a

GAO

United States Government Accountability Office

Report to Congressional Requesters

January 2007 TELECOMMUNICATIONS

Issues Related to the 

Structure and Funding 

of Public Television

GAO-07-150
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

January 2007

TELECOMMUNICATIONS 

Issues Related to the Structure and 

Highlights of GAO-07-150, a report to Funding of Public Television 

congressional requesters 

How to fund public television has 

been a concern since the first 

noncommercial educational station

went on the air in 1953. The use of 

federal funds to help support 

public television has been a 

particular point of discussion and

debate. This report reviews (1) the 

organizational structure of public 

television, (2) the programming 

and other services that public

television provides, (3) the current 

funding sources for public 

television, (4) the extent to which

public television stations are

increasing their nonfederal funding 

sources and developing new 

sources of nonfederal support, and 

(5) the extent to which public 

television benefits financially from 

business ventures associated with

programming and how this 

compares with commercial

broadcasters. 

GAO reviewed revenue, 

membership, and programming 

data for all public television 

licensees. GAO also interviewed 

officials from 54 of public

television’s 173 licensees, the 

Corporation for Public 

Broadcasting, the Public

Broadcasting Service, federal 

agencies, and producers of

commercial and public television 

programming. 

Public television is a largely decentralized enterprise of 349 local stations, 

owned and operated by 173 independent licensees. The stations’ operations 

are funded in part by the Corporation for Public Broadcasting (CPB), a 

nongovernmental entity that receives federal appropriations. The Public 

Broadcasting Service (PBS), a nonprofit organization funded by fees paid by 

member licensees and CPB grants, operates a satellite-based interconnection 

system to distribute programs to local stations. These programs are created

by producers inside public television and by outside production entities. 

Public television stations broadcast national and local programs and provide 

a variety of nonbroadcast services to their communities. PBS prime-time 

and children’s programs account for the majority of broadcast hours, to 

which stations add instructional and local programs tailored to meet the 

needs and interests of their communities. Nonbroadcast services include 

educational, civic engagement, health, and emergency-alert services. 

In 2005, public television licensees reported annual revenues of $1.8 billion, 

of which 15 percent came from federal sources and the rest from a variety of 

nonfederal sources including individuals, businesses, and state and local 

governments. Federal funds help licensees leverage funds from nonfederal 

sources. Thirty of 54 licensees GAO interviewed said that cuts in federal 

funding could lead to a reduction in staff, local programming, or services. In 

general, smaller licensees receive a higher percent of revenue from federal 

sources and 11 said that cuts in federal support might force the station to 

shut down. 

Substantial growth of nonfederal funding appears unlikely. The one area 

with growth potential is major gifts, which many licensees are pursuing with 

help from CPB. Program underwriting by businesses and foundations has 

traditionally been an important source of revenues. A few licensees believe 

that these revenues could be increased if restrictions on the content of on-air 

underwriting acknowledgments were relaxed. Many licensees, however,

believe that this would go against the noncommercial character of public 

television and could cause a loss of funding support from other sources. 

Public television sometimes benefits from business ventures associated with

its programs, but these opportunities are infrequent and do not generate 

significant revenue. Public television does not have the financial resources 

to invest heavily in the cost of program production to secure a larger share 

of any resulting back-end revenues. Moreover, the sale of merchandise 

associated with a program generally returns only a small percentage of the 

retail price to the program’s producer and investors, as is also true for 

commercial television programs. 

GAO provided CPB and PBS with a draft of the report for their review and 

comment. CPB and PBS agreed with the report. 

www.gao.gov/cgi-bin/getrpt?GAO-07-150.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark L. 

Goldstein at (202) 512-2834 or 

goldsteinm@gao.gov. 
Page i GAO-07-150 Structure and Funding of Public Television

Contents

Letter 1

Results in Brief 4

Public Television Is Structured around Local Ownership and Control 

of Stations, with Assistance from National-Level Organizations 7

Public Television Stations Provide a Variety of National and Local 

Programs and Services 18

Individuals, Businesses, and the Federal and State Governments 

Provide the Majority of Funds for Public Television 28

Public Television Stations Are Pursuing a Variety of Nonfederal 

Funding Sources, but Substantial Growth to Offset a Reduction or 

Elimination of Federal Support Appears Unlikely 36

Public Television Is Unlikely to Generate Significant Additional 

Back-End Revenues 46

Agency Comments 55

Appendixes

Appendix I: Scope and Methodology 57

Appendix II: CPB Funding Allocation 61

Appendix III: Demographics of Public Television Viewers and Members 63

Data Sources and Methodology 63

Viewers of Public Television’s Prime-Time Programming 64

Viewers of Public Television Children’s Programming 64

Public Television Members 65

Appendix IV: Sesame Workshop 66

Background 66

Product Licensing 66

Relationship with Public Television 68

Appendix V: Comments from the Corporation for Public Broadcasting 70

Appendix VI: Comments from the Public Broadcasting Service 72

Appendix VII: GAO Contact and Staff Acknowledgments 73

Tables Table 1: Percentage of Revenue from Various Sources and Type of 

Public Television Licensee, 2005 30

Table 2: Percentage of Revenue from Various Sources and Size of 

Public Television Licensee, 2005 31

Table 3: Percentage of Revenues from Various Sources and Size of 

Television Market, 2005 32
Contents

Page ii GAO-07-150 Structure and Funding of Public Television

Table 4: Public Television Licensees Interviewed 58

Table 5: Components of CPB’s Community Service Grants 62

Figures Figure 1: Number of Noncommercial Educational Television 

Stations, 1953-2002 9

Figure 2: Number of Public Television Licensees, 2005 10

Figure 3: WNET (New York) Master Control Facility 12

Figure 4: Percentage of Total Broadcast Hours Filled from Various 

Sources, 2005 19

Figure 5: Types of Programming in PBS’s National Programming 

Service (Excluding Children’s Programming), 2005 21

Figure 6: Percentage of Revenue from Various Sources for Public 

Television Licensees, 2005 29

Figure 7: Retail Price, Wholesale Price, and Royalty Payments for 

General Merchandise 53

Figure 8: Sources of Revenue for Sesame Workshop, Year Ending 

June 30, 2005 67

Figure 9: Sesame Workshop Expenses, Year Ending June 30, 

2005 68

Abbreviations

APT American Public Television

CCC City Colleges of Chicago

CPB Corporation for Public Broadcasting

DEAS Digital Emergency Alert System

DTV digital television

FCC Federal Communications Commission

HDTV high-definition television

ITVS Independent Television Service

KET Kentucky Authority for Educational Television

NETA National Educational Telecommunications Association

NPR National Public Radio

NTIA National Telecommunications and Information Administration

SABS Stations Activities Benchmarking Study 

SIP Station Independence Program

PBS Public Broadcasting Service

RUS Rural Utilities Service
Contents

Page iii GAO-07-150 Structure and Funding of Public Television

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Page 1 GAO-07-150 Structure and Funding of Public Television

United States Government Accountability Office

Washington, D.C. 20548

A

January 19, 2007 Letr

The Honorable Ginny Brown-Waite

House of Representatives

The Honorable Candice S. Miller

House of Representatives

From its beginnings in the 1950s with a small number of noncommercial 

educational stations focused on formal instruction, public television has 

evolved to encompass a wide range of cultural, educational, entertainment, 

news, and public affairs programming offered by 349 stations nationwide. 

Public television stations were built and continue to operate as nonprofit, 

community-based organizations, largely funded by nonfederal sources. 

Funding for programming and station operations has been a continuing 

issue, given that public broadcasting operates outside of the advertisingbased business model that sustains commercial television. A key point in 

the evolution of public television came with the Public Broadcasting Act of 

1967, which amended the Communications Act of 1934, as amended (the 

Communications Act) to establish the Corporation for Public Broadcasting 

(CPB) and authorized federal funding to help support public television’s 

operations. The Communications Act’s current “declaration of policy” 

states that it is in the public interest of the federal government to ensure 

that all citizens have access to “public telecommunications,” of which 

public television is a part. The Communications Act also states that it is in 

the public interest to encourage the development of programming that 

involves creative risks and addresses the needs of unserved and 

underserved audiences, particularly children and minorities. 

In the decades since the passage of the Public Broadcasting Act, the 

position of public television as the primary source of alternative 

programming to the commercial broadcasting networks (such as ABC, 

CBS, Fox, and NBC) has been challenged by the emergence of cable and 

satellite television providers. These companies offer their paying 

subscribers dozens of channels—including some devoted to subjects that 

are mainstays of public television—such as nature, travel, cooking, and 

drama. In fact, most households today receive television service from a 

cable or satellite company. However, in an era of media consolidation in 

commercial television, public television stations continue to be locally 

owned and operated by community-based nonprofit organizations, 

universities, and state and local governments. Another important change in 

the media environment is the digital television (DTV) transition, a federal 
Page 2 GAO-07-150 Structure and Funding of Public Television

mandate requiring stations to transition from analog to digital transmission 

of television signals. Digital transmission not only greatly improves picture 

and sound quality, but it also enables stations to use the radiofrequency 

spectrum1

 more efficiently, thereby allowing stations to simultaneously 

broadcast multiple program channels (known as multicasting) and offer 

auxiliary services such as datacasting (the transmission of text, graphics, 

software, and Web pages to designated users). Many public television 

stations see the DTV transition as an opportunity to increase their program 

offerings—such as formal instruction and coverage of local government—

and also enhance the services they can offer to their communities, such as 

emergency communications.

Against this backdrop of change, the issue of how to fund public 

broadcasting continues to be a concern for policymakers and public 

television’s stakeholders, as it has been for decades. Without the financial 

base of advertising that sustains commercial television, public television 

stations acquire their operating revenues from diverse private and public 

funding sources, including voluntary membership gifts by viewers; support 

from organizations and businesses that underwrite programming and 

station operations; funding from private foundations; funding from 

universities; and local, state, and federal government funding. In addition, 

several signature public television programs have become cultural icons 

and have given rise to separate business ventures, such as sales of books, 

DVDs, and children’s toys, that provide additional sources of revenue. 

Given these alternative sources of funding, some policymakers and public 

television stakeholders have debated the continued role of federal funding 

and whether public television can survive and prosper with less direct 

federal support. 

In response to your request, this report examines the funding and operation 

of public television. Specifically, this report provides information on (1) the 

organizational structure of public television, (2) the programming and 

other services that public television provides, (3) the current funding 

sources for public television, (4) the extent to which public television 

stations are increasing their nonfederal funding support and developing 

new sources of nonfederal support, and (5) the extent to which public 

1

The radiofrequency spectrum is a natural resource used to provide an array of wireless 

communications services, such as mobile voice, radio and television broadcasting, radar, 

and satellite-based services.
Page 3 GAO-07-150 Structure and Funding of Public Television

television benefits financially from business ventures associated with 

programming and how this compares with commercial broadcasters.

To respond to the objectives of this report, we interviewed officials from 

CPB, the Federal Communications Commission (FCC), the National 

Telecommunications and Information Administration (NTIA) of the 

Department of Commerce, and the Public Broadcasting Service (PBS). For 

the first objective, we reviewed existing literature on the foundation and 

current structure of public broadcasting and reviewed relevant provisions 

of the Communications Act and FCC regulations. For the second, third, and 

fourth objectives, we interviewed officials from 54 of the 173 public 

television licensees; we selected licensees according to their type of 

license, total revenues and percentage of total revenues derived from 

federal funding, and by the size of the television market where the licensee 

operates.2

 We also interviewed officials from the Association of Public 

Television Stations, a membership organization representing public 

television stations; the Department of Education; the Federal Emergency 

Management Agency of the Department of Homeland Security; the Ford 

Foundation; the National Science Foundation; the Rural Utilities Service 

(RUS) of the Department of Agriculture; and the Urban Institute. 

Additionally, we analyzed 177 licensees’ revenue sources, membership, and 

programming using CPB’s Stations Activities Benchmarking Study (SABS). 

(In 2005, the year for which we have SABS data, there were 177 public 

television licensees; currently, there are 173 licensees.) SABS is a datagathering mechanism through which licensees provide information 

annually on their finances and operations. To assess the reliability of SABS 

data, we reviewed relevant information about the database, including the 

user manual and a data dictionary, and we interviewed CPB officials and 

subcontractors for information on data quality assurance procedures. We 

also performed electronic testing to detect obvious errors in completeness 

and reasonableness. We concluded that the SABS data were sufficiently 

reliable for the purposes of this report. For the fifth objective, we 

interviewed officials from organizations producing programming for public 

television, including David Grubin Productions, Ken Burns (Florentine 

Films), HIT Entertainment, Insignia Films, Lumiere Productions, 

Scholastic, Sesame Workshop, WETA (Arlington, Virginia), WGBH 

(Boston), and WNET (New York); the Independent Television Service; 

commercial broadcast networks and cable channels, including A&E 

2

We used total commercial television advertising revenues to measure the size of a 

television market.
Page 4 GAO-07-150 Structure and Funding of Public Television

Television Networks, Fox, National Geographic Channel, Nickelodeon, and 

NBC; and several experts. We also reviewed the relevant media economics 

literature and materials provided by CBS. See appendix I for a more 

detailed discussion of our overall scope and methodology. 

We conducted our review from January through November 2006 in 

accordance with generally accepted government auditing standards.

Results in Brief Public television evolved from a handful of noncommercial educational 

television stations in the 1950s to a complex and uniquely organized 

broadcasting infrastructure that spans the United States. Public television 

stations are independent, locally based entities that serve their individual 

communities. The initial basis for this localism was FCC’s decision in 1952 

to reserve 242 channel assignments for educational television stations in 

various markets across the country. Today, there are 349 public television 

stations, owned and operated by 173 licensees, which reach 98 percent of 

the households that have televisions.3

 FCC licenses public television 

stations to community organizations, local governments, universities, and 

state governments. Through the Public Broadcasting Act, the Congress 

authorized the establishment of CPB as a nongovernmental, nonprofit 

corporation to facilitate the growth and development of public television 

and radio. CPB’s primary responsibility is distributing federally 

appropriated funds to benefit public television and radio. PBS is a 

nonprofit membership organization made up of licensees of public 

television stations and is funded by fees paid by its member licensees, 

underwriting, and grants from CPB and other federal sources. PBS acquires 

children’s and prime-time programming and operates a satellite-based 

interconnection system to distribute this programming to member 

licensees. CPB and PBS do not produce programming, but rather they rely 

on suppliers internal and external to public television. These suppliers 

include larger public television stations, such as WGBH (Boston) and 

WNET (New York); external producers, such as Sesame Workshop and Ken 

Burns; and other external suppliers, such as American Public Television. 

Public television stations broadcast a variety of national and local 

programs and also provide nonbroadcast services to their communities. 

3

Throughout the text, when we refer to a specific licensee or station, we use the name or 

abbreviation of the licensee or the station call sign, whichever is most appropriate for the 

organization.
Page 5 GAO-07-150 Structure and Funding of Public Television

PBS prime-time and children’s programming accounts for a majority of 

broadcast hours for most public television stations. However, stations 

supplement these programs with both instructional and locally produced 

programming. Local programming broadcast by stations includes a variety 

of topics that represent the local interests of the community, including 

history and public affairs, arts and culture, and community events. In some 

instances, stations focus their instructional programming on grades K 

through 12 educational material, while in other instances, stations focus on 

university-level educational material. In addition to programming, public 

television stations provide a variety of nonbroadcast services. Stations 

provide educational services, including programs to help prepare children 

for school, facilitate teacher training, and deliver instructional materials. 

Stations also provide civic engagement and health outreach services. 

Finally, the Department of Homeland Security has been working with 

public television stations to provide a digital emergency alert system that 

will improve the ability of emergency managers and public safety officials 

to rapidly broadcast emergency information, potentially enabling nearuniversal service throughout the United States once the program is 

complete. 

