Worrisome trend in CPB analysis: Too many PTV stations taking on too much debt

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NEW ORLEANS — More public television stations are taking on increasing amounts of debt in what CPB’s chief financial analyst calls a “worrisome trend.”

In fiscal 2015, 26 stations had a debt ratio of more than 50 percent. That’s up from just nine stations in 2009, said Moustapha Abdul in a CPB “state of the system” presentation at the Public Media Business Association meeting here Wednesday.

An additional 23 stations are carrying more than 40 percent debt.

While for-profit companies can use debt as a tax shield, Abdul said, “you don’t have that benefit for a nonprofit. There’s really no upside for a nonprofit station to load up on debt.”

The presentation analyzed FY15 data from 577 CPB grantees, including 407 radio licensees and 170 TV licensees. Eighty of these grantees are joint licensees that operate both radio and TV stations. Abdul said he gleaned the most granular information in his analysis from television Station Activities Benchmarking Study survey forms, which radio stations do not complete.

Revenue numbers look strong across public broadcasting, with total income for TV and radio continuing a growth trend that began in 2013. In FY15, TV grantees brought in $1.76 billion in revenues and radio, $1.19 billion.

But the growth is primarily concentrated at larger stations. The 48 TV grantees with budgets greater than $10 million (excluding producing powerhouses WNET, WGBH and WETA) took in $789 million in FY15, approaching a pre-recession high of $800 million, said Ted Krichels, CPB senior v.p. for system development, who presented the findings with Abdul.

“But when we look at medium and smaller stations, that revenue is flat,” he said. At those 119 grantees with annual budgets up to $5 million, revenue fell 11 percent to $447 million from a 2008 peak.

A similar trend is occurring in the radio system: Revenue at larger grantees, with annual budgets exceeding $3 million, is up 43 percent since 2009. However, revenue for medium-size radio grantees is up 13 percent, and smaller grantees actually experienced a drop of .3 percent.

When looking at specific types of revenue, business funding for both TV and radio licensees has “suffered a significant decrease,” Abdul said, down 32 percent from 10 years ago.

Capital equipment expenses are another point of concern for TV grantees because they exceed capital funding — a trend Abdul termed “troubling.” Across TV stations, capital revenue is stagnant at $47 million, the same amount earned in fiscal 2013. But stations’ expenses have since grown from $85 million to $100 million.

Total capital funding fell from a high of $120 million in 2008, before the Commerce Department’s Public Telecommunications Facilities Program extinguished in 2011. Capital funding from state and university licensees is significantly down as well.

Krichels noted capital costs will continue to increase, especially with the upcoming TV channel repack following the spectrum auction and the transition to the new ATSC 3.0 broadcast standard.

Staffing levels at stations have leveled off across the system. After increasing annually since fiscal 2009, the total radio workforce has flattened at 8,378 employees. TV staff is relatively stable at 10,675, recovering from 15 percent cuts that occurred between FY08 and FY13.

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