To
Current's home pageOriginally published in Current, July 22, 1996
By Jacqueline Conciatore
In a speech last week, NPR President Delano Lewis sought to allay fears that the network will lose sight of its public service mission as it moves into new moneymaking initiatives--even in possible joint ventures with media conglomerates.
After his speech at the NPR Board's July 18-19 meeting in Washington, D.C., the board passed a resolution that directs NPR to develop new revenue-building opportunities. The unanimous resolution said the board would "guide and monitor'' NPR's initiative, and has "full confidence in NPR's internal business structure and staff acumen, as well as management's commitment to move forward with new enterprises in the spirit of public service and without adversely affecting NPR's fundamental mission.''
Lewis delivered a similar message, calling "broad and unsubstantiated accusations'' the recent conjectures that NPR was about to make a deal with a conglomerate like Liberty Media and would jeopardize its soul in the process. "We have said over and over and over again. . . that we are committed to our public-service mission and that we use it to guide everything we do--including business deals with corporate partners,'' Lewis said. NPR will not enter into any deal that "call[s] its principles into question,'' he said.
NPR has stuck with its principles before, he indicated, on occasions when it "left money on the table because we have been asked to link it with coverage of certain issues,'' he said.
There is no offer from TCI, Disney, Microsoft or Liberty Media, he said. But people who run corporations are not devoid of public-service ethics. "I know. I used to be one of them. We should not hesitate to talk with [corporate executives].''
Summing up, Lewis said: "Our board has expressed confidence in NPR's approach. . . Member stations are ready to accompany us. Every group with a stake in the public radio community has been considered in our strategy. We cannot stand still or wish for the way it used to be. We must do this to survive. And we are determined to survive, with our independence and integrity intact.''
Lewis's speech was a response to concerns expressed informally by pubcasters, and in recent New York Times (July 16) and Current (July 8) op-eds by independent producer Sandy Tolan. Tolan's Times piece, titled "Must NPR Sell Itself?'' questioned the motivation of Peter Barton, c.e.o. of TCI subsidiary Liberty Media, in offering to partner with NPR, and the effect on NPR of an alliance with a company that exists to earn the maximum profit for shareholders.
Speculation about a NPR-Liberty partnership has been rife since the Public Radio Conference in May, when keynote speaker Barton urged NPR to be aggressive in capturing a share of new media markets, and offered to lend a hand. Lewis later responded--at the NPR 25th-anniversary party thrown by Liberty--that public radio would want to "stay very close'' to Barton because their destinies "may be intertwined.'' But the sight of a hug between the two CEOs during Barton's keynoter seemed to leave the deepest imprint on the PRC crowd. People refer to it again and again. Peter Jablow, NPR's chief operating officer, even joked recently that Lewis never should have hugged Barton. "But they like each other!'' he explained.
In his speech, Lewis acknowledged the embrace was seen as portentous. "Don't worry,'' he said. "I hug everybody.''
The single person who arguably has the most cause for concern about NPR's editorial integrity, NPR news chief Bill Buzenberg, says he's not at all alarmed by the company's plans to exploit the brand name and forge partnerships. The need for NPR to develop new revenue sources clearly exists, he says. And he is comfortable with the way NPR is proceeding with the enterprises effort. "I haven't seen anything to make me worry, and I don't see anything coming that would make me worry.''
The board provided $1.41 million in startup funds for entrepreneurial projects as part of NPR's $52.3 million fiscal 1997 budget. NPR is projecting $1.57 million in revenues from the unnamed projects.
The network is sensitive to concern in the system about efforts to exploit NPR's brand name and content--concern based on memories of NPR's 1983 fiscal crisis, which occurred after the launch of an earlier batch of new-media ventures. Concern is also heightened by the uncertainty--and in some quarters, doubt--about income potential in new media.
As NPR Enterprises moves forward, the Finance Department will track revenues and expenses very closely, said Betsy Griffith, assistant finance v.p., "so that nothing gets out of control even for a week.''
