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entitled 'Telecommunications: Issues Related to Federal Funding for
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Report to Congressional Requesters:
April 2004:
TELECOMMUNICATIONS:
Issues Related to Federal Funding for Public Television by the
Corporation for Public Broadcasting:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-04-284]
GAO Highlights:
Highlights of GAO-04-284, a report to congressional requesters
Why GAO Did This Study:
For fiscal year 2002 (the most recent data), the Corporation for Public
Broadcasting provided about 16 percent of public television’s revenues
of $1.63 billion. GAO agreed to review the statutory allocations for
federal funding of public television, the Corporation’s distribution of
funds through its Community Service Grant and Television Future Fund
programs, its distribution of funds for the Public Broadcasting
Service’s National Program Service and for local programming, and its
grant programs for assisting public television’s transition to digital
technologies and services.
What GAO Found:
By statute, 75 percent of the Corporation’s annual federal funding for
public television is to be distributed among licensees of public
television stations, and 25 percent is to be available to the
Corporation for the support of national public television programming.
In our survey of all 176 licensees, of which 85 percent responded, more
than three-fifths favored maintaining the current allocations. Of those
favoring a change, most proposed an increase in the allocation for
distribution among licensees.
The Corporation uses Community Service Grants as the primary means of
distributing funding to licensees. Most licensees were generally
satisfied with the recent consultation process for reviewing the
eligibility criteria for these grants. Another program, the Television
Future Fund, awarded grants to projects designed to reduce licensees’
operational costs and enhance revenues. Only about 40 percent of the
licensees indicated that these projects had resulted in practical
methods to help their stations, and only about 30 percent agreed with
the Corporation’s approach of using funds designated for distribution
among licensees to partly support these projects. In our legal view,
the use of such funds for this purpose is not consistent with the
statutory authority under which the Corporation operates.
The Corporation provides an annual grant to the Public Broadcasting
Service to help fund a package of children’s and prime-time programming
that make up the National Program Service. Most licensees favored
continuation of the Corporation’s funding, noting that this national
programming helps them meet their educational and cultural missions and
build community support for their stations. Licensees also indicated
that local programming is important in serving their communities.
However, most responded that they do not produce enough local programs
to meet their communities’ needs, and many cited a lack of funds as the
reason.
About 85 percent of the licensees responding to our survey indicated
that the congressionally mandated transition from analog to digital
broadcasting will improve their ability to provide local services to
their communities. The Corporation has received appropriations to help
support this transition since fiscal year 2001. In consultation with
licensees, the Corporation has used these funds to provide licensees
with grants for acquiring digital transmission equipment. Some
grantees, however, did not receive their awards in time to meet FCC
deadlines for the construction of digital transmission facilities. In
addition, the Corporation received only a few grant applications during
the latter part of 2003. Our survey indicates that most licensees’
priorities now involve other aspects of the transition, some of which
(including digital production equipment and development of digital
content) were not included in the scope of the grant programs. The
Corporation is also seeking funds for digitally based infrastructure
improvements for distributing public television programming to stations
and is working with public television stakeholders to develop a
strategic plan that includes the creation of digital content.
What GAO Recommends:
We recommend that the Corporation request specific statutory authority
before making further Television Future Fund awards or expenditures if
it intends to continue using funds that were designated for
distribution among licensees. We also recommend that the Corporation
broaden the scope of its digital grant programs to include support for
digital production equipment and digital content. In response, the
Corporation generally agreed with our recommendation on digital grants
but disagreed with our recommendation on the Future Fund. We added a
matter for congressional consideration that if the Congress supports
using funds designated for distribution among licensees to finance the
Future Fund, it should provide the necessary authority to do so.
www.gao.gov/cgi-bin/getrpt?GAO-04-284.
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Mark Goldstein at (202)
512-2834 or goldsteinm@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
A Majority of Licensees Favor the Current Statutory Allocations for
Public Television Funding through the Corporation:
Most Licensees Were Generally Satisfied with the Process for
Determining Community Service Grants, but Many Expressed Concerns about
the Television Future Fund:
Most Licensees Favor Continued Federal Funding Support for the National
Program Service, as Well as Additional Funding to Produce More Local
Programming:
Corporation Has Funded Digital Transmission Equipment, but Other
Digital Infrastructure and Content Needs Remain:
Conclusion:
Recommendations for Executive Action:
Agency Comments:
Matter for Congressional Consideration:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Components of the Corporation's Community Service Grants:
Appendix III: Legality of the Corporation for Public Broadcasting's
Television Future Fund Program:
Background:
Issues:
Conclusion:
Appendix IV: Digital Transition Regulatory Issues of Concern to Public
Television:
Appendix V: Underwriting Acknowledgments on Public Television:
Appendix VI: Survey of Public Television Licensees:
Appendix VII: Comments from the Corporation for Public Broadcasting:
GAO Comments:
Appendix VIII: Comments from the Public Broadcasting Service:
GAO Comments:
Appendix IX: Key Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Figures:
Figure 1: The Number of Noncommercial Educational Licensees and Stations
by Type, as of February 2004:
Figure 2: Sources of Public Television Revenues, Fiscal Year 2002 ($1.63
billion):
Figure 3: Federal Appropriations for the Corporation for Public
Broadcasting, Fiscal Years 1969-2006:
Figure 4: Federal Funding Allocations by the Corporation, as Required by
the Communications Act:
Figure 5: Percentage of Licensees that Favor Either the Current
Allocations or a Change in the Allocations:
Figure 6: Percentage of Licensees by Type that Favor Either the Current
Allocations or a Change in Allocations:
Figure 7: Percentage of Licensees by Size (total revenue) that Favor
Either the Current Allocations or a Change in Allocations:
Figure 8: Favorable Responses of Licensees on the Corporation's 2001
Consultation Process:
Figure 9: Distribution of Television Future Fund Grants by Project Type:
Figure 10: Extent of Licensees' Knowledge of Findings and Outcomes of
Television Future Fund Projects:
Figure 11: Licensees' Responses on Whether Television Future Fund
Projects Provided Them with Practical Methods for Reducing Costs and
Enhancing Revenues:
Figure 12: Licensees' Responses on Favored Approach for Funding the
Television Future Fund:
Figure 13: The Corporation's Distribution of Funding in Support of
National Programming:
Figure 14: Licensees' Views on the Corporation's Funding of the PBS
National Program Service and the Service's Selection Process:
Figure 15: Licensees' Views on the Extent to Which the National Program
Service's Children's and Prime-Time Programming Helps Them Meet Their
Mission:
Figure 16: Licensees' Views on the Extent to Which the National Program
Service's Children's and Prime-Time Programs Help Them Build Membership
and Underwriting Support:
Figure 17: Licensees' Views on Whether the Amount of Local Programming
That They Produce is Sufficient to Meet the Needs of Their Communities:
Figure 18: Licensees' Views on the Need for the Corporation to Have
Explicit Authority to Fund More Local Programming:
Figure 19: Public Television Licensees that Currently Provide or Plan to
Provide Digital Services:
Figure 20: Time Line of Activities for the Corporation's Digital Grant
Programs, August 2001 through November 2003:
Figure 21: Licensees' Highest and Lowest Priorities for Use of
Additional Federal Funds to Support the Digital Transition:
Figure 22: Components of the Corporation's Community Service Grants:
Figure 23: Issues Cited by Licensees As Impeding Public Television's
Digital Transition:
Figure 24: Licensees that Air, Plan to Air, and Do Not Air or Plan to
Air Their Own 30-Second Underwriting Acknowledgments:
Figure 25: Reasons Identified by Licensees as the Highest Priority for
Airing or Planning to Air Their Own 30-Second Underwriting
Acknowledgments:
Figure 26: Views on the Need for a Federal Requirement Limiting the
Length of Underwriting Acknowledgments:
Abbreviations:
CEO: chief executive officer:
CPB: Corporation for Public Broadcasting:
CSG: Community Service Grant:
DDF: Digital Distribution Fund:
DUSF: Digital Universal Service Fund:
FCC: Federal Communications Commission:
NTIA: National Telecommunications and Information Administration:
PBS: Public Broadcasting Service:
RFP: Request for Proposal:
Letter April 30, 2004:
The Honorable Joe Barton:
Chairman, Committee on Energy and Commerce:
House of Representatives:
The Honorable Fred Upton:
Chairman, Subcommittee on Telecommunications and the Internet:
Committee on Energy and Commerce:
House of Representatives:
The Honorable Ralph Regula:
Chairman, Subcommittee on Labor, Health and Human Services, Education,
and Related Agencies:
Committee on Appropriations:
House of Representatives:
The Honorable W.J. "Billy" Tauzin:
House of Representatives:
The Honorable Richard Burr:
House of Representatives:
Created to harness the technology of broadcast television for the
delivery of educational, informational, and cultural programming,
noncommercial educational television--generally known as "public
television"[Footnote 1]--has evolved over the past half-century into a
complex and uniquely structured broadcasting system. Since the first
station went on the air in 1953 until today, the nation's 356 public
television stations were built and have continued to operate as
nonprofit, community-based organizations, offering a mix of broadcast
programming and other outreach activities to serve their local
communities. While public television stations themselves produce
programming for local broadcast, programming is also created for
national audiences and distributed through national station-based
membership organizations, such as the Public Broadcasting Service
(PBS), distributor of noted series such as Sesame Street, Masterpiece
Theatre, and Great Performances. The funding of public television, also
unique in form, has historically come from a multitude of sources,
including foundations, corporations, colleges and universities, state
and local governments, and individual viewers. For the past 35 years,
the federal government has also provided funding to advance the mission
of public broadcasting, principally through the Corporation for Public
Broadcasting.[Footnote 2] The Corporation was established in 1967 by an
act of Congress as a nongovernmental, nonprofit corporation to
facilitate--with federal funds--the availability and distribution of
high quality educational and cultural programming to public broadcast
stations. Since its founding, the Corporation has received an annual
federal appropriation from the Congress and, more recently, additional
funds have been made available to assist in public television's
transition from analog to digital broadcast technology.
Because the House Energy and Commerce Committee could consider
reauthorizing the Corporation for Public Broadcasting as early as this
year, you requested that we review various programs and funding
mechanisms utilized by the Corporation to support public television.
Specifically, you asked us to review the Corporation's activities and
obtain the views of public television station officials regarding: (1)
the statutory allocations for federal funding of public television; (2)
the distribution of funds by the Corporation through its Community
Service Grant and Television Future Fund programs, including a legal
analysis of whether the funding of the Television Future Fund program
is consistent with the Corporation's underlying statutory authority;
(3) the distribution of funds by the Corporation for PBS's National
Program Service and for local programming; and (4) Corporation funding
to assist public television stations in their transition to digital
technologies and services. You also asked us to review the statutory
and regulatory requirements, system policies and guidance, and
licensees' views on underwriting acknowledgments (see app. V).
To respond to these objectives, we reviewed provisions of the
Communications Act of 1934, as amended (Communications Act), and the
processes of the Corporation for Public Broadcasting to allocate
federal funding for public television and distribute grant funds to
public television stations and for public television programming. We
also interviewed officials of the Corporation and PBS, as well as the
Association of Public Television Stations--a nonprofit organization
that represents public television stations in legislative and policy
matters and conducts planning and research activities on behalf its
members. For the second objective, the distribution of funds among
licensees, we reviewed the legal opinions of the Corporation's outside
counsels as part of our legal analysis to determine whether the
Corporation's approach to funding the Television Future Fund is
consistent with the governing statute. For the third objective,
national programming, we reviewed documents and interviewed officials
of the Independent Television Service, a nonprofit corporation that
receives federal funding support from the Corporation for distribution
to independent producers of public television programming,[Footnote 3]
and from two other distributors of national public television
programming--American Public Television and the National Educational
Telecommunications Association. For the fourth objective, the digital
transition, we interviewed officials of the National Telecommunications
and Information Administration (NTIA) in the Department of Commerce,
which makes grants to public television licensees for digital
equipment. Officials of American Public Television, the National
Educational Telecommunications Association, and the Federal
Communications Commission (FCC) were also interviewed on issues related
to underwriting acknowledgements on public television.
To obtain views on each of these objectives from the officials who
operate the nation's 356 public television stations, we conducted a
Web-based survey of all 176 entities that are licensed by the FCC to
operate these stations and receive grants from the Corporation. We
received 149 completed surveys--an overall response rate of 85 percent.
(The number of responses to individual questions may be lower depending
on the number of licensees who were eligible or chose to answer each
question.) The survey consisted of objective questions and the option
for licensees to add narrative comments in each section of the survey.
The survey questions and aggregate responses appear in appendix VI. We
also conducted interviews with officials of 16 public television
station licensees to obtain general perspectives on the issues to be
reviewed, and we conducted pretests with seven of these licensees to
assist us in the development of the survey instrument.
Our review was performed from April 2003 through February 2004 in
accordance with generally accepted government auditing standards. For a
more detailed discussion of our scope and methodology, see appendix I.
Results in Brief:
The Corporation for Public Broadcasting allocates federal funding for
public television under provisions specified in the Communications Act.
Of the federal appropriation made annually to the Corporation, 75
percent of the funds allocated for public television are to be
available for distribution among licensees of public television
stations, and 25 percent are to be available for national public
television programming. Based on our survey of licensees, more than
three-fifths of the licensees indicated that these statutory
allocations should stay the same, compared to about one-third who
favored a change. Among the licensees favoring retention of the
existing allocations, some stated that the current allocations have
served the system well for many years and have provided the appropriate
level of federal funding for both licensees and national programming.
Of the licensees who favored a change, most proposed an increase in the
allocation for licensees and a decrease for national programming.
However, a couple of respondents expressed a preference for the
reverse--a decrease in the allocation for licensees and an increase in
the allocation for national programming.
The principal mechanism by which the Corporation provides federal
funding among licensees of public television stations is the Community
Service Grant program. In accordance with the statute, the eligibility
criteria established by the Corporation for distributing Community
Service Grants are periodically reviewed by the Corporation in
consultation with licensees. Based on our survey, over 75 percent of
responding licensees expressed overall satisfaction with the most
recent consultation process. The Corporation also administers the
Television Future Fund, which in past years offered grant support to
projects to help licensees achieve operational cost reductions and
revenue enhancements. The manner in which the Corporation administered
this program raised concerns among a substantial percentage of
licensees. Based on our survey, only about 40 percent of the
respondents indicated that Television Future Fund projects had provided
them with practical methods for reducing costs and/or enhancing
revenues. Additionally, only 30 percent of the licensees agreed with
the Corporation's approach of funding the program, in part, with funds
that the Congress has made available for distribution to licensees of
public television stations. Although the Corporation, as informed by
outside counsel, contends that it has the authority to use these monies
for the Television Future Fund, we disagree. Based on our own legal
review of this issue, we conclude that the Corporation's funding and
distribution of grants under the Television Future Fund program is not
in accord with the statutory authority under which the Corporation
operates. Fundamentally, in the context of the entire statutory scheme,
funds that the Congress has designated for distribution to public
television licensees are not available for project-specific grants
intended to have a systemwide benefit. The Corporation recently revised
the Television Future Fund program to focus on a number of improvement
initiatives to be funded from the Television Future Fund's account
balance, which stood at $18.3 million on December 31, 2003. However,
this account still includes about $10 million that the Congress made
available for distribution to the licensees of public television
stations, which the Corporation intends to use to fund additional
Television Future Fund projects. Appendix III contains our legal
opinion.
Provisions of the Communications Act also govern the Corporation's
support for national public television programming. As a result of a
statutory provision, the Corporation developed and implemented a plan
that includes the awarding of an annual grant to PBS for a package of
children's and prime-time programs broadcast by most public television
stations, known as the "National Program Service." Nearly three-fourths
of licensees responding to our survey support the Corporation's
continued annual grant support for the National Program Service and
believe that this programming helps them meet their mission and build
underwriting and membership support. However, most licensees also
indicated that the amount of local programming they currently produce
is not sufficient to meet their local communities' needs, and about
half favored the enactment of explicit statutory authority to enable
the Corporation to provide federal grants for the production of local,
as well as national, programming.
The Congress has mandated that television broadcasters transition from
analog to digital transmission technology. The digital transition has
the potential to expand the capabilities of public television and offer
licensees' communities an array of new digital services that support
educational, governmental, and cultural activities. In our survey of
licensees, over 85 percent of the respondents indicated that successful
completion of the digital transition will improve their ability to
provide services to their local communities. However, licensees face
funding challenges as they move to digital technology, with the total
cost of the transition for public television estimated at $1.7 billion.
For fiscal years 2001 through 2003, the Corporation was provided with
appropriations totaling $93.4 million to assist public television
licensees with the digital transition. However, the Corporation was not
always timely in getting grant support to stations to help them meet
FCC digital construction deadlines, and about $24 million remained
unobligated at the end of calendar year 2003. Furthermore, we found
that by then most licensees' priorities for federal funding involved
aspects of the transition not covered by the Corporation's current
digital grant program, such as digital production equipment and digital
content. Regarding systemwide digital transition issues, the
Corporation is seeking additional federal funds for modernizing public
television's program distribution infrastructure.
This report makes recommendations to the Corporation to (1) request
specific statutory authority before making further Television Future
Fund awards or expending any funds in the Television Future Fund
account, if it intends to continue using funds that were designated for
distribution among licensees, and (2) broaden the scope of its digital
transition funding to include support for digital production equipment
and digital content.
We provided a draft of this report to the Corporation, to PBS, and to
FCC for their comments. The Corporation responded that it generally
agreed with our recommendation on the digital transition funding.
However, the Corporation disagreed with our findings and recommendation
on the Television Future Fund, maintaining that it has acted
consistently with the provisions of the Communications Act in
establishing and administering the fund. Nevertheless, it is our view
that the Corporation does not have the authority to fund the Future
Fund program, in part, with monies that the Congress has designated for
distribution among public television licensees. Accordingly, we have
added a Matter for Congressional Consideration stating that the
Congress may wish to provide the Corporation with the authority to use
these funds to finance the Television Future Fund if the Congress
supports the use of such funds for this purpose. PBS provided
additional information and perspectives on issues raised in our report
and highlighted planned actions to improve input from member stations
on PBS's programming decisions. FCC provided comments on technical
points that were incorporated where appropriate.
Background:
Public broadcasting dates back to the 1920s, when the first radio
stations devoted to instructional and cultural programming went on the
air. With the advent of television broadcasting in the 1940s and a 1952
decision by the FCC to reserve channel allocations for noncommercial
educational television, the first public television station--KUHT in
Houston, Texas--began operations in 1953. Today, 356 public television
stations are on the air, each operating under the terms of a license
granted by the FCC. These stations are owned and operated by 176
entities that, under FCC rules, must either be: (1) a nonprofit
educational institution, such as a university or a local school board
(shown separately below as "university" and "local authority"); (2) a
governmental entity other than a school, such as a state agency; or (3)
another type of nonprofit educational entity, such as a "community"
organization. Among these 176 licensees, some operate a single station,
such as the Detroit Educational Television Foundation, which operates
WTVS public television; others operate multiple stations, such as the
Kentucky Authority for Educational Television, which has 16 stations on
the air throughout the state. Figure 1 provides a breakdown of the
number of licensees and stations they operate (by type of licensee).
Figure 1: The Number of Noncommercial Educational Licensees and
Stations by Type, as of February 2004:
[See PDF for image]
Note: In May 2003, there were 89 community licensees operating 138
stations, 59 university licensees operating 85 stations, 21 state
licensees operating 126 stations, and 7 local authority licensees
operating 7 stations. Neither the total number of licensees (176) nor
the total number of stations (356) had changed at the conclusion of our
review in February 2004.
[End of figure]
Licensees also differ by the size of their budgets, ranging from the
smallest licensees, with total revenues below $3.5 million, to the
largest, with total revenues exceeding $20 million.[Footnote 4] A few
of the largest licensees are also among the most prominent producers of
public television programming, such as WGBH in Boston, producer of
Masterpiece Theatre, Arthur, and other notable series. Other licensees
also produce programming for national distribution, such as KUHT in
Houston, producer of The American Woodshop and the children's program
Mary Lou's Flip Flop Shop. Programs intended for local and regional
audiences are produced by many licensees, such as KDIN public
television in Johnston, Iowa, producer of Iowa Press and Living in
Iowa. Finally, public television licensees provide numerous services to
their communities, such as programming-related outreach, formal
educational services, literacy services, Amber Alerts[Footnote 5] for
the abduction of children, and emergency weather information.
Public television is characterized as a decentralized system, with all
licensees owned and controlled at the local level. Stations exercise
substantial discretion over programming decisions. This structure is
due, in part, to the institutional and financial factors that motivated
the founding of each individual public television station. Unlike
commercial television stations, which typically involve business-
related investment decisions, establishing a public television station
entails a local-level commitment to the education and cultural
enrichment of viewers. Further, whereas advertising revenues finance
commercial television, public television has always been financed by
both public and private sources. For fiscal year 2002 (the most recent
data available), public television generated $1.63 billion in revenues,
which came from a variety of sources: federal, state, and local
government; private foundations; corporations; and subscribers
(individual memberships) (see fig. 2). The Corporation's funding of
$263 million provided about 16 percent of this total.[Footnote 6]
Figure 2: Sources of Public Television Revenues, Fiscal Year 2002
($1.63 billion):
[See PDF for image]
Note: These fiscal year 2002 data, the most recent data available, are
derived from public television licensees' audited financial reports
provided to the Corporation.
[End of figure]
The Educational Television Facilities Act of 1962 authorized the first
form of federal funding support for public television, establishing a
program in the former Department of Health, Education, and Welfare to
provide grants to public broadcasting licensees for equipment and
facilities. Soon thereafter, the Carnegie Commission on Educational
Television, a national commission formed in 1965 with the sponsorship
of the Carnegie Corporation, studied educational television's financial
needs. Based on recommendations in the Carnegie Commission's 1967
report, President Lyndon Johnson proposed and the Congress enacted the
Public Broadcasting Act of 1967, amending the Communications Act of
1934 to reauthorize funding for facilities and equipment grants and,
among other provisions, to authorize funding for public television
programming through a new entity--the Corporation for Public
Broadcasting.[Footnote 7] The Corporation is organized under the act as
a nongovernmental, nonprofit corporation to facilitate the growth and
development of public television and radio broadcasting and the use of
public television and radio broadcasting for instructional,
educational, and cultural programming.[Footnote 8]
In passing the 1967 act, the 90th Congress did not intend that annual
authorizations and appropriations for the Corporation would serve as a
permanent process for funding support of public broadcasting.[Footnote
9] Rather, they were seen as temporary measures pending the development
and adoption of a long-term financing plan for public
broadcasting.[Footnote 10] Although various financing proposals for
public broadcasting have since been suggested,[Footnote 11] the
Corporation continues to receive nearly all of its budget in the form
of an annual federal appropriation. Figure 3 illustrates the history of
annual federal appropriations made to the Corporation in current
dollars.
Figure 3: Federal Appropriations for the Corporation for Public
Broadcasting, Fiscal Years 1969-2006:
[See PDF for image]
Note: Although established in November 1967 by enactment of the Public
Broadcasting Act, with an authorization of $9 million to enable the
Corporation to come into being, the Corporation was not incorporated
until March 1968. The first federal appropriation ($5 million) made to
the Corporation was enacted in October 1968. Figure 3 includes advance
appropriations for fiscal years 2005 and 2006.
[End of figure]
The Corporation is governed by a board of directors that is appointed
by the President and confirmed by the Senate.[Footnote 12] The
Corporation's most recent mission statement, adopted by the board in
July 1999, states that the Corporation is to facilitate the development
of, and ensure universal access to, noncommercial high-quality
programming and telecommunications services in conjunction with
licensees.[Footnote 13] Reflecting the local and national
characteristics of public television, the Corporation's current goals
include: (1) strengthening the value and viability of local stations as
essential community institutions by improving their operational
effectiveness and fiscal stability and increasing their capacity to
invest in and create services and content to advance their mission and
(2) developing economically sustainable, high-quality noncommercial
programming that inspires, enlightens, and entertains.
The most important work the Corporation has underway, according to a
July 2003 memorandum to the board, is a systemwide planning study that
addresses three facets of public television.[Footnote 14] First, to
improve the financial sustainability of public television, the
Corporation has determined that improvements in public television's net
revenues can occur by attracting increased financial support for
stations from major donors and by developing new practices to improve
the efficiency of stations' operations. Second, through a strategic
assessment of the local services provided by public broadcasting
stations, the Corporation seeks to "help stations chart the course
ahead" and aid in efforts to improve the financial sustainability of
public television, provide direction for efficiencies in station
operations, and inform decisions on national programming. Systemwide
efforts related to national programming, the third area of focus, will
address the "wide disconnect between audience research, national
commissioning and scheduling decisions, and local service strategy."
According to the Corporation, this will involve strategic analysis and
reengineering of national programming.[Footnote 15]
Public television also faces the challenge of transitioning its
broadcast operations from analog to digital technology. Unlike analog
broadcasting, which converts moving pictures and sound into a "wave
form" electrical signal, digital technology converts pictures and sound
into a stream of digits consisting of zeros and ones that are
transmitted over the air. Digital technology has the potential to
significantly enhance the capabilities and services of all television
broadcasters and is viewed as critical to the broadcast television
industry's ability to enhance its provision of communications services.
The Telecommunications Act of 1996 established the framework for
licensing digital television spectrum to existing broadcasters. Under
FCC rules implementing this framework, public television licensees are
required to:
* complete the construction of digital station facilities by May 1,
2003;
* broadcast in digital a minimum of 50 percent of the programming that
they broadcast in analog--known as "simulcasting"--as of November 1,
2003,[Footnote 16] simulcast 75 percent by April 2004, and simulcast
100 percent by April 2005; and:
* by December 31, 2006, return their analog (or digital) spectrum to
FCC for reallocation.[Footnote 17]
In response to the difficulties faced by public television licensees in
financing expenses related to the digital transition, the regulatory
deadline for the construction of digital public television stations was
set for May 1, 2003, a year later than the deadline for commercial
stations. Further, eligible licensees were allowed to request
extensions of time to meet the construction requirement if they had
good cause for failing to meet the requirement.
A Majority of Licensees Favor the Current Statutory Allocations for
Public Television Funding through the Corporation:
Provisions of the Communications Act, as amended, specify the
allocation of federal funds appropriated to the Corporation for Public
Broadcasting. Of the federal funds provided for public television, the
Corporation is directed to distribute 75 percent of such funds among
licensees of public television stations and 25 percent for support of
national public television programming. Based on responses to our
survey, more than three-fifths of licensees indicated that these
statutory allocations for funding support of public television should
stay the same, compared to about one-third that favored a change.
The Communications Act Specifies the Allocation of Federal Funds for
Public Television Licensees and National Programming:
Federal funds appropriated to the Corporation must be allocated in
accordance with provisions of the Communications Act, as
amended.[Footnote 18] As shown in figure 4, the act directs the
Corporation to allocate 6 percent of its federal appropriation for
various expenses incurred by public broadcasting, an account the
Corporation identifies as "System Support;"[Footnote 19] not more than
5 percent is to be allocated for the Corporation's administrative
expenses; and of the remaining funds (about 89 percent), the act
specifies that 75 percent is to be allocated for public television and
25 percent for public radio. Of the funds allocated for public
television, 75 percent is to be made available for distribution among
licensees of stations and 25 percent for national public television
programming.
Figure 4: Federal Funding Allocations by the Corporation, as Required
by the Communications Act:
[See PDF for image]
[End of figure]
For example, with a federal appropriation of $380 million for fiscal
year 2004, the Corporation made the following allocations to its
budget: $24 million (6 percent) for System Support; $17.8 million (5
percent) for administrative expenses; and of the remaining $338.2
million, $253.7 million (75 percent) for public television. Of these
funds, $190.2 million (75 percent) is allocated for distribution among
station licensees, and $63.4 million (25 percent) is allocated for
support of national public television programming.[Footnote 20]
A Majority of Licensees Favor the Current Statutory Allocations of
Federal Funding for Public Television:
We asked public television licensees in our survey whether the
statutory allocations for federal funding support of public television
by the Corporation--the 75 percent allocation for distribution among
licensees and the 25 percent allocation for national programming--
should remain the same or be changed. Overall, 62 percent of licensees
responded that these statutory allocations should stay the same, and 34
percent responded that the allocations should be changed (see fig. 5).
