NPR’s board of directors approved a deficit budget for fiscal year 2023 during its Friday meeting, reflecting new investments in the NPR Network and economic uncertainty in the coming year.
The budget anticipates $318.4 million in revenue and $309.8 million in expenses. But the organization expects a deficit of more than $5 million in operating cash, which adjusts to reflect expenses such as debt service and capital expenditures. NPR CFO Deborah Cowan called it NPR’s “key financial metric” during a Sept. 7 meeting of the board’s finance committee.
“We typically do not put together deficit budgets, but this year is an exception, just like 2021 was for COVID,” Cowan said.
A “key driver” of the deficit budget, she said, is a 9% increase in expenses that includes a $17 million investment in the NPR Network. Approved by NPR’s board in June, the NPR Network comprises numerous digital initiatives to be undertaken by NPR in collaboration with member stations, including fundraising efforts, a podcast subscription bundle and a network of NPR and station podcasts.
The FY23 budget includes 35 additional positions, 30 of which will be for the NPR Network, Cowan said. The positions will include roles supporting the Network in digital product and technology, consumer marketing, development and audience growth, according to an NPR spokesperson.
NPR also had some “surprise expense increases,” Cowan said, which included its seven-figure cyber insurance policy doubling in one year.
NPR is budgeting for revenue that is “more conservative than we typically would pull together in any other budget year,” Cowan said. “That's solely driven by the headwinds and the uncertainty that we see in the economy.”
The budget forecasts a nearly 10% decline in development revenue. That reflects NPR’s “gift pipeline” not being “at the point where we feel comfortable projecting a lot of growth,” Cowan said, as well as gifts from prior years ending and not recurring.
NPR’s income will be bolstered in FY23 by $16 million in special distributions provided by the NPR Foundation in previous years. The distributions were deferred to this budget, in addition to normal annual distributions from the foundation and long-term reserves, according to Cowan.
NPR anticipates having “enough excess cash to fund the deficit without liquidating any of our investment reserves,” Cowan said.
NPR projects that it will end FY22 with a slight surplus in operating cash of nearly $3 million. But the surplus “has softened up a little bit from what we thought it would be at the beginning of the year,” Cowan said, citing broader economic uncertainty and sponsorship orders that fell through.
Still, NPR expects to see revenue of more than $300 million at the end of the fiscal year, which would be a record amount for the organization, and growth in sponsorship, development and station fees, its three biggest sources of income.
Expenses have been higher than budgeted, Cowan said, which she attributed in part to COVID hanging around “a little bit longer than we had budgeted last year.” That led to premium pay for unionized on-site essential workers and operation of a testing program for employees for longer than planned.
Cowan said she has been asked about how inflation is affecting NPR. “I would say not so much,” she said. “... People is where we spend the most, and then acquired content. And in our acquired content we tend to have multiyear agreements that kind of lock in what we pay for that acquired content.”
Podcast bundle to launch
Board members heard during Friday’s full board meeting that a podcast subscription bundle — one of the NPR Network initiatives — will launch in beta this fall, with 34 stations participating. The bundle provides sponsorship-free podcast episodes to new sustaining members of the participating stations who give $8 a month or $96 a year, said COO Will Lee.
By late October or early November, online donors will be able to give directly to the NPR Network on NPR.org. NPR’s board and management will determine how to allocate unrestricted donations, which could support stations or NPR Network infrastructure.
Additionally, the NPR Podcast Network launches Monday, with an NPR Network brand added to tiles for podcasts from NPR and participating member station. Cross-promotion of the network’s shows will begin in October. An app unifying the NPR One and NPR News apps is expected to launch sometime in the fourth quarter of 2022 or the first quarter of 2023, Lee said.
Later this year, NPR will conduct the first joint meeting of NPR and member station employees focused on the NPR Network, Lee said. Those joint meetings will continue on a quarterly basis.
NPR is also forming a leadership team for the Network that will include representatives of both NPR and stations. It will begin meeting later this year. “The team will act as an advisory group to NPR management, ensuring that collaboration with members is built into the NPR Network framework,” Lee said.
Lee also briefly discussed the roles of music content and collaborative journalism in the Network. He said that Bruce Auster, managing editor for collaborative journalism, and Edith Chapin, VP & executive editor at large, will begin work this year to “reimagine the journalism roadmap” and early next year will share “an updated version of collaborative journalism” with leaders of the NPR Network initiative.
“Additionally, as part of ongoing work evaluating the focus of NPR Music, the team will explore possible connections to the emerging public radio Urban Alternative music formats, including a potential new national radio program,” Lee said.
Seven public media stations broadcast Urban Alternative, a CPB-backed format focused on hip-hop, dance and R&B music. CPB issued a request for proposals last month with the aim of funding three more Urban Alternative stations.