Maximizing the
Public Service Investment

"The next time a producer offers to give you his
two cents worth, tell him it's not enough"
– John Sutton

The goal of financial analyses is often to maximize profit. While "profit" may be the goal in commercial media, it is merely a means to an end in a medium that defines public service as its goal. Weighing the cost of programming against its return is an appropriate calculation for the public broadcaster.

Programming that "costs" the station or the producer more than it "earns" literally removes resources that can could be used for other programming.

A listener-hour is the basic unit of radio "consumption." It is the product of the average quarter-hour audience times the number of hours the program is on the air over the time period in question.

A station’s cost per listener-hour can be estimated by dividing its annual operating cost by its full-week average quarter-hour audience times 65.7.

The cost of a program can be estimated by dividing its expenses (ideally, both direct and indirect) by its average quarter-hour audience times the number of hours it’s on the air per year. In both cases the results are in pennies per listener-hour.

As cheap as spinning disks may seem, the true cost of local music production is a complex issue. It involves the allocation of many real expenses beyond the host’s salary. To name just a few:

• Is there a music director’s salary to pay?
• How much of the program director’s time is involved?
• The manager’s time?
• Are benefits and overhead included?
• What is the true cost of maintaining the music library?
• Is production involved?
• Is the cost of equipment depreciation factored in?

Underwriting is sensitive to the number and qualities of listeners. The more people in the audience, and the more they are like the people the underwriter wishes to reach, and the more difficult they are to reach through other media, the more the underwriter will pay to reach them with on-air credits.

Listener support is even more listener-sensitive. Like underwriting, the more people a station serves, the more listener support it is likely to receive. However, the programming that serves these listeners must be important in their lives. It must be significant. Otherwise, people may listen, but they won’t value it enough to support it financially.

Listener support is the product of programming significance, or value to the listener (measured by listener income per listener-hour) times the significance of the audience, or use by the community, (measured in listener-hours).

These return-per-listener-hour figures are based on the Public Radio Recontact Survey as analyzed by AUDIENCE 98^®. They are very close to numbers calculated from the Corporation for Public Broadcasting’s annual financial reports and Arbitron Ratings. The differences between the two sets of numbers are minor and do not affect the key findings of this report.

Locally Produced Programming

• 49% Percent of Listening
• 42% Percent of Listener Support
• 25% Percent of Underwriting Support
• 1.19¢ Return from Listeners (per Listener-Hour)
• 0.44¢ Return from Underwriting (per Listener-Hour)
• 1.63¢ Combined Listener-Sensitive Return (per Listener-Hour)

Acquired Programming

• 51% Percent of Listening
• 58% Percent of Listener Support
• 75% Percent of Underwriting Support
• 1.62¢ Return from Listeners (per Listener-Hour)
• 1.16¢ Return from Underwriting (per Listener-Hour)
• 2.77¢ Combined Listener-Sensitive Return (per Listener-Hour)

Local Classical Music

• 22% Percent of Listening
• 20% Percent of Listener Support
• 13% Percent of Underwriting Support
• 1.25¢ Return from Listeners (per Listener-Hour)
• 0.41¢ Return from Underwriting (per Listener-Hour)
• 1.66¢ Combined Listener-Sensitive Return (per Listener-Hour)

Local Jazz Music

• 10% Percent of Listening
• 6% Percent of Listener Support
• 6% Percent of Underwriting Support
• 0.86¢ Return from Listeners (per Listener-Hour)
• 0.43¢ Return from Underwriting (per Listener-Hour)
• 1.30¢ Combined Listener-Sensitive Return (per Listener-Hour)

Local Blues Music

• 2% Percent of Listening
• 1% Percent of Listener Support
• 2% Percent of Underwriting Support
• 0.71¢ Return from Listeners (per Listener-Hour)
• 0.56¢ Return from Underwriting (per Listener-Hour)
• 1.26¢ Combined Listener-Sensitive Return (per Listener-Hour)

Local AAA Music

• 2% Percent of Listening
• 2% Percent of Listener Support
• <1% Percent of Underwriting Support
• 1.04¢ Return from Listeners (per Listener-Hour)
• 0.49¢ Return from Underwriting (per Listener-Hour)
• 1.53¢ Combined Listener-Sensitive Return (per Listener-Hour)

Local News (Stand-Alone Programs Only)

• 2% Percent of Listening
• 3% Percent of Listener Support
• 2% Percent of Underwriting Support
• 2.35¢ Return from Listeners (per Listener-Hour)
• 0.61¢ Return from Underwriting (per Listener-Hour)
• 2.96¢ Combined Listener-Sensitive Return (per Listener-Hour)

Note: Most stations’ local news is embedded in the cutaways of national news programs; cutaways could not be tracked in this study.