Public television receives the majority of its revenues from individuals, 

businesses, and the federal and state governments. In 2005, public 

television licensees reported annual revenues of $1.8 billion, of which 15 

percent came from federal sources and the rest from a variety of 

nonfederal sources including individuals, businesses, foundations, and 

state and local governments. However, the sources of revenue vary 

dramatically from licensee to licensee. Licensees with less operating 

revenue (small licensees) and licensees that provide service in small 

television markets receive a larger percentage of revenue from federal 

sources than do licensees with more operating revenue (large licensees) 

and licensees that provide service in large television markets. To help 

public television licensees complete the DTV transition, the Congress has 

appropriated nearly $400 million for CPB, NTIA, and RUS since 1999. Many 

licensees have received some form of support from the federal government 

for the DTV transition. Federal funds also help licensees leverage funds 

from nonfederal sources. Thirty of 54 licensees with whom we spoke said 

that a reduction or elimination of federal funding could lead to a reduction 

in staff, local programming, or services; 11 others, primarily small 

licensees, said that a reduction or elimination of federal funding might 

force the station to shut down. Similar to licensees, PBS receives funding 

from a variety of sources, including underwriting, fees from member 
Page 6 GAO-07-150 Structure and Funding of Public Television

stations, and CPB and federal sources, and a reduction or elimination of 

federal funding could negatively impact PBS programming.

Public television licensees receive nonfederal support from a variety of 

sources, but substantial growth of nonfederal support to offset a reduction 

or elimination of federal support appears unlikely. Between 1999 and 2005, 

revenues from individual member gifts of less than $1,000—or basic 

membership revenue—decreased by 6 percent. According to CPB officials, 

public television lags behind other nonprofit organizations in attracting 

major gifts. For example, in 2005, 13 percent of revenues from members 

came from gifts of $1,000 or more. In response to this situation, CPB 

launched a major giving initiative to help licensees capture major gifts. 

Many licensees report initial success with major giving, but see the 

initiative as a long-term effort. Foundations represent another nonfederal 

funding source; but foundations typically only fund capital expenditures or 

special projects, and foundation support is unlikely to expand to include 

general station operations. The trend in underwriting support—or revenues 

derived from on-air acknowledgements of businesses providing financial 

support—has been mixed, with some licensees experiencing increases and 

others decreases. According to many licensees, corporate consolidation 

and an increased focus on advertising among businesses have made 

garnering underwriting support increasingly difficult. Eleven of the 54 

licensees with whom we spoke favor an easing of the statutory and 

regulatory restrictions on on-air underwriting acknowledgments as a 

means to secure more underwriting revenues. However, 19 licensees with 

whom we spoke oppose greater commercialization of underwriting, 

believing that it could threaten other sources of support and the mission of 

public television. Finally, licensees generally receive minimal revenues 

from ancillary and miscellaneous activities, such as leasing space on 

television towers.

Although public television receives $7 million to $10 million in annual 

revenue from business ventures associated with its programming, these 

business ventures are unlikely to generate significant additional revenue. 

Some television programs generate back-end revenues from separate 

business ventures, such as syndication, book and video sales, and clothing 

and toy sales. In commercial television, broadcast networks and cable 

channels receive rights to back-end revenues associated with these 

business ventures. However, the extent of the up-front investment in the 

development and production of programming greatly influences the rights 

to back-end revenues. Similar to their counterparts in commercial 

television, CPB and PBS negotiate financing and rights to back-end 
Page 7 GAO-07-150 Structure and Funding of Public Television

revenues with producers of programming. The extent to which CPB and 

PBS receive rights to back-end revenues depends on their up-front 

investment in program development and production—just as it does in the 

commercial television environment—and the importance of PBS as a 

distribution outlet for producers of programming. Given its statutorily 

defined mission and limited financial resources, public television is 

unlikely to greatly increase back-end revenues. In particular, relatively few 

programs generate significant back-end revenues. When a program is 

successful, the royalties to program producers typically yield 2.5 percent to 

7.5 percent of the gross retail price of the merchandise sold, and the 

producers share these royalties with program investors and others. 

Because of funding limitations, CPB and PBS do not make major 

investments in individual programs and therefore receive a modest share of 

the resulting back-end revenues. 

We provided a draft of this report to CPB; the departments of Agriculture, 

Commerce, Education, and Homeland Security; FCC; and PBS. CPB and 

PBS agreed with the report and their written comments appear in 

appendixes V and VI, respectively. The Department of Agriculture neither 

agreed nor disagreed with the report, but it emphasized the extensive 

burden that the DTV transition imposes on small and rural television 

stations. The Department of Education, the Department of Homeland 

Security, and FCC provided technical comments that we have incorporated 

in this report as appropriate. The Department of Commerce had no 

comments on the report.

Public Television Is 

Structured around 

Local Ownership and 

Control of Stations, 

with Assistance from 

National-Level 

Organizations

Many programs shown on public television stations carry the logo of PBS, 

which can create the misperception that public television is a single, 

national-level enterprise. However, public television is not a single, national 

entity, nor is it identical with PBS. Public television evolved from a handful 

of noncommercial educational television stations in the early 1950s to 349 

stations today that reach virtually every household in the United States. 

The stations were built and continue to operate as independent, nonprofit, 

community-based entities offering a mix of broadcast programming and 

outreach activities to their local communities. The late 1960s saw the 

creation of national-level organizations to support and interconnect the 

stations: CPB and PBS. With producers and distributors supplying a wide 

variety of educational, cultural, entertainment, and public affairs programs, 

public television today remains a locally based enterprise with a national 

reach that serves the particular needs and interests of the communities 

within the range of each station. 
Page 8 GAO-07-150 Structure and Funding of Public Television

Public Television Stations 

Are Independent, Locally 

Based Entities That Serve 

Their Communities

Public television began as, and continues to be, a largely decentralized 

enterprise, with ownership and control of the stations maintained at the 

state or local level. The basis for this localism was established by FCC’s 

initial decision in 1952 to reserve 242 channels assignments for educational 

television stations in various markets across the country.4

 These reserved 

channels were to serve “the educational and cultural broadcast needs of 

the entire community to which they are assigned.” It was left to the local 

communities to construct and operate television stations to use these 

reserved channels, since neither FCC nor the Congress provided funds for 

this purpose.

The growth of public television’s station infrastructure has been the work 

of decades, as civic leaders, universities, and state and local governments 

have marshaled funding and operational support from public and private 

sources to establish and operate noncommercial educational television 

stations to serve their communities. Today, there are 349 such stations, 

owned and operated by 173 licensees, which reach at least 98 percent of 

households that have a television.5

 Figure 1 illustrates the pace of station 

growth since 1953, when KUHT (Houston, Texas) became the first 

noncommercial educational television licensee.

4

In addition to the 242 noncommercial assignments, FCC’s order allocated 2,053 commercial 

stations. Since then, the number of reserved channels has been increased incrementally. 

Sixth Report and Order, 41 FCC 148 (1952). 

5

Licensees can operate more than one station, such as licensees chartered by a state to 

operate a statewide network. An example of a state network is the Kentucky Authority for 

Educational Television (KET), which has 16 stations on the air throughout the state. 
Page 9 GAO-07-150 Structure and Funding of Public Television

Figure 1: Number of Noncommercial Educational Television Stations, 1953-2002

Most public television stations broadcast under the terms of 

noncommercial educational television licenses granted to them by FCC. 

Under FCC rules, licensees of public television stations must be one of the 

following (see fig. 2):

• A nonprofit educational organization, such as a university or local 

school board. For example, WKYU (Bowling Green, Kentucky) is a 

university licensee.

• A governmental entity other than a school, such as a state agency. For 

example, Mississippi Public Broadcasting (Jackson, Mississippi) is a 

state licensee and WNYE (New York) is a local licensee. 

• Another type of nonprofit educational entity, such as a “community 

organization.” For example, North Texas Public Broadcasting, Inc., 

operates KERA (Dallas, Texas).

0

50

100

150

200

250

300

350

400

2001

199

1999

7

199

1995

3

198

1985

1987

1989

1991

3

197

1975

1977

1979

1981

3

196

1965

1967

1969

1971

3

195

1955

1957

1959

1961

3

Number of stations

Source: GAO analysis of PBS data.

Year
Page 10 GAO-07-150 Structure and Funding of Public Television

Figure 2: Number of Public Television Licensees, 2005

Public television stations’ most visible activity is broadcasting programs to 

serve the educational and cultural needs of their communities. Each 

station’s management decides what programs to air to meet the particular 

needs and tastes of their communities. In addition, stations are typically 

involved in a variety of nonbroadcast activities that extend their 

educational and cultural mission and support their local communities. As 

noncommercial educational licensees, the stations must support 

themselves financially without reliance on the airing of commercial 

advertising.6

 Both the stations’ activities and the various funding streams 

that support them are discussed in more detail in later sections of this 

report.

The stations’ overall operational expenses vary greatly depending on a 

station’s size and specific activities. In fiscal year 2005, these expenses 

6

Advertisements are any message or other programming material that is broadcast or 

otherwise transmitted “in exchange for any remuneration” and is intended to “promote any 

service, facility, or product” of for-profit entities. 47 U.S.C. §399b(a). See, also 47 C.F.R. 

§73.621(e).

0

20

40

60

80

100

Number

Source: GAO analysis of SABS data.

Type of licensee

Community

Local government

 or school board

State

University
Page 11 GAO-07-150 Structure and Funding of Public Television

ranged from $881,106 for WVUT (Vincennes, Indiana) to $174,474,123 for 

WGBH (Boston). Stations incur expenses associated with

• construction and maintenance of broadcast towers and transmission 

equipment;

• utilities associated with signal transmission;

• office and studio facilities;

• master control equipment to manage the station’s broadcast traffic (see 

fig. 3);

• production equipment, such as television cameras;

• program production and acquisition fees;

• nonbroadcast community outreach activities; and

• salaries for station personnel. 
Page 12 GAO-07-150 Structure and Funding of Public Television

Figure 3: WNET (New York) Master Control Facility

Many stations have formed affinity groups, such as the Organization of 

State Broadcasting Executives, the Small Station Association, and the 

University Licensee Association, to deal with common concerns. Stations 

may also be members of the Association of Public Television Stations, a 

nonprofit organization established in 1980 to advocate for public television 

interests at the national level.

The Corporation for Public 

Broadcasting Provides 

Federal Support to Stations 

and Other Public Television 

Entities

Funding has been a continual concern for public television. As noted 

earlier, the channels reserved for noncommercial educational television in 

1952 did not come with any federal funding to get the stations up and 

running. The first decade of public television saw slow growth in the 

number of stations. By 1960, 49 stations were broadcasting. To spur the 

construction of stations, the Educational Television Facilities Act of 1962 

was enacted to provide the first direct federal funding for station

Source: GAO.
Page 13 GAO-07-150 Structure and Funding of Public Television

infrastructure.7 The Educational Television Facilities Act authorized a $32 

million, 5-year program of federal matching grants to licensees for 

facilities.8

 The program, however, did not cover stations’ operational 

expenses. In 1965, the Carnegie Corporation sponsored a commission to 

study educational television’s financial needs. As recommended in the 

Carnegie Commission’s 1967 report, President Lyndon Johnson proposed, 

and the Congress enacted, the Public Broadcasting Act, which amended the 

Communications Act to reauthorize funding for facilities and equipment 

grants under the Educational Television Facilities Act and to authorize 

additional federal funding for public television through a new entity—

CPB.9

CPB was authorized under the Public Broadcasting Act to be established as 

a nonprofit corporation to facilitate the growth and development of both 

public television and public radio, along with the use of these media for 

instructional, educational, and cultural programming. This private 

corporation structure was to afford “maximum protection from extraneous 

interference and control.”10 CPB operates under the provisions of the 

Communications Act, and is governed by a board of directors consisting of 

nine members appointed by the President and confirmed by the Senate. 

The Communications Act includes a congressional “Declaration of Policy” 

stating, among other things, that it is in the public interest to encourage the 

growth of public radio and television, as well as the development of 

programming that involves creative risks and serves the needs of unserved 

and underserved audiences, particularly children and minorities. The 

declaration also states that public telecommunications services (including 

public television and radio) constitute a valuable local community resource 

for addressing national concerns and local problems, and that it is in the 

interest of the federal government to ensure that all citizens have access to 

these services.11

7

Pub. L. No. 87-447, 76 Stat. 64 (1962).

8

This program was originally administered by the Department of Health, Education, and 

Welfare to provide grants. It was later moved to NTIA in the Department of Commerce, 

which administers the program today. 

9

Public Broadcasting Act of 1967, Pub. L. 90-129, 81 Stat. 365 (1967).

1047 U.S.C. §396(a)(10).

1147 U.S.C. §396(a)(1-10).
Page 14 GAO-07-150 Structure and Funding of Public Television

CPB’s main responsibility is distributing congressionally appropriated 

funds to benefit public broadcasting (both public television and public 

radio).12 CPB allocates its appropriated funds (which constitute virtually its 

entire budget) in accordance with the provisions of the statute.13 The 

statute directs CPB to allocate yearly 6 percent of its appropriated funds 

for “system support” (largely royalty fees, station interconnection costs, 

and projects and activities to enhance public broadcasting) and not more 

than 5 percent for CPB’s administrative expenses. Of the remaining funds 

(about 89 percent), 25 percent is to be allocated for public radio and 75 

percent for public television. There is a further division of the funds for 

public television: 75 percent is to be made available for distribution to 

station licensees and 25 percent for national programming. Because the 

distribution formula is defined by statute, changes in CPB’s yearly 

appropriation affect both public television and public radio licensees.

The principal mechanism by which CPB distributes federal funding to 

public television licensees is the Community Service Grant program.14 CPB 

currently administers the program by providing each licensee that operates 

an on-air public television station with a “basic” grant of $10,000. In 

addition to the basic grant, eligible licensees receive two component grants 

in their Community Service Grant—a “base” grant and an “incentive” grant. 

Base grants are determined by the statutory allocations noted above, CPB’s 

annual appropriation, the number of licensees eligible for grants, and a 

fixed grant funding level set by CPB’s board of directors. Incentive grants 

are designed to encourage stations to maintain and stimulate new sources 

of nonfederal funding support. Accordingly, the size of an incentive grant 

depends on the amount of revenues that an individual licensee raises from

12In passing the Public Broadcasting Act, the 90th Congress saw annual appropriations for 

CPB as a temporary measure for providing funding support for public broadcasting pending 

the development and adoption of a long-term financing plan. Various long-term financing 

proposals have been suggested over the years, without a consensus being reached. In the 

absence of a long-term financing plan, CPB has continued to receive nearly all its budget in 

the form of annual federal appropriations. Since 1976, the Congress has provided a 2-year 

advanced appropriation for CPB.

1347 U.S.C. §396(k).

14Statutory provisions requiring CPB to distribute funds directly to licensees were first 

enacted in 1975. See, Public Broadcasting Financing Act of 1975, Pub. L. No. 94-192, 89 Stat. 

1099. 47 U.S.C. §§396(k)(5), (6) and (7).
Page 15 GAO-07-150 Structure and Funding of Public Television

nonfederal sources.15 (See app. II for detailed information on the 

components of Community Service Grants.)

The Public Broadcasting 

Service Is a Nonprofit 

Organization That Provides 

Technical and Programming 

Support to Stations

One of the goals of the Public Broadcasting Act was to establish a system to 

interconnect the individual public television stations for the distribution of 

programming. The Communications Act, as amended by the Public 

Broadcasting Act, authorizes CPB to assist in the establishment and 

development of one or more interconnection systems, but in keeping with 

the concept of local control, CPB is expressly prohibited from owning the 

interconnection systems or from producing, scheduling, or disseminating 

programs.16 To fill these needs, CPB worked with the stations and other 

stakeholders to create PBS in 1969 as an entity for managing an 

interconnection system and acquiring and distributing programs. PBS was 

established as a private, nonprofit organization made up of licensees of 

noncommercial television stations. Today, nearly all public television 

licensees have chosen to be members paying assessments for access to 

PBS national programming. PBS is governed by a board with a majority of 

members representing stations. PBS’s activities and services include the 

following:

• acquiring and promoting the programs for children’s and prime-time 

broadcast that make up PBS’s “National Programming Service;”

• operating a satellite-based interconnection system for distributing 

programming to member stations for broadcast to their local 

communities;

• providing educational services, such as its Web-based TeacherSource; 

and

• assisting member stations with fund-raising and development support, 

as well as a variety of engineering and technology development issues, 

such as the digital transition.

15For a more detailed explanation of the allocation and distribution process, see GAO, 

Telecommunications: Issues Related to Federal Funding for Public Television by the 

Corporation for Public Broadcasting, GAO-04-284 (Washington, D.C.: Apr. 30, 2004).

1647 U.S.C. §396(g)(3).
Page 16 GAO-07-150 Structure and Funding of Public Television

As a result of agreements with the stations at the time of its creation, PBS 

was authorized to coordinate the development of a national program 

schedule, but not to produce broadcast programming of its own. 

