a

GAO

United States General Accounting Office

Report to Congressional Requesters

April 2004 TELECOMMUNICATIONS

Issues Related to 

Federal Funding for 

Public Television by 

the Corporation for 

Public Broadcasting

GAO-04-284
www.gao.gov/cgi-bin/getrpt?GAO-04-284.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Mark Goldstein 

at (202) 512-2834 or goldsteinm@gao.gov. 

Highlights of GAO-04-284, a report to 

congressional requesters 

April 2004

TELECOMMUNICATIONS 

Issues Related to Federal Funding for 

Public Television by the Corporation for 

Public Broadcasting 

By statute, 75 percent of the Corporation’s annual federal funding for public 

television is to be distributed among licensees of public television stations, 

and 25 percent is to be available to the Corporation for the support of 

national public television programming. In our survey of all 176 licensees, of 

which 85 percent responded, more than three-fifths favored maintaining the 

current allocations. Of those favoring a change, most proposed an increase 

in the allocation for distribution among licensees. 

The Corporation uses Community Service Grants as the primary means of 

distributing funding to licensees. Most licensees were generally satisfied 

with the recent consultation process for reviewing the eligibility criteria for 

these grants. Another program, the Television Future Fund, awarded grants 

to projects designed to reduce licensees’ operational costs and enhance 

revenues. Only about 40 percent of the licensees indicated that these 

projects had resulted in practical methods to help their stations, and only 

about 30 percent agreed with the Corporation’s approach of using funds 

designated for distribution among licensees to partly support these projects. 

In our legal view, the use of such funds for this purpose is not consistent 

with the statutory authority under which the Corporation operates. 

The Corporation provides an annual grant to the Public Broadcasting Service 

to help fund a package of children’s and prime-time programming that make 

up the National Program Service. Most licensees favored continuation of the 

Corporation’s funding, noting that this national programming helps them 

meet their educational and cultural missions and build community support 

for their stations. Licensees also indicated that local programming is 

important in serving their communities. However, most responded that they 

do not produce enough local programs to meet their communities’ needs, 

and many cited a lack of funds as the reason. 

About 85 percent of the licensees responding to our survey indicated that the 

congressionally mandated transition from analog to digital broadcasting will 

improve their ability to provide local services to their communities. The 

Corporation has received appropriations to help support this transition since 

fiscal year 2001. In consultation with licensees, the Corporation has used 

these funds to provide licensees with grants for acquiring digital 

transmission equipment. Some grantees, however, did not receive their 

awards in time to meet FCC deadlines for the construction of digital 

transmission facilities. In addition, the Corporation received only a few 

grant applications during the latter part of 2003. Our survey indicates that 

most licensees’ priorities now involve other aspects of the transition, some 

of which (including digital production equipment and development of digital 

content) were not included in the scope of the grant programs. The 

Corporation is also seeking funds for digitally based infrastructure 

improvements for distributing public television programming to stations and 

is working with public television stakeholders to develop a strategic plan 

that includes the creation of digital content. 

For fiscal year 2002 (the most 

recent data), the Corporation for 

Public Broadcasting provided 

about 16 percent of public 

television’s revenues of $1.63 

billion. GAO agreed to review the 

statutory allocations for federal 

funding of public television, the 

Corporation’s distribution of funds 

through its Community Service 

Grant and Television Future Fund 

programs, its distribution of funds 

for the Public Broadcasting 

Service’s National Program Service 

and for local programming, and its 

grant programs for assisting public 

television’s transition to digital 

technologies and services. 

We recommend that the 

Corporation request specific 

statutory authority before making 

further Television Future Fund 

awards or expenditures if it intends 

to continue using funds that were 

designated for distribution among 

licensees. We also recommend that 

the Corporation broaden the scope 

of its digital grant programs to 

include support for digital 

production equipment and digital 

content. In response, the 

Corporation generally agreed with 

our recommendation on digital 

grants but disagreed with our 

recommendation on the Future 

Fund. We added a matter for 

congressional consideration that if 

the Congress supports using funds 

designated for distribution among 

licensees to finance the Future 

Fund, it should provide the 

necessary authority to do so. 
Page i GAO-04-284 Corporation for Public Broadcasting

Contents

Letter 1

Results in Brief 4

Background 6

A Majority of Licensees Favor the Current Statutory Allocations for 

Public Television Funding through the Corporation 14

Most Licensees Were Generally Satisfied with the Process for 

Determining Community Service Grants, but Many Expressed 

Concerns about the Television Future Fund 22

Most Licensees Favor Continued Federal Funding Support for the 

National Program Service, as Well as Additional Funding to 

Produce More Local Programming 37

Corporation Has Funded Digital Transmission Equipment, but Other 

Digital Infrastructure and Content Needs Remain 49

Conclusion 62

Recommendations for Executive Action 63

Agency Comments 64

Matter for Congressional Consideration 65

Appendixes

Appendix I: Scope and Methodology 66

Appendix II: Components of the Corporation’s Community Service 

Grants 70

Appendix III: Legality of the Corporation for Public Broadcasting’s 

Television Future Fund Program 74

Background 74

Issues 78

Conclusion 85

Appendix IV: Digital Transition Regulatory Issues of Concern to Public 

Television 86

Appendix V: Underwriting Acknowledgments on Public Television 90

Appendix VI: Survey of Public Television Licensees 98

Appendix VII: Comments from the Corporation for Public Broadcasting 111

GAO Comments 127

Appendix VIII: Comments from the Public Broadcasting Service 133

GAO Comments 137

Appendix IX: Key Contacts and Staff Acknowledgments 138

GAO Contacts 138
Contents

Page ii GAO-04-284 Corporation for Public Broadcasting

Staff Acknowledgments 138

Figures Figure 1: The Number of Noncommercial Educational Licensees 

and Stations by Type, as of February 2004 7

Figure 2: Sources of Public Television Revenues, Fiscal Year 2002 

($1.63 billion) 9

Figure 3: Federal Appropriations for the Corporation for Public 

Broadcasting, Fiscal Years 1969-2006 11

Figure 4: Federal Funding Allocations by the Corporation, as 

Required by the Communications Act 16

Figure 5: Percentage of Licensees that Favor Either the Current 

Allocations or a Change in the Allocations 18

Figure 6: Percentage of Licensees by Type that Favor Either the 

Current Allocations or a Change in Allocations 19

Figure 7: Percentage of Licensees by Size (total revenue) that 

Favor Either the Current Allocations or a Change in 

Allocations 20

Figure 8: Favorable Responses of Licensees on the Corporation’s 

2001 Consultation Process 25

Figure 9: Distribution of Television Future Fund Grants by Project 

Type 29

Figure 10: Extent of Licensees’ Knowledge of Findings and 

Outcomes of Television Future Fund Projects 30

Figure 11: Licensees’ Responses on Whether Television Future Fund 

Projects Provided Them with Practical Methods for 

Reducing Costs and Enhancing Revenues 31

Figure 12: Licensees’ Responses on Favored Approach for Funding 

the Television Future Fund 32

Figure 13: The Corporation’s Distribution of Funding in Support of 

National Programming 39

Figure 14: Licensees’ Views on the Corporation’s Funding of the PBS 

National Program Service and the Service’s Selection 

Process 42

Figure 15: Licensees’ Views on the Extent to Which the National 

Program Service’s Children’s and Prime-Time 

Programming Helps Them Meet Their Mission 44

Figure 16: Licensees’ Views on the Extent to Which the National 

Program Service’s Children’s and Prime-Time Programs 

Help Them Build Membership and Underwriting 

Support 45
Contents

Page iii GAO-04-284 Corporation for Public Broadcasting

Figure 17: Licensees’ Views on Whether the Amount of Local 

Programming That They Produce is Sufficient to Meet the 

Needs of Their Communities 47

Figure 18: Licensees’ Views on the Need for the Corporation to Have 

Explicit Authority to Fund More Local Programming 48

Figure 19: Public Television Licensees that Currently Provide or 

Plan to Provide Digital Services 50

Figure 20: Time Line of Activities for the Corporation’s Digital Grant 

Programs, August 2001 through November 2003 54

Figure 21: Licensees’ Highest and Lowest Priorities for Use of 

Additional Federal Funds to Support the Digital 

Transition 58

Figure 22: Components of the Corporation’s Community Service 

Grants 72

Figure 23: Issues Cited by Licensees As Impeding Public Television’s 

Digital Transition 88

Figure 24: Licensees that Air, Plan to Air, and Do Not Air or Plan to 

Air Their Own 30-Second Underwriting 

Acknowledgments 94

Figure 25: Reasons Identified by Licensees as the Highest Priority 

for Airing or Planning to Air Their Own 30-Second 

Underwriting Acknowledgments 95

Figure 26: Views on the Need for a Federal Requirement Limiting the 

Length of Underwriting Acknowledgments 96
Contents

Page iv GAO-04-284 Corporation for Public Broadcasting

Abbreviations

CEO chief executive officer

CPB Corporation for Public Broadcasting

CSG Community Service Grant

DDF Digital Distribution Fund

DUSF Digital Universal Service Fund

FCC Federal Communications Commission

NTIA National Telecommunications and Information Administration

PBS Public Broadcasting Service

RFP Request for Proposal

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Page 1 GAO-04-284 Corporation for Public Broadcasting

United States General Accounting Office

Washington, D.C. 20548

A

April 30, 2004 Letr

The Honorable Joe Barton

Chairman, Committee on Energy and Commerce

House of Representatives

The Honorable Fred Upton

Chairman, Subcommittee on Telecommunications

and the Internet

Committee on Energy and Commerce

House of Representatives

The Honorable Ralph Regula

Chairman, Subcommittee on Labor, Health and Human Services,

Education, and Related Agencies

Committee on Appropriations

House of Representatives

The Honorable W.J. “Billy” Tauzin

House of Representatives

The Honorable Richard Burr

House of Representatives

Created to harness the technology of broadcast television for the delivery 

of educational, informational, and cultural programming, noncommercial 

educational television—generally known as “public television”1

—has 

evolved over the past half-century into a complex and uniquely structured 

broadcasting system. Since the first station went on the air in 1953 until 

today, the nation’s 356 public television stations were built and have 

continued to operate as nonprofit, community-based organizations, 

offering a mix of broadcast programming and other outreach activities to 

serve their local communities. While public television stations themselves 

produce programming for local broadcast, programming is also created for 

national audiences and distributed through national station-based 

membership organizations, such as the Public Broadcasting Service (PBS), 

1

As used in this report, “public television” refers to noncommercial educational television. 

Specifically, this report focuses on entities that are licensed by the Federal Communications 

Commission to operate noncommercial educational television stations and receive grants 

from the Corporation for Public Broadcasting. This report does not address issues related to 

federal funding by the Corporation for public radio.
Page 2 GAO-04-284 Corporation for Public Broadcasting

distributor of noted series such as Sesame Street, Masterpiece Theatre, and 

Great Performances. The funding of public television, also unique in form, 

has historically come from a multitude of sources, including foundations, 

corporations, colleges and universities, state and local governments, and 

individual viewers. For the past 35 years, the federal government has also 

provided funding to advance the mission of public broadcasting, principally 

through the Corporation for Public Broadcasting.2

 The Corporation was 

established in 1967 by an act of Congress as a nongovernmental, nonprofit 

corporation to facilitate—with federal funds—the availability and 

distribution of high quality educational and cultural programming to public 

broadcast stations. Since its founding, the Corporation has received an 

annual federal appropriation from the Congress and, more recently, 

additional funds have been made available to assist in public television’s 

transition from analog to digital broadcast technology.

Because the House Energy and Commerce Committee could consider 

reauthorizing the Corporation for Public Broadcasting as early as this year, 

you requested that we review various programs and funding mechanisms 

utilized by the Corporation to support public television. Specifically, you 

asked us to review the Corporation’s activities and obtain the views of 

public television station officials regarding: (1) the statutory allocations for 

federal funding of public television; (2) the distribution of funds by the 

Corporation through its Community Service Grant and Television Future 

Fund programs, including a legal analysis of whether the funding of the 

Television Future Fund program is consistent with the Corporation’s 

underlying statutory authority; (3) the distribution of funds by the 

Corporation for PBS’s National Program Service and for local 

programming; and (4) Corporation funding to assist public television 

stations in their transition to digital technologies and services. You also 

asked us to review the statutory and regulatory requirements, system 

policies and guidance, and licensees’ views on underwriting 

acknowledgments (see app. V).

To respond to these objectives, we reviewed provisions of the 

Communications Act of 1934, as amended (Communications Act), and the 

processes of the Corporation for Public Broadcasting to allocate federal 

funding for public television and distribute grant funds to public television 

stations and for public television programming. We also interviewed 

2

The Corporation for Public Broadcasting is referred to in this report either by its full name 

or as “the Corporation.”
Page 3 GAO-04-284 Corporation for Public Broadcasting

officials of the Corporation and PBS, as well as the Association of Public 

Television Stations—a nonprofit organization that represents public 

television stations in legislative and policy matters and conducts planning 

and research activities on behalf its members. For the second objective, the 

distribution of funds among licensees, we reviewed the legal opinions of 

the Corporation’s outside counsels as part of our legal analysis to 

determine whether the Corporation’s approach to funding the Television 

Future Fund is consistent with the governing statute. For the third 

objective, national programming, we reviewed documents and interviewed 

officials of the Independent Television Service, a nonprofit corporation that 

receives federal funding support from the Corporation for distribution to 

independent producers of public television programming,3

 and from two 

other distributors of national public television programming—American 

Public Television and the National Educational Telecommunications 

Association. For the fourth objective, the digital transition, we interviewed 

officials of the National Telecommunications and Information 

Administration (NTIA) in the Department of Commerce, which makes 

grants to public television licensees for digital equipment. Officials of 

American Public Television, the National Educational Telecommunications 

Association, and the Federal Communications Commission (FCC) were 

also interviewed on issues related to underwriting acknowledgements on 

public television.

To obtain views on each of these objectives from the officials who operate 

the nation’s 356 public television stations, we conducted a Web-based 

survey of all 176 entities that are licensed by the FCC to operate these 

stations and receive grants from the Corporation. We received 149 

completed surveys—an overall response rate of 85 percent. (The number of 

responses to individual questions may be lower depending on the number 

of licensees who were eligible or chose to answer each question.) The 

survey consisted of objective questions and the option for licensees to add 

narrative comments in each section of the survey. The survey questions and 

aggregate responses appear in appendix VI. We also conducted interviews 

with officials of 16 public television station licensees to obtain general 

perspectives on the issues to be reviewed, and we conducted pretests with 

seven of these licensees to assist us in the development of the survey 

instrument. 

3

Independent producers of public television programming are generally not affiliated with a 

studio, a television station, or a major production company.
Page 4 GAO-04-284 Corporation for Public Broadcasting

Our review was performed from April 2003 through February 2004 in 

accordance with generally accepted government auditing standards. For a 

more detailed discussion of our scope and methodology, see appendix I.

Results in Brief The Corporation for Public Broadcasting allocates federal funding for 

public television under provisions specified in the Communications Act. Of 

the federal appropriation made annually to the Corporation, 75 percent of 

the funds allocated for public television are to be available for distribution 

among licensees of public television stations, and 25 percent are to be 

available for national public television programming. Based on our survey 

of licensees, more than three-fifths of the licensees indicated that these 

statutory allocations should stay the same, compared to about one-third 

who favored a change. Among the licensees favoring retention of the 

existing allocations, some stated that the current allocations have served 

the system well for many years and have provided the appropriate level of 

federal funding for both licensees and national programming. Of the 

licensees who favored a change, most proposed an increase in the 

allocation for licensees and a decrease for national programming. However, 

a couple of respondents expressed a preference for the reverse—a 

decrease in the allocation for licensees and an increase in the allocation for 

national programming.

The principal mechanism by which the Corporation provides federal 

funding among licensees of public television stations is the Community 

Service Grant program. In accordance with the statute, the eligibility 

criteria established by the Corporation for distributing Community Service 

Grants are periodically reviewed by the Corporation in consultation with 

licensees. Based on our survey, over 75 percent of responding licensees 

expressed overall satisfaction with the most recent consultation process. 

The Corporation also administers the Television Future Fund, which in past 

years offered grant support to projects to help licensees achieve 

operational cost reductions and revenue enhancements. The manner in 

which the Corporation administered this program raised concerns among a 

substantial percentage of licensees. Based on our survey, only about 40 

percent of the respondents indicated that Television Future Fund projects 

had provided them with practical methods for reducing costs and/or 

enhancing revenues. Additionally, only 30 percent of the licensees agreed 

with the Corporation’s approach of funding the program, in part, with funds 

that the Congress has made available for distribution to licensees of public 

television stations. Although the Corporation, as informed by outside 

counsel, contends that it has the authority to use these monies for the 
Page 5 GAO-04-284 Corporation for Public Broadcasting

Television Future Fund, we disagree. Based on our own legal review of this 

issue, we conclude that the Corporation’s funding and distribution of grants 

under the Television Future Fund program is not in accord with the 

statutory authority under which the Corporation operates. Fundamentally, 

in the context of the entire statutory scheme, funds that the Congress has 

designated for distribution to public television licensees are not available 

for project-specific grants intended to have a systemwide benefit. The 

Corporation recently revised the Television Future Fund program to focus 

on a number of improvement initiatives to be funded from the Television 

Future Fund’s account balance, which stood at $18.3 million on December 

31, 2003. However, this account still includes about $10 million that the 

Congress made available for distribution to the licensees of public 

television stations, which the Corporation intends to use to fund additional 

Television Future Fund projects. Appendix III contains our legal opinion.

Provisions of the Communications Act also govern the Corporation’s 

support for national public television programming. As a result of a 

statutory provision, the Corporation developed and implemented a plan 

that includes the awarding of an annual grant to PBS for a package of 

children’s and prime-time programs broadcast by most public television 

stations, known as the “National Program Service.” Nearly three-fourths of 

licensees responding to our survey support the Corporation’s continued 

annual grant support for the National Program Service and believe that this 

programming helps them meet their mission and build underwriting and 

membership support. However, most licensees also indicated that the 

amount of local programming they currently produce is not sufficient to 

meet their local communities’ needs, and about half favored the enactment 

of explicit statutory authority to enable the Corporation to provide federal 

grants for the production of local, as well as national, programming.

The Congress has mandated that television broadcasters transition from 

analog to digital transmission technology. The digital transition has the 

potential to expand the capabilities of public television and offer licensees’ 

communities an array of new digital services that support educational, 

governmental, and cultural activities. In our survey of licensees, over 85 

percent of the respondents indicated that successful completion of the 

digital transition will improve their ability to provide services to their local 

communities. However, licensees face funding challenges as they move to 

digital technology, with the total cost of the transition for public television 

estimated at $1.7 billion. For fiscal years 2001 through 2003, the 

Corporation was provided with appropriations totaling $93.4 million to 

assist public television licensees with the digital transition. However, the 
Page 6 GAO-04-284 Corporation for Public Broadcasting

Corporation was not always timely in getting grant support to stations to 

help them meet FCC digital construction deadlines, and about $24 million 

remained unobligated at the end of calendar year 2003. Furthermore, we 

found that by then most licensees’ priorities for federal funding involved 

aspects of the transition not covered by the Corporation’s current digital 

grant program, such as digital production equipment and digital content. 

Regarding systemwide digital transition issues, the Corporation is seeking 

additional federal funds for modernizing public television’s program 

distribution infrastructure.

This report makes recommendations to the Corporation to (1) request 

specific statutory authority before making further Television Future Fund 

awards or expending any funds in the Television Future Fund account, if it 

intends to continue using funds that were designated for distribution 

among licensees, and (2) broaden the scope of its digital transition funding 

to include support for digital production equipment and digital content. 

We provided a draft of this report to the Corporation, to PBS, and to FCC 

for their comments. The Corporation responded that it generally agreed 

with our recommendation on the digital transition funding. However, the 

Corporation disagreed with our findings and recommendation on the 

Television Future Fund, maintaining that it has acted consistently with the 

provisions of the Communications Act in establishing and administering 

the fund. Nevertheless, it is our view that the Corporation does not have the 

authority to fund the Future Fund program, in part, with monies that the 

Congress has designated for distribution among public television licensees. 

Accordingly, we have added a Matter for Congressional Consideration 

stating that the Congress may wish to provide the Corporation with the 

authority to use these funds to finance the Television Future Fund if the 

Congress supports the use of such funds for this purpose. PBS provided 

additional information and perspectives on issues raised in our report and 

highlighted planned actions to improve input from member stations on 

PBS’s programming decisions. FCC provided comments on technical points 

that were incorporated where appropriate.

Background Public broadcasting dates back to the 1920s, when the first radio stations 

devoted to instructional and cultural programming went on the air. With the 

advent of television broadcasting in the 1940s and a 1952 decision by the 

FCC to reserve channel allocations for noncommercial educational 

television, the first public television station—KUHT in Houston, Texas—

began operations in 1953. Today, 356 public television stations are on the 
Page 7 GAO-04-284 Corporation for Public Broadcasting

air, each operating under the terms of a license granted by the FCC. These 

stations are owned and operated by 176 entities that, under FCC rules, 

must either be: (1) a nonprofit educational institution, such as a university 

or a local school board (shown separately below as “university” and “local 

authority”); (2) a governmental entity other than a school, such as a state 

agency; or (3) another type of nonprofit educational entity, such as a 

“community” organization. Among these 176 licensees, some operate a 

single station, such as the Detroit Educational Television Foundation, 

which operates WTVS public television; others operate multiple stations, 

such as the Kentucky Authority for Educational Television, which has 16 

stations on the air throughout the state. Figure 1 provides a breakdown of 

the number of licensees and stations they operate (by type of licensee).

Figure 1: The Number of Noncommercial Educational Licensees and Stations by 

Type, as of February 2004

Note: In May 2003, there were 89 community licensees operating 138 stations, 59 university licensees 

operating 85 stations, 21 state licensees operating 126 stations, and 7 local authority licensees 

operating 7 stations. Neither the total number of licensees (176) nor the total number of stations (356) 

had changed at the conclusion of our review in February 2004.
Page 8 GAO-04-284 Corporation for Public Broadcasting

Licensees also differ by the size of their budgets, ranging from the smallest 

licensees, with total revenues below $3.5 million, to the largest, with total 

revenues exceeding $20 million.4

 A few of the largest licensees are also 

among the most prominent producers of public television programming, 

such as WGBH in Boston, producer of Masterpiece Theatre, Arthur, and 

other notable series. Other licensees also produce programming for 

national distribution, such as KUHT in Houston, producer of The American 

Woodshop and the children’s program Mary Lou’s Flip Flop Shop. 

Programs intended for local and regional audiences are produced by many 

licensees, such as KDIN public television in Johnston, Iowa, producer of 

Iowa Press and Living in Iowa. Finally, public television licensees provide 

numerous services to their communities, such as programming-related 

outreach, formal educational services, literacy services, Amber Alerts5

 for 

the abduction of children, and emergency weather information.

Public television is characterized as a decentralized system, with all 

licensees owned and controlled at the local level. Stations exercise 

substantial discretion over programming decisions. This structure is due, in 

part, to the institutional and financial factors that motivated the founding 

of each individual public television station. Unlike commercial television 

stations, which typically involve business-related investment decisions, 

establishing a public television station entails a local-level commitment to 

the education and cultural enrichment of viewers. Further, whereas 

advertising revenues finance commercial television, public television has 

always been financed by both public and private sources. For fiscal year 

2002 (the most recent data available), public television generated $1.63 

billion in revenues, which came from a variety of sources: federal, state, 

and local government; private foundations; corporations; and subscribers 

4

According to Corporation officials, the Corporation classifies licensees’ size on the basis of 

total revenues—large licensees have total revenues of $20 million or more annually, 

medium-large licensees have total revenues between $9 million and $19.9 million, medium 

licensees have total revenues between $3.5 million and $8.9 million, and small licensees 

have total revenues below $3.5 million.

5

An Amber Alert is a broadcast announcement that interrupts regular programming to relay 

information to the public about an abducted child. Amber Alerts are part of the Emergency 

Alert System, which is also used to notify the public about severe weather and other 

national emergencies.
Page 9 GAO-04-284 Corporation for Public Broadcasting

(individual memberships) (see fig. 2). The Corporation’s funding of $263 

million provided about 16 percent of this total.6

Figure 2: Sources of Public Television Revenues, Fiscal Year 2002 ($1.63 billion)

Note: These fiscal year 2002 data, the most recent data available, are derived from public television 

licensees’ audited financial reports provided to the Corporation. 

