Carrots on CSG menu: Rules may favor TV mergers, limits on website ads

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Draft rules for allocating CPB Community Service Grants to public TV stations recommend a new wave of incentives for mergers and other joint operations.

The incentives — ranging from $500,000 to $1.5 million per station — plus economic pressures from the recession, could give an extra push to CPB’s ongoing matchmaking efforts. Four stations in the Los Angeles area, for example, have been discussing possible collaborations since January.

Another proposed provision would require stations to apply noncommercial underwriting rules to website advertising if they want to count the revenues as “nonfederal financial support” in calculating their CSGs.

PubTV station leaders are now reviewing the recommendations from a 17-member CSG Review panel that’s been working for eight months to update CPB’s rules for dividing up the largest piece of its congressional appropriation.

Other new proposals include:

  • Requiring stations to post on their website and submit to CPB an annual report on their content and services “that serve local needs” and
  • Bolstering support of minority-owned and operated stations with grants of 1.5 times the first $5 million of their NFFS, and encouraging increased minority hiring at other stations, particularly in executive positions.

The review panel said that it “identified changes needed to transform the current structure of public television for long-term growth and … has drafted recommendations around incentives that would assist stations seeking common cause on a variety of scales — from outright mergers to coordinated spectrum usage and programming schedules.”

CPB has been encouraging joint operations among nearby stations for several years. Earlier this year the CPB Board restricted master control grants to those that serve two or more stations. CPB says that this “centralcasting” will save millions of dollars.

To win the incentive grants, joint operations would need to be sealed with an agreement lasting at least 10 years. The aid would arrive in two payments, the second dependent on meeting benchmarks. If an agreement dissolved within three years, the stations would have to return all of it to CPB. The panel also recommends giving additional money for pubcasters to collaborate on spectrum use in overlap markets.

Linking two or more stations is a complex process, said Mark Erstling, senior v.p. of system development and media strategy at CPB. “But more and more stations are beginning to talk about various models, and we’re trying to keep up with them all.” In hotly competitive Los Angeles, station execs “have really come together,” overcoming differences of personality, Erstling said.

CPB will soon issue a standing offer — separate from the proposed CSG funding — of financial assistance to stations that are in merger talks, he said. There will be “very specific requirements” for the cash, such as a station board directing management to explore a merger. The money will be drawn from CPB’s pool of discretionary System Support funds — 6 percent of its appropriation — and will be available to pubradio as well as pubTV stations.

Diversity, localism vital

The panel “struggled” to find a way to encourage stations to produce more local content, the panel’s report said, but it was “unable to find a practical way to require a local service minimum” or local programming incentives. Its proposal would take only a small step in that direction, requiring grantees to create annual reports on local service — but it leaves the definition of that “local service” up to the stations.

“What we said is, we want a way that people can understand what their local station is doing for them,” said David Dial, panel member and president of WNIN-FM/TV in Evansville, Ind. “Right now, a lot of this work is falling through the cracks — there’s no way to capture it” in the usual Station Activities Benchmarking Study. This is a way for pubcasters to aggregate all the community work they do, including various outreaches, education efforts or websites.

To fufill the new reporting requirement, stations would define their “local content and service” and report specifics such as number of hours and “quantitative and qualitative measurement” on success. Reports would be submitted on the same deadline as the SABS/ SAS (Station Activities Surveys) before the grantee could receive its second CSG.

Dial stressed that these new local service requirements were not targeted at trying to close the so-called “zombie” stations that produce little or no local programming. “This is not a punitive action, and should not be taken in those terms,” he said. “This is about how we build our service for the future.”

The revised grant rules would also give incentives for ethnic and racial diversity. The panel says that diversifying pubTV so that it “reflects the changing face of our nation” is just as significant as ensuring the pubTV system’s financial stability. The document “strongly encourages” stations to interview “at least one qualified diversity candidate for any senior leadership position,” including c.e.o., c.o.o., c.f.o., c.c.o. or g.m.

The panel advises requirements including:

  • Formally adopting the goal of diversity among station executives, staffs and boards;
  • Completing an annual report on hiring goals and statistics, and posting the report on the station website; and
  • Providing diversity hiring training programs for management.

It also mandates that stations take one of three steps toward diversifying the people who run them: ensure that interns and work-study participants include diverse individuals; locate diverse candidates to join its board; or begin annual diversity training sessions for its board.

Minority-owned public TV stations merit additional funds beyond current support, the panel decided, noting that promoting diversity to better reflect “the changing face of our nation” is “equally significant” to ensuring system financial stability.

Minority stations are defined those as having a full-time staff and board composed of 50 percent or more minority racial or ethnic groups, or licensed to one of the Historically Black Colleges and Universities, or a board of at least 50 percent Native Americans.

Twelve stations would be eligible now, including KGTF in Guam; KYUK in Bethel, Alaska; and WYCC in Chicago. The panel hasn’t decided on the size of the supplement, the report says, but it’s leaning toward inserting a multiplier of 1.5 on the first $5 million of NFFS — the key determinant of CSG size.

‘Clarity’ for online underwriting

The panel also tackled the topic of online underwriting.

Some fundraisers have looked toward the Internet as a wide-open, rule-free haven where noncommercial stations could sell full-strength advertising and not be limited to the FCC’s restrictions that define underwriting on public broadcasting stations.

But the panel pointed out that the Communications Act of 1934 bans advertising that’s broadcast “or otherwise transmitted.” Panel members declared that includes “messages which are distributed via the Internet.” Erstling said the recommendation “provides clarity” to the system. Dial said the decision is proactive and not a reaction to any specific situation.

Revenue from advertising spots (as opposed to underwriting) would not be eligible to be counted as NFFS. “We took what we already do for broadcast and other services and made online consistent with that,” Dial said.

CPB reps and panelists are now meeting with affinity groups of pubTV stations and holding webinars to get feedback; the next webinar is July 14 at 1 p.m. Eastern.

After the CPB Board adopts the rules, they will go into effect in fiscal 2012.

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