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From the CPB
Mon June 25, 2012
CPB: Report on Alternative Sources of Funding for Public Broadcasting
Report language accompanying the final FY 2012 Appropriations legislation asked the Corporation for Public Broadcasting (CPB) to provide a report on alternative sources of funding for public broadcasting stations in lieu of federal funding. The report was due within 180 days of enactment of the Act to the House and Senate Committees on Appropriations.
CPB completed this report and submitted it to the committees on time, on June 20, 2012.
Talking Points about the Report:
- CPB did a thorough review and analysis of alternative funding models for public broadcasting. CPB engaged Booz & Company to assist with the research required to identify and evaluate possible alternatives to the federal appropriation as well as consider the impact of the loss of the federal appropriation on the public broadcasting system. Booz & Company considered a broad range of potential new funding sources and reviewed the possibility of expanding a number of existing sources of revenue. After an initial review, CPB and Booz & Company narrowed the focus to five new options and 14 existing sources that offered the most realistic opportunity to enhance revenue.
- The five new or alternative options are: television advertising, radio advertising, retransmission consent fees, paid digital subscriptions, and digital game publishing.
- CPB also examined whether it would be feasible for the public broadcasting system to generate significant additional revenue from 14 existing revenuesources on which public broadcasting already draws: merchandise licensing, digital advertising, education and state government fee-for-service arrangements, events, direct marketing, tower leasing, production services, on-demand distribution, content licensing, DVD/CD sales, retail productsales, magazine publishing, book publishing and mobile device apps.
- Finally, CPB examined the potential for revenue which might be generated through the sale of spectrum, as well as the potential impact of a change in the law that currently bars public broadcasters from selling time for political advertisements.
- Findings: None of the evaluated alternative sources of revenue would generate enough net revenue to replace federal funding through CPB. And, there is no combination of alternative sources of funding that together could replace the federal appropriation.\
- Further, moving to a commercial advertising model on public television and radio would result in a net loss in revenues, and the change would force stations to deviate from their statutory service mission.
- Further, ending federal funding for public broadcasting would severely diminish, if not destroy, public broadcasting service in the United States. Public radio and television stations in many localities would struggle to survive without federal funding, particularly those stations serving rural and underserved areas that are most dependent on federal support and have the least potential to earn additional revenue.
- Public broadcasting stations are raising more than six times the federal appropriation and continue to undertake efforts to increase revenue in ways consistent with public media’s mission. Even if public broadcasting could raise additional revenue through charitable giving, corporate underwriting and other, smaller existing sources of potential revenue in the faltering economic recovery – the revenues raised would barely begin to cover the losses that public broadcasting has experienced due to the recession and could not replace the federal appropriation.
- Without federal funding, the high-quality content, the universal service, and high accountability for public service that federal funding has fostered and ensuredfor the last 45 years would end.
- The issue of federal funding goes directly to whether the United States should have a public broadcasting system. For decades, this country’s leaders and the public have answered in the affirmative. Over that time, the public broadcasting system, with both public and private investment, has promoted and enhancedour democracy and civil society and educated our citizens. Its viewers and listeners are first and foremost citizens of the United States, and they have come to rely on public broadcasting to be informed and engaged on matters of importance to our country and our society.
- Any debate about the value of public broadcasting is fundamentally a debate about the value of an informed and engaged citizenry, and the central role of public broadcasting to America’s pursuit of this goal.
Q. What was CPB’s goal in writing this report?
A. In response to a request from Congress, CPB undertook a thorough and impartial evaluation and analysis of alternatives to federal funding for public broadcasting. That is why CPB engaged the services of Booz & Company and why so many alternatives and scenarios were evaluated.
Q. Could CPB not have done this analysis on its own?
A. CPB required outside assistance and also wanted an independent evaluation of possible alternatives to develop this report.
Q. Why were only five alternatives fully analyzed?
A. CPB and Booz & Company considered many alternatives, but only five represented entirely new opportunities, on which public broadcasting stations do not already draw, that held any realistic potential for providing significant revenue. In addition to those five, CPB also studied two other potential new sources – sales of spectrum and paid political advertising – that were too speculative and not ready for analysis when Booz & Company began its work.