The Educational Television Facilities Act of 1962 authorized the first form 

of federal funding support for public television, establishing a program in 

the former Department of Health, Education, and Welfare to provide grants 

to public broadcasting licensees for equipment and facilities. Soon 

thereafter, the Carnegie Commission on Educational Television, a national 

commission formed in 1965 with the sponsorship of the Carnegie 

Corporation, studied educational television’s financial needs. Based on 

recommendations in the Carnegie Commission’s 1967 report, President 

Lyndon Johnson proposed and the Congress enacted the Public 

Broadcasting Act of 1967, amending the Communications Act of 1934 to 

6

The $263 million in public television revenues attributed above to the Corporation does not 

include funds provided to public television licensees from the $25 million in federal 

appropriations made to the Corporation for public television’s digital transition.
Page 10 GAO-04-284 Corporation for Public Broadcasting

reauthorize funding for facilities and equipment grants and, among other 

provisions, to authorize funding for public television programming through 

a new entity—the Corporation for Public Broadcasting.7

 The Corporation is 

organized under the act as a nongovernmental, nonprofit corporation to 

facilitate the growth and development of public television and radio 

broadcasting and the use of public television and radio broadcasting for 

instructional, educational, and cultural programming.8

In passing the 1967 act, the 90th Congress did not intend that annual 

authorizations and appropriations for the Corporation would serve as a 

permanent process for funding support of public broadcasting.9

 Rather, 

they were seen as temporary measures pending the development and 

adoption of a long-term financing plan for public broadcasting.10 Although 

various financing proposals for public broadcasting have since been 

suggested,11 the Corporation continues to receive nearly all of its budget in 

the form of an annual federal appropriation. Figure 3 illustrates the history 

7

Public Broadcasting Act of 1967, Pub. L. 90-129, 81 Stat. 365, codified as amended at 47 

U.S.C. §396.

8

The Corporation was established as a nongovernmental entity in part to safeguard the 

distribution of federal funding from government control. According to the Corporation, it 

began receiving an “advance” appropriation—provided 2 years in advance of a fiscal year—

in the mid-1970s for the same reason.

9

The legislative history of the Public Broadcasting Act of 1967 indicates that the question of 

permanent financing for the Corporation would be reserved for consideration at a later 

time. S. Rept. No. 90-222, reprinted in 1967 U.S.C.C.A.N. 1772, 1779; H. Rept. No 90-572 

reprinted in 1967 U.S.C.C.A.N. 1779, 1810-1812. This legislative history was further explained 

in 1975.

“The Congress did not intend for the Public Broadcasting Act of 1967 to impose annual 

authorizations and appropriations on the Corporation for Public Broadcasting as a 

permanent process. Rather, this was to be an interim procedure pending submission of a 

long-term financing plan by the Administrator to the Congress.” S. Rept. No. 94-477 at 5, 

reprinted in 1975 U.S.C.C.A.N. 2206, 2210.

10The intention to develop a long-term plan for financing public broadcasting was 

announced by President Johnson upon signing the 1967 act. However, a plan was not 

produced prior to the end of his term of office in 1969.

11For example, a second commission formed by the Carnegie Corporation in 1977, known as 

Carnegie II, proposed that half of the financing for public broadcasting should come from 

the federal government, derived from general tax revenues and a fee for the use of the 

radiofrequency spectrum. 
Page 11 GAO-04-284 Corporation for Public Broadcasting

of annual federal appropriations made to the Corporation in current 

dollars.

Figure 3: Federal Appropriations for the Corporation for Public Broadcasting, Fiscal Years 1969-2006

Note: Although established in November 1967 by enactment of the Public Broadcasting Act, with an 

authorization of $9 million to enable the Corporation to come into being, the Corporation was not 

incorporated until March 1968. The first federal appropriation ($5 million) made to the Corporation was 

enacted in October 1968. Figure 3 includes advance appropriations for fiscal years 2005 and 2006.

The Corporation is governed by a board of directors that is appointed by 

the President and confirmed by the Senate.12 The Corporation’s most recent 

mission statement, adopted by the board in July 1999, states that the 

Corporation is to facilitate the development of, and ensure universal access 

to, noncommercial high-quality programming and telecommunications 

12By statute, the Corporation’s board of directors is to consist of nine members. One director 

position was unfilled as of February 2004.
Page 12 GAO-04-284 Corporation for Public Broadcasting

services in conjunction with licensees.13 Reflecting the local and national 

characteristics of public television, the Corporation’s current goals include: 

(1) strengthening the value and viability of local stations as essential 

community institutions by improving their operational effectiveness and 

fiscal stability and increasing their capacity to invest in and create services 

and content to advance their mission and (2) developing economically 

sustainable, high-quality noncommercial programming that inspires, 

enlightens, and entertains.

The most important work the Corporation has underway, according to a 

July 2003 memorandum to the board, is a systemwide planning study that 

addresses three facets of public television.14 First, to improve the financial 

sustainability of public television, the Corporation has determined that 

improvements in public television’s net revenues can occur by attracting 

increased financial support for stations from major donors and by 

developing new practices to improve the efficiency of stations’ operations. 

Second, through a strategic assessment of the local services provided by 

public broadcasting stations, the Corporation seeks to “help stations chart 

the course ahead” and aid in efforts to improve the financial sustainability 

of public television, provide direction for efficiencies in station operations, 

and inform decisions on national programming. Systemwide efforts related 

to national programming, the third area of focus, will address the “wide 

disconnect between audience research, national commissioning and 

scheduling decisions, and local service strategy.” According to the 

13The mission statement also says that the Corporation has particular responsibility to 

encourage the development of programming that involves creative risks, and programming 

that addresses the needs of unserved and underserved audiences, particularly children and 

minorities. 

14July 22, 2003, memorandum from Robert Coonrod, President and Chief Executive Officer 

of the Corporation, to the board of directors. The fourth focus of the systemwide planning 

effort is challenges affecting public radio.
Page 13 GAO-04-284 Corporation for Public Broadcasting

Corporation, this will involve strategic analysis and reengineering of 

national programming.15

Public television also faces the challenge of transitioning its broadcast 

operations from analog to digital technology. Unlike analog broadcasting, 

which converts moving pictures and sound into a “wave form” electrical 

signal, digital technology converts pictures and sound into a stream of 

digits consisting of zeros and ones that are transmitted over the air. Digital 

technology has the potential to significantly enhance the capabilities and 

services of all television broadcasters and is viewed as critical to the 

broadcast television industry’s ability to enhance its provision of 

communications services. The Telecommunications Act of 1996 established 

the framework for licensing digital television spectrum to existing 

broadcasters. Under FCC rules implementing this framework, public 

television licensees are required to

• complete the construction of digital station facilities by May 1, 2003;

• broadcast in digital a minimum of 50 percent of the programming that 

they broadcast in analog—known as “simulcasting”—as of November 1, 

2003,16 simulcast 75 percent by April 2004, and simulcast 100 percent by 

April 2005; and

15The systemwide planning effort was informed by the Corporation’s 2002 to 2003 study, 

entitled “Developing a Sustainable Economic Model for Public Television,” and facilitated 

under contract with McKinsey & Company. The study addressed the severity and length of 

financial pressures on the system, the most promising performance improvement 

opportunities available to the system, and implementation of initiatives to effect lasting 

change. As part of the key challenge identified by the study—that the core broadcasting 

service of public television is under “real threat” by economic pressures at both the local 

and national levels—the study found a decline, in real terms, in station membership 

revenues since 1990 and the likely continued decline in membership support due, in part, to 

declining viewership.

16FCC granted a 6-month waiver of the simulcast requirement for noncommercial 

educational stations, extending the date for achieving 50 percent simulcasting from May 1, 

2003, to November 1, 2003. However, such stations were required to air a digital signal for an 

amount of time equal to at least 50 percent of the time they aired an analog signal as of May 

1, 2003, increasing to 75 percent as of April 1, 2004, and 100 percent by April 1, 2005.
Page 14 GAO-04-284 Corporation for Public Broadcasting

• by December 31, 2006, return their analog (or digital) spectrum to FCC 

for reallocation.17

In response to the difficulties faced by public television licensees in 

financing expenses related to the digital transition, the regulatory deadline 

for the construction of digital public television stations was set for May 1, 

2003, a year later than the deadline for commercial stations. Further, 

eligible licensees were allowed to request extensions of time to meet the 

construction requirement if they had good cause for failing to meet the 

requirement.

A Majority of Licensees 

Favor the Current 

Statutory Allocations 

for Public Television 

Funding through the 

Corporation

Provisions of the Communications Act, as amended, specify the allocation 

of federal funds appropriated to the Corporation for Public Broadcasting. 

Of the federal funds provided for public television, the Corporation is 

directed to distribute 75 percent of such funds among licensees of public 

television stations and 25 percent for support of national public television 

programming. Based on responses to our survey, more than three-fifths of 

licensees indicated that these statutory allocations for funding support of 

public television should stay the same, compared to about one-third that 

favored a change.

The Communications Act 

Specifies the Allocation of 

Federal Funds for Public 

Television Licensees and 

National Programming

Federal funds appropriated to the Corporation must be allocated in 

accordance with provisions of the Communications Act, as amended.18 As 

shown in figure 4, the act directs the Corporation to allocate 6 percent of its 

federal appropriation for various expenses incurred by public 

17When the Congress passed the Balanced Budget Act of 1997, it adopted the target 

transition date of December 31, 2006, for the digital transition but specified that 

broadcasters could keep their analog service beyond this date on a market-by-market basis 

under certain conditions. See, 47 U.S.C. §309(j)(14). To help broadcasters meet the 2006 

transition date, FCC developed a schedule for the introduction of digital television. See U.S. 

General Accounting Office, Telecommunications: Many Broadcasters Will Not Meet May 

2002 Digital Transition Deadline, GAO-02-466 (Washington, D.C.: Apr. 23, 2002); and U.S. 

General Accounting Office, Telecommunications: Additional Federal Efforts Could Help 

Advance Digital Television Transition, GAO-03-7 (Washington, D.C.: Nov. 8, 2002).

1847 U.S.C. §396(k). As originally enacted, these amendments to the Communications Act did 

not specify allocations for the distribution of federal funding among licensees and for 

national public television programming.
Page 15 GAO-04-284 Corporation for Public Broadcasting

broadcasting, an account the Corporation identifies as “System Support;”19

not more than 5 percent is to be allocated for the Corporation’s 

administrative expenses; and of the remaining funds (about 89 percent), 

the act specifies that 75 percent is to be allocated for public television and 

25 percent for public radio. Of the funds allocated for public television, 75 

percent is to be made available for distribution among licensees of stations 

and 25 percent for national public television programming.

19System Support is largely used to pay royalty fees, interconnection operating costs, and 

other expenses and, if available funding levels permit, for projects and activities that will 

enhance public broadcasting. 47 U.S.C. §396(k)(3)(A)(i)(II).
Page 16 GAO-04-284 Corporation for Public Broadcasting

Figure 4: Federal Funding Allocations by the Corporation, as Required by the Communications Act
Page 17 GAO-04-284 Corporation for Public Broadcasting

For example, with a federal appropriation of $380 million for fiscal year 

2004, the Corporation made the following allocations to its budget: $24 

million (6 percent) for System Support; $17.8 million (5 percent) for 

administrative expenses; and of the remaining $338.2 million, $253.7 million 

(75 percent) for public television. Of these funds, $190.2 million (75 

percent) is allocated for distribution among station licensees, and $63.4 

million (25 percent) is allocated for support of national public television 

programming.20

A Majority of Licensees 

Favor the Current Statutory 

Allocations of Federal 

Funding for Public 

Television

We asked public television licensees in our survey whether the statutory 

allocations for federal funding support of public television by the 

Corporation—the 75 percent allocation for distribution among licensees 

and the 25 percent allocation for national programming—should remain 

the same or be changed. Overall, 62 percent of licensees responded that 

these statutory allocations should stay the same, and 34 percent responded 

that the allocations should be changed (see fig. 5).

20Dollar figures have been rounded. In addition to the $380 million appropriation, the 

Corporation’s fiscal year 2004 budget includes an estimate of $5.5 million in interest. As 

directed by the statute, these funds are allocated between public television (75 percent, or 

$4.125 million, specified for national programming) and public radio (25 percent, or $1.375 

million). 47 U.S.C. §396(k)(3)(A)(v). $49.7 million in federal funds was also provided to the 

Corporation for fiscal year 2004 to support public broadcasting’s transition to digital.
Page 18 GAO-04-284 Corporation for Public Broadcasting

Figure 5: Percentage of Licensees that Favor Either the Current Allocations or a 

Change in the Allocations

Note: N=148 licensees. Percentages have been rounded and do not equal 100 percent.

We further analyzed responses to this question factoring in the type (e.g., 

state, university, community, and local authority) and size (based on total 

revenues) of licensees, to determine whether the views of licensees on the 

statutory allocations vary on the basis of these characteristics. Our analysis 

indicates that the current allocations were favored by a majority of 

licensees of each type, with the exception of local authority licensees (see 

fig. 6) and by each size, based on total revenues (see fig. 7). Among the 

various types and sizes of licensees, those that most favored the current 

allocations were university licensees (71 percent of the 51 university 

licensees responding) and large licensees by total revenues (80 percent of 

the 20 large licensees responding).
Page 19 GAO-04-284 Corporation for Public Broadcasting

Figure 6: Percentage of Licensees by Type that Favor Either the Current Allocations 

or a Change in Allocations

Note: N=51 “university” licensees; N=15 “state” licensees; N=7 “local authority” licensees; and N=75 

“community” licensees. Percentages have been rounded and may not equal 100 percent due to 

respondents answering “don’t know.”
Page 20 GAO-04-284 Corporation for Public Broadcasting

Figure 7: Percentage of Licensees by Size (total revenue) that Favor Either the 

Current Allocations or a Change in Allocations

Note: N=58 small licensees, 52 medium licensees, 18 medium-large licensees, and 20 large licensees. 

Percentages have been rounded and may not equal 100 percent due to respondents answering “don’t 

know.” As noted earlier, large licensees have total revenues of $20 million or more annually, mediumlarge licensees have total revenues between $9 million and $19.9 million, medium licensees have total 

revenues between $3.5 million and $8.9 million, and small licensees have total revenues below $3.5 

million.

Among the licensees favoring retention of the existing allocations, some 

stated that the current allocations have served the system well for many 

years and provide the appropriate level of federal funding for both 

licensees and national programming. For example, one licensee noted that 

the allocations provide a balance between supporting station operations—

referred to as “the crucial local infrastructure” of public broadcasting—and 

“high profile” national programming (i.e., programming that is generally 

recognizable to television viewers) created for distribution to, and for the 

benefit of, local stations. An official of another licensee, described as a 

small rural licensee that relies heavily on funds received through the 75 
Page 21 GAO-04-284 Corporation for Public Broadcasting

percent allocation, commented that even though additional federal funding 

for station operations would be useful, quality national programming is 

also important to support the station’s fundraising efforts. 

Of the respondents favoring a change in the allocations, most proposed 

that the allocation for support among licensees increase above the current 

level of 75 percent and the allocation for national programming decrease 

below 25 percent. In fact, several of these respondents suggested that all of 

the public television funds should be allocated among licensees, with no 

funds for national programming. Among the reasons cited for an increase 

in the allocation for licensees was the view that providing more of these 

funds to licensees, rather than to national programming entities, would 

advance the “local” quality of public television. Another reason given was 

that distributors of national programming would be more accountable and 

responsive to licensees’ local needs if more funds were allocated to 

licensees. In addition, one licensee noted that by placing the funds in the 

hands of licensees, a greater degree of insulation from political influence 

over national programming would be likely.

However, a couple of licensees suggested that the 25 percent allocation for 

national programming should be increased and the 75 percent allocation 

for licensees decreased. One licensee suggested, for example, that despite 

the need for national programming, licensees would likely not pool funding 

necessary to produce national programming if all funds were distributed to 

licensees. Another licensee noted that funding for costly, high-quality, 

national programming should occur at the national level, and that local 

stations should obtain most of their financial support from their local 

communities.
Page 22 GAO-04-284 Corporation for Public Broadcasting

Most Licensees Were 

Generally Satisfied 

with the Process for 

Determining 

Community Service 

Grants, but Many 

Expressed Concerns 

about the Television 

Future Fund

Community Service Grants, the principal mechanism by which the 

Corporation provides federal funding among licensees of public television 

stations, are to be awarded in accordance with applicable statutory 

provisions. Among these provisions is a requirement that the Corporation 

periodically review, in consultation with licensees, the eligibility criteria 

established by the Corporation for distribution of funds among public 

television stations. More than three-fourths of the licensees responding to 

our survey expressed overall satisfaction with the most recent consultation 

process. Another grant program, the Television Future Fund, was created 

by the Corporation to support projects to help public television achieve 

greater economic self-sufficiency. However, over 40 percent of licensees in 

our survey responded that the projects have not resulted in practical 

methods for reducing costs or enhancing revenues in their own operations. 

Moreover, our legal review of this program determined that the 

Corporation’s approach of supporting these projects, in part, with funds 

designated for distribution among licensees is not consistent with the 

statutory authority under which the Corporation operates. In September 

2002, the Corporation temporarily suspended the awarding of further 

Television Future Fund grants pending the outcome of a review. The 

program has recently been reactivated under different procedures but 

continues to be funded, in part, with funds that the Congress has made 

available for distribution among licensees of public television stations.

Most Licensees Were 

Satisfied with the Review 

and Consultation Process 

for Determining Community 

Service Grants

The Community Service Grant program is the principal mechanism by 

which the Corporation currently distributes federal funding among 

licensees of public television stations.21 Although not expressly established 

by the act, the Community Service Grant program is administered by the 

Corporation under the provisions of the act that provide for the allocation 

of funds for distribution among public television licensees. Statutory 

provisions requiring that the Corporation distribute funds directly among 

21The 75 percent allocation is generally referred to as the Community Service Grant (CSG) 

“fund” or “pool.” In addition to the Community Service Grant program, the CSG pool also 

funds the Television Future Fund, discussed later in this report; the Collaboration Fund, a 

competitive grant program providing assistance for collaborative relations among stations, 

and between stations and other community-based organizations; and the Small Station 

Fund, providing grants to stations facing “extreme” financial hardship and those not able to 

raise the minimum level of nonfederal financial support to receive the base grant portion of 

a Community Service Grant.
Page 23 GAO-04-284 Corporation for Public Broadcasting

licensees were first enacted in 1975.22 Of the $190.2 million allocated for 

distribution among licensees in fiscal year 2004, the Corporation’s 

budget for the Community Service Grant program is $181.2 million.23

The Corporation currently administers the program by providing each 

licensee that operates an on-air public television station with a “basic” 

grant, as specifically required by the act. The $10,000 in funds awarded to 

each eligible licensee currently as the basic grant component of a 

Community Service Grant predates the establishment of the program and 

began soon after establishment of the Corporation. In addition to the basic 

grant, eligible licensees also receive two additional component grants in 

their Community Service Grant—a “base” grant and an “incentive” grant.24

Base grant funds are determined on the basis of the statutory allocations, 

the Corporation’s total annual appropriation, the number of licensees 

eligible for grants, and a fixed grant funding level set by the Corporation’s 

board of directors. Incentive grant funds depend largely on each individual 

licensee’s share of the combined amount of revenues generated from 

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

components of Community Service Grants.)

The act specifies that the funds distributed through the 75 percent 

allocation may be used at the discretion of the recipient for purposes 

related primarily to the production or acquisition of programming.25

According to officials of the Corporation, this provision is generally 

22See Public Broadcasting Financing Act of 1975, Pub.L. 94-192, 89 Stat. 1099. 47 U.S.C. 

§§396(k)(5), (6) and (7). 

23Of the fiscal year 2004 federal appropriation made to the Corporation, the 75 percent 

allocation for distribution among licensees of public television stations totaled $190.2 

million. Of these funds, the Corporation budgeted $181.2 million for Community Service 

Grants; $1 million for the Small Station Fund; $4 million for the Television Future Fund; $1 

million for the Collaboration Fund; and $3 million for Local Service Grants. Funds sets aside 

for Local Service Grants assist licensees that generate less than $2 million in nonfederal 

financial support in order to strengthen local services provided by these licensees.

24The act requires that after the basic grant is made, the balance of the funds reserved for 

television stations is to be distributed to licensees in accordance with eligibility criteria

that “promote the public interest in public broadcasting” and on the basis of a formula

designed to—(a) provide for the financial needs and requirements of stations in relation to 

the communities and audiences such stations undertake to serve and (b) maintain existing, 

and stimulate new, sources of nonfederal financial support for stations by providing 

incentives for increases in such support. 47 U.S.C. §396(k)(6)(B).

2547 U.S.C. §396(k)(7).
Page 24 GAO-04-284 Corporation for Public Broadcasting

understood to provide licensees with discretion to use such funds for any 

expenses incurred.

In tandem with the act’s requirements setting forth the basis for distributing 

funds, the Corporation is required to review periodically the eligibility 

criteria for distributing these funds in consultation with licensees or their 

designated representatives. In practice, the Corporation has undertaken a 

review and consultation of the Community Service Grant program every 2 

to 3 years. According to Corporation officials, a review and consultation 

consists of polling licensees and other public broadcasters to identify 

issues of concern regarding the distribution of funds and convening an 

advisory panel that broadly represents licensees to facilitate the review. 

Further, the Corporation develops and analyzes numerical models to assess 

likely impacts of recommended policy changes in the distribution of funds 

and disseminates information to licensees for further advice and 

consultation. Ultimately, the advisory panel’s recommendations are 

presented first to licensees and the Corporation’s management and then to 

the Corporation’s board, with any exceptions or refinements proposed by 

management for its vote of approval.

In our survey, we asked licensees several questions about the Corporation’s 

most recent consultation on the eligibility criteria for distributing 

Community Service Grants, conducted in 2001. Over 80 percent of 

licensees responding said that they were aware of the 2001 consultation 

process. Slightly more than half of the respondents said the Corporation 

solicited input from them to a great or moderate extent. Half of the 

licensees said they provided input to the Corporation to a great or 

moderate extent. Overall, more than three-fourths of all licensees said they 

were either basically satisfied with the consultation process, or that only 

minor changes were needed (see fig. 8).
Page 25 GAO-04-284 Corporation for Public Broadcasting

Figure 8: Favorable Responses of Licensees on the Corporation’s 2001 Consultation 

Process

Note: N=148 licensees for “awareness of consultation”; N=126 licensees for “input solicited”; N=125 

licensees for “input provided”; N=97 licensees for “input considered”; and N=125 licensees for “overall 

satisfaction.” Favorable responses were those answering “yes” on our question regarding awareness of 

the consultation process; “to a great extent” or “to a moderate extent” on questions regarding input 

solicited, input provided, and input considered; and “basically satisfied” or “only minor changes 

needed” on our question about the process overall.

In commenting on changes needed in the consultation process, some 

licensees noted the importance of the process and the Corporation’s 

effectiveness in conducting reviews of the eligibility criteria for distributing 

Community Service Grants in consultation with licensees. For example, 

one licensee indicated that the review is important in light of changes 

occurring within the public television community and that a review by a 

panel of peers helps to ensure that public funds are appropriately 

administered. Another licensee said the consultations used by the 

Corporation have successfully solicited input from licensee officials and 

that despite the wide variety of views within the community, the process 

allows for deliberation and consensus building. However, other licensees 

were critical of the consultation process and offered suggestions for 
Page 26 GAO-04-284 Corporation for Public Broadcasting

changes. For example, several licensees indicated their belief that the 

Corporation predetermines the desired outcome of modifications to the 

Community Service Grant eligibility criteria and is not responsive to 

licensees. With regard to the make-up of the review panel, suggestions 

were made to rotate panel members, involve licensee officials that have not 

previously served on a review panel, and make the review panel more 

representative of the licensee community. One perspective highlighted by a 

few licensees was that small stations do not have adequate representation 

on the Corporation’s review panels. For example, one licensee said that 

small rural station licensees only have “token” representation on the 

Corporation’s review panels, and another noted the difficulty for officials of 

small station licensees to participate in review panels given the costs and 

time commitments for participating in the panel meetings.

In both our survey and in interviews we conducted with licensees and 

officials from the Corporation, PBS, and the Association of Public 

Television Stations, specific factors in the eligibility criteria for grant award 

determinations were noted as causing some licensees to perceive 

disparities in the distribution of funds through the Corporation’s 

Community Service Grants. Among such factors were the policy which 

specifies that licensees operating stations in the same market (known as an 

“overlap” market) share a single base grant component of their Community 

Service Grants, the provision of supplemental funds in the incentive grant 

portion of the Community Service Grant for licensees that operate multiple 

public television stations, and an insufficient level of Community Service 

Grant funds provided to licensees to cover PBS membership assessment 

for access to PBS’s national programming.26

However, we were told that while modifying the eligibility criteria for 

establishing the base and incentive grant portions of Community Service 

Grants may result in an increase in the grant funds awarded to some 

licensees, it would also likely reduce the grant amounts awarded to others. 

