Monday, January 26, 2009

Renewing the Call for Self-Sufficiency

It was Day One of a public policy class at the University of Maryland. The professor offered this challenge to the students.

"You have just started as the head of a government agency fighting the drug problem in America. What is the first thing you do?"

The class was evenly split with half wanting tougher laws and more jails. The other half wanted to invest in urban renewal and education programs.

"You're all wrong," said the professor. "Your number one priority is to get funded again next year. Otherwise you are out of a job."

I was reminded of this after hearing that WMUB, the NPR News station in Oxford, Ohio, will no longer be operated locally. The station’s licensee, Miami University is pulling $500,000 in annual cash support due to major budget shortfalls of its own. All staff members are losing their jobs. The station will be operated by Cincinnati Public Radio.

Not surprisingly, some in public radio reacted by suggesting that the industry needs even more subsidies from the federal government.

That’s the wrong approach. Public radio needs to become more self-sufficient. Its service to nearly 30 million Americans each week is too valuable to leave vulnerable to a single stroke of a pen. That's not fair to donors either.

Self-sufficiency is a path public radio actually started down in the Reagan era. The industry was pushed further down that path in the mid-1990s. Remember Newt Gingrich? Remember the phrase "glide path to zero?"

Helping to lead the charge, and working against the logic of that Public Policy 101 professor, was CPB. Significant funds were invested in developing concepts, tools, and training to help wean stations from big subsidies. Those resources still exist in the form of Strategic Financial AudiGraphics and the Community Financial Support Index in DEI’s Benchmarks, and a still relevant 1995 report by David Giovannoni called "Licensees at Risk." These resources can help public radio today.

There are more WMUB's waiting to happen. Many more. And they aren't just small market stations or university licensees.

The problem isn't fundraising as much as it is spending. Too many stations are over reliant on the subsidies they receive from CPB, their state governments, and their universities.

In a dispassionate discussion, it can be argued that the WMUB outcome is the right one. WMUB's listeners will still be served with public radio's most important programs. The cost of serving those listeners is much lower. Cincinnati Public Radio should be strengthened.

Maybe this is the future of public radio. The consolidation of costs by having fewer independent operations is an option. It would be a very messy and painful transition.

It also goes against the belief that localism is important and, perhaps, the future of public radio in the new media marketplace. If localism is important, then self-sufficiency is the ultimate option.

Many stations currently in trouble can be saved if they are willing to back away from the subsidy trough. It won't be easy and they would need help.

Self-sufficiency doesn’t have to mean eliminating government support for public media. CPB could benefit greatly from helping these stations reduce their reliance on all subsidies, including federal support. That would free up sufficient money to fund efforts to reach new audiences and fund national projects for current audiences. Right now, there's really not enough to go around. It would be a great role for CPB to be advancing the industry rather than just sustaining the status quo.

Self-sufficiency is as important as growing the audience because it cements the foundation for future service. It’s not an easy choice, but it is the right one.

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9 Comments:

Blogger Aaron Read said...

To be honest, John, I think you just posted a sanitized "wine and cheese" version of the same b.s. rant that JJ Jackson posted (and got linked in Current.org) not long ago.

I wrote a scathing reply on my own blog, which Current declined to link to. :-P

But here's the core point: if the government is going to continue to tie the hands of non-commercial radio stations, by drastically reducing their earning power via underwriting content restrictions, then government has to accept the responsibility of hefty perpetual subsidies.

If anyone REALLY wants public radio to become self-sufficient, then the handcuffs have to come off and non-comms have to be able to run ads just like everyone else.

I suspect that most public radio people (myself included) find that concept abhorrent. But that's what fiscal self-sufficiency means.

11:24 AM  
Blogger RadioSutton said...

Aaron, are you saying the your station has tapped its full fundraising potential and the only way it could survive without CPB money is to sell outright commercials? Could you please provide supporting data?

12:47 PM  
Blogger Aaron Read said...

Well, I wouldn't call it my station, but I'd go one further. Forget CPB money, without substantial subsidies from our parent college, we couldn't survive, period.

Hell, John...YOU told us why regular fundraisers wouldn't work on WEOS. And I agreed with your logic.

While your strategies have helped us greatly in increasing our annual listener contributions, we're still only pulling in about one-fifth our annual budget from listeners, and another fifth from underwriting.

I'm of the opinion that if we had a full-time salesperson to solicit underwriting, we could probably increase that one-fifth up to about half our budget...but that's probably it. And, of course, we'd have the added expense of paying that salesperson.

We'd still need CPB money to cover the gap. Or money from our parent college, which not every station has the luxury of falling back on.

But that's not really the point. The point is that I'm very, very tired of people saying that public radio needs to be weaned off federal funds. Either this country cares about more than the almighty dollar when it comes to media, or it frickin' doesn't.

I don't deny that Jackson is lying sack of s**t who conveniently ignores or twists the facts he doesn't like. But the bottom line is that nobody's saying that a big reason why public radio NEEDS federal funds is that it is, by design, unable to compete in the free market as effectively as its commercial brethren.

5:16 PM  
Blogger Aaron Read said...

BTW, to anyone else reading, John and I have also been having an "off air" conversation about this topic, and I have apologized to him for going off on him when really I'm just kinda stressed out for a variety of unrelated reasons...and John happened to touch on a topic that is a VERY raw nerve for me.

5:30 PM  
Anonymous Anonymous said...

Self sufficiency is only part of the issue. Many stations that have well developed sources of listener-sensitive income are also feeling the pain this time. For them, the problem may have less to do with funding sources and more to do with poor and highly optimistic long-range forecasts...

