Subcommittee on Telecommunications and the Internet
July 10, 2002
10:00 AM
2123 Rayburn House Office Building

Introduction

I am pleased to be here today before the Subcommittee on Telecommunications and the Internet. This is the first time I have appeared before you since you became Chairman of the Subcommittee, Mr. Upton. I hope that today's testimony contributes to a broader understanding of the many contributions that public broadcasting makes to the American people. I also acknowledge that we are among old friends like Chairman Tauzin, Mr. Dingell and Mr. Markey, who have worked with public broadcasters for many years and contributed much to the success of both public television and public radio.

This November will mark the 35^th anniversary of the Public Broadcasting Act, signed by President Lyndon Johnson on November 7, 1967. It has been 10 years since the Public Broadcasting Act was reauthorized and three years since we have been before you to discuss issues of mutual concern. We, therefore, appreciate this opportunity for an oversight hearing and look forward to a constructive discussion.

At the Subcommittee's request, I am going to provide a primer on how CPB fulfills the charter contained in the Public Broadcasting Act and implements its' responsibilities to support educational programming and to make grants to radio and television stations. But before I do, I would ask for a few minutes to brag a little about public broadcasting's recent contributions to the lives of the American people, and to talk about the steps we are taking to ensure that public broadcasting remains a leading source of quality programming.

Recognition of Public Broadcasting

Year after year, according to "Roper Reports," Americans rank public broadcasting as one of the five best values they receive for their tax dollars. Our peers in the industry share the public's high regard for the extraordinary programming available from public broadcasting. This year, public broadcasting received a total of 11 Peabody awards, nearly one-third of the 34 awarded. Public broadcasting won five primetime Emmys, seven news and documentary Emmys, and 11 daytime Emmys. Nine of the daytime Emmys were for children's programming, marking the 5^th straight year that PBS has earned more Emmys for children's series than any other broadcast network. I think it is clear that the vision of Congress in passing the Public Broadcasting Act - to create an institution that would encourage extraordinary, creative programming to educate, inform, and enrich Americans - is being fulfilled daily.

Objectivity and Balance

We are proud of the recognition public broadcasting receives. We also strive to know and understand the opinions of those who criticize us. And yes, we do have critics - after all, people do have different opinions on most subjects.

As required by the Public Telecommunications Act of 1992, CPB routinely solicits, reviews and disseminates the views of the public on national public broadcasting programming, and considers these comments in making programming and grant decisions. CPB also reports to Congress annually on the public comments it has received.

We responded to the 1992 directives by creating the Open to the Public initiative, described more fully later in this submission. In designing it, we strove to achieve a high level of accountability while abiding by congressional prohibitions on interfering in the editorial decisions of other public broadcasting entities and respecting public broadcasting's commitment to decentralization and localism.

Last year, CPB's Board and officers undertook a comprehensive review of its Open to the Public policies and procedures to see how they could be updated and strengthened. The review included an examination of the ways in which public broadcasting institutions in the United Kingdom, Japan, Australia, and Canada ensure accountability to their citizens, as well as consultation with leaders of America's national broadcasting organizations to explore ways to expand public comment efforts and assure objectivity and balance in programming.

CPB's Board and officers identified and reviewed a number of enhancements to existing Open to the Public policies and procedures. The changes, which are in the process of being implemented, include:

soliciting feedback in CPB-distributed publications;
distributing analyses of public comments to CPB executives, the Board, and grant recipients on a regular basis;
encouraging local stations to develop awareness of Open to the Public in their communities;
requiring CPB-funded producers to include e-mail links on their Web sites to CPB's comment line;
designating a senior CPB official to act as a point person to whom viewers and listeners can direct comments; and
working with a representative number of local radio and television stations to develop model public feedback mechanisms.

We hope that these initiatives will encourage the public to share its views with us, and make it easier for us to address their comments.

