End of CPB funding would affect stations of all sizes

Rural stations have long been poster children for the cause of preserving federal funding to public broadcasting. If Republicans in Congress go along with President Trump’s proposal to eliminate funding for CPB in next year’s federal budget, the stations that broadcast to sparsely populated regions of the country would be the first to reduce service or even go off the air.

That’s the standard response whenever Republicans in Washington threaten to zero out CPB’s appropriation, and it’s true that these stations are especially vulnerable to the loss of federal money. But there are many other ways that local stations — in the biggest cities and smallest towns — would be affected, as Adam Ragusea explored in a recent episode of The Pub. In an interview with Tom Thomas, co-CEO of Station Resource Group, they discussed the ways that an end to CPB would ripple across the $3 billion public media economy.

Working through such a scenario is extraordinarily difficult, Thomas said, “because we have such a decentralized system and such an interconnected fabric of economics, politics and social alliances that ultimately determine how things play out.” But Thomas has studied the public media economy long and hard enough to make clear-cut predictions that give a bigger picture of what could happen if CPB funding evaporates.

Thomas appeared on The Pub shortly after the White House released President Trump’s budget blueprint proposing to eliminate CPB. Congress has since approved an omnibus spending bill that provides a forward-funded $445 million appropriation in fiscal 2019, following the forward-funding principle that guides federal support for public broadcasting. That’s a good sign for public broadcasters and their advocates in Washington, D.C., but doesn’t put the issue to rest. A detailed White House budget for fiscal 2018 — which under forward funding would set CPB’s appropriation for fiscal 2020 — is expected later this month.

This interview has been edited for length and clarity. — Karen Everhart

Adam Ragusea, Current: Have you ever tried to quantify precisely the amount or the proportion of federal funding relative to the overall public media economy?

Tom Thomas, Station Resource Group: The overall public media economy hovers around the $3 billion range. Support for the Corporation for Public Broadcasting is $445 million within that box, but there are several other elements of federal support, such as Ready To Learn, funding of the interconnection system and a couple of other odds and ends. So, if we maybe round up to $500 million in a $3 billion economy, it would be one-sixth of the whole enchilada.

Current: Fifteen percent. That doesn’t sound terribly important. Is it?

Thomas: It’s absolutely terribly important in two ways. That 15 percent pays uniquely for things like the interconnection systems for public television and public radio. If that money was not provided by the federal government, we’d be back to square one on how to knit the system together to move content around. Secondly, as the dollars flow out to stations and producers, there are all kinds of formulas and equations that determine who gets what. The role that federal funding plays in any individual station or production company may be dramatically different, either larger or smaller, than the average of just the big numbers in total.

Current: Let’s fantasize that Republicans in Congress were able to zero out funding for CPB this year. What do you think would happen?

Thomas: Two things. Just to be clear, there’s a kind of layered bow wave of federal funding. In terms of operating support to the Corporation for Public Broadcasting, the $445 million in appropriations is made two years in advance, so Congress has already appropriated money for fiscal year 2018. One scenario for sum-total elimination of the federal role would be to leave those dollars in place and simply put no more money into the till going forward.

But other proposals have been to rescind that appropriation for 2018, even though it’s already been made. That’s a totally legal thing to do. In that stark scenario, the funding from the federal government for public media would come to an end on September 30 of this calendar year.

Current: Let’s say that either this year or two years from now the federal spigot totally shuts off. What do you think would happen?

Thomas: If that is clear early on, in the intervening period of time there needs to be significant planning and realignment by virtually all parts of the public media system. In terms of speculating end-state outcomes from that, it is extraordinarily difficult to do because we have such a decentralized system and such an interconnected fabric of economics, politics and social alliances that ultimately determine how things play out.

We’ve seen examples of these kinds of triage decisions that individual stations have made when there have been dramatic reversals in their funding. For example, the state eliminates its support of public broadcasting or dramatically reduces it.

Current: An important thing for people to be aware of is that state- and local-government funding accounts for almost as big a chunk in the overall public media economy as the federal funding does.

Thomas: We’ve just seen an example of that, which is continuing in the state of West Virginia. The governor’s initial budget fully eliminated $4.6 million that the state invests in supporting West Virginia Public Broadcasting, which is both a television and radio operation. That’s a very significant portion of that organization’s support in a state that has relatively limited private-sector resources. The board and the executive leadership at West Virginia Public Broadcasting had to start moving fairly quickly to say, “If this did indeed come to pass, what would we do?”

Their answers — which follow patterns that we’ve seen elsewhere — are to look at where they have extended coverage in parts of the state with very sparse populations and just make the tough decision that those are not self-sustaining operations. They would have to turn some transmitters off. They looked at their workforce and said, “With this amount of reduction in our funding, we can’t keep this many people on,” and determined that they would need to eliminate 20 positions, five of which were currently unfilled and 15 would be reductions in force. That would make a qualitative difference in the character of the service they could do.

Would they remain in business? Yes. Would the service that West Virginians get be the same? Absolutely not. And then you just have to play it forward of how that cascades into program decisions, of what they acquire and what they produce, and what they can no longer do and what they keep alive.

We’ve seen those examples around the country, when people had a deep pothole in the road and scramble as best they can. Certainly, there would be just scores of those kinds of decisions playing out community by community.

