System Financial Health

Round Robin Meetings

I. Revenue & Expense Trends

II. Employment Profile

III. Audience-based Revenue

IV. CSG and PBS Dues History

OUTLINE FOR SYSTEM FINANCIAL HEALTH SECTION

$1.77$1.77$1.87

$1.79$1.71$1.66

$1.44$1.45

$1.93

1997 1998 1999 2000 2001 2002 2003 2004 2005

TOTAL SYSTEM REVENUES HAVE GROWN SLOWLY AND DECLINED RECENTLY

Public Television Revenues, 1997-2005

$ Billions

Source: AFR

Total Revenue Annual Growth Rate, 97-02: 5.9%*

* Compound Annual Growth Rate.

Total Revenue Annual Growth Rate, 02-05:

-2.8%*

$1,409 $1,368$1,494 $1,506 $1,598 $1,566 $1,636 $1,570 $1,585

$0 $28

$78 $108$168

$198$189

$117 $120

1997 1998 1999 2000 2001 2002 2003 2004 2005

THOUGH CAPITAL FUNDS HAVE GROWN AT A FAST RATE, THEY HAVE PLAYED A SMALL ROLE IN TOTAL REVENUES

Public Television Revenues and Capital Funds Contributions, 1997-2005$ Millions

Source: AFR

Capital Funds 7.5 %

Annual Growth Rate*

Non-operational

Operational

Capital Funds

*Growth rate from ’99-’05

5.5%

$291 $315

$77 $76$209

$233$71

$124$210

$180 $282

$109

$35

$410

$370

1997 2005

MEMBERSHIP, BUSINESS & STATE FUNDING HAVE ALL GROWN SLOWLY

Source: AFR

Total Operational Revenues, 1997 and 2005

$ Millions

Membership/Fundraising

Major Giving/Endowment**

Foundation

Businesses

Local/State

1.3%

33.0%

1.4%

1.0%

$1409

$1585

Growth Rate*

Total Operational Revenues 1.5%

* Inflation in this same period is 2.3% annually** Major giving growth rate is 1998-2005

Federal 5.8%

Other -6.4%

University -0.2%

$256$124

$219$282

$354$315

$94$76

$451$410

$233

$255

$86

$109

$35

1997 2005

TOTAL FEDERAL FUNDING IS THE LARGEST SOURCE OF REVENUE THAT IS GROWING IN REAL DOLLARS

Source: AFR

Total System Revenues Indexed to 2005 CPI, 1997 and 2005

$ Millions$1714

Growth Rate

* Major giving growth rate is 1998-2005

$1585

2.9%

Membership/Fundraising

Major Giving/Endowment*Foundation

Businesses

Local/State

-1.2%

29.0%

-1.1%

-1.4%

Total Operational Revenues -1.0%

Federal 3.2%

Other -8.7%

University -2.6%

8.7% 8.4%

7.4%

8.7%9.4%

8.8%9.4%

10.4%11.3%

1997 1998 1999 2000 2001 2002 2003 2004 2005

% of Total System Revenue that is CSG Funding, 1997 – 2005

Source: AFR, CPB

CSG FUNDING HAS ALSO BECOME AN INCREASINGLY IMPORTANT REVENUE SOURCE FOR STATIONS

$270 $250 $250 $300 $340 $350 $363 $378 $387

Total CPB Appropriation (in millions) after any rescissions

Appropriations (in millions) before rescission: 2003: $365; 2004: $380; 2005: $390

THOUGH REVENUE HAS DECREASED RECENTLY, EXPENSES REMAIN FLAT

Total System Expenses vs. Total System Revenues, 1997 – 2005

$ BillionsTotal System Expenses

Total System Revenue

$1.43 $1.51$1.59

$1.71$1.78

$1.84 $1.83 $1.86 $1.87

$0.0

$0.5

$1.0

$1.5

$2.0

1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: AFR

THE MIX OF EXPENSES OVER TIME HAS STAYED CONSTANT DESPITE SHIFTING OPERATING AND ECONOMIC CONDITIONS

Source: AFR

Percent Station Expenses, 1990 to 2005

49% 48% 46%

16% 17% 16% 18% 19%

6% 5% 5% 5% 5%

17% 16% 16% 16% 17%

12% 14% 13% 13% 14%

48%49%

1990 2000 2001 2003 2005

Membership & Underwriting

Management & General

Program Information & Promotion

Broadcasting

Programming & Production

10,81410,703 10,485 10,523 10,666 10,599 10,429

11,71911,167

10,590 10,510

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

EMPLOYMENT LEVELS HAVE RETURNED TO 1990s LEVELS

Public Television Full-time Employment, 1995-2005

Source: 1995-2002 AFR, 2003-2005 SABS

Source: SABS

EMPLOYEES ARE CONCENTRATED IN PRODUCTION AND CONTENT, DELIVERY & DISTRIBUTION (CD&D)

0

1,000

2,000

3,000

4,000

FTEs per Functional Area, 2004-20052005

2004

Corp. Mgt & Support

Develop-ment

Auction Under-writing

Program-ming

Production CD&D Education & Outreach

Marketing/

CRM

VIEWER AND DONOR NUMBERS ARE DECLINING AT THE SAME RATE

Nielsen Full Day Average Cumulative Households: Weekly (#) vs. Station Donors (#)

34,000,000

36,000,000

38,000,000

40,000,000

42,000,000

44,000,000

2003 2004 2005

# of

Hou

seho

lds

3,200,000

3,400,000

3,600,000

3,800,000

4,000,000

4,200,000

4,400,000

# of

Sta

tion

Don

ors

Weekly Cumulative (#) Station Donors (#)

Source: SABS

‘Cost per Dollar’ depictions exclude any allocated costs from the Corporate Management and Support, and other station areas.

FUNDRAISING COSTS IN THE SYSTEM GREW SLIGHTLY FROM 2004 TO 2005.

$0.42

$0.24

$0.17

$0.27

$0.38

$0.63

$0.43

$0.28

$0.62

$0.39

$0.24$0.26

$0.00

$0.20

$0.40

$0.60

$0.80

2005

2004

Source: SABS

Membership (gifts < $1K)

Major Giving (gifts ≥ $1K)

Planned Giving (realized)

Spot/Run of Scheduling

Underwriting

Auction Average

Fundraising Cost per Dollar Raised, 2004-2005

DESPITE CHALLENGES, PUBLIC TELEVISION HAS SEEN POSITIVE REVENUE GROWTH IN SEVERAL AREAS

• Foundation

Up 3% in real dollars (’97-’05)

• Major Giving

Up 29% in real dollars (’99-’05)

• Underwriting

Up slightly over the past three years to $233.4 million from $230.5 million

• Membership Giving

Average membership gift increase to $95/member in 2005 from $92/member in 2004

$75

$125

$175

$225

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

SYSTEMWIDE, CSG FUNDING EXCEEDES PBS DUES

CSG Grant PBS Dues*

*PBS dues are NPS and MSA dues onlySource: CPB, PBS

System-wide CSG Grant and PBS Dues*, 1997 – 2007$ millions