With the debates surfacing Mitt Romney's suggestion to cut federal funding to PBS, Americans became mired in a challenge that has been facing us even more than usual over the past year: lack of context. There is a constant rush to judgment based on both headlines and partisan lines that focuses on emotion rather than facts, goals and rationality.
I love Sesame Street and PBS in general. In fact, I am glad that the debate brought a renewed light to the quality of their programming and hopefully, brought in a slew of private donations. However, despite the clever Twitter accounts and Internet memes, cutting federal aid to PBS should in no way kill Big Bird.
I urge you to put pre-conceptions aside for just a few minutes to learn a bit in the way that Big Bird, Elmo and friends would encourage us to.
Brought to you by the number $232 million... in net assets
Let's break down the financial need and the business case of funding to Sesame Street and others with some concrete numbers.
Sesame Workshop, the non-profit company who develops and markets Sesame Street, has their most recent financial statements available here.
As of June 2011, according to this last set of financial statements, Sesame Workshop had:
- $289 million in total assets, including $29 million in cash, $47 million in receivables and $121 million in investments on their balance sheet;
- $232 million in net assets (after accounting for liabilities);
And yes, according to their own financial statements, Big Bird and his friends are invested in both private equity funds and hedge funds.
Now, what about the revenue, or money that Sesame Workshop takes in before expenses, from Sesame Street and related content and products? In 2011, Sesame Workshop made:
- Nearly $47 million from licensing;
- Around $42 million from distribution fees and royalty fees;
That amount totals nearly $90 million, before adding in support from corporate sponsors, donations and government grants to get to a total of more than $134 million in total revenues for the year.
Also, as a nonprofit 501(c)(3)corporation, it is not required to pay certain taxes. It does have some for-profit subsidiaries consolidated into its financial statements.
Now, you can draw your own conclusions from those numbers. Having advised businesses, including consumer and publishing businesses for more than 17 years, my read of these financial statements is that Sesame Workshop does not need the government grants to exist, before even exploring business model tweaks.
While the government funding allows them to operate at an accounting loss (which differs from a cash loss, because some of their expenses, such as the amortization of the expense of the purchase of the Sesame Street Muppet characters several years ago are non-cash items), they can more than cover the cost of producing content with their existing model -- not to mention their very strong $29 million cash position -- before even looking at the cushion of $121 million in investments.
Bringing in business model considerations, they could also take in additional corporate sponsors, amongst other business model tweaks, to make up any shortfall.
While Big Bird may be the face of the discussion, there is a bigger issue around federal funding for public television and radio. According to their annual report, where the most recent report is the 2010 report, the Corporation for Public Broadcasting allocates close to $450 million in federal funds (aka taxpayer dollars)as of 2012 to public television and radio efforts. The Corporation for Public Broadcasting also has $280 million in total assets with nearly $195 million in investments and almost $100 million in unrestricted net assets.
From their annual report:
The Corporation for Public Broadcasting (the Corporation) is a District of Columbia not-for-profit corporation authorized to receive federal appropriations...
The primary source of funding to the Corporation is the federal government. Congress has approved future annual funding to the Corporation through fiscal year 2012. Annual funding for 2012 and 2011 amounts to $445,000,000 and $430,000,000, respectively.
These monies fund PBS, NPR and other public broadcasting efforts.
According to an article from The New York Times, of this amount allocated by The Corporation for Public Broadcasting, $97.8 million went to PBS in 2010, accounting for about 17 percent of PBS's total revenue.
Does the suggestion of eliminating this funding mean that PBS, NPR and other public broadcasting isn't worthwhile? Absolutely not. These entities produce some of the best content around. However, there are other ways to ensure their viability and longevity without adding to the debt burden of the government, collectively standing at over $16 trillion in total currently, with a deficit of more than $1 trillion each of the last four years.
When PBS was founded, you could count the number of stations available for programming on your hands. Now, there are thousands of cable channels, not to mention myriad other content outlets. Many of those generate revenue from a subscription model. Others take on advertising and sponsorship dollars. There is no reason why PBS's model couldn't be shifted in those ways or others to make up the difference from any cut of federal funding.
Now, is cutting $100 million or $445 million going to solve our more than $1 trillion deficit? Of course not- by making just those cuts alone. But at the same time, we have to start somewhere. If we continually keep the projects that we like or that we are emotionally tied to, we are never going secure our country's financial position. But if we make tough choices and start getting rid of programs that have viability in another way, identifying just a few hundred of these could completely rid us of our yearly deficit.
Regardless of whether or not you agree with the notion of making those cuts, I do hope that you understand that if that funding was cut for PBS, Big Bird would not be killed or even be unemployed.
It's my greatest hope that we can start moving beyond the headlines to understand the reality of situations and options in front of us. When reading that Mitt Romney wanted the auto industry to go into bankruptcy, understand that bankruptcy means a process, not an outcome. It doesn't mean going out of business and in fact, the government took GM through a bankruptcy process as well, once it got involved.
If we want to move America forward, we need to understand the terms and facts around what we are discussing without the spin. Ask probing questions and let's keep our eyes on finding opportunities and solutions to problems, instead of preserving our problems under the guise of clever memes. America, we're better and smarter than that.