Figure 5: Percentage of Licensees that Favor Either the Current
Allocations or a Change in the Allocations:
[See PDF for image]
Note: N=148 licensees. Percentages have been rounded and do not equal
100 percent.
[End of figure]
We further analyzed responses to this question factoring in the type
(e.g., state, university, community, and local authority) and size
(based on total revenues) of licensees, to determine whether the views
of licensees on the statutory allocations vary on the basis of these
characteristics. Our analysis indicates that the current allocations
were favored by a majority of licensees of each type, with the
exception of local authority licensees (see fig. 6) and by each size,
based on total revenues (see fig. 7). Among the various types and sizes
of licensees, those that most favored the current allocations were
university licensees (71 percent of the 51 university licensees
responding) and large licensees by total revenues (80 percent of the 20
large licensees responding).
Figure 6: Percentage of Licensees by Type that Favor Either the Current
Allocations or a Change in Allocations:
[See PDF for image]
Note: N=51 "university" licensees; N=15 "state" licensees; N=7 "local
authority" licensees; and N=75 "community" licensees. Percentages have
been rounded and may not equal 100 percent due to respondents answering
"don't know.":
[End of figure]
Figure 7: Percentage of Licensees by Size (total revenue) that Favor
Either the Current Allocations or a Change in Allocations:
[See PDF for image]
Note: N=58 small licensees, 52 medium licensees, 18 medium-large
licensees, and 20 large licensees. Percentages have been rounded and
may not equal 100 percent due to respondents answering "don't know." As
noted earlier, large licensees have total revenues of $20 million or
more annually, medium-large licensees have total revenues between $9
million and $19.9 million, medium licensees have total revenues between
$3.5 million and $8.9 million, and small licensees have total revenues
below $3.5 million.
[End of figure]
Among the licensees favoring retention of the existing allocations,
some stated that the current allocations have served the system well
for many years and provide the appropriate level of federal funding for
both licensees and national programming. For example, one licensee
noted that the allocations provide a balance between supporting station
operations--referred to as "the crucial local infrastructure" of public
broadcasting--and "high profile" national programming (i.e.,
programming that is generally recognizable to television viewers)
created for distribution to, and for the benefit of, local stations. An
official of another licensee, described as a small rural licensee that
relies heavily on funds received through the 75 percent allocation,
commented that even though additional federal funding for station
operations would be useful, quality national programming is also
important to support the station's fundraising efforts.
Of the respondents favoring a change in the allocations, most proposed
that the allocation for support among licensees increase above the
current level of 75 percent and the allocation for national programming
decrease below 25 percent. In fact, several of these respondents
suggested that all of the public television funds should be allocated
among licensees, with no funds for national programming. Among the
reasons cited for an increase in the allocation for licensees was the
view that providing more of these funds to licensees, rather than to
national programming entities, would advance the "local" quality of
public television. Another reason given was that distributors of
national programming would be more accountable and responsive to
licensees' local needs if more funds were allocated to licensees. In
addition, one licensee noted that by placing the funds in the hands of
licensees, a greater degree of insulation from political influence over
national programming would be likely.
However, a couple of licensees suggested that the 25 percent allocation
for national programming should be increased and the 75 percent
allocation for licensees decreased. One licensee suggested, for
example, that despite the need for national programming, licensees
would likely not pool funding necessary to produce national programming
if all funds were distributed to licensees. Another licensee noted that
funding for costly, high-quality, national programming should occur at
the national level, and that local stations should obtain most of their
financial support from their local communities.
Most Licensees Were Generally Satisfied with the Process for
Determining Community Service Grants, but Many Expressed Concerns about
the Television Future Fund:
Community Service Grants, the principal mechanism by which the
Corporation provides federal funding among licensees of public
television stations, are to be awarded in accordance with applicable
statutory provisions. Among these provisions is a requirement that the
Corporation periodically review, in consultation with licensees, the
eligibility criteria established by the Corporation for distribution of
funds among public television stations. More than three-fourths of the
licensees responding to our survey expressed overall satisfaction with
the most recent consultation process. Another grant program, the
Television Future Fund, was created by the Corporation to support
projects to help public television achieve greater economic self-
sufficiency. However, over 40 percent of licensees in our survey
responded that the projects have not resulted in practical methods for
reducing costs or enhancing revenues in their own operations. Moreover,
our legal review of this program determined that the Corporation's
approach of supporting these projects, in part, with funds designated
for distribution among licensees is not consistent with the statutory
authority under which the Corporation operates. In September 2002, the
Corporation temporarily suspended the awarding of further Television
Future Fund grants pending the outcome of a review. The program has
recently been reactivated under different procedures but continues to
be funded, in part, with funds that the Congress has made available for
distribution among licensees of public television stations.
Most Licensees Were Satisfied with the Review and Consultation Process
for Determining Community Service Grants:
The Community Service Grant program is the principal mechanism by which
the Corporation currently distributes federal funding among licensees
of public television stations.[Footnote 21] Although not expressly
established by the act, the Community Service Grant program is
administered by the Corporation under the provisions of the act that
provide for the allocation of funds for distribution among public
television licensees. Statutory provisions requiring that the
Corporation distribute funds directly among licensees were first
enacted in 1975.[Footnote 22] Of the $190.2 million allocated for
distribution among licensees in fiscal year 2004, the Corporation's
budget for the Community Service Grant program is $181.2 million.
[Footnote 23]
The Corporation currently administers the program by providing each
licensee that operates an on-air public television station with a
"basic" grant, as specifically required by the act. The $10,000 in
funds awarded to each eligible licensee currently as the basic grant
component of a Community Service Grant predates the establishment of
the program and began soon after establishment of the Corporation. In
addition to the basic grant, eligible licensees also receive two
additional component grants in their Community Service Grant--a "base"
grant and an "incentive" grant.[Footnote 24] Base grant funds are
determined on the basis of the statutory allocations, the Corporation's
total annual appropriation, the number of licensees eligible for
grants, and a fixed grant funding level set by the Corporation's board
of directors. Incentive grant funds depend largely on each individual
licensee's share of the combined amount of revenues generated from
nonfederal sources. (See app. II for detailed information on the grant
components of Community Service Grants.):
The act specifies that the funds distributed through the 75 percent
allocation may be used at the discretion of the recipient for purposes
related primarily to the production or acquisition of
programming.[Footnote 25] According to officials of the Corporation,
this provision is generally understood to provide licensees with
discretion to use such funds for any expenses incurred.
In tandem with the act's requirements setting forth the basis for
distributing funds, the Corporation is required to review periodically
the eligibility criteria for distributing these funds in consultation
with licensees or their designated representatives. In practice, the
Corporation has undertaken a review and consultation of the Community
Service Grant program every 2 to 3 years. According to Corporation
officials, a review and consultation consists of polling licensees and
other public broadcasters to identify issues of concern regarding the
distribution of funds and convening an advisory panel that broadly
represents licensees to facilitate the review. Further, the Corporation
develops and analyzes numerical models to assess likely impacts of
recommended policy changes in the distribution of funds and
disseminates information to licensees for further advice and
consultation. Ultimately, the advisory panel's recommendations are
presented first to licensees and the Corporation's management and then
to the Corporation's board, with any exceptions or refinements proposed
by management for its vote of approval.
In our survey, we asked licensees several questions about the
Corporation's most recent consultation on the eligibility criteria for
distributing Community Service Grants, conducted in 2001. Over 80
percent of licensees responding said that they were aware of the 2001
consultation process. Slightly more than half of the respondents said
the Corporation solicited input from them to a great or moderate
extent. Half of the licensees said they provided input to the
Corporation to a great or moderate extent. Overall, more than three-
fourths of all licensees said they were either basically satisfied with
the consultation process, or that only minor changes were needed (see
fig. 8).
Figure 8: Favorable Responses of Licensees on the Corporation's 2001
Consultation Process:
[See PDF for image]
Note: N=148 licensees for "awareness of consultation"; N=126 licensees
for "input solicited"; N=125 licensees for "input provided"; N=97
licensees for "input considered"; and N=125 licensees for "overall
satisfaction." Favorable responses were those answering "yes" on our
question regarding awareness of the consultation process; "to a great
extent" or "to a moderate extent" on questions regarding input
solicited, input provided, and input considered; and "basically
satisfied" or "only minor changes needed" on our question about the
process overall.
[End of figure]
In commenting on changes needed in the consultation process, some
licensees noted the importance of the process and the Corporation's
effectiveness in conducting reviews of the eligibility criteria for
distributing Community Service Grants in consultation with licensees.
For example, one licensee indicated that the review is important in
light of changes occurring within the public television community and
that a review by a panel of peers helps to ensure that public funds are
appropriately administered. Another licensee said the consultations
used by the Corporation have successfully solicited input from licensee
officials and that despite the wide variety of views within the
community, the process allows for deliberation and consensus building.
However, other licensees were critical of the consultation process and
offered suggestions for changes. For example, several licensees
indicated their belief that the Corporation predetermines the desired
outcome of modifications to the Community Service Grant eligibility
criteria and is not responsive to licensees. With regard to the make-up
of the review panel, suggestions were made to rotate panel members,
involve licensee officials that have not previously served on a review
panel, and make the review panel more representative of the licensee
community. One perspective highlighted by a few licensees was that
small stations do not have adequate representation on the Corporation's
review panels. For example, one licensee said that small rural station
licensees only have "token" representation on the Corporation's review
panels, and another noted the difficulty for officials of small station
licensees to participate in review panels given the costs and time
commitments for participating in the panel meetings.
In both our survey and in interviews we conducted with licensees and
officials from the Corporation, PBS, and the Association of Public
Television Stations, specific factors in the eligibility criteria for
grant award determinations were noted as causing some licensees to
perceive disparities in the distribution of funds through the
Corporation's Community Service Grants. Among such factors were the
policy which specifies that licensees operating stations in the same
market (known as an "overlap" market) share a single base grant
component of their Community Service Grants, the provision of
supplemental funds in the incentive grant portion of the Community
Service Grant for licensees that operate multiple public television
stations, and an insufficient level of Community Service Grant funds
provided to licensees to cover PBS membership assessment for access to
PBS's national programming.[Footnote 26]
However, we were told that while modifying the eligibility criteria for
establishing the base and incentive grant portions of Community Service
Grants may result in an increase in the grant funds awarded to some
licensees, it would also likely reduce the grant amounts awarded to
others. Further, we were told that the Corporation makes every attempt
to ensure that these grant funds are distributed fairly among public
television licensees. For example, as a result of the 2001 review, the
Corporation revised a policy previously adopted to increase the minimum
level of nonfederal financial support that licensees must raise to $1
million beginning in fiscal year 2003 in order to receive the incentive
portion of the Community Service Grant. As revised, the minimum level
was set at $800,000.
Many Licensees Expressed Concerns About Aspects of the Television
Future Fund:
Concerned in the mid-1990s over the prospect of declining revenues from
public television funding sources, including federal funding, the
Corporation created the Television Future Fund in 1995 as a means of
helping public television licensees achieve greater economic self-
sufficiency. The program provided grants to projects aimed at reducing
stations' operating cost and enhancing their revenues. Prior to the end
of fiscal year 2003, the Television Future Fund awarded grants to
licensees, consortia of licensees, and non-licensee entities (e.g.,
consultants) on the basis of project-specific criteria. Grant proposals
were to:
* show clear evidence that the project would meet a demonstrated need;
* actively involve a number of stations, have benefits beyond one
individual station, offer economic returns that could be widely shared,
and/or act as a model that could be widely replicated;
* prove, through feasibility studies, that concepts could be widely
implemented, thus demonstrating that the effort can lead to economies
of scale;
* be envisioned as long-term efforts, sustainable after the
Corporation's funding for the project concluded; and:
* reflect a shared risk through funds provided by the applicant,
thereby demonstrating an institutional commitment.
In addition, all proposals were to demonstrate an awareness of
systemwide efforts already under way and make use of existing
resources, whether from public television or the private
sector.[Footnote 27]
To provide funding for Television Future Fund projects, the Corporation
annually pooled funds from two separate sources: funds from its System
Support account and funds from the 75 percent allocation for
distribution among licensees. Between 1996 and 2004, $30.5 million came
from the System Support account and $28.5 million from the licensee
allocation.[Footnote 28] Based on recommendations of advisory panels
comprised of station and system representatives, the Corporation
awarded 204 Television Future Fund grants through September 2002 for a
broad range of projects, including:
* development projects aimed at improving fundraising through local,
regional, and national underwriting efforts, strengthening pledge
practices, and studying financial contributions given via the Internet;
* technology projects designed to increase the public television
community's knowledge of its digital capabilities, including developing
interactive television programming;
* new service and business models projects aimed at forging links
between the public television community and other entities, such as
licensee and university partnerships;
* management information projects to improve efforts to manage and
disseminate relevant data, such as a database used by licensees to
compare their programming and fundraising activities with other
licensees and a section of the Association of Public Television
Stations' Web site that contains information for both licensees and the
public about the digital transition;
* collaboration and consolidation projects designed to support the
development of back office operations that could be used by more than
one station; and:
* research projects aimed at improving the public television
community's understanding of viewers and the public television
industry, such as updating the handbook for television programmers and
a viewer panel study.
Figure 9 illustrates the distribution of the types of Television Future
Fund projects.
Figure 9: Distribution of Television Future Fund Grants by Project
Type:
[See PDF for image]
[End of figure]
According to Corporation officials, some licensees raised issues
regarding how the program is funded and what benefits are being derived
from it. We heard similar concerns while interviewing several
licensees. To evaluate these concerns, we asked licensees in our survey
to indicate the extent to which they knew about the findings and
outcomes of Television Future Fund projects, whether any such projects
resulted in practical methods for enhancing revenues or reducing costs
in licensees' own operations, and whether they supported the way in
which the Television Future Fund is funded.
The extent of the licensees' knowledge of Television Future Fund
projects varied significantly. Of licensees responding to our survey,
58 percent stated that they knew about Television Future Fund projects
to a great or moderate extent, but the other 42 percent indicated that
they knew about the findings and outcomes of Television Future Fund
projects to little or no extent (see fig. 10).
Figure 10: Extent of Licensees' Knowledge of Findings and Outcomes of
Television Future Fund Projects:
[See PDF for image]
Note: N=148 licensees. Percentages have been rounded.
[End of figure]
Several licensees noted that they did not know about the findings and
outcomes of Television Future Fund projects because of inadequate
efforts by the Corporation to distribute information about the
projects. For example, the Corporation did not compile and distribute
to licensees, or release publicly, a list of the findings and outcomes
of Television Future Fund projects until November 2001, 5 years after
the first grants were awarded. One licensee stated that although there
has always been sufficient information about the awarding of Television
Future Fund grants, there has been little information on the outcomes
of the projects supported by those grants.
We asked licensees in our survey to indicate whether Television Future
Fund projects had provided their stations with practical methods for
either reducing costs or enhancing revenues. A little over one-third of
the responding licensees indicated that Television Future Fund projects
had provided them with practical methods for reducing costs. About the
same percentage of licensees indicated that projects had provided them
with practical methods for enhancing revenues. In cross-tabulating
these responses, we determined that, overall, only 41 percent of
licensees responded that Television Future Fund projects had provided
them with practical methods for reducing costs and/or enhancing
revenues (see fig. 11).
Figure 11: Licensees' Responses on Whether Television Future Fund
Projects Provided Them with Practical Methods for Reducing Costs and
Enhancing Revenues:
[See PDF for image]
Note: N=143 licensees. Percentages have been rounded and do not equal
100 percent due to respondents answering "don't know.":
[End of figure]
The Corporation's approach for funding Television Future Fund projects
was another area of concern for licensees. Only 30 percent of the
responding licensees in our survey indicated that they favored the
current approach of funding the projects, in part, with funds from the
75 percent allocation for distribution among licensees (see fig. 12).
Altogether, over 40 percent indicated their preference for funding the
program only from system support funds or from other sources. In their
survey comments, a number of licensees suggested that other sources of
funding could come from an additional appropriation from the Congress
or from funds provided by philanthropic foundations. Over one-fifth of
our survey respondents, however, indicated that the Corporation should
cease all funding for the Television Future Fund.
Figure 12: Licensees' Responses on Favored Approach for Funding the
Television Future Fund:
[See PDF for image]
Note: N=148 licensees. Percentages have been rounded and do not equal
100 percent due to respondents answering "don't know.":
[End of figure]
In September 2002, the Corporation suspended the award of further
Television Future Fund grants pending a review of the program to (1)
assess the consistency between the planning and execution of the
program in relation to the Corporation's goals and (2) determine how
the program could address concerns that the public broadcast mission
and business models were no longer adequate in the digital era. In the
course of its review, the Corporation's Future Fund Advisory
Panel[Footnote 29]concluded that while a majority of the projects had
yielded the results anticipated, some were not successful for reasons
that included an inability to achieve appropriate scale or significant
economic benefit, inadequately defined objectives and poor execution,
and inadequate marketing of results to stations. The panel solicited
comments from the public television community on how the Future Fund
could best be used to help stations maximize their financial resources
and invest these resources in new and strengthened service to their
local communities. Based on input from public television stakeholders
and its own deliberations, the panel developed four new criteria to
guide the investment of funds. Specifically, Television Future Fund
initiatives should have:
* the potential to change systemwide decision making and transform
current approaches to achieving system and station goals,
* measurable and sustainable outcomes,
* strong and verifiable support of key advocates and participants, and:
* consistency with the Corporation's legislative mandate.
In addition, the panel recommended changes in how Television Future
Fund initiatives are developed and supported. Rather than continuing to
invite proposals on a broad array of themes, as had been done in the
past, the panel recommended that the solicitations more directly define
the initiatives' intended outcomes for participants, the station
community, and the system overall. The panel also recommended that
funding commitments be made over longer time frames at higher monetary
levels in order to focus on fewer initiatives that have greater impact.
The panel called for improved project management, with clearly defined
expectations and performance measures and a clear definition of
success. To evaluate and monitor the progress of the initiatives, the
panel recommended that the membership of the Future Fund Advisory Panel
include greater representation from across the station community.
The Corporation's board adopted these recommendations in April 2003.
During the remainder of the year, the panel continued work to translate
its recommendations into practices and processes. This included
reaching agreement on a clearly defined review process for making
Television Future Fund investment decisions, a plan for determining the
representation and terms of the members, and priorities for Future Fund
investment. During the time that the Corporation was reviewing the
Television Future Fund program, it was also engaged in the systemwide
planning study discussed earlier. According to Corporation officials,
it was anticipated that the Future Fund program would help support some
of the new initiatives and projects stemming from the planning study.
The Television Future Fund was reactivated in November 2003 with the
advisory panel endorsing several funding grants. In a December 2003
memorandum to station managers, the Corporation outlined the new
Television Future Fund review and selection process and described three
Future Fund projects that were in progress: (1) the Major Giving
Initiative aimed at helping stations attract financial support from
major donors--an area of opportunity identified in the Corporation's
systemwide planning study; (2) the Education Leadership Academy, a
pilot effort to identify opportunities for improved community
partnership in elementary and secondary school education; and (3) an
online knowledge base to improve public television's fundraising
potential, strategies, and practices. Corporation officials noted that
90 of the 176 licensees have signed up to participate in the first
Major Giving Initiative workshop, and they expect licensees to
participate in another workshop to be held later this year. In
addition, they noted that the Future Fund was used to cover the
participation of about 110 station personnel in a 2-day concentrated
track of sessions for the Education Leadership Academy.
Corporation's Approach to Funding the Television Future Fund Is Not
Consistent with Its Underlying Statute:
The advisory panel's recommendations on the Television Future Fund did
not, however, include changes to the program's funding mechanism. As
noted earlier, the Corporation has supported the program with funds
taken annually from the Corporation's System Support funds and from
funds designated for distribution among licensees. The Corporation's
funding approach has been challenged by some station executives, who
maintain that it is inconsistent with the Corporation's underlying
statute. For example, in an August 2003 letter to the Corporation, four
station executives expressed the view that the Corporation's use of
funds designated for distribution to licensees for other purposes was
not consistent with congressional intent. Both the licensees' letter
and the Corporation's reply pointed to legal opinions from their
respective outside counsels to support their differing positions on
this issue.[Footnote 30] As part of our review, we examined the
Corporation's statutory authority to use funds allocated for
distribution among public television licensees to support the
Television Future Fund. Although our legal review focused on the
program as it was constituted prior to its recent revisions, the recent
changes made do not appear to have solved the legal deficiencies that
we identified. As reconstituted, the Future Fund program still is
funded, in part, with funds designated by the Congress for distribution
among public television licensees.
According to the Corporation, its authority to establish "eligibility
criteria," and the formula under which the funds are disbursed, is
broad enough to allow the Corporation to take a portion of the funds
allocated for distribution among licensees, pool them with System
Support funds, and use this aggregated pool of money to make selective
grants only to applicants submitting project proposals acceptable to
the Corporation after being reviewed and recommended by a review
panel.[Footnote 31] We disagree. The difference between our view and
that of the Corporation rests on whether the eligibility criteria the
Corporation may adopt include project-focused criteria that govern the
selective award of funds for a particular project (as the Corporation
maintains) or whether eligibility criteria the Corporation may adopt
include only station-based criteria that distinguish among public
television licensees on the basis of such factors as financial needs,
audience satisfaction, or fundraising effectiveness. It is our view
that the phrase "eligibility criteria" should be read in the context of
the distribution mechanism to mean criteria focusing on the eligibility
of the licensees, rather than the eligibility of the projects. Although
we often defer to an agency's interpretation of a statute it is charged
to administer, we cannot do that here because the Corporation's
interpretation of its authority is neither consistent with the
statutory language nor the Congress' policy choice favoring local, not
Corporation, control of the expenditure of the funds allocated for
licensees.
Fundamentally, we believe that the Corporation's interpretation of the
statutory language changes the basic nature and control over the
expenditure of the funds allocated for licensees. First, the language
of the distribution provision makes no reference to funding specific
projects. By contrast, the Congress has provided the Corporation with
specific authority to fund projects using system support funds. Second,
the statute and its legislative history reflect a clear division of
roles vis-à-vis the Corporation and the licensees and permittees of
public television stations. Under the statutory scheme, it is the
Corporation that is responsible for distributing funds to the
licensees, and it is the recipients of these funds that are granted the
discretion over how they are to be used. Thus, in the context of the
entire statutory scheme, these funds would not be available for
project-specific systemwide grants.
Moreover, as implemented by the Corporation, the Television Future Fund
grants are available to nonstation entities. We believe this is
inconsistent with the direction in the statute regarding the fact that
the funds are to be distributed among licensees of public television
stations. For example, an award was given to a consultant to conduct
studies to identify skills that will be needed by chief executive
officers of public television stations in the next decade. Another
award was given to a consultant group to study the perception of public
television by its current and potential financial supporters. In our
view, the funds allocated by statute for distribution among licensees
are not available to nonstation entities. Appendix III presents our
legal opinion in detail.
In January 2004, a month after the Corporation's announcement to the
public television community of the changes being made to the Television
Future Fund and ongoing and planned initiatives that were to be funded,
there was a new development in the issue of how to fund the Television
Future Fund. At its January meeting, the Corporation's board,
expressing its recognition that system resources were scarce and local
needs were great, directed the staff to develop a comprehensive plan
for returning Television Future Fund dollars to stations. Corporation
officials told us in February that what is under consideration is that
beginning in fiscal year 2005 monies designated for distribution among
licensees would no longer be used to support the Future Fund. The
officials said that they would be developing a proposal for the board's
vote before the end of fiscal year 2004.
Meanwhile, the ongoing and planned projects will continue to be
supported from the balance in the Television Future Fund account, which
amounted to about $18.3 million as of December 31, 2003. According to
the Corporation, $10.1 million of this balance came from funds
designated for distribution among licensees from fiscal year 2004 and
previous fiscal years; the remaining $8.2 million came from System
Support funds. Approximately $8.4 million of the $18.3 million in the
account balance has been committed for ongoing projects, mostly for the
Major Giving Initiative ($6.6 million). The remaining $9.9 million has
been "earmarked" by the Future Fund Advisory Panel for several other
major initiatives that are under development.[Footnote 32]
Most Licensees Favor Continued Federal Funding Support for the National
Program Service, as Well as Additional Funding to Produce More Local
Programming:
Provisions of the Communications Act govern the Corporation's support
for the production and distribution of national programming. The
Corporation provides PBS with an annual grant to help support its
National Program Service, a package of children's and prime-time series
that are broadcast by most public television stations. In response to
our survey, most licensees expressed support for continuation of the
Corporation's annual grant to PBS for the National Program Service and
held the view that the Service's programming enables them to meet their
mission and build underwriting and membership support. Many licensees
also emphasized the importance of producing their own programs to meet
the needs of their local communities, suggesting that federal funds
should be made available for the production of local programming.
Most Licensees Favor Having the Corporation Continue Funding for the
National Program Service:
Expressly prohibited from producing or distributing public television
programming,[Footnote 33] the Corporation is authorized by provisions
of the Communications Act to provide federal funding for national
public television programming.[Footnote 34] Under the act, the
Corporation is directed to distribute a substantial amount of available
programming funds to independent producers and production entities,
producers of national children's educational programming, and producers
of programming addressing the needs and interests of
minorities.[Footnote 35] In fulfillment of this mandate, the
Corporation provides programming support through three mechanisms--the
General Program Fund, the Program Challenge Fund, and an annual grant
to PBS for the production and distribution of some of public
television's best known or "signature" series, a package known as the
"National Program Service" (see fig. 13). Some of the productions
supported through the Program Challenge Fund and the General Program
Fund are broadcast as part of the PBS National Program
Service.[Footnote 36]
Figure 13: The Corporation's Distribution of Funding in Support of
National Programming:
[See PDF for image]
[A] The Independent Television Service was founded in 1988. See, 47
U.S.C. §396(k)(3)(B)(iii).
[B] The Minority Consortia consist of the following organizations:
National Black Programming Consortium, Native American Public
Telecommunications, Latino Public Broadcasting, National Asian
American Telecommunications Association, and Pacific Islanders in
Communications.
[End of figure]
The $65 million in funds distributed by the Corporation in fiscal year
2003 through these three mechanisms made up a relatively modest portion
of the total revenues used for the production and distribution of
national public television programming. According to the Corporation,
its funding support amounted to only 14 percent of the $450 million in
total funds used for such programming in fiscal year 2003.
Many of the best-known programs associated with public television are
part of PBS's National Program Service. The Service currently includes
miniseries, specials, and children's and prime-time series--including
Sesame Street, NOVA, The NewsHour with Jim Lehrer, and American
Experience--providing PBS member-stations with approximately 2,100
hours of programming in 2003. The Corporation's annual grant of $22.5
million to PBS makes up only a small portion of the funds that finance
the National Program Service; a large source of the Service's financing
comes from public television station licensees that collectively paid
$126 million in 2003 membership assessments to PBS for programming and
related broadcast rights to the Service's programs. In 2003, 171 of the
176 public television licensees were PBS members. The National Program
Service is distributed to PBS member-stations for broadcast either at
the time of their delivery or at a time of the licensees' choosing.
Member-stations are free to choose which of the Service's programs to
broadcast, although PBS officials stated that licensees receive no
reduction or rebate in their assessment for programming that is not
broadcast.
Our survey asked a series of questions about the National Program
Service. In response to our question on whether the Corporation should
continue to provide direct funding for the Service at its current
level, 72 percent of the responding licensees answered "yes." Some
licensees stated that the quality of the programs included in the
Service would suffer without continued funding from the Corporation. Of
the 19 percent of the licensees who indicated that a change was needed,
most suggested that the funding be reduced or eliminated and be given
instead to the licensees.
