are expected because of proximity to thirty three o'clock somewhere in that time frame it be wonderful if everyone could be concise and lucid so that we could finish before then i wouldn't put any smithsonian business ventures serve in furthering institutions mission as an establishment for the increase in diffusion of knowledge the goal of our hearing is to allow the smithsonian to provide an overview of their current status and bring transparency to the operations of the business venture this will include discussion of the recent creation of a new joint venture between the smithsonian institution and c b s and showtime networks smithsonian networks and the launch of its first product smithsonian on demand the smithsonian institution is a treasured part of the american cultural landscape last year alone twenty four million visitors experience the objects are artworks and specimens housed within its walls which contains more than one hundred thirty six million items that exceeds non the stuff i have in my  baby my wife might dispute that it is the duty of this committee to ensure that this jewel of american culture be preserved and that its policies and procedures serve the public trust something incidentally which it has done very well for many many years for those students visitors and others who are unable to visit the institution in person to view its vast archive programming created by independent producers has served as an essential tool in furthering education about the many artifacts that are part of the smithsonian has been considerable concern expressed by those in educational and creative communities regarding the potential risks involved with retailing use of the smithsonian collections to make theirs rival networks journalists and scholars as proposed in the smithsonian on demand venture and the committee looks forward to hearing from our panelists on these issues today's hearing will focus on several areas areas of concern to the committee first my staff has made strenuous efforts over the past several weeks to obtain a copy of the contract the smithsonian business ventures entered into with s showtime like to thank secretary small for providing a copy of the contract in the past several days however large portions of the contract were redacted in the version that was for bennett making it difficult to gain a complete picture of its substance my understanding is that the smithsonian cited a confidentiality clause as the reason for actions that were made to the contract before it was a little furry funded institution such as the smithsonian thank you secretary small for now making the full text of this contract contract available in keeping with your role as a steward of this institution institution on behalf of the american public we want to honor your request to keep it confidential while we review the our second objective today's to better understand your management philosophy in the operations of smithsonian business ventures and to bring clarity and transparency to the process used by the smithsonian in training into this contract with c b s show time very interested to learn more about the genesis of this partnership and why a deal of this magnitude was not certainly vetted with the smithsonian's authorizing and appropriating committees prior to the venture being ratified by the smithsonian's board of regents finally and most importantly this committee must insist insist on behalf of the millions of americans who not only visit the smallest smithsonian each year but who also enjoy programming based on its contents that this institution must put the needs of the public above its own need to explore new sources new sources of revenue when those income sources limit the public's access to the nation's attic we must take whatever steps are necessary to ensure that no filmmaker scholar or any other individual whose goal is to use and foster educational awareness of the smithsonian is inhibited in making use of the resources contained within the institution to address the growing concerns surrounding the smithsonian business ventures and particularly the new joint venture between the smithsonian several witnesses from the educational and creative community to provide their testimony our first witness today is lawrence m small secretary of the smithsonian institution secretary small we welcome you and thank you for being with us today we look forward to your overview of smithsonian operations as they stand today and expect you will conceptually address your guiding philosophy behind smithsonian business ventures and its operations our second panel of witnesses today includes current malamud senior fellow and chief technology officer from the center for american progress margaret green former executive producer vice president of the national programming for w third tunnel today we have alice rooney chief financial officer of the smithsonian institution john work the general counsel of the smithsonian institution and gary m beer chief executive officer i think each of you for being with us today at this time like to recognize and ranking member ms milner from california for any opening remarks she made thank you mr chairman thank you it's good to see you again mr secretary i am pleased that you have called its oversight hearing mr chairman because it provides us with giving the smithsonian an opportunity to inform us about what the where the smithsonian its is today and where it is going in the future the house appropriations committee cut the smithsonian's budget by twenty million dollars to last week and i would be very interested in hearing what impact that cuts will have on the operations of this critical institution and to hear from the secretary as to what caused these cuts the smithsonian is a public trust which shows the nation's culture and historic treasures it operates as a trust entity for the people of the united states and as such has a special place in the hearts of all americans but congress has allowed it to occupy a place of honor on the national  mall and it is a big can for scientists scholars families and donors there for the public trust should never be breached i think this hearing will provide a long overdue opportunity for the american people to meet the person who had their national trust and to begin to understand the complex nature of the institution with the availability of public funds being drained away from other national priorities and reduced revenues inevitably inevitably and negatively affected i am very appreciative of the smithsonian and i look forward to its continued viability and expansion there are many things to be preserved and displayed which have yet to be fully realized and the smithsonian is the place where that can occur to the benefit of the nation while the congress has gotten the smithsonian's attention i want to say but i have not taken a position on the smithsonian on demand contract itself nor to the laudable ambitions behind it which is to increase public awareness about the smithsonian's collections and to increase the smithsonian's ability to utilize its trust funds however i am deeply concerned as to the lack of transparency to the process and to this contract that i have yet to really get into congress only received a copy of the contract and this ranking member couple of days ago and we must examine the contract fully and receive the views of the public and or outside experts i will again  make sure that the confidentiality of this contract is not breached by this member this hearing the first and the one hundred and one to congress on this subject or in any other smithsonian issue will begin th process today i would hope that the issue of the budget cuts would resolve itself as the appropriations process moves forward in the senate and in conference but that that will depend upon in part on how responsive the smithsonian is to us today mr chairman and in the future to the concerns which have been raised i am particularly interested in hearing the institutions justifications of the increased salaries paid out of the trust fund monies to personnel in the smithsonian business ventures as well as the secretary of the smithsonian and other high officials of the institution some of these may well be justified but for comparative purposes looking at salaries that federal agencies funded entirely from federal funds this could have a negative appearance mr chairman frequent oversight to provide a way to address the inevitable differences which arise among visitors to public use at the smithsonian collections the institution and the congress it could help avert the impulse to take counterproductive actions and provides an avenue to redress grievances it really falls within the legislative and policy jurisdictions of our committee and house administration and i like and i would like are committed to be the court of first resort whenever possible mr chairman therefore i look forward to hearing more collections the smithsonian is the world's largest provider of museum experiences it connects americans to their cultural heritage and it also acts as an international leader in the scientific research and exploration last year of this more than twenty four million visitors and which one hundred fifty more fifty million more people through it's magazines and websites the smithsonian is unique in status and structure it's not a federal agency it's not in the executive branch it's an independent trust and to the established as such by congress one hundred sixty years ago in eight hundred forty six that was done to ensure that scholarly research and exploration would be unaffected by changing political climates in fact congress was satisfied enough with the public private nature of the smithsonian structure to make the national gallery of art the kennedy center for the performing arts and the woodrow wilson international center for scholars legally part of the smithsonian when they were established and they continue with such today although as you know they receive separate appropriations from congress and have independent governance the support of the administration the support of congress and the private sector is crucial for all four institutions and we're more than grateful for it the smithsonian relies on the federal funds for roughly seventy five percent of its budget in addition the smithsonian has nonfederal funds which we refer to as trust funds which include contributions from private sector sources and earnings from smithsonian business ventures which we call s b the smithsonian has had museum shops it's had restaurants movie theaters and a study tour travel business for decades it's highly regarded smithsonian magazine which i know all of you are familiar with is now thirty five years old smithsonian business ventures was established in  ninety eight when the institutions board of regents authorized the creation of a distinct operating division that would bring together the smithsonian's diverse business activities and have them manage professionally by a team of experienced executives reporting to a board of directors and the secretary in fiscal year two thousand and five smithsonian business ventures contributed thirty million dollars to the institution and from two thousand to two thousand and five a cumulative total of one hundred fifty five million dollars and these are funds that are used for activities that are not paid for by taxpayer dollars so and while the smithsonian business ventures contributes less than four percent of the total annual budget it's really a critical contribution because the unrestricted funds that it provides aren't earmarked for special projects as are most philanthropic gifts and it feels really vital funding needs that would otherwise not be met as bibi's contributions of the smithsonian accounts for nearly half of the institutions total unrestricted funds and these are dollars that help pay for programs such as the largest traveling museum exhibition service in the world the relationships that the smithsonian has with one hundred forty three affiliate museums around the united states and thirty nine states hundreds of lectures and trips and seminars every year and the annual folklife festival on the mall which attracts more than a million people and many many education programs which reach millions of students and teachers at the smithsonian has long sought to do on television what it was able to do in print so successfully with this magazine the smithsonian magazine this magazine was established thirty five years ago it reaches millions and millions of people who would not otherwise have had their lives affected and touched by the fascinating content of the smithsonian and to that