Hill chairmen cast themselves as problem-solvers
Trust fund caught in spectrum flap, underwriting compromise foreseenOriginally published in Current, Sept. 25, 1995
By Steve Behrens
Two subcommittees of Congress adjourned hearings this month without a clear consensus on future funding of public broadcasting. Conflicts surround nearly every option.
Compromise may be possible on the polarized issue of on-air advertising, however. Spokesmen on both sides signaled that they are not far apart on the issue, and may work out some further loosening of underwriting rules.
The House and Senate hearings, Sept. 12 and 14 [1995], were markedly friendlier than a January rescission hearing in the House, where the witness list was stacked with sworn enemies of public broadcasting.
This time, subcommittee chairmen Rep. Jack Fields (R-Tex.) and Sen. Larry Pressler (R-S.D.) cast themselves as problem-solvers looking for a funding solution, and every witness was a supporter of pubcasting.
Fields, wearing a KUHT label pin, told reporters he wanted to keep a "free, over-the-air public broadcasting system" and was glad to note that pubcasters weren't coming to him "with their heads in the sand" about what Congress could do.
But he and Sen. Ted Stevens (R-Alaska), a longtime supporter of the field, lent no support to the pubcasters' proposal to replace CPB with a trust fund endowed with spectrum auction proceeds.
Fields told reporters that he opposes letting pubcasters cash in on unused spectrum because it would "take away" from deficit reduction. Stevens said that investing billions in the trust fund would simply cost taxpayers hundreds of millions a year in additional interest on the national debt. "I don't see the taxpayers standing still for that gift."
In the Senate hearing, the trust fund got a strong pitch from Newton Minow and a burst of support by Pressler. But Pressler muddied the issue by linking it with his proposal to make commercial broadcasters bid for the ATV channels the FCC has been planning to give them without charge for the digital transition. A portion of the auction proceeds would go to support pubcasting, Pressler proposed on the Senate floor Sept. 11.
This outraged commercial broadcasters and Pressler was soon backing down.
Edward Fritts, president of the National Association of Broadcasters on Sept. 8 blasted "some members of the Washington public broadcasting community" for seeking to live at the sole expense of commercial broadcasters.
NPR President Del Lewis--who has been speaking for America's Public Television Stations, PBS and Public Radio International as well as NPR--told Fritts in a letter that national pubcasting leaders hadn't asked for funds from an ATV spectrum auction--or from advertising, as Fritts also had claimed.
In fact, the quartet of national organizations did propose in Lewis's testimony Sept. 12 and 14 that the trust fund would receive proceeds from other kinds of spectrum auctions as well as from a 2 percent fee on sales of commercial broadcasting licenses--both of which could affect commercial broadcasters. A third proposed endowment source was leasing out unused channels that are reserved for noncommercial broadcasting.
But by last weekend, APTS was rethinking these proposals. In a retreat in San Antonio, the trustees of the lobbying group switched its strategy, according to association spokeswoman Nancy Neubauer. In ongoing talks with Pressler's staff, APTS is now asking Congress to put public TV's ATV digital transition channels into the hands of the proposed trust.
In both hearings, Lewis was all business, presenting the trust idea as a "business plan" for pubcasting's future, pledging that his colleagues are "willing to do business in a new way" and seeking "working capital" to endow a "private corporation" that would succeed CPB.
CPB President Richard Carlson was ready to dispute this last point in his House testimony. It would be "stupid" to create a new bureaucracy to replace CPB with "another acronym," he told the lawmakers.
Instead, he asked them to examine the many mandates that Congress has imposed upon CPB over the years to see if they're still useful. He displayed a complicated chart of mandates in tiny print that "looks like the New York subway system."
In pursuit of the trust fund idea, Pressler brought in investment banker Fred Smith of First Boston Corp., to testify as an expert on privatization. The proposed $4 billion endowment certainly would be enough to generate earnings to replace CPB funding of $285 million a year, Smith said. He advised that Congress should hold on to membership in the trust's board and keep a "reversionary right" to the trust's assets in case it collapses or earns more than expected.
Isn't there a "treasure trove" of resources, such as VHF-UHF swaps, that could support pubcasting? Pressler asked the banker.
Yes, said Smith, pubcasting could make a sizeable sum by swapping its VHF channels for UHF channels with lesser reach. But that would prevent reception by some viewers, he said, maintaining the impartial tone of an expert consultant. "You might not want to do that."
A Morrill in this story
Newton Minow, former chairman of the FCC and PBS and now of the Carnegie Corp. of New York, put the trust fund idea in a historical setting, retelling a tale from his recent book, Abandoned in the Wasteland (coauthored with Craig LaMay).
