Fields proposes trust fund but caps size at $1B

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Federal appropriations to public broadcasting will end at close of business, Sept. 30, 2000, under the House Republican leadership’s proposal introduced Feb. 28 by Rep. Jack Fields (R-Tex.).

The Corporation for Public Broadcasting would live on, however, as overseer of a new trust fund endowed through the auction of vacant noncommercial TV channels.

Fields and MarkeyIn the meantime, Fields’ Public Broadcasting Self-Sufficiency Act of 1996 delays panic in the field by authorizing annual sums of $250 million a year for fiscal years 1998, 1999 and 2000, and maintaining the traditional 75/25 split between public TV and public radio for these next few years.

The trust fund looked good to public broadcasters testifying at hearings on the bill Feb. 29–they had long sought a permanent mechanism for funding public TV and radio–but they expressed dismay that Fields endowed the bill with spectrum that was not to exceed $1 billion in value, when they had advocated capital of $4 billion (including $1 billion to help public TV cover the cost of digital conversion).

Worse yet, an NTIA study released by Fields offered no assurance that the vacant channels could bring even $1 billion at auction, and a TV industry spectrum expert was soon alerting broadcasters that the vacant channels were already claimed for advanced TV.

Fields said that, with good investments, the trust fund could generate annual funding at today’s levels, though at the nearly universal 5 percent payout rate of most endowments, a $1 billion endowment would yield just $50 million a year, compared with this year’s CPB appropriation of $260 million.

CPB President Richard Carlson, WGBH President Henry Becton, NPR President Del Lewis and Rep. Anna Eshoo (D-Calif.) said during the hearing that a $1 billion endowment would not be able to replace the present appropriations. Eshoo said the funding level “would mean slow starvation” for public broadcasting and would contribute to the “dumbing-down of America.”

The bill not only provides too little aid for pubcasting, but also “would bring excessive commercial pressures” to the system, said the statement of APTS, NPR, PBS and PRI, the quartet of national organizations that have taken a common position since last spring.

“Most important legislation”

Fields urged pubcasters to seize the “moment of opportunity” offered in the bill before congressional “budgeteers” grab the vacant channels to auction for other purposes.

“This is the most important piece of legislation … that has ever been considered for public broadcasting,” Fields had said the day before at his press briefing.

The bill was a “work in progress,” and he asked pubcasters for help in improving it. Fields clearly had already listened to them, since nearly everything in the bill had been proposed by someone or other from public TV and radio. But he rejected the more promising spectrum asset that national leaders had proposed to capitalize the trust fund.

As a conservative politician suspicious of centralized authority and Washington-based bureaucracies, he refused to accept the APTS/NPR/PBS/PRI proposal that the trust fund be given control of the advanced TV (ATV) channels that the FCC has been planning to give to public TV stations for the transition to digital transmission. Giving control to the trust fund would be “taking a proprietary right” from the local stations, he explained.

In a press briefing, Fields inveighed against the “elitism” he had found in pubcasting’s national leadership–“that Washington knows what is best for the individual licensee and various communities.”

Fields and other Republicans on the subcommittee dismissed complaints that the trust fund would be too small. They couldn’t hope to convince their party colleagues to put as much as $3 billion into the future of public broadcasting.

“I can’t sell $3 billion,” seconded subcommittee Vice Chairman Mike Oxley (R-Ohio). “We couldn’t get 100 votes on the floor of the House. We’ll be very lucky to sell $1 billion.”

Pubcasters should just prepare to change their expectations, Oxley told them. “It is unlikely to expect public broadcasting not to change when everything else in broadcasting is changing so dramatically.”

Fields said he had changed his own prescriptions for the future of public broadcasting during the year he has been preparing for the bill. “I never thought I could embrace the concept of a permanent trust fund,” he said at the hearing. He also said he was surprised to find himself finally declining to give pubcasters the right to carry on-air advertising, as some had sought.

Tradeoff where signals overlap

But Fields did accept commercialization for one category of stations: the bill would let the licensee of one overlapped TV station in a market be operated as a commercial or pay-TV station or sold for commercial use. Proceeds from that station would help support the remaining public TV station; neither could continue to receive grants from CPB.

A similar plan for overlapped TV stations has been discussed in ongoing attempts to reach a consensus among public TV stations, but in a draft proposal circulated by APTS the proceeds would be split between the local licensee and the national trust fund.

The consensus proposal has not yet been presented to Fields. APTS President David Brugger said talks are continuing within the field. Sessions will be held during APTS meetings surrounding Capitol Hill Day, March 24-26, he said. “I’m trying to give more people a comfort level with it.”

But Charles Sydnor, president of WCVE, Richmond, thanked Fields for including the provision that would let his organization earn commercial revenues from two of its four stations. Sydnor identified himself as a longtime friend of Rep. Thomas Bliley (R-Va.), chairman of the Commerce Committee that Fields reports to.

Bryce Combs, who runs a two-station operation in Milwaukee, WMVS/WMVT, backed the provision for multi-station markets, and called the bill “an excellent start” on the road to self-sufficiency for stations. He asked Congress to “get out of the way” so that local stations can make their own “tactical decisions.”

Giving overlapped stations the financial incentive to cash in a channel could lead to the loss of second and third public TV stations in most metro areas that have them, not only eliminating the “waste” that politicians oppose but also the potential for diverse program streams.

