RULE 8: Financial Considerations
Price. The price of items that may be offered should be determined by the offeror, taking into account the relevant marketplace; however, PBS retains the discretion to investigate the basis on which items are priced and conclude that certain items are priced too high.
Comment: Offerors are encouraged to establish prices which are consistent with the objective of enhancing the effectiveness and educational value of programs.
Revenue Share. On all items offered for sale on PBS programs (i.e., with an address, phone number, or other direct response ordering information) the offeror must share 20% of net revenues generated by the offer. "Net revenues" are defined as gross revenues, less the offeror's cost of the item and the direct costs of fulfillment. Program production expenses are not allowable as an expense against gross revenues; however, on rare occasions, exceptions to the revenue sharing requirement may be appropriate where a program's production financing depends significantly on anticipated offer revenue and where other factors suggest that an exception is warranted.
Offers of items priced at $5 or less are exempt from revenue-sharing if the offer generates less than $5,000 in net revenue annually. (For purposes of this exemption, the offer of transcripts of a series would be considered as a single offer; for example, a transcript offer for episodes of a 13-part series would be considered as one offer, not thirteen offers.) Announcements providing information on products or services where no direct offer is made (e.g., book mentions) are exempt from revenue sharing.
Comment: Revenue sharing recognizes both the unique opportunity afforded offerors to market program-related materials on PBS programs and the importance of the contribution made by local public television stations in airing announcements and generating responses.
Distribution of Revenue. Offerors must distribute revenue at least twice a year. In distributing the 20% of net revenue to stations (or PBS), offerors may choose from among four methods: (1) Twenty percent of net revenue may be sent to PBS; (2) CSG share basis only to stations which broadcast the offer; (3) Sourced Orders -- Net revenue distributed directly to the stations whose viewers ordered the item offered; or (4) Designated Market Area population or Average Quarter-Hour audience share basis only to stations which broadcast the offer. (If option #2, 3 or 4 is selected, offeror must contact PBS for CSG data or other information.)
If an offeror chooses to distribute net revenue under options #2, 3 or 4 above, the offeror is responsible for taking affirmative steps to ascertain carriage information in order to assure equitable distribution of the net revenue among all stations that broadcast the offer. Offerors with only small amounts of net revenue and/or without adequate administrative mechanisms for confirming carriage or distributing revenues directly to stations should use option #1.
Reporting on Revenue Distributions. All offerors must report to PBS all revenue distributions (showing gross revenues, expenses, and net amount). Offers that generate no net revenue must be reported to PBS at least annually (also showing gross revenues and expenses). Offers priced at $5 or less which generate less than $5,000 in net revenue annually must be reported to PBS at least annually, but offerors need not report gross revenues and expenses. However, offerors must provide documentation of gross revenues and expenses for such offers upon reasonable request by PBS.
Identity of Offerors. Offers of program-related material may be made only by non-profit (i.e., government chartered institutions or those included in the list of tax-exempt organizations maintained by the Internal Revenue Service) producers or distributors of public television programs, and such offerors must own the materials offered. No offer may be made without the program producer's authorization.
Comment: Offerors are limited to nonprofit producers or distributors of public television programs to help insure that revenues are used for public television purposes, to preserve the noncommercial character of public television, and to facilitate the revenue sharing required by Rule 8(b) above.