Concerns with the process that PBS uses to choose the programs selected
for the National Program Service were also noted in some of our
interviews with officials of public television licensees. The
Corporation's annual grant to PBS for the National Program Service was
instituted as a result of a statutory provision enacted in 1988
requiring that the Corporation study and submit a plan to the Congress
for funding support of national public television programming.[Footnote
37] Prior to the establishment of the National Program Service, grants
were awarded by the Corporation directly to several of the producers of
programming included on the PBS national schedule. Other programs were
made part of the national schedule through a mechanism known as the
"Station Program Cooperative." Through the Cooperative, officials from
public television stations would vote on which individual programs to
include on the national schedule and participate in a "group buy"--
combining their funds for the purchase of programming for distribution
by PBS. However, concerns arose that the Station Program Cooperative
model was not effective in the establishment of programming priorities,
the production of minority programming, or the ability of producers to
effectively attract underwriters. In 1989, a National Program Funding
Task Force--comprised of representatives from the Corporation, public
television stations, PBS, independent producers, and other
stakeholders--was formed to review the method of funding national
programming. This review led to the replacement of the Station Program
Cooperative with a new model for selecting PBS programming. Under this
new model, PBS created the position of chief programming executive to
make programming decisions. Currently, two chief programming executives
located on the East and West coasts, respectively, select programs for
the National Program Service with input from licensees, internal PBS
programming staff, and PBS management. This approach was designed to
facilitate the centralized development and purchasing of programming
for the National Program Service and for other programming distributed
nationally under the PBS logo--including children's, prime-time, and
syndicated programs.
Our survey of licensees found that only a small percentage expressed a
desire to reinstate the former Station Program Cooperative or a similar
model to select programming for PBS's National Program Service.
However, a majority of the survey respondents, 58 percent, indicated
that changes were needed in the process for selecting programs for the
Service. Specifically, respondents suggested that PBS solicit more
input from licensees in making the selections. Some licensees we
interviewed commented that the strong relationship between PBS and
producers has created an entrenched system that limits the ability of
new producers to get their programs on the National Program Service.
Figure 14 highlights the licensees' views on the Corporation's funding
of the PBS National Program Service and the process used to select the
programs that are included in the Service.
Figure 14: Licensees' Views on the Corporation's Funding of the PBS
National Program Service and the Service's Selection Process:
[See PDF for image]
Note: N=144 licensees for "Corporation should continue funding the
National Program Service" and N=143 licensees for "the National Program
Service selection process should be changed." Percentages have been
rounded.
[End of figure]
While our survey shows that over half of the licensees indicated that
changes are needed in the selection process for the PBS National
Program Service, most respondents nevertheless indicated satisfaction
with the extent to which the Service's programming helps them meet the
missions of their stations.
Ninety-six percent of the licensees we surveyed said that the
children's programs included as part of the National Program Service
enable them to meet their mission to a great or moderate extent. As
described by some respondents, the noncommercial, nonviolent,
educational content of children's programming makes it the cornerstone
of public television. A few licensees also noted that PBS provides a
"safe harbor" of children's programs that are distinct from their
commercial counterparts. Children's programming was viewed as more
important to licensees' missions than to building underwriting and
membership support because only 23 percent of the licensees responding
to our survey indicated that they rely to a great extent on children's
programming to build such support, and 39 percent said they rely on
such programming to a moderate extent. Many licensees stated that they
do not rely on children's programming for underwriting support because
of content restrictions and because underwriters do not see a strong
market in the viewers of such programs. However, a few licensees stated
that some underwriters support children's programs because of their
high quality and their educational and social value. Several licensees
stated that they do not rely on children's programming to generate
membership support because families with young children often do not
have the economic means to contribute financially.
Licensees also indicated that they value the prime-time programs on the
National Program Service, with 96 percent of the respondents indicating
that prime-time programs help them meet their mission to a great or
moderate extent. As noted above, some licensees criticized the programs
for having become less unique, less innovative, and less willing to
explore controversial issues in recent years. However, most licensees
stated that they rely on the prime-time programs included in the
National Program Service to meet their mission of providing quality
life-long educational content for adults of all ages. Many licensees
added that the prime-time programs allow them to compete with
commercial stations, attract new audiences, and retain existing
viewers. Our survey also showed that 91 percent of the licensees
believe that prime-time programs help them build local underwriting and
membership support to a great or moderate extent. According to the
licensees, some of the reasons that the prime-time programs are helpful
in attracting local underwriters are that audience numbers are higher,
the program titles are familiar, and the programs themselves are of
high quality and are well promoted. Figures 15 and 16 summarize the
responses of licensees to questions regarding the National Program
Service's children's and prime-time programming.
Figure 15: Licensees' Views on the Extent to Which the National Program
Service's Children's and Prime-Time Programming Helps Them Meet Their
Mission:
[See PDF for image]
Note: N=149 licensees for "children's programming" and N=144 licensees
for "prime-time programming." Percentages have been rounded and may not
equal 100 percent due to respondents answering "don't know.":
[End of figure]
Figure 16: Licensees' Views on the Extent to Which the National Program
Service's Children's and Prime-Time Programs Help Them Build Membership
and Underwriting Support:
[See PDF for image]
Note: N=144 licensees for "children's programming" and N=144 licensees
for "prime-time programming." Percentages have been rounded and may not
equal 100 percent due to respondents answering "don't know.":
[End of figure]
Most Licensees Indicated that They Would Produce More Local Programming
if Additional Funding Resources Were Available:
Although the Corporation does not currently provide or have explicit
authority to make grants for the production of local programming,
Corporation funding can indirectly support local programming
productions through two sources: (1) Community Service Grants, which
may be used at the discretion of licensees to produce their own
programming, and (2) grants made by the Corporation to the Independent
Television Service and the National Center for Outreach, both of which
fund some local productions. Local stations produce their own
programming to fill out their broadcast schedules by covering issues
and events that are of special interest to their communities. However,
cost is a major challenge facing licensees in the production of local
programming. As a result, some producers of local programming have
focused on productions that tie into a national program. This method
allows individual licensees the possibility of extending the value of
national promotions to such local programs. For example, local stations
in several cities took advantage of the popularity of the PBS series
Jazz: A Film by Ken Burns, broadcast in 2001, by producing local
programs that featured local and regional jazz musicians and cultural
influences.
Previously, the Corporation funded regional organizations that provided
licensees with specialized content for their areas. In 1961, the
Eastern Educational Network began as a collaboration of public
television stations in the northeastern United States that produced
regional programs for its member stations. Other regional
collaborations were formed to provide similar functions, such as the
Southern Educational Communications Association, the Central
Educational Network, and the Pacific Mountain Network. However, over
the last decade, almost all of these regional organizations have
changed their focus to provide quality national programming to members
nationwide.[Footnote 38] In 1997, the Southern Educational
Communications Association and the Pacific Mountain Network joined to
form the National Educational Telecommunications Association, a
membership organization that offers a library of national programs to
licensees. Rather than paying for or obtaining the rights to programs,
public television producers give to the National Educational
Telecommunications Association the rights to distribute the programs;
in return, the association provides producers with basic promotion of
programming on its Web site and a forum for licensees to exchange
products. In 1998, the Eastern Educational Network became American
Public Television, which acquires finished programs and develops and
coproduces original programming in a variety of genres, including
documentaries, biographies, and instructional programs, among others.
In our survey, some licensees indicated that public television stations
are rapidly becoming the only locally owned and operated television
broadcast medium. They stated that the consolidation of local media
outlets and expanding national cable and satellite networks have
resulted in less local programming on commercial television, creating a
void in their communities. They believe that their locally produced
programs set them apart from commercial television and allow them to
provide their communities with a unique product that contributes to the
civic and cultural lives of their viewers. However, 79 percent of the
licensees responding to our survey indicated that the amount of local
programming they currently produce is not sufficient to meet local
community needs (see fig. 17). Moreover, of the 139 licensees that
provided narrative comments regarding this issue, 85 stated that they
do not have adequate funds for local programming or that they would
produce more local programming if they could obtain additional sources
of funding. Several licensees stated that they have had to ignore local
issues and turn away programming opportunities because they lacked the
financial resources to produce them.
Figure 17: Licensees' Views on Whether the Amount of Local Programming
That They Produce is Sufficient to Meet the Needs of Their Communities:
[See PDF for image]
Note: N=148 licensees. Percentages have been rounded.
[End of figure]
Many licensees suggested that federal funds should be made available to
support the production of local programming, with more than half
responding that the Corporation should have explicit authority to award
grants for the production of local programming (see fig. 18).
Approximately 60 percent of those licensees favoring this authority
also favored sacrificing some of the Corporation's funding support for
national programming in order to establish direct funding support of
local programming productions. Some of these licensees indicated that
the Corporation's funds would be better spent on local programming
because such programming has been and will continue to be a unique
asset of public television and has more of a direct impact on the
community. However, among the licensees who expressed a willingness to
sacrifice funding for national programming to fund local productions,
some warned that taking too much from national programming would be
harmful to the entire system.
Figure 18: Licensees' Views on the Need for the Corporation to Have
Explicit Authority to Fund More Local Programming:
[See PDF for image]
Note: N=149 licensees for "The Corporation should have explicit
authority to fund local programming" and N=79 licensees for "The
Corporation should fund local programming even if it means less money
for national programming." Percentages have been rounded.
[End of figure]
Corporation Has Funded Digital Transmission Equipment, but Other
Digital Infrastructure and Content Needs Remain:
Digital technology offers public television licensees opportunities to
provide innovative services to their communities. The Corporation
received additional funding of $93.4 million for the digital transition
for fiscal years 2001 through 2003. After consultation with
representatives of the public television community, the Corporation
directed these funds toward providing grants to licensees for acquiring
digital transmission equipment. However, some licensees did not receive
their grants in a timely manner and cited this as contributing to their
failure to meet FCC's initial May 2003 deadline for constructing
digital transmission facilities. At the systemwide level, the
Corporation is seeking funding for infrastructure improvements to fully
leverage the potential benefits of the digital transition. In addition,
the Corporation, licensees, and other public television stakeholders
have emphasized the importance of support for the production of digital
content as part of the transition. Various mechanisms, including
additional federal funding, have been suggested to address these needs.
Licensees See the Digital Transition as an Opportunity to Provide
Innovative Services:
The Corporation, licensees, and other public television stakeholders
have emphasized that the future of public television depends on the
successful rollout of digital services. Such services would, in the
view of public television stakeholders, help public television realize
the full potential of digital technology, solidify existing audiences,
and reach new viewers in an era of increased competition from cable and
satellite television providers.[Footnote 39] Nearly all of licenses in
our survey reported that they either now have, or plan to have, key
digital capabilities to produce sharper television pictures and CD-
quality sound (high-definition), offer multiple channels for
programming and data services ("multicasting"), and transmit text and
other data in a digital format ("datacasting") (see fig. 19).
Figure 19: Public Television Licensees that Currently Provide or Plan
to Provide Digital Services:
[See PDF for image]
Note: N=148 licensees for "High definition television"; N=147 licensees
for "multicasting"; and N=146 licensees for "datacasting." Percentages
have been rounded and do not equal 100 percent due to respondents
answering "don't know," "don't provide," or "don't plan to provide.":
[End of figure]
About 85 percent of the licensees responding to our survey indicated
that successful completion of the digital transition would improve
their ability to serve their communities to a great or moderate extent.
Many of the digital-based services mentioned by licensees involve
supporting educational, governmental, and cultural activities.
Educational services include the delivery of on-demand instructional
content material to teachers and students in K-12 classrooms, higher
education institutions, and libraries. Local and state governmental
services include emergency response services and alerts, such as Amber
Alerts for child abductions. In addition, licensees noted that
multicasting would allow for an increased range of cultural content,
such as programs that highlight local arts or serve minority
populations.
Many licensees also indicated their intention to use digital technology
to provide "ancillary and supplementary" services.[Footnote 40] These
are nonbroadcast services, such as subscription-based video services,
paging services, and computer software distribution, offered by
stations to generate revenue. Fifty-one percent of the licensees
indicated they are offering or would offer these services to nonprofit
entities, while slightly more than one-third of licensees indicated
they would offer these services to for-profit entities.
Corporation Has Assisted Licensees in Acquiring Digital Transmission
Equipment, Though Its Support Has Not Always Been Timely:
The Corporation, licensees, and other public television stakeholders
have identified the importance of federal and nonfederal support for
the digital transition that enables public broadcasters to provide a
full range of digital services to their communities.[Footnote 41] In
1997, the Corporation and other public television stakeholders
estimated the costs of the digital transition for public television
stations to be approximately $1.7 billion, largely for transmission
equipment.[Footnote 42]At that time, the Corporation, PBS, and other
stakeholders proposed a plan under which the majority of this cost
would be funded by nonfederal sources, such as state governments,
foundations, and corporations, and about $771 million (45 percent)
would be funded through federal funds. In the plan, the Corporation
also requested an increase of $100 million in its regular fiscal year
2000 appropriation for the acquisition, enrichment, and production of
digital programming and services. For fiscal years 2000 and 2001, the
Clinton administration proposed a funding approach whereby the National
Telecommunications and Information Administration's (NTIA) Public
Telecommunications Facilities Program, a source of financial support
for public television infrastructure, would provide federal funding for
licensees to acquire digital equipment.[Footnote 43] The Corporation,
for its part, would provide federal funding to support digital
programming production, development, and distribution.
Although this initial funding approach included federal funding for
both digital equipment and digital programming, most of the federal
funds that have been awarded through fiscal year 2003 have been for
digital equipment.[Footnote 44] NTIA began awarding grants to public
television licensees for digital transmission equipment in fiscal year
1998. Although specific appropriations for the digital transition were
made for the Corporation in fiscal years 1999 and 2000--at $15 million
and $10 million, respectively--both were contingent on the enactment of
an authorization which did not occur. The Corporation received its
first specific digital appropriation ($20 million) in August of fiscal
year 2001 after the enactment of both an appropriation and an
authorizing provision. A second digital appropriation ($25 million) was
received in February 2002. The Corporation, relying on report language
accompanying its fiscal year 2002 appropriation and considering the
limited funds available to licensees from NTIA, determined that the
highest priority for its digital funds was to assist as many licensees
as possible in meeting FCC's May 2003 deadline for constructing digital
transmission facilities.[Footnote 45] Accordingly, the Corporation
developed two grant programs to help licensees acquire basic digital
transmission equipment---the Digital Distribution Fund and the Digital
Universal Service Fund.
* The Digital Distribution Fund, established in January 2002, offers
grants to both individual stations and collaborations of multiple
stations for digital transmission equipment; the Corporation provides
50 percent matching funds to the nonfederal funds raised by grantees.
* The Digital Universal Service Fund was established in June 2002 to
take advantage of FCC's 2001 decision permitting licensees to satisfy
the May 2003 construction deadline by initially constructing digital
facilities that use power levels that are lower than what is needed to
fully cover their service areas. Stations can then increase their power
levels over time to full-power operation.[Footnote 46]This program is
designed to provide grant recipients with a standard package of
equipment for use in constructing a low-power digital facility. The
Corporation funds up to 75 percent of the cost of the equipment
packages, with the remaining cost covered by grant recipients with
nonfederal funds.
Both Corporation and NTIA officials told us they coordinate their grant
programs to ensure that there is no duplication in the types of
transmission equipment purchased by licensees with funds from their
respective programs. Figure 20 provides a time line of the
Corporation's activities up to November 2003 for awarding funds through
these two digital grant programs.
Figure 20: Time Line of Activities for the Corporation's Digital Grant
Programs, August 2001 through November 2003:
[See PDF for image]
[End of figure]
The Corporation used its fiscal year 2001 and 2002 digital
appropriations to award grants to 96 stations for digital transmission
equipment prior to FCC's May 2003 construction deadline. However, the
Corporation was not always timely in getting the awarded equipment
packages or funds to the grantees. Specifically, 30 stations did not
receive their equipment packages or funds by the deadline. Most of
these stations were recipients of equipment package grants from the
Digital Universal Service Fund. Public television stations that did not
expect to meet the construction deadline had to apply to the FCC for a
6-month extension. In requests to FCC for extensions, 28 of the 30
stations cited the delay in receiving their digital grant from the
Corporation as a contributing factor, among others, as to why they
filed for an extension.[Footnote 47]
We identified two reasons for the Corporation's lack of timeliness in
distributing its fiscal year 2001 and 2002 digital appropriations.
First, the Corporation took several months after receiving its digital
funds to (1) convene consultation panels comprised of licensees (or
their designated representatives) to develop recommendations for the
use of those funds and (2) obtain approval of the panels'
recommendations by the Corporation's board.[Footnote 48] Second, the
Corporation had to devise grant programs for the distribution of its
digital appropriations. When the Corporation's board initially approved
the use of the funds for transmission equipment in November 2001, the
Corporation did not have any equipment-related grant programs in place.
Due to its inexperience in this area, the Corporation contracted with
PBS (which had staff with expertise in transmission technology) for
assistance in developing and administering these programs.
As a result, the first Digital Distribution Fund grants were not
awarded until 9 months after the first digital appropriation was
received by the Corporation in August 2001. With regard to the Digital
Universal Service Fund, the administration contract between the
Corporation and PBS and the equipment contracts negotiated between PBS
and 2 manufacturers for low-power transmission equipment were not
finalized until 2 months before the May 2003 construction deadline.
Only 15 of the 43 stations that were awarded a Digital Universal
Service Fund grant received their equipment package by the May
deadline.
The Corporation also had difficulties distributing its fiscal year 2003
digital appropriation of $48.4 million, of which $37.4 million was
allocated for public television.[Footnote 49] Having received all of
its 2003 funds by March 2003, the consultation panel process again took
several months to develop recommendations for the use of these funds
and obtain the approval of the Corporation's board. In July 2003, the
panel recommended two phases of grant awards for these fiscal year 2003
funds, the first of which was to continue funding for licensees'
digital transmission equipment. The application period for this first
phase extended from August to October 2003.
Although 201 stations had filed for a 6-month extension to FCC's May
2003 construction deadline, only 26 stations applied to the Corporation
for a digital grant during this first phase. Of these 26 applicants, 23
stations received grants from the Corporation, totaling $7 million.
None of the new grantees, however, received its funds or equipment
package prior to the end of the 6-month extension period in November
2003. As of December 2003, $24 million of the Corporation's fiscal year
2003 digital appropriation--more than two-thirds of the total fiscal
year 2003 amount for television--remained unobligated, with 126
stations operating under a second 6-month extension for meeting FCC's
digital construction requirement.
In a survey commissioned by the Corporation and PBS of licensees with
stations that had not met the May 2003 deadline or previously applied
for a Corporation grant, the most common response for why a station had
not or was not planning to apply for this phase of funding was because
they had been able to secure funding through other sources.[Footnote
50] Survey respondents suggested that they would consider applying for
future grant rounds of the Digital Distribution Fund if it awarded
funding for transmission equipment upgrades from low to full power,
digital master control facilities that control broadcast management,
and studio and production equipment to create digital content.
Because many of these licensees were able to secure funding from other
sources, funding priorities for these licensees and for those that met
the May 2003 deadline had shifted from transmission equipment to other
digital transition needs not included in the scope of the grant
programs. In our survey, we, too, found that licensees' priorities for
additional federal funding of the digital transition were in areas
other than transmission equipment. Only 14 percent of the respondents
indicated that digital transmission equipment was their top priority
for additional federal funding and over half indicated that it was
their lowest (see fig. 21).[Footnote 51] Digital master control,
digital content, digital production equipment, and digital operating
costs were all named more frequently as the highest priority.
Figure 21: Licensees' Highest and Lowest Priorities for Use of
Additional Federal Funds to Support the Digital Transition:
[See PDF for image]
Note: N=140 licensees. Percentages have been rounded and do not equal
100 percent.
[End of figure]
With $24 million of its fiscal year 2003 appropriation available for
the second phase of grant awards, Corporation officials told us that
they are developing new guidelines for Digital Distribution Fund
grants. Although the Corporation intends to continue funding digital
transmission equipment for the second phase of grant awards with its
remaining fiscal year 2003 digital funds, it will also fund digital
master controls and digital translators:
and repeaters.[Footnote 52] At the time we concluded our audit work in
February 2004, Corporation officials indicated that applications were
due in March and that a digital review panel was scheduled to meet at
the end of that month to review the applications. Corporation officials
also indicated that the digital consultation panel would meet in early
March to provide guidance on allocating the $49.7 million made
available to the Corporation in fiscal year 2004 appropriations for the
digital transition.
System Infrastructure Improvements and Digital Content Identified as
Important to Leveraging Benefits from the Digital Transition:
In addition to supporting licensees in constructing their digital
transmission facilities, the Corporation and PBS have identified
systemwide infrastructure improvements as important in maximizing the
benefits of the digital transition. The development of digital content
and production is also becoming more important as more public
television stations become digital ready.
Under the Communications Act, the Corporation is to assist in the
establishment and development of an interconnection system to
facilitate the distribution of public television service.[Footnote 53]
The current interconnection system, which is managed by PBS under
agreement with the Corporation, uses satellites to distribute PBS and
other programming to stations and is scheduled for replacement by the
time the current leases for satellite capacity expire in 2006. As
proposed by the Corporation and PBS, a new system, called the "Next
Generation Interconnection System," would replace the current system
with a digital one that distributes programming in real-time and
nonreal time to licensees. Licensees can then store these programs for
later broadcast, which in turn allows PBS to become more efficient by
broadcasting these programs to licensees once instead of multiple
times. The Corporation and PBS have estimated that it will cost $177
million to replace the interconnection system. The Corporation has
requested that the cost be covered by federal appropriations during
fiscal years 2004 through 2006. The Corporation received an initial $10
million appropriation for fiscal year 2004 for this purpose.
In addition, PBS is separately seeking funds from the Corporation for a
project to provide enhancements to the new interconnection system. This
effort, known as the Enhanced Interconnection Optimization Project, is
designed to allow licensees and PBS to schedule and manage the digital
broadcasting of public television programs through the use of automated
channel operations and monitoring. According to PBS, this system will
cost approximately $12 million to $15 million to implement at its
facilities. PBS told us that approximately $8 million is still needed,
half of which it is seeking from the Corporation. The individual
stations will also need to implement the interconnection project at
their ends. PBS has estimated that a typical station-side installation
costs between $1 million and $1.2 million. The Corporation's
consultation panel for digital funds recommended in July 2003 that PBS
receive $4.1 million for the project from the Corporation's fiscal year
2003 digital transition funds.
While some licensees noted that this project has potential to bring
about substantial savings and improved operations for licensees, others
expressed concerns about increased maintenance costs, stranded
investments in digital master control equipment bought before the
project was announced, and a lack of detailed information to assess the
costs and usefulness of the project. For example, in our survey, about
25 percent of the licensees responding said that they have already
acquired some types of digital equipment (master control, production,
or storage) that are not fully compatible with the project, which may
limit the capabilities and usefulness of the project to them. New
equipment may need to be acquired in order to obtain the full benefits
of the project. In response to concerns about the potential
incompatibility of some licensees' existing digital equipment with the
project, the Corporation has conditioned the award of its $4.1 million
grant to PBS on an independent review of the project.
In addition to systemwide infrastructure improvements, the Corporation,
licensees, and other public television stakeholders have also
identified digital content as essential to ensure the success of public
television's digital transition. The Corporation testified before the
House Energy and Commerce Committee in July 2002 that digital content,
along with digital equipment, is a primary element of the digital
transition. Additionally, a working group--funded by the Corporation
and comprised of Corporation and PBS officials, as well as public
television licensees--highlighted this need in a 2003 report, which
stated that the digital transition provides public television with an
opportunity to reposition itself to carry out its mission if it is
willing to create digital services that are "more responsive to the
needs of our constituents and cheaper, simpler, smaller, and more
convenient to use."[Footnote 54]
Noting that 2 years' advance time may be needed to plan, develop, and
launch digital services, and that digital production costs are
generally higher than the costs of creating analog programming, the
Corporation has characterized the need for digital content and research
as "even more pressing" due to the limited availability of past federal
funding for the digital transition. Corporation officials told us that
licensees and other national public television organizations, including
the Corporation, are developing a systemwide strategic plan on the
future of public television that includes the creation of digital
content. As part of this planning, the Corporation is in discussions
with PBS on the need to develop a new national programming plan to
support digital content needs.
Some Public Television Stakeholders Have Suggested Funding Alternatives
for the Digital Transition:
Many public television stakeholders have indicated a need for
additional federal funds to support the digital transition and fully
utilize the potential of digital television. Several licensees in our
survey, however, suggested changes to some of the Corporation's
existing funding mechanisms to help manage such needs. Among the
suggested changes were limiting the Corporation's digital grants to one
licensee in a market served by multiple licensees; offering grants to
support shared operations, such as digital master control equipment,
among public television stations in the same market; and eliminating
duplication of public television stations in markets served by multiple
licensees. However, several licensees in markets with multiple stations
believe that they provide valuable services and unique programming to
their communities.
In addition, some public television stakeholders have observed that
Corporation funds should be repositioned in order to achieve the
benefits of the digital transition.[Footnote 55] According to these
stakeholders, the Corporation should foster new collaborative services
by supporting the provision of digital content favoring alternative
distribution platforms such as the Internet over the traditional medium
of over-air broadcasting. These services include interactive Web sites
that provide audio and video content on subjects such as history,
science, and literature. Unlike over-air broadcasting, interactive Web
sites would allow people to access this content regardless of their
location. Stakeholders have noted that such services would encourage
collaboration of licensees without diminishing their local presence and
that this approach may help public television strengthen its mission to
provide high-quality noncommercial programming and services.
Conclusion:
A long-standing issue for the pubic television community is how best to
distribute the Corporation's funds among local station operations,
national programming, and infrastructure support. Most licensees
responding to our survey supported the existing statutory allocation of
the Corporation's television funds between licensees and national
programming and were generally satisfied with the Corporation's process
for periodically reviewing the eligibility criteria for distributing
funds through Community Service Grants. In addition, most licensees
expressed their support for the Corporation's continued funding for
PBS's National Program Service, which nearly all see as helping them
meet their missions for providing quality children's and prime-time
programming. As for local programming, most licensees indicated that
the amount of local programming they produced was not sufficient to
meet their communities' needs, largely due to their limited financial
resources.
The Corporation's approach for funding its Television Future Fund
program is a concern for many licensees. As our survey shows, only 30
percent of respondents agreed with the Corporation's current approach
of using funds designated for distribution among licensees to support
Television Future Fund projects. The Corporation, as informed by
counsel, contends that it has the authority to use these funds to
support the Television Future Fund program. It is our view that the
Corporation may not take a portion of the funds designated by the
Congress for distribution among public television licensees, pool them
with System Support funds, and use them to make competitive grants only
to applicants submitting project proposals acceptable to the
Corporation after review and recommendation by an advisory panel.
Although our legal analysis focused on the Television Future Fund
program as it existed prior to the end of fiscal year 2003, we note
that under the revised program, the Corporation is still aggregating
the funds and using them for projects that benefit the entire system
rather than giving the monies directly to the individual licensees.
Moreover, it appears that the majority of the funds will be going to
vendors rather than the stations. Accordingly, we continue to question
whether the Corporation has the authority to utilize in this fashion
the $10.1 million of the $18.3 million currently in the Television
Future Fund account that came from funds designated for distribution
among licensees.
The Corporation's support for the digital transition is another area of
concern. As shown by our survey, the priorities of most licensees in
2003 shifted beyond the digital transmission equipment supported by
Corporation grants. This contributed to a low application rate for the
Corporation's digital grants in the latter half of that year and a
carryover of $24 million in digital transition funds into calendar year
2004. While the Corporation is broadening the scope of its digital
transition grants in 2004, the licensees' priorities for digital
production equipment and digital content still are not included in the
Corporation's digital transition funding.
Recommendations for Executive Action:
We recommend that the Corporation for Public Broadcasting take the
following two actions regarding the Television Future Fund and its
digital transition funds:
* Before making further Television Future Fund awards or expending any
funds in the Television Future Fund account, the Corporation should
request specific statutory authority to do so, if it intends to
continue using funds that were designated for distribution among
licensees. Should this specific authority not be obtained, the
Corporation should return to the licensees such funds remaining in the
Television Future Fund account that came from the funds designated for
distribution among licensees.
* The Corporation should broaden the scope of its digital transition
funding support to include digital production equipment and digital
content.
Agency Comments:
We provided a draft of this report to the Corporation for Public
Broadcasting and to the Public Broadcasting Service for their review
and comments. The Corporation agreed with our recommendation to broaden
the scope of its digital funding to include production equipment and
content, consistent with congressional directives and station needs
after consultation with licensees or their designated representatives.