Digital Transition

This year, public television is nearing the FCC-mandated construction deadline to convert to digital transmission by May 1, 2003, and the public radio transition is about to begin. At our last authorization hearing before this Committee three years ago, we discussed the challenges and opportunities this new technology presents - the need to raise funds from federal, state, and local sources; to purchase and install the equipment; and to create programming and content that takes advantage of the new technology.

Digital Technology and Public Broadcasting

Many have suggested that the digital transition represents the biggest change in the TV medium since the advent of television itself. Digital television (DTV) technology provides a host of opportunities for public television including interactive education and training programs. Digital radio also offers an array of technological opportunities including on-demand personal audio services and assisted living/technology services.

The new technology presents the opportunity to address some of the nation's biggest domestic challenges. We can truly revolutionize the way we use the airwaves not just to entertain, but also to teach, and to work. Interactive TV, for example, permits viewers to watch programs and interact at their own pace with extra features that are "fed" as extra resources within the actual broadcasts. Viewers decide if and when they want more information on a particular program topic and use their TV remotes to call up the additional information on their TV screens. Another innovative feature of digital technology is multicasting. TV signals are split into two or more streams, all airing simultaneously but carrying different programming. These additional program streams could include distance learning for adults, broadcasts of live local events, and full-time children's programming.

Public broadcasters are excited about the potential of the medium. With their long experience in providing exciting educational, cultural, and public service programming, they are uniquely positioned to use the various digital technologies to serve the needs of millions of viewers and listeners of all ages and ethnic backgrounds.

Status of Digital Transition

Today, nearly 20 percent of public broadcasting stations (76 of 356) are able to broadcast a digital signal. Although this does not mean they are fully functioning digital public broadcasting stations, they have crossed the first threshold - transmission of a digital signal. So far this year, 27 stations have converted. My statement includes a complete list of public broadcasting stations that have converted to digital, as of this week.

Many stations are not yet able to purchase the necessary transmission equipment, but have still invested considerable time and resources to prepare for the transition. The total cost for creating fully operational digital public broadcast stations is estimated to be more than $1.8 billion. Stations have already raised nearly $750 million of this amount, including $476 million already authorized or appropriated by the legislatures of 44 states as of July 1, 2002.

The federal commitment in the last three years is just over $123 million, including grants from the Public Telecommunications Facilities Program at the Department of Commerce and the $45 million appropriated by Congress to CPB for fiscal years 2001 and 2002. CPB has been given the authority to distribute the $45 million to public broadcasting stations in consultation with representatives of both television and radio licensees, as required by statute, and these consultations have been on-going for both radio and television. The first grants from the federal money were announced at the end of May, and a list of recipients is attached to my testimony. We expect that the full $45 million will be awarded by October 2002.

Under the requirements set by the Administration and the Congress, as well as the guidelines issued by CPB, these grants must be put towards digital transmission facilities. Grant applicants must demonstrate that they will inaugurate new services to the community, and preference is given to projects that provide local educational and rural services and promote efficiency in operations. These awards can be made to individual stations or to multi-station collaborations that will contribute to cost and administrative efficiency.

Beyond Digital

Public broadcasters are the only broadcasters committed to giving every American access to the important educational services and other critical services that digital broadcasting offers. Our commitment to rural and remote communities means not only ensuring that they are not left behind in the digital transition, but also exploring ways of bringing them additional benefits, for example, broadband.

We are also exploring ways of continuing our leadership in educational programming by using new technology. Tens of millions of Americans - and particularly children - are already benefiting from the educational services available through the Internet, and that number will continue to grow as schools become more adept at using the new technology. CPB recently funded "Are We There Yet?," a study sponsored by the National School Board Foundation of the ways that schools are using technology. The study found that many schools were not yet tapping the full potential of the Internet, but nearly all respondents expected that the next few years would bring an explosion of Internet use in the classroom.

