Friday, March 06, 2009

Not All Public Radio Stations Control Their Destinies

It’s time for many public radio managers to address this critical question.

Is my public radio station worth saving if most or all of the subsidies went away?

The reality is that as many as half of all public radio stations probably couldn’t survive the loss of all state, university, and federal support. In essence, these stations do not have control of their destinies. Many of them could be wiped out with the single stroke of a pen, as happened to WMUB in Ohio. But it doesn’t have to be that way.

Since its inception, DEI’s Benchmarks for Public Radio has tracked a metric called the Community Financial Support Index (CFSI).
CFSI measures a station’s ability to cover its operating budget, minus direct fundraising costs, with net fundraising revenue. An index of 100 means a station could fund is current operating budget on net revenue from individual giving, underwriting, event revenue, etc.

Every year, DEI Benchmarks show the median station CFSI is around 65. That is, the typical station could cover just about two-thirds of its operating budget, not including fundraising costs, with community financial support. Put another way, the typical station would have to cut up to a third of its budget to survive the loss of subsides.

Most stations probably could not survive cuts that deep if they happened all at once. But many of these stations could survive if their dependence on subsidies were gradually reduced.

History shows that more listeners will step up and give more money when subsidies go away. Stations such as KUNC in Greeley and WYPR in Baltimore (formerly WJHU) effectively turned independence from university control into significantly greater levels of listener support.

Once heavily dependent on university subsidies, these stations were forced to take control of their own destinies. They accomplished that through improvements in fundraising results an, sd spending practices. Losing their remaining subsidies today would be very difficult, but like other high-performing stations, they are positioned to adjust and survive.

KUNC and WYPR, along with WRNI in Providence, are rich with lessons on how public radio stations can become more important to and sustained by the communities they serve.

Unfortunately, the public radio industry treats these success stories as anomalies to be avoided. Greater independence from tax dollars and greater long-range security for the station’s core service are shunned in favor of maintaining the status quo.

If public radio has learned anything over the past 6 to 10 months it’s that economic change is here and the status quo won’t cut it anymore.

Is your public radio station worth saving if most or all of the subsidies went away? Assuming the answer is “yes,” then it is time to take control of your destiny and start planning on greater self-sufficiency.

Jay Clayton contributed to this article.

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Blogger Aaron Read said...

Oy, I don't even want to think what our CFSI is. But that's for another day at the moment...possibly later this year (and that's not a "premonition of doom" statement)

One question I had: you mentioned KUNC, WYPR and WRNI. All three of those are, if I recall correctly, fairly large stations in fairly large markets. Not top-10, obviously, but they're not rural by any stretch.

I know WRNI had, for many years, suffered with a mediocre signal (particularly after dark) and that WYPR has had to contend with a general economic malaise that Baltimore has consistently slipped in and out of. I don't know too much about the Raleigh-Durham area, though. Anyways, point is that I can imagine lots of specific points that these stations had to overcome that make their success stories that much more meaningful.

But I'm wondering how "save-able" the small rural stations are (not surprising, since my station is one of them). These stations often still have comparable costs (NPR demands we all have five FT staff no matter what) but they have a much smaller pool to get donors from. And a much smaller pool of potential underwriters.

At the moment, underwriting in all markets, large and small, seems to be plummeting by huge percentages (speaking of which: is that really the case, or are news outlets exaggerating for journalistic impact?) and while listener donations are up, a fundraiser increase by 10% doesn't make up for an underwriting drop by 40% if both sides are supposed to contribute roughly equally to your budget.

This seems especially tough since my instinct is that you can more quickly add new underwriters than you can add new listener donors. Getting a donor to give is a long-term relationship that tends to take lots of convincing but can lead to a long-term commitment. Underwriting is more business less emotion, so it's more subject to a business's bottom line.

Another big question that's particular relevant to us, but I'd be curious to know if it applies to other stations, how does one adapt the "grow or die" axiom of radio at a time like this? I just read in Current that pubradio should step up and fill the local news void by newspapers. Many pubradio stations are, or soon will, be getting new FM station Construction Permits from the FCC thanks to the Oct.2007 filing window. These things could bring in lots of new revenue but they will cost lots of money before that happens. Is there a universal lesson to apply there, or is it more case-by-case?

11:01 AM  
Blogger RadioSutton said...

Thanks for the thoughtful post Aaron. You hit on some very important issues.

Regarding the 3 examples in my post, they all turned around due to their independence. They succeeded by managing what was under their control: spending and fundraising. External factors really weren't holding them back.

Yes, rural stations have a bigger challenge. If public radio wants to act like a system, stations that can be more self-sufficient would give up funds to support those whose market conditions make self-sufficiency unlikely or impossible.

As subsidies shrink, and they will shrink in the future even if Congress says yes to the new request for emergency funds next year, CPB will have a make a choice between universal service and locally-owned universal service.

My guess is that, despite the rhetoric, more local stations will go the way of WMUB. They will be operated by out-of-towners that hire a few local staff for news and fundrasing.

That might even be an ideal model, even if it sounds like Clear Channel comes to public radio.

Management and "back room" costs are absorbed by a larger operation that uses community support and grant money to fund activities specific to the local community. You need less staff and less physical space. That saves money. The staff you have is 100% focused on the community either through content or fundraising.

It's not the way we do business today, but it is a model for ensuring local service even when when ownership is not local.

The question is, can public radio do it better than Clear Channel?

2:48 PM  

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