The Corporation stated that it recognizes that stations are at various
stages in the conversion process and that all station needs are being
given careful consideration in consultations on the distribution of
fiscal year 2004 digital transition funds. The Corporation did not
agree with our recommendation that the Corporation should request
specific statutory authority before making further Television Future
Fund awards or expending any funds in the Television Future Fund
account. The Corporation's comments include a legal memorandum from its
outside counsel which concludes that the Television Future Fund is
fully consistent with the Communications Act of 1934, as amended. For
the most part, the legal memorandum raises the same arguments that we
have addressed in our opinion. However, one argument raised for the
first time involves the "doctrine of ratification." The Corporation
cites to cases holding that when the Congress reenacts, without change,
statutory terms that have been given a consistent judicial or
administrative interpretation, the Congress has expressed an intention
to adopt that interpretation. The Corporation uses this doctrine to
support its contention that the Congress has consistently replenished
funds designated for distribution among licensees knowing that a
portion of these funds are being used for Future Fund projects. Thus,
the Corporation contends that the Congress has, in essence, ratified by
appropriation the Corporation's interpretation of the statute. However,
as recognized by GAO opinions summarizing the test that courts have
used to find ratification by appropriation, three factors generally
must be present to conclude that the Congress, through the
appropriations process, has ratified agency action. First, the agency
takes the action pursuant to at least arguable authority; second, the
Congress has specific knowledge of the facts; and third, the
appropriation of funds clearly bestows the claimed authority. None of
these factors is present here. The Corporation's comments and our
response to points raised by its attached legal memorandum are included
in appendix VII.
The Public Broadcasting Service's comments are included in appendix
VIII. Noting our finding that over half of the survey respondents
indicated a need for changes in the process for selecting programs for
the National Program Service, PBS stated that it will analyze its
current mechanisms for generating program input from member stations
and will seek counsel from the Content Policy Committee of its board on
how best to improve its systems for securing member input. PBS also
provided additional information to clarify the respective funding needs
of the Enhanced Interconnection Optimization Project and the Next
Generation Interconnection System.
We also provided a draft of the report to FCC and have incorporated
FCC's technical comments where appropriate.
Matter for Congressional Consideration:
If the Congress supports the concept of using funds that were
designated for distribution among licensees to finance the Television
Future Fund program, it should provide the Corporation with the
authority to use the funds for this purpose.
As agreed with your offices, unless you publicly announce the contents
of this report earlier, we plan no further distribution of it until 30
days from the date of this letter. We will then send copies of this
report to the appropriate congressional committees, the President and
Chief Executive Officer of the Corporation for Public Broadcasting, the
President and Chief Executive Officer of the Public Broadcasting
Service, the Chairman of the Federal Communications Commission, and
others who are interested. We also will make copies available to others
who request them. In addition, the report will be available at no
charge on the GAO Web site at [Hyperlink, http://www.gao.gov]. If you
or your staff have questions concerning this report, please contact me
on (202) 512-2834 or at [Hyperlink, goldsteinm@gao.gov]. Key contacts
and major contributors to this report are listed in appendix IX.
Signed by:
Mark L. Goldstein:
Director, Physical Infrastructure Issues:
[End of section]
Appendixes:
[End of section]
Appendix I: Scope and Methodology:
Our objectives were to review the Corporation's activities and obtain
the views of public television station officials regarding: (1) the
statutory allocations for federal funding of public television; (2) the
distribution of funds by the Corporation through its Community Service
Grant and Television Future Fund programs, including a legal analysis
of whether the funding of the Television Future Fund program is
consistent with the Corporation's underlying statutory authority; (3)
the distribution of funds by the Corporation for PBS's National Program
Service and for local programming; and (4) Corporation funding to
assist public television stations in their transition to digital
technologies and services. We also reviewed the statutory and
regulatory requirements, system policies and guidance, and licensees'
views on underwriting acknowledgments.
To respond to these objectives, we gathered information from a variety
of sources, including a survey of all public television licensees
receiving funds from the Corporation for Public Broadcasting. To
respond to the first and second objectives, we reviewed provisions of
the Communications Act, as well as documents and records used by the
Corporation to implement and administer programs supporting public
television stations. We also interviewed officials of the Corporation,
PBS, and the Association of Public Television Stations, a nonprofit
organization whose members include nearly all of the licensees of
public television stations.
To respond to the third objective on Corporation funding for national
programming, we reviewed provisions of the Communications Act and
documentation on funding for national programming obtained from the
Corporation, PBS, and the Independent Television Service, a nonprofit
corporation that receives federal support from the Corporation for
distribution to independent public television producers. We also
interviewed officials from all of these organizations, the Association
of Public Television Stations, and two additional distributors of
national programming that do not receive funding from the Corporation-
-American Public Television and the National Educational
Telecommunications Association.
To respond to the fourth objective on assisting in the transition to
digital technologies and services, we reviewed statutory provisions,
documents, and records from the Corporation and PBS, which is under
contract to the Corporation to administer the Corporation's digital
grant programs. We also interviewed officials of the Corporation, PBS,
the Association of Public Television Stations, and the National
Telecommunications and Information Administration in the Department of
Commerce that also awards grant funds to public television stations for
digital equipment costs. To further our understanding of public
television's progress in the digital transition, we requested and
received data from the FCC on its June 2003 survey of public television
licensees that are PBS-affiliates in the top 100 television markets.
For our objective on underwriting acknowledgments, we reviewed
statutory and regulatory documents and interviewed officials of FCC,
which enforces acknowledgment requirements, and obtained guidance
provided by and interviewed officials of the primary national
programming distributors--PBS, American Public Television, and the
National Educational Telecommunications Association.
We also reviewed the legal opinions of the Corporation's outside
counsels as part of our legal analysis to determine whether the
Corporation's approach to funding the Television Future Fund is
consistent with the governing statute. Our legal review focused on the
program as it existed prior to the end of fiscal year 2003.
We responded to all of these objectives by conducting interviews with
16 licensees of public television stations and deploying a Web-based
survey of public television licensees. As the scope of our work was
limited to an evaluation of the Corporation's activities, we only
surveyed entities licensed by FCC to operate one or more public
television stations that received funds from the Corporation as of
mid-August 2003. We identified the population of public television
licensees from the Public Broadcasting Directory published by the
Corporation and verified this information with a database provided by
the Association of Public Television Stations, as well as with FCC's
database of public television licensees. This information included
names, addresses, and other contact information of public television
licensees, as well as licensee type and size. We acquired data on
public television licensee market size and station revenues from an
online Station Activities and Benchmarking Survey and Station Grant
Making System, both developed by the Corporation and to which all
recipients of Corporation grants contribute data. To assess the
reliability of this licensee data, we reviewed these documents and
discussed the data with knowledgeable agency officials. As a result, we
determined that the data were sufficiently reliable for the purposes of
this report. We surveyed 178 licensees and subsequently excluded the
surveys of two licensees: (1) one licensee who did not meet the
aforementioned criteria and (2) another licensee who holds two
licenses, but who completed only one survey rather than two. Our
resulting population consisted of 176 licensees.
To develop our survey, we interviewed officials at the Corporation,
PBS, the Association of Public Television Stations, the Independent
Television Service, American Public Television, the National
Educational Telecommunications Association, and several licensees of
public television stations. We also conducted an interview with an
official of and obtained documents from Citizens for Independent Public
Broadcasting, a national membership organization dedicated to
addressing public broadcasting issues. We then conducted pretests with
seven public television licensees to help further refine our questions,
develop new questions, clarify any ambiguous portions of the survey,
and identify any potentially biased questions. These pretests were
conducted in person and by telephone with licensees of various types,
sizes, and regional locations across the country.
We began our Web-based survey on August 21, 2003, and included all
useable responses received as of September 22, 2003. Log-in information
to the Web survey was e-mailed to officials of public television
licensees, which included general managers and presidents. We sent two
follow-up e-mails, and after the survey was online for 3 weeks, we
attempted to contact all those who had not logged into the survey. The
Corporation and the Association of Public Television Stations
coordinated with us to encourage station licensees to complete the
survey. Of the population of 176 public television licenses, we
received 149 complete surveys, for an overall response rate of 85
percent. However, the number of responses to individual questions may
be fewer than 149, depending upon how many licensees were eligible to
or chose to respond to a particular question.
All completed surveys were reviewed, and we contacted respondents to
obtain information where clarification was needed. Because the survey
was made accessible to all public television licensees in the
appropriate population, percentage estimates do not have sampling
errors. The practical difficulties of conducting any survey may
introduce other types of errors, commonly referred to as nonsampling
errors. For example, differences in how a particular question is
interpreted, the sources of information available to respondents, or
the types of people who do not respond can introduce unwanted
variability into the survey results. We included steps in both the data
collection and data analysis stages for the purpose of minimizing such
nonsampling errors. In addition to pretesting the questions with
members of the population, we performed computer analyses to identify
inconsistencies and other indications of error. We also conducted
analyses on available licensee characteristics to evaluate the
possibility that the respondents might differ from the nonrespondents.
Although there is some evidence of differences, these are not large
enough to provide a basis for adjusting survey responses. Distributions
by type of licensee (community, local authority, state, university) and
numbers of stations operated by licensees were not significantly
different. Licensees operating large stations were somewhat more likely
to respond and those operating smaller stations were somewhat less
likely to respond, but the differences were not significant.
The following data is used only as background information in the
report; therefore, the data was not verified for data reliability
purposes: (1) the digital television cost estimate developed by the
Corporation and PBS; (2) the sources and percentages of public
television revenue provided by the Corporation; (3) the number of
Television Future Fund and digital television grants awarded by
category; (4) and the distribution of funds by the Corporation for
programming.
Our review was performed from April 2003 through February 2004 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Components of the Corporation's Community Service Grants:
On the basis of statutory provisions and the receipt of an annual
federal appropriation from the Congress, the Corporation for Public
Broadcasting makes an annual Community Service Grant award to each
eligible licensee of one or more noncommercial educational public
television station(s). Figure 22 summarizes the factors upon which
funds are awarded through each of the three component grants of a
Community Service Grant.
Figure 22: Components of the Corporation's Community Service Grants:
[See PDF for image]
[A] Nine other eligibility criteria for the base grant are specified by
the Corporation, including licensees' compliance with regulations on
equal opportunity employment, Internal Revenue Service requirements,
provisions of the Communications Act, and regulations on the use and
control of donor names and lists.
[End of figure]
[End of section]
Appendix III: Legality of the Corporation for Public Broadcasting's
Television Future Fund Program:
The Corporation for Public Broadcasting (the Corporation) established
the Television Future Fund in 1995 for the purpose of investing in
projects that would reduce costs, facilitate collaboration, and
increase revenue across the public television system. The Television
Future Fund is funded, in part, by monies designated by the Congress to
be distributed among public television licensees. As part of our review
of the Corporation, we were asked to determine the legality of this
funding practice. Specifically, the issue is whether the Corporation
may use funds designated by the Congress for distribution among public
television licensees to support a competitive grant program, the
Television Future Fund program. As explained more fully below, the
Corporation's funding and distribution of grants under the Television
Future Fund program are not in accord with the underlying statutory
authority under which the Corporation operates.[Footnote 56]
Background:
The Congress established the Corporation in 1967 as a nonprofit
corporation to facilitate the development of public radio and
television broadcasting. 47 U.S.C. §396. To ensure insulation from
government control or influence over the expenditure of federal funds,
the Congress provides funds directly to the Corporation. Although not a
federal agency, the Corporation receives an annual appropriation from
the Congress, which is its primary source of funding and is deposited
into the Public Broadcasting Fund. The 2004 fiscal year appropriation
was $380 million.[Footnote 57] In turn, the Corporation supports local
television and radio stations, programming, and improvements to the
public broadcasting system as a whole. According to the Corporation,
its support represents approximately 15 percent of public
broadcasting's revenues. Other support for the public broadcasting
system comes from such sources as membership, businesses, college and
universities, and state and local governments.
The Corporation funds more than 350 locally operated public television
stations across the country.[Footnote 58] Prior to the establishment of
the Television Future Fund, the Corporation distributed available
monies among licensees of public television stations through the
Community Service Grant mechanism.[Footnote 59] Community Service
Grants (CSG) are unrestricted general operating grants provided by the
Corporation directly to qualified public television stations according
to a mathematical formula.[Footnote 60] As required by 47 U.S.C.
§396(k)(6)(B), the Corporation established eligibility criteria and a
formula for distributing these funds and has periodically reviewed them
in consultation with the public television station community. All
qualified licensees receive a CSG, although the amount varies. A full-
power station operating under a noncommercial, educational Federal
Communications Commission (FCC) license qualifies for a CSG if it meets
minimum requirements including a minimum level of nonfederal financial
support, a minimum broadcast schedule, and bookkeeping and programming
standards.[Footnote 61]
The Corporation established the Television Future Fund in 1995. At that
time, the Corporation had growing concerns about declining federal
support, as well as diminished revenues from other sources. The
Corporation saw a need to establish and maintain a pool of money,
aggregating funds from two different sources, to fund projects to
address systemwide concerns. According to the 1995 Public Television
Issues and Policies Task Force, the Future Fund was established to:
* provide seed capital or short-term financing for projects that can
significantly reduce costs, increase efficiency, provide economies of
scale, or generate incremental gains in membership, underwriting, or
other sources of income;
* fund station proposals to explore opportunities to achieve new
operating efficiencies through collaborative efforts, partnerships,
joint operating agreements, consolidations, and other arrangements
resulting in significant annual savings; and:
* fund extraordinary efforts and new initiatives to raise nonfederal
income, in anticipation of reduced federal funding, with a goal of
stimulating an increase in annual nonfederal revenue.
According to Corporation officials, the Corporation had previously
funded similar projects on a smaller scale through the use of system
support funds.[Footnote 62] However, since, under the statutory
allocation formula, these funds are relatively limited, the Corporation
felt a larger pool of funds was needed.[Footnote 63] Accordingly, the
Corporation's board, after what it terms extensive consultation with
the public television station community, approved the funding of the
Television Future Fund using monies from the system support and the CSG
pools.[Footnote 64]
The Corporation views Television Future Fund awards as a special
category of grant that is neither exclusively a CSG grant nor a System
Support expenditure. The Corporation notes that while CSGs typically
are utilized only as determined by an individual station recipient for
its own benefit, Television Future Fund grants can be used as
determined or directed by more than one station for the benefit of
multiple stations and, potentially, for the benefit of public
television as a whole. Under procedures in place prior to the end of
fiscal year 2003, the Corporation solicited interest in Future Fund
grants by issuing a Request for Proposal (RFP) and would evaluate
applicants for grants on the basis of RFP funding criteria.[Footnote
65] Not all applicants received funding.
Since its creation and through May 2003, the Corporation has allocated
a total of $51 million to the Television Future Fund. Of this amount,
$24.5 million is from CSG funds--in other words, from funds that are
available for distribution among licensees of public television
stations. Approximately $41.3 million has been awarded through the
Television Future Fund program.[Footnote 66] Prior to the end of fiscal
year 2003, the Corporation has made 204 grant awards, of which
39 percent of the grants have gone to stations, 30 percent have gone to
stations paired with consultants, and 31 percent have gone to third-
party awardees. The nature of the projects funded with Television
Future Fund grants has varied greatly and included Web site experiments
and marketing projects. The grant amounts have varied from a few
thousand dollars to hundreds of thousands of dollars.
Issues:
From its inception, the Corporation always envisioned that monies from
two sources--the System Support and CSG pools--would support the
Television Future Fund program. We are not aware of any concerns that
have been raised about the Corporation's use of System Support funds to
support the Television Future Fund. Because the statute provides that
System Support monies may be used, if available funding levels permit,
for projects and activities that enhance public broadcasting, the
Corporation is clearly permitted to so use such funds. 47 U.S.C.
§396(k)(3)(A)(i)(II). The primary question concerning the legality of
the Television Future Fund program involves the use of CSG
funds.[Footnote 67] Specifically the issue is whether the Corporation
may use CSG funds to support the Television Future Fund, a competitive
grant program that awards grants on the basis of selective, project-
specific criteria. As explained more fully below, we have determined
that the statute does not authorize the Corporation to use these funds
in this manner.
The Statutory Framework:
A statutory allocation formula governs how the Corporation distributes
appropriated funds to support public television stations.[Footnote 68]
47 U.S.C. §396(k). Under this formula, after administrative costs and
System Support funds are allocated (about 11 percent of the annual
appropriation), the remaining funds are divided between television and
radio, with 75 percent earmarked for television, and 25 percent for
radio. 47 U.S.C. §396(k)(3)(A). Of the monies reserved for television,
"75 percent of such amounts shall be available for distribution among
the licensees and permittees of public television stations pursuant to
paragraph (6)(B)." 47 U.S.C. §396(k)(3)(A)(ii)(I). For these
"(3)(A)(ii)(I) funds," paragraph (6)(B) specifically provides that the
Corporation "shall make a basic grant... to each licensee and
permittee of a public television station that is on the air." 47 U.S.C.
§396(k)(6)(B). Paragraph (6)(B) then provides:
"The balance of the portion reserved for television stations...
shall be distributed to licensees and permittees of such stations in
accordance with eligibility criteria (which the Corporation shall
review periodically in consultation with public... television
licensees or permittees, or their designated representatives) that
promote the public interest in public broadcasting, and on the basis of
a formula designed to--
i. provide for the financial needs and requirements of stations in
relation to the communities and audiences such stations undertake to
serve; [and]
ii. maintain existing, and stimulate new, sources of nonfederal
financial support for stations by providing incentives for increases
in such support..." 47 U.S.C. §396(k)(6)(B). (Emphasis added.):
The next paragraph of the statute further provides that funds
distributed through the above mechanism "may be used at the discretion
of the recipient for purposes related primarily to the production or
acquisition of programming." 47 U.S.C. §396(k)(7) (Emphasis added.):
Analysis:
In our view, subsection 396(k)(6)(B) does not authorize the Corporation
to establish a competitive grant program using project-focused criteria
funded in part with CSG funds. Although we often defer to an agency's
interpretation of a statute it is charged to administer,[Footnote 69]
in this instance, the Corporation's interpretation of its authority
under the statute is neither consistent with the statute's language nor
the Congress's policy choice favoring local, not Corporation, control
of the expenditure of CSG funds. Moreover, as implemented by the
Corporation, some Television Future Fund grants have been awarded to
nonstation entities. This is in direct contravention of paragraph
(k)(6)(B) directions that these funds be distributed to eligible
licensees and permittees of public television stations.
The difference between our view and that of the Corporation focuses on
whether the "eligibility criteria" the Corporation may adopt includes
project-focused criteria that would govern the competitive award of
funds for a particular project or whether the "eligibility criteria"
the Corporation may adopt includes only station-based criteria that
distinguishes among public television licensees on the basis of such
factors as financial needs, audience satisfaction, or fundraising
effectiveness. According to Corporation officials, the term
"eligibility criteria" is broad enough to allow them, in consultation
with the station community, to adopt not only station "qualification"
criteria but also "selective" project criteria. We disagree. There are,
in our view, several reasons why the Congress did not intend the
Corporation's authority to establish "eligibility criteria," and the
formula under which CSG funds are disbursed, to mean that the
Corporation may take a portion of CSG funds, pool them with System
Support funds, and use them to make competitive grants only to
applicants submitting project proposals acceptable to the Corporation
after review and recommendation by an advisory panel. First, the
language of subsection 396(k)(6)(B) does not readily support such a
reading. Second, the statutory construct governing the Corporation's
distribution of funds indicates that the Congress specifically
identified a limited source of funding for Corporation-approved
project-specific grants, which by necessary implication is the
exclusive source of funding for such grants. And third, the Television
Future Fund program runs contrary to the Congress's expressed policy
favoring local, not Corporation, control of the expenditure of these
discretionary funds. These reasons for our conclusions are discussed
more fully below.
First, with respect to the statutory language, section 396(k) provides
an allocation formula directing the Corporation, after deducting about
11 percent of amounts appropriated to the Public Broadcasting Fund for
administrative and System Support expenses, to distribute 75 percent of
the remaining balance to public television stations. 47 U.S.C.
§396(k)(3)(A). The statute further provides that 75 percent of the 75
percent reserved for public television stations "shall be available for
distribution among the licensees and permittees of public television
stations pursuant to paragraph (6)(B)." Paragraph (6)(B), in turn,
provides two directions to the Corporation. It must first "make a basic
grant... to each licensee and permittee of a public television
station that is on the air." 47 U.S.C. §396(k)(6)(B). Second, paragraph
(6)(B) directs the balance of the portion reserved for public
television stations to "be distributed to licensees and permittees of
[public television] stations in accordance with eligibility criteria .
. . that promote the public interest in public broadcasting." Id. In
addition, the distribution of such balance shall be "on the basis of a
formula designed to" honor station-focused considerations such as their
"financial needs and requirements... in relation to the communities
and audiences they serve or the level of, and increases in, nonfederal
financial support received by the stations. The point of paragraph
(6)(B) is to direct the Corporation's distribution of CSG funds to the
licensees and permittees of public television stations. While paragraph
(6)(B) provides only that the "eligibility criteria" are to "promote
the public interest in public broadcasting," the Congress nonetheless
directed the distribution of such funds on the basis of a formula with
a pronounced focus on station-based considerations. Hence, in the
context of paragraph (6)(B)'s distribution mechanism, we believe the
phrase "eligibility criteria... that promote the public interest in
public broadcasting" can best be read to mean criteria focusing on the
eligibility of licensees and permittees of public television stations,
not project eligibility criteria.[Footnote 70]
An additional and perhaps more glaring defect in the Corporation's
interpretation of "eligibility criteria" is that it changes the basic
nature, and control over the expenditure of the grant funds. To read
paragraph (6)(B), as the Corporation does--as authorizing competitive
grants for specific projects--introduces an element into the CSG funds
allocation that the Congress did not appear to intend. We have two
reasons for this view. First, as pointed out above, the language of
paragraph (6)(B) makes no reference to funding specific projects. By
contrast, the Congress has provided the Corporation with express
authority to fund projects using System Support funds. 47 U.S.C.
§396(k)(3)(A)(i)(II). In 1988, the Congress amended the system support
provision and specifically authorized the Corporation to use such funds
"if the available funding level permits, for projects and activities
that will enhance public broadcasting." Public Telecommunications Act
of 1988, Pub. L. No. 100-626, 102 Stat. 3207 (1988). As stated above,
by identifying a specific source of funds to be used for project-based
grants, the legislative language suggests that other funds would not be
used for the same purpose. The legislative history supports the view
that the Congress anticipated that these funds would be used for
systemwide projects that benefit the public broadcasting
community.[Footnote 71]
Second, the statute and its legislative history reflect a clear
division of roles vis-à-vis the Corporation and licensees and
permittees of public television stations. Under the statutory scheme,
it is the Corporation that is responsible for distributing funds to the
licensees and it is the recipients of these funds that decide how they
are to be used. From the time that the Congress first established the
Corporation, one of the Corporation's functions was to distribute funds
to licensees of public television stations who, in their sole
discretion, decide how to use them.[Footnote 72] In 1975, when the
Congress established the subsection (6)(B) statutory distribution
mechanism, the Congress, in another subsection, also specified that the
discretion over how funds are to be used rests with the stations
receiving the funds. Specifically, as amended, the statute provides
that "[t]he funds distributed... may be used at the discretion of
the recipient for purposes related primarily to the production or
acquisition of programming." 47 U.S.C. §396(k)(7). Not surprisingly,
the legislative history of the distribution mechanism is replete with
references to the funds flowing "directly" to the licensees and the
licensees having "discretion" over the use of the funds.[Footnote 73]
The Corporation's creation of a competitive grant program where it
decides not only who receives a grant but also more importantly the
specific purposes for which the grant funds can be used alters the
fundamental balance of discretion over the use of the funds.
[Footnote 74] Under the Corporation's process, in effect prior to the
end of fiscal year 2003, the Request for Proposal Submission Guidelines
and Application (RFP) establishes the funding initiatives that guide
awards for project support.[Footnote 75] However, the Corporation
reserves the right to fund "otherwise outstanding proposals based on
their individual merits, though they may not necessarily respond to
these priorities but demonstrate a clear response to Fund objectives."
Fiscal Year 2002 RFP.[Footnote 76] By setting forth what recipients
could spend funds on, the Corporation transferred discretionary
authority from each individual licensee to itself.
Faced with the statute's clear division of roles, the Corporation's
outside counsel attempts to justify first, the Corporation's use of CSG
funds to make project-specific grants and second, that the Television
Future Funds grants are not primarily designated for
programming.[Footnote 77] In our view, the outside counsel's conclusion
that the Corporation, in consultation with the stations, "may" spend
funds on projects that will be financially beneficial to the stations
and that will stimulate nonfederal funding is based on two unsupported
assumptions. First, the outside counsel reads paragraph (k)(6)(B) as
providing the Corporation with authority to "spend" CSG funds. Second,
the outside counsel contends that the goals of the formula design are
in essence mandates on how the CSG funds are to be used. We see no
support for either proposition. Paragraph (k)(6)(B) directs the
Corporation on how CSG funds are to be distributed not on how they are
to be spent. The goals of the formula design also provide guidance on
what criteria the Corporation should consider in distributing funds,
but does not constrain a recipient's use of CSG funds. Moreover,
although the Corporation's outside counsel reads paragraph (k)(7) in
terms of its permissive direction, this does not recognize that the
subsection emphasizes the discretion of the recipient to use CSG funds
for purposes related primarily to programming, i.e., for purposes
chosen by the recipient. (Emphasis added).
Finally, the Corporation has implemented the Television Future Fund to
make it open to "all public television stations and station consortia,
and to any person, foundation, institution, partnership, corporation,
or other business whose project is expressly intended to benefit public
television." Fiscal Year 2002 RFP. Thus, some CSG funds have been
awarded to entities other than licensees or permittees of public
television stations.[Footnote 78] According to the Corporation, so long
as the purpose of the grants is to benefit public television stations,
the award of grants to consultants or other third-party entities is
consistent with the statute. Since consultants and stations often work
together to generate project proposals that are reviewed by a panel
representing a diverse group of stations, the Corporation's outside
counsel concludes that the statutory purposes are being fulfilled,
regardless of whose name appears as payee on the Corporation check.
Letter from Stephen A. Weiswasser, July 9, 2003. The difficulty with
this approach is that paragraph (6)(B) directs the Corporation to
distribute the balance of funds reserved for television stations, after
deduction of the basic grant, "to licensees of such stations." 47
U.S.C. §396(k)(3)(A)(ii)(I) (Seventy-five percent of 75 percent
remaining after deduction of administrative and system support funds
"shall be available for distribution among the licensees and permittees
of public television stations pursuant to paragraph (6)(B).")
Accordingly, in our view, the Corporation may not distribute CSG funds
to a nonstation entity (other than one acting as the agent for a
station or group of stations).
Conclusion:
For the reasons noted above, we find that the Corporation's funding and
distribution of the Television Future Fund program is not consistent
with the underlying statutory authority under which the Corporation
operates.
[End of section]
Appendix IV: Digital Transition Regulatory Issues of Concern to Public
Television:
Licensees and others in the public television community maintain that
the ability of licensees to provide a full range of digital services
depends, in part, on regulatory issues related to digital carriage by
cable and satellite system providers. Many in the public television
community believe that how mandatory carriage obligations are applied
to their digital signal is at the heart of public television's future.
Cable systems are required to carry local noncommercial educational
television stations based upon a cable system's number of usable
activated channels.[Footnote 79] Satellite carriers are required to
carry all nonduplicative noncommercial educational television stations
in markets where they provide local-into-local service.[Footnote 80]
These mandatory carriage requirements are often referred to as "must
carry" obligations.
There are two key issues on how to apply the mandatory carriage
obligations in the digital arena that are of importance to the public
television community. The first is whether the "must carry"
requirements apply to both the digital and analog signal during the
transition period. In other words, would a cable provider be required
to carry both the analog and digital signal until the analog spectrum
is returned. In a January 2001 Order concerning the carriage of digital
television broadcast signals by cable operators, FCC tentatively
concluded, based on the existing record evidence, that during the
transition, a dual must-carry requirement would burden the cable
operator's First Amendment interests more than is necessary to further
the government's interests. In this regard, the record was found
insufficient to demonstrate the degree of harm that broadcasters,
including public television stations, would suffer without carriage of
both signals.[Footnote 81] In order to ensure that it had sufficient
evidence to fully evaluate this issue, FCC issued a Further Notice of
Proposed Rulemaking.