CPB is supporting five new Internet projects geared at 9 to 12 year olds - the "tweens" who too often fall between the cracks of children and adult programming. These are fun, engaging and educational destinations on the Internet - places that are dedicated to educating children, rather than marketing products to them. The sites are:

"It's My Life," offering a place where kids can share experiences and concerns about the social and emotional issues that affect them, produced by KCTS, Seattle;
"Don't Buy It," teaching tweens to be smart consumers by thinking critically about advertising and media, produced by Castle Works, Inc., New York;
"Backyard Jungle," exploring our natural surroundings and showing kids "what's out there," produced by Forum One Communications, Virginia;
"The Plastic Fork Diaries," questioning whether - and how - what we eat affects who we are, produced by Maryland Public Television; and
"3D & I," offering kids a chance to test their eye at design and encouraging them to think about the role of culture and environment, produced by The Doc Tank, New York.

We believe that public broadcasting is uniquely positioned to develop this kind of Web content. Thus far, the kids seem to agree. "It's My Life" is receiving 150 e-mails a day, many of them containing the word "cool." There were about 2 million page visits at "It's My Life" in its first two months of operation, and Yahooligans (Yahoo's kid-friendly search engine) has listed "Don't Buy It" as a "cool site of the day." The three other sites will go live by the end of this summer. The sites can be accessed through local public television station Web sites, giving them content with which to reach out to a new audience.

We also believe that the television programming we support is strengthened and enriched by a strong Web component. We now look at programming in a different way, seeing the broadcast program as one element in a mix that always includes an interactive Web site where viewers can access information not included in the broadcast. We also look for imaginative education components for the schools and for strategic community outreach to encourage informed civic dialogue.

We are expanding the ways in which we use existing public television content on the Web. CPB worked with PBS, NPR, WNET in New York, and an independent producer to create a new African-American Web portal, "African American World." This just-launched site is a treasure house of material - photographs, essays, music, and interviews - providing invaluable information on this critical part of American history. Creating the portal means that the material developed for broadcast - everything from segments of Morning Edition to "Soldiers Without Swords," a film about the black press - will be easily accessible long after the programs have aired.

CPB now provides major funding for the American Film Institute's Enhanced TV (eTV) workshop. The workshop provides television producers an opportunity to work with world-class technology innovators and designers - who serve as mentors - to tap digital television's potential to provide viewers with interactive, personalized, and multi-faceted on-screen learning experiences. Entry into the workshop is highly competitive, and we are very proud of the number of public television programs chosen to participate. In 2001, public television programs such as "People Like Us: Social Class in America" and "Accordion Dreams" were accepted into the workshop. In 2002, two flagship children's series - Sesame Street and Arthur - will be included, as will two PBS signature series, P.O.V. and Matters of Race.

Serving Communities

In 1967, Congress created the Corporation for Public Broadcasting, declaring, "It is in the public interest to encourage the growth and development of public radio and television broadcasting, including the use of such media for instructional, educational and cultural purposes." For more than 30 years public broadcasters have used the most current technology available to ensure that all Americans have access to the highest-quality, non-commercial, educational and cultural programming in their homes, schools and workplaces. With more than 1,000 locally controlled public radio and television stations, public broadcasting forms the largest community-based educational and civic institution in the nation.

As our discussion of the Internet demonstrates, much has changed since 1967. There are new issues facing communities and the nation, new technologies that pose challenges as well as opportunities. Despite the many changes, the public policy goals for public broadcasting remain the same - universal access for all Americans to quality non-commercial content and services.

There is no better example of the valuable service that public broadcasters provide than what it has been doing in the months since September 11. The Public Broadcasting Service (PBS), National Public Radio (NPR), and local public broadcasting stations have been on the air with extensive in-depth reporting of the terrorist attacks on the United States, the nation's response, and the underlying issue of international terrorism. Many hours of special coverage have been devoted to keeping the American public informed, helping them understand the unprecedented events, and providing an outlet for local response. As you may know, NPR's coverage of September 11 won a Peabody Award, one of broadcasting's highest honors.