10:54 AM  
Anonymous RadioAnn said...

CPB, I think it was in 2002, funded a groundbreaking joint underwriting project for the 13 independent public radio stations in Minnesota (that means we are not owned by Bill Kling of Minnesota Public Radio fame). This joint underwriting project got start up funding of perhaps a quarter of a million dollars, I can't remember anymore. It is now self-sufficient supporting a staff of 3 to sell joint underwriting packages across the state of Minnesota. A third of the partnering stations are in the Twin Cities, but most of them in outstate - the collaboration spreads the wealth a bit more evenly - and my former employer, KFAI, actually takes a loss because everyone wants to purchase underwriting there and other stations not at all.

Organizationally, the station leadership believed that all of us was stronger than one of us. Maybe someday Bill Kling will sit at that table too ( I doubt it, but nobody predicted the fall of the Berlin Wall either!)

The localism of public radio has great advantages...but it has one strong disadvantage. We are pitted against each other, even natural allies such as the Independent Public Radio network in Minnesota. It took about 10 years to get everyone at the table, because of leadership's fear of change, because of turf protection, and frankly, because of unambitious minds who would rather stick to the status quo and not rock the boat for fear of pissing off their university regents, or boards of directors, or whoever they have to answer to for their decisions. Lack of leadership and vision are the two greatest problems I see. And be careful what you wish for: do you want a system like the BBC, which is well funded through license fees, but submits to political pressure to censor programming on controversial issues? Diverse revenue streams are not only smart financially - they preserve our editorial independence.

A lot of smart people work in public broadcasting - which surprised me when I took a recent trip to D.C. to meet with folks from the parent organizations. But for some reason member stations think they have to die alone, or be absorbed into a larger public broadcasting Borg that offers little to none local programming, or regional programming that isn't relevant to their listenership. Isn't there anybody out there, a Barack Obama if you will, who can lead us - TOGETHER - to identify a course of action in desperate times?

11:00 AM  
Blogger RadioSutton said...

Thanks for the comments folks. There are some really good insights here. The point about over optimistic projections is very much on target. It's a pretty standard practice in public radio to build an expense budget first and then make the revenue numbers fit. Flipping the process, being conservative about revenue and then building the expense budget would be a good first step toward self-sufficiency for many stations. The first year or two would be painful but the station would be better for it in the long run.

4:04 PM  
Blogger Aaron Read said...

Flipping the process, being conservative about revenue and then building the expense budget would be a good first step toward self-sufficiency for many stations.

In all seriousness, though, isn't this a very slippery slope? I'd be very worried about where one draws the line in the sand that says: "no more cutting the budget, you've hit the minimum quality that we demand". Where does deciding that you only have enough revenue to do a 60% "good enough" job is sufficient? Isn't that cut-your-budget-into-profitability approach exactly what we, in public radio, so often vilify commercial radio for? Being so cheap that they won't invest in "risky" strategies like new shows and new talent?

Or am I already too entrenched in the standard "pubradio GM" way of thinking?

I don't deny that I've been spoiled by my budget/no-budget that I've got at WEOS, but a day of reckoning is fast approaching for us. Fortunately I have a really good boss who sees the value in our college having a public radio station, but that doesn't make the upcoming budget cuts any less painful.

Also, where does the relationship between affiliate stations and NPR come into play. If I needed to slash my budget in a hurry, the biggest and easiest cuts would be Morning Edition and All Things Considered...while they provide good value, they still cost my station a bloody fortune. (and we get them very, very cheap as a grandfathered auxiliary station)

To be fair, it's not just NPR...it's APM, PRI and Pacifica. And other providers as well.

And, in fact, I think that's why I'm inherently uneasy about this concept. The stations are the ones bearing the brunt of the pain (shows are too, but we're talking mostly about stations for the moment). So they have few options beyond carrying a show or dropping it. A or B. And it's very, very easy for that process, en masse, to get very messy and very ugly...and ultimately force a show to either be canceled or have its staff/scope slashed. A situation that might not be necessary if there were a more organized system that could reallocate resources with greater precision.

I guess I'm wondering if the real solution here (impractical as it is) is for NPR to buy up hundreds, or thousands, of affiliate stations and manage the entire affair; make us all NPR employees. Restructure the charter to ensure equal representation for smaller market stations, of course, but also restructure the entire network to eliminate wasteful duplication of programming in the same area/region and focus funds on preserving local staff/shows in ways that maximize the ROI.

Is that just way too "pie in the sky"?

12:00 AM  
Anonymous Anonymous said...

The networks have their own unique money problems, too, right? So maybe the NPR bailout plan is a bit untenable.

CPB might be able to help us by providing incentives for stations to consolidate back office work and focus on distinct local content. So stations like Aaron's (and possibly mine, which I cannot mention btw) might shre an undrwriting and membership team with other stations in his state or region and he would operate a production facility focused on creating unique local content. Expenses could be cut while allowing for distinct local content and unique services. The Minnesota project mentioned in an earlier post seems similar to this.

Technology allows for outsourcing certain activities in a way that builds efficiency and allows for high quality fundraising activities (I can only afford one full-time person in membership, but might be able to draw on multiple people if I shared with others). Maybe this could be like the HD radio project, where CPB doles out money for technology that helps stations share more back office work. Then we could plow our money into programs that serve our market.

There are a number of issues to address with this including all the politics, but it may be worth CPB doing a pilot project focused on encouraging more voluntary partial mergers like this.

5:59 PM  

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