The second key issue involves the specific content of a digital
television signal that is subject to mandatory carriage. Most analog
broadcast stations have only one video broadcast product. However,
digital television will operate on a much more flexible basis that
could allow for multiple-streams, or "multicasting," of standard
definition digital television programs. Under the statute, a cable
operator is required to carry in its entirety the "primary video" of
the commercial broadcast station.[Footnote 82] According to FCC,
largely parallel provisions are contained in the statute relating to
carriage of noncommercial stations.[Footnote 83] Although FCC
recognized that the term "primary video" was susceptible to different
interpretations, FCC concluded that, based on the available record, the
term "primary video" means a single programming stream and other
program-related content. In its Further Notice of Proposed Rulemaking,
FCC sought comment on the appropriate parameters for "program-related"
in the digital context. FCC also raised questions concerning the
applicability of the rules and policies it adopted in the above cited
Order to satellite carriers. Public television stations and other
broadcasters have asked FCC to reconsider its ruling, and a decision on
this request is pending.
As our own survey of licensees shows, there is a very strong consensus
among licensees that the lack of dual carriage of analog and digital
signals by cable companies, as well as a lack of cable carriage of the
entire digital over the air stream such as multicast offerings are seen
as factors impeding public television's digital transition.
Additionally, there is a strong consensus that lack of carriage of
local stations' digital signals by direct broadcast satellite (e.g.,
DISH Network, DIRECTV), would produce similarly negative results (see
fig. 23).
Figure 23: Issues Cited by Licensees As Impeding Public Television's
Digital Transition:
[See PDF for image]
Note: Percentages reflect the licensees responding "yes" to our
questions whether each issue would impede their transition to digital.
N=147 licensees for "Lack of dual cable carriage"; N=148 licensees for
"Lack of multicast cable carriage;" and N=148 for "Lack of satellite
carriage.":
[End of figure]
However, opponents of these mandatory carriage obligations, including
the cable television industry, have maintained that in the absence of
dual cable carriage, broadcasters, including public television, will
not be negatively affected. The cable television industry also pointed
out that some cable television providers have managed the need for dual
carriage by voluntarily entering into a number of agreements with local
public television stations to carry their digital signals in addition
to their analog signals during the transition period. Additionally,
they have noted that adoption of mandatory carriage requirements for
multicasting would impose unconstitutional freedom of speech
restrictions and a governmental limitation on cable television
providers' right to decide what services they provide.[Footnote 84]
Absent changes to FCC's ruling on these issues, some in the public
television community have taken the position that they "must convince"
cable and satellite providers that the digital services offered by
public television are valuable additions for their customers and,
therefore, should be carried by them.
[End of section]
Appendix V: Underwriting Acknowledgments on Public Television:
One of the distinguishing features of public television is, by
definition, its noncommercial character. Unlike commercial television
stations, public television stations are prohibited from airing
advertisements. However, public television stations are permitted to
acknowledge station support[Footnote 85] and, without interrupting
regular programming, may acknowledge underwriters on the air.[Footnote
86] Dating back to the initial decision to reserve spectrum for
noncommercial educational broadcast television, FCC rejected proposals
to allow noncommercial educational licensees the ability to generate
revenues through advertising sales and frequency sharing with
commercial broadcasters. In 1981, as part of a "major" reevaluation of
the noncommercial educational broadcast service, FCC reaffirmed its
rejection of advertising on public television, concluding that
advertiser-supported programming of any kind could harm the service.
FCC's 1981 policy statement on the nature of public broadcasting states
that the Commission's interest in creating a noncommercial service in
1951 was to remove the programming decisions of public broadcasters
from the normal kinds of market pressures faced by commercial
broadcasters. FCC noted, however, that acknowledgments of funders are
"proper" and possibly necessary to ensure continued funding from such
sources.[Footnote 87]
In 1981, the Communications Act was amended to authorize licensees the
ability to offer services, facilities, and products in exchange for
remuneration, provided that nonfederal funds are used to subsidize such
activities and that such activities would not interfere with the
provision of public telecommunications services.[Footnote 88] In
addition, the amendments included a provision establishing a "Temporary
Commission on Alternative Financing for Public Telecommunications" to
identify funding options for public broadcasting, and to conduct
demonstrations of limited advertising for the purpose of "reduc[ing]
the uncertainty about the advantages and disadvantages accompanying
public broadcast station's use of limited commercial advertising or
expanded underwriting credits." In its 1983 Report to the Congress, the
Temporary Commission concluded that potential revenues from advertising
were limited in scope and that the avoidance of significant risks to
public broadcasting could not be ensured. In addition, it recommended
that the Congress continue to provide federal funding for public
broadcasting until or unless adequate alternative financing becomes
available.[Footnote 89]
Under current law, the Communications Act defines a "noncommercial
educational broadcast station" and "public broadcast station" as a
television or radio broadcast station that under the rules and
regulations of the Commission in effect on November 2, 1978, is
eligible to be licensed as a station that is "owned and operated by a
public agency or nonprofit private foundation, corporation or
association" or "is owned and operated by a municipality and which
transmits only noncommercial programs for educational
purposes."[Footnote 90] For our purposes here, the act defines
"advertisements" as any message or other programming material that is
broadcast or otherwise transmitted "in exchange for any remuneration"
and is intended to "promote any service, facility, or product" of for-
profit entities. As noted above, the act permits public broadcasting
stations to provide facilities and services for remuneration so long as
those uses do not interfere with stations' provision of public
telecommunications services; the act also prohibits stations from
making their facilities "available to any person for the broadcasting
of any advertisement."[Footnote 91]
Under FCC rules and policies, noncommercial educational stations have
the discretion to air announcements acknowledging station
support.[Footnote 92] A station's financial contributors may receive
on-air acknowledgements for identification purposes only.[Footnote 93]
Such acknowledgments may not promote the contributors' products,
services, or business, and may not contain comparative or qualitative
descriptions, price information, calls to action, or inducements to
buy, sell, rent, or lease. No limitation, however, was adopted on the
length of acknowledgments.[Footnote 94] Recognizing that it may be
difficult to distinguish between language that "promotes" and language
that merely "identifies" an underwriter, broadcasters must make
"reasonable good faith judgments" to exclude language or visual
elements in their acknowledgments that promote the contributors'
products, services, or business. Consistent with the identification of
underwriters, FCC has determined that acknowledgments may include, in
addition to the underwriter's name, the following identifying
information:
* logo-grams or slogans which identify and do not promote,
* location information and telephone numbers,
* value neutral descriptions of a product line or service, and/or:
* brand and trade names and product or service listings.
According to FCC, enforcement primarily occurs through self-policing by
licensees of public television stations and also by the Commission's
response to complaints. For the period from January 2000 through early
February 2004, FCC had 43 complaint cases. Thirteen of the complaints
were denied or dismissed, 17 complaints resulted in admonishments or
cautions, and 2 resulted in notices of apparent liability. Eleven
others were under investigation.
The statutory and regulatory provisions on underwriting acknowledgments
are supplemented by guidelines and policies developed by PBS, by other
national distributors of public television programming, and by
licensees themselves. For example, PBS guidelines govern how
underwriters of PBS-distributed programs may be identified on air. The
acceptance of program funding from third parties, the guidelines state,
are intended to ensure that editorial control of programming remains in
the hands of program producers, that funding arrangements will not
create the perception that editorial control has been exercised by
someone other than the producer, and that the noncommercial character
of public broadcasting is protected and preserved. PBS guidelines also
specify that the maximum duration for all underwriter acknowledgments
may not exceed 60 seconds and generally that the maximum duration for a
single underwriter not exceed 15 seconds. Other national distributors
of public television programming, such as American Public Television
and the National Educational Telecommunications Association, also have
guidelines with similar acknowledgment length limitations. The PBS
Board adopted an exception to its guidelines in February 2003. As
modified, the maximum duration for one underwriter may not exceed 30
seconds within a 60-second maximum interval for all acknowledgments.
This applies only to underwriters that contribute $2.5 million or more
per year for the production of PBS's prime-time programming and the
NewsHour with Jim Lehrer.
In our survey of licensees, we asked several questions related to the
airing of 30-second underwriting acknowledgments by licensees
themselves and not those aired as part of PBS programming. The
percentage of licensees that said they are currently airing 30-second
acknowledgments (41 percent) was equal to the percentage of licensees
that said that they neither air, nor plan to air, 30-second
underwriting acknowledgments. An additional 9 percent of the licensees
responded that they intend to air 30-second acknowledgments in the
future. Figure 24 illustrates the responses of licensees to this
question.
Figure 24: Licensees that Air, Plan to Air, and Do Not Air or Plan to
Air Their Own 30-Second Underwriting Acknowledgments:
[See PDF for image]
Note: N=149 licensees. Percentages have been rounded and do not equal
100 percent.
[End of figure]
Of the respondents who told us that they are currently airing 30-second
acknowledgments, the earliest date provided for the first airing of
such acknowledgments was 1982.
We also asked licensees who currently air or plan to air 30-second
acknowledgments to prioritize the reasons for such decisions. For both
groups of licensees, the highest priority identified was to attract new
underwriters--56 percent of those that already air 30-second
acknowledgments and 69 percent of those that plan to air 30-second
acknowledgments. For both groups, maintaining revenues from existing
underwriters was the second most frequently identified top priority.
Only 5 percent of those that currently air such acknowledgments and 8
percent of those that plan to air such acknowledgments identified
increasing revenues from existing underwriters as their highest
priority. These responses are illustrated in figure 25.
Figure 25: Reasons Identified by Licensees as the Highest Priority for
Airing or Planning to Air Their Own 30-Second Underwriting
Acknowledgments:
[See PDF for image]
Note: N=57 licensees that "Air" and N=136 licensees that "Plan to Air"
30-second underwriting acknowledgments. Percentages have been rounded.
[End of figure]
In response to our question as to whether licensees would favor or
oppose a federal requirement that limits the length of underwriting
acknowledgments, 71 percent said they oppose a requirement, and 22
percent said they favor a federal requirement (see fig. 26).:
Figure 26: Views on the Need for a Federal Requirement Limiting the
Length of Underwriting Acknowledgments:
[See PDF for image]
Note: N=147 licensees. Percentages have been rounded and do not equal
100 percent.
[End of figure]
Licensees' commentary on underwriting acknowledgements addressed both
the use of longer acknowledgments and views on a federal requirement
limiting their length. A few of the comments provided to us were
critical of the use of 30-second acknowledgments and supportive of a
federal requirement. Specifically, some expressed concern that longer
underwriting acknowledgments threaten the noncommercial nature of
public television. One licensee noted, for example, that the length of
acknowledgments and the images of underwriters' messages directly
affect viewers' experience watching public television. Another licensee
said longer acknowledgments undermine viewer perceptions of public
television as a unique noncommercial service. However, many more
comments were provided suggesting that the length of acknowledgments is
a matter that should be left to the discretion of licensees, not the
federal government, based on local judgments and response of local
viewers. In particular, some licensees indicated that flexibility is
needed with respect to the length of acknowledgments in order to
attract underwriting support and to further the mission of public
television.
[End of section]
Appendix VI: Survey of Public Television Licensees:
Our survey of public television licensees consisted of objective
questions and the option to include narrative comments in each section
of the survey. The aggregate results of objective questions are
presented below. We received completed surveys from 149 out of 176
licensees--an overall response rate of 85 percent. The number of
respondents answering individual questions may be lower, however,
depending on the number of licensees who were eligible to answer a
particular question or who chose to do so. Each question indicates the
number of licensees responding to it.
Q1. Do you think the current 75%/25% allocation of the federal funds
supporting public television should remain the same or be changed?
Allocation should remain the same (percent): 61.5;
Allocation should be changed (percent): 33.8;
Don't know (percent): 4.7;
Number of respondents: 148.
[End of table]
Q2. Please provide the reasons for your answer and, if you think the
allocation should be changed, describe what the allocation should be.
Writing comment (percent): 77.2;
Number of respondents: 149.
[End of table]
Q3. Were you aware of the consultation process that was conducted in
2001 to review the eligibility criteria for Community Service Grants?
Yes (percent): 83.8;
No (percent): 10.8;
I was not associated with a station during the 2001 consultation
process (percent): 4.1;
Don't know (percent): 1.4;
Number of respondents: 148.
[End of table]
Q4. During the 2001 consultation process, to what extent did CPB
solicit input from your station(s) on the Community Service Grant
eligibility criteria?
To a great extent (percent): 24.6;
To a moderate extent (percent): 32.5;
To a little extent (percent): 26.2;
Not at all (percent): 8.7;
Don't know (percent): 7.9;
Number of respondents: 126.
[End of table]
Q5. During the 2001 consultation process, to what extent did your
station(s) provide CPB with input on the Community Service Grant
eligibility criteria?
To a great extent (percent): 20.0;
To a moderate extent (percent): 30.4;
To a little extent (percent): 27.2;
Not at all (percent): 12.8;
Don't know (percent): 9.6;
Number of respondents: 125.
[End of table]
Q6. To what extent do you think CPB considered input from your
station(s) on the Community Service Grant eligibility criteria?
To a great extent (percent): 18.6;
To a moderate extent (percent): 36.1;
To a little extent (percent): 25.8;
Not at all (percent): 8.2;
Don't know (percent): 11.3;
Number of respondents: 97.
[End of table]
Q7. Overall, are you basically satisfied with the process used by CPB
to periodically review the eligibility criteria for Community Service
Grants or do you think changes are needed?
Basically satisfied, no changes are needed (percent): 48.0;
Only minor changes are needed (percent): 28.8;
Substantial changes are needed (percent): 20.8;
Don't know (percent): 2.4;
Number of respondents: 125.
[End of table]
Q8. Please explain what changes you think are needed.
Writing comment (percent): 41.6;
Number of respondents: 149.
[End of table]
Q9. To what extent do you know about the outcomes or findings of CPB
Television Future Fund projects?
To a great extent (percent): 16.9;
To a moderate extent (percent): 40.5;
To a little extent (percent): 37.2;
Not at all (percent): 5.4;
Don't know (percent): 0.0;
Number of respondents: 148.
[End of table]
Q10. How have you learned about the outcomes or findings of CPB
Television Future Fund projects?
a. From CPB (e.g. website, mailings, emails);
Yes (percent): 84.8;
No (percent): 12.9;
Don't know (percent): 2.3;
Number of respondents: 132.
b. From the Association of Public Television Stations;
Yes (percent): 69.0;
No (percent): 25.4;
Don't know (percent): 5.6;
Number of respondents: 126.
c. From the Public Broadcasting Service;
Yes (percent): 43.9;
No (percent): 44.7;
Don't know (percent): 11.4;
Number of respondents: 123.
d. From a public broadcasting publication (e.g. Current);
Yes (percent): 82.9;
No (percent): 14.7;
Don't know (percent): 2.3;
Number of respondents: 129.
e. From a public broadcasting meeting or conference;
Yes (percent): 89.2;
No (percent): 8.5;
Don't know (percent): 2.3;
Number of respondents: 130.
f. From Future Fund project grantees (e.g. other stations,
consultants);
Yes (percent): 71.5;
No (percent): 24.4;
Don't know (percent): 4.1;
Number of respondents: 123.
g. Other (please describe below);
Yes (percent): 47.5;
No (percent): 45.0;
Don't know (percent): 7.5;
Number of respondents: 40.
[End of table]
Q10a. Please describe other ways, if any, you have learned about
outcomes or findings of CPB Television Future Fund projects.
Writing comment (percent): 27.5;
Number of respondents: 149.
[End of table]
Q11. Have the outcomes or findings of any CPB Television Future Fund
project provided your station(s) with practical methods for either
reducing costs or enhancing revenues?
a. Reducing Costs;
Yes (percent): 36.4;
No (percent): 50.3;
Don't know (percent): 13.3;
Number of respondents: 143.
b. Enhancing Revenues;
Yes (percent): 37.1;
No (percent): 49.7;
Don't know (percent): 13.3;
Number of respondents: 143.
[End of table]
Q11a. If you answered yes to either above, please provide examples or
the name(s) of one or more project(s).
Writing comment (percent): 44.3;
Number of respondents: 149.
[End of table]
Q12. Do you agree with CPB's current approach of using the funds
allocated for distribution among public television licensees to fund
the Television Future Fund or would you prefer an alternate approach,
such as using funds from a different source?
I agree with CPB's current approach of using funds allocated for
distribution among public television licensees to fund the Television
Future Fund (in addition to System Support funds); (percent): 29.7;
I prefer using only the System Support account as an alternate approach
of funding the Television Future Fund; (percent): 27.0;
I prefer using other sources of funds as an alternate approach of
funding the Television Future Fund (please describe below); (percent):
15.5;
CPB should not fund the Television Future Fund; (percent): 21.6;
Don't know (percent): 6.1;
Number of respondents: 148.
[End of table]
Q13. Please provide the reasons for your answer to Question 12.
Writing comment (percent): 72.5;
Number of respondents: 149.
[End of table]
Q14. To what extent do the children's programs offered by PBS's
National Program Service help you to meet the mission of your
station(s)?
To a great extent (percent): 86.6;
To a moderate extent (percent): 8.7;
To a little extent (percent): 1.3;
Not at all (percent): 0.7;
Don't know (percent): 0.0;
My station is not a member of PBS (percent): 2.7;
Number of respondents: 149.
[End of table]
Q15. Please provide the reasons for your answer to Question 14.
Writing comment (percent): 84.6;
Number of respondents: 149.
[End of table]
Q16. To what extent do the prime-time programs offered by PBS's
National Program Service help you to meet the mission of your
station(s)?
To a great extent (percent): 60.4;
To a moderate extent (percent): 36.1;
To a little extent (percent): 3.5;
Not at all (percent): 0.0;
Don't know (percent): 0.0;
Number of respondents: 144.
[End of table]
Q17. Please provide the reasons for your answer to Question 16.
Writing comment (percent): 83.2;
Number of respondents: 149.
[End of table]
Q18. To what extent do the children's programs offered by PBS's
National Program Service help you to build local underwriting and
membership support?
To a great extent (percent): 22.9;
To a moderate extent (percent): 38.9;
To a little extent (percent): 34.0;
Not at all (percent): 2.8;
Don't know (percent): 1.4;
Number of respondents: 144.
[End of table]
Q19. Please provide the reasons for your answer to Question 18.
Writing comment (percent): 80.5;
Number of respondents: 149.
[End of table]
Q20. To what extent do the prime-time programs offered by PBS's
National Program Service help you to build local underwriting and
membership support?
To a great extent (percent): 47.9;
To a moderate extent (percent): 43.1;
To a little extent (percent): 9.0;
Not at all (percent): 0.0;
Don't know (percent): 0.0;
Number of respondents: 144.
[End of table]
Q21. Please provide the reasons for your answer to Question 20.
Writing comment (percent): 79.2;
Number of respondents: 149.
[End of table]
Q22. Do you believe that changes are needed to the processes involved
in selecting programming for PBS's National Program Service?
Yes (percent): 58.0;
No (percent): 22.4;
Don't know (percent): 19.6;
Number of respondents: 143.
[End of table]
Q23. Please provide your comments on any program selection issues that
are of concern to you.
Writing comment (percent): 74.5;
Number of respondents: 149.
[End of table]
Q24. Should CPB continue to provide direct funding to support the PBS
National Program Service (as it exists today)?
Yes (percent): 72.2;
No (percent): 18.8;
Don't know (percent): 9.0;
Number of respondents: 144.
[End of table]
Q25. Please provide the reasons for your answer to Question 24.
Writing comment (percent): 75.2;
Number of respondents: 149.
[End of table]
Q26. Is the amount of local programming that you produce sufficient to
meet the needs of your community?
Yes, the amount of local programming is sufficient to meet the needs of
our community; (percent): 18.2;
No, the amount of local programming is not sufficient to meet the needs
of our community; (percent): 79.1;
Don't know (percent): 2.7;
Number of respondents: 148.
[End of table]
Q27. Please provide the reasons for your answer to Question 26.
Writing comment (percent): 93.3;
Number of respondents: 149.
[End of table]
Q28. In addition to CPB's current statutory authority to support the
production of national programming, should CPB have explicit statutory
authority to award station grants for the production of local
programming?
Yes (percent): 53.0;
No (percent): 39.6;
Don't know (percent): 7.4;
Number of respondents: 149.
[End of table]
Q29. Assuming CPB's statutory authority to award station grants for
local programming would require the use of funds that currently support
national programming, would you still favor this authority?
Yes (percent): 59.5;
No (percent): 30.4;
Don't know (percent): 10.1;
Number of respondents: 79.
[End of table]
Q30. Please provide the reasons for your answer to Question 29.
Writing comment (percent): 56.4;
Number of respondents: 149.
[End of table]
Q31. In addition to or in conjunction with television broadcasting, do
you currently provide each of the following local services to your
community?
a. Services to support pre-school through 12th grade education;
Yes (percent): 94.6;
No (percent): 5.4;
Don't know (percent): 0.0;
Number of respondents: 149.
b. Services to support higher education;
Yes (percent): 88.6;
No (percent): 11.4;
Don't know (percent): 0.0;
Number of respondents: 149.
c. Services to support workforce training, professional development,
and/or continuing education;
Yes (percent): 84.5;
No (percent): 15.5;
Don't know (percent): 0.0;
Number of respondents: 148.
d. Television program-related outreach (e.g., additional program-
related material on station's own website, sponsoring workshops and
discussion groups about programs, community partnerships, PBS
toolkits);
Yes (percent): 97.3;
No (percent): 2.7;
Don't know (percent): 0.0;
Number of respondents: 149.
e. Services to support local, state, and/or federal government agencies
(e.g. National Weather Service, Homeland Security);
Yes (percent): 77.0;
No (percent): 22.3;
Don't know (percent): 0.7;
Number of respondents: 148.
f. Sponsorship of local community events;
Yes (percent): 93.9;
No (percent): 6.1;
Don't know (percent): 0.0;
Number of respondents: 147.
g. Other (please describe below);
Yes (percent): 80.3;
No (percent): 15.2;
Don't know (percent): 4.5;
Number of respondents: 66.
[End of table]
Q31a. Please describe other services, if any, you provide to your
community in addition to or in conjunction with television
broadcasting.
Writing comment (percent): 52.3;
Number of respondents: 149.
[End of table]
Q32. What types of services does (at least one of) your station(s)
currently provide, or plan to provide after transitioning to digital?
a. A high-definition channel;
Currently provide (percent): 51.4;
Plan to provide (percent): 39.2;
Don't provide and don't plan to provide (percent): 3.4;
Don't know (percent): 6.1;
Number of respondents: 148.
b. A standard definition channel;
Currently provide (percent): 60.1;
Plan to provide (percent): 37.1;
Don't provide and don't plan to provide (percent): 1.4;
Don't know (percent): 1.4;
Number of respondents: 143.
c. Multiple channels (i.e. "multicasting");
Currently provide (percent): 34.7;
Plan to provide (percent): 61.9;
Don't provide and don't plan to provide (percent): 2.0;
Don't know (percent): 1.4;
Number of respondents: 147.
d. Data broadcasting (i.e. "datacasting");
Currently provide (percent): 10.3;
Plan to provide (percent): 82.9;
Don't provide and don't plan to provide (percent): 1.4;
Don't know (percent): 5.5;
Number of respondents: 146.
e. Other (please describe below);
Currently provide (percent): 10.9;
Plan to provide (percent): 40.0;
Don't provide and don't plan to provide (percent): 0.0;
Don't know (percent): 49.1;
Number of respondents: 55.
[End of table]
Q32a. Please describe other services, if any, you plan to offer.
Writing comment (percent): 30.2;
Number of respondents: 149.
[End of table]
Q33. Do you currently provide, or are you likely to provide after
transitioning to digital, revenue-generating ancillary and
supplementary non-broadcast services to nonprofit entities?
Yes (percent): 50.7;
No (percent): 10.8;
Don't know (percent): 38.5;
Number of respondents: 148.
[End of table]
Q34. Do you currently provide, or are you likely to provide after
transitioning to digital, revenue-generating ancillary and
supplementary non-broadcast services to for-profit entities?
Yes (percent): 38.3;
No (percent): 16.1;
Don't know (percent): 45.6;
Number of respondents: 149.
[End of table]
Q35. Were you aware of the consultation process conducted by CPB on the
allocation of fiscal year 2003 digital television funding?
Yes (percent): 89.3;
No (percent): 6.7;
Don't know (percent): 4.0;
Number of respondents: 149.
[End of table]
Q36. To what extent did CPB solicit input from your station(s) on the
allocation of fiscal year 2003 digital television funding?
To a great extent (percent): 28.8;
To a moderate extent (percent): 28.8;
To a little extent (percent): 28.8;
Not at all (percent): 10.1;
Don't know (percent): 3.6;
Number of respondents: 139.
[End of table]
Q37. To what extent did your station(s) provide CPB with input on the
allocation of fiscal year 2003 digital television funding?
To a great extent (percent): 16.3;
To a moderate extent (percent): 30.4;
To a little extent (percent): 31.1;
Not at all (percent): 16.3;
Don't know (percent): 5.9;
Number of respondents: 135.
[End of table]
Q38. To what extent do you think CPB considered input from your
station(s) on the allocation of fiscal year 2003 digital television
funding?
To a great extent (percent): 26.2;
To a moderate extent (percent): 30.8;
To a little extent (percent): 20.6;
Not at all (percent): 8.4;
Don't know (percent): 14.0;
Number of respondents: 107.
[End of table]
Q39. Overall, are you basically satisfied with the consultation process
used by CPB to allocate fiscal year 2003 digital television funding?
Basically satisfied, no changes are needed (percent): 61.9;
Only minor changes are needed (percent): 13.4;
Substantial changes are needed (percent): 11.9;
Don't know (percent): 12.7;
Number of respondents: 134.
[End of table]
Q40. Please explain what changes you think are needed.
Writing comment (percent): 25.5;
Number of respondents: 149.
[End of table]
Q41. How would you currently prioritize the use of any additional
federal funding to support your station(s) during the digital
transition?
a. Digital content;
% Ranking 1 (percent): 22.1;
% Ranking 2 (percent): 24.3;
% Ranking 3 (percent): 22.1;
% Ranking 4 (percent): 20.7;
% Ranking 5 (percent): 10.7;
Number of respondents: 140.
b. Digital transmission equipment;
% Ranking 1 (percent): 14.3;
% Ranking 2 (percent): 5.7;
% Ranking 3 (percent): 7.9;
% Ranking 4 (percent): 20.0;
% Ranking 5 (percent): 52.1;
Number of respondents: 140.
c. Digital production equipment;
% Ranking 1 (percent): 19.3;
% Ranking 2 (percent): 27.9;
% Ranking 3 (percent): 25.7;
% Ranking 4 (percent): 21.4;
% Ranking 5 (percent): 5.7;
Number of respondents: 140.
d. Digital operating costs (i.e. energy costs);
% Ranking 1 (percent): 16.4;
% Ranking 2 (percent): 19.3;
% Ranking 3 (percent): 25.7;
% Ranking 4 (percent): 17.1;
% Ranking 5 (percent): 21.4;
Number of respondents: 140.
e. Digital master control/content management automation;
% Ranking 1 (percent): 27.9;
% Ranking 2 (percent): 22.9;
% Ranking 3 (percent): 18.6;
% Ranking 4 (percent): 20.7;
% Ranking 5 (percent): 10.0;
Number of respondents: 140.
[End of table]
Q42. Is your digital master control equipment fully compatible with the
EIOP (for all of your stations)?
Yes, fully compatible (percent): 18.2;
No, not fully compatible, but our capabilities won't be materially
affected (percent): 22.3;
No, not fully compatible, and our capabilities will be materially
affected (percent): 13.5;
Don't have digital master control equipment (percent): 28.4;
Don't know (percent): 17.6;
Number of respondents: 148.
[End of table]
Q43. Is your digital production equipment fully compatible with the
EIOP (for all of your stations)?
Yes, fully compatible (percent): 9.6;
No, not fully compatible, but our capabilities won't be materially
affected (percent): 16.4;
No, not fully compatible, and our capabilities will be materially
affected (percent): 10.3;
Don't have digital production equipment (percent): 43.2;
Don't know (percent): 20.5;
Number of respondents: 146.
