How to support public broadcasting? Part 2
What can be done — and is being done — to raise support from nonfederal sources

This Briefing pulls together articles from Current that examine funding prospects beyond the federal budget.

Since congressional leaders warned that Congress would "zero-out" federal aid to public broadcasting late in 1994, the field has accelerated its efforts to raise funds from other sources — and to cut back costs to operate more efficiently.

Nonfederal sources already provide more than 80 percent of the revenues that run public TV and radio [table].

Pubcasters are giving attention to all the nonfederal options:

More and more of the money is "audience-sensitive" revenues, meaning that it goes up when the audience does. To a point, this encourages programs that people want, but it also frequently brings up thorny questions of purpose. The audience [Current Briefing] has to be big enough to attract support somehow, but small enough to justify aid from government and donors. Because of the costs of direct-mail, salaries for underwriting salespeople, premiums to hawk to donors, and the costs of running auxiliary businesses -- a growing percentage of money is spent on just raising more money, as in any nonprofit. In that respect, nothing beats government aid.

The result looks like commercialism [Current Briefing] to some people and sound "marketplace" thinking to others. Station execs feel pressure for more popular programming and also spend larger and larger portions of their budgets and management time on fundraising rather than on providing programs.

Obvious opportunity: ancillary products

During the federal aid crisis of 1995, critics like Sen. Larry Pressler (R-S.D.) argued that pubcasters were overlooking a "treasure trove" of moneymaking options. Pressler claimed that products linked with the Barney & Friends public TV show had sold "billions" and could support the rest of pubcasting. But licensing industry experts said Barney royalties actually never had that much reliable potential. Consultants could find no simple, guaranteed way to raise more private money to replace the threatened federal aid.

Pubcasters are going after product sales, anyway, and earning smaller but substantial sums. Videocassette sales, for instance, make up an important part of budget growth at the PBS network for 1997, though only a small part of the growth can be applied to public TV. As in any business, much of the revenue must be spent to generate more sales.

Though it's been successful, PBS Home Video had a major tumble. Its first distributor, Michael Nesmith's Pacific Arts Video, lasted from 1990 to 1993, and fell apart when Pac Arts fell behind in paying royalties. PBS and producers filed suit, but it boomeranged, resulting in a $47 million civil judgment against PBS in 1999. PBS meanwhile in 1994 delegated the retail portion of its home video business to Turner Home Entertainment -- now Warner Home Video. The PBS Home Video start-up with Nesmith helped set a $20 price for documentary cassettes, though competing video distributors initially objected the market was being undercut and PBS was using unfair leverage to sign up programs for Nesmith.

PBS is now trying a similar partnership in audio with Warner Bros. Records to issue soundtracks and performance recordings under the label PBS Records, instead of letting all proceeds of broadcast-related discs go outside public broadcasting.

In major cities, public TV stations have lent their names to chains of educational book/video/toy stores in exchange for a piece of the proceeds. Though the original Learningsmith chain has uncoupled from public TV (except in Boston), the Store of Knowledge is still expanding with stations as part-owners.

Stations also have been ingenious at local fundraising. The statewide network in North Dakota, for instance, earned a good part of its keep for several years by running bingo parlors.

Memberships and pledging

Viewers and listeners remain one of the largest and fastest-growing categories of backers, accounting for a quarter of station revenue in fiscal year 1999.

Though member revenues continue to grow, there are signs of trouble in public TV, where the number of members slipped slightly in the late 1990s. PBS scheduled a "summit" meeting in April 2001 to deal with interrelated problems in membership and pledge drives.

To build their member lists and replace drop offs, the stations continally seek new members through pledging, which they conduct with increasingly sophisticated techniques. After years of pledge specials starring WWII-era musical acts, they're airing rock concerts — and even a ballet based on Elvis Presley music — aimed at a new generation of donors.

For some stations, members provide more than half of their revenues and the stations have extended pledge drives longer and longer. Analysts are seeing diminishing returns from pledging, however. A number of public radio stations began experimenting with shortened on-air pledge drives several seasons ago, and in spring 1998 more were trying out reduced pledging.

