Developing a Sustainable Economic Model for Public TelevisionMay 29, 2003CONFIDENTIAL来源： http:/ ； http:/PROJECT ASPIRATIONS AND KEY QUESTIONSIdentify and drive major changes that will put public television on a more sound economic footing and ensure its future successHow severe and long lasting are the financial pressures on the system?How should we launch these initiatives and effect lasting change?Which performance improvement opportunities offer the most promise?麦肯锡公共电视 运营模式(英文版)CHALLENGES: BOTH STATION ECONOMIES AND PROGRAM DEVELOPMENT ARE AT-RISK * Excludes capital funding for digital upgrade. Revenues not adjusted for inflation*Growth rate from 1994-2001Source: CPB Audited Financial Reports (AFR), PBS analysis (dues), Appendix Q from PBS SG white paper (“Funding for PBS NPS Programming by Funder Category”)$1.93 Billion$450 Million2001 Local Station Economy2001 National Program FundingProspects for future revenue growth3.5 % per year*3.1 % per year*Historical growthin revenues (1990-2001)CurrentsizeDecline in real terms due to falling net member revenuesA system decision5.4 % per yearFlat to very slowly growing (1% above inflation)2001 Station Assessment$107 M麦肯锡公共电视 运营模式(英文版)273.3374.0249.4328.5230.5330.5205.6347.6128.6259.6104.2145.662.994.5Total PTV system revenue,* 1990 and 2001$ MillionsUniversity In-kindCorporate and foundation givingUnrelated businessState and local funding Federal funding* Member giving*Excludes capital funding for digital upgrade, additional capital fundraising, endowment, and interest *Federal agency grants for 2001 are estimated (assumed 5% growth over 2000)Source: AFR; federal reports; PBS annual reports$1.25 billion$1.88 billionCHALLENGES: ONLY GROWTH AREAS ARE UNRELATED BUSINESS AND UNDERWRITING199020013.83.16.64.93.32.9Annual Growth %1990-20012.5Drivers of growth麦肯锡公共电视 运营模式(英文版)CHALLENGES: HISTORICALLY, THE SYSTEM HAS GROWN THROUGH DIVERSIFICATION NOW ALL REVENUE SOURCES ARE THREATENED Source:AFRs; Team perspectiveFuture Outlook麦肯锡公共电视 运营模式(英文版)CHALLENGES: NET STATION MEMBERSHIP REVENUE HAS DECLINED IN REAL TERMS SINCE 1990* All growth rates are compound annual growth rates.Source:AFRs; Bureau of Labor StatisticsFundraising costs: 1.0%Net membership revenues: -0.9%$17 million lost income$ Millions, Adjusted for inflation to constant 2001 $Gross revenues: 0.1%*麦肯锡公共电视 运营模式(英文版)CHALLENGES: DECLINES WILL CONTINUE IN NET MEMBER SUPPORTPledge, which is the engine of new member acquisition, has seen rising costs relative to new member yield in line with declining productivity trends outside PTVNet renewal revenue will not offset declining acquisitionStations already have among the nonprofit sectors highest renewal ratesRenewal mails productivity is flat to decliningDeclining ratings increase stations challengeFalling ratings likely contribute to the long term membership decline, both because the prospect pool with a connection to PTV shrinks and because membership renewal is highly correlated with audienceWith the number of nonprofits growing twice as fast as real household charitable giving, stations will be hard pressed to grow their share of members wallets Source:“Donor Centrics Comparison Report for Public Television, December 2000;” DMA Factbook 2001; Giving USA 2002Audience SizeNew MemberRenewing MemberPhilanthropic EnvironmentMembership Revenue DriversOutlook麦肯锡公共电视 运营模式(英文版)CHALLENGES: STATION HAVE MET THESE CHALLENGES IN THE PAST BY CONTROLLING COSTS ACROSS THE BOARD1990UnderwritingProgram informationFundraisingManagement and generalBroadcasting Programming and production100% =$1.80 billion7.93.33.83.14.03.8 * Expenses do not include CPB or PBS overhead or CPB provided nonstation grantsSource:AFR; PBS annual report, 2001 Annual Growth Rate1990-2001Stations expense, 1990 and 2001Percent100% = $1.19 billion2001NPS dues and services4.0Nearly 1/3 of station programming and production costs are concentrated in producing stations for national programming麦肯锡公共电视 运营模式(英文版)2001 Actual2010 IllustrativeBroadcast ops MembershipEduc. / outreachOtherCHALLENGES: REVENUE DECREASES WILL PROMPT REPEATED PAINFUL COST REDUCTIONSSource:SABS; interviewsStation cost-cutting scenario:15% revenue lossAcquisition & schedulingProg. productionGeneral & administrative$10.7 millionUnderwriting Website 76 Reduce headcount by 26%, from 80 to 59Cut local production budget by 40%, reducing annual locally produced hours from 109 to 65Eliminate the Program GuideMaintain or slightly decrease investment in website and education76 $9.1 millionIllustrative expense budget for an average medium/large community station100%=麦肯锡公共电视 运营模式(英文版)CHALLENGES: CAPITAL INVESTMENTS MAY FURTHER REDUCE AVAILABLE FUNDINGOnly $800 million of the estimated $1.7 billion goal has been raisedDigital ConversionPlans are to replace current infrastructure by 2006 using CPBs $177 million appropriation requestSource:CPB; APTS Digital Clearinghouse; PBS estimatesNext Generation InterconnectDigital MediaNew ServicesPlanned capital in