[End of table]
Q44. Is your digital storage equipment fully compatible with the EIOP
(for all of your stations)?
Yes, fully compatible (percent): 14.9;
No, not fully compatible, but our capabilities won't be materially
affected (percent): 23.0;
No, not fully compatible, and our capabilities will be materially
affected (percent): 17.6;
Don't have digital storage equipment (percent): 24.3;
Don't know (percent): 20.3;
Number of respondents: 148.
[End of table]
Q45. Please use the box below to describe any other comments on the
Next Generation Interconnection System or the Enhanced Interconnection
Optimization Project.
Writing comment (percent): 52.3;
Number of respondents: 149.
[End of table]
Q46. To what extent will completion of the digital transition improve
the ability of your station(s) to provide local services to your
community?
To a great extent (percent): 58.4;
To a moderate extent (percent): 26.8;
To a little extent (percent): 7.4;
Not at all (percent): 2.7;
Don't know (percent): 4.7;
Number of respondents: 149.
[End of table]
Q47. Please describe how the ability of your station(s) to provide
local services will or will not improve with the digital transition.
Writing comment (percent): 87.2;
Number of respondents: 149.
[End of table]
Q48. Could any of the following digital carriage issues impede your
station's future if not resolved during the digital transition?
a. Lack of dual cable carriage of analog and digital signals during the
transition;
Yes (percent): 91.2;
No (percent): 8.2;
Don't know (percent): 0.7;
Number of respondents: 147.
b. Lack of cable carriage of the entire digital over-the-air stream
(i.e. HDTV and multicast offerings);
Yes (percent): 98.0;
No (percent): 2.0;
Don't know (percent): 0.0;
Number of respondents: 148.
c. Lack of cable carriage of multiple digital public television
stations in a single market;
Yes (percent): 60.4;
No (percent): 35.4;
Don't know (percent): 4.2;
Number of respondents: 144.
d. Lack of carriage of local stations' digital signals by direct
broadcast satellite (e.g. Dish Network, DirecTV);
Yes (percent): 94.6;
No (percent): 4.1;
Don't know (percent): 1.4;
Number of respondents: 148.
e. Other (please specify below);
Yes (percent): 66.7;
No (percent): 3.7;
Don't know (percent): 29.6;
Number of respondents: 27.
[End of table]
Q48a. Please list other digital carriage issues, if any, that will
impede your station's future if not resolved during the digital
transition.
Writing comment (percent): 29.5;
Number of respondents: 149.
[End of table]
Q49. Aside from acknowledgements included as part of PBS's National
Program Service, do you currently run or plan to run 30-second
underwriter acknowledgements on your station(s)?
Yes, I currently run 30-second underwriter acknowledgements (percent):
40.9;
Yes, I plan to run 30-second underwriter acknowledgements (percent):
9.4;
No, I do not run and do not plan to run 30-second underwriter
acknowledgments (percent): 40.9;
Don't know (percent): 8.7;
Number of respondents: 149.
[End of table]
Q50. In what year did you begin to run 30-second underwriter
acknowledgements? (Enter a 4 digit number only. Letters and symbols
will be deleted.):
Mean: 1998;
Median: 1999;
Minimum: 1982;
Maximum: 2003;
Number of respondents: 60.
[End of table]
Q51. How did you prioritize your reasons for deciding to run 30-second
underwriter acknowledgements?
a. To maintain revenues from existing underwriters;
% Ranking 1 (percent): 38.6;
% Ranking 2 (percent): 21.1;
% Ranking 3 (percent): 40.4;
Number of respondents: 57.
b. To increase revenues from existing underwriters;
% Ranking 1 (percent): 5.3;
% Ranking 2 (percent): 54.4;
% Ranking 3 (percent): 40.4;
Number of respondents: 57.
c. To attract new underwriters;
% Ranking 1 (percent): 56.1;
% Ranking 2 (percent): 24.6;
% Ranking 3 (percent): 19.3;
Number of respondents: 57.
[End of table]
Q52. How would you prioritize your reasons for your plans to run 30-
second underwriter acknowledgements?
a. To maintain revenues from existing underwriters;
% Ranking 1 (percent): 23.1;
% Ranking 2 (percent): 23.1;
% Ranking 3 (percent): 53.8;
Number of respondents: 13.
b. To increase revenues from existing underwriters;
% Ranking 1 (percent): 7.7;
% Ranking 2 (percent): 46.2;
% Ranking 3 (percent): 46.2;
Number of respondents: 13.
c. To attract new underwriters;
% Ranking 1 (percent): 69.2;
% Ranking 2 (percent): 30.8;
% Ranking 3 (percent): 0.0;
Number of respondents: 13.
[End of table]
Q53. Would you favor or oppose a federal requirement that limits the
length of underwriter acknowledgements?
Favor a federal requirement that limits the length of underwriter
acknowledgements (percent): 22.4;
Oppose a federal requirement that limits the length of underwriter
acknowledgements (percent): 70.7;
Don't know (percent): 6.8;
Number of respondents: 147.
[End of table]
Q54. Please provide the reasons for your answer to Question 53.
Writing comment (percent): 87.2;
Number of respondents: 149.
[End of table]
Q55. If there are other issues that you would like to raise, or if you
would like for GAO staff to be in contact with you to discuss in
greater detail issues included in this survey, please use the space below to identify those issues and/or provide your contact information.
Writing comment (percent): 35.6;
Number of respondents: 149.
[End of table]
[End of section]
Appendix VII: Comments from the Corporation for Public Broadcasting:
Corporation for Public Broadcasting:
March 12, 2004:
Mr. Mark L. Goldstein:
Director, Physical Infrastructure Issues
United States General Accounting Office
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Goldstein:
Thank you for allowing the Corporation for Public Broadcasting ("CPB")
the opportunity to review a draft of the report by the General
Accounting Office ("GAO") entitled "Issues Related to Federal Funding
for Public Television by the Corporation for Public Broadcasting." The
GAO's draft report contained two recommendations: that CPB should seek
statutory authority before making any further expenditure of funds from
the Future Fund; and that CPB should broaden the scope of its digital
transition funding support to include digital production equipment and
digital content. In brief, CPB respectfully disagrees with the
recommendation that CPB needs to obtain statutory authority before
continuing to expend funds from the Future Fund. As to the second
recommendation, CPB agrees it should broaden the scope of its digital
funding to include production equipment and content, consistent with
congressional directives and station needs after consultation with the
system.
Future Fund:
While CPB appreciates the effort GAO committed to this review and
values the GAO's analysis of the complex issues facing public
broadcasting, CPB disagrees with the first recommendation regarding
further expenditure of funds from the Future Fund. In establishing and
continuing the Future Fund mechanism, CPB relied not only on its own
judgment, but also on extensive consultation with the system and the
advice of two highly respected law firms with nationally recognized
expertise in interpreting the provisions of the Communications Act of
1934, as amended (the "Act"). As the draft report noted, CPB obtained
an opinion from Skadden Arps Slate Meager & Flom before establishing
the Future Fund in 1995, and more recently consulted Covington &
Burling with respect to the ongoing validity of the original 1995
opinion. Based on this advice, CPB believed and continues to believe
that it has acted consistently with the law in establishing and
administering the Future Fund.
After reviewing the draft report, CPB requested that Covington &
Burling prepare a memorandum of law that specifically responds to the
GAO's legal opinion attached to the draft report. The Covington &
Burling memorandum, attached hereto for incorporation in the GAO's
final report, reaches the same conclusion as the previous advice -
namely that in establishing and administering the Future Fund, CPB has
acted consistently with the relevant provisions of the Act.
The Television Future Fund has supported over 200 projects that have
benefited public television stations across the country. As the
attached document describes, CPB has annually informed Congress of the
work of the Future Fund since 1996. Without the flexibility to
aggregate funds allocated by Section 396(k)(3)(A)(i)(II) [NOTE 1] and
Section 396(k)(3)(A)(ii)(I), [NOTE 2] CPB would be severely constrained
in its ability to respond to the needs of the public broadcasting
system and to support projects designed to improve the system as a
whole. The Act states:
"6 percent of such amounts shall be available for expenses incurred by
the Corporation for capital costs relating to telecommunications
satellites, the payment of programming royalties and other fees, the
costs of interconnection facilities and operations (as provided in
clause (iv)(I)), and grants which the Corporation may make for
assistance to stations that broadcast programs in languages other than
English or for assistance in the provision of affordable training
programs for employees at public broadcast stations, and if the
available funding level pen-nits, for projects and activities that will
enhance public broadcasting." [NOTE 3]
Given the many competing demands on these system support funds, CPB's
ability to support large scale projects is dependent on its ability to
aggregate funds from the CSG pool when necessary to match the system
support funds for the stations' benefit. If CPB were to use only the
system support funds for projects historically funded using the Future
Fund mechanism, CPB would be forced to either scale back the projects
in order to pay for the items listed in Section 396(k)(3)(A)(i)(II) or
scale back on its full payment of the expenses listed in that section.
For example, CPB could be forced to reduce support for training
programs or fund only part of the programming royalty fees on behalf of
the system in order to pay for other system support projects. Clearly,
without aggregation of funds through efforts like the Future Fund
mechanism, support for system-wide efforts from CPB could decrease to
the detriment of the entire system.
In order to support critical needs of all of the public broadcasting
stations - including royalties, interconnection operating costs and
system-wide research, planning, training, and development, CPB must
have continued flexibility to aggregate funds and set criteria based on
the prospective needs of the public broadcasting system as a whole or
realize an increase in its current system support allocation under the
statutory fonnula.
Digital Transition Funds:
CPB generally agrees with the GAO's conclusions regarding CPB funding
of the digital transition. In addition, CPB recommends that the Public
Telecommunications Facilities Program ("PTFP"), under the National
Telecommunications Information Administration ("NTIA") of the
Department of Commerce, should provide the primary support for
equipment needed for digital conversion of both public television and
radio, as PTFP has done in the analog era.
CPB has consistently requested federal support for digital transmission
and production equipment, content and services in its annual
appropriations request to Congress. As the GAO noted, public
broadcasting's original revenue plan for supporting the costly mandated
transition from analog to
digital was for CPB to utilize a small portion of any federal dollars
for content (programming) and to rely upon PTFP support for the larger
portion of equipment needs. Estimates by CPB and PBS recognized that
equipment needs would be significant as digital transmission requires
entirely new equipment for transmission as well as for production,
including transmitters, translators, antennas, master control,
cameras, video libraries and digital converters. The NTIA, which has
administered analog grants for public broadcasting since 1962, was
thought to have the experience and personnel to administer such grants
for the acquisition, maintenance and replacement of digital equipment
for both public television and radio. This was the strategy behind the
original request to Congress for the federal share of the estimated
$I.7 billion total cost of the digital conversion.
It was necessary to alter this original plan, however, because
congressional support consisted of limited additional appropriations
that were not actually received by CPB until 2001. Further, CPB faced
constantly changing technology and shifting regulatory policy
concerning the mandates of the digital transition. [NOTE 4] These
limited and intermittent installments of congressional support,
combined with the significant number of stations in need and the
looming mandated deadline for conversion, led stations and
congressional representatives to ask CPB to give priority to funding
transmission equipment. [NOTE 5] Subsequently, CPB, in consultation
with stations as required by statute, agreed to this priority for
utilizing the digital conversion dollars granted by Congress in FYs
2001-2003. Currently, the stations are in varying degrees of conversion
and have voiced support for more dollars for digital production,
content, services, master controls and additional equipment. As such,
all station needs are being given careful consideration in the system
consultation for the distribution of the FY 2004 digital conversion
dollars, which were not received by CPB until March 4, 2004.
In order to meet America's need for quality noncommercial educational
programming and services, CPB believes that it must be allowed to
respond to the demonstrated needs of its grantees and that Congress
should maintain a strong PTFP program under the Department of Commerce.
Other Issues:
Congressional Commitment. CPB also must respond to the following
passage of the draft report relating to CPB's history:
In passing the 1967 act [sic], the 90Th Congress did not intend that
annual authorizations and appropriations for the Corporation would
serve as a permanent process for funding support of public
broadcasting. Rather, they were seen as temporary measures pending the
development and adoption of a long-term financing plan for public
broadcasting. Although various financing proposals for public
broadcasting have since been suggested, the Corporation continues to
receive nearly all of its budget in the form of an annual federal
appropriation. [NOTE 6] [internal footnotes omitted]
We are concerned that this paragraph might be interpreted to question
Congress's intention to support public broadcasting in the long term.
If so, we believe that this paragraph presents a misleading
characterization of early congressional intent regarding federal
funding of public broadcasting. Congress's cautious approach did not
indicate a lack of long-term commitment to public broadcasting. It was
always Congress's intent that federal support would only make up part
of the total revenue for public broadcasting, but Congress did intend
to fund public broadcasting through CPB. There was a purposeful
determination to revisit the issue of long-term financing after
experience bore out how successful attracting other forms of financing
would be. This should not, however, be confused with a lack of
commitment to public broadcasting.
In passing the Public Broadcasting Act of 1967, Congress determined to
fund CPB initially in the short-term so that the Administration and
Congress could analyze how the public reacted to public broadcasting
before committing itself to a long-term funding plan. The May 1967
Senate Report for the Public Broadcasting Act of 1967 refers to the
initial authorization of $9 million for CPB as "seed" money "designed
to get the Corporation off the ground. [NOTE 7] However, the Senate
Committee also noted that long-term financing for CPB would have to be
revisited as President Johnson intended to issue recommendation on the
matter in the following year. [NOTE 8] Additionally, in August 1967,
the House Report for the Public Broadcasting Act of 1967 echoed the
Senate's plan to revisit long-term financing for CPB when it stated
that "[t]he committee believes it is perfectly workable to establish
the Corporation this year with I year's financing and resolve the issue
of long-range financing after further study and experience." [NOTE 9]
Since then,
Congress has reaffirmed its support for federal funding for public
broadcasting. In fact, in 1975; when the Act was amended, Congress
reiterated and quantified its commitment to funding public broadcasting
by recognizing that the federal government should contribute an amount
equal to 40 percent of the yearly total non-federal financial support
("NFFS") raised by the public broadcasting system. [NOTE 10]
In the 35-year history of public broadcasting, continued federal
support has been vital to public broadcasting's continued success. The
Act still authorizes a federal appropriation for CPB that is pegged to
40 percent of the total annual NFFS raised by the public broadcasting
system. [NOTE 11] The 1967 legislation was, to be sure, a grand plan to
better the lives of the American public - full of optimism, but unsure
of how long-term financing would be achieved.
Survey Interpretation. Finally, we must note the survey that the GAO
conducted of the public broadcasting stations and their views toward
the programs that CPB administers. The survey
results certainly are helpful and present a snapshot of how public
television stations feel about the status quo. However, CPB must inject
a cautionary note. The Act states that "it is in the public interest
for the Federal Government [sic.] to ensure that all citizens of the
United States have access to public telecommunications services through
all appropriate available telecommunications distribution
technologies." [NOTE 12] As such, CPB is authorized by the Act to:
(A) facilitate the full development of public telecommunications in
which programs of high quality, diversity, creativity, excellence, and
innovation, which are obtained from diverse sources, will be made
available to public telecommunications entities, with strict adherence
to objectivity and balance in all programs or series of programs of a
controversial nature;
(B) assist in the establishment and development of one or more
interconnection systems to be used for the distribution of public
telecommunications services so that all public telecommunications
entities may disseminate such services at times chosen by the entities;
(C) assist in the establishment and development of one or more systems
of public telecommunications entities throughout the United States;
and:
(D) carry out its purposes and functions and engage in its activities
in ways that will most effectively assure the maximum freedom of the
public telecommunications entities and systems from interference with,
or control of, program content or other activities. [NOTE 13]
CPB's most important constituency is the American public. CPB is
uniquely tasked with facilitating and developing [NOTE 14] a public
broadcasting system consisting of over 1,000 independently owned and
operated public television and public radio stations, hundreds of
producers, several national program distribution organizations, and
various affinity groups of all sizes. Yet our responsibility under the
Act is to ensure that this system serves all Americans in accordance
with the universal service mandate in the Act. [NOTE 15] Therefore, CPB
engages in constant forward-thinking exercises to improve the service
provided by the public broadcasting system. Producing a survey that
demonstrates the system, as a whole, is satisfied with CPB's current
allocation of funds [NOTE 16] seems to CPB to prematurely end the
analysis of our work. Over the past year, CPB has undertaken extensive
efforts to help public television stations better manage their
operations and improve service to their communities. CPB, with our
partners throughout public broadcasting, must continuously strive to
improve public broadcasting's value to the nation. The survey's results
showing the system's general satisfaction with CPB's current work,
while gratifying, are not the end of this exercise. We must always do
more to better serve our constituency, the American public.
CPB takes its responsibilities to consult with the system [NOTE 17]
very seriously, and we faithfully discharge these duties by seeking
the input of stations whenever CPB perceives a need to change its
allocation of funds. Given CPB's responsibility to the public, however,
we also take issue with the draft report to the extent that it seems to
imply that CPB should base its policies primarily on their popularity
with stations. Administration by plebiscite misses the intent of the
statute.
Congress created CPB to encourage the growth and development of public
television and radio broadcasting for the benefit of the American
public. [NOTE 18] As the GAO's survey of stations has demonstrated,
there is a multiplicity of opinions and views within the public
broadcasting community on how best to serve the public. CPB values the
opinions of station leaders because they have an important perspective
on the needs of the communities they serve. CPB also endeavors to be
responsive to the needs of the public broadcasting affinity groups as
they develop and distribute services to the public. While CPB considers
their views, in the final analysis it is CPB that must use its judgment
to proceed in a manner that best serves the goals of the Act, not
necessarily in a way that is the most popular with any one particular
group.
Conclusion:
While CPB may disagree with some of the draft report's language,
recommendations, and conclusions, we believe that this exercise has
been helpful in clarifying how the public television community feels
about the support it receives from the federal government through CPB.
The exercise was a constructive forerunner to reauthorization. We
commend the GAO review team members on their professionalism and
courtesy throughout the review. While such an undertaking is certainly
an arduous task for everyone, we appreciate the team's cooperation when
interacting with CPB.
Sincerely,
Signed by:
Robert T. Coonrod:
President & Chief Executive Officer:
Corporation for Public Broadcasting:
NOTES:
[1] i.e. the "system support funds."
[2] i.e. the "CSG Pool."
[3] 47 U.S.C. § 396(k)(3)(A)(i)(II).
[4] Congress opted to provide only $10 million in FY 1999 and $15
million in FY 2000. Moreover, both amounts were contingent upon an
authorization of digital and were diverted to the Treasury when
authorization was not realized. Congress finally passed an
authorization in 2001, and $20 million was not released until August,
near the end of the fiscal year. Congress soon followed with an
appropriation of $25 million for FY 2002. In addition, the Federal
Communications Commission issued an Order in November 2001 that adopted
a policy allowing television stations to begin initial digital
operations at decreased power levels. In the matter of Review of the
Commission's Rules and Policies, Affecting the Conversion to Digital
Television, Memorandum Opinion and Order on Reconsideration, Adopted
November 8, 2001, Released November 15, 2001.
[5] The Conference Report states "[f he conference agreement also
includes $25,000,000 for equipment and facilities to enable public
broadcasters to meet the statutory deadline for digital conversion as
proposed by the Senate." H.R. Conf. Rep. No. 342, 107th Cong. 1tSESS.,
164 (2001).
[6] Page 9 of the draft report.
[7] S. Rep. No. 222, 90th Cong. 1st Sess. 8 (1967).
[8] Id.
[9] H.R. Rep. No. 572, 90th Cong. 1st SESS. 21 (1967).
[10] Public Broadcasting Financing Act of 1975, Pub. L. No. 94-192,
Sec. 3 (1975).
[11] 47 U.S.C. § 396(k)(1)(B).
[12] 47 U.S.C. §; 396; (a)(9).
[13] 47 U.S.C. §; 396; (g)(1).
[14] 47 U.S.C. §; 396; (a)(10).
[15] 47 U.S.C. §; 396; (a)(9).
[16] Page 4 of the draft report.
[17] 47 U.S.C. § 396 (k)(6)(B).
[18] 47 U.S.C. § 396 (a)(1).
COVINGTON & BURLING:
March 12, 2004:
MEMORANDUM:
To: Donna Gregg, Vice President, General Counsel and Corporate Secretary
From: Stephen A. Weiswasser:
Re: Statutory Support for the Future Fund:
The General Accounting Office (the "GAO") has provided the Corporation
for Public Broadcasting ("CPB") with a draft report regarding the
statutory basis for the CPB's Future Fund program, which was created in
1995. Nothing in that draft report changes the conclusion we previously
reached in a memorandum to CPB dated July 9, 2003 --that the Future
Fund program is fully consistent with the Communications Act of 1934,
as amended (the "Act"). The Future Fund provides strategic financial
and other assistance to public stations that is designed to help them
improve the efficiency of their operations and increase their support
from non-federal sources. These are the two statutory purposes set out
by Congress for the use of funds distributed under the so-called
Community Services Grants ("CSG") section of the Act. See 47 U.S.C. §
396(k)(6)(B). CPB has established eligibility criteria for the
distribution of Future Fund project grants following consultation with
an advisory panel made up of a diverse and rotating group of station
representatives. And it works with a separate review panel to select
among specific projects for funding --seeking to identify those that
offer the greatest likelihood of successfully supporting the
achievement of the program's goals in a way that effects systemwide
benefits. [NOTE 1] Proposals are funded from two sources --partially by
so-called System Support funds, see § 396(k)(3)(A)(i)(II), and partly
by the CSG funds program, whose statutory goals are, as noted, those
specifically followed by the Future Fund.
See § 396(k)(3)(A)(ii)(I).
Immediately following the Fund's inception in 1995, CPB explicitly
advised Congress that the program was project-based and would be
supported by these two statutory funding sources. See CPB 1996 Annual
Report at 5. And in a 2001 Report regarding allocation of System
Support funds, CPB once again described the two statutory sources from
which Future Fund financial support is drawn. See Summary (December
200I), 200I CSG Review and Recommendations. In the time between those
two Reports (and since), CPB regularly detailed the projects supported
by the Future Fund in its Annual Reports, all of which were submitted
to Congress. See, e.g., CPB 200I Annual Report at 38-40. Throughout
this period, Congress has continued to appropriate funding for CPB
without limiting its use of CSG funds for the Future Fund Program.
The Future Fund plan has also been regularly placed before the
constituent elements of public broadcasting. As the GAO Report itself
notes, for example, last year a cross-section of the public
broadcasting community convened to make recommendations regarding the
Future Fund's priorities. See GAO Report at 28-30. While a number of
proposed changes in those priorities were approved, significantly that
group issued recommendations that neither questioned the legality or
propriety of CPB's funding plan nor suggested changes to the basic
funding structure. Indeed, of the more than 350 public television
stations, it appears that very few have ever raised a question about
the legality of using CSG money to support the Future Fund. [NOTE 2]
In sum, the Future Fund has functioned in its current form in a very
public way for over eight years under the watchful eyes of CPB's
congressional oversight and appropriations committees and with the
focused support of the public broadcasting community. Moreover,
Congress has repeatedly ratified the program by re-appropriating CPB's
funding expenditures without limiting its authority to administer the
Future Fund program.
Despite this record, the GAO now suggests that CPB's use of CSG funds
in support of the Future Fund is improper. [NOTE 3] Specifically, the
GAO asserts that (I) the eligibility criteria for distribution of CSG
funds cannot include what the GAO terms "project-focused criteria"; (2)
the Act provides that CSG funds may not be used to fund specifically
selected projects, but only may be distributed as direct grants to
public broadcasting stations; (3) CPB is simply a pass-through entity
that is not permitted to have any substantive role in deciding how,
once distributed, CSG funds are to be spent; and (4) all funds must be
distributed directly to stations, rather than to third-party
consultants acting in their stead, even if such a station-by-station
distribution would impede the achievement of the Fund's goals and limit
the systemwide impact of the program. With due respect, we believe that
this is a misreading of the plain language of the Act and the relevant
legislative history, which authorize CPB to establish
eligibility criteria for the distribution of CSG funds and give it
considerable discretion to expend the funds in ways that achieve
statutory goals.
I. The role that Congress envisioned for CPB with respect to the
statutory goals that the Future Fund is intended to fulfill is a good
deal more direct and active than the GAO appears to contemplate, and it
is spelled out in the very section of the Act on which the GAO focuses.
The Act's requirements with respect to CSG funds are clear. It requires
that CPB award every station a basic grant from the CSG funds. See 47
U.S.C. § 396(k)(6)(B).
Thereafter, the remaining CSG funds:
shall be distributed to licensees and permittees of such stations in
accordance with eligibility criteria (which the Corporation shall
review periodically in consultation with public radio and television
licensees or permittees, or their designated representatives) that
promote the public interest in public broadcasting, and on the basis of
a formula designed :
(i) provide for the financial needs and requirements of stations in
relation to the communities and audiences such stations undertake to
serve; [and]
(ii) maintain existing, and stimulate new, sources of non-Federal
financial support for stations by providing incentives for increases in
such support.
47 U.S.C. § 396(k)(6)(B) (emphasis added). The legislative history
leading to the addition of paragraph (k)(6) to the Act confirms the
breadth of CPB's discretion to adopt and implement these criteria in
the distribution of the CSG funds to eligible stations. Thus, the
Committee Reports accompanying the bill state:
Paragraph 6 sets forth the method for distributing the funds . Each
licensee or permittee of an on-the-air educational television station
would receive a basic grant . The balance of the amount reserved for
television stations would be distributed among licensees and permittees
of such stations as are eligible to receive additional grants under
criteria established by the Corporation in consultation with the
stations. These additional grants would be apportioned among eligible
stations on the basis of a formula designed to (a) provide for the
financial needs of stations in relation to the communities and
audiences they
undertake to serve and (b) stimulate non-Federal financial support for
station activities. The bill does not prescribe a precise formula for
the distribution of additional grants but rather states these two
objectives that the formula is to achieve. The details of the formula
as well as the weight assigned to each factor, would be determined by
the Corporation in consultation with the stations.
House Report No. 245, 94th Cong., I st Sess. 22 (1975); S. Rep. No.
447, 94th Cong., I st Sess. 11-12 (1975) (emphasis added). [NOTE 4]
Nothing in the statute suggests that the CPB role is passive. To the
contrary, the statute reposes in CPB (following adequate consultation)
the task of establishing eligibility criteria for providing funding to
some, but not all, stations pursuant to a formula established and
implemented by CPB. And nothing in this statutory language suggests
limitations on the form of the support or distributions; the only
limitations appear to be that grants must fall within the two statutory
criteria for funding and that CPB must establish standards only after
consultation with the stations. The clear statutory mandate is that CPB
is to determine the eligibility criteria for distribution of the CSG
funds and apportion the money on the basis of a non-quantitative
formula whose factors are weighed and applied by CPB. [NOTE 5]
The GAO suggests nonetheless that the only criteria CPB may adopt in
distributing CSG funds are "station-based criteria." GAO Report at 3I.
We understand the GAO's position to be that CPB may make grants
directly to qualifying stations, which may use the funds in any way
that they want, but CPB may not fund specific projects that help
stations or the system as a whole achieve the goals --efficient
operation and non-federal funding --for
which the CSG program was created. See GAO Report at 70, 7I. Thus, the
GAO suggests that CPB should focus on such "station-based" criteria as
"financial needs, audience satisfaction, or fundraising effectiveness"
and pick and choose stations for grants on the basis of how well they
do (or fail to do) against those standards. Id. at 70. The GAO
criticizes the Future Fund for not employing such station-based
criteria, but instead employing "project-focused criteria" --which
presumably means identifying and funding projects that will further
statutory goals --which are, in its view, impermissible under the Act.
Id. at 70, 72.
While it is true that Congress could have established the system that
the GAO outlines, the fact is that Congress did not do so. The
distinction between "station-based criteria" and "project-focused
criteria" urged by the GAO simply does not exist; the Act does not
even
use those terms. Nor does the Act constrain CPB to adopt criteria based
on "financial needs, audience satisfaction, or fundraising
effectiveness." These are the GAO's terms, not those of the statute. To
the contrary, paragraph (k)(6)(B) of the Act permits CPB, in
consultation with the stations, to establish "eligibility criteria"
that "promote the public interest in public broadcasting," so long as
they fulfill the two statutory goals that Congress --not the GAO --
spelled out, namely (I) "to provide for the financial needs and
requirements of the stations in relation to their communities and
audiences" and (2) "to maintain existing, and stimulate new, sources of
non-Federal financial support." 47 U.S.C. § 396(k)(6)(B).
