View the latest information regarding CapRadio’s finances.
The following visual narrative provides progress updates regarding specific financial challenges that existed at CapRadio and detailed explanations of corrective actions taken by CapRadio’s new management throughout fiscal year 2024 and beyond. The facts presented below adhere to accounting best-practices to accurately reflect related details relevant to CapRadio’s turnaround efforts and future long-term sustainability.
The Budget Deficit Challenge
As the extent of CapRadio’s financial challenges came to light in the fall of 2023, CapRadio’s new management team was put in a position to overcome a significant $7M budget deficit. This was brought on by unrealized pledged donations related to two downtown building projects, a funding hold put in place by the Corporation for Public Broadcasting and a decrease in one-time funding from unrealized estate gifts and grants.
Management Approach and Progress
Management took swift action to stabilize the organization by streamlining operations at the station, successfully reducing expenses by $11M — from approximately $25M in fiscal year 2023 to $14.5M in fiscal year 2024 — while also finding ways to improve and expand core public services.
CapRadio reduced engagement with third-party consultants and agencies and lowered payroll costs by a third while shepherding the station through a reorganization to more efficiently deploy staff resources to achieve key strategic priorities.
Operational Efficiencies
CapRadio implemented new programming standards and practices such as the adoption of automation for on-air promotional break structures and reporting. This improvement allowed the station to maximize use of its marketing and fundraising inventory — going from 12% to 100% utilization — while enabling news anchors to produce an additional four news stories per hour.
Local Public Service Journalism Focus
CapRadio ended the “modern music” format that aired Saturdays on its news stations, moving to a news-only format and redeploying resources to bolster local journalism offerings, including the addition of a veteran broadcast news director, a new dedicated four-person Politics & Government team, two new Sacramento community reporters and a major partnership with the Central Valley Journalism Collaborative, which helped the organization triple local on-air news coverage by the end of fiscal year 2024.
Sustainable Operations
CapRadio management developed a conservative annual fiscal year 2025 budget that has the organization operating sustainably with revenue ($13.5M) exceeding expenses ($13.2M). The budget has been approved by the CapRadio Board of Directors and the Sacramento State President’s Office.
The Debt Challenge
CapRadio has notable debt obligations that have accumulated over past years, primarily attributable to construction costs related to two building projects located at 1010 8th Street — the CapRadio Live events venue opening in FY 2025 — and 730 I Street and a new 88.9 music broadcast tower at Eagle’s Nest. Prior years’ cash flow limitations also adversely impacted accounts payable with vendors. CapRadio’s debt obligations currently total approximately $9.7M.
Management Approach and Progress
After contracting out accounting services to Sacramento State, management has taken a number of steps to strategically address CapRadio’s debt obligations. Prioritizing delinquent third-party payments, CapRadio caught up on over 1,000 unpaid invoices and set up payment plan arrangements with seven other major vendors, five of which were paid off ahead of schedule.
The vast majority of CapRadio’s debt obligations are related-party debt of $7.7M held by Sacramento State, with which CapRadio has established a favorable long-term payment plan. Additionally, in fiscal year 2024, CapRadio entered into a MOU services exchange agreement with Sacramento State that provides in-kind support through hourly on-air promotional messages for the university to offset the costs of services provided by Sacramento State, such as contracted accounting services, and pay down long-term debt obligations by approximately $220,000 each month.
Growth and Sustainability Challenge
Since the Sept. 27 California State University audit, CapRadio has faced intense scrutiny about its long-term viability given the significant operational deficiencies, financial difficulties and related media coverage.
Management Approach and Progress
Under new management and leadership, CapRadio and its reconstituted Board of Directors have shown their commitment to building a reliable, transparent and sustainable organization. Within one year of the Sept. 27 CSU audit release, CapRadio has submitted compliance updates for all 42 recommendations to align with CSU guidelines and the station now has procedures in place to ensure effective donation management, oversight and accountability.
CapRadio management continues to build a new organization that places a renewed emphasis on its public service mission, focusing resources to better serve local communities and inspire support from those communities. CapRadio staff have actively engaged with the community, holding dozens of donor convenings, station tours, community gatherings and one-to-one discussions with community leaders about the future of the station.
CapRadio has seen overwhelming support from the community during fiscal year 2024 — including a 9% increase in membership support — and the organization continues to find new ways to focus on sustainable growth.
CapRadio developed nearly $1M in new on-air recognition opportunities for supporters, such as local recognition for Morning Edition, All Things Considered, news desks and locally produced music programs. CapRadio continues to evaluate new opportunities to increase support of the station for its members and corporate sponsors, which currently makes up approximately 85% of its annual revenue.
CapRadio has made adjustments to its on-air fundraising efforts to maximize use of its largest platform. For its vehicle donation program, CapRadio went from airing a little over one spot a day to now airing one spot every hour. This update was made halfway through fiscal year 2024 and resulted in an 11% increase in total vehicle donations compared to the previous year. Management expects this trend to continue. In the first three months of fiscal year 2025, CapRadio saw a 19.2% increase in vehicle donation net revenue compared to the previous year.
CapRadio has developed new fundraising techniques by collaborating across departments. A collaboration between Marketing, Membership and Product teams enabled the organization to create more personalized and streamlined email fundraising, such as one-click donation form checkouts. In fiscal year 2024 CapRadio grew email fundraising revenue by over 112%. CapRadio management continues to champion innovative thinking and data-informed decision-making at the organization.
CapRadio has embarked on an initiative to partner with Sacramento State and launch the CapRadio Live venue as a student learning lab and dynamic events space for the community. CapRadio Live offers a special gathering place in the heart of downtown Sacramento and management is exploring the opportunity to grow revenue through rentals of the space. CapRadio Live at 1010 8th Street is planned for opening in fiscal year 2025.
CapRadio management is prioritizing the improvement and expansion of local public service journalism. The organization is actively developing partnerships and working with local foundations to increase local journalism in its core coverage areas while working toward strategic funding opportunities to expand these efforts sustainably. CapRadio management is also evaluating additional opportunities to grow awareness, listenership and member support for its new KXPR 88.9 music broadcast tower, which now covers a much larger core geographic area, including Placer and El Dorado counties, that increases potential audience reach by over 100,000.
