Building Delivery Capacity

Acquiring a Station
A quick overview of key steps.

Public Service Operating Agreements
A growing number of public media organizations operate stations that are licensed to others.

Resolving Mutually Exclusive Applications There are still some frequencies available for which nonprofit organizations can apply through periodic "filing windows" at the FCC. These opportunities often result in mutually exclusive applications, for which the FCC has devised a detailed process to pick the winners.

Delivery Channels

SRG Home

By Marc Hand

By expanding into new frequencies and making better use of public radio stations in multiple-station markets, public radio will offer more programming choices, increase the range of content delivered to a community, and improve the accessibility of both existing and new content and services. This will increase public radio's public services and, in turn, the financial resources to support those services.

A Foundation for the Future

Of the many issues, challenges and opportunities facing public radio, one of the most critical is the question of delivery capacity—how and where listeners will connect with public radio in the coming years.

Historically, individual, "stand alone" public radio stations have been the core of the public radio system. Stations are the connecting points between the well-developed national production entities and national programs and the public radio audience. Stations are the local exchanges that offer a range of intelligent, engaging programs. Stations are the primary source of revenues that support the public radio system.

Development of this system of stations has been largely decentralized, driven by local needs, local institutions, and, often, single individuals. Although the Corporation for Public Broadcasting made targeted coverage expansion investments in the 1970s, the expansion of stations in markets and within regions for the past fifteen years has been more a result of individual initiative than coordinated national policy.

The result is evident in dramatically different levels of station development. Some markets have fully developed multiple services; others have a single outlet. Some regions are served by multiple-station entities well on their way toward parallel, differentiated programming streams; most areas have no such cooperation.

In contrast, both commercial and religious broadcasters have made a dramatic shift to large national group owners and national coordination of programming, marketing, sales and consolidation of administrative functions and financing. Years ago Moody Bible Institute adopted this national expansion strategy in filing mass applications for noncommercial frequencies throughout the United States. This larger national ownership structure also gives commercial station's access to significant public and private financing sources to use in building national groups of 100 to 200 stations.

The question for public radio is one of balancing national versus local needs and control, and developing a system that will support a coordinated strategic approach to the development and expansion of the capacity to deliver programming to audiences.

Today, there is more high-quality programming available in the public radio system than any station can air. Public radio is capable of offering 24-hour-per-day streams of news/public affairs, classical, jazz, AAA and Spanish-language programming—and sufficient programming in some of these formats to offer more than one 24-hour channel in a market. But we do not have the capacity to deliver it.

In addition, public radio faces increasingly sophisticated financial challenges, a fragmenting of the radio audience to more specialized formats, and a growing competitive challenge in both broadcast and nonbroadcast media.

These factors all combine to make a coordinated approach to the question of delivery capacity critical to the future of public radio.

Issues and Challenges

What will happen to institutional licensees? Ironically, the toughest issue we face first is not technical, but that of our own ownership structures. Most public radio stations carry out their business under the auspices of colleges, universities, state and municipal governments or other entities. The operation of these radio stations is shaped by the larger interests and priorities of these institutional licensees.

Closer to home, three quarters of SRG member stations are controlled by entities whose main business is something other than public radio. The capacity to plan, invest, and move through management transitions with "institutional memory" of a station's mission are seriously undermined in these situations. It calls to question efforts to place more outlets in the hands of these owners. In a number of cases, it challenges us to reasonably predict the long-term future of the existing broadcast operation.

Gaining control over new frequencies. Historically public radio has grown through the individual initiative of local stations or individuals—sometimes supported by grants or policy initiatives at the national level. Now the costs of this expansion are higher, vacant noncommercial frequencies are gone except in sparsely populated rural areas, and tax-based funds for signal expansion have largely dried up. Expansion through acquisition of attractive frequencies is moving beyond the reach of almost all public radio station operators.

How can public radio build sufficient capital to expand? It takes significant capital to operate or acquire other frequencies, upgrade and expand facilities, and launch major new program initiatives. How can public radio tap traditional national sources (foundations, corporations and CPB) and build new sources of capital? Should this capital formation be left to stations on a local level or is it a function for NPR, PRI, or others at the national level?

