THE VIEW FROM

WASHINGTON

WSPR MEETING 2007

Bruce TheriaultSenior Vice President, Radio

CPB

FOUR OVERARCHING AND INTERCONNECTED THEMES

• Audience Growth

– Develop strategies & specific steps to

dramatically grow our audiences

– Reinvigorate & reenergize core program

formats & franchise programs

– national & local level

– “Grow the Audience Roadmap” RFP

FOUR OVERARCHING AND INTERCONNECTED THEMES

• Community Significance– Local Efforts

– Measurement Issue

– Community Engagement Initiative

• (Hardwood/NCO)

– Major Giving Initiative for Radio

• Leadership Meeting Spring 08

– My Source (PAI)

FOUR OVERARCHING AND INTERCONNECTED THEMES

• Transitioning to Public Media– New media is new longer new

– A multi-channel, cross-platform landscape

– Audiences increasingly in control - consume & use content

differently

– New business models & job descriptions

– Experiment with new ways to reach & engage audiences

• “fail faster; learn; adapt; and try again.

– Innovations Fund & Public Media Demo Project

• Round 2 deadline Oct 9

FOUR OVERARCHING AND INTERCONNECTED THEMES

• Relevance – How can public radio remain relevant to new America? – Audience mirrors US population in 1980, i.e., 80% white– Enhancing Services to Underserved Audiences RFP

Questions– Audiences that reflect changing public? – Programming to reflect shifting racial/ethnic demographics in

various regions of the country? – Reaching highly educated minorities at the same rate as highly

educated whites?– Strategy to reach new audiences?

Other Issues of Interest

• Digital funding – $5 +/- million round soon

• Arbitron– PPM & higher costs

• SX Licensing– Higher costs & reporting requirements

• CSG - Audience Service Criteria– 9 new stations in FY08 & 2 lose eligibility– CSG calculations/amounts soon

• David Isay – Murrow Award• My Source

My Source

• What It Is - The Approach– Establish national platform adaptable at local level– Build on & complement existing national & local efforts– Provide champions with unified messaging – Demonstrate public media’s relevance & importance to

key internal & external audiences– Honor community connection that listeners/viewers have

to their local stations

My Source

• Why We Need It– Fractured & Decentralized Industry

• Programming, funding, marketing

– Ineffective Appropriation Process• federal, state, local• tactical, big bird, fire engine approach - $1 billion

challenge

– Enter Pat Harrison – • I didn’t know that. Neither does the public.

My Source

• Goals:– Convert users into advocates. Reach influential's &

decision makers from people they trust– Increase both recognition & funding

• How: – Assert PB’s critical role by emphasizing value as most

trusted source for information– most respected source for cultural programming – most pervasive source for lifelong learning– Platform that spans all of our media channels:

television, radio, online

My Source• Transcend traditional divide

– Between radio and TV, & same-market competitors – Focus on mutual gains, not parochial interests

• More than a media campaign – Not a tune-in campaign

• But an overarching strategy to aggregate our success & impact

– Not just media placement • National Center for Outreach • The Harwood Institute • The radio Major Giving Initiative

My Source

• Not an inside the beltway thing– Grounded in station experience

• Station advisory groups as we formed the initiative• Pilot stations • Prove approach at station level

– Activate the creative juices of our producing community

My Source

• Research underpinnings– Focus Groups by Edison

• unbiased and unfiltered information, deeper reporting, educational value of what we do

• Also, appreciation of PB’s ability to connect on a local level

– Core values: • curiosity, substance, credibility, accuracy, honesty,

intimacy, authenticity, and lifelong learning • Keep those in mind as we move to implementation• Are we hitting that mark?