Programming comes from individual public television stations, outside 

production companies, and independent producers. PBS selects programs 

to be included in its National Programming Service and distributes them to 

stations via the interconnection system. Stations exercise substantial 

discretion over programming decisions and are free to choose which of 

these programs to broadcast. 

A Variety of Entities 

Produce and Provide Public 

Television Programs

Television production involves developing and funding an individual 

program or series from an initial concept to a finished product. Producers 

of programming for public television are both internal to public television, 

such as producing stations, and external to public television, such as 

outside producers.

Producing Stations. A small number of the larger public television 

stations regularly produce and coproduce programs and series designed for 

national audiences that are included in PBS’s National Programming 

Service. Examples include WGBH (Boston): NOVA, Mystery!, Frontline, 

and Masterpiece Theatre; WNET (New York): American Masters, Great 

Performances, and Nature; WETA (Arlington, Virginia): The NewsHour 

with Jim Lehrer and Washington Week; and OPB (Portland, Oregon): 

History Detectives and The New Heroes. Other public television stations 

may, from time to time, produce a show that is chosen by PBS for national 

broadcast or by individual stations for local broadcast.

Local Production. Aside from broadcasting programs developed for a 

national audience, stations produce and broadcast their own local 

programs that are designed to meet the special needs and interests of their 

individual communities. Because program production can be expensive, 

the amount of a station’s local production is closely tied to its budgetary 

resources and underwriting support from the business community. 

Examples of such locally produced programs include WVPT’s 

(Harrisonburg, Virginia) farm report, Rural Virginia, and WTTW’s 

(Chicago) showcase of local events and people, Chicago Tonight. 

Outside Producers. These producers are not public television entities but 

are independent production companies and individual producers who 

create programming that is acquired by PBS or individual stations for their 

broadcast schedules. One such production company is Sesame Workshop, 
Page 17 GAO-07-150 Structure and Funding of Public Television

the producer of Sesame Street. Although this long-running program has 

become strongly identified with public television and PBS, Sesame 

Workshop is a nonprofit educational organization. (See app. IV for a 

description of Sesame Workshop.) An example of a for-profit production 

company is HIT Entertainment, the producer of shows such as Barney & 

Friends and Bob the Builder. There are also independent producers of 

public television programming, who are generally not affiliated with a 

studio, a television station, or a major production company. Ken Burns, for 

example, has produced some of public television’s best-known series, such 

as The Civil War, Baseball, and Jazz, as well as profiles of notable 

Americans, such as Mark Twain and Frank Lloyd Wright. International 

producers are another source of programming. British productions, in 

particular, have been a regular feature of public television for decades.

The Independent Television Service (ITVS). In 1988, the Congress 

directed CPB to provide adequate funds to an independent television 

production service.17 Pursuant to this mandate, CPB provides annual 

funding to ITVS. ITVS funds, distributes, and promotes new programs 

developed by independent producers primarily for public television. ITVS 

looks for proposals that increase diversity on public television and present 

a range of subjects and viewpoints that complement and provide 

alternatives to existing public television offerings. An example of ITVS’s 

programs include And Thou Shalt Honor. . ., which explores the increasing 

role of caregiving for elderly Americans. 

Non-PBS Distributors of Programming. Although PBS is the principal 

distributor of children’s and prime-time shows for its member stations, 

other distributors also provide stations with programs. One is American 

Public Television (APT), which distributes shows such as Lidia’s ItalianAmerican Kitchen and Rick Steves’ Europe. Another is the National 

Educational Telecommunications Association (NETA), which distributes 

shows such as This is America with Dennis Wholey. Stations can also 

acquire broadcast rights from international distributors.

1747 U.S.C. §396(k)(3)(B)(i).
Page 18 GAO-07-150 Structure and Funding of Public Television

Public Television 

Stations Provide a 

Variety of National and 

Local Programs and 

Services 

Public television stations broadcast a mix of national and local programs. 

PBS prime-time and children’s programming constitute a majority of 

broadcast hours for most public television stations. However, stations 

supplement these programs with both locally produced and instructional 

programming to meet the needs of their communities. In addition to 

programming, public television stations provide a variety of nonbroadcast 

services. Stations provide educational services, including programs to help 

promote literacy and facilitate teacher training. Some stations also provide 

civic engagement and health outreach services. Finally, many stations 

provide emergency-alert services to facilitate communication among public 

safety officials and between public safety officials and the public.

Public Television Stations 

Provide a Variety of 

National and Local 

Programming

Public television stations produce, acquire, and broadcast programs from a 

variety of sources. According to the Communications Act, public television 

programming should, among other things, (1) serve educational, cultural, 

and instructional purposes; (2) address the needs of unserved and 

underserved audiences, particularly children and minorities; and (3) serve 

local and national interests.18 (See app. III for the demographic 

characteristics of public television viewers.) As we mentioned earlier, each 

station decides what programs to broadcast to meet the needs and tastes of 

its communities. Figure 4 illustrates the percentage of broadcast time filled 

from various program sources. On average, public television stations use 

PBS programs for 67 percent of all broadcast hours. To a far lesser extent, 

stations rely on APT and NETA for nationally distributed programming. 

Finally, stations dedicate about 4 percent of broadcast hours to local 

programs.19

1847 U.S.C. §396(a).

19Other sources of programming include Annenberg Media; other public television stations; 

and international sources, such as the BBC. 
Page 19 GAO-07-150 Structure and Funding of Public Television

Figure 4: Percentage of Total Broadcast Hours Filled from Various Sources, 2005 

a

“PBS Non-Children’s” includes programming from the National Programming Service (excluding 

children’s programming), the Station Independence Program, PBS Plus, and other types of PBS 

program acquisitions. 

The DTV transition expands the programming opportunities for public 

television stations through multicasting. For example, in the Washington, 

D.C., television market, WETA (channel 26) broadcasts 26.1, 26.2, 26.3, and 

26.4, or four separate digital video signals in addition to its analog signal, 

expanding the amount of programming that WETA can broadcast. Among 

the stations we contacted that are broadcasting a digital signal, most are 

simulcasting (or repeating) their analog signal on one of these digital 

signals. Most stations we contacted that broadcast in digital also provide 

additional programming streams such as “PBS HD,” PBS’s high-definition 

programming service; “World,” an aggregation of PBS and other nonfiction 

programs; and “Create,” lifestyle and how-to programs. In addition, some 

stations offer instructional or regional programming. For example, KET 

(Lexington, Kentucky) offers two instructional channels for Kentucky 

schools and KAMU (College Station, Texas) offers “The Research Channel.” 

KTCA (St. Paul, Minnesota) offers “Minnesota Channel,” which features a 

variety of programming that is from or about Minnesota and its close 

neighbors, and WFSU (Tallahassee, Florida) provides “The Florida 

3%

NETA

Source: GAO analysis of SABS data.

10%

16%

51%

4%

Local

APT

Other

PBS Non-Children’sa

16% PBS Children’s
Page 20 GAO-07-150 Structure and Funding of Public Television

Channel,” a C-SPAN-type channel focusing on Florida. Some station 

officials with whom we spoke indicated that their future multicasting plans 

include providing a broader range of programming that is more tailored to 

the needs of their communities. For example, some stations indicated that 

they plan to offer additional programming from packaged programming 

streams, such as “V-me,” a channel planned for launch in early 2007 that 

will feature Spanish language programs on a variety of topics, or “MHz 

WORLDVIEW,” which offers international programming. In addition, some 

stations plan to create their own programming streams tailored to local 

audiences. For example, WYES in New Orleans, Louisiana, is collaborating 

with local organizations to develop a tourist-oriented channel, and South 

Dakota Public Broadcasting (Vermillion, South Dakota) is working with 

local and state organizations to create a channel that would focus on 

instructional programming for classroom use during the day and children’s 

programs in the evening.

We identified several types, or streams, of programming broadcast by 

public television stations. These streams of programs include PBS nonchildren’s, children’s, local, and instructional programming. While most 

public television stations share some common programming, such as PBS 

Primetime and PBS Kids, additional programming choices, such as local 

and instructional programming, vary from station to station.

PBS Programming. Almost all public television stations carry PBS 

programming. PBS programming represents about half of the broadcast 

hours provided by public television stations and is a cost-effective 

approach to acquire and broadcast programming.20 Most PBS programming 

is provided via PBS’s National Programming Service, which features a 

variety of educational and cultural topics. PBS takes a multimedia 

approach to expand the reach of its programming, including Web sites, 

teachers’ guides, and lesson plans for many programs. Figure 5 illustrates 

the major program themes included in PBS’s National Programming 

Service, excluding children’s programming, which is addressed in the next 

section. These themes include the following:

• Public affairs and news programs, such as The NewsHour with Jim 

Lehrer, long-form coverage and analysis of national news; Nightly 

20In 2005, stations paid approximately $86 per hour for PBS programming versus an average 

of $1,785 per hour for local programming that they broadcast.
Page 21 GAO-07-150 Structure and Funding of Public Television

Business Report, business and economic news; and Frontline, longform public-affairs documentaries. 

• Science and nature programming, such as Nova; Nature; and Scientific 

American Frontiers, covering new technologies and discoveries in 

science and medicine. 

• Arts and drama programming, such as American Masters, specials on 

American cultural artists; Masterpiece Theatre, a drama series featuring 

works by classic and contemporary writers; and Great Performances, 

broadcasts of music, theater, and dance performances.

• History programming, such as American Experience, Ken Burns’ 

American Stories, and History Detectives. 

• Life, cultural, and other programming, such as Religion & Ethics 

Newsweekly, news on and analysis of religion and ethics; Independent 

Lens, documentaries and dramas featuring diverse stories; and Wide 

Angle, international current affairs documentaries. 

Figure 5: Types of Programming in PBS’s National Programming Service (Excluding 

Children’s Programming), 2005

Children’s Programming. Children’s programming constitutes an 

important portion of broadcast time, and many station officials told us that 

Life, culture, and other

12%

Source: GAO analysis of PBS data.

13%

14%

17%

44%

Science and nature

Arts and drama

History

Public affairs and news
Page 22 GAO-07-150 Structure and Funding of Public Television

it is one of the strengths of public television.21 We found that children’s 

programming accounts for 16 percent of all program hours broadcast by 

public television stations. Children’s programming represents over 40 

percent of the weekday programming schedule for many stations. Many 

stations broadcast about 8 to 10 hours of children’s programming per 

weekday, often beginning before 8:00 a.m. and ending between 5:00 p.m. 

and 6:00 p.m. Stations often design their weekday schedule to include 

programming oriented toward the prekindergarten age group during the 

school day and toward school-age children, after school. 

PBS Kids features nonviolent, curriculum-based content that promotes 

skills such as literacy, math, problem solving, and social skills. Several 

prominent examples of children’s programming include Sesame Street, 

which encourages the development of preschool level skills, such as those 

needed for reading, writing, math, and science; Between the Lions, which 

fosters literacy skills among 4 to 7 year olds; Maya & Miguel, which 

encourages children to appreciate other cultures and builds understanding 

of English among 6 to 11 year olds; and Cyberchase, which promotes math 

problem-solving skills among 8 to12 year olds. PBS and member stations 

leverage the concepts taught in these and other children’s programs via 

Web resources, including lesson plans, activities, parent guides, book 

suggestions, and links to other resources related to the skills promoted in 

specific programs. 

Local Programming. Most public television stations produce and 

broadcast some local programming in order to meet specific needs of their 

audiences. On average, local programming represents about 4 percent of 

total broadcast hours for public television stations. Some stations we 

contacted indicated that they would like to provide more local 

programming, but that local production is expensive. Although local 

programming does not constitute a large percentage of the programming 

provided by public television, some stations we contacted emphasized the 

unique nature of public television’s local programming or the importance of 

local programming to their communities. Some stations mentioned that 

they are the only source in their community of local programming 

unrelated to news or sports. Stations we contacted cited many examples of 

local programming, such as the following: 

21“PBS Kids” programs constitute most of the children’s programming broadcast by public 

television stations.
Page 23 GAO-07-150 Structure and Funding of Public Television

• Many stations provide programming on local and state history and 

public affairs. For example, KET (Lexington, Kentucky) covers the 

Kentucky state legislature live; many stations provide state election 

coverage; and, of the stations we contacted, the majority provide at least 

one public affairs program, such as KAID’s (Boise, Idaho) Dialogue. 

• Some stations produce local programming to enhance access to arts and 

cultural amenities. WBRA (Roanoke, Virginia) produces a virtual 

excursion show introducing viewers to local sites, a weekly open 

microphone show featuring soloists and small groups, and a weekly 

concert series showcasing old-time and bluegrass music from the 

region. 

• Some stations broadcast local events and residents that are not covered 

by national networks. For example, KNCT (Killeen, Texas) broadcast 

the arrivals of and ceremonies for the 1st Cavalry Division and the 4th 

Infantry Division after their return from Iraq; KOOD (Bunker Hill, 

Kansas) broadcasts some local high school sporting events; and KNME 

(Albuquerque, New Mexico) produces documentaries on the art, 

culture, history, and cultural diversity of New Mexico. 

• Some stations also provide programming that gives underserved 

viewers access to services and information they might otherwise have 

difficulty obtaining. For example, several stations broadcast call-in 

shows, such as Doctors on Call, Lawyers on the Line, and Homework 

Hotline, during which viewers can ask questions of health-care 

professionals, lawyers, and teachers, respectively. Other similar 

programs include Healthy Minds, a WLIW (Plainview, New York) 

program about mental illness; specials on methamphetamine, such as 

Meth in Wisconsin from WPTV (Madison, Wisconsin); and topics such 

as affordable housing on KCWC’s (Riverton, Wyoming) Wyoming 

Perspectives. 

Instructional Programming. Many public television stations provide 

formal instructional programming to meet local educational needs. 

Instructional programming constitutes about 4 percent of total broadcast 

hours. The amount and type of instructional programming offered varies 

from station to station. 

• KET (Lexington, Kentucky) provides instructional programming for 

students in grades K through 12 and adults. For grades K through 12, 

KET produces AP courses, virtual field trips, and a news program; for 
Page 24 GAO-07-150 Structure and Funding of Public Television

adults, KET provides programming for adult basic education, GED 

preparation, workplace essential skills, and childcare certification 

training.22

• WETP (Knoxville, Tennessee) offers 6 hours of instructional 

programming per day, 175 days per year, for grades K through 12 and 

teachers. In addition, WETP provides “in-service” professional growth 

programming for teachers and administrators, including programs such 

as Reading Rockets: Launching Young Readers; Managing Your 

Classroom: Supporting Students at Risk; and Principals & Leaders: 

Set High Expectations & Standards. 

• WYCC (Chicago), licensed to the City Colleges of Chicago (CCC), offers 

5 1⁄2 hours of instructional programming each weekday. In 2 1⁄2 years, 

students can fulfill virtually all requirements for an associate’s degree 

from CCC by participating in WYCC’s telecourses. 

Public Television Stations 

Provide a Variety of 

Nonbroadcast Services

Public television stations provide a variety of nonbroadcast services to 

meet local and national needs. As set forth in the Communications Act, 

public television stations constitute local community resources for using 

electronic media to address national concerns and solve local problems 

through outreach and other community programs.23 Some public television 

services are federally funded and centrally facilitated, but involve some 

local implementation. These services include Ready To Learn, TeacherLine, 

and the Digital Emergency Alert System, which address both national and 

local needs, such as literacy, teacher training, and emergency response. 

Other services are developed and administered at the local level to meet 

22KET developed much of its programming for Kentucky, but other public television stations 

throughout the United States also broadcast its programming.

2347 U.S.C. §396(a)(8).

WCTE Produces a Variety of Local 

Programming for the Rural Upper 

Cumberland Region

Source: WCTE.

WCTE (Cookeville, Tennessee) produces over 200 

hours of local programming annually, including 

Upper Cumberland Business Profiles, featuring 

area business leaders; Kaleidoscope, a

magazine-type program highlighting community 

events; Tennessee Sportsman, featuring hunting 

and fishing; Heart and Soul, a concert series; Road 

Trips, highlighting regional travel destinations; a

book review series; coverage of the Smithville 

Fiddlers’ Jamboree, the Putnam County Fair, and 

the Cookeville Christmas Parade; local high school 

and college sports; High School Academic Bowl, 

covering 30 competitions annually; House Call, a

medical call-in program; and an educational series

on sexual abuse. 
Page 25 GAO-07-150 Structure and Funding of Public Television

needs of the station’s communities. We identified four primary types of 

nonbroadcast services: educational, civic engagement, health, and 

emergency services. 