Further, we were told that the Corporation makes every attempt to ensure 

that these grant funds are distributed fairly among public television 

licensees. For example, as a result of the 2001 review, the Corporation 

revised a policy previously adopted to increase the minimum level of 

26The basis for grant amounts provided to licensees through Community Service Grants 

does not include costs for membership in, or other costs related to the acquisition of 

programming from, PBS or other national programming distributors. However, the 

assessment paid by a licensee for PBS membership includes a factor based on the 

Community Service Grant funds awarded to the licensee by the Corporation.
Page 27 GAO-04-284 Corporation for Public Broadcasting

nonfederal financial support that licensees must raise to $1 million 

beginning in fiscal year 2003 in order to receive the incentive portion of the 

Community Service Grant. As revised, the minimum level was set at 

$800,000. 

Many Licensees Expressed 

Concerns About Aspects of 

the Television Future Fund

Concerned in the mid-1990s over the prospect of declining revenues from 

public television funding sources, including federal funding, the 

Corporation created the Television Future Fund in 1995 as a means of 

helping public television licensees achieve greater economic selfsufficiency. The program provided grants to projects aimed at reducing 

stations’ operating cost and enhancing their revenues. Prior to the end of 

fiscal year 2003, the Television Future Fund awarded grants to licensees, 

consortia of licensees, and non-licensee entities (e.g., consultants) on the 

basis of project-specific criteria. Grant proposals were to

• show clear evidence that the project would meet a demonstrated need;

• actively involve a number of stations, have benefits beyond one 

individual station, offer economic returns that could be widely shared, 

and/or act as a model that could be widely replicated; 

• prove, through feasibility studies, that concepts could be widely 

implemented, thus demonstrating that the effort can lead to economies 

of scale;

• be envisioned as long-term efforts, sustainable after the Corporation’s 

funding for the project concluded; and

• reflect a shared risk through funds provided by the applicant, thereby 

demonstrating an institutional commitment.

In addition, all proposals were to demonstrate an awareness of systemwide 

efforts already under way and make use of existing resources, whether 

from public television or the private sector.27

To provide funding for Television Future Fund projects, the Corporation 

annually pooled funds from two separate sources: funds from its System 

27See Request for Proposals, Television Future Fund and Television Transition Fund, Fiscal 

Year 2002, Corporation for Public Broadcasting.
Page 28 GAO-04-284 Corporation for Public Broadcasting

Support account and funds from the 75 percent allocation for distribution 

among licensees. Between 1996 and 2004, $30.5 million came from the 

System Support account and $28.5 million from the licensee allocation.28

Based on recommendations of advisory panels comprised of station and 

system representatives, the Corporation awarded 204 Television Future 

Fund grants through September 2002 for a broad range of projects, 

including

• development projects aimed at improving fundraising through local, 

regional, and national underwriting efforts, strengthening pledge 

practices, and studying financial contributions given via the Internet;

• technology projects designed to increase the public television 

community’s knowledge of its digital capabilities, including developing 

interactive television programming;

• new service and business models projects aimed at forging links 

between the public television community and other entities, such as 

licensee and university partnerships;

• management information projects to improve efforts to manage and 

disseminate relevant data, such as a database used by licensees to 

compare their programming and fundraising activities with other 

licensees and a section of the Association of Public Television Stations’ 

Web site that contains information for both licensees and the public 

about the digital transition;

• collaboration and consolidation projects designed to support the 

development of back office operations that could be used by more than 

one station; and

• research projects aimed at improving the public television community’s 

understanding of viewers and the public television industry, such as 

updating the handbook for television programmers and a viewer panel 

study.

Figure 9 illustrates the distribution of the types of Television Future Fund 

projects.

28Since fiscal year 2001, $4 million annually from each source has been used to fund the 

Television Future Fund program.
Page 29 GAO-04-284 Corporation for Public Broadcasting

Figure 9: Distribution of Television Future Fund Grants by Project Type

According to Corporation officials, some licensees raised issues regarding 

how the program is funded and what benefits are being derived from it. We 

heard similar concerns while interviewing several licensees. To evaluate 

these concerns, we asked licensees in our survey to indicate the extent to 

which they knew about the findings and outcomes of Television Future 

Fund projects, whether any such projects resulted in practical methods for 

enhancing revenues or reducing costs in licensees’ own operations, and 

whether they supported the way in which the Television Future Fund is 

funded.

The extent of the licensees’ knowledge of Television Future Fund projects 

varied significantly. Of licensees responding to our survey, 58 percent 

stated that they knew about Television Future Fund projects to a great or 

moderate extent, but the other 42 percent indicated that they knew about 

the findings and outcomes of Television Future Fund projects to little or no 

extent (see fig. 10).
Page 30 GAO-04-284 Corporation for Public Broadcasting

Figure 10: Extent of Licensees’ Knowledge of Findings and Outcomes of Television 

Future Fund Projects

Note: N=148 licensees. Percentages have been rounded. 

Several licensees noted that they did not know about the findings and 

outcomes of Television Future Fund projects because of inadequate efforts 

by the Corporation to distribute information about the projects. For 

example, the Corporation did not compile and distribute to licensees, or 

release publicly, a list of the findings and outcomes of Television Future 

Fund projects until November 2001, 5 years after the first grants were 

awarded. One licensee stated that although there has always been 

sufficient information about the awarding of Television Future Fund grants, 

there has been little information on the outcomes of the projects supported 

by those grants. 

We asked licensees in our survey to indicate whether Television Future 

Fund projects had provided their stations with practical methods for either 

reducing costs or enhancing revenues. A little over one-third of the 

responding licensees indicated that Television Future Fund projects had 

provided them with practical methods for reducing costs. About the same 

percentage of licensees indicated that projects had provided them with 
Page 31 GAO-04-284 Corporation for Public Broadcasting

practical methods for enhancing revenues. In cross-tabulating these 

responses, we determined that, overall, only 41 percent of licensees 

responded that Television Future Fund projects had provided them with 

practical methods for reducing costs and/or enhancing revenues (see fig. 

11).

Figure 11: Licensees’ Responses on Whether Television Future Fund Projects 

Provided Them with Practical Methods for Reducing Costs and Enhancing Revenues

Note: N=143 licensees. Percentages have been rounded and do not equal 100 percent due to 

respondents answering “don’t know.” 

The Corporation’s approach for funding Television Future Fund projects 

was another area of concern for licensees. Only 30 percent of the 

responding licensees in our survey indicated that they favored the current 

approach of funding the projects, in part, with funds from the 75 percent 

allocation for distribution among licensees (see fig. 12). Altogether, over 40 

percent indicated their preference for funding the program only from 

system support funds or from other sources. In their survey comments, a 

number of licensees suggested that other sources of funding could come 

from an additional appropriation from the Congress or from funds provided 
Page 32 GAO-04-284 Corporation for Public Broadcasting

by philanthropic foundations. Over one-fifth of our survey respondents, 

however, indicated that the Corporation should cease all funding for the 

Television Future Fund.

Figure 12: Licensees’ Responses on Favored Approach for Funding the Television 

Future Fund

Note: N=148 licensees. Percentages have been rounded and do not equal 100 percent due to 

respondents answering “don’t know.” 

In September 2002, the Corporation suspended the award of further 

Television Future Fund grants pending a review of the program to (1) 

assess the consistency between the planning and execution of the program 

in relation to the Corporation’s goals and (2) determine how the program 

could address concerns that the public broadcast mission and business 

models were no longer adequate in the digital era. In the course of its 

review, the Corporation’s Future Fund Advisory Panel29 concluded that 

while a majority of the projects had yielded the results anticipated, some 

29The panel included representatives of public television stations, PBS, and the Association 

of Public Television Stations, as well as consultants.
Page 33 GAO-04-284 Corporation for Public Broadcasting

were not successful for reasons that included an inability to achieve 

appropriate scale or significant economic benefit, inadequately defined 

objectives and poor execution, and inadequate marketing of results to 

stations. The panel solicited comments from the public television 

community on how the Future Fund could best be used to help stations 

maximize their financial resources and invest these resources in new and 

strengthened service to their local communities. Based on input from 

public television stakeholders and its own deliberations, the panel 

developed four new criteria to guide the investment of funds. Specifically, 

Television Future Fund initiatives should have 

• the potential to change systemwide decision making and transform 

current approaches to achieving system and station goals,

• measurable and sustainable outcomes,

• strong and verifiable support of key advocates and participants, and

• consistency with the Corporation’s legislative mandate.

In addition, the panel recommended changes in how Television Future 

Fund initiatives are developed and supported. Rather than continuing to 

invite proposals on a broad array of themes, as had been done in the past, 

the panel recommended that the solicitations more directly define the 

initiatives’ intended outcomes for participants, the station community, and 

the system overall. The panel also recommended that funding 

commitments be made over longer time frames at higher monetary levels in 

order to focus on fewer initiatives that have greater impact. The panel 

called for improved project management, with clearly defined expectations 

and performance measures and a clear definition of success. To evaluate 

and monitor the progress of the initiatives, the panel recommended that the 

membership of the Future Fund Advisory Panel include greater 

representation from across the station community. 

The Corporation’s board adopted these recommendations in April 2003. 

During the remainder of the year, the panel continued work to translate its 

recommendations into practices and processes. This included reaching 

agreement on a clearly defined review process for making Television 

Future Fund investment decisions, a plan for determining the 

representation and terms of the members, and priorities for Future Fund 

investment. During the time that the Corporation was reviewing the 

Television Future Fund program, it was also engaged in the systemwide 
Page 34 GAO-04-284 Corporation for Public Broadcasting

planning study discussed earlier. According to Corporation officials, it was 

anticipated that the Future Fund program would help support some of the 

new initiatives and projects stemming from the planning study. 

The Television Future Fund was reactivated in November 2003 with the 

advisory panel endorsing several funding grants. In a December 2003 

memorandum to station managers, the Corporation outlined the new 

Television Future Fund review and selection process and described three 

Future Fund projects that were in progress: (1) the Major Giving Initiative 

aimed at helping stations attract financial support from major donors—an 

area of opportunity identified in the Corporation’s systemwide planning 

study; (2) the Education Leadership Academy, a pilot effort to identify 

opportunities for improved community partnership in elementary and 

secondary school education; and (3) an online knowledge base to improve 

public television’s fundraising potential, strategies, and practices. 

Corporation officials noted that 90 of the 176 licensees have signed up to 

participate in the first Major Giving Initiative workshop, and they expect 

licensees to participate in another workshop to be held later this year. In 

addition, they noted that the Future Fund was used to cover the 

participation of about 110 station personnel in a 2-day concentrated track 

of sessions for the Education Leadership Academy. 

Corporation’s Approach to 

Funding the Television 

Future Fund Is Not 

Consistent with Its 

Underlying Statute

The advisory panel’s recommendations on the Television Future Fund did 

not, however, include changes to the program’s funding mechanism. As 

noted earlier, the Corporation has supported the program with funds taken 

annually from the Corporation’s System Support funds and from funds 

designated for distribution among licensees. The Corporation’s funding 

approach has been challenged by some station executives, who maintain 

that it is inconsistent with the Corporation’s underlying statute. For 

example, in an August 2003 letter to the Corporation, four station 

executives expressed the view that the Corporation’s use of funds 

designated for distribution to licensees for other purposes was not 

consistent with congressional intent. Both the licensees’ letter and the 

Corporation’s reply pointed to legal opinions from their respective outside 
Page 35 GAO-04-284 Corporation for Public Broadcasting

counsels to support their differing positions on this issue.30 As part of our 

review, we examined the Corporation’s statutory authority to use funds 

allocated for distribution among public television licensees to support the 

Television Future Fund. Although our legal review focused on the program 

as it was constituted prior to its recent revisions, the recent changes made 

do not appear to have solved the legal deficiencies that we identified. As 

reconstituted, the Future Fund program still is funded, in part, with funds 

designated by the Congress for distribution among public television 

licensees. 

According to the Corporation, its authority to establish “eligibility criteria,” 

and the formula under which the funds are disbursed, is broad enough to 

allow the Corporation to take a portion of the funds allocated for 

distribution among licensees, pool them with System Support funds, and 

use this aggregated pool of money to make selective grants only to 

applicants submitting project proposals acceptable to the Corporation after 

being reviewed and recommended by a review panel.31 We disagree. The 

difference between our view and that of the Corporation rests on whether 

the eligibility criteria the Corporation may adopt include project-focused 

criteria that govern the selective award of funds for a particular project (as 

the Corporation maintains) or whether eligibility criteria the Corporation 

may adopt include only station-based criteria that distinguish among public 

television licensees on the basis of such factors as financial needs, 

audience satisfaction, or fundraising effectiveness. It is our view that the 

phrase “eligibility criteria” should be read in the context of the distribution 

mechanism to mean criteria focusing on the eligibility of the licensees, 

30Letter from four station executives to Mr. Robert T. Coonrod, President and Chief 

Executive Officer, Corporation for Public Broadcasting, dated August 8, 2003. The letter 

expressed concerns about the potential use of monies designated by the Congress for 

distribution to public television licensees to fund the initiative and projects stemming from 

the systemwide planning study and attached a legal opinion from outside counsel which 

concluded that the expenditure of these funds for any purpose other than distribution to 

public television stations was inconsistent with restrictions placed by the Congress on the 

use of these funds. The Corporation’s August 21, 2003, response maintains that the 

Corporation has allocated and distributed all funds in a fashion fully consistent with 

statutory directives and has been so advised by outside legal counsel. This debate surfaced 

in 1995 when the program was established. At that time, the Corporation was advised by 

outside legal counsel that it had authority to create the fund and use funds allocated for 

distribution among public television licensees for Future Fund grants. In July 2003, the 

Corporation’s current outside counsel reviewed this issue and reached the same conclusion.

31The Corporation’s views are consistent with the interpretations articulated by its outside 

counsel in 1995 and 2003.
Page 36 GAO-04-284 Corporation for Public Broadcasting

rather than the eligibility of the projects. Although we often defer to an 

agency’s interpretation of a statute it is charged to administer, we cannot 

do that here because the Corporation’s interpretation of its authority is 

neither consistent with the statutory language nor the Congress’ policy 

choice favoring local, not Corporation, control of the expenditure of the 

funds allocated for licensees. 

Fundamentally, we believe that the Corporation’s interpretation of the 

statutory language changes the basic nature and control over the 

expenditure of the funds allocated for licensees. First, the language of the 

distribution provision makes no reference to funding specific projects. By 

contrast, the Congress has provided the Corporation with specific 

authority to fund projects using system support funds. Second, the statute 

and its legislative history reflect a clear division of roles vis-à-vis the 

Corporation and the licensees and permittees of public television stations. 

Under the statutory scheme, it is the Corporation that is responsible for 

distributing funds to the licensees, and it is the recipients of these funds 

that are granted the discretion over how they are to be used. Thus, in the 

context of the entire statutory scheme, these funds would not be available 

for project-specific systemwide grants. 

Moreover, as implemented by the Corporation, the Television Future Fund 

grants are available to nonstation entities. We believe this is inconsistent 

with the direction in the statute regarding the fact that the funds are to be 

distributed among licensees of public television stations. For example, an 

award was given to a consultant to conduct studies to identify skills that 

will be needed by chief executive officers of public television stations in 

the next decade. Another award was given to a consultant group to study 

the perception of public television by its current and potential financial 

supporters. In our view, the funds allocated by statute for distribution 

among licensees are not available to nonstation entities. Appendix III 

presents our legal opinion in detail.

In January 2004, a month after the Corporation’s announcement to the 

public television community of the changes being made to the Television 

Future Fund and ongoing and planned initiatives that were to be funded, 

there was a new development in the issue of how to fund the Television 

Future Fund. At its January meeting, the Corporation’s board, expressing 

its recognition that system resources were scarce and local needs were 

great, directed the staff to develop a comprehensive plan for returning 

Television Future Fund dollars to stations. Corporation officials told us in 

February that what is under consideration is that beginning in fiscal year 
Page 37 GAO-04-284 Corporation for Public Broadcasting

2005 monies designated for distribution among licensees would no longer 

be used to support the Future Fund. The officials said that they would be 

developing a proposal for the board’s vote before the end of fiscal year 

2004.

Meanwhile, the ongoing and planned projects will continue to be supported 

from the balance in the Television Future Fund account, which amounted 

to about $18.3 million as of December 31, 2003. According to the 

Corporation, $10.1 million of this balance came from funds designated for 

distribution among licensees from fiscal year 2004 and previous fiscal 

years; the remaining $8.2 million came from System Support funds. 

Approximately $8.4 million of the $18.3 million in the account balance has 

been committed for ongoing projects, mostly for the Major Giving Initiative 

($6.6 million). The remaining $9.9 million has been “earmarked” by the 

Future Fund Advisory Panel for several other major initiatives that are 

under development.32

Most Licensees Favor 

Continued Federal 

Funding Support for 

the National Program 

Service, as Well as 

Additional Funding to 

Produce More Local 

Programming

Provisions of the Communications Act govern the Corporation’s support 

for the production and distribution of national programming. The 

Corporation provides PBS with an annual grant to help support its National 

Program Service, a package of children’s and prime-time series that are 

broadcast by most public television stations. In response to our survey, 

most licensees expressed support for continuation of the Corporation’s 

annual grant to PBS for the National Program Service and held the view 

that the Service’s programming enables them to meet their mission and 

build underwriting and membership support. Many licensees also 

emphasized the importance of producing their own programs to meet the 

needs of their local communities, suggesting that federal funds should be 

made available for the production of local programming.

32The Corporation refers to these committed funds as being “obligated,” by which they mean 

that the Future Fund Advisory Panel has agreed to specific projects with a budget, that the 

Corporation has committed funds to the project, and that the contracting process is under 

way. By “earmarked,” they mean that the Future Fund Advisory Panel has designated that 

funds be directed toward major initiatives that are in development, but as yet have no 

specific project budget and workscope to which the funds may be specifically allocated. In 

February 2004, Corporation officials told us that there would be a request for proposals in 

March 2004 for conducting Major Giving Initiative workshops; they said that the request for 

proposals would be open to public television licensees and stations, consultants, and others.
Page 38 GAO-04-284 Corporation for Public Broadcasting

Most Licensees Favor 

Having the Corporation 

Continue Funding for the 

National Program Service

Expressly prohibited from producing or distributing public television 

programming,33 the Corporation is authorized by provisions of the 

Communications Act to provide federal funding for national public 

television programming.34 Under the act, the Corporation is directed to 

distribute a substantial amount of available programming funds to 

independent producers and production entities, producers of national 

children’s educational programming, and producers of programming 

addressing the needs and interests of minorities.35 In fulfillment of this 

mandate, the Corporation provides programming support through three 

mechanisms—the General Program Fund, the Program Challenge Fund, 

and an annual grant to PBS for the production and distribution of some of 

public television’s best known or “signature” series, a package known as 

the “National Program Service” (see fig. 13). Some of the productions 

supported through the Program Challenge Fund and the General Program 

Fund are broadcast as part of the PBS National Program Service.36

3347 U.S.C. §396(g)(3).

3447 U.S.C. §396(k)(3)(A)(ii)(II). 

3547 U.S.C. §396(k)(3)(B)(i). The Congress has also provided 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. 47 

U.S.C. §396(a)(6).

36According to Corporation officials, approximately $20 million of these additional national 

programming funds support productions that are included in PBS’s National Program 

Service.
Page 39 GAO-04-284 Corporation for Public Broadcasting

Figure 13: The Corporation’s Distribution of Funding in Support of National Programming 

a

The Independent Television Service was founded in 1988. See, 47 U.S.C. §396(k)(3)(B)(iii).

b

The Minority Consortia consist of the following organizations: National Black Programming 

Consortium, Native American Public Telecommunications, Latino Public Broadcasting, National Asian 

American Telecommunications Association, and Pacific Islanders in Communications.

The $65 million in funds distributed by the Corporation in fiscal year 2003 

through these three mechanisms made up a relatively modest portion of the 

total revenues used for the production and distribution of national public 

television programming. According to the Corporation, its funding support 
Page 40 GAO-04-284 Corporation for Public Broadcasting

amounted to only 14 percent of the $450 million in total funds used for such 

programming in fiscal year 2003.

Many of the best-known programs associated with public television are 

part of PBS’s National Program Service. The Service currently includes 

miniseries, specials, and children’s and prime-time series—including 

Sesame Street, NOVA, The NewsHour with Jim Lehrer, and American 

Experience—providing PBS member-stations with approximately 2,100 

hours of programming in 2003. The Corporation’s annual grant of $22.5 

million to PBS makes up only a small portion of the funds that finance the 

National Program Service; a large source of the Service’s financing comes 

from public television station licensees that collectively paid $126 million 

in 2003 membership assessments to PBS for programming and related 

broadcast rights to the Service’s programs. In 2003, 171 of the 176 public 

television licensees were PBS members. The National Program Service is 

distributed to PBS member-stations for broadcast either at the time of their 

delivery or at a time of the licensees’ choosing. Member-stations are free to 

choose which of the Service’s programs to broadcast, although PBS 

officials stated that licensees receive no reduction or rebate in their 

assessment for programming that is not broadcast. 

Our survey asked a series of questions about the National Program Service. 

In response to our question on whether the Corporation should continue to 

provide direct funding for the Service at its current level, 72 percent of the 

responding licensees answered “yes.” Some licensees stated that the 

quality of the programs included in the Service would suffer without 

continued funding from the Corporation. Of the 19 percent of the licensees 

who indicated that a change was needed, most suggested that the funding 

be reduced or eliminated and be given instead to the licensees.

Concerns with the process that PBS uses to choose the programs selected 

for the National Program Service were also noted in some of our interviews 

with officials of public television licensees. The Corporation’s annual grant 

to PBS for the National Program Service was instituted as a result of a 

statutory provision enacted in 1988 requiring that the Corporation study 

and submit a plan to the Congress for funding support of national public 

television programming.37 Prior to the establishment of the National 

3747 U.S.C. §396(k)(6)(A). See Meeting the Mission in A Changing Environment: A 

Comprehensive CPB Plan for Public Television’s National Program Financing in the 

1990s, A Report to Congress from the Corporation for Public Broadcasting, January 1990.
Page 41 GAO-04-284 Corporation for Public Broadcasting

Program Service, grants were awarded by the Corporation directly to 

several of the producers of programming included on the PBS national 

schedule. Other programs were made part of the national schedule through 

a mechanism known as the “Station Program Cooperative.” Through the 

Cooperative, officials from public television stations would vote on which 

individual programs to include on the national schedule and participate in a 

“group buy”—combining their funds for the purchase of programming for 

distribution by PBS. However, concerns arose that the Station Program 

Cooperative model was not effective in the establishment of programming 

priorities, the production of minority programming, or the ability of 

producers to effectively attract underwriters. In 1989, a National Program 

Funding Task Force—comprised of representatives from the Corporation, 

public television stations, PBS, independent producers, and other 

stakeholders—was formed to review the method of funding national 

programming. This review led to the replacement of the Station Program 

Cooperative with a new model for selecting PBS programming. Under this 

new model, PBS created the position of chief programming executive to 

make programming decisions. Currently, two chief programming 

executives located on the East and West coasts, respectively, select 

programs for the National Program Service with input from licensees, 

internal PBS programming staff, and PBS management. This approach was 

designed to facilitate the centralized development and purchasing of 

programming for the National Program Service and for other programming 

distributed nationally under the PBS logo—including children’s, primetime, and syndicated programs. 

Our survey of licensees found that only a small percentage expressed a 

desire to reinstate the former Station Program Cooperative or a similar 

model to select programming for PBS’s National Program Service. 

However, a majority of the survey respondents, 58 percent, indicated that 

changes were needed in the process for selecting programs for the Service. 

Specifically, respondents suggested that PBS solicit more input from 

licensees in making the selections. Some licensees we interviewed 

commented that the strong relationship between PBS and producers has 

created an entrenched system that limits the ability of new producers to get 

their programs on the National Program Service. 

Figure 14 highlights the licensees’ views on the Corporation’s funding of the 

PBS National Program Service and the process used to select the programs 

that are included in the Service.
Page 42 GAO-04-284 Corporation for Public Broadcasting

Figure 14: Licensees’ Views on the Corporation’s Funding of the PBS National 

Program Service and the Service’s Selection Process

Note: N=144 licensees for “Corporation should continue funding the National Program Service” and 

N=143 licensees for “the National Program Service selection process should be changed.” 

