Is NPR State Sponsored Media?

For years, my good friend Jack and I have argued about various pundits on both the left and the right and their extreme political statements.  Besides throwing red meat to their base, do they honestly believe what they are saying or is this just another example of celebrities making sure their names remain in the news?  After many years of spouting semi-nonsense, do they start to believe their own press releases?

A recent example is Elon Musk’s decision for Twitter to label NPR as “state sponsored media” thus provoking an immediate angry denial by both National Public Radio and the Public Broadcast Service (PBS).  I’m not sure who was acting more childish—the billionaire needlessly affixing a label to organizations we are all familiar with or the organizations who evidently don’t know the definition of the very words that make up their names.

“Only one percent of our funding comes from the Federal government,” claims NPR.  “Public Radio is not state sponsored radio.”

Now those are interesting statements and they deserve a little investigation.  To be fair, I should say that I listen regularly to NPR and over the years have given donations that add up into the low five figures.  I will also admit to frequently being very critical of some of NPR’s policies.  At the very least, I can't understand why the folks at Planet Money can't teach Terry Gross at least the basics of economics.

Right off the bat, I can tell you that NPR does indeed receive only about 1% of its current funding directly from the federal government.  I can also tell you that the statement is a masterpiece of political bullshit deliberately crafted to mislead the public.  Let me explain.

Back in the 1960’s, during President Johnson’s Great Society Program, Washington became concerned about the quality—more specifically, the lack of it—available on the public airwaves, particularly in the rural parts of the country where regular commercial broadcasting was unavailable.  As a child growing up in a rural area of Texas, I can remember a time when our family, didn’t own a television and the family radio could pick up relatively few stations.  If you believe what I tell my sons—and I advise against it—we lived in such a remote location we had cable radio.

In response, Washington passed legislation creating the Corporation for Public Broadcasting (CPB), a private non-profit corporation established and annually funded by the federal government to provide quality broadcasting for all Americans.  The CPB is still in operation and its current appropriation is just a hair over half a billion dollars annually.

To fulfill its mission, CPB created the National Public Radio network in 1970 by linking together 88 broadcast stations.  Most of them were (and still are) university-run stations, with CPB providing these stations content to broadcast.  Today, the number of stations has grown to over a thousand.  For the first dozen years or so, NPR ran huge deficits and there were frequent, and well-founded, public complaints of reckless spending and political bias in the reporting.  

Fifty years ago, you could reasonably argue that not every American had equal access to quality programming.  By quality programming, I mean Car Talk, Prairie Home Companion, and (most importantly) Sesame Street.  From the way some people talk, you would be forgiven for believing that there is a constitutional right to watch Big Bird for free.  

In response to the growing political pressure to review NPR’s budget, CPB staved off the criticism by decreasing the direct funding to NPR while simultaneously increasing the funding to the member stations to enable them to buy program content from NPR.  Since CPB maintains no broadcast stations of its own, it is not responsible for the content of the broadcasts.

It is true that, today, besides the fees the stations pay to buy content, NPR has many funding sources, including endowments, corporate sponsors and listener pledges, and it is also true that all of the donated money is tax deductible.  It is also true that the stations frequently operate from public universities, often using student labor.  Public radio also pays much smaller royalty fees for playing copyrighted music than do the privately owned stations.  While it is impossible to add up all the tax breaks, free rent, free labor, and reduced licensing fees these stations receive from the government (not to mention the cost of operating totally at taxpayer expense for the first dozen years while the stations established a market position), there is no doubt that these are publicly sponsored stations that enjoy significant advantages over the commercial stations.

But what about Big Bird?  Well, Sesame Street and all the characters are owned by a separate non-profit corporation, Sesame Workshop, whose assets include the royalty rights to enough different toys and merchandise to fill a huge warehouse—Amazon alone has over 10,000 entries if you search for ‘Sesame Street’.  Altogether, the corporation is valued at over $500,000,000 and the president of the corporation is paid just under a million dollars a year.  Even if Public Broadcasting went away, you could still watch Big Bird on HBOMax.

All of the above doesn't really answer whether NPR is actually controlled by the Washington, it just addresses who is paying for them.  In my opinion, Washington probably has little to no direct control of the NPR's editorial content, so Elon Musk is probably wrong to label them as such.  

The question the public should be asking is not whether they are paying for NPR (they are), but whether we even need public broadcasting at all.  Most of the reasons for establishing public media no longer exist.  Even though I live in a relatively remote area of New Mexico, I have a device in  in my pocket that can allow me to listen to any podcast ever made, read any newspaper on the planet, and even watch all 53 seasons of Sesame Street.  You would be hard pressed to find the ‘underserved’ American audience that originally formed the reason to create public media.

Any economist worthy of the name will tell you that the only time that government should intrude into the private market is when there is a market failure—meaning that the market fails to efficiently deliver a product or service competitively to the consumer.  We allow public utilities to deliver electricity and water because history has shown us that the private market has usually failed to deliver those essential services to consumers efficiently.  

We only have NPR because of a market failure in which the private market failed to efficiently provide quality broadcast services to the entire country.  But that was sixty years ago and improved technology has dramatically changed the market.   Since the market failure no longer exists, there is no longer a compelling reason for the federal government to be competing in the free market.  As it happens, even if the government were to continue paying for public radio, the days of radio broadcasts may be soon over.

Today, it is not unreasonable to question whether broadcast radio (and perhaps, broadcast television) will survive much longer.  As the internet grows, the need for thousands of costly broadcast stations becomes increasingly less realistic.  Already, some major automobile companies, including both Ford and Tesla, have announced that future models of their vehicles will no longer come with AM radios: can the death of FM radios be that far behind?  When every consumer is able to choose between an incredible array of commercial-free streaming entertainment—much of it provided free—why would anyone want to listen to a DJ play the same few dozen songs over and over while frequently being interrupted by obnoxious advertisements for the local car dealership?

The internet, with its various music channels, blogs, podcasts, and streaming services has eliminated any need for the taxpayers to continue to fund the production of any media….Even Big Bird.