NV89 Performance and Intangible Value After two full years signing on in Reno, the financial results of the operation are significantly below expectations while the difficult-to-quantify benefits are many. Before embarking on the project, the Board was supplied with a briefing document that included the challenges and risks. Some of those challenges have proven to be significant obstacles. Challenges Running membership and underwriting from Las Vegas is simply more efficient given the cost of travel but getting traction in the market has been very tough. Underwriting buys are smaller and making a book of business for a salesperson selling one station has yet to be viable. Membership department in Las Vegas prioritized maximizing revenue from our news format in Las Vegas as a more efficient strategy than hiring a part time person in Reno for FY2017 and FY2018. Prior to sign on we were reasonably confident we could trade out studio space with KNPB Public TV, ultimately their space was too small, and their available office space was rented before our deal was finished. The expense of office rental and studio is significant but does provide our own news bureau in addition to a performance space. Signal strength – we anticipated we could improve the signal and those options have not come to fruition yet. There is a key permit held by KUNR due to expire in January 2020 that will provide options to expand the NV89 signal strength and coverage area if KUNR doesn’t move on it this summer (prior to snow making mountain access impossible). If they do or they don’t, we have options. We were aware of, but underestimated the resistance of, Reno businesses and philanthropic entities to engage with Southern Nevada organizations. The models we worked with prior to launch projected that NV89 could break even by the end of FY2019. Despite the additional expense of rent and studio build out, our expenses were lower than the model but the revenue projected was not realized for the reasons identified above. Those results are compounded by a model that built in projected year over year increases. 1 NV89 Financial Performance Against Original Model Since Inception On the other hand… • Every dollar of NV89 revenue is NEW money • NV89 creates NVPR more efficiency • We are a statewide news service and have fulfilled “eponymous destiny” • The music discovery format contributes to key diversity metrics of audience and community service • NV89 is driving marketing and morale • NV89 is an asset and adds financial value to the balance sheet NV89 is not only a station and it’s not just another NVPR channel, it is a stand-alone music brand for Nevada Public Radio that shows up in the ratings on our HD services and is visible in social media and video. (See Appendix A, a separate break out of accomplishments and the astonishing $30M+ of PR value generated since 2017.) Strategically, the music discovery format is a solid bet to expand our reach and increase our listener base. Financially, though, the value of NV89 and our position in the north may not be so easily apparent. Every Dollar of NV89 Revenue is NEW Money ▪ Consider our most recent $10K grant award from the E.L. Cord Foundation designated solely to NV89 operations. This foundation, with over $57M in assets and $17M in annual revenue, very rarely awards funding to organizations outside of the Reno/Carson City area. 2 ▪ The Wiegand Foundation, with $131M in reported assets and annual income of over $15M, is based in Reno and lists supporting arts and cultural affairs and civic and community affairs as its lead areas of focus. Of the $48M awarded since 2000, 58% ($28M) was awarded to organizations in the Reno/Carson City area, 36% ($17.3M) was distributed among organizations in 13 other states, and 6% ($2.8M) was awarded to organizations in Las Vegas. ▪ $41.6K of the $1.3M generated in Broadcast Underwriting revenue in FY17-18 was generated from our signal in Reno. New relationships with advertisers that did not know us have been cultivated and they are spending marketing dollars on NV89 as the brand becomes more and more identifiable in the market such as Patagonia Outlet Reno, Another Planet Entertainment and Sierra Nevada College. Long-time KNPR advertisers, Caesars and Jaguar Land Rover, are supporting NV89 with product lines located in the north without slicing dollars away from KNPR and the other products that they buy from Nevada Public Radio. ▪ Federal and state funding is marginally increased with the service in Reno and Carson City. It is hard to determine the amount allocable for federal funding, but we receive an additional full slice of the base dollars available from the state, which is about $3K annually. ▪ Messaging on NV89 for our vehicle donation program has attributed to the upswing in revenue from that line item this fiscal year. Over $2.7K has been generated from NV89 listeners. As current NV89 