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PRX merges with PRI

Or "merge," depending on how you read the tea leaves.

It’s a big enough story that you probably know this one already, but I should never assume what the audience knows! So here’s the cheese-whiz, courtesy of the Wall Street Journal:

Public-radio companies PRX and PRI are merging in a bid to capitalize on the surging popularity of podcasts and other digital formats as listeners and content creators migrate away from traditional broadcast radio.

PRX and PRI are two of the nation’s four national distributors of programming for public-radio stations and the first to combine operations. The other networks, National Public Radio and American Public Media, are much larger… No money will change hands in the tie-up. Boston-based public-radio station WGBH, which has co-produced content with PRI for decades and recently turned to PRX as a partner for podcasts, will invest $10 million in developing new content, including a new production studio and a “Podcast Garage” in Washington, D.C., to train new creators.

Also of note:

  • PRX CEO Kerri Hoffman will serve as the head of the newly combined entity.
  • Just a reminder that WGBH acquired PRI back in 2012. At the time, the deal was thought to extend the reach of WGBH — a public television powerhouse — well into radio, and to provide some financial and operational stability to PRI, which had already carried a noteworthy operating deficit by that time.
  • Per the Wall Street Journal article: “Gross revenue for the combined entity in its first year is estimated to be about $38 million.” For what it’s worth, PRI pulled in $18 million in the 2017 fiscal year, per Pew Research, and as Current’s Tyler Falk pointed out, PRX pulled in $8.5 million in the 2016 fiscal year (the last tax document year available to Current).

PRI may have brought in more revenue, and it may be bigger in absolute terms, but the overarching trends are more important.

  • PRX — Falk notes that PRX’s 2016 revenue number marked a 75% increase from its 2014 fiscal year, and I should add that the organization has been pretty aggressive since: expanding its Radiotopia network, bringing on Market Enginuity to formally handle sales, growing its list of ad sales clients (including signing Night Vale Presents and Gen-Z Media at the beginning of this year), and continuing to serve blue-chip publishers like Serial and This American Life with its podcast technology platform Dovetail.
  • PRI — In contrast, PRI has been on a considerable multi-year down-swing. Again, Falk has good context: the organization’s revenue had decreased 17% year-over-year by 2017, which brought the company to its lowest revenue point in the past decade. The public radio distributor, which once distributed This American Life — until a split over “digital differences” — and was feasibly competitive against NPR, has also been facing falling program and affiliation fees, a shrinking portfolio, and an operating deficit. WGBH may have stabilized PRI’s finances, but growth, apparently, proved elusive.

I’ve noticed some commentary online equating this to a coming together of two notable operations: Disney and Pixar, or something of the sort. I’m not quite sure about that. In my mind, the situation is pretty clear: PRI is a messy legacy public radio organization that nonetheless contains some valuable assets — The World, for one thing — which offers the right kind of expansionary organization some valuable pieces to add to their game.

PRX is just that expansionary organization: far from a scrappy up-start with something to prove, the Cambridge, MA-based outfit is a growing and diversified company — between its highly popular, innovative, and respected Radiotopia network, plus the ad sales and technology partnerships, plus their existing distribution-marketplace work, plus whatever’s coming out from the Garage stuff — that’s the product of several historical iterations and shifts with the times. (I sketched a very brief outline of PRX’s history in this column from January. Check the second story. It’s wild.)

So, if anything, this is less a “coming together of two organizations” to me than one working from a position of strength and the other working from a position of need.

And WGBH? Well, having acquired PRI and all, they’re fiscally responsible for the outfit. This takes the messiness out of their ranks and into the hands of someone that might figure out how to do something with it. Plus, they have the money to finance the whole move. Sometime you gotta spend money to save your money.

Anyway, I’ve got an interview scheduled with Hoffman later today. That’ll run on Tuesday, I believe.