Underwriting drop leaves NPR with $2.6M shortfall

Facing an operating deficit of $2.6 million this fiscal year due to a shortfall in corporate sponsorship income, NPR is stepping up efforts to cover the gap with additional gifts, grants and underwriting.

These measures are being taken rather than “cutting deep into NPR,” a spokesperson told Current last week, after the Washington Post reported that the network had considered cutting Tell Me More, the daily newsmagazine aimed at people of color. The Post’s report cited anonymous sources describing internal discussions. NPR President Gary Knell later told media outlets that there were no plans to cancel the show.

NPR hit a record high in corporate sponsorship income last year but is now struggling, with a variety of factors contributing to the slowdown in sponsorship revenue. It will draw from its operating reserves to make up the deficit, said Danielle Deabler, NPR public relations director.

The shortfall is less than 2 percent of the network's $173.7 million operating budget this year.

Several major sponsors ended year-long campaigns at the end of last year, and the network has been unable to close as many contracts of equal value this year. In addition, corporations are keeping their ad budgets flat as the outlook for the economy remains uncertain, says Steve Moss, c.e.o. of National Public Media, which sells underwriting for NPR. Most companies are putting more of their advertising dollars into Web search and social media, areas which NPR does not benefit from.

Sponsorship reps also find themselves increasingly hampered by FCC guidelines that dictate the language permissible in underwriting announcements. These were less of a hindrance in the last few years, Moss says, because corporations’ goals were more compatible with the limitations of noncommercial underwriting.

The financial and automotive industries in particular had been pummeled by the recession and were more focused on simply rebuilding their brands, which NPR was able to facilitate with its stripped-down form of advertising.

This year, however, corporations have increasingly set specific targets, such as selling more cars or seats on airplanes, for example. As a result, they are focusing their ad dollars on spots that can include calls to action or name particular quantities. FCC guidelines prohibit such spots on public radio.

Other sales trends this year are also bypassing NPR: the shift in dollars toward political advertising and corporate cobranding with the Summer Olympics. The latter is particularly focused on television, Moss says. And some corporations want to integrate their brands with content and with the brands of media companies that carry their advertising, which NPR must avoid.

On the plus side, Moss says, NPR is continuing to attract new clients who want to target the attractive demographic of highly educated, affluent adults who are drawn to the network’s programming. Sales reps have sold underwriting to more sponsors than last year, but the new clients are simply spending less than those who pulled back.

“It bodes well for the future,” Moss says. “It shows the brand is still powerful and attracting clients that haven’t tried NPR before.”
NPR is also working to sell underwriting packages to clients by bundling broadcast spots with online ad placement, such as underwriting on the NPR Music website. 

Copyright 2012 American University