Minow told of an Austrian immigrant, Stanley Newberg, who became wealthy and gratefully bequeathed $5.6 million to his new country. The donation supported the federal government for all of 89 seconds.
"There's a Morrill in this story," Minow punned--referring to Justin Morrill, the Republican congressman who proposed the land grant system that has lasted much longer than Mr. Newberg's bequest--and has by now endowed 70 state universities and enormously promoted the scientific practice of agriculture.
Minow advised that the sale of spectrum could leave a similar legacy rather than filling the "black hole" of the federal deficit. Expending the asset on pubcasting would not be taking it from somebody else, he said. "This is money that literally is coming from the sky."
The argument did not move Sen. John McCain (R-Ariz.), a devoted critic of pubcasting, who said that dismissing the deficit problem as a "black hole" is "not in tune" with public sentiments. He warned that if Congress invests billions in the trust, it will later have to pay for a "rescue," as it has with Amtrak subsidies.
WETA President Sharon Rockefeller, observing the Senate hearing, noted that many members of the subcommittee come from largely rural states, and they will be most reluctant to let the marketplace dictate how resources are allotted within pubcasting.
Indeed, Maine Sen. Olympia Snowe (R) had asked pointedly whether pubcasting would cut back on rural services if its urban-dominated trust had financial shortfalls.
Stevens, who has fought for services to Alaska, noted that many foundations have "run amok" from their original intentions and wondered how Congress would "keep a string" on pubcasting.
Sen. Slade Gorton (R-Wash.) put the question most candidly: "Aren't we, as public policymakers, better off in keeping an arm over you? ... Why in the world should I give you that money and release all control?"
Del Lewis admitted being confused by the question, since Congress had asked for alternatives to the present system.
"Mr. Lewis," said Gorton, "you have every right to be confused."
"Super-enhanced underwriting"
While Pressler's Senate hearing focussed on spectrum-related proposals, the House hearing chaired by Fields spent more time on the advertising question.
Henry Becton, president of WGBH-FM/TV, presented an anti-advertising letter signed by 85 station executives.
And Jeff Clarke--g.m. of Fields' back-home station, KUHT in Houston--spoke in favor of advertising, along with Mike Hardgrove, president of KETC in St. Louis. Dennis Haarsager, g.m. of KWSU in Pullman, Wash., and head of public TV's Small Station Association, spoke up for a test of limited advertising (only between programs), as well as other new sources that pubcasters have suggested.
Becton reported that WGBH focus groups indicate viewers don't want public TV to become more commercial; Hardgrove countered that KETC's focus groups already think underwriting is advertising and aren't disturbed by it--as long as it's tasteful.
Clarke advised the subcommittee to put advertising on "a menu of options" that individual stations can choose, as appropriate in their communities. In Houston, for example, he would take a "conservative approach" to ads, carrying only "corporate imaging messages."
After the hearing, Becton told Fields that he and Clarke were not far apart on the issue.
Clarke agrees. "I think we'll find a midpoint," he said in an interview last week. He called the midpoint "super-enhanced underwriting."
This may not be very far from the position of APTS and other pubcasters who oppose "advertising." APTS President David Brugger said his member stations want looser rules on underwriting credits, but don't seek to carry spots including either "calls to action" or price information.
Clarke, who admits to being a moderate among the pro-ad managers, only wants to be able to carry credits with "subtle calls to action" like a proposed spot for American Airlines in which the pilot says "welcome aboard."
"Worst nightmare"
Though Fields and Pressler stuck to the question of funding for the field, Republican members of their subcommittees expressed common criticisms of programming on both public TV and public radio.
House members Daniel Frisa (N.Y.), Clifford Stearns (Fla.) and Christopher Cox (Calif.) knocked NPR for ideological imbalance but said they tune in for its news anyway. "I find it useful to listen to NPR every day to keep up with what's happening on the left," said Cox, chairman of the House Republican Policy Committee.
They and Fields and Sen. John McCain (R-Ariz.) also questioned why cable programmers like the Discovery Channel can make profits while public TV requires subsidies. Frisa said that when's he's channel-surfing he can't tell whether he's watching public TV or a cable network. McCain said cable networks are less biased than PBS and "superior in some cases."
John Hendricks, who runs both Discovery Channel and the Learning Channel, spoke in the House hearing on behalf of continued federal aid to public TV (admitting that advertising on PBS would be his "worst nightmare"), but Republican subcommittee members pointed to his company's $450 million in annual revenues ($300 million from advertising, the rest from cable systems) as evidence that public TV is out of whack financially.
Digital "tools for self-sufficiency"
Senators took a short break from testimony on Sept. 14 to stare appreciatively at aerial landscapes shot in high-definition video by KCTS, Seattle. The station had arranged for a 38-inch, 450-pound Sony monitor to be manhandled into the room.
