Current Online

Few things go smoothly for trust fund bill

Originally published in Current, Feb. 26, 1996

By Karen Everhart Bedford

Just as the long anticipated debate over public broadcasting's future funding is about to get underway with a House hearing this week, complications have arisen that create even more uncertainty over how the field will fare.

An expected move by Sen. John McCain (R-Ariz.) to tie auctions of digital television spectrum to pending debt ceiling legislation holds the potential not only to deprive the field of the asset on which it has staked its future funding, but also to require public TV to bid for spectrum if it wishes to switch to digital transmission someday.

In addition, the delicate process through which America's Public Television Stations has attempted to unite member stations around a single legislative proposal appeared to have hit a snag late last week. One well-placed station manager on a tentative witness list for the House telecommunications subcommittee hearing on Feb. 29 is opposing a key element of the consensus plan backed by many TV stations.

The digital spectrum on which public broadcasting is pinning its hopes for long-term stable financing has become a political hot potato in recent weeks. Passage of the big telecom bill early this year was not assured until Senate Majority Leader Robert Dole and broadcasters agreed to hold hearings on the auction of advanced television spectrum, opening up the possiblity that the digital channels all broadcasters expected to receive for free may go to the highest bidder.

Now McCain proposes to forestall those hearings by attaching ATV spectrum auctions to must-pass debt ceiling legislation.

''What's going on here is a severe threat to public broadcasting as well as all free over-the-air broadcasting,'' said lobbyist John Lawson, president of the telecom consulting firm Convergence Services. "Some on the Hill are saying even public broadcasting would have to purchase its spectrum at auction. Any ATV auctions signal the eventual death of free, over-the-air broadcasting.''

For public broadcasters, these free allocations of digital spectrum are crucial not only for public TV's move to digital but also its financial prospects if annual federal approprations cease. A financing plan endorsed by APTS, PRI, NPR and PBS proposes to auction off or rent out extra spectrum allocations in markets with more than one public television station. Proceeds would capitalize a Public Broadcasting Investment Fund to support both public television and radio stations.

Most stations appear to back the proposal, but some--particularly duopoly licensees that operate two stations in major markets--have objected that by giving up their second ATV channels they would be making much greater contributions to the trust than other stations will make.

Expectations vs. realities

Whether McCain's proposal would have an immediate impact on the public broadcasting legislation was unclear last week. Lobbyists had not yet seen the Public Broadcasting Self-Sufficiency Act by Rep. Jack Fields (R-Tex.) that is to be discussed at the long-delayed hearing.

At a meeting of the NPR Board's policy and planning committee Feb. 22, Mary Lou Joseph, v.p. of national affairs, reported that the spectrum auction proposal may delay the House's planned hearing, but other sources said the hearings wouldn't be affected.

"I don't have any sense that [spectrum auctions] will affect any planned legislation at this point,'' said David Brugger, APTS president. "It depends on whether there's a real chance for it to become reality.'' Congressional leaders have made a commitment to hold hearings on the auctions. "The expectation is that everybody will stick to their word.''

Fields, chairman of the House telecom subcommittee, is expected to introduce his bill early this week. In earlier discussions with public broadcasters, Fields has indicated that it will include provisions to establish a trust fund and capitalize it with auctions of unallocated noncommercial spectrum--not the new ATV channels that pubcasters have proposed. It is likely to offer stations what Fields has called a "menu of opportunities'' to finance themselves, according to Brugger, and to restrict television grants to one per market.

Estimates of the value of the unallocated spectrum that Fields proposes for the trust fund vary greatly. Federal agencies advising Congress have projected it could bring in $800 million to $2.5 billion for the trust, according to CPB Senior Vice President Mike Schoenfeld. However, an APTS consultant contended the value is "negligible,'' said Brugger.

An additional provision that one source said would not be included in the bill appears to have created problems for APTS's consensus-building efforts. Creation of a new class of licensee, the commercial nonprofit, that was proposed as a way to support noncommercial educational services in markets with two PTV channels, does not appear to have political support. "The not-for-profit community licensee is not there,'' said Hal Bouton, president of WTVI, Charlotte. "I don't think it's going to be in the bill.''

Split over strategy

Participants in a recent meeting of APTS's legislative advisory group in Phoenix agreed not to discuss revisions to the consensus paper with the press, so it had been difficult to determine how much progress the talks have made.

But Bryce Combs of WMVS/WMVT, Milwaukee, who had supported an earlier consensus paper that included the commercial nonprofit license, told Current that he is unwilling to give up one of the channels held by his licensee to help finance the proposed public broadcasting trust fund.