end with the full support of the board of regents the smithsonian concluded an agreement in early two thousand and six with c b s showtime to create a new cable t v offering called smithsonian on demand this is targeted at a market vastly larger than the smithsonian's total number of annual visitors simply doesn't have the resources i have the expertise to do something like this alone smithsonian on demand will allow the institution for the first time and in  own voice to connect with millions of people nationwide most of whom will visit the smithsonian rarely if at all the new arrangement involves very minor change to the way the smithsonian interacts with its many constituencies access to the collections to the archives to the libraries for research remains completely unchanged researchers teachers journalists continue to have full access to the smithsonian for news and public affairs and academic and scholarly purposes the smithsonian is totally committed to keeping congress up to date and informed as the progress of this exciting and innovative service takes place we look forward to discussing with you this new means of communication that represents a really major step forward in permitting the smithsonian to touch the lives of millions of americans through the use of twenty first century technology thank you thank you very much for your testimony and the telephone reminded me to go back to dimension the rules of this committee no cellphones allowed to be on so if you have a cell phone please turn it on for the remember number of the audience or a member of the media thank operations for that type of thing that each one of its businesses does against other people who do the same sort of thing so for sample the mission of the magazine is to be one of the great general interest magazines in the united states and it's consistently is view doing that and has that terrific reputation of as i said is read by seven or eight million people a month mission of our restaurants and our museum shops that seem to be the best restaurants and museum shops in the museum world each one of these businesses is simply designed to be the best it can by simply be to provide first of all an extension of the mission of the institution which is has always been since eight hundred forty six the increase in diffusion of knowledge so the magazine is meant to reach out to millions of people who otherwise wouldn't be able to come and visit the museums the shops restaurants an extension of the visitor experience at the smithsonian so in each case it's the be the best in class for the type of market that's supposed to serve and obviously to raise funds endowment which generates a little over eight hundred million dollars in that generates about thirty five to thirty six million dollars a year for the institution we also raised money from the private sector over the last six years we've raised a billion dollars in private sector philanthropy so there are definitely other sources that contribute none of federal funds to the smithsonian so in other words the development fund raising within your certain the magazine the restaurants shops theaters all of that is on there smithsonian business ventures the raising of funds through philanthropy is not if you see the need to start the smithsonian staff business ventures is just a name to indicate an operating division of the smithsonian institution it's not separate from the smithsonian institution the reason it was formed is that back in nineteen ninety eight the board of regents felt that they had to be a more organized professional approach to dealing with so many museum shops such a successful magazine so many restaurants all of these diverse activities they asked former senat majority leader howard baker who was member of the border regions at the time to chair a committee to look at the issue help by some outside consultants as to what to do and the committee went and looked at other institutions that are large and complex universities hospitals things that nature and they found on that where the most successful model appeared was when these institutions have pulled together their activities that were in the business world and had been run by professional business managers and so the board of regents in one nine hundred ninety eight decided to form smithsonian business ventures separately chartered organization or simply operates within the framework of the smithsonian  by smithsonian business ventures is completely under the governance of the board of regents and we're no less interested in mission there than we are in any of our museums so anything we do with the publication of the magazines the type of merchandise that we sell an thank you so much and again thank you for your testimony mr small in looking at this first of all my first inclination and reviewing all of this material that i received was a thirty year contract given to you and why how often and maybe mr chairman you might be able to answer this do we review this contract are we waiting for thirty years to review this contract how often do we come back to review just where you are where you are purporting to go what are you doing some of those business ventures that you have entered into you mean with the committee itself well there's a thirty year contract that i am reading here and i was just concerned as to how often is that contract reviewed by either this committee or whatever committee that applied was thirty years chosen as the length of his contract well first of all i think it's a good point to make because thirty years is an unusual amount of time relevance to me also it's relative to the kind of things that we have done in the past in the smithsonian on the other hand  gotten more and more into the world of learning about television because the whole idea of this is to do for the smithsonian in the twenty first century what the magazine did in the twentieth century it was so many people discovered that building a t v channel the cable t v channel building a film library are all long term propositions that they take at least seven to ten years to get established and that long term contracts are not unusual in the television industry so as we've learned more and more about this we've come to see that it's not something that you can do overnight you have to take a long time to build up the film library it's a long time to build up the number of users of the of the network so while it is different from what we've done in the past we've understood that it's not unusual in the c and it's a possibility it's not unusual as you have said given television industry but there is one thing that tends to put you apart from all of this and that is that you do get federal funds and you get seventy five percent of federal funds and those funds are really the people's money given all of that then it would appear to me that we would have some sense of accountability if you will if nothing else as to where you are along this continuum of thirty years to see whether or not there is something that we need to do to enhance the budget  the smithsonian it just and so that in another itself is a deep concern of mine that there's a thirty year contract irrespective of what you're saying that you have to do all of these things and it timon i can understand that but there is this proviso that you have said while it's not a federal agency you do get federal funds and those funds really represent the people's money and partner ten percent it's a ten percent what such an equity arrangement be considered unusual i think that it's since the smithsonian is not investing have a total of two point three billion dollars that's needed to maintain all of the facilities and yet in your statement you are suggesting that you need to come back to the federal government perhaps the appropriators to look for in excess of one hundred million dollars beyond that amount why with the appropriate want to do this when they have seen as som perceive an arrogance and certainly the inability of your wanting to cooperate with them on questions and issues that they have raised about this business venture that you have ventured into that's one question the other question is about line all of your previous the predecessors having gone into different ventures and all of that what sets you apart from them in terms of where you are today from what they have where they've been f all i would say that i believe the smithsonian on demand that's completely consistent with the other outreach activities of the smithsonian the past and that is really  defeat of knowledge focused activity it's focused on getting the smithsonian's treasures and stories objects out to the american people most effective way possible one of the things we're aware of and i'm totally sensitive to what you were saying congresswoman is that congress was surprised by the blow up about smithsonian business which we were surprised we were completely shocked by it our board was shocked by it because the way this about smithsonian on the man because the way smithsonian on demand is actually structured it actually represents almost no change minimal change to the way the smithsonian operates with people who come to the smithsonian with professors with filmmakers with all sorts of different constituents because it involved so little change we didn't not foresee at all that there would be any hue and cry and that people would interpret the smithsonian the way they seem to have which that they believe ha some restricted access so we apologize for the tremendous hullabaloo that's been created for members of congress because we didn't expect it and then when the time came to react to it since this contract has confidentiality clause but designed to protect the business information in it that could hurt its venture competitively if it were made public just because competitors would see it we had to go back to the partner in it and say since we're bound by this confidentiality clause and congress wants to see the document can we provide the document the congress and it's taken us this long to be able to get that from mission and i'm not going but doctors small the small secretary wouldn't you think that because this was a venture unlike any other venture you know we had magazines business offices and all of these things open up the chief outline this is something unusual it seems that you were putting the smithsonian on sale as others have seen it members of congress but you did not have the sensitivity to come to congress before this and then when congress heard that it was in the media and that it's what it's perplexing confusing and insensitive to members of congress i completely understand what you're saying from our point of view is the way we thought it through and obviously in the blinding  light hindsight we would try to do it differently the way we thought it through is we the smithsonian has been doing television programming and working with filmmakers for years and years and years their ability to access the smithsonian the ability to work with the some sony is hardly changed by this at all so we did not think that there was going to be any big uproar because we saw it as minimal change the reason we didn't come to congress is we didn't see that there was anything  involved any significant change in any big way and so now that we've seen that it has been turned into what you might call an issue where some people have believe that access is restricted although they really do believe that the fact is it's not and the same people can access the smithsonian the same way they always can the smithsonian can do just about everything it did before we did this arrangement but it's been listed in some people's minds into something that's dramatically different than the way we've operated for a hundred sixty years and it is not and so i understanding that i'm sorry that it's created problems for members of the paper with all sorts of congressman and the fact is we did not estimate it would blow up our board did an estimate would blow up because we didn't see it as a big change that it has blown up obviously we want to communicate with everybody as best we can to alleviate their concerns to point in time in the smithsonian to keep this secret from congress because all of the minutes of the meetings of the smithsonian regions where this was talked about in detail were in fact sent to our committees of jurisdiction but we didn't call up the committees of  jurisdiction look at the minutes of this we pay particular attention to what they just were sent and then now that we've seen what's happened on this we want to work very very aggressively with all of the committees that work with us to make sure