In addition, our stations responded in their own communities by providing much needed services - both on and off air. This was especially true in New York City where WNET, the local public television station, turned over its phone banks to the Red Cross and the Mayor's Office of Emergency Management to operate a 24-hour emergency response center to assist families of the victims with counseling services and information. They also provided temporary workspace to Port Authority staff members who lost nearly 200 of their colleagues in the attack, and to the WNYC-radio staff that was displaced by the World Trade Center attacks.

WNYC, New York City's largest public radio station, was on the air at 8:51 am on September 11, with what may have been the first eyewitness account of the attack on the World Trade Center. While the attacks cut off WNYC's FM transmission and telephone service, several WNYC staffers stayed in the building and continued broadcasting over WNYC's AM signal. Another WNYC reporter was present and providing live coverage from Ground Zero when the south tower collapsed. WNYC reporters played key roles in NPR's around the clock coverage of the attacks for days following September 11.

The special programming and services were not confined to the New York area, as public television and radio stations across the country responded to the needs of their communities.

Now, as we approach the one-year anniversary of September 11, public radio is preparing to air one of its most important programming experiments - the first nationwide Public Radio Collaboration. Producers and stations across the country are working to create a week of locally crafted programming that will help us to understand the way Americans live now, after September 11. We expect that September 3 to 10 will be a week in which public radio once again stands out from the predictable, offering the depth and insight that only public broadcasting provides.

How the Public Broadcasting System Operates

Let me turn now to discussing the way that public broadcasting operates. In contrast to commercial broadcasting, which is increasingly centralized, the public broadcasting system is very decentralized. Every public broadcasting outlet is under local control or ownership; increasingly, they are the only locally owned and operated media outlets in their communities. With local governing boards, community advisors, volunteers, and partnerships with local organizations, stations work to provide programs and services responsive to the needs of their communities. Each local station maintains sole authority and responsibility for selecting, presenting or producing the programs that it airs. Congress placed control of programming with local stations rather than CPB. It ensured this autonomy by prohibiting CPB from owning or operating any television or radio station, system or network, and barring it from producing, scheduling or disseminating programs to the public.

Instead, CPB operates within congressionally prescribed guidelines to provide financial support and services to 560 licensees operating more than 1,000 television and radio stations that deliver educational services and programming to virtually every household in the country. Congress has mandated that a majority of CPB's appropriation be allocated for direct station support. Our obligation to Congress and the American people is to ensure that this money is being spent wisely and efficiently. Our obligation to stations is to insulate them from the political process, and to ensure that their receipt of federal support in no way interferes with their ability to operate as free and independent broadcasters, as prescribed by law.

In addition to our financial support of stations, CPB complies with the statutory requirement of providing funds to producing entities and independent producers to help them develop a wide range of programming that is then made available to local stations. As encouraged by Congress, CPB provides direct program support to PBS through contractual negotiations for a high-profile national program service, which includes series such as Nova, American Experience, Sesame Street and NewsHour with Jim Lehrer. CPB does not provide direct program support to NPR, which competes with other producers for CPB radio program funds on a program-by-program basis. CPB also provides programming dollars to entities such as the Independent Television Service (ITVS), five separate entities collectively known as the National Minority Consortia, and many independent producers and producing organizations, all of which are entirely independent of CPB. This enables stations to acquire programming independently from a wide variety of sources.

Public television stations choose their programs from the following sources, among others:

PBS, which provides more than 1200 hours a year of children's, prime time, and other educational programming from which its member stations can choose.
, which acquires programs that may be purchased by stations on a title-by-title basis. These include series and specials such as Nightly Business Report and Julia & Jacques: Cooking at Home. APT also maintains the largest source of free programming available to U.S. public television stations.
ITVS, which funds, distributes and promotes independently produced television programs such as "An American Love Story," "Digital Divide: Technology and Our Future," and "The Farmer's Wife."
The National Educational Telecommunications Association (NETA), which annually distributes about 2,000 hours of programming -- produced by public television stations, other entities and independent producers -- via satellite to stations nationwide.