As we have noted, the official Committee reports left the task of
defining how to achieve these goals to CPB. Both houses of Congress
recognized that the Act "does not prescribe a precise formula for the
distribution of [CSG] grants" and that "[t]he details of the formula,
as well as the weight assigned to each factor, would be determined by
the Corporation in consultation with the stations." H. Rep. No. 94-245
at 22; S. Rep. No. 94-447 at 11-12 (emphasis added). Indeed, in a
subsequent amendment to the Act, the Senate Report reiterated that
"CPB, in order for it to meet the needs of competing interests and
audiences needs some element of discretion" with respect to
distribution of the CSG funds. S. Rep. No. 444, 100th Cong., 2nd Sess.
28 (1988). And Congress' consistent replenishment of CSG funds in the
face of reminders that a portion of the CSG funds would be used for
the Future Fund constitutes legally cognizable ratification of the way
that CPB has understood its discretion and implemented the statute.
See, e.g., Society of Plastics Indus. v. Interstate Commerce Comm'n,
955 F.2d 722, 728-29 (D.C. Cir. 1992). [NOTE 6]
II. The GAO also suggests that CSG funds cannot be used to support the
Future:
Fund because Congress intended that "projects" be funded only through
the System Support fund segment of its funding. See GAO Report at 72.
The System Support provision requires CPB to allocate 6% of its
appropriation for
expenses incurred by the Corporation for capital costs relating to
telecommunications satellites, the payment of programming royalties and
other fees, the costs of telecommunications satellites, the payment of
programming royalties and other fees, the costs of interconnection
facilities and operations (as provided in clause (iv)(I)), and grants
which the Corporation may make for assistance to stations that
broadcast programs in languages other than English or for assistance in
the provision of affordable training programs for employees at
public broadcast stations, and if the available funding level permits,
for projects and activities that will enhance public broadcasting.
47 U.S.C. § 396(k)(3)(A)(i)(II) (emphasis added). Significantly, the
final clause --making clear that CPB could use surplus funds for any
projects or activities beneficial to public broadcasting - -was added
in 1988. Id.; see also S. Rep. No. 100-444 at 27. At its most common-
sense level, this 1988 addition recognized the desirability of
providing CPB with discretion to use any excess funds authorized under
this section, after the spending criteria are met, for any purpose or
project that supports public broadcasting.
The GAO appears to treat language clearly designed to expand CPB's
discretion as evidence of an intention to narrow that discretion for
other purposes. But as we have noted, in the very next section of the
Report adopting the 1988 amendments, the Committee made clear with
respect to the CSG funds that it "did not make any major changes in
this section because it believes that the CPB, in order for it to meet
the needs of competing interest and audiences needs some element of
discretion." S. Rep. No. 100-444 at 28.
The GAO appears to believe that the permission to use System Support
funds for projects must negate the comparable discretion to use other
funds for projects, because Congress would not have intended that CPB
could use different statutory sources to support similar programs or
similar methods of making grants. GAO Report at 72. But nothing in the
statute suggests that Congress intended to limit programs like the
Future Fund to one particular funding source or that it intended to
compartmentalize the funding methods so as to require CPB to limit its
grants to one or another type. Compare, Matter of Payment of SES
Performance Awards, 68 Comp. Gen. 337 (Mar. 20, 1989) (use of funds
from multiple sources to support a single program would be improper
only "if it were clear that the Congress intended. [one particular]
appropriation to be the exclusive source of funds"). The Future Fund
grants are consistent with
the criteria for the System Support funds --"projects and activities
that will enhance public broadcasting" --and they satisfy the specific
substantive statutory elements for the distribution of CSG funds.
Accordingly, the text of the Act, as well as Congressional intent,
permit both sources to be tapped to support the Future Fund. The GAO's
assertions to the contrary find no warrant in the text or the
legislative history of the Act.
III. At its base, the GAO is suggesting that CSG funds cannot be used
to support the Future Fund because only stations may decide how such
federal funds should be used. In essence, the GAO appears to view CPB
as a mere conduit --a pass through --without a role in defining or
requiring the most effective use of funds.
As we have suggested, there is no way to construe the language of the
statute that would achieve that result. Moreover, the approach would
severely curtail CPB efforts to coordinate or orchestrate any
collective or centralized focus on large-scale systemwide projects,
even if such projects offer the best ways to help stations solve the
problems they face in common and achieve systemwide benefits of the
kind contemplated in the Act. We suggest that it should require a very
clear direction from Congress to preclude CPB from acting as a
centralizing and coordinating clearinghouse for such purposes or to
prevent it from funding projects designed to achieve maximal systemwide
programmatic benefits in which all stations would share. No such
direction exists. To the contrary, § 396(k)(6)(B) clearly provides CPB
with broad discretion in funding projects capable of solving problems
covered by or furthering the goals set out in the section.
IV. Finally, the GAO challenges situations in which CPB project funding
has involved outside consultants or other entities, who are selected to
manage or operate projects being funded. It suggests that CSG funds
must be paid directly to stations. [NOTE 7] The GAO's interpretation,
if followed, would give rise to needless inefficiency.
Consultants and stations often work together to generate project
proposals that would benefit individual stations or groups of stations,
and a review panel of stations convened by CPB typically recommends
which of these projects should be funded. This approach recognizes that
it is occasionally more efficient for CPB to issue funds directly to a
consultant, and to manage consultants and the projects to ensure both
that the funds are used within the scope of the grant and that the
intended results are achieved. Regardless of what entity the funds are
channeled through, Future Fund project grants are designed with and for
the benefit of the stations, as specified in the statutory criteria.
Under these circumstances, the statutory purposes are being fulfilled
without regard to the identities of the payees on CPB's checks.
V. In sum, the GAO reads restrictions into the Act where they do not
exist and overlooks the governing legislative history. In doing so, it
reaches a conclusion inconsistent with numerous congressional
appropriations of CSG funds and the longstanding concurrence of the
public broadcasting community with respect to the current funding
structure. It is entirely appropriate for CPB to utilize CSG funds to
support the Future Fund program, and the GAO's contrary conclusion is
without support in the governing statute, in the law, or in sound
policy.
NOTES:
[1] As the GAO has recognized, the current criteria for Future Fund
grants look to support proposals that: show clear evidence that the
project would meet a demonstrated need; actively involve and benefit
multiple stations; demonstrate that concepts could be widely
implemented and lead to economies of scale; reflect a shared risk
through funds provided by the applicant; and are sustainable after
funding for the project is concluded. See GAO Report at 23.
[2] Four stations did express this position in a joint August 8, 2003
letter to Robert Coonrod, the President and Chief Executive Officer of
CPB.
[3] The GAO does not challenge the use of System Support funds under §
396(k)(3)(A)(i)(II) for this purpose. Nor does it question CPB's use of
CSG funds in any other respect.
[4] Although the GAO does cite and quote from the House and Senate
Reports, it excised the specific language explaining that the "details
of the formula [for distribution], as well as the weight assigned to
each factor, would be determined by the Corporation in consultation
with the stations." See GAO Report at 72 n.64.
[5] See GAO Report at 22-23, 66 (discussing CPB's discretion to modify
the eligibility criteria and the effects of such modification on
stations).
[6] The "doctrine of ratification holds that when Congress reenacts,
without change, statutory terms that have been given a consistent
judicial or administrative interpretation, Congress has expressed an
intention to adopt that interpretation." Society ofPlastics, 955 F.2d
at 728-29; see also Commodity Futures Trading Comm'n v. Schor, 478 U.S.
833, 846 (1986) ("It is well established that when Congress revisits a
statute giving rise to a longstanding administrative interpretation
without pertinent change, the congressional failure to revise or repeal
the agency's interpretation is persuasive evidence that the
interpretation is the one intended by Congress."); EEOC v. Associated
Dry Goods Corp., 449 U.S. 590, 600 (1981) (explaining that "[i]n the I5
years during which the Commission has consistently [taken the current
approach] . Congress has never expressed its disapproval, and its
silence in this regard suggests its consent to the Commission's
practice"); Harris v. James, I27 F.3d 993 (I 1th Cir. 1997) (same).
[7] In the great majority of cases, as we understand it, Future Fund
money is in fact paid to stations directly, to consultants at one or
more stations' specific direction, or to both stations and consultants
working together on the same project. Even in the smaller percentage of
projects where funds are paid solely to consultants (perhaps 30% of the
projects), stations nevertheless remain intimately involved in the
projects, either as research subjects or by lending their facilities to
host consultants, and in most cases were involved in the design of the
project being funded. Future fund grants, in short, are always premised
on the active involvement of one or more stations, even in the minority
of cases where stations are not direct recipients or co-recipients of
grant money. And CPB assumes overall management responsibility for all
Future Fund projects.
The following are GAO's comments on the Corporation for Public
Broadcasting's letter dated March 12, 2004.
GAO Comments:
1. Our legal opinion on this issue remains unchanged. See our comments
below on the attached legal memorandum from Covington and Burling. The
Corporation notes that its ability to support projects designed to
improve the system as a whole could decrease if it had to depend only
on system support funds. We recognize the Corporation's concern.
However, we continue to believe that this is a matter that should be
addressed to the Congress.
2. The point of the cited paragraph of our report is limited to
historical background and is not a characterization of congressional
commitment to public television. To restate, when the Public
Broadcasting Act of 1967 was passed, annual congressional
appropriations were seen as a temporary measure pending the development
and adoption of a long-term financing plan for public broadcasting.
Absent the development of such a plan, the Congress has in fact
continued to support public broadcasting with annual appropriations at
the levels indicated in figure 3. We agree with the Corporation that
when the Congress deferred the development of a long-term financing
plan at the time the 1967 act was passed, it did not intend that
federal funding for the Corporation would be discontinued.
Congressional committee reports accompanying the 1967 legislation and
subsequent reauthorization legislation suggest the need for ongoing
federal funding to enable the Corporation to fulfill its mission.
3. We do not agree with the Corporation that our report implies that
its policy decisions should be made on the basis of our survey of
licensees. Although we recognize that the views of licensees are, by
statute and in practice, central to the making of policy decisions by
the Corporation, the survey served as only one source of evidence for
our review. We determined that it was important to ascertain the views
of licensees because we believe they are integral to the discussion of
the statutory framework for federal support of public television and
the Corporation's funding programs and processes. The findings,
conclusions, and recommendations in this report are based on several
methodologies we employed to review the Corporation's activities in
support of public television (as described in app. I) including, but
not limited to, the survey of public television licensees.
4. We are not taking a position on the desirability or efficacy of the
goals of the Television Future Fund. Rather, our opinion rests on the
Corporation's legal authority to use section 396(k)(6)(B) funds for
this purpose. The Corporation misconstrues the plain meaning of section
396(k)(6)(B). This provision does not authorize the Corporation to use
funds designated for distribution to public television licensees.
Rather, section 396(k)(6)(B) sets out a distribution mechanism under
which the Corporation distributes funds to public television licensees.
Moreover, section 396(k)(6)(B) does not set out two statutory purposes
for the use of these funds. Rather, section 396(k)(6)(B) provides two
goals for the design of the formula under which the funds are to be
disbursed. The formula is to be designed to provide for the financial
needs and requirements of stations and to maintain existing, and
stimulate new, sources of nonfederal financial support. The Congress
has provided directions on the use of section 396(k)(6)(B) funds.
Specifically, section 396(k)(7) provides that these funds "may be used
at the discretion of the recipients for purposes related primarily to
the production or acquisition of programming.":
5. While the Congress has been provided with some information on the
Future Fund, the information does not clearly and consistently identify
the funding sources for the Television Future Fund. For example, in
testimony before the Committee on House Energy and Commerce,
Subcommittee on Telecommunications and the Internet, the President and
CEO of the Corporation made no reference to the Future Fund in his
comments about grants to stations. However, the President and CEO did
mention Future Funds when speaking about the System Support account
(statement of Mr. Robert Coonrod, President and CEO of the Corporation
for Public Broadcasting, July 10, 2002).[Footnote 95] During the course
of our review, we pointed out to the Corporation that the 2002 annual
report could be confusing because it defines TVRFF (Future Fund,
Collaboration Fund and Small Station Fund Grants) as "Television and
Radio Future Funds and System Support." We were advised that the
Corporation agreed that the definition might lead to confusion and that
they would consider modifying the definition for future annual reports.
Letter from Donna Coleman Gregg, Vice President, General Counsel and
Corporate Secretary of the Corporation for Public Broadcasting to Mindi
Weisenbloom, Senior Attorney, General Accounting Office, dated August
11, 2003.
6. Our review did not examine whether the make-up of the Television
Future Fund advisory panels have adequately represented a cross-section
of the public broadcasting community. We note that the Corporation
intends to change the composition of the advisory panel to ensure a
greater representation from across the station community. It also
appears that the Corporation envisions that the panel will operate more
as an investment board than as a consultation panel. Although the
Corporation contends that the Future Fund plan has been regularly
placed before the constituent elements of public broadcasting, our
survey of public television licensees indicates a number of concerns
about the program. For example, 42 percent of the respondents to our
survey indicated that they had little or no knowledge about the
findings and outcomes of Television Future Fund projects. Overall, only
41 percent of licensees responding to our survey indicated that the
projects had provided them with practical methods for reducing costs
and/or enhancing revenues. The Corporation's approach for funding the
Television Future Fund program was another area identified in our
survey as a concern for licensees. Only 30 percent of the responding
licensees indicated that they favored the current funding approach, and
one-fifth of our survey respondents indicated that the Corporation
should cease all funding for the program.
7. We agree that nothing in the statute suggests that the Corporation's
role is passive. Section 396(k)(6)(B) provides the Corporation with
discretion to establish eligibility criteria and a formula for the
distribution of funds reserved by the Congress for public television to
the licensees. However, this discretion must be exercised within the
constraints of the provision. The Corporation must periodically review
its eligibility criteria with the station community, and the formula
must be designed to provide for the financial needs and requirements of
stations and to maintain existing, and stimulate new, sources of
nonfederal financial support. More importantly, the provision provides
that the funds are to be distributed to licensees. Thus, under the
plain meaning of the provision, these funds are not available for the
Corporation's use or for the Corporation to decide how the licensees
may use the funds. Nor are the funds available for distribution to
entities other than the licensees themselves.
8. The statute specifies that it is the recipients of the funds, in
other words the public television licensees, who have discretion over
the use of these funds. Specifically, section 396(k)(7) provides that
these funds "may be used at the discretion of the recipient for
purposes related primarily to the production or acquisition of
programming.":
9. GAO is not suggesting that the Corporation "pick and choose"
stations for grants. Rather, under the plain meaning of section
396(k)(6)(B), the Corporation is to distribute the funds reserved to
television stations on the basis of eligibility criteria and a formula.
And under the plain meaning of section 396(k)(7), it is the licensees
who have the discretion over the use of these funds within the
constraints of the statute. The Congress has directed that the
396(k)(6)(B) funds be used "for purposes related primarily to the
production or acquisition of programming.":
10. We disagree that the Congress has ratified the Corporation's use of
section 396(k)(6)(B) funds for the purposes of the Future Fund by
continuing to make funds available for distribution under section
396(k)(6)(B). "Ratification by appropriation" is the doctrine by which
the Congress can, by the appropriation of funds, confer legitimacy on
any agency action that was questionable when it was taken. However,
this doctrine is not favored and will not be accepted where prior
knowledge of the specific disputed action cannot be demonstrated
clearly. GAO summarized the test courts have used to find ratification
by appropriation in B-285725, September 29, 2000.
"To conclude that Congress through the appropriations process has
ratified agency action, three factors generally must be present.
First, the agency takes the action pursuant to at least arguable
authority; second, the Congress has specific knowledge of the
facts; and third, the appropriation of funds clearly bestows the
claimed authority.":
All three elements are missing here. The Corporation does not have the
authority to use funds designated for distribution to public television
licensees to support the Future Fund. The Congress has not clearly been
informed that the Future Fund is supported in part with section
396(k)(6)(B) funds. Finally, the Congress has not in any way indicated
that the funds it has provided to the Corporation for public television
licensees may be used to support the Television Future Fund.
Accordingly, "ratification by appropriation" is not applicable in this
instance.
11. As noted in the report, in 1988, the Congress specifically
authorized the use of system support funds "if the available funding
level permits, for projects and activities that will enhance public
broadcasting." We are not reading this provision to "narrow" the scope
of section 396(k)(6)(B). At the time that the amendment was enacted,
the Future Fund did not exist, and the Corporation was not attempting
to fund projects and activities through section 396(k)(6)(B) but was
appropriately distributing funds under this section directly to the
public television licensees. In our view, section 396(k)(6)(B) funds
were not then and are not now available to be pooled with System
Support funds and used to support the Television Future Fund program.
12. The Corporation cites to a GAO decision for the proposition that
multiple sources of funding to support a single program would be
improper only if the Congress had intended one particular appropriation
to be the exclusive source of funds. Matter of: Payment of SES
Performance Awards, 68 Comp. Gen. 337 (Mar. 20, 1989). That analysis is
inapplicable here. As a general rule, an appropriation for a specific
object is available for that object to the exclusion of a more general
appropriation unless there is something in the general appropriation to
make it available in addition to the specific appropriation. See, e.g.,
B-272191, Nov. 4, 1997. 68 Comp. Gen. 337 involved a case where an
agency had two appropriations that were available for an expenditure.
In those situations, an agency may charge either appropriation and must
consistently follow that choice. Here, the Corporation is not faced
with deciding between two of its accounts equally available for the
purpose of the Television Future Fund. Rather, the Congress has
specified that under certain circumstances, system support monies are
available to the Corporation to fund projects and activities that will
enhance public broadcasting, such as the Television Future Fund. As
explained above, section 396(k)(6)(B) funds are not available for such
purposes. Thus, the Corporation does not have the choice of selecting
both accounts to pay for the Television Future Fund.
13. As noted above, under the plain meaning of section 396(k)(6)(B),
funds designated by the Congress for distribution to licensees are not
available to the Corporation to fund projects and activities. This does
not mean that the Corporation could not coordinate or orchestrate any
collective or centralized focus on large-scale systemwide projects.
Clearly, to the extent that funding levels permit, System Support funds
are available for such projects. Additionally, individual licensees
could exercise their discretion over the use of their funds to
contribute to such efforts.
14. As stated in the report, under the plain meaning of the statute,
section 396(k)(6)(B) directs the Corporation to distribute the balance
of funds reserved for television stations, after deduction of the basic
grant, "to licensees of such stations." Thus, the Corporation does not
have the discretion to distribute these funds to other than public
television licensees even if the purpose of the grant is to ultimately
benefit public television stations.
[End of section]
Appendix VIII: Comments from the Public Broadcasting Service:
Appendix VIII: Comments from the Public Broadcasting Service
March 15, 2004:
VIA. FACSIMILE AND U.S. MAIL:
Mr. Mark Goldstein:
Director, Physical Infrastructure Issues
U.S. General Accounting Office
Washington, D.C. 20548:
Dear Mr. Goldstein:
Thank you for sharing the draft report entitled, "Issues Related to
Federal Funding for Public Television by the Corporation for Public
Broadcasting" prepared by the General Accounting Office ("GAO").
We appreciate the time and effort that the GAO has dedicated to this
effort on behalf of public broadcasting_ It is gratifying that nearly
two-thirds of respondents to GAO's survey of public television
licensees favor continuing the current statutory allocation of federal
funds which makes 2596 of the federal monies appropriated to the
Corporation for Public Broadcasting ("CPB") for public television
available to fund national programming. We are particularly pleased
that nearly threc-quarters of respondents favored CPB's continued
annual support for the National Program Service ("NPS") distributed by
PBS, with 9696 of respondents finding that PBS's children's and
primetime NPS programs enable them to meet their mission to a great or
moderate extent and 91°6 of respondents finding that primetime NPS
programs help them build membership and underwriting support within
their local communities.
Given the importance of these services to the ability of PBS member
stations to meet their mission serving local audiences, we are
appropriately concerned about GAO's finding that just over half of
respondents indicated that changes were needed in the process for
selecting programs for the NPS, with some licensees commenting that the
current selection process limits the ability of new producers to
produce for the NPS.
Currently, PBS seeks input from its members in a variety of ways,
including an annual survey of stations soliciting feedback regarding
the performance of programs in local markets. The NPS also receives
input from and is advised by the following committees and task forces
consisting of more than 100 educators, station managers, programmers
and others: the Programming Services Committee, Group of 20 (major
market programmers), PBS Kids Advisory Group, Pledge Advisory Group,
PBS/NPR NewsBrief Advisory Committee and Ready To Learn Station
Advisory Council. The programming division produces live, interactive
teleconferences at least
monthly to communicate with member stations regarding programming
decisions and related initiatives. Until this year, PBS has also
produced a meeting for programmers and the PBS annual meeting which
attracts roughly 1200 system representatives and provides very
productive information-sharing opportunities. Regarding NPS programs
receiving federal funds from CPB, CPB informs PBS of its programming
priorities and objectives and the parties jointly work to ensure that
federal funding is used to meet those programming priorities. In
addition, the Content Policy Committee of the PBS Board provides
guidance through its evaluation and approval of PBS's annual
programming plan.
With respect to production opportunities, there are a number of factors
influencing the selection of producers and programming, including: the
extent to which the programming meets the needs of the national
schedule, with an emphasis on limited and continuing series; the
production experience of the producer and its ability to deliver a
quality production on-time and on-budget; the ability of the producer
to raise the underwriting support necessary to fund the production; and
the ability of the producer to carry the production deficit during what
is usually an extensive development and production period while full
funding is being secured. While many stations, because of the risks
involved in developing national production capabilities, choose to
devote their production resources to local programming, over 32
stations have contributed programs or series to the NPS and other PBS
program services over the past few years. To help less-experienced
stations and independent producers develop the skill-set necessary to
increase their ability to compete for national production
opportunities, PBS and CPB have supported a Producers' Academy which is
designed to train the next generation of national producers. Many of
our major producing stations have lent their time and talent to this
effort.
PBS values GAO's analysis and recognizes that PBS must do more to
communicate the input it currently receives from member stations
regarding programming decisions and must determine whether more
effective methods for securing input can be developed. PBS management
will analyze its current mechanisms for generating programming input
from member stations and will review that analysis with the Content
Policy Committee of its Board, seeking counsel from the committee on
how best to improve its systems for securing member input.
GAO recommends that CPB broaden the scope of its digital grant programs
to include support for digital production equipment and digital
content. Recognizing that GAO's survey of licensees revealed a
significant number of licensees reporting a shift in digital priorities
from transmission equipment to digital master control, digital content
and digital production equipment needs. PBS supports CPB having the
flexibility to increase the scope of its grant program.
At the same time, PBS notes that many licensees will need assistance
with transmission equipment: upgrades from low-power to full power
transmitters and the purchase of digital translators. Translators serve
over 10 million public television households, many in rural parts of
the United States. The draft GAO report notes that PBS is seeking CPB
funds to complete the Enhanced Interconnection Optimization Project
("EIOP") at a cost of $12-15 million. To clarify, the $12-15 million is
needed to build out a digital technical operating center ("TOC")
redesign for the purpose of more efficiently managing digital content
from the point initially received from the producer through editing and
traffic management to delivery to the interconnection system. This
money is not for the purchase of the next generation interconnection
system ("NGIS") which is the satellite and terrestrial system through
which material will be received by the local public television station.
NGIS is the subject of a separate federal appropriation request.
In addition, PBS acknowledges the comments in the draft GAO report
regarding the concern of some licensees over the potential for stranded
investments from their purchase of digital master control equipment
prior to the announcement of the EIOP project. It should be noted that
licensees may elect to purchase the EIOP master control solution or a
solution of their own choice. Every station will be able to seamlessly
interface with the redesigned PBS TOC regardless of the master control
solution they choose. Since last Fall, PBS has increased its
communications efforts with stations through presentations at round
robin discussions around the country and at various meetings of
affinity groups, as well as by offering demonstrations to general
managers and others visiting PBS.
Based on its survey of licensees, GAO notes that nearly all of the
respondents either now have or plan to offer multiple digital channels
to their communities for the delivery of programming and other
digitally-based services, including those supporting educational needs
(e.g. on-demand instructional content to K-12 classrooms) and
governmental needs (e.g. emergency response services and Amber alerts
for child abductions). It should be noted that there is compelling
evidence that public television stations would deteriorate to a
substantial degree, and might not survive, if cable operators were to
refuse to carry multicast programming. PBS, CPB and the Association of
Public Television Stations ("APTS") will continue to advocate for full
must-carry rights for public television stations.
As noted in GAO's draft report, CPB undertook a system-wide planning
study to, among other things, improve the financial sustainability of
public television. PBS applauds the work that CPB has done in this
regard and pledges to continue to support CPB in those efforts.
Finally, GAO recognizes in its draft report that, in passing the Public
Broadcasting Act of 1967, Congress viewed annual appropriations and
authorizations as temporary measures pending the development and
adoption of a long-term financing plan for public broadcasting. PBS
hopes that the GAO report will highlight the need for a national dialog
on a permanent funding solution to ensure that public television is
able to continue providing vital programming and educational services
in communities across America.
I commend the GAO for its professionalism and thoroughness in preparing
this report and assure you that PBS has received constructive guidance
for future action from GAO's analysis.
Signed by:
Wayne Godwin,
Executive Vice President & Chief Operating Officer:
The following are GAO's comments on the Public Boardcasting Service's
letter dated March 15, 2004.
GAO Comments:
We have edited language in the report to clarify that the funds needed
to complete the Enhanced Interconnection Optimization Project of $12
million to $15 million are separate from those to purchase the Next
Generation Interconnection System.
[End of section]
Appendix IX: Key Contacts and Staff Acknowledgments:
GAO Contacts:
Mark L. Goldstein, (202) 512-2834 John Finedore, (202) 512-2834:
Staff Acknowledgments:
In addition to those named above, Dennis Amari, Alan Belkin, Edda
Emmanuelli-Perez, Colin Fallon, Michele Fejfar, Kevin Heinz, Logan
Kleier, Randall Lennox, Omari Norman, Tina Sherman, Mindi Weisenbloom,
and Alwynne Wilbur made key contributions to this report.
(545032):
FOOTNOTES
[1] As used in this report, "public television" refers to noncommercial
educational television. Specifically, this report focuses on entities
that are licensed by the Federal Communications Commission to operate
noncommercial educational television stations and receive grants from
the Corporation for Public Broadcasting. This report does not address
issues related to federal funding by the Corporation for public radio.
[2] The Corporation for Public Broadcasting is referred to in this
report either by its full name or as "the Corporation."
[3] Independent producers of public television programming are
generally not affiliated with a studio, a television station, or a
major production company.
[4] According to Corporation officials, the Corporation classifies
licensees' size on the basis of total revenues--large licensees have
total revenues of $20 million or more annually, medium-large licensees
have total revenues between $9 million and $19.9 million, medium
licensees have total revenues between $3.5 million and $8.9 million,
and small licensees have total revenues below $3.5 million.
[5] An Amber Alert is a broadcast announcement that interrupts regular
programming to relay information to the public about an abducted child.
Amber Alerts are part of the Emergency Alert System, which is also used
to notify the public about severe weather and other national
emergencies.
[6] The $263 million in public television revenues attributed above to
the Corporation does not include funds provided to public television
licensees from the $25 million in federal appropriations made to the
Corporation for public television's digital transition.
[7] Public Broadcasting Act of 1967, Pub. L. 90-129, 81 Stat. 365,
codified as amended at 47 U.S.C. §396.
[8] The Corporation was established as a nongovernmental entity in part
to safeguard the distribution of federal funding from government
control. According to the Corporation, it began receiving an "advance"
appropriation--provided 2 years in advance of a fiscal year--in the
mid-1970s for the same reason.
[9] The legislative history of the Public Broadcasting Act of 1967
indicates that the question of permanent financing for the Corporation
would be reserved for consideration at a later time. S. Rept. No. 90-
222, reprinted in 1967 U.S.C.C.A.N. 1772, 1779; H. Rept. No 90-572
reprinted in 1967 U.S.C.C.A.N. 1779, 1810-1812. This legislative
history was further explained in 1975.
