stations the power in the program-fee equation.

9:55 PM  
Anonymous Anonymous said...

Thanks for clarifying your points. Now certain things make more sense.

8:18 AM  
Blogger theneedledrop said...

Though you did discuss several issues in this post, would you say that overspending is one of the major issues at the end of the day?

11:22 AM  
Blogger RadioSutton said...

Overspending is always a problem, or should be, especially in a non-profit environment. Instead of talking about overspending, I'd rather talk about how the current model for creating programs and running stations is too expensive given the changing media marketplace. That model worked 20 years ago but it won't work 5 years from now, if it is still working at all. It is unlikely that public radio will aggregate audiences of 5 million or more to any one program or service again. Smaller audiences mean smaller chunks of revenue. We might come up with creative ways of reaggregating content and audiences to sell underwriting or appeal to foundations, but I believe the big ticket revenue deals will be harder to come by. It would be folly to budget as though they will be there.

4:17 PM  
Anonymous Selena S-D said...

I am sorry to see Weekend America go. Besides having consistently interesting stories and neat ways to incorporate listener input on air, it also provided a great venue for freelancers and young producers like myself.

I have one question about all this budget business. I remember on the Weekend America podcast Target was mentioned as the "founding sponsor." I remember taking note of that and wondering if corporate sponsorship offered a cushion of financial support. Clearly it didn't prevent the show's cancellation, but is this kind of sponsorship common practice with podcasts and emerging shows?

2:12 AM  
Blogger Aaron Read said...

John, I think you put too little emphasis on the core problem in your article and only briefly touched on it in your comments: there's too much programming for too few hours.

While there's 24 hours every day, seven days a week...really only about four hours a day on weekdays, and maybe six hours per weekend, are really "prime time" hours that you can get serious listenership in. In other words, you've got morning drive, afternoon drive, and early-mornings on maybe midday on Saturday.

And there is a tremendous amount of competition for those timeslots. D2D and N&N have to compete against Here & Now, Fresh Air, and countless local call-in talk shows that span the 12n to 2pm gap between Diane Rehm/OnPoint and TOTN.

Weekends are no better: APHC, WWDTM, Car Talk, TAL, Whad'ya Know and, to a somewhat lesser degree, WESAT/WESUN, were all trying to get that coveted lunchtime-Saturday slot.

I think there is way too much duplication of programming targeted at the same timeslot (Morning Edition and Bryant Park Project AND The Takeaway!?!?) going on and some of this winnowing is not a bad thing, even if it is painful.

However, I don't deny that the current funding model is probably unsustainable, too.

4:50 AM  
Blogger RadioSutton said...

Aaron -- your point is well taken. There's probably too much programming being offered. Some of that is the nature of an open marketplace and much of it is providing stations with options.

It took a while for Car Talk to establish its current carriage. When Wait Wait as created, a lot of people thought it was frivolous because there was already a Saturday quiz show, Whad Ya Know?

So while there is probably too much programming in theory, I don't think there is a national mechanisim for deciding where the line on program creation should be drawn. That would be dangerous.

Even projects like Bryant Park and the Takeaway are necessary to keep the industry competitive. Just maybe not both at the same time. But again, who decides that?

Your point about there being relatively few prime time hours is dead-on. Those are the hours that generate sufficient business support to sustain national programs. Shows designed to air outside those slots should have lower underwriting expectations. Unfortunately, they frequently do not and then actual revenue can't support the production budgets.

8:43 AM  
Anonymous Jim Klingenfus said...

Isn't the method of estimating audience fundamentally flawed?

12:42 PM  

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