Public radio stations also get their programming from a wide variety of sources:

Local productions typically account for about half of programming. In the Washington, D.C. area, for example, WAMU's The Diane Rehm Show and Stained Glass Bluegrass, to name just two programs, are locally produced, as is much of WETA's classical music programming.
36 percent is from NPR, including news and information programs like Morning Edition, All Things Considered, and The Tavis Smiley Show, cultural programming like Jazz from Lincoln Center and The Thistle and the Shamrock, and entertainment programming like Car Talk and Wait, Wait . Don't Tell Me!
10 percent is obtained from PRI, which distributes programs like Marketplace and A Prairie Home Companion; and
5 percent is from other producers, including other public radio stations. For example, The Diane Rehm Show, produced at WAMU, is heard on stations around the country.

How CPB Distributes its Appropriation

CPB distributes its funds based on a formula set forth in the Communications Act of 1934, as amended (47 U.S.C. 396(k)(3):

At least 6 percent of its appropriation for certain statutorily enumerated expenses for the system of stations (i.e., music royalties, interconnection expenses, ITVS and minority consortia operational expenses, etc.)
Not more than 5 percent for administrative expenses

The remaining 89 percent is allocated to stations as follows:

75 percent for public television\

75 percent of which is for grants to television stations

25 percent of which is for television programming

25 percent for public radio

70 percent of which is for radio station grants

23 percent of which is for radio program acquisition grants

7 percent of which is for radio programming

A schematic diagram of the flow of the funds is as follows:

Grants To Stations

The statute directs CPB to provide a grant to each station in accordance with eligibility criteria and on the basis of a formula designed to (1) provide for the financial needs and requirements of stations in relation to the communities and audiences such stations undertake to serve; (2) maintain existing, and stimulate new, sources of non-federal financial support for stations by providing incentives for increases in such support; and (3) assure that each eligible licensee and permittee of a public station receives a basic grant (47 U.S.C.A. 396(k)(6)(B)).

Local television and radio stations are the bedrock of the public broadcasting system. They are community institutions working in partnership with schools, libraries, and other community organizations to provide news and information, children's, local public affairs, and cultural programming for their viewers and listeners. There are many types of stations -- state networks that provide service across an entire state and receive significant support from their state government; tiny rural stations that offer the only local news in a town or a region; major city stations that produce national programs; joint licensees that operate both public television and radio stations; and stations owned by universities or school systems. Each of these stations is governed by its own board of directors, provides its own brand of program options, and faces its own challenges in meeting its financial obligations. CPB's grant structure, while complex, represents our best efforts to respond to the multiplicity of needs facing public broadcasters.

Public Television Stations

Television Community Service Grants

Almost 50 percent of the money CPB receives is set aside for direct grants to public television stations, known as television community service grants or CSGs. 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 non-federal financial support, a minimum broadcast schedule, and bookkeeping and programming standards.

The CSG is divided into two parts. The first part is the base grant, a percentage of the federal appropriation. In FY 2002, the base grant is $385,000. Designated overlap stations (that is, stations that share a market) share a single base grant for that market. The second part is an incentive grant designed to reward a station according to the amount of non-federal financial support it raises. Every CSG qualifying station receives the incentive part of the grant, which encourages the development of non-federal revenue, as prescribed by the statute.

As required by statute, stations use CSGs for purposes "primarily related to the production or acquisition of programming." Grant amounts vary widely from station to station, based on the amount of non-federal support that each station raises. CPB monitors grant spending through a combination of routine reporting requirements and direct audits conducted by CPB's Office of the Inspector General.

