Forecasts revised for underwriting: ‘Flat is the new up’

Originally published in Current, Jan. 12, 2009
By Karen Everhart

Public radio’s strongest local stations are off their stride in corporate support, the system’s first income stream to weaken, with flat underwriting sales or only slight growth compared with last year.

Less fortunate stations are losing more underwriting and asking listeners to help fill the budget gaps. NPR also is hurting — its underwriting revenues in the first quarter of the fiscal year ran 20 percent off the pace from the year prior.

In a survey of a cross-section of 78 stations by Development Exchange Inc., station sales reps expressed less confidence. Twenty percent were “concerned” about meeting revenue goals, and 23 percent were “very concerned.”

Last year was a completely different story: In corporate underwriting, the first quarter of fiscal 2008 was the biggest in NPR’s history, according to Dana Davis Rehm, senior v.p. of marketing, communications and external relations. The network exceeded expectations, closing fiscal '08 with $45.9 million in corporate underwriting. Last month, when NPR announced layoffs, program cancellations and budget cuts, officials forecast $33 million in sales for this year.

Sales execs said national underwriting took a bigger hit because it depends more on brand promotion than does local underwriting. Local sales relate more directly to sales promotion and are based on personal relationships to community businesspeople.

Ad spending cutbacks by automotive and financial companies — which contributed substantially to growth in NPR revenues in recent years — hit NPR hard. “When the key to our growth is in tremendous distress, we feel that,” said Don Ershow, chief operating officer of National Public Media, the rep firm owned by NPR and Boston’s WGBH that sells underwriting on NPR as well as local stations.

“On the national side, the trends are a little more negative than local,” said Kathy Golbuff, underwriting sales director for Minnesota Public Radio and American Public Media. Corporate support income for the sister nonprofits had been growing 8 to 10 percent annually for several years. Last year they booked almost $8.7 million in revenues. Now local sponsorship revenues are running even with last year’s results while national sales are down.

“We are hopeful we’ll be able to hit our goals and, depending on our crystal ball, to at least be flat to last year,” Golbuff said. “Flat is the new up in my book.”

Boston station WBUR, which doubled its corporate support income to $10 million from 2002 to 2007, also is adjusting to a different economic climate. After a modest 2 percent gain in underwriting revenues in fiscal 2008, WBUR’s earnings since July have been flat, according to Corey Lewis, station manager. He predicts the station will end fiscal 2009 with a 3 percent gain.

“We are doing okay because there was so much new ground we’d been able to forge,” Lewis said. WBUR has a diverse client base of more than 600 underwriters that includes more retailers and automotive companies than those of most pubradio stations, he said. WBUR benefits from its reputation in the corporate community as an effective marketing investment and a valued public service, according to Lewis. 

“I certainly do see a slowdown, but I’ve got enough of a head start to be protected,” Lewis said. He and the station’s 11 sales reps are “working harder than we ever have and spending more hours on the streets than we ever have,” Lewis said. “We’re doing 50 percent more work into be plus 2 percent.” 

The DEI survey found wide variations in underwriting sales among the 78 stations. Slightly more than half reported sales higher than last year’s, but overall the stations’ results were spread evenly from 20 percent gains to 20 percent losses.

During a Jan. 8 conference call with seven major-market stations, most reported that December sales were down, and January looks sluggish, said Marlene Schneider, DEI corporate support coordinator. The lone exception was Washington, D.C., which appears to be getting a bump from the lead-up to the presidential Inauguration Jan. 20.

The stations “still have the same number of accounts on books, but people are spending less, and they’re taking longer to close,” Schneider said. “They’re getting a lot of push-back on rates.” 

For WABE-FM in Atlanta, underwriting revenues are running even with last year’s results, but that is 12 percent below the goal set for the year, according to Jared Blass, director of sales and underwriting. “We’ll be able to deliver revenues comparable to, or slightly above, the same period the prior year,” he predicts. 

In mid-October, shortly after the national financial crisis, National Public Media warned local stations that underwriting losses for the fiscal year could average 15 percent, Ershow said. “We felt they should be particularly cautious about their budgets going forward because the marketplace was weakening, there was more bad news to come and unemployment would continue to rise through the holidays.”

“I don’t think at that point anyone could have anticipated the general economic news would get as bad as it has gotten,” Ershow said. “This is going to be a particularly challenging year, a very challenging year.”     

This article contains a clarification of the print edition: The $45.9 million figure refers to the NPR underwriting sales in fiscal year 2008.

It also contains a correction of Don Ershow’s job title, which was misstated in the print edition.

Web page posted Jan. 29, 2009
Copyright 2009 by Current LLC

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