Percentages have been rounded.

While our survey shows that over half of the licensees indicated that 

changes are needed in the selection process for the PBS National Program 

Service, most respondents nevertheless indicated satisfaction with the 

extent to which the Service’s programming helps them meet the missions of 

their stations.

Ninety-six percent of the licensees we surveyed said that the children’s 

programs included as part of the National Program Service enable them to 

meet their mission to a great or moderate extent. As described by some 

respondents, the noncommercial, nonviolent, educational content of 

children’s programming makes it the cornerstone of public television. A 
Page 43 GAO-04-284 Corporation for Public Broadcasting

few licensees also noted that PBS provides a “safe harbor” of children’s 

programs that are distinct from their commercial counterparts. Children’s 

programming was viewed as more important to licensees’ missions than to 

building underwriting and membership support because only 23 percent of 

the licensees responding to our survey indicated that they rely to a great 

extent on children’s programming to build such support, and 39 percent 

said they rely on such programming to a moderate extent. Many licensees 

stated that they do not rely on children’s programming for underwriting 

support because of content restrictions and because underwriters do not 

see a strong market in the viewers of such programs. However, a few 

licensees stated that some underwriters support children’s programs 

because of their high quality and their educational and social value. Several 

licensees stated that they do not rely on children’s programming to 

generate membership support because families with young children often 

do not have the economic means to contribute financially. 

Licensees also indicated that they value the prime-time programs on the 

National Program Service, with 96 percent of the respondents indicating 

that prime-time programs help them meet their mission to a great or 

moderate extent. As noted above, some licensees criticized the programs 

for having become less unique, less innovative, and less willing to explore 

controversial issues in recent years. However, most licensees stated that 

they rely on the prime-time programs included in the National Program 

Service to meet their mission of providing quality life-long educational 

content for adults of all ages. Many licensees added that the prime-time 

programs allow them to compete with commercial stations, attract new 

audiences, and retain existing viewers. Our survey also showed that 91 

percent of the licensees believe that prime-time programs help them build 

local underwriting and membership support to a great or moderate extent. 

According to the licensees, some of the reasons that the prime-time 

programs are helpful in attracting local underwriters are that audience 

numbers are higher, the program titles are familiar, and the programs 

themselves are of high quality and are well promoted. Figures 15 and 16 

summarize the responses of licensees to questions regarding the National 

Program Service’s children’s and prime-time programming.
Page 44 GAO-04-284 Corporation for Public Broadcasting

Figure 15: Licensees’ Views on the Extent to Which the National Program Service’s 

Children’s and Prime-Time Programming Helps Them Meet Their Mission

Note: N=149 licensees for “children’s programming” and N=144 licensees for “prime-time 

programming.” Percentages have been rounded and may not equal 100 percent due to respondents 

answering “don’t know.” 
Page 45 GAO-04-284 Corporation for Public Broadcasting

Figure 16: Licensees’ Views on the Extent to Which the National Program Service’s 

Children’s and Prime-Time Programs Help Them Build Membership and 

Underwriting Support

Note: N=144 licensees for “children’s programming” and N=144 licensees for “prime-time 

programming.” Percentages have been rounded and may not equal 100 percent due to respondents 

answering “don’t know.”

Most Licensees Indicated 

that They Would Produce 

More Local Programming if 

Additional Funding 

Resources Were Available

Although the Corporation does not currently provide or have explicit 

authority to make grants for the production of local programming, 

Corporation funding can indirectly support local programming productions 

through two sources: (1) Community Service Grants, which may be used at 

the discretion of licensees to produce their own programming, and (2) 

grants made by the Corporation to the Independent Television Service and 

the National Center for Outreach, both of which fund some local 

productions. Local stations produce their own programming to fill out their 

broadcast schedules by covering issues and events that are of special 

interest to their communities. However, cost is a major challenge facing 

licensees in the production of local programming. As a result, some 

producers of local programming have focused on productions that tie into a 
Page 46 GAO-04-284 Corporation for Public Broadcasting

national program. This method allows individual licensees the possibility of 

extending the value of national promotions to such local programs. For 

example, local stations in several cities took advantage of the popularity of 

the PBS series Jazz: A Film by Ken Burns, broadcast in 2001, by producing 

local programs that featured local and regional jazz musicians and cultural 

influences. 

Previously, the Corporation funded regional organizations that provided 

licensees with specialized content for their areas. In 1961, the Eastern 

Educational Network began as a collaboration of public television stations 

in the northeastern United States that produced regional programs for its 

member stations. Other regional collaborations were formed to provide 

similar functions, such as the Southern Educational Communications 

Association, the Central Educational Network, and the Pacific Mountain 

Network. However, over the last decade, almost all of these regional 

organizations have changed their focus to provide quality national 

programming to members nationwide.38 In 1997, the Southern Educational 

Communications Association and the Pacific Mountain Network joined to 

form the National Educational Telecommunications Association, a 

membership organization that offers a library of national programs to 

licensees. Rather than paying for or obtaining the rights to programs, public 

television producers give to the National Educational Telecommunications 

Association the rights to distribute the programs; in return, the association 

provides producers with basic promotion of programming on its Web site 

and a forum for licensees to exchange products. In 1998, the Eastern 

Educational Network became American Public Television, which acquires 

finished programs and develops and coproduces original programming in a 

variety of genres, including documentaries, biographies, and instructional 

programs, among others. 

In our survey, some licensees indicated that public television stations are 

rapidly becoming the only locally owned and operated television broadcast 

medium. They stated that the consolidation of local media outlets and 

expanding national cable and satellite networks have resulted in less local 

programming on commercial television, creating a void in their 

communities. They believe that their locally produced programs set them 

apart from commercial television and allow them to provide their 

38The Central Educational Network continues to provide services to member stations in the 

midwestern and northeastern regions under their parent organization, the American 

Television Group.
Page 47 GAO-04-284 Corporation for Public Broadcasting

communities with a unique product that contributes to the civic and 

cultural lives of their viewers. However, 79 percent of the licensees 

responding to our survey indicated that the amount of local programming 

they currently produce is not sufficient to meet local community needs (see 

fig. 17). Moreover, of the 139 licensees that provided narrative comments 

regarding this issue, 85 stated that they do not have adequate funds for 

local programming or that they would produce more local programming if 

they could obtain additional sources of funding. Several licensees stated 

that they have had to ignore local issues and turn away programming 

opportunities because they lacked the financial resources to produce them.

Figure 17: Licensees’ Views on Whether the Amount of Local Programming That 

They Produce is Sufficient to Meet the Needs of Their Communities

Note: N=148 licensees. Percentages have been rounded. 

Many licensees suggested that federal funds should be made available to 

support the production of local programming, with more than half 

responding that the Corporation should have explicit authority to award 

grants for the production of local programming (see fig. 18). Approximately 

60 percent of those licensees favoring this authority also favored sacrificing 

some of the Corporation’s funding support for national programming in 

order to establish direct funding support of local programming 

productions. Some of these licensees indicated that the Corporation’s 

funds would be better spent on local programming because such 

programming has been and will continue to be a unique asset of public 
Page 48 GAO-04-284 Corporation for Public Broadcasting

television and has more of a direct impact on the community. However, 

among the licensees who expressed a willingness to sacrifice funding for 

national programming to fund local productions, some warned that taking 

too much from national programming would be harmful to the entire 

system.

Figure 18: Licensees’ Views on the Need for the Corporation to Have Explicit 

Authority to Fund More Local Programming

Note: N=149 licensees for “The Corporation should have explicit authority to fund local programming” 

and N=79 licensees for “The Corporation should fund local programming even if it means less money 

for national programming.” Percentages have been rounded. 
Page 49 GAO-04-284 Corporation for Public Broadcasting

Corporation Has 

Funded Digital 

Transmission 

Equipment, but Other 

Digital Infrastructure 

and Content Needs 

Remain

Digital technology offers public television licensees opportunities to 

provide innovative services to their communities. The Corporation 

received additional funding of $93.4 million for the digital transition for 

fiscal years 2001 through 2003. After consultation with representatives of 

the public television community, the Corporation directed these funds 

toward providing grants to licensees for acquiring digital transmission 

equipment. However, some licensees did not receive their grants in a timely 

manner and cited this as contributing to their failure to meet FCC’s initial 

May 2003 deadline for constructing digital transmission facilities. At the 

systemwide level, the Corporation is seeking funding for infrastructure 

improvements to fully leverage the potential benefits of the digital 

transition. In addition, the Corporation, licensees, and other public 

television stakeholders have emphasized the importance of support for the 

production of digital content as part of the transition. Various mechanisms, 

including additional federal funding, have been suggested to address these 

needs.

Licensees See the Digital 

Transition as an 

Opportunity to Provide 

Innovative Services

The Corporation, licensees, and other public television stakeholders have 

emphasized that the future of public television depends on the successful 

rollout of digital services. Such services would, in the view of public 

television stakeholders, help public television realize the full potential of 

digital technology, solidify existing audiences, and reach new viewers in an 

era of increased competition from cable and satellite television providers.39

Nearly all of licenses in our survey reported that they either now have, or 

plan to have, key digital capabilities to produce sharper television pictures 

and CD-quality sound (high-definition), offer multiple channels for 

programming and data services (“multicasting”), and transmit text and 

other data in a digital format (“datacasting”) (see fig. 19). 

39In a report on broadcast television, FCC notes that between 1984 and 2001, public 

television’s prime-time viewing shares declined 30 percent. Federal Communications 

Commission, Broadcast Television: Survivor in a Sea of Competition (Washington, D.C., 

Sept. 2002).
Page 50 GAO-04-284 Corporation for Public Broadcasting

Figure 19: Public Television Licensees that Currently Provide or Plan to Provide 

Digital Services

Note: N=148 licensees for “High definition television”; N=147 licensees for “multicasting”; and N=146 

licensees for “datacasting.” Percentages have been rounded and do not equal 100 percent due to 

respondents answering “don’t know,” “don’t provide,” or “don’t plan to provide.”

About 85 percent of the licensees responding to our survey indicated that 

successful completion of the digital transition would improve their ability 

to serve their communities to a great or moderate extent. Many of the 

digital-based services mentioned by licensees involve supporting 

educational, governmental, and cultural activities. Educational services 

include the delivery of on-demand instructional content material to 

teachers and students in K-12 classrooms, higher education institutions, 

and libraries. Local and state governmental services include emergency 

response services and alerts, such as Amber Alerts for child abductions. In 

addition, licensees noted that multicasting would allow for an increased 

range of cultural content, such as programs that highlight local arts or 

serve minority populations. 
Page 51 GAO-04-284 Corporation for Public Broadcasting

Many licensees also indicated their intention to use digital technology to 

provide “ancillary and supplementary” services.40 These are nonbroadcast 

services, such as subscription-based video services, paging services, and 

computer software distribution, offered by stations to generate revenue. 

Fifty-one percent of the licensees indicated they are offering or would offer 

these services to nonprofit entities, while slightly more than one-third of 

licensees indicated they would offer these services to for-profit entities. 

Corporation Has Assisted 

Licensees in Acquiring 

Digital Transmission 

Equipment, Though Its 

Support Has Not Always 

Been Timely

The Corporation, licensees, and other public television stakeholders have 

identified the importance of federal and nonfederal support for the digital 

transition that enables public broadcasters to provide a full range of digital 

services to their communities.41 In 1997, the Corporation and other public 

television stakeholders estimated the costs of the digital transition for 

public television stations to be approximately $1.7 billion, largely for 

transmission equipment.42 At that time, the Corporation, PBS, and other 

stakeholders proposed a plan under which the majority of this cost would 

be funded by nonfederal sources, such as state governments, foundations, 

and corporations, and about $771 million (45 percent) would be funded 

through federal funds. In the plan, the Corporation also requested an 

increase of $100 million in its regular fiscal year 2000 appropriation for the 

acquisition, enrichment, and production of digital programming and 

services. For fiscal years 2000 and 2001, the Clinton administration 

proposed a funding approach whereby the National Telecommunications 

40In a 2001 Order, FCC clarified the manner in which public television licensees could use 

excess digital television capacity for remunerative purposes. Under the Order, public 

television stations are required to use their entire digital capacity primarily for nonprofit, 

noncommercial educational broadcast services, but are allowed to use some of their 

capacity to offer ancillary and supplementary services and to advertise on those services 

when they did not constitute broadcasting. Ancillary or Supplementary Use of Digital 

Television Capacity by Noncommercial Licensees, 16 FCC Rcd 19042 (2001). The U.S. Court 

of Appeals, D.C., denied a petition for review of this Order. Office of Communication, Inc. 

of the United Church of Christ v. FCC, 327 F.3d 1222, (D.C. Cir. 2003).

41In addition to funding, public television stakeholders have expressed concerns about 

regulatory issues associated with the transition involving the carriage of public television 

stations’ digital signals by cable and satellite providers. See appendix IV for a brief 

discussion of these issues.

42The PBS Engineering Committee, in consultation with Andersen Consulting, developed 

and implemented a comprehensive survey of stations used by the Corporation and other 

public television stakeholders to refine their estimate of the digital transition costs. The $1.7 

billion estimate includes $50 million for digital radio. The estimate was subsequently revised 

to $1.8 billion for increases related to digital radio and other expenses.
Page 52 GAO-04-284 Corporation for Public Broadcasting

and Information Administration’s (NTIA) Public Telecommunications 

Facilities Program, a source of financial support for public television 

infrastructure, would provide federal funding for licensees to acquire 

digital equipment.43 The Corporation, for its part, would provide federal 

funding to support digital programming production, development, and 

distribution. 

Although this initial funding approach included federal funding for both 

digital equipment and digital programming, most of the federal funds that 

have been awarded through fiscal year 2003 have been for digital 

equipment.44 NTIA began awarding grants to public television licensees for 

digital transmission equipment in fiscal year 1998. Although specific 

appropriations for the digital transition were made for the Corporation in 

fiscal years 1999 and 2000—at $15 million and $10 million, respectively—

both were contingent on the enactment of an authorization which did not 

occur. The Corporation received its first specific digital appropriation ($20 

million) in August of fiscal year 2001 after the enactment of both an 

appropriation and an authorizing provision. A second digital appropriation 

($25 million) was received in February 2002. The Corporation, relying on 

report language accompanying its fiscal year 2002 appropriation and 

considering the limited funds available to licensees from NTIA, determined 

that the highest priority for its digital funds was to assist as many licensees 

as possible in meeting FCC’s May 2003 deadline for constructing digital 

transmission facilities.45 Accordingly, the Corporation developed two grant 

programs to help licensees acquire basic digital transmission equipment—-

the Digital Distribution Fund and the Digital Universal Service Fund.

• The Digital Distribution Fund, established in January 2002, offers grants 

to both individual stations and collaborations of multiple stations for 

43The Public Telecommunications Facilities Program is the successor to the equipment and 

facilities grants program originally authorized by the Educational Television Facilities Act of 

1962. The program was transferred to NTIA in 1978. In addition to public broadcasting 

stations, the program also awards grants to state and local governments, Indian tribes, and 

nonprofit organizations. Between 1998 and 2003, NTIA’s funding for the digital transition has 

totaled $125 million through the award of digital grants to 129 licensees.

44A limited number of digital, interactive, and multimedia projects have received support 

through the Corporation's Program Challenge Fund, which is jointly funded by the 

Corporation, through its regular annual appropriation, and by PBS.

45H. Conf. Rept. 107-342 (2001). The conference report directed that the funds be used for 

“equipment and facilities to enable public broadcasters to meet the statutory deadline for 

the digital conversion. . . .” 
Page 53 GAO-04-284 Corporation for Public Broadcasting

digital transmission equipment; the Corporation provides 50 percent 

matching funds to the nonfederal funds raised by grantees.

• The Digital Universal Service Fund was established in June 2002 to take 

advantage of FCC’s 2001 decision permitting licensees to satisfy the May 

2003 construction deadline by initially constructing digital facilities that 

use power levels that are lower than what is needed to fully cover their 

service areas. Stations can then increase their power levels over time to 

full-power operation.46 This program is designed to provide grant 

recipients with a standard package of equipment for use in constructing 

a low-power digital facility. The Corporation funds up to 75 percent of 

the cost of the equipment packages, with the remaining cost covered by 

grant recipients with nonfederal funds. 

Both Corporation and NTIA officials told us they coordinate their grant 

programs to ensure that there is no duplication in the types of transmission 

equipment purchased by licensees with funds from their respective 

programs. Figure 20 provides a time line of the Corporation’s activities up 

to November 2003 for awarding funds through these two digital grant 

programs.

46Review of the Commission’s Rules and Policies Affecting the Conversion to Digital 

Television, 16 FCC Rcd 20594 (2001). Fewer viewers are served by a low-power broadcast 

signal than a full-power one. The construction of a low-power facility is less costly than a 

full-power one and, therefore, potentially less of an initial financial burden for licensees.
Page 54 GAO-04-284 Corporation for Public Broadcasting

Figure 20: Time Line of Activities for the Corporation’s Digital Grant Programs, August 2001 through November 2003
Page 55 GAO-04-284 Corporation for Public Broadcasting

The Corporation used its fiscal year 2001 and 2002 digital appropriations to 

award grants to 96 stations for digital transmission equipment prior to 

FCC’s May 2003 construction deadline. However, the Corporation was not 

always timely in getting the awarded equipment packages or funds to the 

grantees. Specifically, 30 stations did not receive their equipment packages 

or funds by the deadline. Most of these stations were recipients of 

equipment package grants from the Digital Universal Service Fund. Public 

television stations that did not expect to meet the construction deadline 

had to apply to the FCC for a 6-month extension. In requests to FCC for 

extensions, 28 of the 30 stations cited the delay in receiving their digital 

grant from the Corporation as a contributing factor, among others, as to 

why they filed for an extension.47

We identified two reasons for the Corporation’s lack of timeliness in 

distributing its fiscal year 2001 and 2002 digital appropriations. First, the 

Corporation took several months after receiving its digital funds to (1) 

convene consultation panels comprised of licensees (or their designated 

representatives) to develop recommendations for the use of those funds 

and (2) obtain approval of the panels’ recommendations by the 

Corporation’s board.48 Second, the Corporation had to devise grant 

programs for the distribution of its digital appropriations. When the 

Corporation’s board initially approved the use of the funds for transmission 

equipment in November 2001, the Corporation did not have any equipmentrelated grant programs in place. Due to its inexperience in this area, the 

Corporation contracted with PBS (which had staff with expertise in 

transmission technology) for assistance in developing and administering 

these programs. 

As a result, the first Digital Distribution Fund grants were not awarded 

until 9 months after the first digital appropriation was received by the 

Corporation in August 2001. With regard to the Digital Universal Service 

Fund, the administration contract between the Corporation and PBS and 

47Other contributing factors mentioned included weather-related problems that delayed 

construction and difficulties in obtaining the necessary level of nonfederal matching funds.

48Specifically, the consultation process took 3 months for fiscal year 2001 funds and 4 

months for fiscal year 2002. The appropriations provision for both fiscal year 2002 and 2003 

specified that the digital funds “be awarded as determined by the Corporation in 

consultation with public radio and television licensees or permittees, or their designated 

representatives.” Pub. L. 107-116, 115 Stat. 477 (2002). Pub. L. 108-7, 117 Stat. 11 (2003). A 

consultation requirement was not included in the 2001 fiscal year appropriation. Pub. L. 106-

554, 114 Stat. 2763 (2000).
Page 56 GAO-04-284 Corporation for Public Broadcasting

the equipment contracts negotiated between PBS and 2 manufacturers for 

low-power transmission equipment were not finalized until 2 months 

before the May 2003 construction deadline. Only 15 of the 43 stations that 

were awarded a Digital Universal Service Fund grant received their 

equipment package by the May deadline.

The Corporation also had difficulties distributing its fiscal year 2003 digital 

appropriation of $48.4 million, of which $37.4 million was allocated for 

public television.49 Having received all of its 2003 funds by March 2003, the 

consultation panel process again took several months to develop 

recommendations for the use of these funds and obtain the approval of the 

Corporation’s board. In July 2003, the panel recommended two phases of 

grant awards for these fiscal year 2003 funds, the first of which was to 

continue funding for licensees’ digital transmission equipment. The 

application period for this first phase extended from August to October 

2003.

Although 201 stations had filed for a 6-month extension to FCC’s May 2003 

construction deadline, only 26 stations applied to the Corporation for a 

digital grant during this first phase. Of these 26 applicants, 23 stations 

received grants from the Corporation, totaling $7 million. None of the new 

grantees, however, received its funds or equipment package prior to the 

end of the 6-month extension period in November 2003. As of December 

2003, $24 million of the Corporation’s fiscal year 2003 digital 

appropriation—more than two-thirds of the total fiscal year 2003 amount 

for television—remained unobligated, with 126 stations operating under a 

second 6-month extension for meeting FCC’s digital construction 

requirement. 

In a survey commissioned by the Corporation and PBS of licensees with 

stations that had not met the May 2003 deadline or previously applied for a 

Corporation grant, the most common response for why a station had not or 

was not planning to apply for this phase of funding was because they had 

been able to secure funding through other sources.50 Survey respondents 

suggested that they would consider applying for future grant rounds of the 

Digital Distribution Fund if it awarded funding for transmission equipment 

49The Corporation received an advance transfer of $7 million in December 2002, and the 

remainder was received in March 2003. $11 million of the total $48.4 million for fiscal year 

2003 was allocated for public radio.

50The Corporation’s survey universe was 140 stations, of which 95 responded (68 percent).
Page 57 GAO-04-284 Corporation for Public Broadcasting

upgrades from low to full power, digital master control facilities that 

control broadcast management, and studio and production equipment to 

create digital content.

Because many of these licensees were able to secure funding from other 

sources, funding priorities for these licensees and for those that met the 

May 2003 deadline had shifted from transmission equipment to other digital 

transition needs not included in the scope of the grant programs. In our 

survey, we, too, found that licensees’ priorities for additional federal 

funding of the digital transition were in areas other than transmission 

equipment. Only 14 percent of the respondents indicated that digital 

transmission equipment was their top priority for additional federal 

funding and over half indicated that it was their lowest (see fig. 21).51

Digital master control, digital content, digital production equipment, and 

digital operating costs were all named more frequently as the highest 

priority. 

51As of late January 2004, 233 PBS member stations were on the air with a digital signal. 

According to PBS, when the Corporation’s digital grants that have been awarded are fully 

executed and the equipment is implemented and turned on, there will be more than 300 

public television stations on the air in digital. As noted earlier, there is a total of about 350 

public television stations.
Page 58 GAO-04-284 Corporation for Public Broadcasting

Figure 21: Licensees’ Highest and Lowest Priorities for Use of Additional Federal 

Funds to Support the Digital Transition

Note: N=140 licensees. Percentages have been rounded and do not equal 100 percent.

With $24 million of its fiscal year 2003 appropriation available for the 

second phase of grant awards, Corporation officials told us that they are 

developing new guidelines for Digital Distribution Fund grants. Although 

the Corporation intends to continue funding digital transmission equipment 

for the second phase of grant awards with its remaining fiscal year 2003 

digital funds, it will also fund digital master controls and digital translators 
Page 59 GAO-04-284 Corporation for Public Broadcasting

and repeaters.52 At the time we concluded our audit work in February 2004, 

Corporation officials indicated that applications were due in March and 

that a digital review panel was scheduled to meet at the end of that month 

to review the applications. Corporation officials also indicated that the 

digital consultation panel would meet in early March to provide guidance 

on allocating the $49.7 million made available to the Corporation in fiscal 

year 2004 appropriations for the digital transition.

System Infrastructure 

Improvements and Digital 

Content Identified as 

Important to Leveraging 

Benefits from the Digital 

Transition

In addition to supporting licensees in constructing their digital 

transmission facilities, the Corporation and PBS have identified 

systemwide infrastructure improvements as important in maximizing the 

benefits of the digital transition. The development of digital content and 

production is also becoming more important as more public television 

stations become digital ready. 

Under the Communications Act, the Corporation is to assist in the 

establishment and development of an interconnection system to facilitate 

the distribution of public television service.53 The current interconnection 

system, which is managed by PBS under agreement with the Corporation, 

uses satellites to distribute PBS and other programming to stations and is 

scheduled for replacement by the time the current leases for satellite 

capacity expire in 2006. As proposed by the Corporation and PBS, a new 

system, called the “Next Generation Interconnection System,” would 

replace the current system with a digital one that distributes programming 

in real-time and nonreal time to licensees. Licensees can then store these 

programs for later broadcast, which in turn allows PBS to become more 

efficient by broadcasting these programs to licensees once instead of 

52This is consistent with a recommendation of the July 2003 consultation panel on the fiscal 

year 2003 appropriation. Similar to its analog counterpart, digital translators receive a signal 

on one channel, amplify the signal, and then transmit it on another channel. Translators are 

especially important to stations located in the western mountainous regions that need to 

transmit their signals over long distances in order to reach their viewers. Of the 4,900 

translators in operation in the United States, 450 are assets of public broadcasting licensees. 