Educational Services. Educational services extend the value of public 

television’s electronic resources, especially broadcast programming and 

Web resources, to help fulfill a variety of local and national educational 

needs. These services are rooted in the historical education mission of 

public television and are the most common type of services provided by the 

stations we interviewed. For the most part, public television’s educational 

services are designed to align with local and national standards. 

Public television’s centrally facilitated educational services help prepare 

children for school, train teachers, and provide teaching resources; these 

services often rely on federal funding and involve some local 

implementation. The Department of Education’s Ready To Learn initiative 

was a joint initiative of PBS and 149 public television licensees and 

included educational programming, workshops, books and magazines, Web 

sites, and classroom resources. Until recently, almost all public television 

licensees provided local outreach in association with Ready To Learn, 

including workshops for over 140,000 caregivers and teachers annually, 

focusing on linking concepts presented in programs to skill-building 

activities. Many aspects of the program are being continued or modified 

under the new Ready To Learn and Ready to Lead in Literacy initiatives, 

with less emphasis on local-level workshops and greater emphasis on 

educational programming and more geographically limited, need-targeted 

outreach. Another initiative featuring PBS and station involvement is 

TeacherLine, which is funded through the Department of Education’s 

Ready to Teach program. TeacherLine provides pedagogical and content 

training for teachers, consistent with national and state standards. Over 

22,000 teachers in all 50 states and the District of Columbia enrolled in 

TeacherLine courses from 2000 through 2005. While PBS provides access to 

the online courses, several stations customize or supplement course 

modules for teachers in their region, and many higher education 

institutions provide graduate credit for TeacherLine courses. In addition to 

these initiatives, PBS offers TeacherSource, a Web site that provides at 

least 3,000 free lesson plans, designed to be consistent with individual state 

education standards, for teachers of grades pre-K through 12. 

At the local level, stations initiate a variety of other educational services. 

Station officials whom we spoke with cited many examples of educational 

services, including the following:

KLVX Provides Instructional Programming

and Services for Clark County, Nevada

Source: Vegas PBS.

KLVX (Las Vegas, Nevada) provides instructional 

programming and services for Clark County via

multiple media and multiple delivery mechanisms, 

including a media center with over 15,000 items

available for daily delivery to local schools; a

free-loan, captioned media library available to deaf 

or hard-of-hearing students and adults, their 

parents, and their caregivers; free video streaming 

of instructional programming aligned with state 

standards; and a “Virtual High School” with courses

for students throughout the state, accessible via

broadcast, DVD, video, and the Internet. 
Page 26 GAO-07-150 Structure and Funding of Public Television

• Stations increasingly offer instructional programming and other 

instructional resources via multiple platforms, especially the Internet. 

Some station officials said that they offer instructional resources, such 

as advanced placement courses, in order to provide underserved regions 

with more equitable access to instructional resources. 

• Many stations conduct the “Reading Rainbow Writers and Illustrators 

Contest” in their viewing areas. In addition, some stations organize and 

broadcast regional high school knowledge bowls. KLCS (Los Angeles) 

organizes an awards program that honors teachers and students who 

create videos that advance the California State Content Standards.

• Many stations, especially university licensees, provide internship and 

employment opportunities for students. 

Civic Engagement and Community Building. Many of public 

television’s nonbroadcast services foster civic engagement and community 

building. For example, stations we contacted mentioned the following 

services:

• SDPB (Vermillion, South Dakota) provides video streams of all state 

legislature committee meetings and audio streams of Public Utilities 

Commission meetings on its Web site.

• KYUK (Bethel, Alaska) documents the history, culture, and lifestyle of 

the Yup’ik people of Western Alaska. The station is transferring its large 

archive of documentaries and raw footage—including oral histories, 

traditional dances and ceremonies, meetings, and other materials—to 

digital media in order to preserve these resources and make them 

available.

• WKYU (Bowling Green, Kentucky) organized a “Living Will” symposium 

that attracted 500 people who created living wills with the assistance of 

an attorney at no charge. 

Health Outreach. Many stations provide educational programming on 

health issues combined with outreach programs to expand the reach of the 

messages. Two examples follow: 

• WTTW (Chicago) is one of many public television stations that offered 

outreach in association with the broadcast of A Lion in the House, a 

documentary addressing childhood cancer. WTTW partnered with the 

WNMU News Program Is Produced, 

Directed, and Hosted by an All-Student 

Crew

Source: WNMU, Northern Michigan University.

Public Eye News, a WNMU (Marquette, Michigan) 

news program, provides news for the Upper Great 

Lakes Region and training opportunities for 

students. Northern Michigan University students

are responsible for all aspects of the newscast. The 

program features local news stories, sports

highlights, weather reports, and national news. 

Several other public television stations provide 

student-run news programs. 
Page 27 GAO-07-150 Structure and Funding of Public Television

Chicago Pediatric Cancer Care Coalition to offer referral support and 

answer inquiries about childhood cancer services. 

• Numerous public television stations provided outreach in association 

with the program The Forgetting, a documentary about Alzheimer’s 

disease. WNET (New York) provided a range of services, including 

screenings and panel discussions for the general public and for 

community service and health-care professionals, Web materials, and 

print materials for outreach events and partner organizations. 

Emergency Services. Many public television stations have integrated or 

will soon integrate emergency services into the public services they 

provide. At least 26 public television stations in 17 states recently 

participated in the pilot of a Digital Emergency Alert System (DEAS) that is 

being created by the Department of Homeland Security in coordination 

with other federal departments and agencies via a cooperative agreement 

with the Association of Public Television Stations. The new system will 

improve the ability of emergency managers and public safety officials to 

rapidly broadcast emergency information to first responders and the 

general public. The technology will enable officials to pinpoint to whom the 

information is sent and can be relayed over a variety of media, such as 

television, radio, cellular telephones, computers, and personal data 

accessories.24 The next phase of the DEAS program includes the extension 

of the system so that all public television stations can transmit information 

to local first responders and the public, potentially enabling near universal 

service throughout the United States once the program is complete. 

Many stations have developed other emergency services, often in 

partnership with local organizations, such as the following: 

• To improve community preparedness in the case of flooding of the Red 

River, Prairie Public Television (Fargo, North Dakota) hosts a 

“Riverwatch” Web site featuring information provided by government 

agencies and commercial entities. 

24Participation of commercial mobile service providers, such as cellular telephone 

companies, is dependent on agreements between those companies and FCC and the 

Department of Homeland Security. 
Page 28 GAO-07-150 Structure and Funding of Public Television

• Some stations, such as MAINE (Lewiston, Maine), provide AMBER 

Alerts, emergency messages broadcast when a law enforcement agency 

determines that a child has been abducted and is in imminent danger. 

Individuals, 

Businesses, and the 

Federal and State 

Governments Provide 

the Majority of Funds 

for Public Television

Public television receives funding from many sources, the most important 

of which are individuals, businesses, and the federal and state 

governments. In 2005, public television licensees reported annual revenues 

of $1.8 billion, of which 15 percent came from federal sources. However, 

the relative sources of funds differ significantly from licensee to licensee; 

licensees with less operating revenue (small licensees) and licensees that 

provide service in small television markets receive a larger percentage of 

revenues from federal sources than do licensees with more operating 

revenue (large licensees) and licensees that provide service in large 

television markets. In addition to basic support provided through CPB, the 

Congress provides funds for public television to help licensees complete 

the DTV transition. Licensees consider federal funding important for their 

operations, and many suggested that its elimination would lead to staff 

reductions and less local programming and services. Finally, federal funds 

help support PBS and the production of national programming.

Public Television Licensees 

Receive Funding from Many 

Sources; However, Small 

Licensees and Licensees in 

Small Television Markets 

Exhibit Greater 

Dependence on Federal 

Funds 

Public television licensees receive the majority of their revenues from four 

sources: individuals, businesses, and the federal and state governments. In 

2005, the 177 public television licensees reported revenues of $1.8 billion. 

Of the $1.8 billion, contributions from individuals account for 25 percent, 

and business support, state support, and federal support each account for 

15 percent. The remaining sources make up about 30 percent of licensees’ 

total revenues. Figure 6 illustrates the sources of revenues for public 

television licensees in 2005. 
Page 29 GAO-07-150 Structure and Funding of Public Television

Figure 6: Percentage of Revenue from Various Sources for Public Television 

Licensees, 2005

The sources of revenues vary according to the type of licensee—

community, local, state, or university. Table 1 lists the sources of revenues 

for different types of licensees in 2005. Community licensees received a 

significant percentage of revenues from individuals, businesses, and the 

federal government through CPB. Local licensees received a large 

percentage of revenues from local governments, state licensees received a 

large percentage of revenues from state governments, and university 

licensees received a large percentage of revenues from universities. The 

percentage of revenues from the federal government varied modestly 

across the types of licensees, with the state licensees receiving the lowest 

percentage. 

3%

Federal - Other

Source: GAO analysis of SABS data.

12%

15%

15%

25%

5%

Local government

Individuals

6%

Foundations

University

CPB

State government

Businesses

11% Other

8%
Page 30 GAO-07-150 Structure and Funding of Public Television

Table 1: Percentage of Revenue from Various Sources and Type of Public Television 

Licensee, 2005

Source: GAO analysis of SABS data.

Note: The percentages refer to the mean percent per licensee to account for differences in the size of 

licensees.

The percentage of revenue received from the federal government through 

CPB decreases significantly as the size of the licensee increases;25 in 

particular, CPB distributes funds through a statutory formula designed to 

consider the financial needs and requirements of stations and to maintain 

and stimulate new sources of nonfederal support.26 Table 2 provides data 

for 2005 on the sources of revenues for licensees of different sizes. For the 

smallest licensees, those with revenues of less than $3.0 million, federal 

support through CPB represented 33 percent of the average licensee’s 

revenues. In fact, federal support provides over 40 percent of the 

revenuesfor 9 licensees.27 Alternatively, among the largest licensees, those 

with revenues exceeding $10.7 million, federal support made up about 

Type of licensee

Source Community Local State University

Individuals 30.7 14.9 14.1 15.8

Business 17.0 12.5 5.9 6.0

State government 11.5 8.6 43.9 11.8

Federal government—CPB 19.3 19.2 15.4 19.8

Foundation 5.5 1.8 2.6 2.8

University 2.5 0.6 1.8 34.8

Local government 2.4 36.4 7.5 3.7

Other 11.1 6.0 8.8 5.3

Total 100.0 100.0 100.0 100.0

25For purposes of classifying the size of licensees, we consider total licensee operating 

revenues.

2647 U.S.C. §396(k)(6)(B).

27These licensees were KYUK (Bethel, Alaska), KEET (Eureka, California), KSMQ (Austin, 

Minnesota), KRSC (Claremore, Oklahoma), WCTE (Cookeville, Tennessee), KCOS (El Paso, 

Texas), KMBH (Harlingen, Texas), KNCT (Killeen, Texas), and KOCV (Odessa, Texas).
Page 31 GAO-07-150 Structure and Funding of Public Television

10 percent of total revenues for the average licensee.28 Large licensees 

received a greater percentage of revenues from individuals, businesses, 

state governments, and foundations than did small licensees.

Table 2: Percentage of Revenue from Various Sources and Size of Public Television 

Licensee, 2005

Source: GAO analysis of SABS data.

Notes: The number of licensees in each category is 44 for “Less than $3.0,” 44 for “$3.0 to $5.5,” 44 for 

“$5.5 to $10.7,” and 45 for “More than $10.7.” The percentages refer to the mean percent per licensee 

to account for differences in the size of licensees.

A similar trend appears when we consider the size of the television market 

where the licensee operates. In larger television markets, licensees have 

access to larger numbers of individual donors, businesses, and foundations 

and thus would generally be less reliant on federal support. Table 3 

provides data for 2005 on the sources of revenues for licensees in television 

markets of different sizes. On average, among licensees in the smallest 

television markets, those with revenues of less than $46.2 million, federal 

support through CPB represented about 27 percent of revenues. 

28While federal support accounts for a smaller percentage of total revenues for large 

licensees than for small licensees, large licensees nonetheless received more federal 

support, on average, than small licensees. Licensees with total revenues less than $3.0 

million received $656,573 on average from CPB while licensees with total revenues greater 

than $10.7 million received $2.5 million from CPB. CPB staff attributed this outcome to the 

Incentive Grant component of the Community Service Grant, which is designed to 

encourage licensees to acquire nonfederal support. 

Licensee operating revenues (in millions)

Source

Less than 

$3.0

$3.0 to 

$5.5 

$5.5 to 

$10.7

More than 

$10.7

Individuals 15.9 23.7 26.5 26.0

Business 9.5 12.4 12.6 13.1

State government 11.2 12.9 16.6 19.5

Federal government—CPB 32.9 18.7 14.3 10.3

Foundation 4.3 2.3 3.5 6.0

University 13.9 19.4 10.0 8.3

Local government 3.0 2.3 10.1 6.0

Other 9.3 8.3 6.4 10.8

Total 100.0 100.0 100.0 100.0
Page 32 GAO-07-150 Structure and Funding of Public Television

Conversely, for licensees in the largest television markets, those with 

revenues exceeding $313.0 million, federal support made up an average of 

12 percent of revenues. As anticipated, licensees in large television markets 

received a larger proportion of revenues from individuals, businesses, and 

foundations than did licensees in the smallest television markets.

Table 3: Percentage of Revenues from Various Sources and Size of Television 

Market, 2005

Source: GAO analysis of SABS data.

Notes: We used total commercial television advertising revenue to measure the size of a television 

market. The number of licensees in each category is 42 for “Less than $46.2,” 43 for “$46.2 to $107.6,” 

43 for “$107.6 to $313.0,” and 45 for “More than $313.0.” We did not receive information on television 

market advertising revenue for four licensees. The percentages refer to the mean percent per licensee 

to account for differences in the size of licensees.

Most Licensees Received 

Federal Support for the DTV 

Transition

For commercial and noncommercial television stations, the DTV transition 

requires a substantial capital investment. In 2002, we reported that stations 

would incur capital costs of approximately $3.0 million each for the DTV 

transition.29 Stations must overhaul and replace the transmitting 

equipment, including perhaps replacing the antenna, and studio equipment.

Size of television market (in millions)

Source

Less than 

$46.2

$46.2 to 

$107.6 

$107.6 to 

$313.0

More than 

$313.0

Individuals 19.5 23.9 22.5 27.8

Business 8.3 9.7 14.1 14.7

State government 10.6 15.3 19.6 14.2

Federal government—CPB 27.2 21.6 14.7 12.3

Foundation 2.8 4.0 4.3 5.4

University 18.5 15.0 9.6 9.9

Local government 2.8 3.7 7.3 6.8

Other 10.3 6.8 7.9 8.9

Total 100.0 100.0 100.0 100.0

29See, GAO, Telecommunications: Many Broadcasters Will Not Meet May 2002 Digital 

Television Deadline, GAO-02-466 (Washington, D.C.: Apr. 23, 2002), p. 16.
Page 33 GAO-07-150 Structure and Funding of Public Television

In addition, during the DTV transition, stations must operate both an analog 

and digital transmitter, which increases the stations’ operating expenses.30

To help public television licensees complete the DTV transition, since 1999, 

the Congress has appropriated nearly $400 million for CPB, NTIA, and the 

Rural Utilities Service (RUS) of the Department of Agriculture. CPB 

operates the Digital Distribution Fund, which provides grants for digital 

transmission equipment necessary to comply with FCC’s regulations. In 

2006, CPB offered grants of $500,000 for each transmitter, and stations 

were required to match 25 percent of the cost of the project.31 NTIA, 

through its Public Telecommunications Facilities Program, also provides 

grants to licensees. In 2006, NTIA required stations to match 25 percent to 

50 percent of the cost of the funded project. Finally, RUS operates the 

Public Television Station Digital Transition Grant Program. This program 

provides support for rural licensees and does not require matching funds 

because of the financial burden of the DTV transition for rural licensees.32

NTIA officials said that the agency coordinates with officials at CPB and 

RUS to prevent duplication; however, RUS officials noted that a licensee 

could receive support from more than one agency, as long as the support 

funded different equipment.

