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Two assumptions were made in calculating the allocations:

1) that public broadcasting expenses and income can be treated as equal over time;

2) that the data reported from annual financial reports to CPB provide a satisfactory base from which to calculate the costs of both purely local services and services performed at local stations for national purposes; and furthermore, that experience allows these data to be refined to categorize some expenses beyond the detail required by the reports."

In analyzing the allocations of public broadcasting resources, three points are apparent:

1) The bulk of public broadcasting's funds go into programming and its direct support. Of the total system's resources, two dollars out of three (and three of four operating dollars) go directly into the production or acquisition, the distribution or broadcast, and the promotion of television and radio programs. This shows a high concentration by public broadcasting of resources directly on its single product.

2) The national elements of public broadcasting are even more concentrated in their focus on programming than those on the more diversified local level. Almost 85% of the resources expended by public broadcasting on the national level is concentrated on programming and its distribution and promotion.

3) Public broadcasting does not have an excessive overhead. The category of System Administration, Expansion and Improvement includes not only classic "G & A" management costs, but also national efforts at planning, technological research, personnel training (including equal opportunity programs for women and minorities), and coverage expansion. Less than one dollar in five of the system's resources goes into this broad management and improvement category

The Facilities Program

The allocations figures indicate that about one public broadcasting dollar in nine is spent on capital goods. The Educational Broadcasting Facilities Program (EBFP) of the Department of Health, Education and Welfare has provided important capital support for both the expansion and upgrading of public television and radio since 1963 (Table 8).

*To check on these assumptions, more than 10 percent of the local station managers in both radio and television were questioned regarding the refinement problem.

Source: DHEW

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There has been a substantial increase in Facilities Program funding since Fiscal 1973. About one-third of all EBFP money disbursed since its beginning was expended during the Fiscal Years 1974-1976, while the average grant in both media was also generally higher than before.

EBFP funds have been used to upgrade many public television stations to color capability in the last few years. This should continue, while EBFP grants can also be expected to be used to improve transmission in many areas over the next few years. In Fiscal Years 1973-1976, the EBFP granted nearly four times as many dollars for television facilities improvement as for the activation of new services. On the other hand, in radio almost 40% of radio grants during the same period supported the activation of new stations.

EBFP grants have never covered all the facilities requirements of public broadcasting. Total EBFP grants in Fiscal 1976 provided only one-quarter of the funds requested by the proposals processed. In fact, the total requested in each year's unfunded EBFP applications has for a decade consistently exceeded public broadcasters' capital expenditures in that year. In a consistently under capitalized system the bulk of funds for facilities has thus had to come from sources other than the EBFP.

Summary of the Profile

Public

From reviewing all these data, a picture emerges. broadcasting income has increased in the 1970's; since Fiscal 1973, Non-Federal, Non-Tax-based income has grown faster than Non-Federal, Tax-based income. Public broadcasting appears relatively efficient in focusing its resources on the programming for which it was created, despite remaining under-capitalized and committing a high proportion of funds to the base costs of maintaining a diversified and decentralized system.

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PROJECTING THE FUTURE

This picture of the present status of public broadcasting, and of the trends leading up to it, provides the basis for projecting the future. Projections will be made in three

areas:

1) Public broadcasting income;

2) Public broadcasting's allocations of resources;

3) The impact of Federal funding on public broadcasting's prospects.

The Growth of Public Broadcasting

In order to project public broadcasting's income, an estimate must be made of the number of new stations to begin operation. The number of public stations continues to grow. This growth has been rapid in the 1970's and can be expected to continue into the mid-1980's. Furthermore, the satellite interconnection system---expected in Fiscal 1979 in television and in Fiscal 1980 in radio---should help encourage continued growth by providing more flexible distribution for expanding programming services (Table 9).

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The decentralized structure of public broadcasting prevents an accurate projection of the impact of the additional new stations on population coverage. Based upon the patterns of increase in stations, however, public broadcasting's continued growth in the next decade should add about one percent a year in income.

Income

Recent financial trends can be used to develop projections of public broadcasting income into the mid-1980's (Table 10).

Tax Based
Non-Tax-Based

$185.0 $199.8 $215.8 $233.1 $251.7 $271.9 $293.6 $317.1 $342.5 147.3 168.0 190.1 209.5 231.4 253.1 275.4 299.1 324.2

TOTAL INCOME $486.8 $546.3 $605.3 $663.3 $777.5 $845.9 $919.3 $996.9 $1079.3

Federal Match ratio 2.5:1 through Fiscal 1980, 2.0:1 from Fiscal 1981 on.

Source: Task Force Projections