In addition to the CSGs, CPB will provide two other types of grants to television stations beginning in 2003 - the local service grant and the distant service grant. These grants are based on formulas arrived at after extensive consultation throughout the system - with representatives of APTS and PBS, but primarily with station general managers who appreciate the sharply different needs of stations throughout the system. The formulas that they developed are complex, but strike an extraordinary balance between providing support to all and offering special help to those who need it. In this, they reflect the statute's policy goals by working to maintain universal service. This translates into making extra help available to stations providing services to small and rural communities; encouraging support from local private and public sources; and encouraging efficiency.

Local Service Grants. CPB recognizes the special needs and challenges of small stations and the important role they play in providing universal access to free, over-the-air local public television. For that reason, CPB will provide additional incentives to stations with less than $2 million in non-federal financial support. The grants are intended to strengthen local services such as outreach initiatives, educational projects and services, operational efficiencies, implementation of best practices, financial planning, and professional development.

Distant Service Grants. To recognize the additional costs of serving multiple communities and the efficiency of multiple transmitter operations, and to further the goal of universal service, CPB will provide larger grants to single grantees who operate three or more transmitters (stations). The grants will be used to strengthen services, including outreach, educational workshops and training, and local content, in these communities

The complete CSG policy is attached for your review.

Public Radio Stations

Radio Community Service Grants (CSGs)

Under the statute, CPB provides 15.6 percent of its total appropriation to 384 grantees who operate approximately 700 public radio stations that qualify for radio CSG funding. The grants are designed to address the disparate needs of urban and rural stations. These stations provide outstanding, award-winning news and information, arts and entertainment programming, as well as valuable community services. Sometimes they represent the only local broadcast signal -- commercial or noncommercial -- that a rural community receives. CPB also offers special funding incentives for nearly 60 minority grantees and more than 100 grantees operating in rural environments.

A licensee or permittee of a radio station operating under a noncommercial, educational FCC license is eligible to receive a CSG if it satisfies certain minimal requirements relating to power, staff size, on-air time, financial viability, access to non-Federal financial support, record keeping, and programming. Higher grant amounts are available to public radio stations meeting a minimum standard of public service as measured either by the average quarter-hour listening audience, or by the level of local fund-raising support.

Grants for Programming

CPB is prohibited by law from producing or distributing programming. However, CPB actively encourages promising TV and radio projects, supports independent producers, and helps fund productions by and about minorities. CPB provides funding to the Public Broadcasting System (PBS) to support the National Program Service, and CPB's Radio Competitive Funds are the major source of funding for new national radio programs.

Television Programming

CPB provides an annual grant to support the National Program Service (NPS), the package of television programming that is fed by satellite to PBS member stations in return for their dues payments. This includes signature series like NewsHour with Jim Lehrer and PBS Kids children's programming, as well as the Sunday-through-Friday prime time schedule. In FY 2002, CPB is providing $22.5 million for the NPS. These funds, which CPB does not administer, support scores of individual programs and provide continuing support for some of public television's signature series.

In addition, CPB matches the stations' contribution to the PBS/CPB Program Challenge Fund, which is intended to stimulate the development of high-impact, innovative television series such as Frontier House and American Family, as well as programs such as the critically acclaimed "Commanding Heights."

CPB also administers a General Program Fund, used to fund educational projects and television programming. It supports a number of proposals on selected topics of national interest that meet the highest standards of excellence. Past projects include Masterpiece Theater's American Collection, "Accordion Dreams," and the Memorial Day and July 4^th Concerts. High priority is given to programming that illustrates America's rich cultural heritage and ethnic diversity.

CPB also provides administrative and programming funds to five multicultural groups known collectively as the National Minority Programming Consortia (National Asian American Telecommunications Association; Native American Public Telecommunications, Inc.; National Black Programming Consortium; Pacific Islanders in Communications; and Latino Public Broadcasting). These groups reallocate funds to producers for the development of programs of diverse content.

