Guess Who's Making Money? NPR

For more than two decades, public-radio listeners have grown accustomed to the erudite questioning style of Fresh Air host Terry Gross. What many people don't realize is that the program is profitable, although its unclear how much of a windfall it makes for WHYY, the Philadelphia NPR affiliate that broadcasts the show.

"WHYY covered the production costs of Fresh Air for many years. (The program began in the mid-1970s and became a daily NPR show in 1987)," WHYY spokesman Brian Rossiter writes in an email. "In the past few years, as the program's carriage and underwriting increased, WHYY has seen a return on investment. Due to contractual obligations, I can't discuss exact figures on the program's costs and revenues."

Fresh Air, which airs on more than 500 stations, attracts more than 5 million listeners every week. The show isn't the only public-radio hit that brings in more money than it costs. Morning Edition, All Things Considered, and Car Talk are among the shows that return "a margin to our organization," NPR says in a statement to DailyFinance. Another fan favorite, This American Life (TAL), also has earned small profit, says Daniel Ash, vice president for strategic communications at Chicago Public Media, which produces the show.

Into the Black

As a whole, NPR -- as is common for a nonprofit -- usually runs a deficit. According to audited financial statements, NPR's revenue ran a $8.3 million deficit in the 2010 fiscal year, which ended Sept. 30. Revenues rose to $184.3 million from $148.7 million a year earlier, while expenses jumped to $192.5 last year from $166.6 million in 2009. But after cutting staff and scaling back benefits in 2008, NPR expects to make a "modest margin" this year, according to spokeswoman Dana Davis Rehm.

Of course, nobody's making dividends on these earnings. "Any surplus, which is rare, is reinvested with the program," Ash writes in an email. "For two years, during the recent recession, TAL surplus (net earnings) did cover other operating losses at WBEZ. However, moving forward, there is no expectation that TAL revenues will underwrite any other Chicago Public Media initiative."

Questions about the economics of public radio are taking center stage after last week's vote to defund the Corporation for Public Broadcasting. Such a move, NPR and its allies argue, would cripple public broadcasting by depriving millions of listeners access to news programs at member stations. Some local affiliates would go dark, NPR says.

Critics reject its argument as ludicrous. "Taxpayer dollars are not essential to their operation," Rep. Doug Lamborn (R-CO), who is leading the effort to defund NPR, writes in the Washington Examiner. "This fiscal year, Congress appropriated $430 million for the Corporation for Public Broadcasting, NPR's parent organization. In the next fiscal year, that amount is set to climb by $15 million.At a time when our federal debt is increasing by $54,373 every second, and the government is borrowing more than 40 cents of every dollar it spends, we must cut all nonessential government spending."

Should Taxpayers Support NPR?

Much of the anger at NPR's management, particularly by conservatives, stems from last year's mishandled firing of commentator Juan Williams. NPR's reputation was further damaged after one of its top executives was caught -- in a conservative blogger's "sting" -- saying that the network would be better off without federal funding. The uproar over the tapes, which were later found to be distorted, led to the resignation of Vivian Schiller as NPR's CEO.

Debates over whether NPR has a vendetta against conservatives, though, miss the larger issue of the network's financial strength. NPR says its finances have rebounded. NPR makes most of its revenue from program fees and dues that stations pay to broadcast its programs. Its second-largest source of revenue -- and one of the reasons for its financial success -- is that it allows corporations the chance to reach the its well-heeled audience through sponsorships, which it says has enjoyed "strong growth" over the past decade. NPR doesn't run any traditional commercials.

But although the network bristles at the suggestion, critics -- including Williams -- argue that these acknowledgments are little more than commercials. "Their claim that they don't have any commercials is a pretense," says Williams, now a political analyst at Fox News Channel who has called for NPR to be defunded. "They have all sorts of way to do advertising."

Davis Rehm disputes Williams, saying that the messages are limited and bring in nowhere near the amount of money that it would take to fill the budget gap if federal funding disappears.

Nonprofit Pay

Another subject of contention is the salaries of the top NPR talent, which are nothing to sneeze at -- but nowhere near the same league as the salaries of folks like Rush Limbaugh ($38 million) and Katie Couric ($15 million). Gross, who is also Fresh Air's executive producer, earned total compensation of $245,563 in 2008, according to the station's latest 990 filing with the IRS. Ira Glass, host of This American Life, earned $170,605 in 2008, according to Chicago Public Radio.

Meanwhile, the hosts of Morning Edition, Renee Montagne and Steve Inskeep, received compensation of $405,140 and $356,499, respectively. All Things Considered anchor Robert Siegel earned $358,653, while Weekend Edition Saturday host Scott Simon got $364,465, according to NPR's latest 990 form.

All of NPR's on-air staff is unionized, and the non-union staff typically receives salary increases of about 2.5% annually. However, the staff saw no raises during the last fiscal year due to financial pressures as a result of the economic crisis, NPR says.

Davis Rehm tells DailyFinance that these hosts deserve their pay because they helm programs that are among the most popular in radio. "I don't think we have anything to be apologetic about," she says, adding that the broadcasters could earn higher wages elsewhere.

Salaries: Higher than Average?

In an email interview, Gross argued that pay at public radio should be viewed in context. She received no salary at her first public-radio job while she was in graduate school at the State University of New York at Buffalo. Within a year, she was earning several thousand dollars a year. Gross came to WHYY in 1975 to host Fresh Air, which was then a local show.

"I don't remember exactly what my salary was, but it was in the very low two figures. In fact I think it was $10,000, which was a lot more then than it is now," she writes. "I think the highest-paid reporters and hosts who work on national shows make less, usually far less, than their commercial broadcasting counterparts. It's also important to note that most of the people who work in public radio have very modest salaries."

Michael Harrison, publisher of Talkers magazine, argues that some people at NPR receive higher compensation than they would in the for-profit media. Overall, NPR spends more money on its programs' employees than most commercial radio outfits, he says. Gross, for one, would not be able to match her public radio pay in the private sector.

"Sarah Palin and Charlie Sheen would be more attractive to commercial radio than Terry Gross," Harrison writes in an email. "There are people in commercial radio who make far less than people working at NPR and there are people in commercial radio who are making far more. That being said, my observation is that within the middle range of comparable positions, such as engineers, producers and average anchors and announcer types, the NPR employees are better paid."

NPR's Popularity

Of course, NPR is hardly the only group facing the possibility of losing federal funding. Federal spending of all sorts has been under scrutiny and there's a palpable concern that many programs could get cut.

NPR is under attack from critics: A Defund NPR page has been set up on Facebook which has more than 7,100 fans. But the network has plenty of support, too. Progressives, and some conservatives, are rallying to its defense.

Given its surplus this year, though, it might be harder to convince the cash-strapped government of its need for funding. Could NPR wind up being a victim of its own success?