Q. Was CPB biased in their development of this report?
A. CPB was asked to develop this report, and as the steward responsible for the federal funding for public broadcasting – including public radio, public television, and related content distributed on digital media – it was appropriate for CPB to research and develop it. CPB embraced the opportunity to address the important issue of whether and how to fund public broadcasting in the United States, and this report goes directly to whether the United States should have a public broadcasting system. CPB engaged Booz & Company to complete the detailed examination that Congress requested, to investigate alternatives from a neutral point of view and to apply its expertise in commercial media to the analysis.
Q. Why is this report important?
A. The question of whether the government can and should fund a public broadcasting service continues to be debated in this country. Some contend that public broadcasting could survive without federal funding. Just as the GAO report demonstrated in 2007, this report clearly shows that federal funding is essential to maintaining public broadcasting service in this country.
Q. Will stations pursue any of these options, not to replace the federal appropriation, but to perhaps fund additional public media programs or content, or provide additional support to stations that may be facing financial challenges?
A. American public broadcasting is uniquely entrepreneurial among similar public broadcasting services around the world, and stations and content producers, which are independently owned and operated, effectively leverage the federal funding they receive through CPB to raise additional funding from corporations, foundations, local governments and from individuals in the communities they serve. Through this model public-private partnership, stations are already raising six dollars for every one dollar they receive from CPB. Some stations and program producers are raising modest amounts of incremental revenue from some of the sources identified in this report, and some may be able to raise more. In pursuing any fundraising opportunity, however, stations are committed to preserve the noncommercial public service model that makes this system accountable, reliable and of value to the American people.
Q. Over the years, there have been suggestions that there should be advertising on Sesame Street. What does this report say about that?
A. Commercials would fundamentally change the service public broadcasting provides to this country. In short, commercials would make public broadcasting commercial broadcasting. Because service is public broadcasting’s mission, not revenue, Americans trust, value and support the noncommercial public service-based media provided through public broadcasting.
With respect to Sesame Street and other children’s content, for decades public television has offered a safe place that parents rely on to educate their children. Parents value public television’s children’s programming because of its proven educational benefits and because it does not treat children as consumers. Commercialization of the children’s schedule would be entirely inconsistent with public television’s commitment to these values.
Finally, the report finds that allowing advertising on public television and radio would result in a net loss in revenue.
Q. Why is federal funding so important to public broadcasting?
A. Congress designed the public broadcasting system to be a public-private partnership, with an essential federal contribution as the foundation of public broadcasting. Federal funding ensures universal access to public media by virtually all citizens of the U.S., defines the public service mission of the system, ensures the accountability of the system to the American people, and provides an investment that the system uses to leverage non-federal financial support (currently six times the federal appropriation).
This is a uniquely American system, where the American public receives excellent public media content and service at a fraction of the cost to the taxpayer than is found in other nations.
Q. Should Congress reauthorize CPB with the authority to pursue these alternative revenue sources?
A. CPB is responsible for the federal appropriation and does not raise other funds. Stations and content producers leverage CPB dollars to raise addition funds from non-federal sources, while following FCC rules for noncommercial, educational licensees. Unless Congress chooses to change the noncommercial nature of the service public broadcasting provides (and with it the dilution of the public service mission such a change will bring), stations and content producers do not need additional authority to pursue additional charitable funding or ancillary revenue opportunities that do not impact public broadcasting’s public service mission.
Q. The U.S. Court of Appeals for the Ninth Circuit recently ruled that public broadcasters can sell air time for political advertisements. Why can’t public broadcasters rely on this as a revenue as part of their business model?
A. The Circuit Court’s decision is not yet final. It could be reconsidered by the entire Court en banc, and thereafter appealed to the U.S. Supreme Court. Pending an appeal, the decision would affect only those stations located in the Ninth Circuit.
In addition, we believe the sale of issue or political advertising could quickly erode the public’s trust in the integrity of public broadcasting’s content. Moreover, revenues that could be obtained from the sale of issue or political advertising would be unevenly available and distributed.
Q. Were there any unexpected findings or conclusions in the report?
A. Yes, allowing advertising on public broadcasting would not only be detrimental to the mission of public broadcasting, but it would also result in a net loss in revenue.