Licensees with whom we spoke reported receiving support for the DTV 

transition from a variety of sources. Forty-two of 54 licensees reported 

receiving some form of support from the federal government. Among the 

three grant programs, licensees most frequently cited CPB’s Digital 

Distribution Fund and NTIA’s Public Telecommunications Facilities 

Program. In addition to federal support, many licensees reported receiving 

support from a state government. Licensees also reported receiving 

funding from universities, licensee capital campaigns, licensee operating 

funds, and gifts. 

30In the Digital Television Transition and Public Safety Act of 2005, Congress set February 

17, 2009, as the end date for the DTV transition. Following this date, television stations will 

no longer transmit an analog signal. Pub. L. No. 109-171, title III, 120 stat. 4, 21 (2006).

31CPB can reduce or waive the matching requirement on the basis of need.

32In general, the cost of the DTV transition is independent of the size of the licensee—

measured in total revenues. Thus, the DTV transition can prove relatively burdensome for 

licensees with small budgets. 
Page 34 GAO-07-150 Structure and Funding of Public Television

Public Television Licensees 

Consider Federal Funding 

to Be Important 

Twenty-three of the 54 licensees with whom we spoke said that federal 

funding was important for their operations. In particular, federal funding 

has several positive attributes for licensees. First, licensees have generally 

broad discretion with federal funds and therefore can use these funds for 

general station operations.33 Funding from other sources, especially 

foundations, is generally restricted to specific projects or programs, 

potentially limiting the licensee’s ability to respond to changing needs. 

Second, licensees incur relatively minimal costs to secure federal funding, 

compared with funding from other sources. Finally, some licensees noted, 

federal funds are a vehicle to attract other funds. For example, WVPB 

(Charleston, West Virginia) said that the state government considers 

federal funding a source of matching support, and the state government is 

willing to appropriate state funds because the licensee will also receive 

federal funding.

If federal funding were reduced or eliminated, some licensees would need 

to reduce their level of service. In a report prepared for CPB, McKinsey and 

Company projected that in response to a 15-percent reduction in total 

revenues, licensees would need to reduce staff by 26 percent and reduce 

local programming by 40 percent.34 Twelve licensees with whom we spoke 

noted that another source of funds does not exist that could fill the void 

that would be left if federal funding were reduced or eliminated. Eleven 

licensees said that the station would discontinue operations if federal 

funding were eliminated; these were generally smaller licensees in smaller 

television markets. However, a larger number (30) said that they would 

need to reduce staff, local programming, or services. Some licensees noted 

that they must continue to purchase PBS programming, because this 

programming attracts viewers and therefore membership and underwriting 

support. Thus, some licensees would likely reduce local programming, 

which is more costly to produce. Furthermore, three licensees said that 

they would need to reduce or eliminate television service to more rural 

areas of their service territory.

33For example, licensees can use CPB’s Community Service Grant funds for the following 

expenditures: programming and production; broadcasting, transmission, and distribution; 

program information and promotion; fund-raising and membership development; 

underwriting and grant solicitation; management and general; and purchasing, 

rehabilitation, or improvement of capital assets. 

34Developing a Sustainable Economic Model for Public Television, March/April 2003.
Page 35 GAO-07-150 Structure and Funding of Public Television

Several licensees with whom we spoke had incurred funding reductions in 

the past and responded with reductions in staff, local programming, and 

services. For example, according to three licensees, the state of Tennessee 

reduced state funding for public television licensees by 9 percent. In 

response, these licensees undertook the following actions: 

• WETP (Knoxville, Tennessee) eliminated instructional programming, 

delayed sign-on until 3:00 pm, and reduced staff benefits.

• WCTE (Cookeville, Tennessee) reduced staff, staff benefits, and local 

programming.

• WNPT (Nashville, Tennessee) reduced staff and local programming.35

In addition, WNMU (Marquette, Michigan) lost 40 percent of its state 

support and eliminated 12 staff positions from a total of 36. KLCS (Los 

Angeles) lost $1.3 million in support from the Los Angeles Unified School 

District and eliminated 33 staff positions from a total of 76.

Federal Funds Also Support 

PBS Nationwide 

Programming 

The three largest revenue sources for PBS are underwriting, member 

station assessments, and CPB and other federal sources. In 2005, PBS’s 

revenues were $532 million. Of this total, $192 million, or 36 percent, came 

from underwriting.36 PBS also received $163 million from member station 

assessments and $70 million from federal sources, such as funds from 

CPB.37 In fiscal years 2000 though 2005, PBS’s annual revenues ranged 

between $489 million and $542 million. During this period, member station 

assessments typically increased on a yearly basis, while funding from the 

remaining sources varied from year to year. Among licensees with whom 

we spoke, eight indicated that a reduction or elimination of federal funding 

could negatively affect PBS programming. 

35In response to the state funding reduction, WNPT increased fund-raising, which 

contributed to a slight increase in membership.

36According to PBS, underwriting includes the imputed value of contributions made by 

corporations, foundations, and others to producers. Thus, it represents the difference 

between the value of PBS productions and PBS grants to producers. PBS recognizes the 

underwriting revenue and offsetting expenses when PBS receives the initial program.

37PBS received $107 million in revenue from video, royalties, license fees, investment 

returns, and other sources. In some instances, these revenues were largely offset by 

corresponding expenses.
Page 36 GAO-07-150 Structure and Funding of Public Television

In 2004, PBS formed the PBS Foundation to increase the long-term stability 

of the organization. According to PBS staff, the foundation is a 509(a)(3) 

supporting organization and operates exclusively for the benefit of PBS. 

The foundation conducts fund-raising activities to support PBS’s needs and 

PBS controls the foundation through various bylaw requirements. 

According to PBS staff, the foundation has raised over $17 million, 

including $2.4 million from the Ford Foundation for the foundation’s 

operating expenses.38 

Public Television 

Stations Are Pursuing a 

Variety of Nonfederal 

Funding Sources, but 

Substantial Growth to 

Offset a Reduction or 

Elimination of Federal 

Support Appears 

Unlikely

While contributions from individual members represent a significant 

source of revenue, this source is not expected to grow significantly in the 

future. Alternatively, public television officials consider major giving a 

source of long-term revenue growth, and CPB has initiated a major giving 

initiative to cultivate major donations. Foundations provide funding to 

public television, but generally only support capital and other projects, and 

not station operations. The trend in underwriting support has been mixed, 

with some licensees experiencing increases and others decreases. While 

some licensees favor an easing of the statutory and regulatory restrictions 

on underwriting activities, many licensees do not share this sentiment. 

Finally, licensees generally receive minimal revenues from ancillary and 

miscellaneous activities. 

Basic Membership Revenue 

Is Not Expected to Grow 

Significantly in the Future

Basic membership, or gifts from individuals of less than $1,000, has been a 

mainstay of public television for many years. Among the 54 licensees with 

whom we spoke, several mentioned that their stations began on-air 

membership campaigns during the late 1960s and early 1970s to increase 

revenue. Almost all licensees receive contributions from individuals, and 

with the exception of several local licensees,39 the licensees with whom we 

spoke conduct membership campaigns. 

38PBS staff said that National Public Radio’s (NPR) experience with its foundation, the NPR 

Foundation, greatly influenced PBS and the PBS Foundation. NPR established its 

foundation in 1993, and in 2003, it received a gift exceeding $200 million from Joan Kroc; 

today, the $300 million foundation provides resources for NPR to expand its news 

operations.

39Since these licensees rely on local tax dollars for support, they do not ask viewers, and 

thus taxpayers, to fund the station again through donations. 
Page 37 GAO-07-150 Structure and Funding of Public Television

While basic membership serves as an important source of revenue for 

licensees, recent trends indicate that this source of revenue is decreasing. 

Both the number of members and the average gift size determine the 

amount of basic membership revenue that a station receives. According to 

CPB, the number of public television members has decreased from 4.7 

million in 1999 to 3.6 million in 2005. At the same time, the average annual 

gift has increased from $79 to $97. As a result, annual basic membership 

revenue has decreased about $24 million, or 6 percent, from $373 million in 

1999 to $349 million.

Several factors appear to be contributing to the decrease in the number of 

members and basic membership revenue. According to a study prepared by 

McKinsey and Company for CPB, increased competition for gifts from a 

growing number of nonprofit entities, more viewer choices, and less 

familiarity with public television are expected to contribute to declines in 

the number of members and basic membership revenue. Additionally, the 

free-rider problem hinders the ability of licensees to acquire members. The 

free-rider problem refers to the tendency of individuals not to contribute to 

a service that they can receive free of charge; in the case of broadcast 

television, individuals can view the station’s signal without contributing. 

Furthermore, officials at licensees with whom we spoke said that 

increasing the number of members and basic membership revenue is 

difficult for the following reasons:

• Competition for charitable gifts has increased because more nonprofit 

entities are seeking gifts.

• Viewers have many more choices since the advent of cable and satellite 

television and as a result are less familiar with public television than in 

the past. 

• In some areas, a poor local economy limits the number of viewers that 

are able to make charitable gifts. (See app. III for the demographic 

characteristics of public television members.)

Several licensees are adopting alternative approaches to increase the 

number of members and basic membership revenues. Traditionally, 

licensees purchase a package of programs from PBS—known as the
Page 38 GAO-07-150 Structure and Funding of Public Television

Station Independence Program (SIP)40—that the stations broadcast during 

their on-air membership campaigns. However, several licensees said they 

do not use the traditional SIP programming. Rather, these officials stated 

that airing programming that viewers most enjoy or local programming, 

rather than the SIP programming package, could attract more viewers 

during on-air membership campaigns and thereby increase the number of 

members and basic membership revenues.41 Some station officials added 

that discovering what programming viewers most enjoy and airing that 

programming could be important to increasing the number of members and 

basic membership revenues. In addition, some officials told us that 

involvement in community activities is more important to attracting 

members and gifts than are on-air membership campaigns. 

Major Giving Is Seen as 

Having Potential for LongTerm Growth

To improve the financial sustainability of public television, in 2003, CPB 

launched a major giving initiative to help stations increase gifts of $1,000 or 

more. According to CPB officials, public television lags behind most other 

nonprofit organizations in designing and implementing campaigns to 

garner major gifts.42 For example, in 2005, 13 percent of revenues from 

members came from gifts of $1,000 or more. In contrast, CPB noted that 

other nonprofit organizations receive a much larger share of revenue from 

major gifts.

Since acquiring major gifts requires an approach much different from 

traditional membership campaigns, CPB implemented a capacity building 

program for station staff. Acquiring major gifts requires one-on-one contact 

with current and potential donors, instead of the retail-oriented effort 

associated with on-air membership campaigns. The major giving initiative 

also requires station management and staff alter their traditional roles. For 

example, the station manager must focus not just internally on station 

operations, but also externally on fund-raising. The capacity building 

program consists of four elements:

40SIP includes research, programming, and promotional materials for stations to use during 

on-air fund-raising. 

41Public radio adopts this approach to on-air membership campaigns.

42Public television considers gifts of $1,000 or more to be a major gift.
Page 39 GAO-07-150 Structure and Funding of Public Television

• team leadership meetings attended by the station’s chief executive 

officer, board members, and chief development officer to involve top 

station management;

• curricula delivered via Web lectures once a month for 6 months, with 

follow-up teleconferences among various station groups to share 

experiences;

• on-site consulting to help the stations implement their specific plans; 

and 

• a set of Web-based tools, including (1) information about best practices 

and budgeting, (2) on-air spots for station use, and (3) videos to show at 

donor gatherings.

According to CPB, 110 of 177 licensees are participating in the major giving 

initiative. Among the 54 licensees with whom we spoke, most are 

participating, or plan to participate, in the initiative. Several licensees had 

efforts under way to attract major gifts prior to CPB’s initiative; some of 

these licensees have joined CPB’s initiative while others have chosen to 

continue with their own efforts. Licensees with whom we spoke that have 

chosen not to participate in the initiative cited several reasons for their 

decision, including a small number of individuals in their area that have the 

financial resources to make a major gift and a lack of staff and budgetary 

resources to undertake the initiative.43

According to CPB, early results from the major giving initiative appear 

encouraging. In 2004, licensees received $49.3 million in major giving 

revenue. However, in 2005, the first full year of the major giving initiative, 

revenue from this source increased by about 3 percent to $50.8 million. 

Furthermore, among the first group of licensees participating in the major 

giving initiative,44 major giving revenues increased from $16.2 million in 

2004 to $19.2 million in 2005, or 18 percent in 1 year. CPB also cited several 

examples of major gifts: KCET (Los Angeles) and WNPT (Nashville, 

Tennessee) both received $1,000,000 gifts while KWCM (Appleton, 

Minnesota) received a $100,000 estate-related gift. Among the 54 licensees 

43CPB imposes no fee on licensees participating in the major giving initiative. However, 

licensees must fund their own personnel and a portion of travel-related expenses. 

44The first group consisted of 79 licensees.
Page 40 GAO-07-150 Structure and Funding of Public Television

with whom we spoke, several also mentioned early successes. For 

example, an official at KNME (Albuquerque, New Mexico) told us that the 

station increased major giving revenue from $35,000 in 2004 to $1.1 million 

in 2005. 

While the major giving initiative has generated some early successes, CPB 

and licensees noted that realizing the benefits of the initiative requires a 

long-term effort. Of the 54 licensees we spoke with, 16 said that major 

giving is a long-term effort. CPB noted that acquiring major gifts requires a 

lengthy period of courtship and confidence building. As a result, CPB said, 

it will take several years for the major giving initiative to mature and CPB 

will not have definitive quantitative measures until 2009. Furthermore, CPB 

does not anticipate that increases in major giving revenues will offset 

decreases in basic membership revenues for several years. Thus, major 

giving appears to hold promise, but at this early stage, it is difficult to 

project how much funding the initiative will generate and whether it will 

benefit all stations, especially those in rural and low-income areas.

Foundations Typically 

Provide Support for 

Projects and Capital, but 

Not Station Operations

Most licensees receive support from foundations; but, the amount varies 

significantly between licensees. According to our analysis of SABS data, 

158 of 177 licensees received foundation revenue in 2005. However, the 

largest 25 percent of licensees received an average of $2.1 million from 

foundations while the remaining 75 percent of licensees received an 

average of $153,520. Officials from the Ford Foundation noted that stations 

in large cities can more easily attract foundation support than stations in 

smaller cities and rural areas. 

In general, foundations provide support for specific projects, such as 

capital expenditures and programming, and not for general station 

operations. Among licensees with whom we spoke, many said that 

foundations provide support for specific projects. For example, officials at 

Prairie Public Broadcasting (Fargo, North Dakota) noted that the station 

received foundation support to implement the major giving initiative and 

the DTV transition. Again, officials from the Ford Foundation said that few 

foundations provide general support for public television, but that some 

foundations support particular programs or projects.

From 1999 through 2004, CPB data show that foundation revenues 

increased 19 percent, from $97 million to $115 million; however, in 2005, 

foundation revenues remained at $115 million. Among the licensees we 

contacted, many said that they do not expect a significant increase in 
Page 41 GAO-07-150 Structure and Funding of Public Television

support from foundations. Some licensees do not receive or seek 

foundation support because there are no, or a very limited number of, 

foundations in their local area. Other licensees said that foundation 

support is increasingly difficult to obtain because of greater competition 

from other nonprofit organizations for foundation support. These officials 

added that many foundations seek out projects that have a direct and 

measurable impact on a population and that it is difficult to measure the 

impact of public television programming.

Underwriting Revenues Are 

Generally Flat, and 

Licensees Express Mixed 

Opinions about Greater 

Commercialization of 

Underwriting

The Communications Act and FCC regulations establish parameters for 

underwriting acknowledgments. Unlike commercial television stations, 

public television stations are prohibited from airing advertisements. 

However, public television stations are permitted to acknowledge station 

support and, without interrupting regular programming, may acknowledge 

underwriters on air. Such acknowledgments may not promote the 

underwriters’ products, services, or businesses, and may not contain 

comparative or qualitative descriptions, price information, calls to action, 

or inducements. Within these statutory and regulatory parameters, 

individual licensees develop and implement underwriting policies for their 

stations. For example, in 2004, we reported that an equal number of 

licensees aired and did not air or plan to air, 30-second underwriting 

acknowledgments.45 In addition, PBS established guidelines that govern 

how underwriters of PBS-distributed programs may be identified on air. 

PBS guidelines specify that the maximum duration for all underwriter 

acknowledgments for PBS-distributed programs may not exceed 60 

seconds, and generally the maximum duration for a single underwriter may 

not exceed 15 seconds.46 

Virtually all public television licensees receive underwriting support, 

although the amount varies greatly among licensees. According to our 

analysis of SABS data, 173 of 177 licensees received underwriting support 

45GAO-04-284, p. 94.