people are up to date because i think th the reason is because it will take seven to ten years for them to get through to get ready to get ready to offer anything on their own we expect that by the end of this calendar year they will be programming i said it takes seven to ten years to really build up the brand within the world of television so that it has lots of people who are subscribers to it and it stablish its presence in the marketplace so i'm giving him a thirty year contract we're allowing them to on our time to build up their business whether we and they because we're part of it we're partners and also i understand that a film maker probably a film maker would have to get the offer on them and they would have to offer they have first right of refusal that's not for that but that's one of the things that has been a misunderstanding we have the ability to do virtually almost everything that we did in the past we actually took a look at over the last five years three hundred fifty contracts that we entered into to allow filmmakers to work with us and out of the total the ones that would even come up for a look by this particular partnership and being less than five percent of the whole amount so virtually everything that we did in the past we would have done automatically and then we have the ability to work with independent filmmakers out side of the smithsonian on demand as well so this is a misinterpretation that's gotten into the public arena but if i'm a filmmaker and i want to make a film and you don't agree or demand people don't showtime don't agree you could stop that from happening if you are a commercial filmmaker and you have come to the smithsonian at any time in the past the first place you go is to the museum that you would want to work with that museum has always made a decision whether it wants to work on that project with the filmmakers and that has to do with is that particular topic a priority for the museum it has to do with whether the curators are free to work on it so the first thing that the museums have always done is decide whether they want to showtime and now they make a decision no it's of no then what happens is the museums that let's assume the museum says do they want to work on the project with the filmmaker the museum then has the option of saying this is something that could be of interest to smithsonian on demand or it's something that we might want to do independent of it and so it could go in either direction and that will then depend on the circumstances but it doesn't automatically have to go to showtime with showtime saying that with excuse me some smithsonian on demand with them making a decision it's the museum's decision which way it should go but as of show time a part of that decision showtime is not a part of any of the decision this is a the arrangement we've made at the smithsonian will decide what it will do with who and it has the option to do a certain number of things independently during the year y and during any given year without being a with smithsonian on demand and then expects to do the bulk of this because smithsonian on demand is going to invest hands of millions of dollars every year in programming with independent film makers in this venture so with the smithsonian will be doing much more than it's ever done in the past so much more is going to get done my concern is real simple and independent filmmaker wants to produce or have a film put on v and you're telling me that showtime has no say in that at all they could just keep on coming in and doing what they've been doing when showtime was in the thirty year i'm worrying about stifling these people for thirty years and maybe showtime doesn't want the competition i mean we don't i don't understand let me be very specific we look at three hundred all the cases that we worked on with filmmakers over the last five years there are three hundred fifty cases what we saw in the three hundred fifty cases is that in all but seventeen the use of the smithsonian's objects curators facilities was virtually insignificant so they automatically would just do what we did before when we got to the seventeen cases that we found we saw that in both cases the smithsonian occupied a significant amount of time in that particular show let's say there was an hour show it could be twenty or thirty minutes of the time in those particular cases with the museum with then say is that significant enough so that we may well ask you filmmaker if you would like to talk to smithsonian on demand about working with them on the project or the museum could say this is something we think we would like to do with independently and we have the option under this agreement to be able to do a number of those independently the vast preponderance of people who work with us in the past will be able to do exactly the same thing they have always done if i don't subscribe to showtime i can't watch it if you don't subscribe to smithsonian on demand then you would not be able to see its programs but you don't have all that you don't you you don't have to pay anything to smithsonian on demand so it's only on demand will be offered through the cable package that you can sign up time cable packages and i now show some independent that i  that i don't sign up to all you have to do is it will come automatically with a cable package it's not something where people are going to pay for it specifically and it's not going to be you don't have to sign up for showtime to get it ok thank you  follow up on what you just said that you would not have to pay separately it would be part of your cable package is that in the thirty year contract i believe that let me just double check if the idea that you don't have it will never be in that you'll never have to pay separately for it for thirty the pay channels and for thirty years people are going to guarantee that there will be no additional costs that are part of the contract no it isn't there's nothing in the contract that can guarantee what a cable operator or satellite distributor or a wireless operator or anyone else in the future may do the current offering is conceived as an offering that is commercial free and available to all subscribers of digital cable and that will in the end depend  upon what the customer in this case is say programming service and programming is made available initially to cable operators so what will happen in the future will depend on what happens in the marketplace and what happens with individual distributors things change over the years thirty years a lot of things will change and his testimony is contrary to what you had originally said secretary let me ask you do secretary or mr revere do you have any background in  television or film making yourself no i don't i have some in that for many years i was in the financial services industry and was a banker to people in the media business i was also on the board of directors of paramount communications which owns paramount studios and simon and schuster books gary beer the chief executive of smithsonian business ventures was the partner family partner with robert redford of sundance industries which was in the in the business that it's it's not dramatically different from what we're talking about today and what you have been doing for decades i suppose could you give me some examples of other thirty year contracts for instance could you give me an example of a contract that's been run thirty years that's now expiring or close to expiring all similar kinds of things that what you've done here i know i can as i indicated this is definitely unusual for us before when i made my comments there's no question about it because we  have never attempted to build a presence on digital cable t v before this hasn't existed what i meant is that we have been relative to the issue of access and use of the smithsonian's collections we've been doing film projects with people for years and years and years and in no case is there any issue of the venture at this business partnership have any any right of first refusal in no case does this  partnership decide what gets done and then no place that we require any filmmaker to go to this so i was being responsive to that the thirty year contract is is definitely something that's more similar to what's done in the media industry and we have never done anything like that before but we did a lot of checking to see whether it was reasonable in the feedback we got from professionals was yes just guess i'm not familiar with it is similar to what is done it with in the media industry could you give me an example of a similar contract in the media industry that runs for thirty years i can't speak of like you know i don't know a particular contract i just know that it does take a long time to build up a cable t v channel i mean we've seen that in the course of our lives to build a film library and a lot of subscribers to a service is not something you can do quickly and remember that the partner here is investing tens of millions of dollars and so the likelihood that you can get people to invest tens of millions of dollars a year and keep spending money the program without having them have the confidence that they were going to enter into something where a film library would build and many millions of subscribers would be built up is logical i mean i don't think anybody would invest money in the short term gentleman's time has expired let's pursue some of those things that we just discussed before the for one thing you mentioned the smithsonian board of regents had reviewed the call fairly detailed descriptions of the provisions of the contract but given that it's i think one hundred well over one hundred ten pages long there are no conference smithsonian that long that's the board would go over in detail but anything that an important provision was attached to our minutes was presented in the board books to them but no we did not have them read the entire contract and we i'm not aware of any other contract that the board of regents  description as i said access is unimpeded the same access everybody else has ever had use is simply involves the use simply involves the situations where commercial use is related to commercial filmic where people come to the smithsonian to enter into a commercial film venture where they want to use the smithsonian for a business purpose for the making of a film documentary to sell or to put on broadcast television so it only effects those situation situations and as i indicated the contract has more than enough flexibility for us to allow ourselves to work  with the smithsonian on demand we can we can say we smithsonian on demand exists and it plans to invest tens of millions of dollars within the independent filmmakers that have not been put into the market before so i'm sure there will be lots of independent filmmakers that will go to smithsonian on demand but if they don't wish to they don't have to and if they wish to consider working with the museum on a project at the museum wants to do with them as i say we have the flexibility to do a certain number of programs every year outside of smithsonian on demand and of course if the use of the smithsonian is just completely incidental and not significant they can do the project just as they have in the past which represents ninety five percent of what goes on with the smithsonian anyway demand would be the putting in the money to pay for the production and work with the filmmaker on how that production would take shape if they chose to work with the smithsonian on the met but presumably the money then would go to the smithsonian undermanned the filmmaker is obviously going to get paid for doing the film and so part of the the arrangement the filmmaker would make if he or she chose to work with smithsonian demand would be whatever their financial arrangement was once it's produced the revenues that accrue from having added that particular film to the library of smithsonian the man of the programs that would be available ultimately should produce revenue to go to smithsonian on demand that's why they're producing the movie so that they can actually develop enough programs to put on the channel so the people have access to them and then the cable t v operators who would have the service in their packages with pay smithsonian on demand yes  and the amount of that money goes to your business ventures and thence to you the as i indicated before we have part ownership in the in the partnership and then there is a minimum that smithsonian on demand showtime networks has to has to pay smithsonian that buckskin has to pay to the smithsonian every year so there's a minimum fee that has to be paid and then