Stations in Severe Financial Distress

As the economic crisis has worsened, CPB has been attentive to the financial health of public television and radio licensees, and has been advised that a growing number of stations are in financial distress. For the purposes of this document, we define “financial distress” as station financial conditions that threaten the continuing solvency of the station and that could result in cessation of operations within eighteen months.

CPB treats a request from a station in financial distress as a request from the community for assistance in maintaining public broadcasting service. CPB’s highest priority in preserving service is maintaining universal service. While CPB does not have sufficient discretionary funds to act broadly to keep stations solvent, CPB will work with stations to determine appropriate interventions that serve the public interest in preserving universal service.

Decision Principles

CPB will focus its efforts and resources on the following three priorities presented to the CPB Board during its March 2009 meeting:

  1. Maintain free universal service – which is defined as a service that is “free and over the air.” The priority is to maintain service – television and radio – to an area.
  2. Support operational efficiencies – CPB assistance will be focused on outcomes that foster efficiency and make the best use of CPB and community resources.
  3. Preserve options for diversity of both services and audiences. Broadcast spectrum is a valuable resource, and CPB will therefore seek to maintain spectrum for public service uses, to the extent it is feasible to do so.

Station Process

To request assistance from CPB, licensees should submit the following information:

  • A letter from the General Manager and Board Chair (or senior licensee official) comprehensively explaining the factors causing the financial distress, describing the current financial condition of the station, and outlining the steps the station has taken to address these issues.
  • The most current financial information affirming the cause of financial distress, as well as:
    • Audited statement of financial position and statement of activities (past three years) if CPB does not have these documents on file;
    • Cash flow statements (past three years);
    • Aging of accounts payable and receivable;
    • Quarterly budget to actual operating report for a minimum of the past 18 months;
    • Top three sources of operating revenue detail (past two years);
    • All liens on assets;
    • All debt covenants;
    • Total number of FTEs and staffing structure;
    • Governance structure and board officers (or key licensee officials);
    • Information about the station’s programming strategy and schedule and any audience data on hand for the past 18 months;
    • For television stations, PBS status: full member or PDP station, amount and currency of PBS dues payments;
    • Copies and background information regarding any adverse findings, opinions, or events by any agency of competent jurisdiction; and
    • Other information which may reasonably inform CPB about the station’s current situation.

A formal request to CPB may trigger the following actions by CPB:

  • Onsite financial assessment or audit conducted by an independent analyst, paid for by CPB;
  • Economic and environment analysis, paid for by CPB;
  • Demographic and audience analysis, paid for by CPB;
  • Comparative analysis of stations of similar market size, paid for by CPB;
  • An assessment of operation sustainability, paid for by CPB; and
  • An assessment of other public broadcasting providers who may be capable of providing service to the station’s service area, paid for by CPB.

CPB Assistance

CPB assistance can include the following:

  • Financial and business consultation to the station requesting assistance for the purpose of developing viable business and fundraising plans to attain financial solvency – paid for by CPB; or
  • Direct grants or financial assistance in very limited cases, provided that:
    • CPB has funds available;
    • Station failure would result in a meaningful loss of universal service and there are no reasonable alternative ways to preserve service to an area; and
    • The station agrees to make changes to its operations, management, governing structure, or other areas of corporate operation that are necessary to ensure the continuation of a quality public broadcasting service to the region.

To summarize, CPB’s primary priority is to preserve universal service; this may or may not mean taking action to preserve a particular public broadcasting station. While CPB lacks the discretionary funds to provide direct financial aid to stations in financial distress as a routine activity, CPB may offer other forms of assistance to stations in difficulty, particularly when that assistance will further the priorities listed above. CPB's goal is to work in partnership with stations so that together we can reach the best achievable outcome, which is to maintain the public broadcasting services that are an essential component of our civil society.

Questions

Questions and submission of the information requested above should be directed to:

Television and Joint Licensees

Kevin Martin
202-879-9640
kmartin@cpb.org

Radio

Greg Schnirring
202-879-9799
gschnirring@cpb.org