46An exception to the 15-second limit, and the 60-second total limit, applies in the case of 

corporate underwriters that contribute $1.5 million or more per year to a program or 

program series. A single underwriter in this category may be acknowledged by way of a 30-

second credit. In such a case, PBS’s guidelines allow no more than 60 seconds total for all 

corporate acknowledgments, but provide that the total credit limit can extend to 90 seconds 

if necessary to acknowledge foundation, government, and other nonprofit funding. This 

exception does not apply to children’s programming, where the 15-second limit applies.
Page 42 GAO-07-150 Structure and Funding of Public Television

in 2005. Among licensees with whom we spoke, 11 said that local 

businesses, such as banks, legal offices, medical facilities, and retail 

businesses, provided most of their underwriting support. For licensees 

receiving underwriting support, the average amount of underwriting 

revenue was $1.6 million in 2005. However, licensees’ experiences differ 

dramatically. The largest 25 percent of licensees, in terms of total revenues, 

received on average $4.6 million of underwriting support. Conversely, the 

remaining 75 percent of licensees received just $544,245 on average.

Licensees with whom we spoke experienced mixed results with 

underwriting. In a 2003 report for CPB, McKinsey and Company suggested 

that underwriting represented a potential source of revenue growth. 

Consistent with this assessment, 11 licensees said that underwriting 

revenues have increased. Among factors contributing to the increases in 

underwriting revenues, licensees cited hiring new staff, implementing a 

packaged strategy through which companies sponsor a single program over 

an extended period of time, and adding local sports to the programming 

schedule. However, eight licensees said that underwriting revenues have 

decreased. These licensees cited increased competition for corporate 

dollars, a lack of staff or turnover among underwriting staff, and poor 

economic conditions in the local area as contributing to the decrease in 

their underwriting revenues.

Among the 54 licensees with whom we spoke, some noted that corporate 

consolidation and an increased advertising focus among corporations have 

negatively affected underwriting. Twelve licensees said that corporate 

consolidation hinders underwriting activities. For example, some licensees 

mentioned that corporate offices and facilities have moved from their 

service area, thereby eliminating a source of underwriting support. 

Similarly, some licensees said that distant corporate headquarters limit the 

discretion of local branch operations in terms of underwriting and other 

charitable contributions. Twenty-two licensees said that corporations 

increasingly adopt an advertising approach to underwriting. Some 

licensees note that corporate marketing departments and national 

advertising agencies increasingly handle underwriting activities, rather 

than corporate philanthropy departments.47 With the greater emphasis on 

advertising, corporations and advertising agencies seek out programming 

with high ratings and targeted demographics. 

47For example, one licensee noted that corporations are less interested in brand or image 

advertising and more interested in advertising that moves products.
Page 43 GAO-07-150 Structure and Funding of Public Television

In response to the changing environment, some licensees favor less 

restrictive underwriting regulations and policies. In particular, 11 licensees 

favor greater flexibility for on-air underwriting acknowledgments, 

including perhaps permitting calls to action and price quotes. The licensees 

favoring greater underwriting flexibility serve large television markets or 

an entire state. These licensees said that greater underwriting flexibility

• would enable the licensee to increase underwriting revenues;48

• would allow corporations to use the same advertisement on commercial 

and public television, thereby enabling them to avoid the cost of 

developing multiple advertisements;

• would not represent a significant change, since underwriting 

acknowledgments and pledge drives have already become 

commercialized; and

• would not threaten the licensee’s mission, because licensees operate as 

nonprofit entities and therefore would not focus on low-quality, highratings programming.

In the early 1980s, public television conducted a limited experiment with 

greater underwriting flexibility. In 1981, the Congress amended the 

Communications Act and established the Temporary Commission on 

Alternative Financing for Public Telecommunications to conduct 

demonstrations of limited advertising.49 The amendments authorized 10 

public television stations to experiment with paid commercials for 18 

months.50 Following the experiment, the commission concluded that 

potential revenues from advertising were limited in scope and that the 

avoidance of significant risks to public broadcasting could not be ensured. 

However, one licensee with whom we spoke that participated in the

48Officials from three licensees said they would be willing to forego part or all of their CPB 

grant in exchange for greater underwriting flexibility.

49The Public Broadcasting Amendments Act of 1981, Pub. L. No. 97-35, §1221-34, 95 Stat. 725, 

736 (1981).

50The amendments also authorized an advertising experiment involving up to 10 public radio 

stations, but such stations chose not to participate. See Temporary Commission on 

Alternative Financing for Public Communications, A Report to Congress of the United 

States (October 1983).
Page 44 GAO-07-150 Structure and Funding of Public Television

experiment said that all sources of its revenues increased, including both 

membership and underwriting revenues.51

Among licensees with whom we spoke, 19 oppose greater flexibility. These 

licensees said that greater underwriting flexibility

• would not generate increased underwriting revenues, since 

corporations and advertisers desire programming with high ratings and 

a targeted demographic, which some licensees said public television 

cannot deliver;

• would upset viewers and contribute to a decline in membership support;

• could threaten a licensee’s ability to receive financial support from a 

state government; and

• would be inconsistent with the mission of public television and could 

alter programming decisions.

Ancillary Revenues Are a 

Minor Source of Funding for 

Many Licensees

Ancillary and miscellaneous revenues represent another nonfederal 

funding source. According to our analysis of SABS data, 151 of 177 

licensees received ancillary and other miscellaneous revenue in 2005. 

Although many licensees receive ancillary and miscellaneous revenues, 

these are generally not significant sources of funding. On average, these 

sources contributed $691,648 per licensee in 2005.52 However, just as it 

does from underwriting, the amount of funding from these sources varies 

significantly across licensees. Whereas the largest 25 percent of licensees 

51This licensee also cited its experience with its public radio station. The station receives no 

federal or state government support, and is thus commercial, but it operates as a nonprofit 

station with member support. The station also generates underwriting revenues with “ads” 

that include calls to action. The licensee said that the radio station is thriving and that a 

similar model could work for public television.

52As we mentioned earlier, the DTV transition provides an opportunity for television stations 

to use a portion of the spectrum to provide ancillary services, such as datacasting; stations 

must annually remit a fee of 5 percent of the gross revenues derived from these services (47 

C.F.R. §73.624(g)). According to FCC, for the 12 months ending September 30, 2005, 37 

public television stations reported providing ancillary services with the digital spectrum and 

received $10,861 for these services. Similarly, 10 commercial television stations reported 

providing these ancillary services and received $165,914. Thus, at this point, ancillary 

services provided through digital television spectrum do not appear to represent a 

significant source of revenue for either commercial or public television stations. 
Page 45 GAO-07-150 Structure and Funding of Public Television

receive approximately $2.3 million on average in annual ancillary and 

miscellaneous revenue, the remaining 75 percent of licensees receive 

$141,936 on average.

Among the 54 licensees with whom we spoke, 30 mentioned receiving 

ancillary and other miscellaneous revenues. Sixteen of these licensees said 

ancillary and miscellaneous revenues constituted a relatively minor source 

of revenue.53 Licensees cited many examples of ancillary and 

miscellaneous activities, including the following.54

• Tower leasing was the most frequently mentioned source of ancillary 

revenue. A television station installs its antenna on a tower to facilitate 

the distribution of the station’s video signal. If the station owns the 

tower, the station can lease space to other companies, such as other 

television stations, cellular telephone companies, and other 

organizations that use wireless technologies.55 These leases represent a 

source of ancillary revenue; however, in one instance, the licensee 

leases tower space to state government agencies at below-market rates, 

thereby lowering the possible tower leasing revenue.

• Licensees sell videos of various programs and events. For example, 

KLVX in Las Vegas sells Spanish language and parenting skills videos. 

WKYU (Bowling Green, Kentucky), licensed to Western Kentucky 

University, sells videos of the university’s commencement.

• Several licensees also reported receiving revenues from leasing excess 

office space and providing access to the station’s production facility; for 

example, a company might pay a licensee to produce a training video at 

the station’s production facility.

• WYES in New Orleans operates YES Productions, a for-profit subsidiary. 

This subsidiary produces most of the sports-oriented programming in 

the New Orleans metropolitan area, including the National Basketball 

53Illustrating the importance of all revenue sources for small licensees, KYUK, a licensee in 

Bethel, Alaska with total revenues of $1.1 million, said that the station’s Friday night bingo 

games represent an important source of revenues.

54Licensees also mentioned receiving revenues from vehicle donation programs, a state 

lottery contract, online stores, and a cell phone recycling program.

55If a station does not own a tower, it must place its antenna on a tower owned by another 

company and, in many instances, pay to lease the space on the tower.
Page 46 GAO-07-150 Structure and Funding of Public Television

Association Hornets games, as well as concerts and other entertainment 

events. According to WYES staff, YES Productions is the largest source 

of revenues for the licensee. 

Public Television Is 

Unlikely to Generate 

Significant Additional 

Back-End Revenues

Some television programs generate back-end revenues from separate 

business ventures, such as syndication, the sale of books and videos, and 

the sale of clothing and toys. In commercial television, broadcast networks 

and cable channels receive rights to these back-end revenues, and the 

distribution of these rights depends on the relative amount of up-front 

investment in the development and production of programming that each 

participant contributes. In public television, CPB and PBS also negotiate 

for and receive rights to back-end revenues. The extent to which CPB and 

PBS share in the back-end revenues depends on the relative amount of upfront investment and the importance of PBS as a distribution outlet for 

producers of programming. While CPB and PBS receive between $7 million 

and $10 million annually in back-end revenues, a significant increase in this 

source of revenues appears unlikely.

Television Programs Can 

Generate Back-End 

Revenues

Some television programs generate back-end revenues, which arise from 

separate business ventures associated with the program. Such business 

ventures include syndication, sales of books and videos, and sales of 

clothing and toys.56 For example, Sesame Street generates back-end 

revenues from the sale of books, clothing, DVDs, and toys; and Seinfeld, a 

situation comedy broadcast on NBC from 1990 to 1998, generates back-end 

revenues from syndication and the sale of DVDs. 

The Commercial Model for 

Rights to Back-End 

Revenues

Broadcast networks and cable channels produce some, but not all, of the 

programming they distribute. Traditionally, studios, such as television 

divisions of movie studios, produced the vast majority of programming for

56Syndicated programming includes reruns of previously broadcast programming and 

original programming, such as game and talk shows, licensed to local television stations and 

international networks. For this discussion of back-end revenues, we consider only the 

reruns of previously broadcast programming. 
Page 47 GAO-07-150 Structure and Funding of Public Television

broadcast networks.57 Today, broadcast networks and cable channels have 

several ways to procure programming, including purchasing the 

programming from an external supplier, such as a studio; entering a joint 

venture with an external supplier; or producing the programming 

internally. Broadcast networks typically produce programming for certain 

parts of the day internally, including morning shows, news and new 

magazines, and sports; daytime, prime-time, and children’s programming 

are more likely to be externally produced. Among the three cable channels 

we contacted, one relies primarily on internal production while the other 

two primarily purchase programming from external suppliers. 

In commercial television, investment in the up-front development and 

production of a program influences the relative distribution of back-end 

revenues. We were told that the financing and rights associated with a 

program are as unique as the program itself, and therefore each financing 

and rights structure arrangement is unique. However, the extent of up-front 

investment in the development and production of programming greatly 

influences the financing and rights structure. Because of the large costs 

and risks associated with developing and producing television 

programming,58 entities providing a significant share of the funding and 

assuming the financial risk seek and generally receive a greater portion of 

the rights to back-end revenues. Thus, we were told that the more funding 

an entity provides, the greater will be its share of back-end revenues. 

Descriptions follow of the primary approaches to funding commercial 

television programs and the associated back-end rights.

• For internally produced programming, the broadcast network or cable 

channel funds the development and production of the program. The 

network or cable channel assumes the financial risk associated with the 

program and retains the back-end rights and associated revenues.59

57Prior to its repeal in 1995, the Financial Interest and Syndication Rules (Fin-Syn rules) 

limited the amount of prime-time programming that broadcast networks could produce 

internally. The Fin-Syn rules also prohibited broadcast networks from owning any 

syndication interest in programs they distributed.

58In the early 2000s, broadcast network programming production cost approached $2.0 

million for an hour-long program and $1.5 million for a half-hour situation comedy. For cable 

channels, production costs can vary between $175,000 and $800,000 per hour.

59The broadcast network or cable channel might share a portion of the back-end rights and 

revenues with guild producers, writers, actors, and others.
Page 48 GAO-07-150 Structure and Funding of Public Television

• For externally produced programming and coproductions, the 

broadcast network or cable channel funds a lesser portion of the 

program development and production. For externally produced 

programming, the network or cable channel pays a license fee for the 

program, which may cover one-half to two-thirds of the production 

costs; for coproductions, the network or cable channel provides funding 

in excess of the typical license fee. However, in either instance, the 

external supplier must arrange financing to cover the remainder of the 

development and production costs, referred to as the production deficit. 

If the network or cable channel pays only the license fee, it may not 

receive rights to back-end revenues, although it may share in back-end 

revenues with coproductions.

Public Television Negotiates 

for and Receives Rights to 

Back-End Revenues

As we mentioned earlier, public television acquires programming from a 

variety of sources. PBS does not produce programming but rather acquires 

programming from two primary sources: producing public television 

stations and independent producers. WETA, WGBH, and WNET are the 

major producing stations. The producing stations operate as a production 

company, producing programming internally and also coproducing 

programming with outside suppliers. Independent producers deliver 

programming directly to PBS or producing stations. For example, Ken 

Burns, Scholastic, and Sesame Workshop produce programming for public 

television. 

Much like their counterparts in commercial television, CPB and PBS 

negotiate financing and rights arrangements with producing stations and 

independent producers. One academic expert with whom we spoke said 

that two factors influence the rights structure: the size of the up-front 

investment and the importance of PBS as a distribution outlet for an 

outside supplier. For public television as for commercial television, a larger 

up-front investment generally leads to a greater portion of the back-end 

rights and associated revenues. The importance of PBS as a distribution 

outlet is such that, several producers said that they prefer to distribute 

their programming through public television. For example, two producers 

of children’s programming said they prefer to distribute their programs 

through public television because of the high-quality, education-based 

programming distributed by PBS and public television. In these instances, 

CPB and PBS might receive a more favorable back-end rights arrangement 

than the extent of their up-front investment would ordinarily warrant 

because these producers desire PBS distribution for their programs.
Page 49 GAO-07-150 Structure and Funding of Public Television

In response to criticism about its arrangement with the producer of Barney 

& Friends,

60 CPB revised its revenue-sharing policy in 1997.61 The stated 

objectives of the revised policy include ensuring the availability of quality 

programming, reflecting consideration of producers’ objectives, and 

capturing windfall revenues. To fulfill these objectives, CPB created three 

categories of programming, each with a somewhat different rights 

structure.

• Children’s Programming. For 15 years, CPB receives a 50/50 share of 

the net proceeds from the program, after the producer recoups any 

production deficit. For example, the 50/50 share implies that if CPB 

provides 25 percent of the project’s cost, CPB receives 12.5 percent of 

the net proceeds. The net proceeds represents the revenues less the 

expenses associated with producing, marketing, and distributing the 

ancillary products and uses. Between years 15 and 20, the producer may 

retain CPB’s share of the net proceeds as long as the producer applies 

those proceeds to future children’s programs. Otherwise, CPB receives 

its share of the net proceeds. 

• Major Events. This category includes programs with a production 

budget exceeding $500,000 per hour or music, theater, and similar genre 

programming. CPB receives a 50/50 share of the net proceeds from the 

program for 20 years; the producer may be allowed to recoup the 

production deficit before sharing the net proceeds with CPB. 

• Other Programs and Series. This category includes all other 

programming, which CPB reports would include the majority of its 

programming. For 15 years, CPB receives a 50/50 share of the net 

proceeds from the program, after a $250,000 threshold. The producer 

can retain the $250,000 threshold amount as long as the producer uses 

the proceeds for any public television purpose.

Like CPB, PBS negotiates for back-end rights with producing stations and 

independent producers. PBS staff said that the organization does not take a 

60Some critics maintained that Barney & Friends generated substantial back-end revenues 

and that public television did not properly receive a portion of those revenues. See, 

Congress, House of Representatives, Committee on Appropriations, Downsizing 

Government and Setting Priorities of Federal Programs: Hearings before the 

Subcommittees of the Committee on Appropriations, 104th Cong., 1st sess., 1995.