"The strategy is broken for funding public broadcasting,''said Combs. "We can no longer depend on federal agencies to come forward with entitlements. We have to find another way. We need a whole new set of rules, or less rules.''

Combs is one of two station executives with objections to the proposed trust fund requirements on duopoly licenses who will testify at the hearing. Combs comes from the home state of Rep. Scott Klug, a Wisconsin Republican on the subcommittee who has joined Fields in talks with pubcasters.

Charles Sydnor, president of WCVE/WCVW, Richmond, will also testify. His stations serve Virginia's seventh district, home of Rep. Thomas Bliley, chairman of the House Commerce Committee, which is parent of the Fields subcommittee. Sydnor is looking for ways to exempt his second channel from the trust fund proposal because it has never received federal or state public broadcasting monies.

"Nothing that I'm going to do is intended to undermine the consensus proposal or put us in an adversarial position with APTS or anyone else,'' Sydnor said. "All of these issues are still under discussion, and I am pretty confident that we'll be able to come out with something everybody can accept and live with.''

APTS, meanwhile, continues to fine-tune its consensus paper. Issues still to be resolved are governance of the trust and accommodations for secondary stations.

As it now stands, the consensus plan is supported by an "overwhelming majority of stations,'' said Brugger. But he acknowledged that the system is "too diverse to agree'' on one plan.

"It is still a difficult situation,'' said Terrell Cass, president of WLIW, Long Island, a participant in the Phoenix meeting. APTS "still has a lot of work to put it together.''

Adapted from an earlier story in Current, Jan. 15, 1996

Under the public broadcasters' proposal, the trust fund would continue to earn revenue from these assets until it has built up an endowment--$4 billion is the often cited figure--capable of paying out annual interest equal to present appropriations to CPB.

But at a Dec. 21 meeting with a number of public station managers and Rep. Scott Klug (R-Wis.), Fields "was basically saying those numbers aren't in the cards," recalls a station manager who was present.

The two subcommittee members "seemed to think we needed to cut down on the bureaucracy somehow," says the manager. CPB President Richard Carlson "explained they had already cut their staff 25 percent, and they said, yeah, but maybe we have to cut some more."

The congressmen reportedly said several times that pubcasters would not need as much federal money since CPB is proposing to hand out only one TV station grant per market in the future.

Some station people who attended the meeting with Fields and Klug were somewhat startled to hear a Republican leader talking favorably about the proposed new structure for subsidizing public broadcasting.

"The idea of the trust fund was discussed as if it were not controversial, that it will be the next iteration, and we're only arguing about [funding] mechanisms," remarks Kim Hodgson, NPR vice chairman and g.m. of WAMU-FM in Washington. "That was quite extraordinary."

Constituent support for continued federal aid to public broadcasting was expressed so forcefully last year, Hodgson believes, that CPB funding became a "bad issue" for budget-cutting congressmen to pursue.

"The meeting was full of very positive statements about public broadcasting," Hodgson recalls. "Fields once referred to it as a national treasure."

"I am skeptical," says David Dial, president of WNIN in Evansville, Ind., and a leader of the smaller public TV stations. "I think if he could zero us out tomorrow, he would. But that's only my gut feeling."

Politicians who accept the trust fund get some political cover and "the appearance of a winning solution," comments Hodgson. "The only problem is, to succeed it needs adequate funding."

The subcommittee staff had estimated that leasing or auctioning vacant spectrum could raise $1.5 billion, which NPR President Del Lewis replied was not enough to meet the trust fund's objectives, Hodgson recalls.

Fields "made a particular point of saying, 'We can't take anything out of the money that's meant for deficit reduction and we can't do anything that looks like a tax,' " according to Hodgson.

Fields retires at end of year

Fields seemed interested in finishing work on the public broadcasting bill before he retires from the House at the end of the year, according to pubcasters who met with him, but at least some of them would prefer that the task would fall to his successor as chair of the telecom subcommittee.

"I think part of our strategy should be to keep dodging the bullet until after he leaves," says Dial. "He talks about [offering] a better deal, but the fact of the matter is he's not offering much of anything. ... The billion and a half is the olive branch he's holding out, but it's the slow way to death." Dial fears the declining federal contribution would lead the system to turn to advertising and noncommercial broadcasting would cease to exist.

Rep. Michael Oxley (R-Ohio) is next in line for the chairmanship in the subcommittee, but W.J. (Billy) Tauzin (R-La.) is reportedly interested in the post as well. Tauzin has greater seniority, but was a Democrat until recently.

. To Current's home page
. Earlier news: A second key Republican leader backs the "trust fund" proposal, though the amount of aid may be limited.
. Current Briefing on digital TV and how it fits into the funding picture.

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