BasicFACTS™ is an assessment based report produced for this public television station. FACTS stands for Financial Analysis and Critical Thinking Scenarios. The various FACTS™ reports, including BasicFACTS™, FutureFACTS™, CashFACTS™, and ImpactFACTS™, are designed to provide an objective, data-based review of the station’s financial health, and to support executive decision making. It is intended for internal management use.

BasicFACTS™ uses three principal data sources. They include annual audit reports from the station’s independent auditing firm, SABS Benchmarking reports, station budgets and other financial management reports. In addition to this information, interviews with senior management are conducted to create a context and frame of reference for the station’s overall position. Finally, an analysis of strategic alignment is completed through a community assessment to provide an approximate indicator of effectiveness in delivery of mission and community service.

It is important to remember that every station, like every community, is different. Each operation must be viewed and understood within its unique environment. BasicFACTS™ is designed as a management tool to attempt to create this understanding so that station resources can be leveraged to their maximum return in terms of mission.

Table of Contents:
Overview	3
Narrative	5
Strengths	5
Opportunities	5
Risks	6
Short-term Outlook	7
Long-term Outlook	7
Financial Analysis	8
Audited Financials	8
SABS Report	14
Budget Variance Report	17
Community Needs Assessment	20

Short-Term Outlook for WXXX:
WXXX’s short term outlook is characterized by the staff reductions that have already taken place and the ongoing efforts to build its revenue streams. In the near-term, the station will begin the public phase of its capital campaign. Making efforts to align itself to community needs will strengthen the power of the station’s appeal. Management should look for mechanisms to make the community assessment happen as quickly as possible. Meanwhile, the station should take the appropriate steps to creating its endowment.

Through the generosity of a local benefactor, the station also purchased the unoccupied building next door. It should hold the property and postpone any plans to utilize the property that would require an investment of dollars during the current fiscal year.

Overall, the short-term outlook is reasonably strong, although not without risk. It will be imperative that the current management team operate in a consensus manner, and that the Station Manager and Chief Financial Officer remain the principal architects of the overall financial recovery and operational realignments.

Long-Term Outlook for WXXX:
WXXX’s outlook in the long-term is actually quite positive, assuming the risks that have been described in this report can be avoided. The station has already experienced the type of difficulties on the horizon for many public television stations in the coming years, and has taken the appropriate and difficult steps to adjust itself accordingly. The single largest factor in determining the long-term success of the station will be its ability to focus on its strategic alignment and continuously ask the question of the community of how it can best serve the local population. WXXX has navigated difficult waters, and its management should be well positioned to move into the longer-term future.

Through the generosity of a local benefactor, the station also purchased the unoccupied building next door. It should hold the property and postpone any plans to utilize the property that would require an investment of dollars during the current fiscal year.

Review of Audited Financials—Excerpt
Are the station’s revenues going up or down? In this case, revenue growth lagged the growth in expenses until 2001. If expenses exceed revenues consistently, the station will eventually deplete its reserves. In 2000 the station essentially operated at breakeven, and since then has experienced the windfall of Channel 00’s sale. However, the overall expense structure has not been significantly re-

Operating cash flow shows how much WXXX is generating through its core activities, and net income is the difference between total revenues and total expenses. In 1999 the station made a significant purchase of equipment that reduced its operating cash flow to nearly zero. The graph shows that net income is increasing more rapidly than operating cash flow, suggesting a potential future problem with working capital.

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2003 Budget Variance Report For the 4 Months Ended 10/31/02—Excerpt
Overall expenses to date are in line with the budget; however, individual line items are, in some cases, significantly overspent. They include travel, mail, and professional services, which are largely discretionary items and spending should be adjusted accordingly. In particular the travel budget overspending is disturbing and should be thoroughly understood and the appropriate measures taken. The lease line is also problematic, as spending through October has already reached 73% of the annual budget. Is this run rate on lease expected to continue throughout the year? If so, there will be a $25,000 overrun on this line.

While the budgetary analysis indicates that with the exception of the four expense categories mentioned above, appropriate overall financial management is present, cash flow management remains a real challenge and problem for the station. Management has already made significant staff cuts, and has proposed a management wage cut of 5%. These issues put the bequest income at risk for being utilized to bridge cash flow. Management is aware of this potential but restricting the funds to an endowment is the only sure mechanism for safeguarding this windfall as an income producing asset.

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Basic FACTS™ for WXXX 4 Community Needs and Service Assessment—Excerpt
The BasicFACTS™ report uses an analysis and assessment of the station’s financial and operating information in order to understand how it is performing and what areas may be important in the short– and longterm future. However, it is most important to understand this performance from the perspective of the needs of the communities the station serves and its stated mission. In order to provide that perspective, BasicFACTS™ uses the following process:

• During the initial station interview with General Manager, Station Manager and CFO, the following key questions are asked of each manager: 1) What are the top five needs or problems of the community that makes up your viewing area; 2) what, in your opinion, is the priority of those needs or problems?; and, 3) how would you rate the station’s understanding of the community needs?, 4) how effectively is the station addressing the community’s needs, and 5) how does the community see the station addressing these needs?
• Interviews are conducted with key representatives from each of the following community entities or organizations:
  

  Local/county governments	Higher education	Economic development board/office
  Bank/financial institution economist	Local newspapers	Regional non-profit board or association of non-profits
  Local hospital administration

• During these interviews, the same five questions are asked
• The responses to these questions are reviewed for consistency across the sample
• The responses are reviewed for consistency with the station perspective
• Matches and disconnects are evaluated

Conclusion:
There is a certain amount of disconnect between the community and board members. There is even greater disagreement between the community perception of WXXX’s effectiveness in dealing with these issues and the station’s perception.

The community feels that the station understands what the needs are and simply is not addressing it as well as it could. Most of the participants in the survey could identify something they had seen or heard about on the station that addressed one or more of the issues. However, the difference in the issues of concern identified by the community and those identified by the station would indicate that WXXX does not fully understand the concerns. Some community respondents also offered an understanding that the station couldn’t address all needs because of budgetary restrictions and problems. WXXX is working hard to serve the community, but unless all parties are in agreement as to how the community needs to be served, it is an exercise in futility.

Clearly, the station and board need to work in greater concert with the community in addressing the needs expressed as most problematic and then work to make sure that the station promotes the programs addressing these problems in an effective, efficient way.