Tuesday, February 10, 2009

Self-Sufficiency: Part 2

There are more rumblings that public broadcasting will ask the Obama administration and Congress for federal money to make up for projected shortfalls this year in state subsidies, foundation gifts, underwriting, and membership.

According to Current.org, CPB management recently told its board that up to a fifth of all public stations – radio and TV -- were financially fragile. Management told the CPB board that the financial impact of the economic downturn could be a single year loss of $418 million in FY 09, with $126 million of that coming on the public radio side.

From what we’ve heard, CPB’s numbers are really rough. They are based on conversations with stations not formal research, so its hard to know how accurate they might be. That said, I would believe that a lot of PTV stations are in financial trouble. Who hasn’t seen that coming for years?

This blog is about public radio though, so we will focus on that from here on out.

Four years ago CPB published a report, “Having It All”, on the financial state of public radio stations. That report said 45% of all radio licensees were running at an operating loss. It wasn't a 1 year trend either. Public radio stations were generating less net operating revenue in 2003 than they did in 1999 even though gross operating revenue was up $180,000,000.

One of the key findings in the "Having It All" report was that station spending, not fundraising alone, was contributing to the problem. There were many excellent recommendations in the report, none of which have been acted on.

Asking the government to help financially strapped stations this year might be the only way to keep those stations from going dark or losing their local identity, as is happening to WMUB in Ohio. But becoming more reliant on subsidies is not a long-term solution.

In order to survive in a new media marketplace and a changed economy, public radio stations need to become less reliant on subsidies. They must become more self-sufficient.

Right now, CPB has a chance for a make good after dropping the ball on the “Having It All” recommendations. It can develop incentive programs that encourage stations to operate in such a way the their core services, national and local, will not be threatened by a sudden loss of subsidies. Any new federal money a station receives should come with that requirement. Anything less is a disservice to the station, its listeners, the community of license, and the taxpayers who are footing the bill.

COMING UP THIS WEEK: Why asking for more money from the feds could be bad for healthy stations and membership fundraising programs around the country. And, tapping unrealized membership growth potential in public radio.

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Anonymous Anonymous said...

Do you really think the findings of "Having It All" were related to reliance on subsidies? Weren't a lot of the stations driving the problem actually less reliant on subsidies than the average station? And isn't the current crisis more driven by market sensitive revenue like underwriting? Maybe this comes down to just plain good financial stewardship, no matter what the source of your funds?

1:48 PM  
Blogger RadioSutton said...

I'm looking toward the future here. The "Having It All" report clearly states that at 45% of stations, spending is outpacing operating revenues. That's a recipe for disaster when subsidies go away. And they will continue to go away. Just like public radio people, university people talk to one another. Once a few start cutting public radio funding, more will follow.

Here's why this is important. Stations can spend 100% of a subsidized dollar. But a dollar raised from listeners or businesses isn't a dollar that can be spent because there are fundraising costs. Replacing a subsidized dollar requires raising about a $1.50 in order to cover those fundraising expenses. Losing $100,000 in subsidies means having to raise $150,000 in new revenues. But raising new money takes time and subsidies go away right away. Stations not prepared for this will loses staff, programs, and could very well end up like WMUB --a takeover target. If public radio is lucky, the frequency stays in public radio.

3:14 PM  
Anonymous Anonymous said...

Isn't a fundraising expense of 50 cents on the dollar a little expensive? I find it hard to believe public radio stations spend that much to raise money.

9:32 AM  
Blogger RadioSutton said...

They don't. They spend about 33 cents to raise a dollar. That leaves 67 cents. If you want to replace a subsidized dollar, which has no fundraising expense, you have to gross $1.50. A third-of that, 50 cents, is fundraising expense. So it costs 50 cents to raise $1.50, leaving a full dollar to replace the subsidized dollar.

11:16 AM  

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