Coonrod & Cox:
Q&A originally published in Current, March 10, 2003
Robert T. Coonrod, CPB's president for five years, puts aside talk of a federal trust fund and other silver bullets that would fix public broadcasting's money problems. In an interview with Current, he says the congressionally chartered corporation will respond to its financial crisis by focusing on three broad initiatives that public TV can address without a miracle: boosting major donations to stations, improving station efficiency and fixing problems in national programming.
Coonrod and Chief Operating Officer Kathleen Cox gave the interview on a quiet February morning, warmly sweatered for slogging to the office through renewed snowdrifts. Current editors Steve Behrens and Dan Odenwald asked the questions. This is an edited transcript.
We’ve all heard bad news about station revenues, but when you heard the consultants sum it up, did that have a physiological effect on you? Did you feel a pit in your stomach, tense shoulders?
Coonrod: I’ve been saying for a long time that there was a financial crisis in public television. I told the PBS Board retreat a year ago I thought we were approaching a tipping point. We had 18 to 24 months to deal with this issue. That was based on our own thinking—it was kind of instinct.
The McKinsey analysis gave more texture to that sense we had.
One of the important things to do was to analyze what would likely happen if public television continued to do business the way it has been operating. If you do a solid analysis, you might find the trends are cyclical. You could just keep running harder and things will work out in the end. The McKin-sey analysis demonstrates that’s not going to happen. If everyone keeps running harder, they’re just going to get more tired. To reverse the trends, you’re going to have to think about new ways of operating.
That didn’t surprise me, because Fred [DeMarco, executive v.p.] and I had made a number of visits to stations around the country. We had seen stations that were executing their businesses extremely well—and they were still having trouble because revenues were declining and costs were increasing at a higher rate. The problem isn’t cyclical, it’s structural.
What made it not cyclical? The economy is going through a down cycle right now.
Coonrod: To take one example, during the time when the economy was climbing, membership revenue was actually decreasing in “real” dollars. An upsurge in the economy is not going to reverse the long-term trend.
Cox: McKinsey also found that in the past if one of the major revenue sources was down, there were others to compensate. But that’s not happening now.
Coonrod: Another reason to bring in McKinsey is that we needed greater focus. Public broadcasting tends to move from idea to idea.
There was a growing sense these trends in membership and revenues weren’t looking good. But you’d also hear from station managers: “Well, maybe we’ll have a spectrum auction”—some sense that something was going to save us. That deflects the focus from things that are wholly within the control of public broadcasters.
We brought in McKinsey so we could go back to the stations with a thorough analysis, so we could all be operating on the same page: This is what we’re dealing with.
You’re not talking about public radio right now. Is that because it’s in better shape since it’s a different medium, or does radio have something to teach public TV?
Coonrod: I wouldn’t put it in those terms. Public radio is in a different stage, a different situation. Its increases in audience and revenues have masked some of the challenges public radio faces.
One of the differences is the folks in public radio are trying to think about this before it happens. The way they’re approaching satellite radio today is influenced by the lessons from the way public television didn’t approach cable in the 1970s.
What do you hope to achieve in the five regional round robins?
Coonrod: We need to set a real strong fact base: “This is the information, ask any question you have about it.” We want everyone to understand these are the data.
You talked about starting with some “quick wins for station and national program economies.” Will you be proposing some moves, or feeling people out?
Coonrod: We’ll try out some ideas. We want to be successful here. The way to succeed with 177 licensees is to work this through with them, not try to pre-empt that conversation.
Will you invite trustees and board members of stations?
Coonrod: Eventually. That’s clearly an important part of what we need to do.
CPB seems to be saying, “Let’s get serious,” but people have been serious before. Public TV has proclaimed crises every few years over the decades, with many dire predictions. Public TV has seen audience fragmentation coming for 20 years. Will the McKinsey study just go back on the shelf next year? Is this just a Code Orange alert with little effect?
Coonrod: If you go back to the analysis of the second Carnegie Commission report, the structural flaws it identifies are the same ones we have today. This continuity should not lead us to cynicism.
We don’t have the luxury of getting everyone riled up for a few weeks and then going off to do something else. We’ve been talking about this for a year and a half now. And we have to follow through.
We do need to get serious engagement of the station community. I do believe they are fully prepared to engage. We have to prove to stations that there is no silver bullet. We must focus on those issues that are wholly within our control.
Cox: I don’t know what it was like in the past, but CPB is focusing its staff, energies and resources to these ends. These are our main priorities. People readily agree that this is the time to move.
You selected three initiatives of “real promise,” you told the station managers, where CPB will concentrate its efforts. Were these the areas that were most completely under the control of public broadcasters?
Coonrod: We used economic filters to identify three areas that seem to have potential for significant increases in funding or cost savings. One purpose of the round robins is to get a sense of whether they agree.
Let’s go through the three areas. First, you said you’ll concentrate on “developing strong major gift programs.”
Coonrod: One reason is that we have some examples within public broadcasting where this is working very well, so we can use peer criteria.
