NPR Board Approves FY23 Budget Investing $17 Million in NPR Network

NPR’s board of directors approved a deficit budget for fiscal year 2023 during its meeting Friday, reflecting new investments in the NPR network and economic uncertainty in the coming year.

The budget foresees $318.4 million in revenues and $309.8 million in expenditures. But the organization expects a shortfall of more than $5 million in operating cash, adjusted for expenses such as debt service and capital expenditures. NPR CFO Deborah Cowen called it a “key financial indicator” for NPR during a Sept. 7 board finance committee meeting.

“Normally we don’t do deficit budgets, but this year is an exception, and so is 2021 for COVID,” Cowan said.

A “key driver” of the budget shortfall, she said, is a 9% increase in spending, which includes a $17 million investment in the NPR network. The NPR Network, approved by the NPR board in June, includes numerous digital initiatives that NPR implements in collaboration with member stations, including fundraising efforts, a podcast subscription package and a network of NPR podcasts and stations.

The FY23 budget includes 35 additional positions, 30 of which will be for the NPR network, Cowan said. According to an NPR spokesperson, the positions will include supporting the Network in digital products and technology, consumer marketing, and audience development and growth.

NPR also saw “an unexpected increase in costs,” Cowan said, which included a doubling of a seven-figure cyber insurance policy in one year.

NPR is budgeting for revenue that is “more conservative than what we typically put together in any other budget year,” Cowan said. “It’s just driven by the headwinds and uncertainty we’re seeing in the economy.”

The budget predicts a reduction in income from development by almost 10%. This indicates that NPR’s “gift pipeline” is not “at a point where we feel comfortable projecting significant growth,” Cowen said, and that gifts from previous years are ending and not being repeated.

In FY23, NPR’s revenue will be increased by $16 million in special distributions made to the NPR Foundation in previous years. The distributions were set aside for this budget in addition to normal annual distributions from the fund and long-term reserves, according to Cowen.

NPR expects to have “enough surplus cash to fund the deficit without liquidating any of our investment reserves,” Cowen said.

NPR projects that FY22 will end with a small operating surplus of nearly $3 million. But the surplus was “down a little bit from what we thought it would be at the beginning of the year,” Cowen said, citing broader economic uncertainty and sponsorship orders that fell through.

Still, NPR expects revenue of more than $300 million by the end of the fiscal year, which would be a record for the organization, along with growth in sponsorships, development and station fees, its three biggest sources of revenue.

Costs came in higher than budgeted, Cowan said, which she attributed in part to COVID-19 lasting “a little bit longer than we planned last year.” This resulted in bonus payments to unions for key workers on site and the testing program for workers taking longer than planned.

Cowen said she has been asked about how inflation affects NPR. “I’d say not really,” she said. “… We spend the most on people, and then we acquire content. And for our purchased content, we typically enter into multi-year agreements that fix the amount we pay for the purchased content.”

Starter Pack of Podcasts

During Friday’s board meeting, board members heard that a podcast subscription package — one of NPR’s network initiatives — will launch in beta this fall, with 34 stations participating. The package provides sponsorship-free podcast episodes to new members of participating stations, who pay $8 a month or $96 a year, said Chief Operating Officer Will Lee.

Through late October or early November, online donors will be able to donate directly to the NPR network at NPR’s board and management will determine how to distribute unrestricted donations that may support NPR’s stations or network infrastructure.

In addition, the NPR Podcast Network launches Monday, adding NPR Network branding to tiles for podcasts from NPR and participating stations. Cross-promotion of the network’s shows will begin in October. The program, which combines NPR One and NPR News programming, is expected to launch sometime in the fourth quarter of 2022 or the first quarter of 2023, Lee said.

Later this year, NPR will host the first joint meeting of NPR staff and member stations focused on the NPR network, Lee said. These joint meetings will continue on a quarterly basis.

NPR is also forming a Network leadership team that will include representatives from both NPR and the stations. It will begin sitting later this year. “The team will act as an advisory group to NPR leadership, ensuring that collaboration with members is built into the structure of the NPR Network,” Lee said.

Lee also briefly discussed the role of music content and collaborative journalism on the Web. He said Bruce Oster, managing editor of Collaborative Journalism, and Edith Chapin, vice president and executive editor, will begin work this year to “reimagine the journalism roadmap” and share an “updated version of Collaborative Journalism” with the initiative’s leaders early next year. NPR Network.

“Additionally, as part of ongoing work to evaluate NPR Music’s focus, the team will explore possible connections to Urban Alternative music formats emerging on public radio, including a potential new national radio program,” Lee said.

Seven community media stations broadcast Urban Alternative, a CPB-backed format focused on hip-hop, dance music and R&B. Last month, CPB issued a request for proposals to fund three more Urban Alternative stations.

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