【正文】 Developing a Sustainable Economic Model for Public Television May 29, 2023 CONFIDENTIAL 1 PROJECT ASPIRATIONS AND KEY QUESTIONS Identify and drive major changes that will put public television on a more sound economic footing and ensure its future success How 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? 2 CHALLENGES: BOTH STATION ECONOMIES AND PROGRAM DEVELOPMENT ARE ATRISK * Excludes capital funding for digital upgrade. Revenues not adjusted for inflation **Growth rate from 19942023 Source: CPB Audited Financial Reports (AFR), PBS analysis (dues), Appendix Q from PBS SG white paper (“Funding for PBS NPS Programming by Funder Category”) $ Billion $450 Million 2023 Local Station Economy 2023 National Program Funding Prospects for future revenue growth % per year* % per year** Historical growth in revenues (19902023) Current size Decline in real terms due to falling member revenues A system decision % per year Flat to very slowly growing (1% above inflation) 2023 Station Assessment $107 M 3 Total PTV system revenue,* 1990 and 2023 $ Millions University Inkind Corporate and foundation giving Unrelated business State and local funding Federal funding** Member giving * Excludes capital funding for digital upgrade, additional capital fundraising, endowment, and interest ** Federal agency grants for 2023 are estimated (assumed 5% growth over 2023) Source: AFR。 federal reports。 PBS annual reports $ billion $ billion CHALLENGES: ONLY GROWTH AREAS ARE UNRELATED BUSINESS AND UNDERWRITING 1990 2023 Annual Growth % 19902023 Drivers of growth 4 P e r i o d F l a t o r d e c l i n i n g s o u r c e ( s ) C o m p e n s a t i n g s o u r c e ( s ) 1992 1 9 9 4 ? ? C P B a p p r o p r i a t i o n ? ? S t a t e a n d l o c a l g o v e r n m e n t ? ? U n d e r w r i t i n g 1995 1 9 9 6 ? ? C P B a p p r o p r i a t i o n ? ? S t a t e a n d l o c a l g o v e r n m e n t ? ? N e t m e m b e r r e v e n u e ? ? U n d e r w r i t i n g 1996 1 9 9 8 ? ? C P B a p p r o p r i a t i o n ? ? S t a t e a n d l o c a l g o v e r n m e n t 1999 2 0 0 0 ? ? N e t m e m b e r r e v e n u e ? ? C P B a p p r o p r i a t i o n ? ? S t a t e a n d l o c a l g o v e r n m e n t ? ? U n d e r w r i t i n g 2023 2 0 0 2 ? ? N e t m e m b e r r e v e n u e ? ? U n d e r w r i t i n g ? ? C P B a p p r o p r i a t i o n 200 3 ? ? N e t m e m b e r r e v e n u e ? ? U n d e r w r i t i n g ? ? S t a t e a n d l o c a l f u n d i n g ? ? C P B a p p r o p r a t i o n ? ? none CHALLENGES: HISTORICALLY, THE SYSTEM HAS GROWN THROUGH DIVERSIFICATION – NOW ALL REVENUE SOURCES ARE THREATENED Source: AFRs。 Team perspective Future Outlook 5 CHALLENGES: NET STATION MEMBERSHIP REVENUE HAS DECLINED IN REAL TERMS SINCE 1990 * All growth rates are pound annual growth rates. Source: AFRs。 Bureau of Labor Statistics 050100150200250300350400450199019911992199319941995199619971998199920002001Fundraising costs: % Net membership revenues: % $17 million lost ine $ Millions, Adjusted for inflation to constant 2023 $ Gross revenues: %* 6 CHALLENGES: DECLINES WILL CONTINUE IN NET MEMBER SUPPORT Pledge, which is the engine of new member acquisition, has seen rising costs relative to new member yield in line with declining productivity trends outside PTV Net renewal revenue will not offset declining acquisition ?Stations already have among the nonprofit sector’s highest renewal rates ?Renewal mail’s productivity is flat to declining ?Declining ratings increase stations’ challenge Falling 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 audience With 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 2023?！?DMA Factbook 2023。 Giving USA 2023 Audience Size New Member Renewing Member Philanthropic Environment Membership Revenue Drivers Outlook 7 4 2 . 57 . 31 6 . 51 4 . 81 1 . 45 . 32 . 2CHALLENGES: STATION HAVE MET T