The bill also offers a number of provisions to help the field raise more money:

  • Stations could accept compensation for airing programs produced by others. Field said at the press briefing that the Discovery Channel has had a “long interest” in doing this. “I’m going to tell you, PBS hates this because this, in essence, means there’s competition; PBS no longer has a stranglehold on the broadcaster.” Discovery, or another programmer, could buy time on public TV stations and bring in revenue by selling 30-second underwriting spots or even commercials, Brugger speculated after the hearing. This was the provision that APTS/NPR/PBS/PRI cited as bringing excessive commercial pressures.
  • The FCC would loosen its underwriting rules with two narrow APTS-backed provisions, permitting the airing of underwriter logos or slogans even if they include a call to action, and of underwriter copy that contains “strictly quantifiable comparative descriptions.”
  • Public TV licensees could swap their channels with those of commercial stations in the same markets–for instance, taking a payment to swap a more valuable VHF channel for a UHF channel. APTS has opposed such swaps in the past, but didn’t speak out against the provision.

Filling that trust fund

Fields said the pubcasters’ proposal to let the trust fund control the ATV channels and use some of them for revenue generation was “very innovative.” While he couldn’t impose the plan on the stations, he asked public TV whether stations couldn’t voluntarily contribute their ATV channels to the trust fund.

Becton replied that he doubted that enough stations would do so voluntarily.

“My guess is that we couldn’t do it on a volunteer basis,” said APTS’ Brugger in a later interview. “We would need enough channels volunteered in the right places.” The auction value would depend on selling channels in the largest markets. The right package of channels would be worth a 30 percent premium.

“Everyone is going to benefit from a strong public broadcasting system, because stations are interdependent,” Brugger added. “If stations are going to benefit from it, they should be willing to stick together on a plan to achieve stability.” An “overwhelming majority” of stations support the trust fund/ATV plan, and consensus talks within public TV have expanded that majority, he said.

Fields offered the option of voluntary contributions to the trust fund. He said that the $1 billion cap on the trust fund would apply only to the auction of vacant channels. Other assets could be put into the trust fund, he said.

The legislation does permit stations to relinquish existing channels to help the trust fund. Licensees that do so would retain half of the FCC’s auction proceeds themselves. Eshoo objected that licensees, such as universities, could sell off stations without being required to put proceeds into public broadcasting.

That would endanger universal public TV service, according to Brugger, by allowing a licensee to decide that a community would not have a public station.

Proceeds from VHF/UHF swaps and other asset sales also should go into the trust fund to support the universality of pubcasting service, said NPR’s Hill liaison, Vice President Mary Lou Joseph, in an interview.

Like many endowments, the trust fund would be permitted to spend only the income from its investment and would not be able to spend from its original “corpus.” If Congress finds a “substantial failure” by CPB to carry out its purposes, the corpus of the trust fund will revert to the federal government.

CPB survives and is freed

In the deregulatory spirit of this Congress, the bill removes some of the detailed allocation formula for CPB spending that has held down intramural allocation fights in the field–and constrained CPB’s flexibility–since it was imposed by Congress in the early 1980s.

Though it maintains a 5 percent ceiling on CPB’s own administrative expenses and the 75/25 percent split between TV and radio through September 2000, the bill thereafter drops the radio/TV split, the program fund/station grant split and other formulas that now allocate CPB spending. Lynn Chadwick, president of National Federation of Community Broadcasters, urged that the subcommittee add provisions to ensure funding of radio stations that provide the only radio service to their communities.

The bill does, however, authorize CPB for the first time to “create and deliver” programming–authority that Carlson said he did not recommend.

While CPB has testified in favor of its own continuation, other pubcasting leaders have stayed clear of the question, at least in public.

But giving CPB more leeway on its spending, without adequate involvement of public broadcasting,” dismayed NPR’s Del Lewis, speaking for the quartet of national organizations. When Lewis observed that Fields was moving authority to “a Washington institution,” the congressman said he noted the complaint. CPB’s Carlson said that Lewis was demonstrating a “paranoia that causes him to attack friends.”

Both before and after the transition to the trust fund, CPB would be restricted in funding overlapping public TV stations. In cases of “substantial overlap” of TV stations, CPB could give out the equivalent of only a single station grant.

In radio, however, stations will be free of that restriction if they “serve significantly different listening audiences, using distinct formats and providing a high proportion of locally originated programming.”

The distinction for radio recognized a key point made by public radio: that differentiated program streams are appropriate in radio.

But lobbyist Mary Lou Joseph says public radio would prefer that the legislation not put CPB in the position of judging duplicative content. It would be better if CPB stuck with the objective audience size and support measures that are now proposed as CPB grant criteria. “If a listener values the service … and is willing to support it, that to me is a better determinant.”

The Fields bill brings congressional leaders into the process of appointing CPB Board members between now and 2000. Instead of having board members appointees nominated by the President and confirmed by the Senate, as they are now, the legislation would have them nominated by a selection committee — the top majority and minority officials in each chamber of Congress — and selected by the President.

After 2000, the board would be self-perpetuating: it could determine its own appointment procedures through its bylaws.

Brugger says that pubcasters are likely to propose changes in that, at least giving the stations a role in nominating board members.

Under questioning by the subcommittee, WGBH’s Becton harked back to past proposals that the CPB Board be nominated by a blue-ribbon panel of diverse public figures including the head of the Library of Congress. That idea “had a lot of wisdom to it,” he said.

Reported with the assistance of Karen Everhart

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