revenue renews and we continue to build the revenue base in Reno, all revenue lines are revenue that we could not generate otherwise. We have added many advertisers that are prospects for statewide marketing and can include Desert Companion and broadcast in southern Nevada. (See Appendix B for a list of new advertisers in Reno cultivated in the last two years.) Contribution to NVPR Overall Efficiency NV89 makes Nevada Public Radio more efficient per covered head. Without operations in Reno, it costs us $3 per covered head to operate the whole of Nevada Public Radio; but with NV89 and northern operations, we reduce our cost per covered head to $2.75. Operating frequency in Reno and Carson City provides an efficient means to acquire new listeners, expand our reach and manifest our destiny as a state-wide institution. Focusing in on the costs surrounding just news content production, we spend $1,786 for one hour of original content produced by the broadcast editorial staff.1 Without Reno, the total cost per covered head is about $0.30. With our presence in the north, we reduce the cost of that original content production to $0.25 per covered head and increase our reach by 16%...getting more for less. The cost per hour of original local content production for NVPR reduces from $1,786 per hour to $80 per hour with Reno (producing 22 hours a day of locally hosted music programming). All original local content production is tightly aligned with our goals and relevance. 1 Includes KNPR’s State of Nevada and original local newscasts. 3 Cost to Operate NVPR Cost to Produce News Cost Per Hour of Original Per Covered Head Content Per Covered Head Local Content $1,786 $3.00 $2.75 $0.30 $3.50 $0.35 $0.25 $2,000 $1,000 $80 $2.50 $0.25 $- $1.50 $0.15 Without With Reno Without Reno With Reno Without Reno With Reno Reno To fully compare the financial viability of Reno operations and the music discovery format, we would need to perform a full analysis of each “division” that carries expense in the Nevada Public Radio portfolio; i.e., State of Nevada, KSGU, KLKR, Classical 897, etc., and appropriately determine what revenue can be attributed to each.2 However, a better approach may be to look at what we would be spending in order to fulfill the strategic goals outlined in our three-year plan to increase content reach and impact by developing new audiences, delivering original statewide journalism, growing a younger and more diverse audience and being a first-mover in NPR/public media initiatives. At a cost of $49 per hour of original programming on NV89, we would be hard-pressed to find cost-effective solutions that not only fulfill the goals, but also provide a multi-platform, turn-key format with quality brand recognition and a deep commitment to diversity. Statewide News Service and “Eponymous Destiny” Having a signal and studios to serve Reno/Sparks and Carson City confirms our commitment to be a statewide public media institution. NV89 serves as a news bureau for northern Nevada and the state capital. There is no other broadcast media company with our statewide reach or distributing statewide original news content. The “statewide” status is key case element in grant applications and a compelling characteristic for funders who seek to bridge the geographic, cultural and political regions of Nevada. When our technical upgrade is complete, we can fully “co-host” our program live from northern and southern Nevada. Being in Reno matters…the Reno metro area was ranked No. 1 nationwide for job growth by the Milken Institute's 2018 Best-Performing Cities List, which was released in January 2019. According to the CES (the Current Employment Statistics program of the Bureau of Labor Statistics), total employment reached an all-time high in April 2019 at just over 255K. In 2018 alone, 29 companies moved/expanded into the area with 15 headquarter relocations. 2 Nevada Public Radio as a whole provides public service to the community; it is not our general practice to subdivide financial analysis to specific stations. 4 Reno/Sparks Metro Area Total Job Growth Source: CES/CPS (https://www.deptofnumbers.com/employment/nevada/reno/) Reno’s economy is more diversified than Las Vegas with the tech industry booming in northern Nevada and its population more educated. 3 There is no reason to predict that migration from California will slow, despite the run up in housing costs and rents in the Reno area. Education Graduate Degree Bachelors Degree Associates Degree Some College High School Graduate 9th to 12th Grade Less Than 9th Grade 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% Las Vegas Reno Income and Property Value Las Vegas Reno Median Household Income $56,699 $61,360 Median Property Value $245,500 $329,000 Property Value Growth 7.5% 10.5% Source: DataUSA (https://datausa.io/profile/geo/las-vegas-nv/?compare=reno- sparks-nv-metro-area#economy) 3 Reno Population.