The cost of migrating these 450 translators from analog to digital is estimated at between 

$60 million and $70 million. FCC has initiated a proceeding on eligibility requirements to 

receive a digital translator license. See Amendment of Parts 73 and 74 of the Commission’s 

Rules to Establish Rules for Digital Low Power Television, Television Translator, and 

Television Booster Stations, and To Amend Rules for Digital Class A Television Stations, 18 

FCC Rcd 18365 (2003) (Notice of Proposed Rulemaking). 

5347 U.S.C. §396(k)(10). 
Page 60 GAO-04-284 Corporation for Public Broadcasting

multiple times. The Corporation and PBS have estimated that it will cost 

$177 million to replace the interconnection system. The Corporation has 

requested that the cost be covered by federal appropriations during fiscal 

years 2004 through 2006. The Corporation received an initial $10 million 

appropriation for fiscal year 2004 for this purpose.

In addition, PBS is separately seeking funds from the Corporation for a 

project to provide enhancements to the new interconnection system. This 

effort, known as the Enhanced Interconnection Optimization Project, is 

designed to allow licensees and PBS to schedule and manage the digital 

broadcasting of public television programs through the use of automated 

channel operations and monitoring. According to PBS, this system will cost 

approximately $12 million to $15 million to implement at its facilities. PBS 

told us that approximately $8 million is still needed, half of which it is 

seeking from the Corporation. The individual stations will also need to 

implement the interconnection project at their ends. PBS has estimated 

that a typical station-side installation costs between $1 million and $1.2 

million. The Corporation’s consultation panel for digital funds 

recommended in July 2003 that PBS receive $4.1 million for the project 

from the Corporation’s fiscal year 2003 digital transition funds. 

While some licensees noted that this project has potential to bring about 

substantial savings and improved operations for licensees, others 

expressed concerns about increased maintenance costs, stranded 

investments in digital master control equipment bought before the project 

was announced, and a lack of detailed information to assess the costs and 

usefulness of the project. For example, in our survey, about 25 percent of 

the licensees responding said that they have already acquired some types of 

digital equipment (master control, production, or storage) that are not fully 

compatible with the project, which may limit the capabilities and 

usefulness of the project to them. New equipment may need to be acquired 

in order to obtain the full benefits of the project. In response to concerns 

about the potential incompatibility of some licensees’ existing digital 

equipment with the project, the Corporation has conditioned the award of 

its $4.1 million grant to PBS on an independent review of the project. 

In addition to systemwide infrastructure improvements, the Corporation, 

licensees, and other public television stakeholders have also identified 

digital content as essential to ensure the success of public television’s 

digital transition. The Corporation testified before the House Energy and 

Commerce Committee in July 2002 that digital content, along with digital 

equipment, is a primary element of the digital transition. Additionally, a 
Page 61 GAO-04-284 Corporation for Public Broadcasting

working group—funded by the Corporation and comprised of Corporation 

and PBS officials, as well as public television licensees—highlighted this 

need in a 2003 report, which stated that the digital transition provides 

public television with an opportunity to reposition itself to carry out its 

mission if it is willing to create digital services that are “more responsive to 

the needs of our constituents and cheaper, simpler, smaller, and more 

convenient to use.”54 

Noting that 2 years’ advance time may be needed to plan, develop, and 

launch digital services, and that digital production costs are generally 

higher than the costs of creating analog programming, the Corporation has 

characterized the need for digital content and research as “even more 

pressing” due to the limited availability of past federal funding for the 

digital transition. Corporation officials told us that licensees and other 

national public television organizations, including the Corporation, are 

developing a systemwide strategic plan on the future of public television 

that includes the creation of digital content. As part of this planning, the 

Corporation is in discussions with PBS on the need to develop a new 

national programming plan to support digital content needs. 

Some Public Television 

Stakeholders Have 

Suggested Funding 

Alternatives for the Digital 

Transition

Many public television stakeholders have indicated a need for additional 

federal funds to support the digital transition and fully utilize the potential 

of digital television. Several licensees in our survey, however, suggested 

changes to some of the Corporation’s existing funding mechanisms to help 

manage such needs. Among the suggested changes were limiting the 

Corporation’s digital grants to one licensee in a market served by multiple 

licensees; offering grants to support shared operations, such as digital 

master control equipment, among public television stations in the same 

market; and eliminating duplication of public television stations in markets 

served by multiple licensees. However, several licensees in markets with 

multiple stations believe that they provide valuable services and unique 

programming to their communities.

In addition, some public television stakeholders have observed that 

Corporation funds should be repositioned in order to achieve the benefits 

54Digital Distribution Implementation Initiative, Sustaining the Mission: Television 

Strategic Investment Scenarios, http://technology360.org/DDII-Scenarios-TelevisionFall03.htm (last accessed February 10, 2004).
Page 62 GAO-04-284 Corporation for Public Broadcasting

of the digital transition.55 According to these stakeholders, the Corporation 

should foster new collaborative services by supporting the provision of 

digital content favoring alternative distribution platforms such as the 

Internet over the traditional medium of over-air broadcasting. These 

services include interactive Web sites that provide audio and video content 

on subjects such as history, science, and literature. Unlike over-air 

broadcasting, interactive Web sites would allow people to access this 

content regardless of their location. Stakeholders have noted that such 

services would encourage collaboration of licensees without diminishing 

their local presence and that this approach may help public television 

strengthen its mission to provide high-quality noncommercial programming 

and services. 

Conclusion A long-standing issue for the pubic television community is how best to 

distribute the Corporation’s funds among local station operations, national 

programming, and infrastructure support. Most licensees responding to our 

survey supported the existing statutory allocation of the Corporation’s 

television funds between licensees and national programming and were 

generally satisfied with the Corporation’s process for periodically 

reviewing the eligibility criteria for distributing funds through Community 

Service Grants. In addition, most licensees expressed their support for the 

Corporation’s continued funding for PBS’s National Program Service, 

which nearly all see as helping them meet their missions for providing 

quality children’s and prime-time programming. As for local programming, 

most licensees indicated that the amount of local programming they 

produced was not sufficient to meet their communities’ needs, largely due 

to their limited financial resources.

The Corporation’s approach for funding its Television Future Fund 

program is a concern for many licensees. As our survey shows, only 30 

percent of respondents agreed with the Corporation’s current approach of 

using funds designated for distribution among licensees to support 

Television Future Fund projects. The Corporation, as informed by counsel, 

contends that it has the authority to use these funds to support the 

Television Future Fund program. It is our view that the Corporation may 

not take a portion of the funds designated by the Congress for distribution 

55Digital Distribution Implementation Initiative, Sustaining the Mission: Television 

Strategic Investment Scenarios, http://technology360.org/DDII-Scenarios-TelevisionFall03.htm (last accessed February 10, 2004).
Page 63 GAO-04-284 Corporation for Public Broadcasting

among public television licensees, pool them with System Support funds, 

and use them to make competitive grants only to applicants submitting 

project proposals acceptable to the Corporation after review and 

recommendation by an advisory panel. Although our legal analysis focused 

on the Television Future Fund program as it existed prior to the end of 

fiscal year 2003, we note that under the revised program, the Corporation is 

still aggregating the funds and using them for projects that benefit the 

entire system rather than giving the monies directly to the individual 

licensees. Moreover, it appears that the majority of the funds will be going 

to vendors rather than the stations. Accordingly, we continue to question 

whether the Corporation has the authority to utilize in this fashion the 

$10.1 million of the $18.3 million currently in the Television Future Fund 

account that came from funds designated for distribution among licensees. 

The Corporation’s support for the digital transition is another area of 

concern. As shown by our survey, the priorities of most licensees in 2003 

shifted beyond the digital transmission equipment supported by 

Corporation grants. This contributed to a low application rate for the 

Corporation’s digital grants in the latter half of that year and a carryover of 

$24 million in digital transition funds into calendar year 2004. While the 

Corporation is broadening the scope of its digital transition grants in 2004, 

the licensees’ priorities for digital production equipment and digital content 

still are not included in the Corporation’s digital transition funding. 

Recommendations for 

Executive Action

We recommend that the Corporation for Public Broadcasting take the 

following two actions regarding the Television Future Fund and its digital 

transition funds:

• Before making further Television Future Fund awards or expending any 

funds in the Television Future Fund account, the Corporation should 

request specific statutory authority to do so, if it intends to continue 

using funds that were designated for distribution among licensees. 

Should this specific authority not be obtained, the Corporation should 

return to the licensees such funds remaining in the Television Future 

Fund account that came from the funds designated for distribution 

among licensees.

• The Corporation should broaden the scope of its digital transition 

funding support to include digital production equipment and digital 

content.
Page 64 GAO-04-284 Corporation for Public Broadcasting

Agency Comments We provided a draft of this report to the Corporation for Public 

Broadcasting and to the Public Broadcasting Service for their review and 

comments. The Corporation agreed with our recommendation to broaden 

the scope of its digital funding to include production equipment and 

content, consistent with congressional directives and station needs after 

consultation with licensees or their designated representatives. The 

Corporation stated that it recognizes that stations are at various stages in 

the conversion process and that all station needs are being given careful 

consideration in consultations on the distribution of fiscal year 2004 digital 

transition funds. The Corporation did not agree with our recommendation 

that the Corporation should request specific statutory authority before 

making further Television Future Fund awards or expending any funds in 

the Television Future Fund account. The Corporation’s comments include a 

legal memorandum from its outside counsel which concludes that the 

Television Future Fund is fully consistent with the Communications Act of 

1934, as amended. For the most part, the legal memorandum raises the 

same arguments that we have addressed in our opinion. However, one 

argument raised for the first time involves the “doctrine of ratification.” 

The Corporation cites to cases holding that when the Congress reenacts, 

without change, statutory terms that have been given a consistent judicial 

or administrative interpretation, the Congress has expressed an intention 

to adopt that interpretation. The Corporation uses this doctrine to support 

its contention that the Congress has consistently replenished funds 

designated for distribution among licensees knowing that a portion of these 

funds are being used for Future Fund projects. Thus, the Corporation 

contends that the Congress has, in essence, ratified by appropriation the 

Corporation’s interpretation of the statute. However, as recognized by GAO 

opinions summarizing the test that courts have used to find ratification by 

appropriation, three factors generally must be present to conclude that the 

Congress, through the appropriations process, has ratified agency action. 

First, the agency takes the action pursuant to at least arguable authority; 

second, the Congress has specific knowledge of the facts; and third, the 

appropriation of funds clearly bestows the claimed authority. None of these 

factors is present here. The Corporation’s comments and our response to 

points raised by its attached legal memorandum are included in appendix 

VII. 

The Public Broadcasting Service’s comments are included in appendix VIII. 

Noting our finding that over half of the survey respondents indicated a need 

for changes in the process for selecting programs for the National Program 

Service, PBS stated that it will analyze its current mechanisms for 
Page 65 GAO-04-284 Corporation for Public Broadcasting

generating program input from member stations and will seek counsel from 

the Content Policy Committee of its board on how best to improve its 

systems for securing member input. PBS also provided additional 

information to clarify the respective funding needs of the Enhanced 

Interconnection Optimization Project and the Next Generation 

Interconnection System.

We also provided a draft of the report to FCC and have incorporated FCC’s 

technical comments where appropriate.

Matter for 

Congressional 

Consideration

If the Congress supports the concept of using funds that were designated 

for distribution among licensees to finance the Television Future Fund 

program, it should provide the Corporation with the authority to use the 

funds for this purpose.

As agreed with your offices, unless you publicly announce the contents of 

this report earlier, we plan no further distribution of it until 30 days from 

the date of this letter. We will then send copies of this report to the 

appropriate congressional committees, the President and Chief Executive 

Officer of the Corporation for Public Broadcasting, the President and Chief 

Executive Officer of the Public Broadcasting Service, the Chairman of the 

Federal Communications Commission, and others who are interested. We 

also will make copies available to others who request them. In addition, the 

report will be available at no charge on the GAO Web site at 

http://www.gao.gov. If you or your staff have questions concerning this 

report, please contact me on (202) 512-2834 or at goldsteinm@gao.gov. Key 

contacts and major contributors to this report are listed in appendix IX.

Mark L. Goldstein

Director, Physical Infrastructure Issues
Page 66 GAO-04-284 Corporation for Public Broadcasting

Appendix I

Scope and Methodology ApApenednxidexiIs

Our objectives were to review the Corporation’s activities and obtain the 

views of public television station officials regarding: (1) the statutory 

allocations for federal funding of public television; (2) the distribution of 

funds by the Corporation through its Community Service Grant and 

Television Future Fund programs, including a legal analysis of whether the 

funding of the Television Future Fund program is consistent with the 

Corporation’s underlying statutory authority; (3) the distribution of funds 

by the Corporation for PBS’s National Program Service and for local 

programming; and (4) Corporation funding to assist public television 

stations in their transition to digital technologies and services. We also 

reviewed the statutory and regulatory requirements, system policies and 

guidance, and licensees’ views on underwriting acknowledgments.

To respond to these objectives, we gathered information from a variety of 

sources, including a survey of all public television licensees receiving funds 

from the Corporation for Public Broadcasting. To respond to the first and 

second objectives, we reviewed provisions of the Communications Act, as 

well as documents and records used by the Corporation to implement and 

administer programs supporting public television stations. We also 

interviewed officials of the Corporation, PBS, and the Association of Public 

Television Stations, a nonprofit organization whose members include 

nearly all of the licensees of public television stations. 

To respond to the third objective on Corporation funding for national 

programming, we reviewed provisions of the Communications Act and 

documentation on funding for national programming obtained from the 

Corporation, PBS, and the Independent Television Service, a nonprofit 

corporation that receives federal support from the Corporation for 

distribution to independent public television producers. We also 

interviewed officials from all of these organizations, the Association of 

Public Television Stations, and two additional distributors of national 

programming that do not receive funding from the Corporation—American 

Public Television and the National Educational Telecommunications 

Association. 

To respond to the fourth objective on assisting in the transition to digital 

technologies and services, we reviewed statutory provisions, documents, 

and records from the Corporation and PBS, which is under contract to the 

Corporation to administer the Corporation’s digital grant programs. We 

also interviewed officials of the Corporation, PBS, the Association of 

Public Television Stations, and the National Telecommunications and 

Information Administration in the Department of Commerce that also 
Appendix I

Scope and Methodology

Page 67 GAO-04-284 Corporation for Public Broadcasting

awards grant funds to public television stations for digital equipment costs. 

To further our understanding of public television’s progress in the digital 

transition, we requested and received data from the FCC on its June 2003 

survey of public television licensees that are PBS-affiliates in the top 100 

television markets.

For our objective on underwriting acknowledgments, we reviewed 

statutory and regulatory documents and interviewed officials of FCC, 

which enforces acknowledgment requirements, and obtained guidance 

provided by and interviewed officials of the primary national programming 

distributors—PBS, American Public Television, and the National 

Educational Telecommunications Association.

We also reviewed the legal opinions of the Corporation’s outside counsels 

as part of our legal analysis to determine whether the Corporation’s 

approach to funding the Television Future Fund is consistent with the 

governing statute. Our legal review focused on the program as it existed 

prior to the end of fiscal year 2003.

We responded to all of these objectives by conducting interviews with 16 

licensees of public television stations and deploying a Web-based survey of 

public television licensees. As the scope of our work was limited to an 

evaluation of the Corporation’s activities, we only surveyed entities 

licensed by FCC to operate one or more public television stations that 

received funds from the Corporation as of mid-August 2003. We identified 

the population of public television licensees from the Public Broadcasting 

Directory published by the Corporation and verified this information with a 

database provided by the Association of Public Television Stations, as well 

as with FCC’s database of public television licensees. This information 

included names, addresses, and other contact information of public 

television licensees, as well as licensee type and size. We acquired data on 

public television licensee market size and station revenues from an online 

Station Activities and Benchmarking Survey and Station Grant Making 

System, both developed by the Corporation and to which all recipients of 

Corporation grants contribute data. To assess the reliability of this licensee 

data, we reviewed these documents and discussed the data with 

knowledgeable agency officials. As a result, we determined that the data 

were sufficiently reliable for the purposes of this report. We surveyed 178 

licensees and subsequently excluded the surveys of two licensees: (1) one 

licensee who did not meet the aforementioned criteria and (2) another 

licensee who holds two licenses, but who completed only one survey rather 

than two. Our resulting population consisted of 176 licensees.
Appendix I

Scope and Methodology

Page 68 GAO-04-284 Corporation for Public Broadcasting

To develop our survey, we interviewed officials at the Corporation, PBS, 

the Association of Public Television Stations, the Independent Television 

Service, American Public Television, the National Educational 

Telecommunications Association, and several licensees of public television 

stations. We also conducted an interview with an official of and obtained 

documents from Citizens for Independent Public Broadcasting, a national 

membership organization dedicated to addressing public broadcasting 

issues. We then conducted pretests with seven public television licensees 

to help further refine our questions, develop new questions, clarify any 

ambiguous portions of the survey, and identify any potentially biased 

questions. These pretests were conducted in person and by telephone with 

licensees of various types, sizes, and regional locations across the country.

We began our Web-based survey on August 21, 2003, and included all 

useable responses received as of September 22, 2003. Log-in information to 

the Web survey was e-mailed to officials of public television licensees, 

which included general managers and presidents. We sent two follow-up 

e-mails, and after the survey was online for 3 weeks, we attempted to 

contact all those who had not logged into the survey. The Corporation and 

the Association of Public Television Stations coordinated with us to 

encourage station licensees to complete the survey. Of the population of 

176 public television licenses, we received 149 complete surveys, for an 

overall response rate of 85 percent. However, the number of responses to 

individual questions may be fewer than 149, depending upon how many 

licensees were eligible to or chose to respond to a particular question.

All completed surveys were reviewed, and we contacted respondents to 

obtain information where clarification was needed. Because the survey 

was made accessible to all public television licensees in the appropriate 

population, percentage estimates do not have sampling errors. The 

practical difficulties of conducting any survey may introduce other types of 

errors, commonly referred to as nonsampling errors. For example, 

differences in how a particular question is interpreted, the sources of 

information available to respondents, or the types of people who do not 

respond can introduce unwanted variability into the survey results. We 

included steps in both the data collection and data analysis stages for the 

purpose of minimizing such nonsampling errors. In addition to pretesting 

the questions with members of the population, we performed computer 

analyses to identify inconsistencies and other indications of error. We also 

conducted analyses on available licensee characteristics to evaluate the 

possibility that the respondents might differ from the nonrespondents. 

Although there is some evidence of differences, these are not large enough 
Appendix I

Scope and Methodology

Page 69 GAO-04-284 Corporation for Public Broadcasting

to provide a basis for adjusting survey responses. Distributions by type of 

licensee (community, local authority, state, university) and numbers of 

stations operated by licensees were not significantly different. Licensees 

operating large stations were somewhat more likely to respond and those 

operating smaller stations were somewhat less likely to respond, but the 

differences were not significant.

The following data is used only as background information in the report; 

therefore, the data was not verified for data reliability purposes: (1) the 

digital television cost estimate developed by the Corporation and PBS; (2) 

the sources and percentages of public television revenue provided by the 

Corporation; (3) the number of Television Future Fund and digital 

television grants awarded by category; (4) and the distribution of funds by 

the Corporation for programming.

Our review was performed from April 2003 through February 2004 in 

accordance with generally accepted government auditing standards.
Page 70 GAO-??-?? Document Name

Appendix II

Components of the Corporation’s Community 

Service Grants ApendxiI

On the basis of statutory provisions and the receipt of an annual federal 

appropriation from the Congress, the Corporation for Public Broadcasting 

makes an annual Community Service Grant award to each eligible licensee 

of one or more noncommercial educational public television station(s). 

Figure 22 summarizes the factors upon which funds are awarded through 

each of the three component grants of a Community Service Grant.
Appendix II

Components of the Corporation’s Community 

Service Grants

Page 71 GAO-??-?? Document Name

[This page left blank intentionally]
Appendix II

Components of the Corporation’s Community 

Service Grants

Page 72 GAO-??-?? Document Name

Figure 22: Components of the Corporation’s Community Service Grants
Appendix II

Components of the Corporation’s Community 

Service Grants

Page 73 GAO-??-?? Document Name

a

Nine other eligibility criteria for the base grant are specified by the Corporation, 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.
Page 74 GAO-04-284 Corporation for Public Broadcasting

Appendix III

Legality of the Corporation for Public 

Broadcasting’s Television Future Fund 

Program ApendxiI

The Corporation for Public Broadcasting (the Corporation) established the 

Television Future Fund in 1995 for the purpose of investing in projects that 

would reduce costs, facilitate collaboration, and increase revenue across 

the public television system. The Television Future Fund is funded, in part, 

by monies designated by the Congress to be distributed among public 

television licensees. As part of our review of the Corporation, we were 

asked to determine the legality of this funding practice. Specifically, the 

issue is whether the Corporation may use funds designated by the Congress 

for distribution among public television licensees to support a competitive 

grant program, the Television Future Fund program. As explained more 

fully below, the Corporation’s funding and distribution of grants under the 

Television Future Fund program are not in accord with the underlying 

statutory authority under which the Corporation operates.1

Background The Congress established the Corporation in 1967 as a nonprofit 

corporation to facilitate the development of public radio and television 

broadcasting. 47 U.S.C. §396. To ensure insulation from government control 

or influence over the expenditure of federal funds, the Congress provides 

funds directly to the Corporation. Although not a federal agency, the 

Corporation receives an annual appropriation from the Congress, which is 

its primary source of funding and is deposited into the Public Broadcasting 

Fund. The 2004 fiscal year appropriation was $380 million.2

 In turn, the 

Corporation supports local television and radio stations, programming, and 

improvements to the public broadcasting system as a whole. According to 

the Corporation, its support represents approximately 15 percent of public 

broadcasting’s revenues. Other support for the public broadcasting system 

comes from such sources as membership, businesses, college and 

universities, and state and local governments.

1

This opinion analyzes the Television Future Fund program as it operated prior to the end of 

fiscal year 2003. The Corporation has recently reactivated funding of the Television Future 

Fund under procedures different than those previously in effect. This opinion does not 

analyze the new procedures. The Corporation also has a Radio Future Fund program, as 

well as other competitive grant programs. The Corporation refers to the Television Future 

Fund program as a “selective” grant program. However, we use the more common 

terminology “competitive” grant program to refer to the Television Future Fund program.

2

Fiscal Year 2004 advance appropriation of $380 million was provided in Pub. L. No. 107-116, 

115 Stat. 2177 (2002).
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Page 75 GAO-04-284 Corporation for Public Broadcasting

The Corporation funds more than 350 locally operated public television 

stations across the country.3

 Prior to the establishment of the Television 

Future Fund, the Corporation distributed available monies among 

licensees of public television stations through the Community Service 

Grant mechanism.4

 Community Service Grants (CSG) are unrestricted 

general operating grants provided by the Corporation directly to qualified 

public television stations according to a mathematical formula.5 As 

required by 47 U.S.C. §396(k)(6)(B), the Corporation established eligibility 

criteria and a formula for distributing these funds and has periodically 

reviewed them in consultation with the public television station 

community. All qualified licensees receive a CSG, although the amount 

varies. A full-power station operating under a noncommercial, educational 

Federal Communications Commission (FCC) license qualifies for a CSG if 

it meets minimum requirements including a minimum level of nonfederal 

financial support, a minimum broadcast schedule, and bookkeeping and 

programming standards.6

3

The Corporation provides grants to 176 licensees of public television stations. The 

licensees represent 356 stations.

4

Funds available under 47 U.S.C. §396(k)(6)(B) are generally referred to as CSG funds.

5

The statute requires that funds from the CSG pool be distributed in two parts. 47 U.S.C. 

§396(k)(6)(B). First, a basic grant must be provided to “each licensee and permittee of a 

public television station that is on the air.” Id. Second, the remaining fund must be 

distributed in accordance with eligibility criteria and on the basis of a formula. Id. Since the 

late 1960s the Corporation has provided a $10,000 basic grant to each licensee. The 

Corporation then provides a base grant and an incentive grant to qualified licensees. The 

base grant is a percentage of the total appropriation and is set by the CSG Review Process. 