In public TV, particularly, premiums have become a major reason for giving for some pledge-drive donors. The trend is not without problems, says the former top fundraiser at PBS, Mike Soper, who believes premiums have become high-priced retail sales, undercutting their value as thank-you's for philanthropic giving.

Members or donors have long been assumed to make up about 1/10 of the audience, but the Audience 98 research project found that 1/3 of public radio listeners at any given moment are donors. Still, the smaller percentage (actually averaging about 1/12, according to a recent study) does reflect how many people listen fairly often (at least once a week) and have signed up as members within a year.

Stations have enlisted computers to monitor pledges as they are called in, so they can fine-tune the pitch going out over the air. And public TV invested some $2 million in new, highly flexible database software that they hope will boost fundraising efficiency and reduce annoyances for station members. Small stations are sharing the staff and expertise for direct mail fundraising in projects like Membershop, a CPB-funded "service bureau" for public radio that gives them economies of scale.

The Development Exchange, based in Minneapolis, helps spread fundraising expertise in public radio. The field is developing new premiums and benefits to encourage memberships through a group called the Listener Alliance, and adding new fundraising projects like the annual Valentine's Day campaign with roses as premiums. They develop good-natured geographic rivalries to spur inter-station pledging contests.

In the funding struggle, stations guard viewer/listener contributions as their own, and expect independent producers to raise their funds from businesses and foundations. Woe to the producer of Inspiration of Painting, who asked viewers for aid.

Major gifts

In 2003, CPB launched a major new CPB initiative, involving half of public TV stations, to raise more money through "major gifts"— gifts of more than $1,000. Fundraising specialists had were already advising stations to seek major donors and bequests — mainstays of many other kinds of nonprofits. Experts shared 10 basic suggestions for stations starting to seek major donations.

In 2004, public TV stations planned to raise money by promoting a deluxe Mediterranean cruise, with fans enjoying the company of PBS stars including Jim Lehrer. Stations and program producers have offered tours for years to raise funds and cement bonds with donors.

Underwriting

The really profitable thing that commercial broadcasters do, on the other hand, is to sell airtime for advertising, and to some people that seems the obvious answer for pubcasting, too. They lobby for loosening of guidelines for underwriting credits, to make them more valuable to corporate donors/advertisers, and some large stations have extended the length of underwriting credits to 30 seconds to make them more valuable. Though 30-second spots are not common on most stations, half of the stations believe they should have the right to air them, according to an extensive 1998-99 study by PBS.

Though some spots look very much like soft-sell commercials, they generally are shorter, more restricted in what they can say, and worth a lot less to businesses than actual commercials. Well aware of that, some stations considered asking Congress to let them accept commercials two nights a week in an experiment called PTV Weekend, proposed in 1995 by Lawrence Grossman, a former PBS president. As of 1997, the plan had not gone anywhere.

Other pubcasters want to hold the line on commercialism [Briefing on the commercialization of public TV], especially when credits would appear to sell snack food adjacent to children's programs or alcoholic beverages.

Besides seeking to loosen somewhat the underwriting rules, fundraisers are experimenting with other ways to boost corporate donations. They're giving underwriters "value-added" marketing services, off-the-air.

And stations are collaborating in sales. Public TV stations are trying to sell more regional and multicity underwriting spots, and public radio stations in a community are joining together to sell local underwriting jointly.

In 1997, four major public TV producing stations joined PBS in a new PBS Sponsorship Group, which aims to bring in more program funding by coordinating sales teams that previously were competing. And cable ad entrepreneur Robert Williams started a new rep firm to sell "corporate support announcements" for stations.

State and local governments

Though stations in some states continue to get a substantial amount of aid from state government, particularly where there is a state-owned network, the general trend has been for states and local governments to reduce aid and even spin-off their control of pubcasters to nonprofit corporations. In Maryland, for instance, a state commission recommended in 2003 that the state spin-off Maryland PTV.

 

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To Current's home page

Current Briefing: The struggle over federal aid since 1995.

Current Briefing: What pubcasters are doing to increase efficiency.

 

Web page revised April 12, 2001
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