This report profiles public broadcasting's present status and projects its financial prospects for the next decade.

PROFILING THE PRESENT

In Fiscal 1976, public broadcasting completed its first decade of Federal support for its operations. Public broadcasters operated more radio and television stations than ever before and surpassed all previous figures for hours of programming, audience and income; yet they still faced many problems which have existed since the passage of the Public Broadcasting Act in 1967.

A review of public broadcasting's financial status in Fiscal 1976 (the last year for which full, though unaudited, preliminary data exist) and an analysis of the trends producing that status can provide the basis for projecting what the future may hold.

Public Broadcasting Income

Public broadcasting's total income---about $412 million---can best be analyzed by clustering sources under three general headings: Federal; Non-Federal, Tax-based; and Non-Federal, Non-Taxbased (Table 1).

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Federal sources include not only the Congressional appropriations for CPB and the EBFP but also grants from other Federal agencies, such as the Office of Education of HEW, the National Endowments for the Arts and for the Humanities, and the National Science Foundation. In Fisc] 1976, Federal sources accounted for almost 30% of total public broadcasting income.*

Non-Federal, Tax-based sources are dependent upon taxes levied by state or local governments and come either directl or through community or state colleges and universities. Due to the nature of public broadcasting licensees, funds from different sources in this category are often interrelated. In Fiscal 1976, Non-Federal, Tax-based sources were the largest category of public broadcasting's income, providing over 40% of the total.

Non-Federal, Non-Tax-based sources of income include private college licensee support, grants from businesses and foundations, and direct support of public stations by viewers and listeners through subscriptions, auctions, and other direct fund-raising efforts. In Fiscal 1976, NonFederal, Non-Tax-based sources provided over 30% of the incone for public broadcasting.

The basic source of data on local income is the annual report of financial data filed with CPB by licensees and other public broadcasting entities.

The 1976 income sources were reported according to standards concerning income and its valuation worked out under the Public Broadcasting Financing Act of 1975. In order to identify patterns of change in public broadcasting's income, consistency in data is required. To make Fiscal 1973-1975 data consistent with the 1976 figures, adjustments to the previous data were made for elements of institutional support and non-broadcast income which were not reported in those years. These adjustments bring the 1973-1975 data closer to the real total income for those years than was shown in those years' annual reports. Once adjusted for consistency, the numbers can be used to develop trends in income for the period, Fiscal 1973-1976 (Table 2).

* Since the Fiscal 1976 data are preliminary and as yet unaudited, some changes may occur before final certification. Even so, the changes should be minor.

Source: CPB Data based on annual financial reports of public tele-
vision and radio licensees and other organizations.
Data for Fiscal 1973-1975, based upon calculations of
institutional support and non-broadcast income for
these years.

Figure I illustrates how the different categories of income have grown at different rates. The Federal share of total income has grown consistently during the 1973-1976 period, while the Non-Federal, Tax-based income has declined. Non-Federal, NonTax-based income about held its own as total income rose. The most substantial increases in the Non-Federal, Non-Tax-based category have been in the income from subscribers and business; this voluntary income of public broadcasting has not only grown but also diversified.

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Rapid inflation characterized the 1973-1976 period. understand public broadcasting's real growth during this period, it is necessary to correct the adjusted income data for inflation (Table 3). In constant dollars, public broadcasting's income for 1973-1976 grew less than 21%, or at a rate of about 6.5% compounded annually; this is significantly less impressive than the current dollar growth of almost 55%, over 15.5% per annum. In fact, Non-Federal income actually lost ground to inflation between 1973 and 1974, and Tax-based, Non-Federal income actually declined in constant dollar terms during the three-year period. The bulk of Non-Federal income growth has been in Non-Tax-based income and most of that--indeed most of the growth in total income---took place between 1974 and 1975.

Source: CPB Data, same as Table 2; Bureau of Labor Statistics Figures for CPI.

After correcting for inflation, the importance to public broadcasting of its Non-Federal, Non-Tax-based income becomes obvious. Since Non-Federal, Tax-based revenues actually declined when corrected for inflation, the basis for increased Non-Federal income for public broadcasting during the period 1973-1976 was its voluntary support, independent of taxation. Given the principle of relating Federal funding to Non-Federal income, this voluntary support was thus the basis of increasing public broadcasting's income, Federal as well as Non-Federal.