Three factors may alter the base grant portion a licensee may receive. Stations exceeding a 

certain revenue level will not receive base grants (only basic grants). Stations in overlap 

markets share a single base grant on a percentage of market basis. Waivers for special 

circumstances (such as mergers) may alter the base portion. For fiscal year 2003, the base 

grant totaled approximately $401,500 for each eligible licensee. The incentive grant is a 

match based on a percentage of the amount of nonfederal financial support that a station 

raised. (This is also subject to adjustment based on station revenues, overlap market 

policies (including program differentiation), and special circumstances). For fiscal year 

2003, the incentive grant was calculated by multiplying the Grantee’s fiscal year 2001 

nonfederal financial support by .078242.

6

For example, the Corporation requires stations to certify that they are in compliance with 

the statutory requirements involving: meetings which must be open to the public (47 U.S.C. 

§396(k)(4)); financial information which must be made available to the public (47 U.S.C. 

§396(k)(5)); and community advisory boards which must be established by certain stations 

(47 U.S.C. §396(k)(8)). The statute also requires the station grant recipients to certify to the 

Corporation that they have complied with equal employment opportunity related 

requirements (47 U.S.C. §396(k)(11)).
Appendix III

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Broadcasting’s Television Future Fund 

Program

Page 76 GAO-04-284 Corporation for Public Broadcasting

The Corporation established the Television Future Fund in 1995. At that 

time, the Corporation had growing concerns about declining federal 

support, as well as diminished revenues from other sources. The 

Corporation saw a need to establish and maintain a pool of money, 

aggregating funds from two different sources, to fund projects to address 

systemwide concerns. According to the 1995 Public Television Issues and 

Policies Task Force, the Future Fund was established to 

• provide seed capital or short-term financing for projects that can 

significantly reduce costs, increase efficiency, provide economies of 

scale, or generate incremental gains in membership, underwriting, or 

other sources of income;

• fund station proposals to explore opportunities to achieve new 

operating efficiencies through collaborative efforts, partnerships, joint 

operating agreements, consolidations, and other arrangements resulting 

in significant annual savings; and 

• fund extraordinary efforts and new initiatives to raise nonfederal 

income, in anticipation of reduced federal funding, with a goal of 

stimulating an increase in annual nonfederal revenue. 

According to Corporation officials, the Corporation had previously funded 

similar projects on a smaller scale through the use of system support 

funds.7

 However, since, under the statutory allocation formula, these funds 

are relatively limited, the Corporation felt a larger pool of funds was 

7

Specifically, under the statutory allocation formula:

“6 percent of such amounts [appropriated to the Corporation and available for allocation for 

any fiscal year] shall be available for expenses incurred by the Corporation for capital costs 

relating to telecommunications satellites, the payment of programming royalties and other 

fees, the cost of interconnection facilities and operations . . . and grants which the 

Corporation may make for assistance to stations that broadcast programs in languages 

other than English or for assistance in the provision of affordable training programs for 

employees at public broadcast stations, and if the available funding level permits, for

projects and activities that will enhance public broadcasting.” 47 U.S.C. §396(k)(3)(A)(i)(II). 

(Emphasis added.)
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Page 77 GAO-04-284 Corporation for Public Broadcasting

needed.8 Accordingly, the Corporation’s board, after what it terms 

extensive consultation with the public television station community, 

approved the funding of the Television Future Fund using monies from the 

system support and the CSG pools.9

The Corporation views Television Future Fund awards as a special 

category of grant that is neither exclusively a CSG grant nor a System 

Support expenditure. The Corporation notes that while CSGs typically are 

utilized only as determined by an individual station recipient for its own 

benefit, Television Future Fund grants can be used as determined or 

directed by more than one station for the benefit of multiple stations and, 

potentially, for the benefit of public television as a whole. Under 

procedures in place prior to the end of fiscal year 2003, the Corporation 

solicited interest in Future Fund grants by issuing a Request for Proposal 

(RFP) and would evaluate applicants for grants on the basis of RFP funding 

criteria.10 Not all applicants received funding.

Since its creation and through May 2003, the Corporation has allocated a 

total of $51 million to the Television Future Fund. Of this amount, $24.5 

million is from CSG funds—in other words, from funds that are available 

for distribution among licensees of public television stations. 

Approximately $41.3 million has been awarded through the Television 

Future Fund program.11 Prior to the end of fiscal year 2003, the Corporation 

8

The Future Fund grew out of a recommendation by the TV Issues & Policies Task Force. In 

explaining the need for the Fund, the task force stated: “We saw a clear need for a significant 

pool of money to invest in systemwide efforts to reduce costs and increase net revenues. 

Unfortunately, there was no way to create a pool of any significant size solely with CPB 

discretionary funds [system support funds].” Status Report from the Public Television Issues 

and Policies Task Force, September 12, 1995.

9

According to the Corporation, supporters of the Television Future Fund greatly 

outnumbered opponents. The Corporation states that 30 to 40 stations considered to be 

leaders in public broadcasting expressed strong support, and agreement existed throughout 

the station community at large. The Corporation contends that active opposition to the 

Television Future Fund was confined to fewer than a dozen station licensees.

10The Corporation utilized a review panel, made up of representatives of diverse types of 

public television stations, to assist in reviewing and recommending which projects should 

be awarded Future Fund grants.

11In September 2002, the Corporation temporarily suspended the awarding of any new 

Television Future Fund grants and set aside fiscal year 2003 funding pending the outcome of 

a review. The Television Future Fund grant program was recently reactivated. Fiscal year 

2004 funding was added to the Television Future Fund account.
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Program

Page 78 GAO-04-284 Corporation for Public Broadcasting

has made 204 grant awards, of which 39 percent of the grants have gone to 

stations, 30 percent have gone to stations paired with consultants, and 31 

percent have gone to third-party awardees. The nature of the projects 

funded with Television Future Fund grants has varied greatly and included 

Web site experiments and marketing projects. The grant amounts have 

varied from a few thousand dollars to hundreds of thousands of dollars. 

Issues From its inception, the Corporation always envisioned that monies from 

two sources—the System Support and CSG pools—would support the 

Television Future Fund program. We are not aware of any concerns that 

have been raised about the Corporation’s use of System Support funds to 

support the Television Future Fund. Because the statute provides that 

System Support monies may be used, if available funding levels permit, for 

projects and activities that enhance public broadcasting, the Corporation is 

clearly permitted to so use such funds. 47 U.S.C. §396(k)(3)(A)(i)(II). The 

primary question concerning the legality of the Television Future Fund 

program involves the use of CSG funds.12 Specifically the issue is whether 

the Corporation may use CSG funds to support the Television Future Fund, 

a competitive grant program that awards grants on the basis of selective, 

project-specific criteria. As explained more fully below, we have 

determined that the statute does not authorize the Corporation to use these 

funds in this manner. 

The Statutory Framework A statutory allocation formula governs how the Corporation distributes 

appropriated funds to support public television stations.13 47 U.S.C. 

§396(k). Under this formula, after administrative costs and System Support 

funds are allocated (about 11 percent of the annual appropriation), the 

12We met on several occasions with Corporation officials to discuss these issues. The 

Corporation provided us with three memorandums responding to questions raised. 

Additionally, the Corporation provided us with supporting documentation, including a 1995 

legal opinion prepared by its then outside counsel, as well as the views of its current outside 

counsel, to help us understand their perspective on this issue.

13The Corporation receives a lump sum appropriation. See, e.g. P.L. 108-7, 117 Stat. 11 

(2003). Typically, the appropriation provides that the amounts available must be used 

“within limitations” specified by the Communications Act of 1934. The appropriation act 

may also specify some deviations from the formula. For example, Public Law 108-7 required: 

“That in addition to the funds provided under this heading in Public Law 106-554, $183,000 

shall be available for administrative costs for fiscal year 2003, notwithstanding section 

396(k)(3)(A) of the Public Broadcasting Act.”
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Program

Page 79 GAO-04-284 Corporation for Public Broadcasting

remaining funds are divided between television and radio, with 75 percent 

earmarked for television, and 25 percent for radio. 47 U.S.C. §396(k)(3)(A). 

Of the monies reserved for television, “75 percent of such amounts shall be 

available for distribution among the licensees and permittees of public 

television stations pursuant to paragraph (6)(B).” 47 U.S.C. 

§396(k)(3)(A)(ii)(I). For these “(3)(A)(ii)(I) funds,” paragraph (6)(B) 

specifically provides that the Corporation “shall make a basic grant . . . to 

each licensee and permittee of a public television station that is on the air.” 

47 U.S.C. §396(k)(6)(B). Paragraph (6)(B) then provides: 

“The balance of the portion reserved for television stations . . . shall be distributed to 

licensees and permittees of such stations in accordance with eligibility criteria (which the 

Corporation shall review periodically in consultation with public . . . television licensees or 

permittees, or their designated representatives) that promote the public interest in public 

broadcasting, and on the basis of a formula designed to—

i. provide for the financial needs and requirements of stations in relation to the

 communities and audiences such stations undertake to serve; [and]

ii. maintain existing, and stimulate new, sources of nonfederal financial support for stations

 by providing incentives for increases in such support . . . .” 47 U.S.C. §396(k)(6)(B).

 (Emphasis added.) 

The next paragraph of the statute further provides that funds distributed 

through the above mechanism “may be used at the discretion of the

recipient for purposes related primarily to the production or acquisition of 

programming.” 47 U.S.C. §396(k)(7) (Emphasis added.)

Analysis In our view, subsection 396(k)(6)(B) does not authorize the Corporation to 

establish a competitive grant program using project-focused criteria funded 

in part with CSG funds. Although we often defer to an agency’s 

interpretation of a statute it is charged to administer,14 in this instance, the 

Corporation’s interpretation of its authority under the statute is neither 

consistent with the statute’s language nor the Congress’s policy choice 

favoring local, not Corporation, control of the expenditure of CSG funds. 

14As a general proposition, an agency’s interpretation of a statute it is charged to administer 

is entitled to deference. U.S. v. Mead Corp., 533 U.S. 218 (2001); Chevron U.S.A., Inc. v.

Natural Resources Defense Council, Inc., 467 U.S. 837, 842-843 (1984); Skidmore v. Swift &

Co., 323 U.S. 134 (1944). Deference is not without limits. Deference is not given to an agency 

interpretation that is inconsistent with the language and objectives of a statute. Chevron

U.S.A., Inc. at 844.
Appendix III

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Broadcasting’s Television Future Fund 

Program

Page 80 GAO-04-284 Corporation for Public Broadcasting

Moreover, as implemented by the Corporation, some Television Future 

Fund grants have been awarded to nonstation entities. This is in direct 

contravention of paragraph (k)(6)(B) directions that these funds be 

distributed to eligible licensees and permittees of public television stations.

The difference between our view and that of the Corporation focuses on 

whether the “eligibility criteria” the Corporation may adopt includes 

project-focused criteria that would govern the competitive award of funds 

for a particular project or whether the “eligibility criteria” the Corporation 

may adopt includes only station-based criteria that distinguishes among 

public television licensees on the basis of such factors as financial needs, 

audience satisfaction, or fundraising effectiveness. According to 

Corporation officials, the term “eligibility criteria” is broad enough to allow 

them, in consultation with the station community, to adopt not only station 

“qualification” criteria but also “selective” project criteria. We disagree. 

There are, in our view, several reasons why the Congress did not intend the 

Corporation’s authority to establish “eligibility criteria,” and the formula 

under which CSG funds are disbursed, to mean that the Corporation may 

take a portion of CSG funds, pool them with System Support funds, and use 

them to make competitive grants only to applicants submitting project 

proposals acceptable to the Corporation after review and recommendation 

by an advisory panel. First, the language of subsection 396(k)(6)(B) does 

not readily support such a reading. Second, the statutory construct 

governing the Corporation’s distribution of funds indicates that the 

Congress specifically identified a limited source of funding for 

Corporation-approved project-specific grants, which by necessary 

implication is the exclusive source of funding for such grants. And third, 

the Television Future Fund program runs contrary to the Congress’s 

expressed policy favoring local, not Corporation, control of the 

expenditure of these discretionary funds. These reasons for our 

conclusions are discussed more fully below.

First, with respect to the statutory language, section 396(k) provides an 

allocation formula directing the Corporation, after deducting about 11 

percent of amounts appropriated to the Public Broadcasting Fund for 

administrative and System Support expenses, to distribute 75 percent of 

the remaining balance to public television stations. 47 U.S.C. §396(k)(3)(A). 

The statute further provides that 75 percent of the 75 percent reserved for 

public television stations “shall be available for distribution among the 

licensees and permittees of public television stations pursuant to 

paragraph (6)(B).” Paragraph (6)(B), in turn, provides two directions to the 

Corporation. It must first “make a basic grant . . . to each licensee and 
Appendix III

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Broadcasting’s Television Future Fund 

Program

Page 81 GAO-04-284 Corporation for Public Broadcasting

permittee of a public television station that is on the air.” 47 U.S.C. 

§396(k)(6)(B). Second, paragraph (6)(B) directs the balance of the portion 

reserved for public television stations to “be distributed to licensees and 

permittees of [public television] stations in accordance with eligibility 

criteria . . . that promote the public interest in public broadcasting.” Id. In 

addition, the distribution of such balance shall be “on the basis of a formula 

designed to” honor station-focused considerations such as their “financial 

needs and requirements . . . in relation to the communities and audiences 

they serve or the level of, and increases in, nonfederal financial support 

received by the stations. The point of paragraph (6)(B) is to direct the 

Corporation’s distribution of CSG funds to the licensees and permittees of 

public television stations. While paragraph (6)(B) provides only that the 

“eligibility criteria” are to “promote the public interest in public 

broadcasting,” the Congress nonetheless directed the distribution of such 

funds on the basis of a formula with a pronounced focus on station-based 

considerations. Hence, in the context of paragraph (6)(B)’s distribution 

mechanism, we believe the phrase “eligibility criteria . . . that promote the 

public interest in public broadcasting” can best be read to mean criteria 

focusing on the eligibility of licensees and permittees of public television 

stations, not project eligibility criteria.15

An additional and perhaps more glaring defect in the Corporation’s 

interpretation of “eligibility criteria” is that it changes the basic nature, and 

control over the expenditure of the grant funds. To read paragraph (6)(B), 

as the Corporation does—as authorizing competitive grants for specific 

projects—introduces an element into the CSG funds allocation that the 

Congress did not appear to intend. We have two reasons for this view. First, 

as pointed out above, the language of paragraph (6)(B) makes no reference 

to funding specific projects. By contrast, the Congress has provided the 

Corporation with express authority to fund projects using System Support 

funds. 47 U.S.C. §396(k)(3)(A)(i)(II). In 1988, the Congress amended the 

system support provision and specifically authorized the Corporation to 

use such funds “if the available funding level permits, for projects and 

15The legislative history supports this view. The House Report accompanying the legislation 

that added the distribution mechanism provided:

“The balance of the amount reserved for television stations would be distributed among 

licensees . . . of such stations as are eligible to receive additional grants under criteria

established by the Corporation in consultation with stations. These additional grants would 

be apportioned among eligible stations . . . . “H. Rep. No. 245, 94th Cong., 1st Sess. 22, See, 

also, S. Rep. No. 447, 94th Cong., 1st Sess. 11-12 (1975), reprinted in 1975 U.S.C.C.A.N. 2006, 

2217. (Emphasis added).
Appendix III

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Page 82 GAO-04-284 Corporation for Public Broadcasting

activities that will enhance public broadcasting.” Public 

Telecommunications Act of 1988, Pub. L. No. 100-626, 102 Stat. 3207 (1988). 

As stated above, by identifying a specific source of funds to be used for 

project-based grants, the legislative language suggests that other funds 

would not be used for the same purpose. The legislative history supports 

the view that the Congress anticipated that these funds would be used for 

systemwide projects that benefit the public broadcasting community.16

Second, the statute and its legislative history reflect a clear division of roles 

vis-à-vis the Corporation and licensees and permittees of public television 

stations. Under the statutory scheme, it is the Corporation that is 

responsible for distributing funds to the licensees and it is the recipients of 

these funds that decide how they are to be used. From the time that the 

Congress first established the Corporation, one of the Corporation’s 

functions was to distribute funds to licensees of public television stations 

who, in their sole discretion, decide how to use them.17 In 1975, when the 

Congress established the subsection (6)(B) statutory distribution 

mechanism, the Congress, in another subsection, also specified that the 

discretion over how funds are to be used rests with the stations receiving 

the funds. Specifically, as amended, the statute provides that “[t]he funds 

distributed . . . may be used at the discretion of the recipient for purposes 

related primarily to the production or acquisition of programming.” 47 

U.S.C. §396(k)(7). Not surprisingly, the legislative history of the distribution 

mechanism is replete with references to the funds flowing “directly” to the 

16When this language was added, the Senate Report explained that:

“Funds remaining after payment of the costs set forth in the statute should be spent on 

services that public radio and television stations cannot efficiently perform themselves. 

CPB currently uses funds allocated to system support for professional development, 

training, research, and promotion of public radio and television programming among other 

things. The Committee supports these activities but also recognizes that CPB, in 

consultation with, the public broadcasting community, is in a position to determine which of 

these services public broadcasting needs. The Committee does not intend that the CPB 

must perform these activities itself, but should support activities within the public 

broadcasting community and their national organizations where that is an efficient way to 

proceed.” S. Rep. No. 444, 100th Cong., 2nd Sess. 27 (1988). 

17The 1967 House Report provided that one of the purposes of the Corporation was “to make 

grants to local educational broadcasting entities so that they may in their sole discretion 

produce or otherwise acquire appropriate programs and obtain the personnel required to 

make their own production staffs adequate to fulfill local audience program needs. . . .” H. 

Rep. No. 572, 90th Cong., 1st Sess. 16, reprinted in 1967 U.S.C.C.A.N. 1799, 1806 (1967).
Appendix III

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licensees and the licensees having “discretion” over the use of the funds.18

The Corporation’s creation of a competitive grant program where it decides 

not only who receives a grant but also more importantly the specific 

purposes for which the grant funds can be used alters the fundamental 

balance of discretion over the use of the funds.19 Under the Corporation’s 

process, in effect prior to the end of fiscal year 2003, the Request for 

Proposal Submission Guidelines and Application (RFP) establishes the 

funding initiatives that guide awards for project support.20 However, the 

Corporation reserves the right to fund “otherwise outstanding proposals 

based on their individual merits, though they may not necessarily respond 

to these priorities but demonstrate a clear response to Fund objectives.” 

18When the distribution mechanism was first added, the Senate Report explained that one of 

the purposes of the legislation was “[t]o assure that a portion of Federal funds is distributed

directly to local noncommercial educational . . . television broadcast stations.” Sen. Rep. No. 

447, 94th Cong., 1st Sess. 1, reprinted in 1975 U.S.C.C.A.N. 2206. A 1978 House Report noted, 

“A significant aspect of that support has been the funds CPB passes through to local stations 

for their discretionary use for local or national purposes.” H. Rep. No. 1178, 95th Cong., 2nd

Sess. 8, reprinted in 1978 U.S.C.C.A.N. 5345, 5352. The Senate Report in explaining 

amendments to subsection (k) stated that “Section 396(k) otherwise continues the 

provisions of existing law regarding the distribution of discretionary funds (Community

Service Grants) to public . . . television stations.” S. Rep. No. 858, 95th Cong., 2nd Sess. 31 

(1978). A 1988 Senate Report stated that “In the early 1970’s, the CPB began distributing a 

substantial percentage of its funds to stations in the form of grants (now called Community 

Service Grants (CSGs)) to be used as the stations deemed appropriate. In 1981, Congress 

codified the CPB’s practice of giving stations unrestricted CSGs.” S. Rep. No. 444, 100th

Cong., 2nd Sess. 18 (1988). (Emphasis added).

19Prior to 1995, all section (6)(B) funds were allocated to stations through the CSG 

mechanism, with one exception. For one year, in the early 1990’s, the Corporation used CSG 

funds to make education grants. When the Corporation allocated the education grant funds, 

there was a stipulation that the recipients use the funds for education projects. However, the 

recipient, and not the Corporation, selected the education project.

20The Corporation did not issue an RFP for fiscal year 2003 because it was reviewing the 

Television Future Fund operations and it temporarily suspended accepting Television 

Future Fund proposals during that review. The Corporation recently reactivated the Future 

Fund grant program under different procedures. According to Corporation officials under 

the new process, the Corporation will be issuing more directed RFPs for more large-scale 

Television Future Fund projects, instead of open calls for proposals.
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Fiscal Year 2002 RFP.21 By setting forth what recipients could spend funds 

on, the Corporation transferred discretionary authority from each 

individual licensee to itself.

Faced with the statute’s clear division of roles, the Corporation’s outside 

counsel attempts to justify first, the Corporation’s use of CSG funds to 

make project-specific grants and second, that the Television Future Funds 

grants are not primarily designated for programming.22 In our view, the 

outside counsel’s conclusion that the Corporation, in consultation with the 

stations, “may” spend funds on projects that will be financially beneficial to 

the stations and that will stimulate nonfederal funding is based on two 

unsupported assumptions. First, the outside counsel reads paragraph 

(k)(6)(B) as providing the Corporation with authority to “spend” CSG 

funds. Second, the outside counsel contends that the goals of the formula 

design are in essence mandates on how the CSG funds are to be used. We 

see no support for either proposition. Paragraph (k)(6)(B) directs the 

Corporation on how CSG funds are to be distributed not on how they are to 

be spent. The goals of the formula design also provide guidance on what 

criteria the Corporation should consider in distributing funds, but does not 

constrain a recipient’s use of CSG funds. Moreover, although the 

Corporation’s outside counsel reads paragraph (k)(7) in terms of its 

permissive direction, this does not recognize that the subsection 

emphasizes the discretion of the recipient to use CSG funds for purposes 

related primarily to programming, i.e., for purposes chosen by the 

recipient. (Emphasis added). 

Finally, the Corporation has implemented the Television Future Fund to 

make it open to “all public television stations and station consortia, and to 

21The Corporation also reserved the discretion to not fund a project even if the proposal 

meets all of the funding criteria. According to the Corporation, it is possible that a complete 

and valid application proposing a project that is consistent with Future Fund eligibility 

criteria might not receive a grant. Specifically, the Corporation states:

“In an effort to put limited funds to the best use, evaluators accord higher priority to 

projects that are replicable or otherwise likely to result in more widespread benefit to public 

broadcasting. In addition, a grant may be denied where a proposal consistent on its face 

with Future Fund goals involves an unacceptably high level of risk or produces benefits too 

insignificant to justify the cost involved.” Memorandum from Donna Gregg, Vice President, 

General Counsel and Corporate Secretary to Mindi Weisenbloom, GAO Senior Attorney, 

July 11, 2003.

22Letter from Stephen A. Weiswasser, Covington & Burling, to Donna Gregg, Vice President, 

General Counsel, and Corporate Secretary, dated July 9, 2003.
Appendix III

Legality of the Corporation for Public 

Broadcasting’s Television Future Fund 

Program

Page 85 GAO-04-284 Corporation for Public Broadcasting

any person, foundation, institution, partnership, corporation, or other 

business whose project is expressly intended to benefit public television.” 

Fiscal Year 2002 RFP. Thus, some CSG funds have been awarded to entities 

other than licensees or permittees of public television stations.23 According 

to the Corporation, so long as the purpose of the grants is to benefit public 

television stations, the award of grants to consultants or other third-party 

entities is consistent with the statute. Since consultants and stations often 

work together to generate project proposals that are reviewed by a panel 

representing a diverse group of stations, the Corporation’s outside counsel 

concludes that the statutory purposes are being fulfilled, regardless of 

whose name appears as payee on the Corporation check. Letter from 

Stephen A. Weiswasser, July 9, 2003. The difficulty with this approach is 

that paragraph (6)(B) directs the Corporation to distribute the balance of 

funds reserved for television stations, after deduction of the basic grant, “to 

licensees of such stations.” 47 U.S.C. §396(k)(3)(A)(ii)(I) (Seventy-five 

percent of 75 percent remaining after deduction of administrative and 

system support funds “shall be available for distribution among the 

licensees and permittees of public television stations pursuant to 

paragraph (6)(B).”) Accordingly, in our view, the Corporation may not 

distribute CSG funds to a nonstation entity (other than one acting as the 

agent for a station or group of stations).

Conclusion For the reasons noted above, we find that the Corporation’s funding and 

distribution of the Television Future Fund program is not consistent with 

the underlying statutory authority under which the Corporation operates.