The part we haven’t seen — and is so much more difficult to predict — is all the interconnected fabric that actually makes public media a system: the ways in which stations have aggregated their dollars in television and radio to support the production of national programming, for example. Or the ways in which we deal with the music industry — particularly in public radio — in terms of securing the rights and paying for those rights to publishers and musicians to broadcast their music or to stream it on the web. CPB has paid for those things out of its federal support. With no CPB, some other system would need to be devised of how to do that, and most likely would be more expensive to do. We would lose the benefit of aggregated dollars in a single transaction and introduce some chaos and friction into the process, which would make it more expensive for everyone.

At the highest level, the uncertainties — if one contemplates no federal support — will be some mix of the predictable extending forward what we’ve seen, but also unexpected vulnerabilities that just don’t come to the fore until, as you say, the spigot is turned off and lo and behold there’s no way to carry something forward.

Thomas

Conversely, some unexpected resilience where people faced with adversity often come up with surprising measures to keep the most important things they do going in a business and turn to their communities to join them in doing that. The hard part is predicting how those things play out, which is a mix of leadership and luck and the circumstances of the moment.

Current: That said, stations have certain minimum fixed costs. Creative rejiggering of the budget and trimming of services can only go so far. A rural station, for example, that relies on CPB money for 40 or 50 percent of its budget. … It seems quite likely to me that the institution is simply just going to fold. Have you guys attempted to put together any estimates as to the number or the percentage of stations that would be existentially vulnerable in this scenario?

Thomas: We’ve done that over the years. Our lesson is, “Proceed with caution in any such model that you do.” You can get directional indicators, but certainty is pretty elusive. Let me offer a couple of things that seem rather clear-cut.

One is that public television stations are significantly more vulnerable than public radio stations. The reason for that is not surprising: The fixed cost of infrastructure is significantly greater in a television operation than in most radio operations. The cost of production, in terms of not only the equipment but the number of people involved, also tends to be significantly higher in television than radio. So the capacity of a number of public television stations that are already stretched thin to continue forward — in terms of just basic core costs that need to be covered — is highly problematic.

CPB right now is doing a detailed technology assessment of public television: their hardware in place, what equipment’s aging out, what their expected needs are going forward. Some people are in fine shape — they’ve provided for the future, they have their replacement funds and so on. Perhaps as much as 10 percent of the public television system right now, with continued federal funding, seems to be perched on the edge of a cliff in terms of their capacity to meet their future equipment replacement needs. Absent the Public Telecommunications Facilities Program that stations relied on for so many years — which has been phased out — there’s a kind of lights-on/lights-off vulnerability on the television side that for some number of stations is very acute.

On the radio side, it takes a lot to kill a radio station, I gotta say. We’ve certainly seen examples where it’s been tried. The capacity of stations to downsize, to reduce, to minimize costs is simply amazing. But there’s a big difference between keeping the transmitter on-air and the quality and character of the service that a station’s able to provide. That’s where the difference would be significant on the radio side.

CPB funding yes, CPB funding no, the number of public radio transmitters in operation — at least main transmitters, not distant repeaters and so forth — would be surprisingly stable. It’s a surprise to some people when they really play it out. But what those stations would be able to present would be dramatically changed from what people think of as a public radio service today: the capacity to do local reporting, to have local hosts, to do community engagement, to not only provide the broadcast signal over the airwaves but to provide it on digital platforms. All of what we think of as a contemporary full-service public radio operation for as much as 20 percent of the public radio system would be materially and substantially diminished, again because of the strong role of federal funds in their current budget.

Current: When we look at the proportion of federal money relative to all the other money in the economy, it can look a little bit small. On the other hand, one of the big advantages of getting federal grant money is that you spend very little to get it. You have to do some paperwork, you have to do some financial reporting and that’s the expense that you put into getting that money out. Whereas all of the other sources of income that you have in public media — be it dollars from membership, major giving or underwriting — you have to spend money to make that money, right?

Thomas: Absolutely. The cost of raising a dollar in public broadcasting varies substantially from station to station. But, in the aggregate, 20 percent or 30 percent of each dollar raised had to be invested to raise that dollar. Raising federal dollars does not require that kind of investment, as David Brugger, who once headed America’s Public Television Stations, remarked years ago, “It’s about the highest return on investment in fundraising that public broadcasting can do.”

Current: It sounds like that 15 percent that federal money represents in the overall mix of money in the system is bigger than it looks. Those institutions in the system where community service grants are a relatively small chunk of their budgets — the big-city stations that would lose 5 to 6 percent of their funding — could be hurt more than it looks from all of these secondary effects, the loss of the economies of scale. When you have fewer smaller stations helping to pay for national programming, the bigger stations are gonna have to pay more, et cetera.

Thomas: Absolutely. And the service will not be as rich in the larger cities as well. For the larger stations that don’t rely as much on CPB money, they would have to take greater financial responsibility for maintaining some of the core infrastructure of the system for them, and everyone else, to continue to operate.

Secondly, the character of the service that they are providing would change, particularly the news stations or the NPR newsmagazines that are increasingly drawing on reporting from all across the country, from smaller and rural communities as well as big cities. That reporting enriches the service they’re providing in these major markets. Our largest stations in our largest markets are stronger, and their service is better because of the reach and health of the whole system that we have. And if that whole system is diminished, either in the number of participants or the quality of its work, all of the stations will be diminished in what they are able to bring to their communities.