61See, CPB Television Revenue-Sharing Policy, adopted January 27, 1997.
Page 50 GAO-07-150 Structure and Funding of Public Television

formulaic approach to rights management. Rather, the rights structure 

varies from program to program.62 In general, PBS holds rights to back-end 

revenues in perpetuity. However, several factors influence the percentage 

of back-end revenues that PBS receives. According to PBS staff, these 

factors include the extent of PBS’s investment in the production, the 

program genre and existence of a production deficit, and obligations to 

third parties. The program genre is a factor because PBS typically receives 

a larger percentage of back-end revenues from children’s programming 

than it does from prime-time programming. PBS believes that its 

distribution adds considerable value to children’s programming; and 

therefore, it possesses greater leverage with producers of such 

programming. This allows PBS to negotiate a more favorable rights 

structure for children’s programming, compared with prime-time 

programming. With prime-time programming, PBS frequently allows 

producers to recoup much of the production deficit before PBS begins 

sharing the back-end revenues. With children’s programming, PBS 

frequently receives a share of back-end revenues proportional to its upfront investment and typically receives these revenues sooner than it would 

with prime-time programming. 

Public Television Is Unlikely 

to Realize Significant BackEnd Revenues

CPB and PBS both receive back-end revenues. CPB reports receiving 

between $100,000 and $300,000 annually from back-end sources since 2003. 

According to PBS staff, since 2000, PBS has received between $7 million 

and $10 million annually from back-end sources.63 PBS’s back-end revenues 

exceed CPB’s because (1) PBS funds a greater percentage of children’s 

programming, which more frequently generates back-end revenues; and (2) 

CPB allows PBS to retain and reinvest CPB’s share of back-end revenues 

earned on many programs that CPB funds through PBS. Thus, in aggregate, 

CPB and PBS receive about $7 million to $10 million annually from backend sources.64

62CPB and one producing station noted that PBS takes a more market-oriented approach to 

rights management.

63Prior to 1999, PBS received less than $2 million annually in back-end revenues.

64Major producing stations also receive back-end revenues. For example, in 2005, WGBH 

received $18 million in royalties, video, and foreign distribution revenues. However, station 

expenses offset these revenues.
Page 51 GAO-07-150 Structure and Funding of Public Television

Commercial broadcast networks and cable channels also receive back-end 

revenues. According to some networks and cable channels, ancillary 

revenues from product sales are not a major source of revenue. Cable 

channels rely on advertising and subscriber fees for revenue and do not 

depend on ancillary sales for financial sustainability. For example, one 

cable channel told us that ancillary product sales represent about 1 percent 

of the channel’s total revenues. However, syndication can represent 

another source of revenue for broadcast networks.

Given its statutorily defined mission and limited financial resources, it 

would likely be difficult for public television to substantially increase backend revenues. We identified four constraints to public television’s realizing 

significant back-end revenues: (1) relatively few programs are successful, 

(2) net proceeds are a small percentage of gross retail sales, (3) public 

television does not generally make significant up-front investments in 

program development and production, and (4) public television faces 

competition in the distribution of programming.

Few Programs Are Successful. In commercial television, relatively few 

programs achieve long-term success. A broadcast network might receive 

500 to 800 proposals yearly for new programs, and of these, the network 

might place orders for 12 to 14. Furthermore, only about one-third of new 

programs return the following year. Thus, we were told that picking a hit is 

risky. To earn syndication revenue, a program generally must air for 4 

years. Regarding ancillary product sales, we were told that a couple of 

programs might yield most of a cable channel’s revenues. Because success 

is infrequent and uncertain, commercial television production is a portfolio 

business, and a company must have many programs in the pipeline at any 

given time to ensure that some are successful.

Officials from CPB and PBS, as well as major producing stations WGBH 

and WNET, said that their organizations do not base funding or 

programming decisions on the potential to generate back-end revenues. 

Rather, these organizations make funding and programming decisions that 

further the mission of public television. As a result, most public television 

programs do not generate significant back-end revenues. We were told that 

children’s programming and Ken Burns’ productions have the greatest 

likelihood of commercial success. However, these programs are anomalies 

and are not guaranteed to generate back-end revenues. For example, 

WGBH staff mentioned that Between the Lions generates little back-end 

revenue, even though it has been successful in attracting viewers. Similar 

to the experience of commercial networks and cable channels, PBS staff 
Page 52 GAO-07-150 Structure and Funding of Public Television

said that in 2005, 90 percent of their organization’s back-end revenues came 

from just 23 series. 

Net Proceeds Are a Small Percentage of Gross Retail Sales. For both 

commercial and public television, we found that the net proceeds to 

producers and investors in program-related business ventures are a small 

fraction of the retail sales prices. For general merchandise associated with 

a television program, such as toys, the producer enters into an arrangement 

with one or more manufacturers. The manufacturer produces and 

distributes the merchandise and pays the program producer a royalty for 

the sale of merchandise associated with the television program. These 

royalties are typically 5 to 15 percent of the wholesale price, which is 

typically 50 percent of the retail price. Thus, for example, on a $20 sale, the 

royalty will typically be $0.50 to $1.50. The difference represents reductions 

for manufacturing, distribution, and retail. Figure 7 depicts this 

relationship.
Page 53 GAO-07-150 Structure and Funding of Public Television

Figure 7: Retail Price, Wholesale Price, and Royalty Payments for General 

Merchandise

Similar discounts apply to other business ventures associated with 

television programs. According to CPB staff, a video distributor generally 

pays the producer 15 percent of the wholesale price for video products 

associated with a television program. For books, the producer typically 

receives between 5 and 10 percent of the retail price. Finally, when a 

producer syndicates a television program, the producer usually receives

50 to 65 percent of the sales price, and the syndication agent retains the 

remainder.

In some instances, the producer does not own the underlying intellectual 

property associated with the program. For example, Norman Bridwell 

...then the

wholesale price

is about $10...

...and the royalty

payment is about

$0.50 to $1.50. 

 

If the retail

price is $20...

Source: GAO.
Page 54 GAO-07-150 Structure and Funding of Public Television

created Clifford the Big Red Dog and Marc Brown created Arthur. In these 

instances, the authors and owners of the intellectual property must be paid 

from the royalty proceeds.

Public Television Does Not Generally Make Significant Up-front 

Investments. In general, CPB and PBS contribute less than 50 percent of 

the production budget associated with programming. PBS staff said that 

the organization generally provides seed money to producers, who must 

leverage these funds with funds from other organizations. From 2000 

through 2005, PBS contributed between 22 and 27 percent of the total 

production budgets for nationally distributed programs. Producing stations 

and independent producers confirmed that CPB and PBS contribute 

relatively modest amounts to programming. PBS provided about 25 percent 

of WNET’s total production budget over a 3-year period, and PBS’s net 

contribution to Sesame Workshop is less than 10 percent of the total 

production costs for Sesame Street.

65 Thus, CPB and PBS appear to 

contribute less to the total production budget for programming than is 

typical in commercial television, where the license fee may cover one-half 

to two-thirds of the production costs.

Since CPB and PBS contribute modestly to up-front program development 

and production, the organizations must share the resulting back-end 

revenues with other participants. As discussed above, rights to back-end 

revenues are positively correlated with the share of up-front investment. 

Given their relative contributions to program development and production, 

it is not surprising that CPB and PBS share in the rights to back-end 

revenues. Because CPB and PBS provide a modest portion of the up-front 

program development and production budget, producers must secure the 

remaining funds from other sources, perhaps requiring the producers to 

establish relationships with many organizations. For example, WNET said 

that it cannot fund its productions with just one or two major 

participants.66 Producers may also sell some of the rights to back-end 

revenues in return for up-front funding or in-kind support. Finally, some 

producers are unable to obtain external funding for an entire program and 

65In some instances, CPB and PBS provide a larger percentage of funding. For example, one 

producer said that CPB funded the entire production costs for a film. However, this was a 

special project, funded by a grant awarded through a competitive request-for-proposal 

process. 

66WNET reported that it had 23 funders for Great Performances, 17 funders for American 

Masters, and 11 funders for Nature.
Page 55 GAO-07-150 Structure and Funding of Public Television

thus incur production deficits. In these instances, the back-end revenues 

allow the producer to recoup the production deficit. According to PBS and 

one producer, most programs are deficit financed. 

Increasing the proportion of up-front investment in programming appears 

to be beyond the financial capacity of CPB and PBS and could expose the 

organizations to significant risks. First, PBS supplies programming for over 

170 public television licensees. To accomplish this, CPB and PBS provide 

some funding to producing stations and independent producers, and rely 

on these organizations to secure the remainder of the necessary funding. 

We were told that CPB and PBS do not have sufficient resources to both 

contribute significant amounts to individual programs and ensure adequate 

programming for the remainder of the broadcast year. Second, investing in 

program development and production involves risks. As noted above, 

relatively few programs are successful, and it is difficult to predict which 

programs will be successful. Thus, as one broadcast network told us, 

television production is a portfolio business in which a few winners offset 

losers. Without a significant pool of resources to develop a portfolio of 

programming, CPB and PBS could be exposed to significant financial risk if 

the organizations made relatively large investments in a small number of 

programs. In particular, if the organizations made relatively large 

investments in programs and those programs did not generate sufficient 

back-end revenues, the organizations might be unable to adequately supply 

programming for the remainder of the broadcast year. 

Public Television Faces Competition in the Distribution of 

Programming. Even with their modest up-front investments, CPB and PBS 

could seek greater rights to back-end revenues; however, it is unclear 

whether the organizations could receive greater rights because of the 

presence of other distribution outlets. We were told that if CPB and PBS 

became too aggressive in seeking rights to back-end revenues, producers 

could distribute their programming through alternative outlets, such as 

cable channels. For example, Nickelodeon represents an alternative 

distribution outlet for children’s programming. In fact, Sesame Workshop 

already distributes two programs—the Upside Down Show and Pinky 

Dinky Doo—through cable channels. Other producers confirmed that they 

distribute programming through other outlets besides PBS as well. 

Agency Comments We provided a draft of this report to CPB; the departments of Agriculture, 

Commerce, Education, and Homeland Security; FCC; and PBS. CPB and 

PBS agreed with the report, and their written comments appear in 
Page 56 GAO-07-150 Structure and Funding of Public Television

appendixes V and VI, respectively. The Department of Agriculture neither 

agreed nor disagreed with the report, but it emphasized the extensive 

burden that the DTV transition imposes on small and rural television 

stations. The Department of Education, the Department of Homeland 

Security, and FCC provided technical comments that we incorporated as 

appropriate. The Department of Commerce had no comments on the 

report.

As we agreed with your office, unless you publicly announce the contents 

of this report earlier, we plan no further distribution until 30 days from the 

date of this letter. At that time, we will send copies of this report to the 

appropriate congressional committees and to the Secretary of Agriculture, 

the Secretary of Commerce, the President and Chief Executive Officer of 

the Corporation for Public Broadcasting, the Secretary of Education, the 

Chairman of the Federal Communications Commission, and the President 

and Chief Executive Officer of the Public Broadcasting Service. We will 

also make copies available to others upon request. In addition, the report 

will be available at no charge on the GAO Web site at http://www.gao.gov.

If you have any questions about this report, please contact me at

(202) 512-2834 or goldsteinm@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. Contact information and major contributors to this report 

are listed in appendix VII.

Mark L. Goldstein

Director, Physical Infrastructure Issues
Page 57 GAO-07-150 Structure and Funding of Public Television

Appendix I

Scope and Methodology AAppenednxidexiIs

This report examines the funding and operation of public television 

throughout the United States. In particular, the report provides information 

on (1) the organizational structure of public television, (2) the 

programming and other services that public television provides, (3) the 

current funding sources for public television, (4) the extent to which public 

television stations are increasing their nonfederal funding support and 

developing new sources of nonfederal support, and (5) the extent to which 

public television benefits financially from business ventures associated 

with programming and how this compares with commercial broadcasters. 

To respond to the overall objectives of this report, we interviewed officials 

from the Corporation for Public Broadcasting (CPB), the Federal 

Communications Commission (FCC), the National Telecommunications 

and Information Administration of the Department of Commerce, and the 

Public Broadcasting Service. 

For the first objective, we reviewed existing literature on the foundation 

and current structure of public broadcasting and reviewed relevant 

provisions of the Communications Act of 1934, as amended, and FCC 

regulations. 

For the second, third, and fourth objectives, we interviewed officials from 

54 of the 173 public television licensees (see table 4). To ensure a diversity 

of views, we selected licensees according to their type of license, total 

revenues and percentage of total revenues derived from federal funding, 

and by the size of the television market where the licensee operates. We 

also interviewed officials from the Association of Public Television 

Stations, a membership organization representing public television 

stations; the Department of Education; the Federal Emergency 

Management Agency of the Department of Homeland Security; the Ford 

Foundation; the National Science Foundation; the Rural Utilities Service 

(RUS) of the Department of Agriculture; and the Urban Institute.

Using data from CPB’s Stations Activities Benchmarking Study (SABS), we 

analyzed 177 licensees’ revenue sources, membership, and programming. 

(In 2005, the year for which we have SABS data, there were 177 public 

television licensees; currently, there are 173 licensees.) SABS is a datagathering mechanism through which licensees provide information 

annually on their finances and operations; licensees must complete the 

study to receive their yearly Community Service Grant, which is the 

mechanism through which CPB distributes federal funding to licensees. To 

assess the reliability of SABS data, we reviewed relevant information about 
Appendix I

Scope and Methodology

Page 58 GAO-07-150 Structure and Funding of Public Television

the database, including the user manual and a data dictionary, and we 

interviewed CPB officials and subcontractors for information on data 

quality assurance procedures. We also performed electronic testing to 

detect obvious errors in completeness and reasonableness. We concluded 

that the SABS data were sufficiently reliable for the purposes of this report.

For the fifth objective, we interviewed officials from organizations 

producing programming for public television, including David Grubin 

Productions, Ken Burns (Florentine Firms), HIT Entertainment, Insignia 

Films, Lumiere Productions, Scholastic, Sesame Workshop, WETA, WGBH, 

and WNET; the Independent Television Service; commercial broadcast 

networks and cable channels, including A&E Television Networks, Fox, 

National Geographic Channel, Nickelodeon, and NBC; and several experts. 

We also reviewed the relevant media economics literature and materials 

provided by CBS. 

We conducted our review from January through November 2006 in 

accordance with generally accepted government auditing standards.

Table 4: Public Television Licensees Interviewed

Licensee or station Location Type

Total revenues 

(thousands)

CPB funds as a 

percentage of total 

revenue

KYUK Bethel, AK Community $1,116 58

WCTE Cookeville, TN Community 1,554 41

KNCT Killeen, TX University 1,859 50

KOOD Bunker Hill, KS Community 1,944 35

WNMU Marquette, MI University 2,047 34

KWBU Waco, TX Community 2,490 28

WKYU Bowling Green, KY University 3,096 33

WDSE Duluth, MN Community 3,189 22

KUSM Bozeman, MT University 3,228 22

WVPT Harrisonburg, VA Community 3,490 19

WPBA Atlanta, GA Local 3,632 20

WYCC Chicago, IL University 3,681 19

KCWC Riverton, WY University 3,695 15

WETP Knoxville, TN Community 3,835 18

WBRA Roanoke, VA Community 4,149 18
Appendix I

Scope and Methodology

Page 59 GAO-07-150 Structure and Funding of Public Television

NOVA Falls Church, VA Community 4,200 6

WUFT Gainesville, FL University 4,555 17

WYES Metairie, LA Community 4,869 10

WNPT Nashville, TN Community 5,174 18

WHUT Washington, D.C. University 5,698 17

KAMU College Station, TX University 6,065 18

KLCS Los Angeles, CA Local 6,189 11

KAID Boise, ID State 6,390 18

SDPB Vermillion, SD State 6,421 18

WVPB Charleston, WV State 6,615 15

HPTV Honolulu, HI Community 6,679 14

WKAR East Lansing, MI University 6,700 21

PPB Fargo, ND Community 7,344 12

MAINE Lewiston, ME Community 7,417 14

KNME Albuquerque, NM University 7,633 10

KLVX Las Vegas, NV Local 8,699 13

WFSU Tallahassee, FL University 9,009 12

WPTV Madison, WI State 9,818 12

KOCE Huntington Beach, CA Community 10,285 15

NETV Lincoln, NE State 10,912 15

WNYE New York, NY Local 11,355 0

KUED Salt Lake City, UT University 11,364 13

METV Jackson, MS State 11,642 12

WLIW Plainview, NY Community 12,338 7

KERA Dallas, TX Community 13,443 10

WHYY Philadelphia, PA Community 18,308 10

KPBS San Diego, CA University 20,481 10

IAPT Johnston, IA State 21,603 13

CPTV Hartford, CT Community 22,589 8

KTCA St. Paul, MN Community 26,554 8

KET Lexington, KY State 26,881 11

MPT Owings Mills, MD State 28,746 9

KQED San Francisco, CA Community 30,420 9

NJN Trenton, NJ State 32,751 8

WTTW Chicago, IL Community 33,137 8

WETA Arlington, VA Community 59,012 6

(Continued From Previous Page)

Licensee or station Location Type

Total revenues 

(thousands)

CPB funds as a 

percentage of total 

revenue
Appendix I

Scope and Methodology

Page 60 GAO-07-150 Structure and Funding of Public Television

Source: GAO analysis of SABS data.