"The Congress did not intend for the Public Broadcasting Act of 1967 to
impose annual authorizations and appropriations on the Corporation for
Public Broadcasting as a permanent process. Rather, this was to be an
interim procedure pending submission of a long-term financing plan by
the Administrator to the Congress." S. Rept. No. 94-477 at 5, reprinted
in 1975 U.S.C.C.A.N. 2206, 2210.
[10] The intention to develop a long-term plan for financing public
broadcasting was announced by President Johnson upon signing the 1967
act. However, a plan was not produced prior to the end of his term of
office in 1969.
[11] For example, a second commission formed by the Carnegie
Corporation in 1977, known as Carnegie II, proposed that half of the
financing for public broadcasting should come from the federal
government, derived from general tax revenues and a fee for the use of
the radiofrequency spectrum.
[12] By statute, the Corporation's board of directors is to consist of
nine members. One director position was unfilled as of February 2004.
[13] The mission statement also says that the Corporation has
particular responsibility to encourage the development of programming
that involves creative risks, and programming that addresses the needs
of unserved and underserved audiences, particularly children and
minorities.
[14] July 22, 2003, memorandum from Robert Coonrod, President and Chief
Executive Officer of the Corporation, to the board of directors. The
fourth focus of the systemwide planning effort is challenges affecting
public radio.
[15] The systemwide planning effort was informed by the Corporation's
2002 to 2003 study, entitled "Developing a Sustainable Economic Model
for Public Television," and facilitated under contract with McKinsey &
Company. The study addressed the severity and length of financial
pressures on the system, the most promising performance improvement
opportunities available to the system, and implementation of
initiatives to effect lasting change. As part of the key challenge
identified by the study--that the core broadcasting service of public
television is under "real threat" by economic pressures at both the
local and national levels--the study found a decline, in real terms, in
station membership revenues since 1990 and the likely continued decline
in membership support due, in part, to declining viewership.
[16] FCC granted a 6-month waiver of the simulcast requirement for
noncommercial educational stations, extending the date for achieving 50
percent simulcasting from May 1, 2003, to November 1, 2003. However,
such stations were required to air a digital signal for an amount of
time equal to at least 50 percent of the time they aired an analog
signal as of May 1, 2003, increasing to 75 percent as of April 1, 2004,
and 100 percent by April 1, 2005.
[17] When the Congress passed the Balanced Budget Act of 1997, it
adopted the target transition date of December 31, 2006, for the
digital transition but specified that broadcasters could keep their
analog service beyond this date on a market-by-market basis under
certain conditions. See, 47 U.S.C. §309(j)(14). To help broadcasters
meet the 2006 transition date, FCC developed a schedule for the
introduction of digital television. See U.S. General Accounting Office,
Telecommunications: Many Broadcasters Will Not Meet May 2002 Digital
Transition Deadline, GAO-02-466 (Washington, D.C.: Apr. 23, 2002); and
U.S. General Accounting Office, Telecommunications: Additional Federal
Efforts Could Help Advance Digital Television Transition, GAO-03-7
(Washington, D.C.: Nov. 8, 2002).
[18] 47 U.S.C. §396(k). As originally enacted, these amendments to the
Communications Act did not specify allocations for the distribution of
federal funding among licensees and for national public television
programming.
[19] System Support is largely used to pay royalty fees,
interconnection operating costs, and other expenses and, if available
funding levels permit, for projects and activities that will enhance
public broadcasting. 47 U.S.C. §396(k)(3)(A)(i)(II).
[20] Dollar figures have been rounded. In addition to the $380 million
appropriation, the Corporation's fiscal year 2004 budget includes an
estimate of $5.5 million in interest. As directed by the statute, these
funds are allocated between public television (75 percent, or $4.125
million, specified for national programming) and public radio (25
percent, or $1.375 million). 47 U.S.C. §396(k)(3)(A)(v). $49.7 million
in federal funds was also provided to the Corporation for fiscal year
2004 to support public broadcasting's transition to digital.
[21] The 75 percent allocation is generally referred to as the
Community Service Grant (CSG) "fund" or "pool." In addition to the
Community Service Grant program, the CSG pool also funds the Television
Future Fund, discussed later in this report; the Collaboration Fund, a
competitive grant program providing assistance for collaborative
relations among stations, and between stations and other community-
based organizations; and the Small Station Fund, providing grants to
stations facing "extreme" financial hardship and those not able to
raise the minimum level of nonfederal financial support to receive the
base grant portion of a Community Service Grant.
[22] See Public Broadcasting Financing Act of 1975, Pub.L. 94-192, 89
Stat. 1099. 47 U.S.C. §§396(k)(5), (6) and (7).
[23] Of the fiscal year 2004 federal appropriation made to the
Corporation, the 75 percent allocation for distribution among licensees
of public television stations totaled $190.2 million. Of these funds,
the Corporation budgeted $181.2 million for Community Service Grants;
$1 million for the Small Station Fund; $4 million for the Television
Future Fund; $1 million for the Collaboration Fund; and $3 million for
Local Service Grants. Funds sets aside for Local Service Grants assist
licensees that generate less than $2 million in nonfederal financial
support in order to strengthen local services provided by these
licensees.
[24] The act requires that after the basic grant is made, the balance
of the funds reserved for television stations is to be distributed to
licensees in accordance with eligibility criteria that "promote the
public interest in public broadcasting" and on the basis of a formula
designed to--(a) provide for the financial needs and requirements of
stations in relation to the communities and audiences such stations
undertake to serve and (b) maintain existing, and stimulate new,
sources of nonfederal financial support for stations by providing
incentives for increases in such support. 47 U.S.C. §396(k)(6)(B).
[25] 47 U.S.C. §396(k)(7).
[26] The basis for grant amounts provided to licensees through
Community Service Grants does not include costs for membership in, or
other costs related to the acquisition of programming from, PBS or
other national programming distributors. However, the assessment paid
by a licensee for PBS membership includes a factor based on the
Community Service Grant funds awarded to the licensee by the
Corporation.
[27] See Request for Proposals, Television Future Fund and Television
Transition Fund, Fiscal Year 2002, Corporation for Public Broadcasting.
[28] Since fiscal year 2001, $4 million annually from each source has
been used to fund the Television Future Fund program.
[29] The panel included representatives of public television stations,
PBS, and the Association of Public Television Stations, as well as
consultants.
[30] Letter from four station executives to Mr. Robert T. Coonrod,
President and Chief Executive Officer, Corporation for Public
Broadcasting, dated August 8, 2003. The letter expressed concerns about
the potential use of monies designated by the Congress for distribution
to public television licensees to fund the initiative and projects
stemming from the systemwide planning study and attached a legal
opinion from outside counsel which concluded that the expenditure of
these funds for any purpose other than distribution to public
television stations was inconsistent with restrictions placed by the
Congress on the use of these funds. The Corporation's August 21, 2003,
response maintains that the Corporation has allocated and distributed
all funds in a fashion fully consistent with statutory directives and
has been so advised by outside legal counsel. This debate surfaced in
1995 when the program was established. At that time, the Corporation
was advised by outside legal counsel that it had authority to create
the fund and use funds allocated for distribution among public
television licensees for Future Fund grants. In July 2003, the
Corporation's current outside counsel reviewed this issue and reached
the same conclusion.
[31] The Corporation's views are consistent with the interpretations
articulated by its outside counsel in 1995 and 2003.
[32] The Corporation refers to these committed funds as being
"obligated," by which they mean that the Future Fund Advisory Panel has
agreed to specific projects with a budget, that the Corporation has
committed funds to the project, and that the contracting process is
under way. By "earmarked," they mean that the Future Fund Advisory
Panel has designated that funds be directed toward major initiatives
that are in development, but as yet have no specific project budget and
workscope to which the funds may be specifically allocated. In February
2004, Corporation officials told us that there would be a request for
proposals in March 2004 for conducting Major Giving Initiative
workshops; they said that the request for proposals would be open to
public television licensees and stations, consultants, and others.
[33] 47 U.S.C. §396(g)(3).
[34] 47 U.S.C. §396(k)(3)(A)(ii)(II).
[35] 47 U.S.C. §396(k)(3)(B)(i). The Congress has also provided that it
is in the public interest to encourage the development of programming
that involves creative risks and addresses the needs of unserved and
underserved audiences, particularly children and minorities. 47 U.S.C.
§396(a)(6).
[36] According to Corporation officials, approximately $20 million of
these additional national programming funds support productions that
are included in PBS's National Program Service.
[37] 47 U.S.C. §396(k)(6)(A). See Meeting the Mission in A Changing
Environment: A Comprehensive CPB Plan for Public Television's National
Program Financing in the 1990s, A Report to Congress from the
Corporation for Public Broadcasting, January 1990.
[38] The Central Educational Network continues to provide services to
member stations in the midwestern and northeastern regions under their
parent organization, the American Television Group.
[39] In a report on broadcast television, FCC notes that between 1984
and 2001, public television's prime-time viewing shares declined 30
percent. Federal Communications Commission, Broadcast Television:
Survivor in a Sea of Competition (Washington, D.C., Sept. 2002).
[40] In a 2001 Order, FCC clarified the manner in which public
television licensees could use excess digital television capacity for
remunerative purposes. Under the Order, public television stations are
required to use their entire digital capacity primarily for nonprofit,
noncommercial educational broadcast services, but are allowed to use
some of their capacity to offer ancillary and supplementary services
and to advertise on those services when they did not constitute
broadcasting. Ancillary or Supplementary Use of Digital Television
Capacity by Noncommercial Licensees, 16 FCC Rcd 19042 (2001). The U.S.
Court of Appeals, D.C., denied a petition for review of this Order.
Office of Communication, Inc. of the United Church of Christ v. FCC,
327 F.3d 1222, (D.C. Cir. 2003).
[41] In addition to funding, public television stakeholders have
expressed concerns about regulatory issues associated with the
transition involving the carriage of public television stations'
digital signals by cable and satellite providers. See appendix IV for a
brief discussion of these issues.
[42] The PBS Engineering Committee, in consultation with Andersen
Consulting, developed and implemented a comprehensive survey of
stations used by the Corporation and other public television
stakeholders to refine their estimate of the digital transition costs.
The $1.7 billion estimate includes $50 million for digital radio. The
estimate was subsequently revised to $1.8 billion for increases related
to digital radio and other expenses.
[43] The Public Telecommunications Facilities Program is the successor
to the equipment and facilities grants program originally authorized by
the Educational Television Facilities Act of 1962. The program was
transferred to NTIA in 1978. In addition to public broadcasting
stations, the program also awards grants to state and local
governments, Indian tribes, and nonprofit organizations. Between 1998
and 2003, NTIA's funding for the digital transition has totaled $125
million through the award of digital grants to 129 licensees.
[44] A limited number of digital, interactive, and multimedia projects
have received support through the Corporation's Program Challenge Fund,
which is jointly funded by the Corporation, through its regular annual
appropriation, and by PBS.
[45] H. Conf. Rept. 107-342 (2001). The conference report directed that
the funds be used for "equipment and facilities to enable public
broadcasters to meet the statutory deadline for the digital conversion.
. . ."
[46] Review of the Commission's Rules and Policies Affecting the
Conversion to Digital Television, 16 FCC Rcd 20594 (2001). Fewer
viewers are served by a low-power broadcast signal than a full-power
one. The construction of a low-power facility is less costly than a
full-power one and, therefore, potentially less of an initial financial
burden for licensees.
[47] Other contributing factors mentioned included weather-related
problems that delayed construction and difficulties in obtaining the
necessary level of nonfederal matching funds.
[48] Specifically, the consultation process took 3 months for fiscal
year 2001 funds and 4 months for fiscal year 2002. The appropriations
provision for both fiscal year 2002 and 2003 specified that the digital
funds "be awarded as determined by the Corporation in consultation with
public radio and television licensees or permittees, or their
designated representatives." Pub. L. 107-116, 115 Stat. 477 (2002).
Pub. L. 108-7, 117 Stat. 11 (2003). A consultation requirement was not
included in the 2001 fiscal year appropriation. Pub. L. 106-554, 114
Stat. 2763 (2000).
[49] The Corporation received an advance transfer of $7 million in
December 2002, and the remainder was received in March 2003. $11
million of the total $48.4 million for fiscal year 2003 was allocated
for public radio.
[50] The Corporation's survey universe was 140 stations, of which 95
responded (68 percent).
[51] As of late January 2004, 233 PBS member stations were on the air
with a digital signal. According to PBS, when the Corporation's digital
grants that have been awarded are fully executed and the equipment is
implemented and turned on, there will be more than 300 public
television stations on the air in digital. As noted earlier, there is a
total of about 350 public television stations.
[52] This is consistent with a recommendation of the July 2003
consultation panel on the fiscal year 2003 appropriation. Similar to
its analog counterpart, digital translators receive a signal on one
channel, amplify the signal, and then transmit it on another channel.
Translators are especially important to stations located in the western
mountainous regions that need to transmit their signals over long
distances in order to reach their viewers. Of the 4,900 translators in
operation in the United States, 450 are assets of public broadcasting
licensees. The cost of migrating these 450 translators from analog to
digital is estimated at between $60 million and $70 million. FCC has
initiated a proceeding on eligibility requirements to receive a digital
translator license. See Amendment of Parts 73 and 74 of the
Commission's Rules to Establish Rules for Digital Low Power Television,
Television Translator, and Television Booster Stations, and To Amend
Rules for Digital Class A Television Stations, 18 FCC Rcd 18365 (2003)
(Notice of Proposed Rulemaking).
[53] 47 U.S.C. §396(k)(10).
[54] Digital Distribution Implementation Initiative, Sustaining the
Mission: Television Strategic Investment Scenarios, http://
technology360.org/DDII-Scenarios-Television-Fall03.htm (last accessed
February 10, 2004).
[55] Digital Distribution Implementation Initiative, Sustaining the
Mission: Television Strategic Investment Scenarios, http://
technology360.org/DDII-Scenarios-Television-Fall03.htm (last accessed
February 10, 2004).
[56] This opinion analyzes the Television Future Fund program as it
operated prior to the end of fiscal year 2003. The Corporation has
recently reactivated funding of the Television Future Fund under
procedures different than those previously in effect. This opinion does
not analyze the new procedures. The Corporation also has a Radio Future
Fund program, as well as other competitive grant programs. The
Corporation refers to the Television Future Fund program as a
"selective" grant program. However, we use the more common terminology
"competitive" grant program to refer to the Television Future Fund
program.
[57] Fiscal Year 2004 advance appropriation of $380 million was
provided in Pub. L. No. 107-116, 115 Stat. 2177 (2002).
[58] The Corporation provides grants to 176 licensees of public
television stations. The licensees represent 356 stations.
[59] Funds available under 47 U.S.C. §396(k)(6)(B) are generally
referred to as CSG funds.
[60] The statute requires that funds from the CSG pool be distributed
in two parts. 47 U.S.C. §396(k)(6)(B). First, a basic grant must be
provided to "each licensee and permittee of a public television station
that is on the air." Id. Second, the remaining fund must be distributed
in accordance with eligibility criteria and on the basis of a formula.
Id. Since the late 1960s the Corporation has provided a $10,000 basic
grant to each licensee. The Corporation then provides a base grant and
an incentive grant to qualified licensees. The base grant is a
percentage of the total appropriation and is set by the CSG Review
Process. Three factors may alter the base grant portion a licensee may
receive. Stations exceeding a certain revenue level will not receive
base grants (only basic grants). Stations in overlap markets share a
single base grant on a percentage of market basis. Waivers for special
circumstances (such as mergers) may alter the base portion. For fiscal
year 2003, the base grant totaled approximately $401,500 for each
eligible licensee. The incentive grant is a match based on a percentage
of the amount of nonfederal financial support that a station raised.
(This is also subject to adjustment based on station revenues, overlap
market policies (including program differentiation), and special
circumstances). For fiscal year 2003, the incentive grant was
calculated by multiplying the Grantee's fiscal year 2001 nonfederal
financial support by .078242.
[61] For example, the Corporation requires stations to certify that
they are in compliance with the statutory requirements involving:
meetings which must be open to the public (47 U.S.C. §396(k)(4));
financial information which must be made available to the public (47
U.S.C. §396(k)(5)); and community advisory boards which must be
established by certain stations (47 U.S.C. §396(k)(8)). The statute
also requires the station grant recipients to certify to the
Corporation that they have complied with equal employment opportunity
related requirements (47 U.S.C. §396(k)(11)).
[62] Specifically, under the statutory allocation formula:
"6 percent of such amounts [appropriated to the Corporation and
available for allocation for any fiscal year] shall be available for
expenses incurred by the Corporation for capital costs relating to
telecommunications satellites, the payment of programming royalties and
other fees, the cost of interconnection facilities and operations...
and grants which the Corporation may make for assistance to stations
that broadcast programs in languages other than English or for
assistance in the provision of affordable training programs for
employees at public broadcast stations, and if the available funding
level permits, for projects and activities that will enhance public
broadcasting." 47 U.S.C. §396(k)(3)(A)(i)(II). (Emphasis added.)
[63] The Future Fund grew out of a recommendation by the TV Issues &
Policies Task Force. In explaining the need for the Fund, the task
force stated: "We saw a clear need for a significant pool of money to
invest in systemwide efforts to reduce costs and increase net revenues.
Unfortunately, there was no way to create a pool of any significant
size solely with CPB discretionary funds [system support funds]."
Status Report from the Public Television Issues and Policies Task
Force, September 12, 1995.
[64] According to the Corporation, supporters of the Television Future
Fund greatly outnumbered opponents. The Corporation states that 30 to
40 stations considered to be leaders in public broadcasting expressed
strong support, and agreement existed throughout the station community
at large. The Corporation contends that active opposition to the
Television Future Fund was confined to fewer than a dozen station
licensees.
[65] The Corporation utilized a review panel, made up of
representatives of diverse types of public television stations, to
assist in reviewing and recommending which projects should be awarded
Future Fund grants.
[66] In September 2002, the Corporation temporarily suspended the
awarding of any new Television Future Fund grants and set aside fiscal
year 2003 funding pending the outcome of a review. The Television
Future Fund grant program was recently reactivated. Fiscal year 2004
funding was added to the Television Future Fund account.
[67] We met on several occasions with Corporation officials to discuss
these issues. The Corporation provided us with three memorandums
responding to questions raised. Additionally, the Corporation provided
us with supporting documentation, including a 1995 legal opinion
prepared by its then outside counsel, as well as the views of its
current outside counsel, to help us understand their perspective on
this issue.
[68] The Corporation receives a lump sum appropriation. See, e.g. P.L.
108-7, 117 Stat. 11 (2003). Typically, the appropriation provides that
the amounts available must be used "within limitations" specified by
the Communications Act of 1934. The appropriation act may also specify
some deviations from the formula. For example, Public Law 108-7
required: "That in addition to the funds provided under this heading in
Public Law 106-554, $183,000 shall be available for administrative
costs for fiscal year 2003, notwithstanding section 396(k)(3)(A) of the
Public Broadcasting Act."
[69] As a general proposition, an agency's interpretation of a statute
it is charged to administer is entitled to deference. U.S. v. Mead
Corp., 533 U.S. 218 (2001); Chevron U.S.A., Inc. v. Natural Resources
Defense Council, Inc., 467 U.S. 837, 842-843 (1984); Skidmore v. Swift
& Co., 323 U.S. 134 (1944). Deference is not without limits. Deference
is not given to an agency interpretation that is inconsistent with the
language and objectives of a statute. Chevron U.S.A., Inc. at 844.
[70] The legislative history supports this view. The House Report
accompanying the legislation that added the distribution mechanism
provided:
"The balance of the amount reserved for television stations would be
distributed among licensees... of such stations as are eligible to
receive additional grants under criteria established by the Corporation
in consultation with stations. These additional grants would be
apportioned among eligible stations... . "H. Rep. No. 245, 94th
Cong., 1st Sess. 22, See, also, S. Rep. No. 447, 94th Cong., 1st Sess.
11-12 (1975), reprinted in 1975 U.S.C.C.A.N. 2006, 2217. (Emphasis
added).
[71] When this language was added, the Senate Report explained that:
"Funds remaining after payment of the costs set forth in the statute
should be spent on services that public radio and television stations
cannot efficiently perform themselves. CPB currently uses funds
allocated to system support for professional development, training,
research, and promotion of public radio and television programming
among other things. The Committee supports these activities but also
recognizes that CPB, in consultation with, the public broadcasting
community, is in a position to determine which of these services public
broadcasting needs. The Committee does not intend that the CPB must
perform these activities itself, but should support activities within
the public broadcasting community and their national organizations
where that is an efficient way to proceed." S. Rep. No. 444,
100TH Cong., 2ND Sess. 27 (1988).
[72] The 1967 House Report provided that one of the purposes of the
Corporation was "to make grants to local educational broadcasting
entities so that they may in their sole discretion produce or otherwise
acquire appropriate programs and obtain the personnel required to make
their own production staffs adequate to fulfill local audience program
needs...." H. Rep. No. 572, 90TH Cong., 1ST Sess. 16, reprinted in
1967 U.S.C.C.A.N. 1799, 1806 (1967).
[73] When the distribution mechanism was first added, the Senate Report
explained that one of the purposes of the legislation was "[t]o assure
that a portion of Federal funds is distributed directly to local
noncommercial educational... television broadcast stations." Sen.
Rep. No. 447, 94TH Cong., 1ST Sess. 1, reprinted in 1975 U.S.C.C.A.N.
2206. A 1978 House Report noted, "A significant aspect of that support
has been the funds CPB passes through to local stations for their
discretionary use for local or national purposes." H. Rep. No. 1178,
95TH Cong., 2ND Sess. 8, reprinted in 1978 U.S.C.C.A.N. 5345, 5352. The
Senate Report in explaining amendments to subsection (k) stated that
"Section 396(k) otherwise continues the provisions of existing law
regarding the distribution of discretionary funds (Community Service
Grants) to public... television stations." S. Rep. No. 858, 95TH
Cong., 2ND Sess. 31 (1978). A 1988 Senate Report stated that "In the
early 1970's, the CPB began distributing a substantial percentage of
its funds to stations in the form of grants (now called Community
Service Grants (CSGs)) to be used as the stations deemed appropriate.
In 1981, Congress codified the CPB's practice of giving stations
unrestricted CSGs." S. Rep. No. 444, 100TH Cong., 2ND Sess. 18 (1988).
(Emphasis added).
[74] Prior to 1995, all section (6)(B) funds were allocated to stations
through the CSG mechanism, with one exception. For one year, in the
early 1990's, the Corporation used CSG funds to make education grants.
When the Corporation allocated the education grant funds, there was a
stipulation that the recipients use the funds for education projects.
However, the recipient, and not the Corporation, selected the education
project.
[75] The Corporation did not issue an RFP for fiscal year 2003 because
it was reviewing the Television Future Fund operations and it
temporarily suspended accepting Television Future Fund proposals during
that review. The Corporation recently reactivated the Future Fund grant
program under different procedures. According to Corporation officials
under the new process, the Corporation will be issuing more directed
RFPs for more large-scale Television Future Fund projects, instead of
open calls for proposals.
[76] The Corporation also reserved the discretion to not fund a project
even if the proposal meets all of the funding criteria. According to
the Corporation, it is possible that a complete and valid application
proposing a project that is consistent with Future Fund eligibility
criteria might not receive a grant. Specifically, the Corporation
states:
"In an effort to put limited funds to the best use, evaluators accord
higher priority to projects that are replicable or otherwise likely to
result in more widespread benefit to public broadcasting. In addition,
a grant may be denied where a proposal consistent on its face with
Future Fund goals involves an unacceptably high level of risk or
produces benefits too insignificant to justify the cost involved."
Memorandum from Donna Gregg, Vice President, General Counsel and
Corporate Secretary to Mindi Weisenbloom, GAO Senior Attorney, July 11,
2003.
[77] Letter from Stephen A. Weiswasser, Covington & Burling, to Donna
Gregg, Vice President, General Counsel, and Corporate Secretary, dated
July 9, 2003.
[78] For example, in fiscal year 2001, a consultant group received a
$259,500 Television Future Fund grant to determine how the public
television industry is perceived within a larger and ever more
competitive environment and to understand the present and changing
attitudes of current and potential individual financial supporters of
PBS member stations. In another example, in fiscal year 2001, two
consultants receive a $90,000 grant to create and implement a
communications plan to disseminate Future Fund project information
throughout the public television community. Memorandum from Robert
Coonrod, Corporation's President and CEO to the Corporation's board of
directors on Future Fund Project Report dated November 29, 2001.
[79] See, 47 U.S.C. §535(b) and (e); 47 C.F.R. §76.56(a).
[80] See, 47 U.S.C. §338 Implementation of the Satellite Home Viewer
Improvement Act of 1999: Broadcast Signal Carriage Issues;
Retransmission Consent Issues, 16 FCC Rcd 1918, 1954 (2000) ("DBS
Broadcast Carriage Report & Order").
[81] Carriage of Digital Television Broadcast Signals, First Report and
Order and Further Notice of Proposed Rulemaking, 16 FCC Rcd 2598 (2001)
("Digital Must Carry Order and FNPR").
[82] The cable operator is also required to carry the "accompanying
audio" and line 21 closed-caption transmission for each station.
Additionally, the operator must carry "to the extent technically
feasible, program-related material carried in the vertical blanking
interval or on subcarriers. 47 U.S.C. §534(b)(3).
[83] See, 47 U.S.C. §535(g)(1).
[84] See for example Reply Comments of the National Cable and
Telecommunications Association: In the Matter of Second Periodic Review
of the Commission's Rules and Policies Affecting the Conversion to
Digital Television, MB Docket No. 03-15, (Washington D.C.: May 21,
2003). See also National Cable and Telecommunications Association, Ex
Parte Letter to the Federal Communications Commission Regarding CS
Docket 98-120, (Washington D.C.: July 9, 2002).
[85] Under separate requirements related to sponsorship identification,
broadcasters must "fully and fairly disclose the true identity of all
program sponsors" where specific program material is sponsored. The
sponsorship identification requirement applies to all broadcasters who
air specifically sponsored program material. In the case of
noncommercial educational stations, that requirement may be satisfied
through properly worded underwriting acknowledgments that identify the
sponsor or sponsors.
[86] As required by law and FCC rules, the scheduling of any
announcements and acknowledgments may not interrupt regular
programming. See, 47 U.S.C. §399a(b), 47 C.F.R. §73.621(e).
[87] See Commission Policy Concerning the Noncommercial Nature of
Educational Broadcasting, Second Report and Order, FCC 81-204, 86 FCC
2d 141, 141-43 (1981).
[88] The Public Broadcasting Amendments Act of 1981, Pub. L. No. 97-35,
§1221-34, 95 Stat. 725, 736 (1981).
[89] Temporary Commission on Alternative Financing for Public
Telecommunications, Report to the Congress (October 1, 1983).
[90] 47 U.S.C. §397(6).
[91] 47 U.S.C. §399b(a) and (b).
[92] As noted above, noncommercial broadcasters may satisfy the
requirement that they disclose the true identity of all program
sponsors where specific program material is sponsored through properly
worded underwriting acknowledgments that identify the sponsor or
sponsors.
[93] See Commission Policy Concerning the Noncommercial Nature of
Educational Broadcasting Stations, Public Notice (1986), republished 7
FCC Rcd 827 (1992).
[94] Although there is no limitation on the length of acknowledgments,
the Commission has stated, the longer announcements are, the more
likely they are to be promotional, and licensees should avoid placing
them with such frequency so as to constitute "commercial clutter." See
Board of Education of New York (WNYE-TV), 7 FCC Rcd 6864, 6865 (MMB
1992) and Commission Policy Concerning the Noncommercial Nature of
Educational Broadcasting, 90 FCC 2d 895, 902-03 (1982).
[95] Specifically, Mr. Coonrod stated: "As advised by the stations, CPB
established Future Funds for both television and radio. These are also
funded through the System Support account, as the Future Fund programs
are intended to improve the system of stations and its services
overall." (Statement of Mr. Robert Coonrod, President and CEO of the
Corporation for Public Broadcasting, July 10, 2002.)
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