Has anyone estimated the potential gain in major giving?
Coonrod: We will come out with a white paper just before the round robins.
The filter we used to select these areas was that each of them has the potential to increase revenues by at least $20 million a year.
That’s not very much in a field with revenues of $2 billion.
Coonrod: But it would be significant, an effort worth undertaking.
When you say “major giving,” what size donations is that? Over $1,000?
Coonrod: [He indicates yes.] But to be clear: CPB isn’t saying to the stations, “You have to improve your major-giving activities.” It’s sitting down with the stations and saying, “Do you see the potential here?”
That’s why it’s important to go back to why the first Carnegie Commission was successful and Carnegie II was not. Kathleen did a little historical analysis of the two Carnegie Commissions. Why was the first so successful, though the analysis of Carnegie II by all accounts was brilliant?
Wasn’t the advantage for Carnegie I the presence of Lyndon Johnson in the White House?
Cox: I think it was more the sense in Carnegie I there was a very deliberate assessment of the political environment and a consensus-building effort at each point.
Coonrod: Carnegie I took the time to go around the country and work through these topics with the people who were going to be affected by them.
We have to turn this into a real-world exercise. We have to get the people who would be engaged in the effort to say, “Yes, we can do that; that makes sense to me.”
Public TV has raised a lot of money around the digital transition—one-time capital gifts. Does public TV have the allegiance and the image to attract big general-support gifts, or is it more likely to come for specific projects—a new channel, a new project, a new series?
Coonrod: There’s every reason to believe public television has that kind of allegiance. Stations that have moved in that direction have been successful. Oregon, Utah, New York.
Second, you said, “working to improve station efficiency, especially by consolidating technology and standardizing operations.” Is this mostly about consolidation and sharing staff and facilities?
Coonrod: Economies of scale is part of it. If you look at what’s happening in commercial broadcasting and what technology offers, there are ways to deliver high-quality TV service to communities differently from how a typical station did it in the 1970s.
That’s important. A station that reduces its operating costs can free up dollars to invest in services to the community, further signaling its value in the community and encouraging its success in major giving.
There was apprehension that our purpose was to redirect money toward national programming. That was not our objective.
Stations are now reducing their operating costs—involuntarily, because their budgets are being cut. There’s a way to do that voluntarily so you can save money and apply it to educational services, the outreach services, that signal value in the community.
For years, CPB has been using carrots to encourage stations’ sharing of facilities and staffs. One of the biggest efforts, Infinite OutSource, has just collapsed. What has CPB learned about how to make this sharing work?
Coonrod: We’ve learned a fair amount from projects like Infinite OutSource. There’s an inherent tension where the customers are also the owners, as in that case. We have to come up with some new structural models, because trying to graft these collaborations onto existing operational models presents a problem.
If you think of it as a business-school case study, it was very useful. But we have to stop having case studies.
The eureka moment for me came two or three years ago at a meeting of NETA [National Educational Telecommunications Association]. There were a lot of well-intended, talented people who would share experiences at NETA, but they were going to return to exactly the environment they came from. They were going to be isolated again.
The question is how you change the structure so those people are working in some collaborative way.
Consolidation can get very touchy. It involves losing jobs, turf, local autonomy that people have worked hard to maintain. You could find members of Congress riding to the rescue of their locals. How hard is CPB prepared to push to make anything really happen?
Coonrod: We’re prepared to push. We’re prepared to put our resources behind it. We want to look at the best way to allocate the federal dollars—the whole thing, not just the Future Fund.
Will there be resistance? Sure. That’s why we have to build consensus. Going back to our Goals and Objectives [see next page], a document of which I’m very proud, look at “Long-term systemwide planning.” It says: “articulate the challenges, identify and evaluate the opportunities, and build a consensus.” We can’t jump from the problem to the solution. We have to work it through in a way that will be effective.
One attempt to encourage consolidation and joint operations was in about 20 overlap markets. CPB managed to inspire joint operations of various kinds in several cities—Denver, Indianapolis, New York, with New Orleans yet to come. Should there have been others? Did CPB push hard enough?
Coonrod: I think at the time we pushed hard enough. Had we pushed harder at the time, I don’t think we would have accomplished anything. Part of what we needed to do was to get people talking about the topic.
Critics of the field have said openly—and some station people say privately—that there are too many freestanding stations and too many employees duplicating each others’ efforts from city to city. Does public TV need to do way more consolidation to cut costs?
Coonrod: I don’t know what the right number of employees for public television is, but we do know the average number of people it takes to do certain kinds of jobs in allied industries. In some cases the numbers in public broadcasting are out of whack.
You identified the third area of activity as “re-examining our approach to national programming.” What possibilities should be on the table?
Coonrod: There are a couple parts of that. One is: How do we think through the programming value chain? The way we bring programs to air is very similar to what we did a long time ago. And we don’t use research as effectively in television as we do in radio.