there's a percentage of the total revenue and if that is higher than the minimum fee then we would get that percentage i'm just trying to get a picture of the contract as fully open and free for anyone the independent filmmaker will be is aware that this partnership exists this partnership exists to invest money into making films that are related to the smithsonian that are like the kinds of articles that you see in smithsonian magazine the kind of things that appeal to people who are interested in history art culture and science when a filmmaker comes to the smithsonian goes to one of our museum says i would like to do a film working with you about a particular topic it could be about an art collection it could be about an airplane it could be about an object of american history the first thing the museum has to do is decide whether it wants to work on that project that's always been the case before there was any smithsonian demand and if so that's step one step two is for the filmmaker then to decide is this something even at the museum wants to work on it that i would like to work on with it to something that involves significant  use of the smithsonian artifacts premises curators of the museum has to make a judgment of the significance but not significant it's not significant and it's just passing photograph of an object a sentence or two from a curator then the filmmaker operates the way he or she always did if it is significant such as a large amount of time or it's a very important point made in the in the film then the filmmaker has to decide do i go work with smithsonian business ventures or is the museum willing to do this outside of smithsonian business not so much something this is the man willing to do this outside of that and the museums have the option of doing several productions a year outside of smithsonian business ventures and you know how much is six of those and we we owe as i said of the last five years we only had seventeen productions that we thought could be of that that option and we but you then have the option of the filmmaker saying all right that i still want to work with you but i'm just let us reduce the amount of interview time or the film time or the importance of the smithsonian part of the down to something that's mr secretary it seems like you two having some problems in explaining this is like looted and if you're having problems you can imagine what we having problems that here with this well  you spoke about the fact that in addition to your contract with the showtime folks you can do a side types of things with other  filmmakers or whatever so you can go outside of this showtime on demand and do that and given that you do that then whatever profit sharing that comes about i mean there's a profit here you're saying that you receive the profit over a certain the or above a certain fee what are all of this what what it what are you talking about what i said was we our partners with those t v s showtime smithsonian on demand the first offering of this partnership we own a percentage of that partnership as i indicated before and then we get a percentage of the revenues paid to us and with a minimum every year so that we're guaranteed a minimum amount of money paid to the smithsonian every year if we that's if we're doing films through smithsonian on demand if we're working with an independent filmmaker independently how much we would get out of that venture would have to be negotiated with that independent filmmaker all right so  whole percentage that i initially ask you about the smithsonian networks is that are we in the ballpark of york going outside of this box and the showtime and this is your network that gives you the ten percent don't tell me how does all of this so in that works is simply the name of the partnership with c b s showtime and its first offering to the public is called smithsonian on demand which is just the same thing as video on just one in the same so that partnership we have with c b s showtime is called smithsonian networks the first project that they're doing is to create a series of smithsonian programs on digital cable that's called smithsonian on demand not my concern is your profit sharing on th outside force of folks that you will have to do outside filmmaking in addition to showtime but the one thing that i want to get back to is that on this contract there are so many provisions in this contract believe me mr small that it's not small at all trying to get into it if showtime at any time wants to cut and switch i mean if they want to terminate the contract with you they have that propensity to do that then there are conditions in the time for under which they can terminate and there are conditions in the contract under which we c all right so that's what i want to get to because if this program if he or she smithsonian on demand it's not profitable and it's not sustainable then they certainly will not want to keep with you and they're going to cut and switch they're going to leave they will pull out but when and how can you pull out of this contract to do you have the same clause so you have the same timeframe that showtime has been pulling out of this contract and what will be the liability to smithsonian if that is the case from liability standpoint so if the smithsonian is not investing any money and we certainly wouldn't lose any money we have the the partnership has to perform at certain levels during its life and if it doesn't perform if it isn't as successful as these performance levels hold for which is in the contract provided to you then the smithsonian can say it's not six not successful and can terminate  arrangement and these sides are groups that you enter into and work with in addition to the show time that would not enter into this contract at all believe me in terms of liability or  any profit sharing or anything like that totally independent of a totally different from and so you can it seems with again i haven't gone through this entire contract because i've just gotten the day before yesterday but it seems at the provisions that i've seen that showtime can get out of contract in two or three years and you're saying that you can also and there are different different criteria in the contract it's fairly detailed as to which party can do what and but in our case our ability to get out is dependent on the partnership being successful if the partnership is successful then we don't have the right to terminate the contract if it's not successful in meeting the specific targets that it has then we do and that's where i have difficulty here because if you're not meeting here obligation side of it meaning successful and then you know you define what is success we'll have to define that and in the contract it's if the partnership isn't successful and the that's the reason if it weren't successful then we obviously wouldn't want to continue it so the we have the ability to get out of it if it doesn't hit prescribe the mount of growth that's the important thing and you will not there will be no liability on your part if you should want to get out of it if it's not successful there's no liability as long as we were to leave it meeting the terms that we read to in the contract but if you do not meet those terms and there is a certain amount of liability if  the partnership did not perform as it was supposed to and hit these particular target levels and we decided to leave the partnership that would be fine if we left it in the partnership those levels  would reach and it's those levels that i need to know how they are defined what are those targets levels it's it this is one of the it's in the contract and how absolutely you would not know the mouth plan right now they're one of the provisions that we've asked you to  said there's a minimum guarantee we know that figure it starts out at five hundred thousand dollars a year five hundred thousand dollars a year that's you have to make five hundred thousand dollars a year it has to thousand dollars you know that's that's the minimum that has to be paid i understand that only and not make what you're using the minimum right there and here you asked me about the minimum i'm saying that that's the minimum that the only guarantee you that's the from the that's correct the minimum is the guarantee we obviously believe that we'll do better about p d s could they come in and do an arc of your caution and put on a show p b s has the same access that they've ever had t smithsonian and p b s would go through the exact same procedure that i described before a visit with the museum the museum first has the right to say do we want to work with them on a project if the museum says yes we s s the same access although you have a thirty year contract with another cable company cable company would direct gable and you're telling me that they're not sitting at the table saying no don't do this to p b s we want to do it to make money on the carriage they have any dismissed smithsonian then have the right to say who they want to give that project to the rather give it to showtime around the p b s to for the for the smithsonian has always decided does it want to work on a given project or not the project the filmmaker can say i don't want to go to showtime and that's fine they don't have to go to showtime and the museum could say you don't have to go to show them we want to do it with you the most important thing first is are they going to do anything that's going to involve a significant use of smithsonian resources and ninety five percent of what we do doesn't so that all of that's going to stay the same i don't understand you've got a public broadcasting system that's going to put a show on the air for nothing and it's going to be a good show people want to watch and then you've got showtime come in is going to make a profit we're going to make a profit from a good show and i can't believe you let p b s have the same access that you will show times on it if you want to make money and you want to increase your five hundred thousand dollars which seems like a very little bit amount of money to make to go into a thirty year contract and you're going to make you think you're going to tell me that you're going to have them don't have a level playing field that people that don't have digital cable be able to watch this show have a level playing field as opposed to showtime thinking i got a good show coming on something's clicking whatever maybe and i don't knows space or something might happen that's that's that's that's the problem and i know what i'm saying is that having looked at everything we've done with t v s and others in the past you know that's an engine that is changing but when it actors there aren't people including p b s who are coming to the smithsonian and saying we want to invest doing millions of dollars doing programs with you it's just hasn't happened in any significant way and there's no reason to believe that it would happen what i'm saying is that the vast majority of what we've done in the past continues the same and that we have the flexibility to do projects just like that and amount of flexibility that's far greater than anything we ever did in the past like that so i understand that this has been raised as a polemical topic that people are having difficulty coming to peace with but the fact show that almost everything that we've done in the past we can continue to do and that there's a great deal of flexibility to work with independent filmmakers on projects outside of this venture although we think that independent filmmakers are going to knock down the door of the venture because they're going to be spending so much money with independent to give them an equal playing level playing field or go to a competitor that's not going to give you any revenue as opposed to going to showtime is going to give you revenue that the people have to pay for that's my point my point is that we have there are in many cases instances where we might want to work with somebody outside of the venture and we have the flexibility to do that  our like to follow up on a few points that were just mentioned you said several times a decision will be made what is significant what isn't one point i thought you were saying that the smithsonian on demand would make that decision now the time you said you would make that decision if if i misspoke then i apologize misspeaking the decision as to what's significant or not significant is always my by the smithsonian institution then the other item of cl times per year saying we want you to work with us that's correct but that is vastly in excess of anything that's ever happened in the past the number of cases where people come and say we