The Funding Perils of Public Broadcasting

"Public" radio and television are industries that illustrate well the interplay of outputs and mechanisms to finance them. The collective goods aspects of their broadcast outputs are unusually large; the process of production and distribution of programs is such that the incremental costs of serving additional listeners or viewers is essentially zero, and it is costly, though not impossible, to limit consumer access. These are the precise conditions of production under which financial problems emerge. With user fees to listeners being infeasible, dependence on contributions, gifts, and grants becomes great. When government grants fall, as they have in recent years, public broadcasting has pursued all of the principal finance options: It has moved aggressively to expand private donations, and to increase revenues from each of its two potential sources of sales -- user fees from advertisers and "underwriters," and from ancillary services that are complements of the broadcast process. How has this activity affected public broadcasting's nonprofit mission? In the United States, particularly, public broadcasting was founded on the belief that the private market, while extensive, had failed to provide certain kinds of outputs for which at least some people were willing to pay. Thus public broadcasting's efforts to cultivate private sources of funds, and the consequent implication that programming will be of the type that appeals to those sources, suggests that public broadcasting's mission must also change, whether by default or by design.