Pacifica's finances in a nutshell.

We are listener-sponsored radio. Anyone who knows Pacifica history knows this is a feast or famine type arrangement -- when we're in a "shooting war," people give a lot of money; when we're not, people give less money. This applies regardless of the quality of the programming -- although quality issues are important.

The alternatives to listener-sponsorship are corporate sponsorship/underwriting and/or non-corporate grants from foundations/organizations with media agendas of their own. (We do receive about 10% of our income from the Corporation for Public Broadcasting.)

What happened last fiscal year (10/1/02-9/30/03) was that we were in "feast" mode -- the anti-war movement was building up to protest the Iraq war & Pacifica was a big part of that. This gave us 3 great fund drives in the Fall/Winter/Spring of 2002-2003 at most stations. (And we had done very well since January 2002, too, due in large part to the euphoria from ousting the old board and "taking back" Pacifica.)

With all that money rolling in, the stations and national office "ramped up" their paid staffs last year -- without planning for a drop-off in funding or how they would meet payroll with a smaller income stream this year.

Our CFO, Lonnie Hicks, identified the problem last July in a memo to the board of directors. It's posted at http://www.pacifica.org/news/030727_CFOFinanceReport.html

But, once you have hired staff, it is very painful to lay them off. So, the budgeting process for this fiscal year has been very difficult. The budgets submitted to the board in September were "provisionally approved" by the board. But the CFO recommended, and the board passed, a resolution in September that all stations and the national office would have to resubmit their budgets within 45 days (by November 15th) to show accumulation of one month's operating reserves by the end of this fiscal year (by 9/30/04). Remember, we have no reserves because the old board bankrupted Pacifica -- and left us with about $5 million in debt. The last of the debt was paid off this November, but we still have not rebuilt any reserves to handle emergencies, restore our credit rating, and just maintain the necessary cash-flow to keep current with our bills between fund drives.

The budgets presented to the board in September are posted at http://www.pacifica.org/finance/index.html These budgets predicted 13% less revenue from listener support this year (down to $10.5 million from $12.2 million last year) because the "war bump" was over -- but did not include enough cost reductions to build reserves.

Then came the Fall (October) fund drives. WBAI & KPFK missed their targets by large percentages. WBAI's target was $1.2 million in pledges and they raised $800k in pledges (with a fulfillment rate in recent fund drives dropping precipitously to around 60% compared to other stations' 80%-85% fulfillment rate). KPFK's goal was $900k and they raised $750k in pledges. (This is especially worrisome because they recently repaired their transmitter last year -- increasing power from 10,000 to 100,000 watts.) So, WBAI was off target by 33% and KPFK was off target by 17%. The other 3 stations exceeded their goals, but KPFA had to extend their October drive by 3 days to do it.

This means that both WBAI and KPFK must reduce their revenue projections for the rest of the year, and budget accordingly. The WBAI situation has been discussed elsewhere. They are in emergency mode trying to raise enough cash to keep operating through January.

KPFK, is also facing a crisis. Unless they reduce their budgeted expenses considerably, they could soon be in a similar situation to that at WBAI if they have another bad fund drive. So, that is why they are cutting staff and/or are not filling positions they had previously budgeted for.

KPFA & KPFT are also not filling budgeted-for staff positions in order to meet their reserves requirement for this year.

But that still doesn't solve the network-wide problem. The national operations (administrative, national programming, affiliates services & the archives) are supported mainly by receiving 20% of the on-air fund drive money from the stations. If the on-air fund drives drop off, then the national operation's support also drops off -- and our ability to maintain the archives, produce national programming, keep the KU satellite operations going, and keep our national accounting and administration at the level needed to maintain a complex and troubled organization is also severely impacted.

The budgets submitted to the iPNB in mid-November have not yet been posted to www.pacifica.org. They're still tinkering with them & the board gave them another 45 days to come back with better budgets. But the bottom line is that the network -- as a whole -- will be showing a deficit this year of about $270k without more cutbacks. That means that the operating reserves generated by WPFW, KPFT, KPFA, & KPFK will have to be used to pay for deficits at WBAI & the national operations, and there will still be a deficit at the end of this fiscal year (9/30/04). So, obviously, more major cuts are in store and it's not a pretty picture.