23For example, in fiscal year 2001, a consultant group received a $259,500 Television Future 

Fund grant to determine how the public television industry is perceived within a larger and 

ever more competitive environment and to understand the present and changing attitudes of 

current and potential individual financial supporters of PBS member stations. In another 

example, in fiscal year 2001, two consultants receive a $90,000 grant to create and 

implement a communications plan to disseminate Future Fund project information 

throughout the public television community. Memorandum from Robert Coonrod, 

Corporation’s President and CEO to the Corporation’s board of directors on Future Fund 

Project Report dated November 29, 2001.
Page 86 GAO-04-284 Corporation for Public Broadcasting

Appendix IV

Digital Transition Regulatory Issues of 

Concern to Public Television ApendxiIV

Licensees and others in the public television community maintain that the 

ability of licensees to provide a full range of digital services depends, in 

part, on regulatory issues related to digital carriage by cable and satellite 

system providers. Many in the public television community believe that 

how mandatory carriage obligations are applied to their digital signal is at 

the heart of public television’s future. Cable systems are required to carry 

local noncommercial educational television stations based upon a cable 

system’s number of usable activated channels.1

 Satellite carriers are 

required to carry all nonduplicative noncommercial educational television 

stations in markets where they provide local-into-local service.2

 These 

mandatory carriage requirements are often referred to as “must carry” 

obligations. 

There are two key issues on how to apply the mandatory carriage 

obligations in the digital arena that are of importance to the public 

television community. The first is whether the “must carry” requirements 

apply to both the digital and analog signal during the transition period. In 

other words, would a cable provider be required to carry both the analog 

and digital signal until the analog spectrum is returned. In a January 2001 

Order concerning the carriage of digital television broadcast signals by 

cable operators, FCC tentatively concluded, based on the existing record 

evidence, that during the transition, a dual must-carry requirement would 

burden the cable operator’s First Amendment interests more than is 

necessary to further the government’s interests. In this regard, the record 

was found insufficient to demonstrate the degree of harm that 

broadcasters, including public television stations, would suffer without 

carriage of both signals.3

 In order to ensure that it had sufficient evidence 

to fully evaluate this issue, FCC issued a Further Notice of Proposed 

Rulemaking. 

The second key issue involves the specific content of a digital television 

signal that is subject to mandatory carriage. Most analog broadcast stations 

have only one video broadcast product. However, digital television will 

1

See, 47 U.S.C. §535(b) and (e); 47 C.F.R. §76.56(a).

2

See, 47 U.S.C. §338 Implementation of the Satellite Home Viewer Improvement Act of 1999: 

Broadcast Signal Carriage Issues; Retransmission Consent Issues, 16 FCC Rcd 1918, 1954 

(2000) ("DBS Broadcast Carriage Report & Order").

3

Carriage of Digital Television Broadcast Signals, First Report and Order and Further Notice 

of Proposed Rulemaking, 16 FCC Rcd 2598 (2001) (“Digital Must Carry Order and FNPR”).
Appendix IV

Digital Transition Regulatory Issues of 

Concern to Public Television 

Page 87 GAO-04-284 Corporation for Public Broadcasting

operate on a much more flexible basis that could allow for multiplestreams, or “multicasting,” of standard definition digital television 

programs. Under the statute, a cable operator is required to carry in its 

entirety the “primary video” of the commercial broadcast station.4

According to FCC, largely parallel provisions are contained in the statute 

relating to carriage of noncommercial stations.5

 Although FCC recognized 

that the term “primary video” was susceptible to different interpretations, 

FCC concluded that, based on the available record, the term “primary 

video” means a single programming stream and other program-related 

content. In its Further Notice of Proposed Rulemaking, FCC sought 

comment on the appropriate parameters for “program-related” in the digital 

context. FCC also raised questions concerning the applicability of the rules 

and policies it adopted in the above cited Order to satellite carriers. Public 

television stations and other broadcasters have asked FCC to reconsider its 

ruling, and a decision on this request is pending.

As our own survey of licensees shows, there is a very strong consensus 

among licensees that the lack of dual carriage of analog and digital signals 

by cable companies, as well as a lack of cable carriage of the entire digital 

over the air stream such as multicast offerings are seen as factors impeding 

public television’s digital transition. Additionally, there is a strong 

consensus that lack of carriage of local stations’ digital signals by direct 

broadcast satellite (e.g., DISH Network, DIRECTV), would produce 

similarly negative results (see fig. 23). 

4

The cable operator is also required to carry the “accompanying audio” and line 21 closedcaption transmission for each station. Additionally, the operator must carry “to the extent 

technically feasible, program-related material carried in the vertical blanking interval or on 

subcarriers. 47 U.S.C. §534(b)(3).

5

See, 47 U.S.C. §535(g)(1).
Appendix IV

Digital Transition Regulatory Issues of 

Concern to Public Television 

Page 88 GAO-04-284 Corporation for Public Broadcasting

Figure 23: Issues Cited by Licensees As Impeding Public Television’s Digital 

Transition

Note: Percentages reflect the licensees responding “yes” to our questions whether each issue would 

impede their transition to digital. N=147 licensees for “Lack of dual cable carriage”; N=148 licensees 

for “Lack of multicast cable carriage;” and N=148 for “Lack of satellite carriage.”

However, opponents of these mandatory carriage obligations, including the 

cable television industry, have maintained that in the absence of dual cable 

carriage, broadcasters, including public television, will not be negatively 

affected. The cable television industry also pointed out that some cable 

television providers have managed the need for dual carriage by voluntarily 

entering into a number of agreements with local public television stations 

to carry their digital signals in addition to their analog signals during the 

transition period. Additionally, they have noted that adoption of mandatory 

carriage requirements for multicasting would impose unconstitutional 
Appendix IV

Digital Transition Regulatory Issues of 

Concern to Public Television 

Page 89 GAO-04-284 Corporation for Public Broadcasting

freedom of speech restrictions and a governmental limitation on cable 

television providers’ right to decide what services they provide.6

Absent changes to FCC’s ruling on these issues, some in the public 

television community have taken the position that they “must convince” 

cable and satellite providers that the digital services offered by public 

television are valuable additions for their customers and, therefore, should 

be carried by them.

6

See for example Reply Comments of the National Cable and Telecommunications 

Association: In the Matter of Second Periodic Review of the Commission’s Rules and 

Policies Affecting the Conversion to Digital Television, MB Docket No. 03-15, (Washington 

D.C.: May 21, 2003). See also National Cable and Telecommunications Association, Ex Parte 

Letter to the Federal Communications Commission Regarding CS Docket 98-120, 

(Washington D.C.: July 9, 2002).
Page 90 GAO-04-284 Corporation for Public Broadcasting

Appendix V

Underwriting Acknowledgments on Public 

Television ApendxiV

One of the distinguishing features of public television is, by definition, its 

noncommercial character. Unlike commercial television stations, public 

television stations are prohibited from airing advertisements. However, 

public television stations are permitted to acknowledge station support1

and, without interrupting regular programming, may acknowledge 

underwriters on the air.2

 Dating back to the initial decision to reserve 

spectrum for noncommercial educational broadcast television, FCC 

rejected proposals to allow noncommercial educational licensees the 

ability to generate revenues through advertising sales and frequency 

sharing with commercial broadcasters. In 1981, as part of a “major” 

reevaluation of the noncommercial educational broadcast service, FCC 

reaffirmed its rejection of advertising on public television, concluding that 

advertiser-supported programming of any kind could harm the service. 

FCC’s 1981 policy statement on the nature of public broadcasting states 

that the Commission’s interest in creating a noncommercial service in 1951 

was to remove the programming decisions of public broadcasters from the 

normal kinds of market pressures faced by commercial broadcasters. FCC 

noted, however, that acknowledgments of funders are “proper” and 

possibly necessary to ensure continued funding from such sources.3

In 1981, the Communications Act was amended to authorize licensees the 

ability to offer services, facilities, and products in exchange for 

remuneration, provided that nonfederal funds are used to subsidize such 

activities and that such activities would not interfere with the provision of 

public telecommunications services.4

 In addition, the amendments 

included a provision establishing a “Temporary Commission on Alternative 

Financing for Public Telecommunications” to identify funding options for 

1

Under separate requirements related to sponsorship identification, broadcasters must 

“fully and fairly disclose the true identity of all program sponsors” where specific program 

material is sponsored. The sponsorship identification requirement applies to all 

broadcasters who air specifically sponsored program material. In the case of 

noncommercial educational stations, that requirement may be satisfied through properly 

worded underwriting acknowledgments that identify the sponsor or sponsors. 

2

As required by law and FCC rules, the scheduling of any announcements and 

acknowledgments may not interrupt regular programming. See, 47 U.S.C. §399a(b), 47 C.F.R. 

§73.621(e).

3

See Commission Policy Concerning the Noncommercial Nature of Educational 

Broadcasting, Second Report and Order, FCC 81-204, 86 FCC 2d 141, 141-43 (1981).

4

The Public Broadcasting Amendments Act of 1981, Pub. L. No. 97-35, §1221-34, 95 Stat. 725, 

736 (1981).
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 91 GAO-04-284 Corporation for Public Broadcasting

public broadcasting, and to conduct demonstrations of limited advertising 

for the purpose of “reduc[ing] the uncertainty about the advantages and 

disadvantages accompanying public broadcast station’s use of limited 

commercial advertising or expanded underwriting credits.” In its 1983 

Report to the Congress, the Temporary 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. 

In addition, it recommended that the Congress continue to provide federal 

funding for public broadcasting until or unless adequate alternative 

financing becomes available.5

Under current law, the Communications Act defines a “noncommercial 

educational broadcast station” and “public broadcast station” as a 

television or radio broadcast station that under the rules and regulations of 

the Commission in effect on November 2, 1978, is eligible to be licensed as 

a station that is “owned and operated by a public agency or nonprofit 

private foundation, corporation or association” or “is owned and operated 

by a municipality and which transmits only noncommercial programs for 

educational purposes.”6

 For our purposes here, the act defines 

“advertisements” as 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. As noted above, the act permits public broadcasting stations to 

provide facilities and services for remuneration so long as those uses do 

not interfere with stations’ provision of public telecommunications 

services; the act also prohibits stations from making their facilities 

“available to any person for the broadcasting of any advertisement.”7

Under FCC rules and policies, noncommercial educational stations have 

the discretion to air announcements acknowledging station support.8

 A 

station’s financial contributors may receive on-air acknowledgements for 

5

Temporary Commission on Alternative Financing for Public Telecommunications, 

Report to the Congress (October 1, 1983).

6

47 U.S.C. §397(6).

7

47 U.S.C. §399b(a) and (b).

8

As noted above, noncommercial broadcasters may satisfy the requirement that they 

disclose the true identity of all program sponsors where specific program material is 

sponsored through properly worded underwriting acknowledgments that identify the 

sponsor or sponsors.
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 92 GAO-04-284 Corporation for Public Broadcasting

identification purposes only.9 Such acknowledgments may not promote the 

contributors’ products, services, or business, and may not contain 

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

or inducements to buy, sell, rent, or lease. No limitation, however, was 

adopted on the length of acknowledgments.10 Recognizing that it may be 

difficult to distinguish between language that “promotes” and language that 

merely “identifies” an underwriter, broadcasters must make “reasonable 

good faith judgments” to exclude language or visual elements in their 

acknowledgments that promote the contributors’ products, services, or 

business. Consistent with the identification of underwriters, FCC has 

determined that acknowledgments may include, in addition to the 

underwriter’s name, the following identifying information: 

• logo-grams or slogans which identify and do not promote, 

• location information and telephone numbers,

• value neutral descriptions of a product line or service, and/or

• brand and trade names and product or service listings.

According to FCC, enforcement primarily occurs through self-policing by 

licensees of public television stations and also by the Commission’s 

response to complaints. For the period from January 2000 through early 

February 2004, FCC had 43 complaint cases. Thirteen of the complaints 

were denied or dismissed, 17 complaints resulted in admonishments or 

cautions, and 2 resulted in notices of apparent liability. Eleven others were 

under investigation.

The statutory and regulatory provisions on underwriting acknowledgments 

are supplemented by guidelines and policies developed by PBS, by other 

national distributors of public television programming, and by licensees 

themselves. For example, PBS guidelines govern how underwriters of PBS9

See Commission Policy Concerning the Noncommercial Nature of Educational 

Broadcasting Stations, Public Notice (1986), republished 7 FCC Rcd 827 (1992).

10Although there is no limitation on the length of acknowledgments, the Commission has 

stated, the longer announcements are, the more likely they are to be promotional, and 

licensees should avoid placing them with such frequency so as to constitute “commercial 

clutter.” See Board of Education of New York (WNYE-TV), 7 FCC Rcd 6864, 6865 (MMB 

1992) and Commission Policy Concerning the Noncommercial Nature of Educational 

Broadcasting, 90 FCC 2d 895, 902-03 (1982).
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 93 GAO-04-284 Corporation for Public Broadcasting

distributed programs may be identified on air. The acceptance of program 

funding from third parties, the guidelines state, are intended to ensure that 

editorial control of programming remains in the hands of program 

producers, that funding arrangements will not create the perception that 

editorial control has been exercised by someone other than the producer, 

and that the noncommercial character of public broadcasting is protected 

and preserved. PBS guidelines also specify that the maximum duration for 

all underwriter acknowledgments may not exceed 60 seconds and 

generally that the maximum duration for a single underwriter not exceed 

15 seconds. Other national distributors of public television programming, 

such as American Public Television and the National Educational 

Telecommunications Association, also have guidelines with similar 

acknowledgment length limitations. The PBS Board adopted an exception 

to its guidelines in February 2003. As modified, the maximum duration for 

one underwriter may not exceed 30 seconds within a 60-second maximum 

interval for all acknowledgments. This applies only to underwriters that 

contribute $2.5 million or more per year for the production of PBS’s primetime programming and the NewsHour with Jim Lehrer.

In our survey of licensees, we asked several questions related to the airing 

of 30-second underwriting acknowledgments by licensees themselves and 

not those aired as part of PBS programming. The percentage of licensees 

that said they are currently airing 30-second acknowledgments (41 percent) 

was equal to the percentage of licensees that said that they neither air, nor 

plan to air, 30-second underwriting acknowledgments. An additional 9 

percent of the licensees responded that they intend to air 30-second 

acknowledgments in the future. Figure 24 illustrates the responses of 

licensees to this question.
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 94 GAO-04-284 Corporation for Public Broadcasting

Figure 24: Licensees that Air, Plan to Air, and Do Not Air or Plan to Air Their Own 30-

Second Underwriting Acknowledgments

Note: N=149 licensees. Percentages have been rounded and do not equal 100 percent.

Of the respondents who told us that they are currently airing 30-second 

acknowledgments, the earliest date provided for the first airing of such 

acknowledgments was 1982.

We also asked licensees who currently air or plan to air 30-second 

acknowledgments to prioritize the reasons for such decisions. For both 

groups of licensees, the highest priority identified was to attract new 

underwriters—56 percent of those that already air 30-second 

acknowledgments and 69 percent of those that plan to air 30-second 

acknowledgments. For both groups, maintaining revenues from existing 

underwriters was the second most frequently identified top priority. Only 5 

percent of those that currently air such acknowledgments and 8 percent of 

those that plan to air such acknowledgments identified increasing revenues 

from existing underwriters as their highest priority. These responses are 

illustrated in figure 25.
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 95 GAO-04-284 Corporation for Public Broadcasting

Figure 25: Reasons Identified by Licensees as the Highest Priority for Airing or 

Planning to Air Their Own 30-Second Underwriting Acknowledgments

Note: N=57 licensees that “Air” and N=136 licensees that “Plan to Air” 30-second underwriting 

acknowledgments. Percentages have been rounded.

In response to our question as to whether licensees would favor or oppose 

a federal requirement that limits the length of underwriting 

acknowledgments, 71 percent said they oppose a requirement, and 22 

percent said they favor a federal requirement (see fig. 26).
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 96 GAO-04-284 Corporation for Public Broadcasting

Figure 26: Views on the Need for a Federal Requirement Limiting the Length of 

Underwriting Acknowledgments

Note: N=147 licensees. Percentages have been rounded and do not equal 100 percent.

Licensees’ commentary on underwriting acknowledgements addressed 

both the use of longer acknowledgments and views on a federal 

requirement limiting their length. A few of the comments provided to us 

were critical of the use of 30-second acknowledgments and supportive of a 

federal requirement. Specifically, some expressed concern that longer 

underwriting acknowledgments threaten the noncommercial nature of 

public television. One licensee noted, for example, that the length of 

acknowledgments and the images of underwriters’ messages directly affect 

viewers’ experience watching public television. Another licensee said 

longer acknowledgments undermine viewer perceptions of public 

television as a unique noncommercial service. However, many more 

comments were provided suggesting that the length of acknowledgments is 

a matter that should be left to the discretion of licensees, not the federal 

government, based on local judgments and response of local viewers. In 

particular, some licensees indicated that flexibility is needed with respect 
Appendix V

Underwriting Acknowledgments on Public 

Television

Page 97 GAO-04-284 Corporation for Public Broadcasting

to the length of acknowledgments in order to attract underwriting 

support and to further the mission of public television.
Page 98 GAO-04-284 Corporation for Public Broadcasting

Appendix VI

Survey of Public Television Licensees ApendxiVI

Our survey of public television licensees consisted of objective questions 

and the option to include narrative comments in each section of the survey. 

The aggregate results of objective questions are presented below. We 

received completed surveys from 149 out of 176 licensees—an overall 

response rate of 85 percent. The number of respondents answering 

individual questions may be lower, however, depending on the number of 

licensees who were eligible to answer a particular question or who chose to 

do so. Each question indicates the number of licensees responding to it.

Q1. Do you think the current 75% / 25% allocation of the federal funds supporting public television should remain the same or be changed?

Q2. Please provide the reasons for your answer and, if you think the allocation should be changed, describe what the allocation should be.

Q3. Were you aware of the consultation process that was conducted in 2001 to review the eligibility criteria for Community Service Grants?

Q4. During the 2001 consultation process, to what extent did CPB solicit input from your station(s) on the Community Service Grant 

eligibility criteria?

Allocation should 

remain the same 

(percent)

Allocation should be 

changed 

(percent)

Don't know 

(percent)

Number 

of respondents

61.5 33.8 4.7 148

Writing 

comment 

(percent)

Number 

of 

respondents

77.2 149

Yes 

(percent)

No 

(percent)

I was not 

associated with a 

station during the 

2001 consultation 

process 

(percent)

Don't know 

(percent)

Number 

of respondents

83.8 10.8 4.1 1.4 148

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of respondents

24.6 32.5 26.2 8.7 7.9 126
Appendix VI

Survey of Public Television Licensees

Page 99 GAO-04-284 Corporation for Public Broadcasting

Q5. During the 2001 consultation process, to what extent did your station(s) provide CPB with input on the Community Service Grant 

eligibility criteria?

Q6. To what extent do you think CPB considered input from your station(s) on the Community Service Grant eligibility criteria?

Q7. Overall, are you basically satisfied with the process used by CPB to periodically review the eligibility criteria for Community Service 

Grants or do you think changes are needed?

Q8. Please explain what changes you think are needed.

Q9. To what extent do you know about the outcomes or findings of CPB Television Future Fund projects?

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

20.0 30.4 27.2 12.8 9.6 125

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

18.6 36.1 25.8 8.2 11.3 97

Basically 

satisfied, no 

changes are 

needed 

(percent)

Only minor 

changes are 

needed 

(percent)

Substantial 

changes are 

needed 

(percent)

Don't know 

(percent)

Number 

of 

respondents

48.0 28.8 20.8 2.4 125

Writing 

comment 

(percent)

Number 

of 

respondents

41.6 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

16.9 40.5 37.2 5.4 0.0 148
Appendix VI

Survey of Public Television Licensees

Page 100 GAO-04-284 Corporation for Public Broadcasting

Q10. How have you learned about the outcomes or findings of CPB Television Future Fund projects?

Q10a. Please describe other ways, if any, you have learned about outcomes or findings of CPB Television Future Fund projects.

Q11. Have the outcomes or findings of any CPB Television Future Fund project provided your station(s) with practical methods for either 

reducing costs or enhancing revenues?

Q11a. If you answered yes to either above, please provide examples or the name(s) of one or more project(s).

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

a. From CPB (e.g. website, 

mailings, emails) 84.8 12.9 2.3 132

b. From the Association of 

Public Television Stations 69.0 25.4 5.6 126

c. From the Public 

Broadcasting Service 43.9 44.7 11.4 123

d. From a public broadcasting 

publication (e.g. Current) 82.9 14.7 2.3 129

e. From a public broadcasting 

meeting or conference 89.2 8.5 2.3 130

f. From Future Fund project 

grantees (e.g. other stations, 

consultants) 71.5 24.4 4.1 123

g. Other (please describe 

below) 47.5 45.0 7.5 40

Writing 

comment 

(percent)

Number 

of 

respondents

27.5 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of respondents

a. Reducing Costs 36.4 50.3 13.3 143

b. Enhancing 

Revenues 37.1 49.7 13.3 143

Writing 

comment 

(percent)

Number 

of 

respondents

44.3 149
Appendix VI

Survey of Public Television Licensees

Page 101 GAO-04-284 Corporation for Public Broadcasting

Q12. Do you agree with CPB's current approach of using the funds allocated for distribution among public television licensees to fund the 

Television Future Fund or would you prefer an alternate approach, such as using funds from a different source?

Q13. Please provide the reasons for your answer to Question 12.

Q14. To what extent do the children's programs offered by PBS's National Program Service help you to meet the mission of your 

station(s)?

Q15. Please provide the reasons for your answer to Question 14.

Q16. To what extent do the prime-time programs offered by PBS's National Program Service help you to meet the mission of your 

station(s)?

I agree with CPB's 

current approach of 

using funds 

allocated for 

distribution among 

public television 

licensees to fund the 

Television Future 

Fund (in addition to 

System Support 

funds). 

(percent)

I prefer using only 

the System Support 

account as an 

alternate approach 

of funding the 

Television Future 

Fund. 

(percent)

I prefer using other 

sources of funds as an 

alternate approach of 

funding the Television 

Future Fund (please 

describe below). 

(percent)

CPB should 

not fund the 

Television 

Future Fund. 

(percent)

Don't know 

(percent)

Number 

of 

respondents

29.7 27.0 15.5 21.6 6.1 148

Writing 

comment 

(percent)

Number 

of 

respondents

72.5 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

My station is 

not a member 

of PBS 

(percent)

Number 

of 

respondents

86.6 8.7 1.3 0.7 0.0 2.7 149

Writing 

comment 

(percent)

Number 

of 

respondents

84.6 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

60.4 36.1 3.5 0.0 0.0 144
Appendix VI

Survey of Public Television Licensees

Page 102 GAO-04-284 Corporation for Public Broadcasting

Q17. Please provide the reasons for your answer to Question 16.

Q18. To what extent do the children's programs offered by PBS's National Program Service help you to build local underwriting and 

membership support?

Q19. Please provide the reasons for your answer to Question 18.

Q20. To what extent do the prime-time programs offered by PBS's National Program Service help you to build local underwriting and 

membership support?

Q21. Please provide the reasons for your answer to Question 20.

Q22. Do you believe that changes are needed to the processes involved in selecting programming for PBS's National Program Service?

Writing 

comment 

(percent)

Number 

of 

respondents

83.2 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

22.9 38.9 34.0 2.8 1.4 144

Writing 

comment 

(percent)

Number 

of 

respondents

80.5 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

47.9 43.1 9.0 0.0 0.0 144

Writing 

comment 

(percent)

Number 

of 

respondents

79.2 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

58.0 22.4 19.6 143
Appendix VI

Survey of Public Television Licensees

Page 103 GAO-04-284 Corporation for Public Broadcasting

Q23. Please provide your comments on any program selection issues that are of concern to you.

Q24. Should CPB continue to provide direct funding to support the PBS National Program Service (as it exists today)?

Q25. Please provide the reasons for your answer to Question 24.

Q26. Is the amount of local programming that you produce sufficient to meet the needs of your community?

Q27. Please provide the reasons for your answer to Question 26.

Q28. In addition to CPB's current statutory authority to support the production of national programming, should CPB have explicit statutory 

authority to award station grants for the production of local programming?

Q29. Assuming CPB's statutory authority to award station grants for local programming would require the use of funds that currently 

support national programming, would you still favor this authority?

Writing 

comment 

(percent)

Number 

of 

respondents

74.5 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

72.2 18.8 9.0 144

Writing 

comment 

(percent)

Number 

of 

respondents

75.2 149

Yes, the amount of local 

programming is sufficient to meet 

the needs of our community. 

(percent)

No, the amount of local 

programming is not sufficient to 

meet the needs of our community. 