Local Call-In

• 2% Percent of Listening
• 3% Percent of Listener Support
• 3% Percent of Underwriting Support
• 2.04¢ Return from Listeners (per Listener-Hour)
• 0.82¢ Return from Underwriting (per Listener-Hour)
• 2.86¢ Combined Listener-Sensitive Return (per Listener-Hour)

Morning Edition

• 14% Percent of Listening
• 18% Percent of Listener Support
• 34% Percent of Underwriting Support
• 1.75¢ Return from Listeners (per Listener-Hour)
• 1.74¢ Return from Underwriting (per Listener-Hour)
• 3.49¢ Combined Listener-Sensitive Return (per Listener-Hour)

All Things Considered (Weekdays)

• 9% Percent of Listening
• 12% Percent of Listener Support
• 22% Percent of Underwriting Support
• 1.78¢ Return from Listeners (per Listener-Hour)
• 1.64¢ Return from Underwriting (per Listener-Hour)
• 3.43¢ Combined Listener-Sensitive Return (per Listener-Hour)

Note: Morning Edition and ATC demonstrate that the "program" is alive and well in public radio. The problem has never been with "programs" as stand-alone entities; the problem is with "programs" that seek an audience outside of the station's core, or which are insufficiently compelling to serve the station's core.

Marketplace

• 1% Percent of Listening
• 1% Percent of Listener Support
• 4% Percent of Underwriting Support
• 1.94¢ Return from Listeners (per Listener-Hour)
• 3.09¢ Return from Underwriting (per Listener-Hour)
• 5.04¢ Combined Listener-Sensitive Return (per Listener-Hour)

Car Talk

• 1% Percent of Listening
• 2% Percent of Listener Support
• 2% Percent of Underwriting Support
• 2.65¢ Return from Listeners (per Listener-Hour)
• 0.99¢ Return from Underwriting (per Listener-Hour)
• 3.64¢ Combined Listener-Sensitive Return (per Listener-Hour)

A Prairie Home Companion

• 2% Percent of Listening
• 2% Percent of Listener Support
• 1% Percent of Underwriting Support
• 1.90¢ Return from Listeners (per Listener-Hour)
• 0.47¢ Return from Underwriting (per Listener-Hour)
• 2.37¢ Combined Listener-Sensitive Return (per Listener-Hour)

Whad’Ya Know

• 1% Percent of Listening
• 1% Percent of Listener Support
• <1% Percent of Underwriting Support
• 1.86¢ Return from Listeners (per Listener-Hour)
• 0.28¢ Return from Underwriting (per Listener-Hour)
• 2.14¢ Combined Listener-Sensitive Return (per Listener-Hour)

Performance Today

• 2% Percent of Listening
• 1% Percent of Listener Support
• <1% Percent of Underwriting Support
• 1.24¢ Return from Listeners (per Listener-Hour)
• 0.24¢ Return from Underwriting (per Listener-Hour)
• 1.48¢ Combined Listener-Sensitive Return (per Listener-Hour)

Classical 24

• 0.80¢ Return from Listeners (per Listener-Hour)
• 0.41¢ Return from Underwriting (per Listener-Hour)
• 1.21¢ Combined Listener-Sensitive Return (per Listener-Hour)

Note: Given these national averages, Classical 24’s audience would need to be only 37 percent larger than Local Classical’s (1.66¢/1.21¢) and Performance Today’s merely 12 percent larger (1.66¢/1.48¢) to generate as much listener-sensitive income for the station as Local Classical in the same time period.

 – David Giovannoni
AUDIENCE 98 Core Team

 

Audience Research Analysis
Copyright © ARA and CPB.  All rights reserved.
Revised: September 01, 2000 12:38 PM.