National Prosperous Radio

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Visit National Public Radio at its headquarters in Washington, and you might think you have accidentally wandered into a corporate headquarters. The network, which once operated out of a cramped basement, today fills a sleek seven-story building with a lobby curved like a radio wave. Its studios feature the latest digital sound gear. Executives, if prodded, talk about "branding," "revenue growth" and "audience fragmentation." They speak such words softly — NPR is, after all, a not-for-profit organization whose member stations constantly beg listeners for contributions. But it's getting harder to keep its success a hush-hush affair.

After nearly going bankrupt in the mid-1980s, NPR is enjoying its best stretch ever, with a weekly audience up 48% since 1998 and revenues, in a flat economy, projected to grow 5% this year. As war and terrorism jitters create a hunger for more in-depth news — with little of it to be found on many commercial stations — listeners are turning to NPR programs and to public radio in general. Some 29 million Americans tune in at least once a week — an audience boost of 16% since the Sept. 11 attacks of 2001. Listeners are also attracted by a fresh burst of creativity among producers of public-radio programs, thanks in part to a spirited rivalry between NPR and Public Radio International (PRI), a network based in Minneapolis, Minn.

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Belying its reputed distaste for crass commerce, NPR has become quite entrepreneurial — in a once cozy environment that has turned surprisingly competitive. NPR doesn't own any radio stations. It is an independent producer and distributor of shows, led by the venerable news programs Morning Edition and All Things Considered. More than 700 of the 908 public-radio stations in the U.S. pay annual NPR membership dues of $7,845, plus "carriage fees," which run as high as $1.3 million a year, to broadcast NPR programs. But in contrast to common practice in commercial radio and TV, public-radio stations don't have to affiliate exclusively with one network. Most also pay carriage fees to PRI for such popular offerings as This American Life, a slice-of-life feature show, and Studio 360, starring culture critic Kurt Andersen. PRI also distributes most of the shows produced by Minnesota Public Radio, including Garrison Keillor's A Prairie Home Companion.

Long the whipping boy of politicians who want to cut its subsidies, public radio has become less dependent on federal funds. The U.S. Corporation for Public Broadcasting will dole out $82.7 million to public radio this year, only about 15% of public radio's spending. Most stations are also getting less money from the states, and some small stations are struggling.

Nonetheless, NPR, PRI and many large and medium-size stations have surprisingly healthy balance sheets. Though NPR has suffered a 40% drop in corporate underwriting revenues, from a peak of $33 million in 2000, its total revenue has fallen only 6% and is projected to rise in 2003. NPR plugged much of its shortfall by raising carriage fees and wheedling new cash from big charitable donors. (It recently won a $14 million MacArthur Foundation grant.) NPR has also started selling ad space on its headquarters building, and is widening its brand with two channels on Sirius Satellite Radio and an expanding online presence. "It's been a tough two years, but I think we've weathered it better than many for-profit networks," says executive vice president Ken Stern, 38, who joined NPR in 1999 and is credited with improving its financial health.

Many stations can afford to pay higher fees for NPR's programs these days because they have a broader base of listeners to tap. New York City's WNYC just completed its strongest winter fund-raising drive, reaping $1.2 million, and in the past six years its budget has increased nearly threefold, to $24 million. "We get very little government support," says WNYC president Laura Walker, 45, "but our listeners come through."

One reason people are contributing is that public radio seems to fill a void. Since 1996, when Washington loosened rules on station ownership, a few radio giants have scooped up hundreds of local stations. Today six chains broadcast to 42% of the national radio audience, according to Inside Radio, a trade publication. The giants say their efforts have saved faltering stations while making available more formats — different types of music, news, sports and talk. But the chains have increasingly turned the airwaves into McRadio, with little local flavor, brief news breaks and scant noncrisis coverage. The percentage of Americans who listen to radio for at least 15 minutes at any given time has fallen to 14.5%, from 17.5% in 1989, reports Inside Radio. Commercial stations are "losing out on the growth in the U.S. population," says Inside analyst Tony Sanders. NPR's Stern says this trend "has been to the detriment of radio generally but to the benefit of public-radio listeners."

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