want to make a film that is where the smithsonian is a big presence in the film is less than five percent of the history that we've had over the last five years in three hundred fifty cases how many projects per year wit seventeen total projects for the five years so let's call it three and a half three point so with that we have we have right now almost double the capacity all right   there's certainly nothing wrong with it i really don't know of whether the inspector general would have the experience and background of legal capacity to go through contracts like this you have been most patient thank you so much thank you just a couple more questions here one is that you said that there's no limitation on access i didn't get i've been told that the material on the smithsonian format the way it looked on the web site lists of things to click on looks like video on demand if you if you have access to video on demand at home it had a look like that we felt that that would be confusing to the public as we launch this is all the smithsonian's own stuff we launched in this new service we didn't want to confuse the public so we've taken that then we can now we can put it all back up on our different websites but we did not want to confuse the public with just the format of the content is the same we can show all the material we just didn't want to provide a confusing situation with the public wouldn't recognize that this was different from smithsonian on ok so there's no limitations and act on them that's a member of the other thing and  n reading the regents meeting minutes that was provided to us there is a reference to risk involved in the new venture one of them it's called restrictions on smithsonian internet activities can you respond to  that actually as well it goes on and it goes on to say that because of the service will be offered to cable and broadband internet subscribers there will also be restrictions on the aggregation of general interest audio visual programs on the smithsonian the website so it gets back to the same noting that i think this simply says is that if the world of cable digital cable t v continues to homogenize with the world of the internet then centrally you have the same applicability as it on the internet as you would have on cable t v because so much of t v now is migrating on to the internet so it just says that the world of the internet and t v are coming together and that risk that they're talking about involved in this new venture maybe you would want to talk to me about that and i separate meeting certainly the last one that i want to speak about is here are small and disadvantaged businesses and if you have a completely committed to it we're not anywhere near where we want to be we all know i understand we know that and we know where in the institution we have to improve and we are working at it that has  that question wasn't asked and so i'm happy to respond to a congressman thank you the smithsonian business none of the funds involved in smithsonian business ventures or federal funds so the smithsonian business ventures doesn't follow the specific federal guidelines and the other hand how this was done was very similar to the federal contracting procedure in that smithsonian business ventures first came up with a model of what they thought they would like to do  in digital cable television they went out and they talked to about ten different entities that are involved in a big way in the business out of that emerged first one that said they were quite interested and were willing to invest in it we almost had a deal with them the other side said no they weren't willing to interested in doing it when that deal fell through then c b s showtime came up and said they were interested in doing it and then they worked on the negotiating process so it's similar to the federal contract contracting process but the business ventures they just they don't follow that specifically and never have is there any guarantee that the revenue raised by that contract will go to operations and maintenance it will go generally speaking the money that comes from private sector activities in the smithsonian goes into programming like the traveling exhibition service the work that we do with courses and lectures the work that we do all across the country with different museums we don't make enough money in those areas to even make a dent in maintenance now we have raised a lot of private sector money for physical facilities the new air and space museum is three hundred million dollars a private sector money there's over one hundred million a private sector money in the american indian museum there is over there going to be close to one hundred  forty million dollars in the new patent office building with donald of the rental center for american art in portraiture but what we found is that private sector donors particularly won't give money for building maintenance where buildings have been maintained by the government for years as to the smithsonian created partnerships of private business that's that's not the problem i think it was it was a surprise that this would be gone on and i think it was pretty unanimous feeling on both sides of the aisle thank you very much for being here and we look forward to hearing your testimony as you know those generally we provide you five minutes to give your testimony if you've written testimonies longer than that we will introduce into the record as a firm supporter of the smithsonian but i'm also here as a perplexed and troubled supporter of the smithsonian trying to understand how the recent actions to promote the increase in diffusion of knowledge among men and i should add among women not part of the  charter i think i would like to begin by briefly touching on the showtime contract because i think it illustrates some of the broader issues at the smithsonian institution the showtime contract been many years in the making but it was a surprise to me it was evidently a surprise to filmmakers and many other members of the public and this contract has been chatting in a veil of secrecy that i just don't understand there are some some pieces that we know and pieces that we don't know there's an unspecified revenue stream we learned a little bit about that there's a sole source per curiam and a non disclosure agreement and it appears that the non disclosure agreement at least for a while pertained to members of congress and the list of clauses go on and on but three aspects of this really struck me one is a thirty year term if you look back thirty years in one thousand nine hundred seventy six and ask what would a thirty year contract that was signed then look like thirty years ago there were two hundred computers on the internet ted turner had just begun beaming up the fattah light for w t v s brian lamb had not yet started c span and he was three years away from that and the latest hot technology in japan was the fax machine and it was just beginning to occur in the united states i think if we had signed a thirty year contract in one thousand nine hundred seventy six it would have turned out to be a bad contract and i'm afraid that a thirty year contract today might have the same effect the second cause it is troubling is the right of first refusal and i understand the smithsonian is able to to grant six six exceptions in which films are made in other places but one has to ask whether can burns for example should be forced to apply to the showtime smithsonian joint venture instead of going to p d f to make his films and one has to look at the six exceptions that they're granted mr brady brought up  space as a possible topic as you know two thousand and eight is the fiftieth anniversary of the u s space program one has to ask would not be a good thing if ten different networks all featured the smithsonian and the u s space program and could the smithsonian do that if that kind of excitement was raised the third thing is the non compete clause which appears to be applying to the websites of the smithsonian institution as as was discussed earlier smithsonian dot tv was taken off the web and my understanding from phone calls from quite a few staff members at the smithsonian is that the web masters are going to be placed under fairly severe restrictions on how much video and audio they can place on their websites and i don't know if this is true or not but if it is this will certainly limit access to smithsonian archives by the public and instead of limiting access i believe that the smithsonian should be taking steps to vastly increase the amount of those resources available for the public to use over the internet the smithsonian appears to the showtime deal appears to be part of a pattern of several business deals with which at least leave me perplexed and asking questions the harper collins book deal for example has led to the delisting of smithsonian books as as one of the leading historical publishers and that's troubling when a reputable historical association feels that the situation is so bad that they didn't list august publication like smithsonian books i think it all comes down to transparency and it could be that the showtime deal is the right deal but i think if the public had been involved more and there had been a process of public hearings and deliberation and disclosure it might be a little easier to live with there are four steps that the committee might wish to consider at this point and these are simply suggestions one possibility is a staff investigation into these contracts into the showtime deal in the harper collins looking at them to see whether they are in fact appropriate for an instrumentality of the united states and looking to see whether or not a terminations for convenience of the government might be in order the second st to look at some of the transparency provisions of our laws that apply to try to various agencies now the smithsonian is a unique entity but it is an agency for many purposes for purposes of building for purposes of  variety of actions it might be appropriate to consider extending the definition of agency to include the foyer sunshine privacy and possibly even the c f o acts two additional steps and then then i will conclude the third step is public hearings either by the congress or potentially a blue ribbon commission that looks at this question of business models looks at the questions of the balance of revenue generation and public access and tries to do a deliberate public process that looks at all the different options available these hearings are not an inconvenience hearings are really how we learn what the options are that are available and i'm convinced at the smithsonian had they help public hearings might have had other options in front of them and then the last point and this is i know a sensitive point but i do believe the smithsonian is in need of money and it needs that money in order to fund its operations and it staff and i understand that with the recent appropriations committee actions there were some suggestions of steps that the smithsonian might take to regain the full trust of the congress and if in fact those steps are taken and the distinguish members of congress feel that that the issues of transparency have been addressed i think restoring those twenty million dollars would be very important that's equivalent to about three hundred staff positions and in many cases the smithsonian the curators in  archives are in fact vastly under fort one might also consider investing some money into putting more of the archives online for the public to use without restriction thank you m afternoon i'm vice chair of vice president for national programming at w g b h the public television station in boston and i appreciate the opportunity to speak with you at w g b h we produce much of the programming that is seen on p including the science series nova the history documentary series american experience drama on masterpiece theater and mystery investigative reporting on frontline and the ever popular antiques road show we also produced some of the best known children's series including zoom arthur and between the lines our mission to deliver educational programming that is free and available to all americans depends on our ability to gain access to a ride wide range of materials that means documents archival material and artifacts from museums and institutions throughout the country for two series and particular nova the science series and american experience for history open access is their lifeblood for them the smithsonian collections are critical and over the years we have benefited enormously from such use from the full spectrum of smithsonian museums nineteen and all and even