For a different perspective on the problem — and on the daunting challenges faced by John Fahey, NGS Chairman & CEO — take a look at some of the Society’s basic financial numbers, which I pulled off the most recent 990s that are publicly available at Guidestar:
Trying to interpret 990s is a tricky business, of course. They’re often incomplete, confusing, and not entirely consistent year to year. That said, there are still a few trends worth noting. From 2007 through 2010:
- Net revenue dropped by more than $73 million — or 92%. And while investment income took a beating when the stock market collapsed, our portfolio began to rebound in 2010. Program revenue, though, went down by almost $60 million.
- Net assets fell in value by $132 million (15%).
- Membership revenue (dues) has dropped by more than $21 million. Since 2001, annual membership revenue has fallen more than $47 million — a 26% decline in just eight years. What’s especially sobering is this collapse reflects the publishing world before the iPad, which was introduced in April 2010. (Given this nosedive, it might be a good idea for Editor Chris Johns to say something to our members other than: Hey! People! Have you seen our latest rhino pictures?)
That’s the bad news — or some of it, anyway.
The good news, if you’re simply counting the money, can be found at National Geographic Ventures (NGV), our Society’s wholly-owned and taxable subsidiary. NGV is the corporate umbrella for all our new media and digital initiatives. It’s also the legal home of the National Geographic Channel, which is majority owned by Rupert Murdoch’s News Corp. (NGS has roughly a 25% stake in this joint venture.)
From all indications, the Channel appears to be a huge financial success. Exactly how big a success for NGS is difficult for me to quantify because NGV’s tax returns are not available to the public. But the 990s provide a hint about how much money is coursing through the Channel. On Schedule R (Related Organizations and Unrelated Partnership) in the 2010 filing, you’ll see this:
Column “f” says our Society’s share of the Channel’s income is more than $183 million; about half that amount is paid to the Society, while the remainder is retained to help the Channel grow. And grow it has: column “g” — $1.4 billion — represents the Society’s 25% share (approx.) of the total $5.6 billion value of the Channel itself.
$1.4 billion out of $5.6 billion. That’s pretty serious money, especially when the Society’s initial investment in the Channel was less than $140 million (I think; still checking).
How did the Channel do it? Why is it generating such impressive returns and experiencing such dramatic growth?
The short answer: People apparently love the programs about gangs… Nazis… drugs… prisons… sex addiction… prostitution… the Bikini Test… men who are sexually intimate with inflatable dolls… a woman who is addicted to having sex with strangers in a parking garage (with requisite on-screen analysis by a behavioral scientist)… Cops… lesbians in a Brazilian jail… and so on & so forth, ad nauseam.
Programming brilliance? Not really.
Then again, this discussion really isn’t about Rupert Murdoch. We’ve always known who he is.
In the end, this is about who we are, and who we want to be – as a Society and as a society.
♦ Can National Geographic put its iconic name & logo on fairgrounds & brothels (the Channel) and, at the same time, on libraries & nunneries (i.e., the Magazine) — and still be taken seriously by the public?
♦ Can National Geographic build a sustainable future on a network of brothels, which are raking in the cash, while the libraries wither on the vine — and the Society’s members continue their mass exodus?
♦ Most of all: How can John Fahey manage the National Geographic brand when the Channel, which reaches hundreds of millions of people around the world, is beyond his editorial control?
Put another way: What happens to The Brand’s hard-earned reputation when the Channel showcases stuff like this in prime time…
… and programs like this one called Sex for Sale, which is about “high-end sex work”…
… while our Chairman & CEO shows this earnest face to the public:
From a no-nonsense, hard-headed business perspective,
is this wise brand management?
And: Is it sustainable?
That’s what we’ll be exploring next with an expert in brand management.