KCET Los Angles, CA Community 64,487 7

WGBH Boston, MA Community 161,750 5

WNET New York, NY Community $173,728 8

(Continued From Previous Page)

Licensee or station Location Type

Total revenues 

(thousands)

CPB funds as a 

percentage of total 

revenue
Page 61 GAO-07-150 Structure and Funding of Public Television

Appendix II

CPB Funding Allocation ApendxiI

On the basis of statutory provisions and the receipt of an annual federal 

appropriation from the Congress, CPB makes an annual Community 

Service Grant award to each eligible licensee of one or more 

noncommercial, educational public television station(s). Table 5 

summarizes the criteria for awarding funds through each of the three 

component grants of a Community Service Grant. In addition to the 

Community Service Grant, CPB provides Criteria Based Grants, including 

the Local Service Grant and the Distance Service Grant; the latter grant 

provides additional funds for licensees operating multiple transmitters, 

which extend television service to outlying areas.
Appendix II

CPB Funding Allocation

Page 62 GAO-07-150 Structure and Funding of Public Television

Table 5: Components of CPB’s Community Service Grants

Source: CPB.

a

Nine other eligibility criteria for the base grant are specified by CPB, including licensees’ compliance 

with regulations on equal opportunity employment, Internal Revenue Service requirements, provisions 

of the Communications Act, and regulations on the use and control of donor names and lists.

Eligibility criteria Grant amount determination Exceptions

Basic grant • The entity must operate a full-power 

noncommercial educational television 

station licensed by FCC.

• The public television station must be “on the 

air.”

• $10,000 is awarded to each 

licensee.

Not applicable.

Base grant Same criteria as for the basic grant plus:a

• The licensee must receive a minimum level 

of nonfederal financial support during a 

designated previous fiscal year.

• The licensee must maintain transmission 

and production capabilities that meet FCC 

requirements for a noncommercial 

educational television station.

• The licensed station must have broadcast 

365 days during a designated previous fiscal 

year and for a specified minimum number of 

programming hours.

• The station’s daily broadcast schedule must 

be devoted to programming that is 

responsive to the “demonstrated needs of 

the community” and is noncommercial and 

educational, informative, or cultural in 

nature.

• Based on the amount of the total 

appropriation received by CPB 

from the Congress.

• Based on the act’s allocation of 

75 percent of public television 

funds intended for distribution 

among licensees of stations.

• Based on a predetermined 

amount for each grant set 

through CPB’s periodic review of 

the Community Service Grant 

program.

The Base Grant will be modified 

if:

• More than one licensee has a 

station operating in the same 

market (known as an “overlap” 

market).

• A licensee raised nonfederal 

financial support in excess of 

a maximum-specified level.

Incentive grant Same criteria as for the base grant. • The total of all nonfederal 

financial support raised by public 

television station licensees is 

determined.

• The percentage share of total 

nonfederal financial support is 

determined for each licensee.

• Of the funds not already 

distributed through the basic and 

base grants, each licensee 

receives a percentage of 

remaining funds that match the 

licensee’s share of total 

nonfederal financial support 

raised.

The Incentive Grant will be 

increased if a licensee that 

operates a station in an overlap 

market differentiates its 

programming.
Page 63 GAO-07-150 Structure and Funding of Public Television

Appendix III

Demographics of Public Television Viewers 

and Members ApendxiI

This appendix discusses our analysis of the demographic characteristics of 

public television viewers and members. Specifically, we discuss (1) our 

data sources and methodology, (2) the demographic characteristics of 

viewers of public television’s prime-time programming, (3) the 

demographic characteristics of viewers of public television’s children’s 

programming, and (4) the demographic characteristics of public television 

members.

Data Sources and 

Methodology

We required several data elements to assess the demographic 

characteristics of public television viewers and members. The following is 

a list of our primary data sources.

• We obtained data on a sample of households in the United States from 

Knowledge Networks/SRI, using Knowledge Networks/SRI’s product 

The Home Technology MonitorTM: Spring 2005 Ownership and Trend 

Report. From February through April 2005, Knowledge Networks/SRI 

interviewed a random sample of 1,501 households in the United States. 

Knowledge Networks/SRI asked participating households a variety of 

questions about their television viewing, including how many nights per 

week that the household watched various television networks (such as 

ABC, CBS) and public television. The questions also addressed the 

household’s demographic characteristics.

• We used information from the U.S. Census Bureau to obtain 

demographic information for the U.S. population.

The Knowledge Networks/SRI’s product The Home Technology MonitorTM

is a survey of a probability sample of telephone-owning households in the 

continental United States. To assess the reliability of Knowledge 

Networks/SRI’s data, we reviewed data documentation on survey 

methodology and sampling, e-mails with company officials regarding data 

procedures and weighting, and additional information from a previous 

reliability assessment. We also performed basic electronic testing to detect 

obvious errors in completeness and reasonableness. We concluded that 

these data were sufficiently reliable for the purposes of this report.

To assess the demographic characteristics of public television viewers and 

members, we conducted t-tests with a Bonferroni adjustment. These tests 

allowed us, for households responding to Knowledge Networks/SRI’s 

survey, to compare the demographic characteristics of households that 

viewed certain public television programming with households that did not 
Appendix III

Demographics of Public Television Viewers 

and Members

Page 64 GAO-07-150 Structure and Funding of Public Television

view the corresponding programming, and to compare the demographic 

characteristics of households that are members and former members of 

public television with households that have never been members of public 

television.1

Viewers of Public 

Television’s PrimeTime Programming

We found that households viewing public television’s prime-time 

programming are more likely to be older, to be African American, and to 

have children under the age of 18, and are less likely to be Hispanic than 

are households not viewing this programming. A greater proportion of 

prime-time viewers are age 50 or older, compared with nonviewers in this 

age category. However, a greater proportion of prime-time viewers also 

report having children under the age of 18; 37.0 percent of viewers report 

having children under the age of 18 compared with 33.5 percent for 

nonviewers. While 5.3 percent of nonviewers are African American, 9.4 

percent of viewers are African American, indicating that African Americans 

are more likely to watch prime-time public television programming. By 

contrast, Hispanic households make up 8.8 percent of viewers, compared 

with 12.3 percent of nonviewers. Prime-time viewers are more likely to 

have some college education than nonviewers; 73.6 percent of viewers have 

some college education, compared with 68.7 percent of nonviewers. 

Finally, we did not find a significant difference in the income level of 

viewers of public television’s prime-time programming and of nonviewers. 

Viewers of Public 

Television Children’s 

Programming 

Households that watch public television’s children’s programming are more 

likely to have low-incomes, to be African American and Hispanic, and to 

have children under the age of 18 than households that do not watch this 

programming. Of households that watch public television’s children’s 

programming, 9.5 percent report household income of less than $10,000, 

compared with 6.1 percent for nonviewers, thereby indicating that the lowincome households are more likely to view public television’s children’s 

programming. Households viewing public television’s children’s 

programming are also more likely than nonviewing households to rely on 

over-the-air television, rather than cable or satellite television. Both African 

American and Hispanic households are more likely to watch children’s 

1

Throughout this appendix, the differences we cite are statistically significant at the 5 

percent level, unless otherwise noted. This means that 95 percent of the time we would not 

expect to see such differences if there were no differences in the population.
Appendix III

Demographics of Public Television Viewers 

and Members

Page 65 GAO-07-150 Structure and Funding of Public Television

programming; 13.7 percent of households viewing public television’s 

children’s programming are African American, compared with 6.2 percent 

of nonviewers, and 17.4 percent of viewing households are Hispanic, 

compared with 8.2 percent of nonviewers. Finally, and as expected, 

households watching public television’s children’s programming are more 

likely to have children under the age of 18, compared with households not 

watching this programming. 

Public Television 

Members

Unlike viewers, current and former public television members are more 

likely to be older, white, and report higher levels of income. Compared with 

households that have never been members of public television, a larger 

percentage of current and former member households are age 50 and older. 

Furthermore, 80.7 percent of public television members are white, 

compared with 74.7 percent of nonmembers, indicating that the white 

households are more likely to be current or former members of public 

television. Current and former public television members also report 

higher income levels than nonmembers; 25.6 percent of current and former 

members report household incomes of $100,000 or more, compared with 

11.2 percent for nonmembers, and 43.1 percent of current and former 

members report household incomes below $50,000, compared with 56.0 

percent of nonmembers. Finally, current and former public television 

members are more likely to have college degrees, compared with 

nonmembers. 
Page 66 GAO-07-150 Structure and Funding of Public Television

Appendix IV

Sesame Workshop ApendxiIV

Sesame Workshop (the Workshop), the producer of Sesame Street and 

several other children’s programs, is an independent 501(c)(3) nonprofit 

organization; the Workshop is not affiliated with public television or any 

government agency. To help ensure its financial self-sufficiency, the 

Workshop licenses the distribution of products, such as books and videos, 

associated with its television programs. The revenues derived from these 

product licensing activities offset some of the production and educational 

research expenditures associated with the Workshop’s programs. Today, 

public television pays less than 10 percent of the project costs associated 

with Sesame Street.

Background The Workshop was founded in 1968 as the Children’s Television Workshop. 

The Carnegie Corporation, CPB, and the Ford Foundation provided the 

initial start-up funding for the Workshop. At the time, the Workshop was 

affiliated with National Educational Television (NET) for organizational 

support. Sesame Street premiered on November 10, 1969. Following the 

first season, the Workshop severed its ties with NET and organized as a 

separate entity. Today, the Workshop is an independent 501(c)(3) nonprofit 

organization and is not affiliated with public television or any government 

agency. In addition to Sesame Street, the Workshop produces several 

programs for distribution though public television and domestic cable 

channels, including Dragon Tales, Pinky Dinky Doo, and the Upside Down 

Show. The Workshop also produces programs for international distribution.

Product Licensing The Workshop has pursued a course for financial self-sufficiency to fulfill 

its mission. To this end, the Workshop has partnered with companies, such 

as Fisher-Price and Random House, for the distribution of products 

associated with the Workshop’s television programs. These products 

include books and magazines, clothing, toys, and videos. For the year 

ending June 30, 2005, the Workshop received approximately $54 million 

from its product licensing activities.1

 In addition, the Workshop received 

approximately $21.2 million in direct public support, $11.0 million from

1

In general, program producers, such as the Workshop, receive between 5 and 15 percent of 

the wholesale price as a royalty payment. However, the wholesale price is generally 50 

percent of the retail price. Thus, producers generally receive 2.5 percent to 7.5 percent of 

the retail price. If the Workshop received 5 percent of the retail price, the estimated gross 

retail sales of all Workshop-related products would be $1 billion.
Appendix IV

Sesame Workshop

Page 67 GAO-07-150 Structure and Funding of Public Television

government grants,2 and $20.3 million from program services including 

government fees and contracts. In total, the Workshop reported revenues 

of $107.0 million. Figure 8 illustrates the percentage of revenues derived 

from the various sources for the Workshop.

Figure 8: Sources of Revenue for Sesame Workshop, Year Ending June 30, 2005 

Note: “Program services” includes revenue derived from government contracts and fees.

As a nonprofit organization, the Workshop uses its revenues to fund 

educational research and development of programs and content consistent 

with its mission.3

 For the year ending June 30, 2005, the Workshop reported 

expenses of $107.4 million. Nearly three-quarters of the Workshop’s 

expenses consisted of program production, product licensing, and 

educational research and marketing. Program production expenses were 

approximately $47 million, educational research expenses approximately

2

These government grants apply primarily to the Workshop’s international programming.

3

The Workshop also maintains an investment portfolio to help ensure the organization’s 

long-term financial viability, provide an operating reserve, and finance educational 

activities; the Workshop reported an investment portfolio balance of about $140 million on 

June 30, 2005.

1%

Other

10%

Source: GAO analysis of Sesame Workshop’s Return of Organization Exempt From Income Tax (I.R.S. Form 990).

19%

20%

50%

Government grants

Program services

Direct public support

Product licensing
Appendix IV

Sesame Workshop

Page 68 GAO-07-150 Structure and Funding of Public Television

$6 million,4 and product licensing approximately $15 million. The product 

licensing expenses include licensing; quality control of general 

merchandise; and administration, development, and distribution of 

programs for international television. Figure 9 breaks down the Workshop’s 

expenses. 

Figure 9: Sesame Workshop Expenses, Year Ending June 30, 2005

Relationship with 

Public Television

Since the Workshop and the Public Broadcasting Service (PBS) are 

separate organizations, PBS negotiates with the Workshop for the 

broadcast rights to Sesame Street and other Workshop programs. 

According to the Workshop’s Return of Organization Exempt From Income 

Tax (I.R.S. Form 990), the Workshop incurred direct production expenses 

of about $13.3 million for Sesame Street. Additionally, the Workshop incurs 

expenses associated with educational research for the development of 

program content and with its acquisition of the Sesame Street Muppets

4

The marketing component of educational research and marketing expenses was about $8.8 

million.

4%

Fund-raising

6%

Source: GAO anaylsis of Sesame Workshop’s Return of Organization Exempt From Income Tax (I.R.S Form 990).

14%

18%

44%

Other

Educational research 

and marketing

Management and general

Program production

14% Product licensing
Appendix IV

Sesame Workshop

Page 69 GAO-07-150 Structure and Funding of Public Television

characters.5 According to Workshop officials, PBS pays the Workshop a 

license fee for Workshop programming. In return, PBS receives (1) 

exclusive rights to the distribution of the programming for 2 years and (2) a 

back-end participation in revenues arising from the sale of general 

merchandise and underwriting. Considering both the license fee and 

offsetting back-end revenues, Workshop officials noted that PBS’s net 

contribution to the production of Sesame Street for public television is less 

than 10 percent of the project’s expenses. Officials from CPB also 

mentioned that the Workshop bears all the financial risk associated with its 

production. Thus, the ability of the Workshop to generate revenues from 

product licensing helps offset the project expenses associated the 

programming and outreach provided by the Workshop for public television.

5

Program expenses included about $7.1 million in amortization associated with the 

Workshop’s acquisition of the Sesame Street Muppets characters. Following the death of 

Jim Henson, the Workshop acquired the Muppets characters associated with Sesame Street; 

The Walt Disney Company acquired the Muppets characters created for other programs. 

Thus, the Workshop does not receive revenues associated with the activities of certain 

Muppets characters, such as Kermit or Miss Piggy, which the Disney Company owns. 
Page 70 GAO-07-150 Structure and Funding of Public Television

Appendix V

Comments from the Corporation for Public 

Broadcasting ApendxiV
Appendix V

Comments from the Corporation for Public 

Broadcasting

Page 71 GAO-07-150 Structure and Funding of Public Television
Page 72 GAO-07-150 Structure and Funding of Public Television

Appendix VI

Comments from the Public Broadcasting 

Service ApendxiVI
Page 73 GAO-07-150 Structure and Funding of Public Television

Appendix VII

GAO Contact and Staff Acknowledgments ApendxiVI

GAO Contact Mark L. Goldstein, (202) 512-2834 or goldsteinm@gao.gov.

Staff 

Acknowledgments

Individuals making key contributions to this report include John Finedore, 

Assistant Director; Allison Bawden; Michael Clements; H. Brandon Haller; 

Laura Holliday; Michael Mgebroff; Lisa Mirel; Anna Maria Ortiz; and Mindi 

Weisenbloom.

(543159)
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