zoo zoo the smithsonian's adventure showtime raises the specter that our access may now be curtailed if so we may not be able to produce the programs that rely on key materials that are only available in the smithsonian collection i say may not because we do not still understand and the full terms of the contract it is unclear to us how public television is defined in this new arrangement are we a commercial broadcaster are we a noncommercial broadcaster are we scholarly are we academic what are we and we do not have a sense of what quote incidental use is if you're doing a program that has ten stills five of which come from the smithsonian is that significant use and i have to say on the side of the thirty year deal the length of the term is in my mind unprecedented in this day of an ever changing television environment what we do know is that for those of us producing television s we take seriously our role as public educators access is important not to satisfy the personal ambitions of a producer but to address the public interest to help you understand what's at stake i'd like to offer some examples of existing programs that we would currently not be able to produce these some of these may fall into this five percent that secretary talked about this morning this earlier in the area of science there's mystery of the first americans and nova program which relied on substantial contributions from the smithsonian and also on one of its prominent anthropologists the wright brothers flying machine another nova show simply could not have been made without the involvement of the senior curator of aeronautics at the national air and space museum a relationship that may be off limits to us under the showtime deal there are several other shows and award winning hour documentary easily that was produced for american experience called tupperware a distinctly american story about innovation and free enterprise absolutely would not be possible to make for p b s given what we now understand to be the terms of the showtime deal and i believe the same is true for lost in the grand canyon the story of john wesley power as exploration of the colorado river but these are projects in the past let me tell you what concerns me is what we have going in the future we are now embarking on a five part series on the history of native americans called we shall remain this is an ambitious series that we hope will be a national broadcast event we made contact with the national museum of american indians just days before the showtime deal was announced the curators and staff were enthusiastic about working with us but uncertainties swirling around the showtime deal put a break on those discussions about how we could work together if this isn't resolved it will be a missed opportunity for all because of the prominence and stature of the museum of native american scholarship and what happens when nova goes ahead with plans for a special series on the history of will they be not be denied access to the smithsonian's tom crouch our nation's foremost expert on aviation will the full story only be allowed to appear on smithsonian on demand leaving no his version of it to be compromised like a science textbook textbook missing facts will the public not be able to see the story without paying for a cable channel let's remember the number of viewers who will tune in to smithsonian on demand is a fraction of those who can see these programs free on public television thousands as opposed to millions what you should also understand is that p b s programs are not just television shows television is now the first port of entry we provide a long tail of material educational outreach web streaming teachers guides a v use some of the school video on demand even i pods once created  content lives indefinitely in digital form continuing to deliver public service value years after the initial broad caste every program we produce has a teachers guide hundreds of thousands of teachers throughout the country use it every single year the exclusivity suggested by the showtime deal flies in the face of our educational mission of ensuring that original educationally rich material is available to teachers students and the public on multiple platforms if showtimes goal over thirty years is to own the material on those platforms that is even the bigger threat as someone who spent a great deal of time in my professional life working in the nonprofit world i am sympathetic to the financial difficulties the smithsonian institution faces this stewardship of nonprofit institutions like w g b h whose mission is to educate the public or in the case of the smithsonian quote for the increase in diffusion of knowledge unquote grows more and more difficult in time in a time when federal dollars are tight and money from commercial interests is within our grasp i'm not a purist i understand that non profits must generate some revenue or we will perish however if in the process we dilute the mission we do so at our peril the public knows and trusts the smithsonian it regards it as a repository of our collective past a good afternoon mr chairman i'd like to thank the committee for inviting me to testify today on behalf of the american library association i'm here to express our deep concern over the recently announced agreement between the smithsonian and showtime alias concerns are based on the information about the agreement from news articles because we have most members of the public don't know what is specifically in this agreement the american library association is committed to ensuring access to information for all and that is why we are so concerned about this agreement we understand the financial constraints faced by the smithsonian and other cultural truss solutions must be found but those solutions do not lie in a series of exclusive and in this case largely exclusionary business agreement with a private company the smithsonian while it has business like needs and concerns is not a business it is a taxpayer supported through appropriations of federal funds and tax benefits status as a five hundred one c three organization and it is the guardian of our cultural heritage indeed the bequest of james smithson came with a stipulation which the u s congress accepted the smithsonian institution was to be an establishment for the increase in diffusion of knowledge moreover many of the collections given to the smithsonian have been placed in the institutions hands in trust to be maintained and made accessible to the public this is not therefore simply a matter from where the revenue derives it is a matter of public accountability and public confidence maximum feasible transparency in the arrangements for these collections is an essential component for that trust it appears that access to the collections and archives of the smithsonian will not be limited but use will including the ability to utilize the professional skills and expertise of the institutions curators scientists and other staff as librarians we see this agreement with showtime as analogy to a library signing an agreement with the some publisher that would allow library patrons to come in and look at the books and other resources in the library but not take those books off the shelves to check them out and not be able to talk to the librarians for assistance and information l a is also concerned that this contract w showtime and other contracts in the works may severely impede the ability of the smithsonian institution to digitize the collections it has news coherently and systematically either for preservation or for public access and use while such an undertaking could reasonably be taken with private companies the underlying materials and the data files created must remain the existing the exclusive control of the institution we understand that the smithsonian's practice has been to retain control but we would appreciate assurance that the contract was show time or any future contract do not violate this fundamental principle last year the smithsonian's business ventures unit and mouse an exclusive publishing partnership with harper collins publishers to create a line of high quality smithsonian reference in adult nonfiction books it was announced that harper collins would also be the exclusive distributor of the smithsonian books backlist that contract has not been made public either so we do not know how exclusionary it is we have no evidence that any prospective author is that clear his use of materials in the institution or discussions with smithsonian curators or scientists so we believe that the harper collins agreement is not as exclusionary as the showtime arrangement appears to be however the harper collins agreement does not seem to of late does seem to have laid the gras i don't work for this current venture with showtime sole source contracting is particularly inappropriate for the nature and nature and sculptural stewards the preeminent standing of the smithsonian in our society requires that such substantial changes in how americans can gain access to its collections and use those collections must only here occur after extensive public discussion and review we urge congress to require that the smithsonian ventures know all this contract because it was awarded before there was the requisite public discussion and we also asked the other agreements be examined in public before they are made to protect recognize myself for five minutes for questions the first one the smithsonian makes the argument as you have heard that the length of this one contract is appropriate given the nature of time channel so i think his explanation of the secretary's explanation is a reasonable one i do think a thirty term a thirty year term is unprecedented i've never heard of anything of a contract lasting thirty years particularly in the day and age we're in right now where everything is changing so rapidly you know five years ago we didn't have web sites one year ago we didn't even know what podcasting was you know it's just changing so quickly and i think right now one needs flexibility and more than anything else when you negotiate a contract are contracted the b g b h was for certain shows with also comments that because of this new joint venture only a fraction of the producers wishing to make use of the collection for commercial purposes will be denied access and that this is a necessary trade off to reach millions of individuals who would not otherwise be able to see the collections i'd appreciate your comments and that from anyone on the panel well mr chairman that is a very admirable idea to try and reach more and more americans and maybe this is one step but we have the internet we have pod casting we have that the smithsonian had a smithsonian t v on demand so there are many ways that they can broaden their reach and we're hopeful that this contract is not going to restrict any of those as my colleague mentioned there's new technology being developed every day that will be of tremendous use to this myth tony and broadcasting its collection interesting more and more people in the artifacts that it has and we don't know how restrictive this contract is going to be to keep those artifacts those pictures that video that sound off of the internet and being able to go into people's homes letting people use it for their own genial logical examination as they pursue other interests that they have so we really need to make sure that because they are the public's trust because they keep america's addicts that all the artifacts in their lives are available to the public so that they can use them not only for commercial purposes but for purposes that we don't understand today that in five years will want to use and that other commercial entities in five years or ten years might want to use this thirty year restriction should be very troubling to you three i think if you're trading off access to twenty million people in the cable system and as a result you're limiting access to several hundred million americans on the internet and reducing the amount of information placed on the net that's not a good thing one of the important points is that filmmaking is changing dramatically in the old model of filmmaking it took one hundred thousand dollars or five hundred thousand dollars or a million dollars to produce something and this old industrial style of filmmaking sometimes required large investments on the internet there are people that placer videos online in places like you tube and google video and tran or twenty million people download those videos i think it's important that we look at filmmaking as something that in the future every american might be doing and one of the first places they're