Thursday, October 03, 2013

Transition for NPR Highlights Major Industry Issues - Part 1: Financial has a good read on some of the financial and membership issues facing NPR as it looks for its next leader. 

On the financial side, Current reports that NPR had its best fundraising year ever in 2013, yet ended the year with a $3 million budget deficit.  It was a remarkable comeback given that the project budget deficit was $6.1 million. 

The lesson here is that public radio doesn't have a fundraising problem, it has a spending problem.  This is not only true for NPR, it is also true for many public radio stations.  Many stations are raising more money than ever, but struggling to make ends meet.  Additional investments in digital and local news aren't coming close to paying for themselves.

According to Mark Fuerst, who is leading the Public Media Futures Forums, this financial pressure is greatest on medium and smaller stations.  Revenues are growing for the largest 50 stations, but the smaller stations are struggling. That has to change soon or these stations will find themselves facing the same situation as NPR -- having to shed staff to make ends meet. 

How does it change?  Here are two necessary steps.

1.  Restructure how money changes hands in public radio.  After salaries, national program acquisitions are typically the largest line item in a station's budget.  The basis for those programming fees is an economic model rooted in 1990s media market dynamics not today's digital media marketplace. Restructuring the public radio's internal economic model could free up much needed resources for the smaller stations while ensuring that NPR and other national program producers have the resources needed to create high value programming, programming that generates loyal listeners and surplus revenues nationally and locally.

2.  Start applying financial success metrics to digital and local content efforts. Station managers need  to know how much public service these activities really provide.  They need to know if there are real returns in terms of public service provided and net revenues against direct expenses.  They need to know how close these activities come to breaking even.  And if they aren't at least breaking even, they need to know how much subsidization each activity requires. Having a handle on those metrics will help managers make smarter financial decisions whether there is a financial crunch or not.

In the next posting, thoughts on the troubled NPR-Member Station relationship.


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