Jablow said that the revenue projections for this year's projects were conservative, and that any near-at-hand initiatives will be short-term and low-risk. Asked board member Joan Harris: Any projects beyond that threshold will rely on the famous "OPM?'' Most assuredly--"other people's money,'' responded Jablow.
Beyond assurances there was no imminent partnership with Liberty, NPR management gave no indication what kinds of big deals might be in the works. "We really haven't done a helluva lot yet,'' Jablow said during a board committee meeting. NPR has gotten a slew of proposals, "some very interesting, some very bad,'' he said. But the company hasn't yet been "proactive'' in selecting new enterprises.
To get there, it has hired a Coopers & Lybrand consultant, Steve Halliday--described as an expert in helping nonprofits generate new revenue sources without breaching their public-service missions. Halliday also has expertise helping nonprofits with IRS issues. His presentation to the board outlined an "evolutionary'' process that would have NPR license its brand names and undertake new distribution initiatives, with joint ventures down the line. Ultimately, the process would likely evolve a subsidiary controlled by NPR, he said. While a separate for-profit corporation is necessary in part because of tax codes that limit nonprofits' unrelated business income, and that regulate joint ventures, the downside is added administrative burden, he said.
Without defining how, he said the ventures birthing process will ensure that NPR's public service mission remains intact and the network remains fully accountable to the board. All deals and ventures will pass through a quality control filter, and must ensure a worthwhile profit margin without undue risk, he said.
Halliday is also working with two other consultants, one dealing with NPR archives, addressing rights clearances and technical-quality issues and other questions. The other will help NPR evaluate the potential of its brand name, looking specifically at how to protect and enhance it, said Halliday.
Halliday has done work with the National Geographic Society, Jablow said. But Halliday himself would not elaborate on past projects or other past clients.
Another NPR consultant, Ken August, has been hired for his expertise in matching distributors with content providers. He did not make a presentation to the board.
NPR has been trickling out small money-making projects over the past year or so. The latest is a licensing arrangement with Time-Life Music, for a 20-volume compact disc music series that builds on Performance Today commentator Ted Libbey's book, The Basic Record Library. The project is still in the test phase, "to get our feet wet in a licensing deal,'' said Jablow.
NPR is also putting out CDs related to Performance Today broadcasts from Atlanta during the Olympic Games. In a pilot revenue-sharing project, NPR will turn over to a given station $2 of every sale associated with that station. The company will also distribute an unspecified portion of sales to member stations at the end of the fiscal year.
Other NPR discs released since last year have included "Opening Day with Bob and Red,'' based on a 1990 special that Bob Edwards and Red Barber did, and two Performance Today discs, "Christmas Around the Country,'' and "J.S. Bach in Performance.'' NPR is negotiating with Allegro, a Portland, Ore., classical recordings distributor, to begin retail sales. Previously the discs were sold only to stations as premiums.
Movement toward Internet distribution has been slow. But NPR announced at the Public Radio Conference that it had overcome one major hurdle--rights clearances from independent producers--with a revenue-sharing plan. The agreement gives NPR permission to distribute indies' work via new-media outlets for a year and a half, during which time NPR will track activity and revenues. At the end of the tracking period, the two parties will return to the table. NPR and the producers have already agreed on sales thresholds at which NPR starts paying royalties from cassette and transcript sales.
The network is also drafting guidelines for the licensing of stations to distribute NPR programming over the Internet for an experimental, one-year period.
Other projects in the works: a video spinoff of All Things Considered being put together by Video News International in Philadelphia. Board members last month also saw demos of Morning Edition and Talk of the Nation videos. These were not fully produced shows, but footage of the shows as they're being taped--radio on videotape. But a couple of board members, lukewarm about the project, said it was presented only as an example of types of proposals NPR is getting.
NPR issued a timeline indicating it will discuss further plans for NPR Enterprises with stations as they gather for regional meetings beginning next month, and will continue with roadshows in January and February 1997. Management will showcase "efforts to date'' at the next PRC. The discussions with regionals will also address the coming expiration of the member dues lockdown, and NPR's structure as a membership organization, sources say.
current.org