How can public radio pursue new business opportunities, joint ventures, or partnerships—especially in new media? There appear to be a number of opportunities for public radio to extend its franchise or brand in new media and new services. But who approaches SW Networks about a partnership? Who negotiates with the Microsoft and cable consortium's @Home venture? Discussions with some of these companies indicate widespread confusion about how best to negotiate with public radio—who is "public radio?" Public television, when facing this issue of building joint ventures, could not move as a system. As a result Discovery and a number of other cable channels are now directly competing for the public television audience.

How can public radio best pursue noncommercial and commercial acquisitions or Public Service Operating Agreements? As public and private entities face budget problems there may be a number of noncommercial frequencies for sale. Some management changes leave stations floating for lengthy periods of time without proper attention for the radio business. How should SRG respond to these challenges and opportunities? Will religious or even commercial broadcasters weigh in? Are there advantages to pursuing control options, such as Public Service Operating Agreements, instead of ownership options? Is it possible to be proactive on a national level in pursuit of these stations rather than waiting for a market-by-market response?

How can public radio compete in a media world that is becoming more highly concentrated in its ownership structure? Public radio has a strong, viable product with a highly desirable audience. Companies which now own eight stations in a single market and 100 to 200 stations nationally are more likely to look at smaller programming niches in markets where they control a significant share of the audience. How will public radio compete against a classical, news or jazz format designed to directly appeal to public radio audiences? Can MSNBC or CNN create a viable "NPR-style" news/public affairs format? Public radio has developed in an almost protected environment—how will it compete with other radio companies or other new media that may deliver similar high-quality programming?

Strategies for New Frequencies

There are a number of opportunities that exist for securing new frequencies for public radio. The overall goal should be to add new service or secure operating agreements with institutional public radio stations. Control may be in the form of direct acquisitions, or management control through Public Service Operating Agreements, or in some cases SRG stations may want to structure Joint Sales Agreements (JSAs) with other public radio stations. These JSAs would enable a group of public radio stations to establish national and regional sales representation for public radio, and offer direct local sales to stations, particularly institutional licensees, which have difficulty with the compensation and training of sales and marketing staff. The opportunities for adding new frequencies to public radio, ranked in order of the viability of the opportunities, are to:
  • Acquire other noncommercial stations

  • Structure long term management contracts which would enable public radio to manage and program other noncommercial stations

  • Acquire or enter into "public service operating agreements" with existing institutionally-licensed public radio stations

  • Structure JSA agreements for local, regional, and national management of the underwriting and marketing for local stations

  • Acquire commercial AM stations, to program or to use in swaps with noncommercial stations

  • Acquire commercial FM frequencies

  • Negotiate policy initiatives with the FCC which would encourage a donation, or long term operational control, of stations owned by groups in major markets which have reached their in-market ownership limits.

Station acquisitions or Public Service Operating Agreements can be pursued in two ways, at a local level and on a coordinated national level. A number of SRG member stations are already active in pursuing acquisitions or Public Service Operating Agreements at the local level. As an organization, SRG currently provides various levels of assistance to stations considering acquisitions on a local level. This existing process of assisting local acquisitions is based upon what we know, and historically how public radio has expanded. This local pursuit, and support from SRG, is very important as a part of the strategy to expand the delivery capacity of public radio. In this activity area, SRG is primarily reactive—assisting stations in their own local pursuits.

The second approach, coordinating a station acquisition campaign on a national level is more ambitious, but moves the system closer to where public radio should be in terms of its ability to provide expanded delivery capacity. There are limits to what can be done on a local level. First, local activity is limited by the station's interest, resources, and commitment to pursue an expansion strategy. Secondly, the acquisition marketplace for radio is national, not local. In today's market, it requires a national strategy and must be supported by national resources. The SRG support of local efforts and development of a national strategy are not mutually exclusive, and both levels should be a focus of SRG time and expertise.

December 12, 1997

Marc Hand is Managing Director of Public Radio Capital, a nonprofit organization that helps public media organizations acquire and protect delivery channels.

Public Radio Capital was created by SRG and launched as an independent organization in 2001.

Copyright 2010 Station Resource Group. All Rights Reserved.