going to want to look to those films are the archives of the smithsonian putting them online making the staff available i think is the most important thing they should be looking at some way saying the contract if it is to be done this sort should only be for t v but also should include any possible uses absolutely mr chairman i believe that is where a lot of distribution channels are moving these days i've been broadcasting radio on the internet since one thousand nine hundred three and i've seen that medium grow by leaps and bounds and today it is really amazing how that market for films and documentaries are changing more documentaries are being produced today than ever everybody is under pressure to give our content away as freely as possible on as many platforms as possible exclusivity is a word of the past and this is what the users want they want to access on every platform that's available to them and they want to access and the ability to use this material also so restricting its use is flying once again flying in the face of where most media companies are going these days  a testimony from a patricia out of haiti professor and director of center for social media social communications form american university and also a lender kerber president of the of historical association maybe brecht beck professor at the liberal arts and sciences from the universe if iowa they were not they had wanted to come but was told that they could drane both of you have said in your testimony vince mr milo had first you say that the smithsonian webmasters are reportedly being advised that they will be placed on the strict guidelines on how much audio and video they will be permitted to place on any site and got wind that may very well lead to taken a huge amount of content off of the smithsonian public website that's what you say in your testimony and this train have set that we are now in barking upon a five part series of the history of the native americans called we shall remain we made contact with the because it's a possibility of the restrictions now you both heard from the secretary when i raised the question with him as to whether there would be limits on access and he said no that there was this once and he went on to describe and reasons why but this material will still be available since then i have gotten from my staff a visual of what used to be at the smithsonian and what is now being seen on the smith tony and web site clear indication that some of this material is being taken off i will not ask the secretary to come forth but i will be raised in this question again with the secretary because of what we have just received from staff five minutes ago i'd also like to say to you that when you ask if we can investigate this thirty year contract i'm not sure whether we can do that but what the appropriate is have asked now that g l reports what they perceive and define s this contract and we'll be reporting back to the appropriators in ten days at which time we will get that report here in the committee on house administration i also will remind you that both the senate and the conference will be saying the same deal where the house appropriators did strict a reduce the the budget for the smithsonian they too are concerned so you do have another opportunity to see just where this goes in terms of the exclusive contract that was part and then to if you will by the smithsonian's we too we shocked with all of this and we're not privy to this until just recently i am also struck by the fact that it's possibly the other witness who says yes it is  educator myself and how my grandchildren use this smithsonian website i would be deeply deeply hurt if some of this educational material some of the other things that you have cited in your testimony be taken from the web site we are creatures and supporters of this website i mean we go to that website we get material smithsonian has been part of our family it comes into our homes when it comes into millions of homes and i will say to you as we have the secretary who has that here and that's good that he has to hear your testimony that we will be coming back to him i don't need to raise questions with you you have given us a great testimony on your thoughts and your concerns and the only thing that i will tell you it's that i will very carefully now get the report from the g a o talk to my counterparts on the senate side and then observe the smithsonian web sites to see whether or not we can continue to have this very valuable or invaluable this been for thirty years is something not going right they would be locked in for a thirty year bit i mean i've never really heard that before i work on the internet server and thirty years is an unheard of time span for us even three years is farther than we can predict i think if in the long run after extensive public hearings this was the best option available the only option maybe this would have been easier to stomach but without those public hearings without that the liberal process without the input from other people on options and that includes the staff of the smithsonian many of whom have very good ideas on how to exploit their resources in a way that balances the public trust with revenue generation i think bedstead with me for sure but in your experience showtime put your show on through on demand and they and they don't do real well they do a good job but there's more time goes on with these to be added to it can be more in depth you know could be more detailed with day than have an exclusive right to that show and not let anybody else like p b s to expand on it i mean once the show was made yeah i don't know what the terms of the deal are so i mean in these days what showtime could conceivably do in the future is negotiate with p b s to license the show on p b s at some future date and i thought that was my question shock a tough you said that you were negotiating with the smithsonian prior to this contract no i said that's me we were negotiating with the museum of native americans to a some kind of a an arrangement of co op a cooperative arrangement and then the deal was announced and the staff because of the uncertainty swirling around the deal decided to put a brake on those discussions until we could figure out what the terms of the showtime deal were and whether we could partner in some way and i have to say that the curators there are really supportive of our project and we have nothing but the greatest of admiration for them so we're hoping that we can continue our conversations we just don't know she you were kind of denied access and use well we wanted access to put on hold we're in limbo right now so we have been really denied access or use yet limbo you have no access well we're not quite ready for access at the point of the production is still in that we're in when pre production right now so this is the critical period that we want this is when you start hammering out these agreed to agreements and arrangement all morning i i have had a chance to read through the testimony even though i didn't get to listen to it and i think i just have a couple of observations first well the smithsonian is in the unique legal structure america thinks of it is our stuff you know it's america's attic and so i do think and i would guess that the powers that be at smithsonian might agree that it was probably a mistake not to be more inclusive with the people's house in terms of the sharing that elements of the contract and the like because there's a great deal of anxiety obviously as we hear from that has my what that deal is the i understand i've not had a chance to read the contract yet and so i'm not going to say what the contract says because i haven't read it and i understand that it was just to see the end of the deck subversion yesterday it's quite lengthy i i  o understand the need to bring private resources into the smithsonian i think that's really a product of our lack of funding of the smithsonian and so i hope that as we move forward in this with the poly the other he would assume i don't know what the chairman and ranking member have in mind but even if it's just in the appropriations committee this should be a reminder of why we need to appropriate sufficient funds to the smithsonian so they can do their maintenance work so they can maintain their collections and so that it can continue to be free to the american people one of the things i'm so proud of is that what americans or anybody for that matter come to this wonderful capital they can go into any museum for free they can appreciate american culture and history for free and just enjoy that richness and we want to make sure or is that on a noncommercial basis which we've had testimony that that contract preserves that and i hope it's true that that can also continue through emerging technologies not only on commercial t v but the internet in on and on so i don't have a lot of questions at this point except that i will i hope to be able to read the contract myself and certainly the g a o analysis of it and i hope that when we see all the details that we will hopefully we will have an opportunity to celebrate more than we are today because i think hopefully we have the same goal of the sharing invite the final panel of witnesses ms were only there to take their places at the table while they are doing so let me just give everyone some word on the schedule so that you will know what is happening here we are scheduled to have some next round of votes close to three o'clock and there will be a series of four votes which will take at least forty five minutes so my goal is to wrap this up before we have to leave to vote in addition to that there are other meetings immediately after the vote so everyone can plan and that we will try to finish three at the very latest revenues were accurately reported mr chairman i think the right thing for me to do on is your microphone on yes sir thank you i think it would be more appropriate for me to refer that question to deputy entity and so whatever the revenues are that are part that we delivered by each of our businesses are provided as part of the general audit identified from each of the operating wondered the other question for you in this room the secretary testified that as the is earned one hundred fifty five million dollars in net revenue for the smithsonian since the year two thousand how much of the hundred fifty five million was already being generated by existing retail and other businesses operated by the smithsonian before the s p v was created and what portion of these residents revenues constitute new or increased revenue attributed as previous management of these activities i mr chairman we don't have a simple way of doing that analysis it's very evident to everyone that as a consequence of the creation of s p v but the institution receives considerably more funding the restricted net gain back to the institution to be able to parse through what was previously received it would not be an apples to apples comparison because of the number of additional businesses that have been added as well as the expanded services new museums a so that analysis does not exist as you've described it but if he has a day every year i assume that would be executives as this number increased or decreased in relation to increasing executive compensation congressman i do have a number i would have to look for and i will in a moment maybe on the next question i can tell you we have about four hundred eighty eight employees and i can tell you that we looked at that ratio of senior executives against the entire employee base and it has not materially changed in the last three years for which i saw the data this morning that i have to flip through to give you the actual rights funding and whatever information you can provide immediately today for any of you we keep the record open for five days for you to respond we also by the way will expect to submit questions in writing to any of the are there where here i took this position to maximize revenues that could be available to support mission activities these are all funds that earn from various different business operations or business activities that then flow to the institution the the idea that the smithsonian business ventures may have an independent mission is one that i don't think any of us would subscribe to our our job is to maximize revenue or profitability but only if it's a tittie that one would commonly believe mission appropriate or help to extend the mission if you were to look at some of the material that was provided from the early days of the inception of smithsonian business ventures i think that you would clearly see that intent in the