We’ve approached the process episodically—we’ve worked to fix underwriting, fix this, fix that. We haven’t looked at the process from beginning to end. How do you plan better? Execute better? Manage back-end rights better?
What kind of research are you talking about?
Cox: General research to understand what programming audiences and communities want and need. There’s a lot of research being done throughout the system, but we don’t have a way to pull that together to create a strategy.
Coonrod: Research can answer a lot of questions that producers have. For example, the producers of the major strands would like to know how the audiences are reacting. You can do research around that, particularly if it’s not adversarial research—if the purpose is seen as improving the program, not as a bludgeon to lower funding for the program.
There’s a real sense of separation between the national producers and PBS and the stations that help support them. We need a conversation to build a bridge between them, so that the stations understand the costs and challenges that the producers are facing—and that the producers understand that national programming is only one part of the service mix.
On the rights question—do you think there’s great potential in PBS routinely buying rights for more repeats? Or spending less on programs? There’s an undercurrent of suggestions that PBS spends too much per hour for programs, far more than cable networks, even if you don’t count the rights for repeats.
Coonrod: Are you looking at comparable figures for a fully accessorized program with promotion, outreach and websites?
That’s why the analytic work is so important. You have to compare the same kinds of fruits. If we use dueling numbers—I say a program costs $250,000 an hour and someone points to one that costs $450,000 an hour—are we comparing like activities?
We can continue to criticize each other, or we can sit down and figure out an approach that would be effective.
Before you chose your first three initiatives, you defined about 30 possibilities. Are there any runners-up you might put R&D money into?
Coonrod: That’s part of what we need to work through with the stations. When you think about R&D money, you think primarily about the Future Fund. We’re going to our board in April with proposals for revamping the Future Fund. Those proposals will be consistent with the approach we’re taking in the planning project.
I’m trying to get away from this notion that we’ve decided already what we’ll do. If we can get strong consensus on other areas, that’s the direction we ought to go.
We’re going to come up with a different way of managing the business of public television. The different way is to get the buy-in at the front end. We’re going be describing possible activities and then working with stations to decide what the investments will be, rather than saying, “These are the investments” and then trying to sell the idea.
Stations have seen now that collaboration can happen. Are they going to do it on their own?
Coonrod: Not only have they seen what can happen, they can see what didn’t happen. There are stations that are now having trouble surviving economically in part because they didn’t pursue collaborations.
When you announced these priorities and reassigned and RIF’d some staffers recently, you explained that the CPB Board adopted new objectives last year. The list of 13 “Goals and Objectives” in four categories seem like things CPB has wanted to do all along. Is the difference today a greater urgency?
Coonrod: I certainly feel a sense of urgency.
Cox: Another difference is that we’re focusing our resources and staff and efforts.
The McKinsey study was focused on understanding the financial sustainability of public broadcasting: what we can do to drive costs down and increase revenues. This effort is to make sure we are on a financially stable footing so that we can make the strategic change into what’s going to be a very different environment five years from now.
Coonrod: We’re both managing the current business and evolving it.
You mentioned in a New Year’s memo to stations that you’ve been suggesting “aligning CSG [Community Service Grant] policy more closely with our public-service aspirations.” Where is it out of alignment?
Coonrod: What the CSG policy has done for a long time, because it’s based on NFFS [nonfederal financial support], is that it rewards effort rather than effectiveness. In revenue terms, CPB matches gross revenues, not net revenues. In service terms, there’s no reward to a station for serving 12 schools or 14 or 17.
The idea here would be to provide incentives for services that stations have identified as the kinds of things they’d like to provide in their communities.
How we allocate the federal appropriation ought to be on the table.
Long ago, CPB defined what it takes to be eligible for grants as a public TV station. Are you thinking about defining another level of service—a bigger package of capabilities, maybe a multichannel telecom center that would be a step up for stations?
Coonrod: I don’t have in mind a specific set of things that ought to go into that box, but that’s exactly the kind of conversation I’d love to have. What’s the public television station of the future going to look like? How do you in Iowa see it? How do you in Baton Rouge see it? What is in common among those visions? How do you move from here to there?
How do you envision gaining support for a major structural overhaul of CSG policy?
Coonrod: One station manager at a time. The reason for these meetings is to have small-enough groups so that every station manager has a full opportunity to hear what the opportunities and risks are.
If we go back to “I’m going to hold my breath and hope my congressman bails me out,” that’s not going to be good for public television.
The three initiatives seem to be operational matters that fit within the present set-up of public broadcasting — quite different than the big-picture reviews of the Carnegie Commissions. Do you want to move toward having a Carnegie III effort at some point, or are those big-think commissions a waste of time because they usually don’t go anywhere?
Coonrod: That’s not what we’re talking about here. We’re working with the community of public television stations about making the changes the community believes will help it execute its mission of public service.
What follows from that inevitably will be some changes in how we do business. I don’t think you start from the big think. You’ve got to start from the services.
If we’re developing collaborations with local libraries and museums, for example, we’re rethinking things like who has editorial control — we’re rethinking everything.
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