In FY2001, CPB established the Diversity Fund to encourage public television projects that help people think about the complexity and beauty of America's contemporary multi-cultural society. Two projects supported by the Diversity Fund will air on PBS this fall. The Rise and Fall of Jim Crow is a four-part series that will fill the gap between The Civil War and Eyes on the Prize in public television's filmed record of American history. Muhammad: Legacy of a Prophet will explore how Muhammad's early 7^th century teachings transformed the world and continue to shape the lives of approximately 1.2 billion Muslims worldwide, including an estimated 7 million in America.

As directed by Congress, CPB also provides annual programming support to ITVS, which in turn, provides production grants to independent producers developing projects intended for public broadcasting. This support helps CPB meet its statutory requirement that it provide "adequate funds for an independent production service." ITVS's work is of high quality - one program, "Still Life with Animated Dogs," won a Peabody Award this year - and ensures that public television benefits from the strong voices of independent producers whose stories resonate particularly with underrepresented and underserved audiences.

Radio Programming

Since 1987, CPB has directly supported the production of radio programs intended for national audiences. Throughout its history, CPB has awarded about three of every four radio programming grants to national projects by or about ethnic groups and to projects by independent producers. All CPB-funded radio programs are made available nationally to all public radio stations. CPB continues to give highest consideration to excellent, balanced, and innovative programming from diverse sources.

In addition, all Community Service Grant recipients are required to use approximately 30 percent of this grant for the purpose of purchasing or producing programming of national interest. These grants ensure the availability of some of the best programming public radio has to offer by targeting use of the funds to the purchase or production of national programming.

System Support Funds

By law, CPB spends at least 6 percent of the funds it receives to support the public broadcasting system, as opposed to individual stations or producers. CPB often supplements this amount with funds from its administrative allocation.

System support expenditures include:

Interconnection grants. These are provided to public television stations specifically to purchase or maintain equipment allowing each local station to receive or deliver signals via satellite. By law, half of the interconnection costs for television are funded with system support funds through these grants.
Music royalty fees for broadcast and Internet use for all CPB-funded public television and radio stations, as well as for NPR and PBS.
Operational costs for ITVS and Minority Consortia.
Promoting work force diversity and career development for minority producers.
Financing public broadcasting award programs, strategic planning, and research into new technologies.

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. For example, CPB funds are being used to support a business integration plan, financial analysis and an operating agreement to build a jointly controlled "master control" and "store and forward" system for a collaboration of stations in the Pacific Northwest; the lessons learned will be important as public broadcasters seek to pool resources for greater efficiency. Future Fund grants were made to create a portal site for all arts organizations in Wisconsin; to launch an on-line education service in Maryland; and to support a national digital TV clearinghouse.

Over the past five years, Television and Radio Future Fund projects have allowed stations to learn from the best practices of others and either saved or raised seven dollars for every dollar invested. These savings and increased revenues have allowed public broadcasters to provide the kind of innovative, high-quality programming that continues to distinguish public broadcasting from other noncommercial and commercial broadcasting, despite our many funding challenges and rapidly rising costs.

CPB Administrative Operations

In 1988, Congress set CPB's administrative budget at a fixed level with annual increases to be based on the Consumer Price Index or 4 percent-- whichever is higher. In no instance may the administrative costs exceed 5 percent of the total appropriation.

CPB's OVERSIGHT OBLIGATION

Compliance with Funding Requirements

The Public Broadcasting Act of 1967, as amended, and federal appropriations place responsibilities on CPB for the distribution, use and reporting of appropriated funds. This responsibility extends to entities receiving CPB funds. External oversight to monitor their compliance with CPB funding criteria is a primary responsibility of the Corporation. In addition to its own grant administration policies, CPB is aided in this regard by its Board of Directors and its Office of Inspector General.