various mandates provided by  begins with the overall compensation to an executive they are cast so that our overall compensation philosophy is to be mid market or the median of the market for comparable jobs in both the nonprofit don't receive those targets are basically budgeted targets each year the smithsonian business ventures has a advisory board they have outside directors of industry experts at a compensation committee they make recommendations to the secretary trouble trouble some to us however i think a lot of that could have been avoided if we had just heard and have this information up front as opposed to hearing it the not that we're that pleased with a thirty year contract but that is something that you guys have done the all important components to the smithsonian because when you do good he looks good and when he looks good we all farewell so i am very pleased to have you before us today the one thing i would like to ask each of you how long have you been in your respective positions since founding in your chief financial officer venture that we've gone into here now certainly you've seen others other secretaries who have gone into different business ventures prior to this one this one is pretty ambitious it seems and that's ok because everything tends to be more ambitious now than what they were years ago how do you feel this though differs from the profitability of the each other the other ventures that took place on the other secretaries do you think this one would be a you know how does one look at this in terms of measurements as to its profitability i served under secretary heyman as well as secretary small and secretary heyman was very frustrated with the income that was generated from the existing we call them auxiliary activities but they were books when i joined the smithsonian the regents were extremely concerned about it they did a number of steps to try and stem the flow of money they were able to do that and that's what led them actually to create this subcommittee the reach regents by former senator baker that eventually led to after a year of study they went outside consultants that led to the formation of smithsonian business ventures  an outside consultant and then they hired mr beer so that's the background on this this particular agreement is off more ambitious than very mor ambitious than anything else it's closest to the magazine although at the time they form the magazine thirty five years ago i don't think the dream that would ever be as successful as it has turned out it's really been the first class american product that we're very is the smithsonian magazine has been a very big success for the institution for all of the programs that we do and in the consumer marketplace for thirty five years the the idea that the smithsonian needed to have the same type of presence in the marketplace as the magazine and television and new media seemed to me when i got here and seem to the reason is because new media and television is listed as one of the things that the regions hoped that we could do in the future as new business or or a new tact and we agreed and we put together a business plan and attempted to go out and and to do that i think that if you look at where all of our earnings come from the smithsonian magazine has sustained over itself with over two million paid subscribers and has returned or over three hundred fifty million dollars to the institution in those thirty five year history we don't know what this is going to be but we do know that it has scale and that's why we built the performance benchmarks into it we knew that we couldn't risk the institution's own money or put itself at risk and so there's lots of other things that go into that but we think this one has scale it's really very difficult to say and something that is this new i suppose so but you know it sounds so fabulous you know it sounds so ambitious as just seems to be something that has been embarked upon but it's never been  barked upon before so you just tend to think with all of this you're just going to reach different heights we just don't want to exclude the public from those web sites that we have come to love and to know and we just want to make sure that when you do well that you also remember us who've bring you into our living rooms and are then every night or every so often to get the material that you have that is invaluable the last thing that i just want to say mr chairman is that this perhaps is something you cannot give me now but i would like to know just how much funds come in from your endowment from individuals from corporations foundations and how much is membership and how much money is drawn from that i'm sure those questions you cannot give me today but if you can get those to mean mr submit for the record something that gives you all of those numbers i would appreciate that thank  the gentleman from pennsylvania your questions just real briefly on the mean to prolong this but we have a thirty year contract we show time how to showtime get to be to have an showtime get to get that that is smithsonian business ventures management with involvement of our boards in our regions created a business model for how we might create a smithsonian channel that means that we would have programming created a distribution means to do it we then went out and looked at who are the potential media players we went to ten of the top media companies in the world and star encore was one of them and in fact out of that liberty media star as encore expressed a serious interest and we had a very definitive negotiation in the end that felt that fell apart about six months after that showtime networks which had seen the initial some of the initial work that we had done came forward and said they wanted to look at it closely and we did and as we got through it it was clear that they wanted to enter a serious negotiation which we brought back to the regions comparing it against the offer that we had had with stars on core and some of the other elements that had been produced in the providers to have an opportunity to i guess not to just try to offer absolutely congressman we we spoke to a variety of different types of media companies because what we were looking for with three things one someone who could make the financial commitment and as  secretary said has tens of millions of dollars up front and a continuing investment secondly so about the technical capability because the institute and then the third which really became the toughest was finding a company that was willing to actually respect  embrace the nature of the mission programs and the activities of the institution because it was so important to us that these programs and this distribution of this channel if you will would allow us to tell our story so we didn't have a lot of bitterness but we certainly went out into the marketplace thank you thank you mister gentleman from california thank you mr chairman i guess one question i have is  what other other ventures are being considered for the content that the smithsonian has in private for profit partners can you tell us of anything that is being contemplated do in the works congresswoman i believe that in the materially provided to the committee we actually showed you a sort of an overview of a ten year ten year five year look back and a five year look forward of basically a  planning document if you will at the regions sort of you would call two thousand and ten the two the two biggest initiatives that we've had on the books for years are a co publishing partner that would allow us to extend the presence of our authors and our content in a variety of trade books the television cable cable channel there aren't any other major initiative currently on the books for that type of activity so and i can assure you to the extent that we have any ideas we'll be here as soon as we get them but right now in getting these integrated and all of the work that needs to be done the harper collins program is only a year old and we actually have a hundred titles in the marketplace being produced and so and i would like to just make one correction there is nothing exclusive about our backlist distribution and there's nothing exclusive with respect to content and our authors in the hard work program as i can understand how perhaps the other witness may have assumed that because of some of the conversation about this but it's very different so i gather then that prospectively if if the if you were considering an exclusive partnership arrangement with the for profit partner you would want to have a more open process and dialogue with clear that this is a very any media business is a complex business and i have made a bunch of notes myself just some additional documents i think the staff would be useful for the staff to fully understand what was the nature of the enterprise so that it's a complex long document and if you want to really boil it down to what it is it's hard to read a contract so i think i would clearly welcome whatever involvement with the to the video but i would hope that as we move forward for example you could do an exclusive contract with some content to an internet portal i think it would be a mistake to do anything ame they do this the senate as well but the house interior appropriations subcommittee and it seems like a thirty year contract of this nature that that might have been on their agenda to mention to us and they did not do so again i don't want to speak for the secretary the deputy secretary but i've got enough meetings over the last weeks that i think i would share that we think that we the idea that a thirty year reign that really relates to the to the nature of the structure of it it's both an equity joint venture as well as a licensing term it's an unusual thing for the smithsonian to do it's not an unusual thing for a nonprofit it's not unusual for the w g b h is in other buyers and sellers of television programming to do i think that we i think that there are let me just interrupt to say since it hadn't been done before by the smithsonian i mean sure this did it in your mind is something that was new different important the same and that's exactly the type of thing specially that if you thought it might be at all controversy a lot you'd want to mention congressman i think that we missed the fact it was going to be controversial but we completely agree with california mentioned that he has i guess been working with the a nonprofit group that is attempting to provide free why five service throughout the mall in the vicinity of the smithsonian institute has run into roadblocks in that regard i guess is now being we evaluated is it possible do you know anything about that is there anything that would preclude this agreement  not i couldn't speak to i believe the deputy secretary could address that i'm not knowledgeable about the details contract and intend to in fact provide free wife i x s throughout the smithsonian institution and into our garden areas this is something you're absolutely correct congresswoman has been of a great deal of interest to a great many people and we are in fact now ready to fact go forward and provide that service in our institution but that's great news and i would just note that with that you can do the same as a museum of art is now doing podcast tours so that it's really worked out very well and and this will  further into the entire mall or do those sort of these in fact i was corrected that apparently the contract is in process not yet signed it will be within the smithsonian confines so the area of the garden area surrounding the smithsonian institution on our buildings similar to apparently an exercise that took place up here although not on the capitol buildings but apparently on buildings in proximity of the decision was to try and do something that essentially allowed it internal to our buildings and to surround ing of our said that you guys are part of the general structure of the smithsonian but do you not have a board of directors that is directly tied in with the contract has been real center of attention and i think the considerable nervousness about the thirty year term as someone commented to me the only common document in the united states thirty year term mortgage on a clearly the final point i would like to thank all the witnesses for being here i think this has been very beneficial for all of us on both sides to hear the testimony hear the questions and hear the responses so i appreciate your assistance i would also like to make clear that we will leave the record open and members having additional questions will submit them in writing and we would ask for your response within five days at that point