Consultants advise spending shift to strengthen national PTV programs

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A bold strategic study for public TV, commissioned by the Corporation for Public Broadcasting, recommends that stations spend less on local program production and more on achieving high quality in national and instructional programs.If PTV fails to “invest fully in national programming,” it will see a “downward spiral” in program quality, audience and revenues, according to the report by Boston Consulting Group, a business strategy firm.

The study, whose earlier drafts have been discussed for months in high-level meetings, was presented publicly for the first time at public TV’s Pacific Mountain Network and Central Educational Network annual meetings earlier this month.

“Most of the managers say, ‘It’s terrible news, but I’ve known it’s there — I’ve felt it,”‘ says Joseph Zesbaugh, president of PMN, who devoted a day and a half of his annual conference to discussions related to the study.

Despite the bad news, the consultants’ presentation won “far and away the highest marks” given by attendees in their evaluations of the PMN meeting, Zesbaugh said.

The consultants gave public broadcasters an unfamiliar profit/loss sketch of their major functions. Local program production, which the report calls PTV’s largest single activity, takes 35 percent of its spending but brings in 16 percent of its revenue and accounts for 7 percent of its air time. National programming from PBS, in contrast, was estimated to cost 29 percent of total spending, bring in 50 percent of revenues and fill 60 to 65 percent of air time.

Among the major findings:

  • Public TV’s rationale of providing unique kinds of programs — not found on commercial networks — is now “obsolete” amid the abundance of TV channels, the report argues. Therefore, public TV must make sure its national and instructional programs are clearly better than those of commercial competitors.
  • In a preface, the study’s Steering Committee of 20 public TV officials endorsed a new drive for excellence: “To retreat to providing those unique (but diminishing) functions in which the commercial sector is still not interested would be not just a defeat for public television’s aspirations, but a loss to American society.”
  • National programming, “the chief value delivered and the chief motivator of donations, enjoys a strong competitive position today, but requires substantially increased investment if it is to survive the intensifying competition of focused cable networks.”
  • Educational services, “a central mission” of public TV, will also face increasing competition and require increased investment and application of new technologies.
  • Stations should make strategic plans to realign services, identifying “areas where resources may be freed up to support national programming and educational services.”

Station officials at the PMN conference noted that they may not be free to “free up” fund from local production, however, because funders expect them to produce local programs with the money.

The study suggests that public TV spend an additional $250 million a year on national and instructional programming — a 55 percent increase — by the end of the decade. Stations now spend $470 million on local production and outreach, the consultants estimate.

Many of these points have been made before — by former PBS President Larry Grossman among others, and were not as well received in public TV. “When Larry Grossman was saying it, that was before we were starting to feel the pinch,” says Zesbaugh. Now public broadcasters are readier to hear the prescription.

Though the analysis is not new, the study presents it with new urgency, says Edward Coltman, CPB’s director of policy development and planning.

CPB commissioned the $225,000 study last summer, says Coltman, and will follow up with “three or four” five-figure grants to support pilot projects pursuing new station strategies, he says. CPB is already hearing informal proposals.

The study was based on interviews with 40 prominent public broadcasters, examination of commercial media competitors, and an analysis of public TV’s costs and revenues.

In interviews, the consultants found “deep-seated frustration” among public TV execs “far more acute than any that BCG has identified in comparable studies for other clients,” but also sensed “a strongly expressed desire for renewal and leadership.”

The picture painted by the consultants would be reason enough for acute frustration.

Media economics have changed so that proliferating low-cost “niche” cable networks can now profitably serve audiences significantly smaller than public TV’s, the report contends. Cable networks are spending more on original programming, threatening public TV’s quality image and viewer loyalty. Though public TV still outspends any of them for original programming, four competing cable nets together — the Discovery Channel, the Arts & Entertainment Network, the Disney Channel and CNN — equal public TV’s spending, and their combined buying power, now $360 million, will double in a decade. Public TV in comparison has “no explicit plans for any significant increase in real terms.”

Challenge in classrooms, too

Commercial media meanwhile are mounting a parallel challenge to win the school and college audience. Changing media economics are making ITV an attractive market for competitors using satellite (Whittle Communications), cable (CNN Classroom) and videocassette or disc (textbook publishers).

These new instructional media have displaced broadcasting as the “most efficient and effective” media for distribution of educational video materials, the report contends.

The new for-profit competitors will be driven, the consultants believe, by opportunities for “synergy” with their other lines of business — building cable TV’s public image and selling textbooks related to classroom videoware.

At the same time, the report projects that rising costs and slowing revenue growth (in part, because of shrinking audiences) will leave public TV with a $250 million funding gap by the end of the decade.

Rather than seeing hope in fundraising, the consultants recommend shifting funds now spent on local production.

New forms of “local presence”

Taking ratings into account, the report says, “stations spend around 50 times more, on a per-viewer-hour basis, on local productions for local use only than…for national programming.” The consultants note, however, that some stations get decent ratings for well-made shows.

Acknowledging that local “presence” and autonomy are “essential” to public TV’s fundraising and political independence, the report endorses the use of nationally produced material in stations’ community activities, as in outreach projects. “Local programming,” the consultants contend, “does not necessarily mean local production.”

CPB’s Coltman says the report is suggesting the stations adopt new ways of doing local programs, instead of traditional half-hour and hour documentaries produced entirely locally.

For example, Zesbaugh, a member of the study’s Steering Committee, suggested during a PMN session that stations consider packaging their local production in “bridge breaks” of two minutes, 40 seconds, between programs. That could cut production costs in half and greatly increase viewing of the product, he believes.

James Pagliarini, general manager of KNPB, Reno, speculates that his station might do better for its viewers by halving its $200,000 local production budget and spending the savings on community outreach supporting the best national programs.

The Boston Consulting Group report is “excellent” and “very provocative,” Pagliarini says. “I was surprised there wasn’t more negative reaction.”

Local presence also doesn’t necessarily mean having a broadcast tower. “Terrestrial broadcasting is becoming obsolete,” the report contends. Though 57 percent of households now subscribe to cable, 89 percent have it available. “The estimate of the number of U.S. households using public television that are unpassed by cable or unable to afford it is about 10 percent.”

Stations “should be ready in the long run to migrate entirely away from terrestrial broadcasting,” the report advises, “if they can provide greater service to the public in other ways.”

The report leads off with a “user’s guide” principally written by two members of the study’s Steering Committee, David Liroff, station manager of WGBH, Boston, and Kathleen Pavelko, program director at WPSX, University Park, Pa.

To get station decision-makers thinking, the preface offers a series of “provocations.” The study asked, among other things: What if stations had no transmitters? No production facilities? Would fewer people watch shows produced more simply? Could studios be closed or shared with commercial stations? Could programs have longer shelf-life? Could stations cut costs by sharing community service campaigns, on-air promotion and operations tasks?

CPB is mailing copies of the study, “Strategies for Public Television in a Multi-channel Environment,” to every public TV station. The findings will be discussed next month, Coltman says, at the CPB Board in New Orleans and the Public Telecommunications Financial Management Association meeting in St. Louis.

Another consultant heard from

Coming hard on the heels of the CPB findings is another study commissioned earlier by America’s Public Television Stations (APTS). APTS Vice President Ric Grefe says the study, by Denver-based media consultants Bortz & Co., puts more emphasis on future strategies for different types of public TV stations. The Bortz study, still underway, was also discussed at the PMN and CEN meetings, but APTS will use the findings without publishing a formal report, Grefe predicts.

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