The demonstration accompanied a proposal from KCTS President Burnie Clark that Congress provide $135 million to $165 million a year for four years--an estimated 75 percent of the cost of public TV's switch to digital transmission.
Clark asked the legislators to give public TV "the tools to become self-sufficient." By switching to digital, stations would gain multichannel capacity and could support their free broadcasts with money-making uses of the remaining capacity.
Under the proposal, all ATV channels in a service area would be assigned to a single noncommercial authority. Where there is more than one pubcasting licensee, they would be encouraged to merge or form joint operating agreements to get access to the ATV channels.
Opponents say advertising is:
'Antithetical to principles and economically unsound'Permitting public TV stations to carry advertising will eventually destroy the field, a group of 85 top station executives told House telecom subcommittee Chairman Jack Fields in a letter presented by WGBH at the hearing Sept. 12 [1995].
The group included most of the big state networks and many prominent freestanding stations, but was missing signatures from the dominant stations in 20 of the 30 largest TV markets--licensees that generally have the greatest potential for ad sales and minimal state or university support.
Bill Baker, president of New York's WNET, sent Fields a separate fax agreeing with the group's letter but citing 30-second underwriting credits as a likely way to raise more private money.
The group letter to Fields concluded: "While appearing to offer an easy solution to public television's funding dilemma, advertising is antithetical to our guiding principles, and is economically unsound. We believe it would unfortunately lead to the eventual demise of America's most respected and valued television service."
"For more than 40 years, beginning with KUHT in your home area of Houston, public television has abided by a covenant with its viewers to bring them noncommercial television--television that answers their needs as citizens in a democracy and not merely as consumers in a marketplace," the letter said. "Advertising would break that covenant, turning America's only public-service television system into just one more ratings-driven network."
The letter cited the Lehman Brothers study for CPB as evidence that advertising "would yield a net loss for the public television system because advertising-related expenses and lost revenue from existing sources would outweigh new advertising revenue."
Organizations represented in the signatures were: Alabama ETV; Arkansas ETV; Georgia PTV; Idaho PTV; Iowa PTV; Kentucky ETV; Louisiana ETV; Maine Public Broadcasting; Mississippi ETV; Nebraska ETV; New Hampshire PTV; Oklahoma ETV; Oregon Public Broadcasting; Prairie Public Broadcasting (N.D.); South Carolina ETV; South Dakota Public Broadcasting; University of North Carolina Center for Public Broadcasting; Utah Educational Network; Vermont ETV; West Virginia Educational Broadcasting; Wisconsin PTV.
Also: KAET, Tempe (Phoenix); KAWE, Bemidji, Minn.; KCPT, Kansas City; KCTF, Waco; KISU, Pocatello, Idaho; KOOD, Bunker Hill, Kan.; KOZK, Springfield, Mo.; KUED, Salt Lake City; KUID, Moscow, Idaho; KVCR, San Bernardino; KVPT, Fresno; KRCB, Rohnert Park, Calif.; KSPS, Spokane; KSYS, Medford, Ore.; KUAT, Tucson; KULC, Salt Lake City.
And: WCFE, Plattsburgh, N.Y.; WCTE, Cookeville, Tenn.; WCVE, Richmond, Va.; WDCN, Nashville; WDSE, Duluth, Minn.; WETA, Washington, D.C.; WFSU, Tallahassee; WFUM, Flint, Mich.; WFWA, Ft. Wayne; WFYI, Indianapolis; WGBH, Boston; WGBY, Springfield, Mass.; WGTE, Toledo; WHA, Madison; WHRO, Norfolk; WITF, Harrisburg, Pa.; WJCT, Jacksonville; WJWJ, Beaufort, S.C.; WKAR, East Lansing, Mich.; WLRN, Miami; WMHT, Schenectady; WNEO/WEAO, Alliance/Akron; WNIT, Elkhart, Ind.; WNIN, Evansville, Ind.; WNMU, Marquette, Mich.; WNPB, Morgantown, W.Va.; WNSC, Rock Hill, S.C.; WOSU, Columbus, Ohio; WLVT, Bethlehem, Pa.; WPSX, University Park, Pa.; WPTD, Dayton; WRET, Spartanburg, S.C.; WQED, Pittsburgh; WRJA, Sumter, S.C.; WSBE, Providence, R.I.; WSKG, Binghamton; WSRE, Pensacola; WTVS, Detroit; WUFT, Gainesville; WUCM, University Center, Mich.; WUSF, Tampa; WVIA, Scranton, Pa.; WVIZ, Cleveland; WVPT, Harrisonburg, Va.; WYIN, Merrillville, Ind.; WXXI, Rochester.
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