(percent)

Don't know 

(percent)

Number 

of 

respondents

18.2 79.1 2.7 148

Writing 

comment 

(percent)

Number 

of 

respondents

93.3 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of respondents

53.0 39.6 7.4 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of respondents

59.5 30.4 10.1 79
Appendix VI

Survey of Public Television Licensees

Page 104 GAO-04-284 Corporation for Public Broadcasting

Q30. Please provide the reasons for your answer to Question 29.

Q31. In addition to or in conjunction with television broadcasting, do you currently provide each of the following local services to your 

community?

Q31a. Please describe other services, if any, you provide to your community in addition to or in conjunction with television broadcasting.

Q32. What types of services does (at least one of) your station(s) currently provide, or plan to provide after transitioning to digital?

Writing 

comment 

(percent)

Number 

of 

respondents

56.4 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

a. Services to support pre-school through 12th grade 

education 94.6 5.4 0.0 149

b. Services to support higher education 88.6 11.4 0.0 149

c. Services to support workforce training, professional 

development, and/or continuing education 84.5 15.5 0.0 148

d. Television program-related outreach (e.g., additional 

program-related material on station's own website, 

sponsoring workshops and discussion groups about 

programs, community partnerships, PBS toolkits) 97.3 2.7 0.0 149

e. Services to support local, state, and/or federal 

government agencies (e.g. National Weather Service, 

Homeland Security) 77.0 22.3 0.7 148

f. Sponsorship of local community events 93.9 6.1 0.0 147

g. Other (please describe below) 80.3 15.2 4.5 66

Writing 

comment 

(percent)

Number 

of 

respondents

52.3 149

Currently 

provide 

(percent)

Plan to 

provide 

(percent)

Don't provide 

and don't plan 

to provide 

(percent)

Don't know 

(percent)

Number 

of 

respondents

a. A high-definition channel 51.4 39.2 3.4 6.1 148

b. A standard definition channel 60.1 37.1 1.4 1.4 143

c. Multiple channels (i.e. "multicasting") 34.7 61.9 2.0 1.4 147

d. Data broadcasting (i.e. "datacasting") 10.3 82.9 1.4 5.5 146

e. Other (please describe below) 10.9 40.0 0.0 49.1 55
Appendix VI

Survey of Public Television Licensees

Page 105 GAO-04-284 Corporation for Public Broadcasting

Q32a. Please describe other services, if any, you plan to offer.

Q33. Do you currently provide, or are you likely to provide after transitioning to digital, revenue-generating ancillary and supplementary 

non-broadcast services to nonprofit entities?

Q34. Do you currently provide, or are you likely to provide after transitioning to digital, revenue-generating ancillary and supplementary 

non-broadcast services to for-profit entities?

Q35. Were you aware of the consultation process conducted by CPB on the allocation of fiscal year 2003 digital television funding?

Q36. To what extent did CPB solicit input from your station(s) on the allocation of fiscal year 2003 digital television funding?

Q37. To what extent did your station(s) provide CPB with input on the allocation of fiscal year 2003 digital television funding?

Writing 

comment 

(percent)

Number 

of 

respondents

30.2 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

50.7 10.8 38.5 148

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

38.3 16.1 45.6 149

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

89.3 6.7 4.0 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

28.8 28.8 28.8 10.1 3.6 139

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

16.3 30.4 31.1 16.3 5.9 135
Appendix VI

Survey of Public Television Licensees

Page 106 GAO-04-284 Corporation for Public Broadcasting

Q38. To what extent do you think CPB considered input from your station(s) on the allocation of fiscal year 2003 digital television funding?

Q39. Overall, are you basically satisfied with the consultation process used by CPB to allocate fiscal year 2003 digital television funding?

Q40. Please explain what changes you think are needed.

Q41. How would you currently prioritize the use of any additional federal funding to support your station(s) during the digital transition?

Q42. Is your digital master control equipment fully compatible with the EIOP (for all of your stations)?

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

26.2 30.8 20.6 8.4 14.0 107

Basically satisfied, 

no changes are 

needed 

(percent)

Only minor 

changes are 

needed 

(percent)

Substantial 

changes are 

needed 

(percent)

Don't know 

(percent)

Number 

of respondents

61.9 13.4 11.9 12.7 134

Writing 

comment 

(percent)

Number 

of 

respondents

25.5 149

% Ranking 1 

(percent)

% Ranking 2 

(percent)

% Ranking 3 

(percent)

% Ranking 4 

(percent)

% Ranking 5 

(percent)

Number 

of 

respondents

a. Digital content 22.1 24.3 22.1 20.7 10.7 140

b. Digital transmission 

equipment 14.3 5.7 7.9 20.0 52.1 140

c. Digital production 

equipment 19.3 27.9 25.7 21.4 5.7 140

d. Digital operating costs 

(i.e. energy costs) 16.4 19.3 25.7 17.1 21.4 140

e. Digital master 

control/content 

management automation 27.9 22.9 18.6 20.7 10.0 140

Yes, fully 

compatible 

(percent)

No, not fully 

compatible, 

but our 

capabilities 

won't be 

materially 

affected 

(percent)

No, not fully 

compatible, 

and our 

capabilities 

will be 

materially 

affected 

(percent)

Don't have 

digital master 

control 

equipment 

(percent)

Don't know 

(percent)

Number 

of 

respondents

18.2 22.3 13.5 28.4 17.6 148
Appendix VI

Survey of Public Television Licensees

Page 107 GAO-04-284 Corporation for Public Broadcasting

Q43. Is your digital production equipment fully compatible with the EIOP (for all of your stations)?

Q44. Is your digital storage equipment fully compatible with the EIOP (for all of your stations)?

Q45. Please use the box below to describe any other comments on the Next Generation Interconnection System or the Enhanced 

Interconnection Optimization Project.

Q46. To what extent will completion of the digital transition improve the ability of your station(s) to provide local services to your 

community?

Q47. Please describe how the ability of your station(s) to provide local services will or will not improve with the digital transition.

Yes, fully 

compatible 

(percent)

No, not fully 

compatible, 

but our 

capabilities 

won't be 

materially 

affected 

(percent)

No, not fully 

compatible, 

and our 

capabilities 

will be 

materially 

affected 

(percent)

Don't have 

digital 

production 

equipment 

(percent)

Don't know 

(percent)

Number 

of 

respondents

9.6 16.4 10.3 43.2 20.5 146

Yes, fully 

compatible 

(percent)

No, not fully 

compatible, 

but our 

capabilities 

won't be 

materially 

affected 

(percent)

No, not fully 

compatible, 

and our 

capabilities 

will be 

materially 

affected 

(percent)

Don't have 

digital storage 

equipment 

(percent)

Don't know 

(percent)

Number 

of 

respondents

14.9 23.0 17.6 24.3 20.3 148

Writing 

comment 

(percent)

Number 

of 

respondents

52.3 149

To a great 

extent 

(percent)

To a moderate 

extent 

(percent)

To a little 

extent 

(percent)

Not at all 

(percent)

Don't know 

(percent)

Number 

of 

respondents

58.4 26.8 7.4 2.7 4.7 149

Writing 

comment 

(percent)

Number 

of 

respondents

87.2 149
Appendix VI

Survey of Public Television Licensees

Page 108 GAO-04-284 Corporation for Public Broadcasting

Q48. Could any of the following digital carriage issues impede your station's future if not resolved during the digital transition?

Q48a. Please list other digital carriage issues, if any, that will impede your station's future if not resolved during the digital transition.

Q49. Aside from acknowledgements included as part of PBS's National Program Service, do you currently run or plan to run 30-second 

underwriter acknowledgements on your station(s)?

Q50. In what year did you begin to run 30-second underwriter acknowledgements? (Enter a 4 digit number only. Letters and symbols will 

be deleted.)

Yes 

(percent)

No 

(percent)

Don't know 

(percent)

Number 

of 

respondents

a. Lack of dual cable carriage of 

analog and digital signals during the 

transition 91.2 8.2 0.7 147

b. Lack of cable carriage of the 

entire digital over-the-air stream (i.e. 

HDTV and multicast offerings) 98.0 2.0 0.0 148

c. Lack of cable carriage of multiple 

digital public television stations in a 

single market 60.4 35.4 4.2 144

d. Lack of carriage of local stations' 

digital signals by direct broadcast 

satellite (e.g. Dish Network, 

DirecTV) 94.6 4.1 1.4 148

e. Other (please specify below) 66.7 3.7 29.6 27

Writing 

comment 

(percent)

Number 

of 

respondents

29.5 149

Yes, I currently run 

30-second 

underwriter 

acknowledgements 

(percent)

Yes, I plan to run 

30-second 

underwriter 

acknowledgements 

(percent)

No, I do not run and 

do not plan to run 

30-second 

underwriter 

acknowledgments 

(percent)

Don't know 

(percent)

Number 

of 

respondents

40.9 9.4 40.9 8.7 149

Mean Median Minimum Maximum

Number 

of 

respondents

1998 1999 1982 2003 60
Appendix VI

Survey of Public Television Licensees

Page 109 GAO-04-284 Corporation for Public Broadcasting

Q51. How did you prioritize your reasons for deciding to run 30-second underwriter acknowledgements?

Q52. How would you prioritize your reasons for your plans to run 30-second underwriter acknowledgements?

Q53. Would you favor or oppose a federal requirement that limits the length of underwriter acknowledgements?

Q54. Please provide the reasons for your answer to Question 53.

% Ranking 1 

(percent)

% Ranking 2 

(percent)

% Ranking 3 

(percent)

Number 

of 

respondents

a. To maintain 

revenues from 

existing 

underwriters 38.6 21.1 40.4 57

b. To increase 

revenues from 

existing 

underwriters 5.3 54.4 40.4 57

c. To attract 

new 

underwriters 56.1 24.6 19.3 57

% Ranking 1 

(percent)

% Ranking 2 

(percent)

% Ranking 3 

(percent)

Number 

of 

respondents

a. To maintain 

revenues from 

existing 

underwriters 23.1 23.1 53.8 13

b. To increase 

revenues from 

existing 

underwriters 7.7 46.2 46.2 13

c. To attract new 

underwriters 69.2 30.8 0.0 13

Favor a federal 

requirement that limits 

the length of 

underwriter 

acknowledgements 

(percent)

Oppose a federal 

requirement that 

limits the length of 

underwriter 

acknowledgements 

(percent)

Don't know 

(percent)

Number 

of respondents

22.4 70.7 6.8 147

Writing 

comment 

(percent)

Number 

of 

respondents

87.2 149
Appendix VI

Survey of Public Television Licensees

Page 110 GAO-04-284 Corporation for Public Broadcasting

Q55. If there are other issues that you would like to raise, or if you would like for GAO staff to be in contact with you to discuss in greater 

detail issues included in this survey, please use the space below to identify those issues and/or provide your contact information.

Writing 

comment 

(percent)

Number 

of 

respondents

35.6 149
Page 111 GAO-04-284 Corporation for Public Broadcasting

Appendix VII

Comments from the Corporation for Public 

Broadcasting ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 112 GAO-04-284 Corporation for Public Broadcasting

See comment 1.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 113 GAO-04-284 Corporation for Public Broadcasting
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 114 GAO-04-284 Corporation for Public Broadcasting

See comment 2.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 115 GAO-04-284 Corporation for Public Broadcasting

See comment 3.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 116 GAO-04-284 Corporation for Public Broadcasting
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 117 GAO-04-284 Corporation for Public Broadcasting

See comment 4.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 118 GAO-04-284 Corporation for Public Broadcasting

See comment 5.

See comment 6.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 119 GAO-04-284 Corporation for Public Broadcasting
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 120 GAO-04-284 Corporation for Public Broadcasting
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 121 GAO-04-284 Corporation for Public Broadcasting

See comment 7.

See comment 8.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 122 GAO-04-284 Corporation for Public Broadcasting

See comment 9.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 123 GAO-04-284 Corporation for Public Broadcasting

See comment 10.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 124 GAO-04-284 Corporation for Public Broadcasting

See comment 11.

See comment 12.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 125 GAO-04-284 Corporation for Public Broadcasting

See comment 13.

See comment 14.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 126 GAO-04-284 Corporation for Public Broadcasting
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 127 GAO-04-284 Corporation for Public Broadcasting

The following are GAO’s comments on the Corporation for Public 

Broadcasting’s letter dated March 12, 2004.

GAO Comments 1. Our legal opinion on this issue remains unchanged. See our comments 

below on the attached legal memorandum from Covington and Burling. 

The Corporation notes that its ability to support projects designed to 

improve the system as a whole could decrease if it had to depend only 

on system support funds. We recognize the Corporation’s concern. 

However, we continue to believe that this is a matter that should be 

addressed to the Congress. 

2. The point of the cited paragraph of our report is limited to historical 

background and is not a characterization of congressional commitment 

to public television. To restate, when the Public Broadcasting Act of 

1967 was passed, annual congressional appropriations were seen as a 

temporary measure pending the development and adoption of a longterm financing plan for public broadcasting. Absent the development of 

such a plan, the Congress has in fact continued to support public 

broadcasting with annual appropriations at the levels indicated in 

figure 3. We agree with the Corporation that when the Congress 

deferred the development of a long-term financing plan at the time the 

1967 act was passed, it did not intend that federal funding for the 

Corporation would be discontinued. Congressional committee reports 

accompanying the 1967 legislation and subsequent reauthorization 

legislation suggest the need for ongoing federal funding to enable the 

Corporation to fulfill its mission.

3. We do not agree with the Corporation that our report implies that its 

policy decisions should be made on the basis of our survey of licensees. 

Although we recognize that the views of licensees are, by statute and in 

practice, central to the making of policy decisions by the Corporation, 

the survey served as only one source of evidence for our review. We 

determined that it was important to ascertain the views of licensees 

because we believe they are integral to the discussion of the statutory 

framework for federal support of public television and the 

Corporation’s funding programs and processes. The findings, 

conclusions, and recommendations in this report are based on several 

methodologies we employed to review the Corporation’s activities in 

support of public television (as described in app. I) including, but not 

limited to, the survey of public television licensees.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 128 GAO-04-284 Corporation for Public Broadcasting

4. We are not taking a position on the desirability or efficacy of the goals 

of the Television Future Fund. Rather, our opinion rests on the 

Corporation’s legal authority to use section 396(k)(6)(B) funds for this 

purpose. The Corporation misconstrues the plain meaning of section 

396(k)(6)(B). This provision does not authorize the Corporation to use

funds designated for distribution to public television licensees. Rather, 

section 396(k)(6)(B) sets out a distribution mechanism under which 

the Corporation distributes funds to public television licensees. 

Moreover, section 396(k)(6)(B) does not set out two statutory purposes 

for the use of these funds. Rather, section 396(k)(6)(B) provides two 

goals for the design of the formula under which the funds are to be 

disbursed. The formula is to be designed to provide for the financial 

needs and requirements of stations and to maintain existing, and 

stimulate new, sources of nonfederal financial support. The Congress 

has provided directions on the use of section 396(k)(6)(B) funds. 

Specifically, section 396(k)(7) provides that these funds “may be used 

at the discretion of the recipients for purposes related primarily to the 

production or acquisition of programming.”

5. While the Congress has been provided with some information on the 

Future Fund, the information does not clearly and consistently identify 

the funding sources for the Television Future Fund. For example, in 

testimony before the Committee on House Energy and Commerce, 

Subcommittee on Telecommunications and the Internet, the President 

and CEO of the Corporation made no reference to the Future Fund in 

his comments about grants to stations. However, the President and 

CEO did mention Future Funds when speaking about the System 

Support account (statement of Mr. Robert Coonrod, President and CEO 

of the Corporation for Public Broadcasting, July 10, 2002).1

 During the 

course of our review, we pointed out to the Corporation that the 2002 

annual report could be confusing because it defines TVRFF (Future 

Fund, Collaboration Fund and Small Station Fund Grants) as 

“Television and Radio Future Funds and System Support.” We were 

advised that the Corporation agreed that the definition might lead to 

confusion and that they would consider modifying the definition for 

future annual reports. Letter from Donna Coleman Gregg, Vice 

1

Specifically, Mr. Coonrod stated: “As advised by the stations, CPB established Future Funds 

for both television and radio. These are also funded through the System Support account, as 

the Future Fund programs are intended to improve the system of stations and its services 

overall.” (Statement of Mr. Robert Coonrod, President and CEO of the Corporation for 

Public Broadcasting, July 10, 2002.)
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 129 GAO-04-284 Corporation for Public Broadcasting

President, General Counsel and Corporate Secretary of the Corporation 

for Public Broadcasting to Mindi Weisenbloom, Senior Attorney, 

General Accounting Office, dated August 11, 2003.

6. Our review did not examine whether the make-up of the Television 

Future Fund advisory panels have adequately represented a crosssection of the public broadcasting community. We note that the 

Corporation intends to change the composition of the advisory panel to 

ensure a greater representation from across the station community. It 

also appears that the Corporation envisions that the panel will operate 

more as an investment board than as a consultation panel. Although the 

Corporation contends that the Future Fund plan has been regularly 

placed before the constituent elements of public broadcasting, our 

survey of public television licensees indicates a number of concerns 

about the program. For example, 42 percent of the respondents to our 

survey indicated that they had little or no knowledge about the findings 

and outcomes of Television Future Fund projects. Overall, only 41 

percent of licensees responding to our survey indicated that the 

projects had provided them with practical methods for reducing costs 

and/or enhancing revenues. The Corporation’s approach for funding the 

Television Future Fund program was another area identified in our 

survey as a concern for licensees. Only 30 percent of the responding 

licensees indicated that they favored the current funding approach, and 

one-fifth of our survey respondents indicated that the Corporation 

should cease all funding for the program.

7. We agree that nothing in the statute suggests that the Corporation’s role 

is passive. Section 396(k)(6)(B) provides the Corporation with 

discretion to establish eligibility criteria and a formula for the 

distribution of funds reserved by the Congress for public television to 

the licensees. However, this discretion must be exercised within the 

constraints of the provision. The Corporation must periodically review 

its eligibility criteria with the station community, and the formula must 

be designed to provide for the financial needs and requirements of 

stations and to maintain existing, and stimulate new, sources of 

nonfederal financial support. More importantly, the provision provides 

that the funds are to be distributed to licensees. Thus, under the plain 

meaning of the provision, these funds are not available for the 

Corporation’s use or for the Corporation to decide how the licensees 

may use the funds. Nor are the funds available for distribution to 

entities other than the licensees themselves.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 130 GAO-04-284 Corporation for Public Broadcasting

8. The statute specifies that it is the recipients of the funds, in other words 

the public television licensees, who have discretion over the use of 

these funds. Specifically, section 396(k)(7) provides that these funds 

“may be used at the discretion of the recipient for purposes related 

primarily to the production or acquisition of programming.”

9. GAO is not suggesting that the Corporation “pick and choose” stations 

for grants. Rather, under the plain meaning of section 396(k)(6)(B), the 

Corporation is to distribute the funds reserved to television stations on 

the basis of eligibility criteria and a formula. And under the plain 

meaning of section 396(k)(7), it is the licensees who have the discretion 

over the use of these funds within the constraints of the statute. The 

Congress has directed that the 396(k)(6)(B) funds be used “for 

purposes related primarily to the production or acquisition of 

programming.”

10. We disagree that the Congress has ratified the Corporation’s use of 

section 396(k)(6)(B) funds for the purposes of the Future Fund by 

continuing to make funds available for distribution under section 

396(k)(6)(B). “Ratification by appropriation” is the doctrine by which 

the Congress can, by the appropriation of funds, confer legitimacy on 

any agency action that was questionable when it was taken. However, 

this doctrine is not favored and will not be accepted where prior 

knowledge of the specific disputed action cannot be demonstrated 

clearly. GAO summarized the test courts have used to find ratification 

by appropriation in B-285725, September 29, 2000. 

 “To conclude that Congress through the appropriations process has ratified agency

 action, three factors generally must be present. First, the agency takes the action

 pursuant to at least arguable authority; second, the Congress has specific knowledge of

 the facts; and third, the appropriation of funds clearly bestows the claimed authority.”

All three elements are missing here. The Corporation does not have the 

authority to use funds designated for distribution to public television 

licensees to support the Future Fund. The Congress has not clearly 

been informed that the Future Fund is supported in part with section 

396(k)(6)(B) funds. Finally, the Congress has not in any way indicated 

that the funds it has provided to the Corporation for public television 

licensees may be used to support the Television Future Fund. 

Accordingly, “ratification by appropriation” is not applicable in this 

instance.
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 131 GAO-04-284 Corporation for Public Broadcasting

11. As noted in the report, in 1988, the Congress specifically authorized the 

use of system support funds “if the available funding level permits, for 

projects and activities that will enhance public broadcasting.” We are 

not reading this provision to “narrow” the scope of section 

396(k)(6)(B). At the time that the amendment was enacted, the Future 

Fund did not exist, and the Corporation was not attempting to fund 

projects and activities through section 396(k)(6)(B) but was 

appropriately distributing funds under this section directly to the public 

television licensees. In our view, section 396(k)(6)(B) funds were not 

then and are not now available to be pooled with System Support funds 

and used to support the Television Future Fund program.

12. The Corporation cites to a GAO decision for the proposition that 

multiple sources of funding to support a single program would be 

improper only if the Congress had intended one particular 

appropriation to be the exclusive source of funds. Matter of: Payment 

of SES Performance Awards, 68 Comp. Gen. 337 (Mar. 20, 1989). That 

analysis is inapplicable here. As a general rule, an appropriation for a 

specific object is available for that object to the exclusion of a more 

general appropriation unless there is something in the general 

appropriation to make it available in addition to the specific 

appropriation. See, e.g., B-272191, Nov. 4, 1997. 68 Comp. Gen. 337 

involved a case where an agency had two appropriations that were 

available for an expenditure. In those situations, an agency may charge 

either appropriation and must consistently follow that choice. Here, the 

Corporation is not faced with deciding between two of its accounts 

equally available for the purpose of the Television Future Fund. Rather, 

the Congress has specified that under certain circumstances, system 

support monies are available to the Corporation to fund projects and 

activities that will enhance public broadcasting, such as the Television 

Future Fund. As explained above, section 396(k)(6)(B) funds are not 

available for such purposes. Thus, the Corporation does not have the 

choice of selecting both accounts to pay for the Television Future Fund.

13. As noted above, under the plain meaning of section 396(k)(6)(B), funds 

designated by the Congress for distribution to licensees are not 

available to the Corporation to fund projects and activities. This does 

not mean that the Corporation could not coordinate or orchestrate any 

collective or centralized focus on large-scale systemwide projects. 

Clearly, to the extent that funding levels permit, System Support funds 

are available for such projects. Additionally, individual licensees could 
Appendix VII

Comments from the Corporation for Public 

Broadcasting

Page 132 GAO-04-284 Corporation for Public Broadcasting

exercise their discretion over the use of their funds to contribute to 

such efforts.

14. As stated in the report, under the plain meaning of the statute, section 

396(k)(6)(B) directs the Corporation to distribute the balance of funds 

reserved for television stations, after deduction of the basic grant, “to 

licensees of such stations.” Thus, the Corporation does not have the 

discretion to distribute these funds to other than public television 

licensees even if the purpose of the grant is to ultimately benefit public 

television stations.
Page 133 GAO-04-284 Corporation for Public Broadcasting

Appendix VIII

Comments from the Public Broadcasting 

Service ApendxiVI

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix VIII

Comments from the Public Broadcasting 

Service

Page 134 GAO-04-284 Corporation for Public Broadcasting
Appendix VIII

Comments from the Public Broadcasting 

Service

Page 135 GAO-04-284 Corporation for Public Broadcasting

See comment 1.
Appendix VIII

Comments from the Public Broadcasting 

Service

Page 136 GAO-04-284 Corporation for Public Broadcasting
Appendix VIII

Comments from the Public Broadcasting 

Service

Page 137 GAO-04-284 Corporation for Public Broadcasting

The following are GAO’s comments on the Public Boardcasting Service’s 

letter dated March 15, 2004.

GAO Comments We have edited language in the report to clarify that the funds needed to 

complete the Enhanced Interconnection Optimization Project of $12 

million to $15 million are separate from those to purchase the Next 

Generation Interconnection System.
Page 138 GAO-04-284 Corporation for Public Broadcasting

Appendix IX

Key Contacts and Staff Acknowledgments ApendxiIX

GAO Contacts Mark L. Goldstein, (202) 512-2834

John Finedore, (202) 512-2834

Staff 

Acknowledgments

In addition to those named above, Dennis Amari, Alan Belkin, 

Edda Emmanuelli-Perez, Colin Fallon, Michele Fejfar, Kevin Heinz, Logan 

Kleier, Randall Lennox, Omari Norman, Tina Sherman, Mindi Weisenbloom, 

and Alwynne Wilbur made key contributions to this report.

(545032)
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