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.

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.