CPB Board of Directors

The CPB Board of Directors is comprised of nine members, appointed by the President and confirmed by the Senate. While the entire Board is charged with oversight, the CPB Audit Committee is the initial vehicle that the Board of Directors uses to discharge its oversight responsibilities under the laws and regulations governing the Corporation. Principal among these is compliance with the Public Broadcasting Act of 1967, as amended, and oversight of funds appropriated annually to public broadcasting. These responsibilities extend to oversight of corporate programs, functions and activities established to manage and control the Corporation's utilization of funds.

Office of Inspector General

In 1989, the CPB's independent Office of Inspector General was created for the purpose of improving efficiency, economy and effectiveness of CPB operations and programs, and preventing and detecting possible waste, fraud and abuse. The CPB Board Audit Committee and CPB Management work with the OIG to establish a programs for review of the adequacy of systems of financial management and internal controls to ensure accurate and complete reporting, compliance with applicable rules and regulations, and safeguards over CPB resources. This includes requiring stations to submit to audits and keep their books in compliance with CPB policies (47 U.S.C. § 396(l)(3)).

Compliance with Content Oversight Obligations

Sections 396(g)(1)(a) and 396(g)(1)(d) of the Act state, "(1) In order to achieve the objectives and to carry out the purposes of this subpart, as set out in subsection (a) of this section, the Corporation is authorized 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.[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."

Our current activities designed to meet these statutory requirements fall into four general categories:

Soliciting Public Comment. In 1993, the CPB Board and management established the Open to the Public initiative in order to encourage viewers and listeners to voice their opinions through:

A toll-free, 24-hour telephone line (1-800-272-2190)
A U.S. post office box (P.O. Box 50880, Washington D.C. 20091)
A dedicated e-mail address (comments@cpb.org)

Virtually all public radio and television stations maintain similar audience response services, as do the national organizations, such as PBS, NPR, and PRI, as well as many other program producers and providers. CPB provides links to these organizations through its Web site. Earlier in this testimony, I discussed our plans to strengthen our Open to the Public initiative.

Monitoring Public Perceptions. In addition to public comment, CPB considers other impartial indicators, including journalism awards, independent polling data and press reports, to help gauge perceptions of quality, as well as objectivity and balance. PBS and NPR also conduct regular independent surveys and focus group opinion studies, which we review and sometimes participate in.

Addressing Concerns. CPB staff meet frequently with producers and station representatives to learn more about projects in development, plans for community dialogue, and special outreach efforts to ensure a variety of perspectives. When controversial programming generates public interest, CPB routinely communicates such comments to the appropriate producer or programmer and seeks further information or clarification.

CPB Program Funding. It has been CPB's long-standing policy to support a wide variety of programming sources and distribution channels, so that local programmers - and viewers and listeners - have a wide number of program choices. Programming content for stations, therefore, comes from PBS, NPR, PRI, APT, many independent sources, and from local sources, including the station. Each local station ultimately decides which programs to carry and when to carry them, and decisions about controversial programs are vested, by law, in individual stations.

Program proposals are evaluated on the basis of comparative merit by CPB staff and panels of outside experts, representing diverse interests and perspectives. Balance and objectivity are important criteria for program proposals concerning topics of a controversial nature. Any resulting CPB program contract requires that a recipient's production meet all applicable standards of journalistic ethics, including issues related to fairness.

CONCLUSION

Since its creation by Congress in 1967, CPB has worked diligently to fulfill its mission of promoting a dynamic, independent and trusted public broadcasting system. I believe that CPB has and continues to meet its obligation to help provide the American public with a range and quality of programming and services unrivaled by any other broadcast service.

Particularly in times such as these, public broadcasting offers the American people a trusted source for in-depth news coverage, a safe haven for our children, and a public square that brings us together to share our experiences and look forward to our common future.

I appreciate the opportunity to provide you with this information on the workings of the public broadcasting system, and I am happy to answer any questions you might have. Thank you very much.

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Corporation for Public Broadcasting Oversight and a Look Into Public Broadcasting in the Digital Era