Mapping

Public Broadcasting’s Road Ahead

Overview

• Time of great change in media industry– Tech changes driving development of new business

models – Flattening revenues & increasing costs – Both public tv & radio facing digital transitions

• Needed better forecasts over next decade• Worked with Booz-Allen

– experts in financial analysis with strong media background

• Enlisted broad system input• Booz developed tool - a framework for

forecasting costs/revenues in future years

The process involved a broad cross section of the public broadcasting system

System InterviewsSystem Interviews

Radio Grantees, Advisory Panels, Producers & Other Service Providers

TV Grantees, Advisory Panels, Producers & Other Service Providers

Radio Grantees, Advisory Panels, Producers & Other Service Providers

TV Grantees, Advisory Panels, Producers & Other Service Providers• PBS:

– Andy Russell– Rob Lippincott– John Boland– Jason Seiken

• APTV, Allan Pizatto, • KET, Malcolm Wall • MPT

– Gail Long– Eric Eggleton– George Beneman

• KLRN, Joanne Winik• WGBH, Jon Abbott

• Affinity Group Coalition - Ted Krichels

• OSBE & KQED, Larry Smith

• ITVS - Sally Fifer

• KUHT, John Hesse

• APT, Cynthia Fenneman

• Beta Group/KOCE, Mel Rogers

• Major Market Group, Rob Shuman,

• Thirteen / WNET– Neal Shapiro– Ron Thorpe

KCRW, Ruth Seymour

WNYC, Laura Walker

WUNC, Joan Siefert Rose

OPB (Radio & TV), Steve Bass

DEI: Doug Eichten

JPR, Ron Kramer

CPB Executives and Other Key IndividualsCPB Executives and

Other Key Individuals

• Terry Bryant• Vinnie Curren• Greg Diefenbach• Brian Gibbons• David Liroff• Donald Lockett• Loren Mayor• Marc McDonald• Kathy Merritt• Peggy O’Brien• Greg Schnirring• Sean Simplicio• Mary Ann Salmon• Bruce Theriault• John Thornburg• Tom White• Whitney Waara

• Terry Bryant• Vinnie Curren• Greg Diefenbach• Brian Gibbons• David Liroff• Donald Lockett• Loren Mayor• Marc McDonald• Kathy Merritt• Peggy O’Brien• Greg Schnirring• Sean Simplicio• Mary Ann Salmon• Bruce Theriault• John Thornburg• Tom White• Whitney Waara

• NPR– Dana Rehm– Jackie Nixon

• SRG

– Tom Thomas– Terry Clifford

• APM & MPR, Jon McTaggart

• Public Radio Program Directors

– Arthur Cohen

• KETC– Juanita Hinshaw– Bill Wilson

• IdahoPTV: Peter Morrill

• KEET: Ron Schoenherr

• NHPTV: Peter Frid

• TPT, Jim Pagliarini

• WSIU: Candace Isberner

• WETA: Joe Bruns

• WHRO: – Bert Schmidt– Larry Crum

• Eastern Region Public Media– Georgette Bronfman

• KPBS, Doug Myrland

• WGBH (TV / Radio)

– Marita Rivero– Bob Lyons

• National Federation of Community Broadcasters

– Carol Pierson

– Ginny Berson

First, Booz Allen developed a baseline economic model

MethodologyMethodology

• Focused on trends in revenues and expenses in the public broadcasting system

• Examined station financial data from FY 2000-FY 2005 and reviewed published system assessments to understand key drivers

• Projected growth rates for each revenue source and expense category, based on interviews and research

• Focused on trends in revenues and expenses in the public broadcasting system

• Examined station financial data from FY 2000-FY 2005 and reviewed published system assessments to understand key drivers

• Projected growth rates for each revenue source and expense category, based on interviews and research

2,000

2,200

2,400

2,600

2,800

3,000

3,200

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Notes:Revenues: Total Direct Revenues – Endowment Revenue, Unrealized Investment Gains/Losses, and Asset Disposal, plus Indirect and In-kindRevenue as Reported on AFR Schedule F; excludes non station expenses (addressed later) Includes analog shutdown

*Based on the 2006 funding of $400MM

Source: AFR, BAH team analysis

Station Revenue and Expenses FY 2005 - 2015

$M

MThe baseline model indicates that expenses will outpace revenues by 2011

Content/ Services Content/ Services

Revenue Generation

Revenue Generation

Second, Booz Allen considered the impact of additional service initiatives and revenue generating strategies

