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Alternative Sources of Funding for Public Broadcasting Stations

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Alternative Sources of Funding for Public Broadcasting Stations Alternative Sources of Funding for Public Broadcasting Stations This report is provided by the Corporation for Public Broadcasting (CPB) in response to the Conference Report accompanying the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2012 (H.R. 2055). June 20, 2012 Table of Contents I. Introduction ................................................................................................................... 1 II. Executive Summary ....................................................................................................... 1 III. The Role of Public Broadcasting in the United States ................................................... 5 Mission .................................................................................................................... 6 The Role of CPB ...................................................................................................... 8 Education ................................................................................................................ 8 Local Service and Engagement .............................................................................. 11 Serving the Underserved ....................................................................................... 12 News and Public Affairs ......................................................................................... 13 History, Science and Cultural Content .................................................................. 15 IV. The Organizational Structure of Public Broadcasting ................................................. 16 System Funding ..................................................................................................... 16 V. The Effect of a Loss of Federal Funding on the Public Broadcasting System ............. 21 VI. Prior Efforts to Identify Alternative Sources of Revenue in Lieu of the Federal Appropriation ............................................................................................................. 24 VII. Discussion of New and Existing Sources of Funding ................................................. 26 New Funding Options ........................................................................................... 26 Commercial Advertising ........................................................................... 26 Television ...................................................................................... 28 Radio ............................................................................................. 30 Retransmission Consent Fees ................................................................... 33 Paid Digital Subscriptions ......................................................................... 35 Digital Game Publishing ........................................................................... 36 Existing Funding Sources ..................................................................................... 36 Digital Online Advertising ......................................................................... 37 Events......................................................................................................... 37 Renting Donor Lists to Direct Marketers ................................................. 38 Tower Leasing ........................................................................................... 38 Merchandise Licensing and Retail Product Sales ..................................... 38 Merchandise Licensing ................................................................. 39 Retail Product Sales ...................................................................... 40 Content Licensing ..................................................................................... 40 On Demand Distribution ........................................................................... 41 Production Services ................................................................................... 41 DVD and CD Sales ..................................................................................... 41 Various Other Sources of Revenue ........................................................... 42 Spectrum Sales ...................................................................................................... 42 Political and Issue Advertising ............................................................................. 43 VIII. Promoting Efficiency in the Public Broadcasting System .......................................... 44 IX. Conclusion ................................................................................................................... 47 Appendix I. Introduction and Summary .........................................................................................52 II. Analyses by Area .......................................................................................................... 55 TV & Radio Advertising .........................................................................................56 TV Advertising ............................................................................... 57 Radio Advertising .......................................................................... 72 Merchandise Licensing ......................................................................................... 85 Retransmission Consent Fees ............................................................................... 92 Digital Online Advertising ..................................................................................... 97 Events................................................................................................................... 105 Paid Digital Subscriptions ................................................................................... 109 Renting Donor Lists to Direct Marketers ............................................................ 114 Tower Leasing ...................................................................................................... 115 Production Services ............................................................................................. 118 On-Demand Distribution ..................................................................................... 120 Content Licensing ................................................................................................ 126 DVD/CD Sales ...................................................................................................... 128 Retail Product Sales ............................................................................................. 129 Magazine Publishing ............................................................................................ 132 Book Publishing ................................................................................................... 135 Mobile Device Apps ............................................................................................. 139 Digital Game Publishing ...................................................................................... 147 Educational Services ............................................................................................ 149 III. Station Viability Analysis (Hamilton Place Update) ................................................. 150 Executive Summary ............................................................................................. 151 Minimum Operating Cost Threshold ................................................................... 164 Long Term View – Minimum Operating Cost ..................................................... 170 Minimum Profitability ......................................................................................... 175 Summary of Results ............................................................................................. 176 I. INTRODUCTION This report is provided by the Corporation for Public Broadcasting (CPB) in response to the Conference Report accompanying the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2012 (H.R. 2055). The conferees requested that CPB provide a report to House and Senate Committees on Appropriations within 180 days of enactment of the Act on alternative sources of funding for public broadcasting stations in lieu of federal funding. II. EXECUTIVE SUMMARY The public broadcasting community is fully aware of the fiscal and budgetary challenges facing the federal government. Since the recession struck in 2008, public broadcasters have seen their own budgets ravaged by declining contributions from individuals, corporations, foundations, universities, state and local governments—and a $50 million reduction in federal support in the last two years alone.1 More than 60 percent of public television and radio stations are operating with budget deficits today.2 Public broadcasters sympathize with the Congress‘s effort to find economies, efficiencies and cost savings. As this report shows, public broadcasters are making similar efforts. In response to Congress‘s request for this report, CPB engaged the management consulting firm of Booz & Company to explore in depth possible alternatives to the federal appropriation, to identify existing funding sources that could yield any significant new revenue, and to consider the impact of the loss of the federal appropriation on the public broadcasting system. In the course of this effort, CPB and Booz & Company consulted with the leaders of the national public broadcasting organizations, officials
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