Individual Membership

Major Giving

Multicasting

News / Talk Programming

Emerging Media

Increased Royalty Payments

Education Services

• For each initiative, Booz Allen developed assumptions about the costs of different levels of service

• From these assumptions, they developed a range of financial needs for each initiative, based on “Low and High” forecasts

• These costs were then layered on top of the baseline

1. News/Talk Programming: Some radio stations will want to acquire and/or produce more news / talk content

Assumptions

• Assumes rising percent of radio grantees increase their level of news programming over music

• Assumes the types of programming offered by grantees will range in quality as will the level of locally versus nationally sourced content

• Estimates an overall ~10% increase in current hours of news / talk programming

• Segments the station community in terms of size and current education spending

• Assumes a portion of stations within each segment would increase educational offerings

Assumptions

2. Education Services: Many television grantees will want to increase educational offerings significantly and use digital capacity

Radio

• Assumes increasing portion of radio grantees will acquire and/or produce content for multicasting

• Assumes that the types of programming offered on new channels by grantees will range both in quality and mix of local versus national content

• Takes into consideration trends in HD radio adoption

Television

• Assumes combination of HD + SD multicasting capability, with mostly national content used to support new channels

• Assumes some grantees more aggressively increase multicasting, with some portion producing new local HD content to support multicasts

• Assumes savings from analog shutdown begin within 2009

Assumptions

3. Multicasting: With greater capacity in both TV & Radio, stations are likely to increase their level of multicasting

• Segments grantees into groups according to their current approach to new media

• Assumes that some portion will increase emerging media offerings

• Assumes incremental operating expenses and capital investments based on public media “best-in-class” and comparable commercial efforts

– Operating expenses addresses both labor and content needs

• Assumes some portion of emerging media spending will be expected to support education initiatives, so takes into account overlap with separate Education initiative

Assumptions

4. Emerging Media: As new platforms proliferate, more grantees will significantly enhance emerging media offerings

• Assumes additional revenues above those calculated in the baseline are possible because of increased level of service

• Assumes sustained increase in number of contributors and average contribution

Assumptions

5. Individual Membership: Increased service enhancements and member campaigns could enable stations to increase net member contributions

• Assumes additional opportunity exists over what is projected in baseline

• Assumes trends from public radio’s major giving effort begun in 1997 and recent TV major giving campaigns can be extrapolated

Assumptions

6. Major Giving: With increased service, stations could increase level of major giving

ConclusionsConclusions

• Under the baseline projections, public broadcasting will face a revenue shortfall by 2011

• Although this deficit is small in 2011 (i.e., $7 million), it will continue to grow over time

• Assuming that public broadcasting also invests in several new service initiatives, the deficit will grow to ~$300 million in 2011

• The “new” initiatives are not optional – Some are core to public broadcastings service mandate (e.g., education,

news programming)– Some are necessary to remain relevant in a multi-platform era (e.g., new

media investments)

• As it does today, public broadcasters will look to grow revenues from multiple sources to cover the projected shortfall and will look to cut costs wherever possible

• Federal support, however, will remain essential to the health of the system

• Under the baseline projections, public broadcasting will face a revenue shortfall by 2011

• Although this deficit is small in 2011 (i.e., $7 million), it will continue to grow over time

• Assuming that public broadcasting also invests in several new service initiatives, the deficit will grow to ~$300 million in 2011

• The “new” initiatives are not optional – Some are core to public broadcastings service mandate (e.g., education,

news programming)– Some are necessary to remain relevant in a multi-platform era (e.g., new

media investments)

• As it does today, public broadcasters will look to grow revenues from multiple sources to cover the projected shortfall and will look to cut costs wherever possible

• Federal support, however, will remain essential to the health of the system

WSPR MEETING 2007

QUESTIONS

AND

DISCUSSION