for the lack of a better title, a grantsman/salesman relationship to the endowment.

This new profession will be expensive, further draining the resources, the meager resources already directed toward programing. Since it is probably good judgment to provide most of the grant dollars to production centers with proven records of performance, the lion's share of the funding would go to the larger centers presently in existence. The centers will grow larger and more expert at the expense of dwindling local service by smaller stations, with a consequent lessening of the diversity in the system.

Diversity by definition is a reflection of the variety and differences in our great country, and while the charge can logically be leveled at our industry that we have failed to achieve this worthy goal, it seems that such an accomplishment presently is clearly impossible given the current level of funding.

However, with the level of funding proposed in the act, if that money was used in a slightly different way, other opportunities are apparent. If local stations were funded on a matching basis, we would see a diversity of nationally and locally produced programs unparalleled.

Mr. Chairman, both Bill McCarter and Jay Iselin have touched on the very creative offering of commercial sales in public television. I will have to tell you that I was a very early supporter of what I called commercials Italian style, which I believe were first seen in Italy with the 30-minute per night commercial program. I believe it is a creative offering to public television, one that gives us the opportunity to experiment and perhaps to develop a system to help ourselves, which is not now apparent.

The one thing that both Bill and Jay have said which is quite true is that we have reached the point in our industry that we simply do not have further places to go that, at least in our own lack of creativity, we have not been able to develop additional methods of funding.

However, I will have to say that after a long reflection on this proposal of which I was an early supporter, I am very concerned that if that proposal is implemented, we are going to see a violation of the integrity of public television across the country, and that does concern me. I think this is intrinsically tied in with the funding method of the endowment, with the kind of division of the basic grant, the amount of that grant to the station.

I think we are going to see stations unavoidably unable to maintain an income level that will fund their operations. They are going to be forced, I believe, through this commercial process, to seek greater audiences, and with greater audiences go the Mork and Mindy mentality. I am very concerned that while this process might not take place not in Jay's market, not in Bill McCarter's market, but perhaps will in New Orleans and perhaps the smaller markets of the country. This might very well be a disaster that looms ahead.

I simply raise that specter as one to be considered.

I commend this committee on the innovative thinking that went into this legislation. I am personally very pleased that public television has raised itself to the stature in this country that we are to be included in the rewrite act as a separate piece.

Mr. Chairman, I thank you for the opportunity to be here and I express my appreciation to the committee for their work. Mr. VAN DEERLIN. Thank you, Mr. Hart.

Mr. Press.

STATEMENT OF O. LEONARD PRESS

Mr. PRESS. Mr. Chairman, I am afraid I may sound less gracious than my colleagues, but I knew I could not be more so.

Mr. VAN DEERLIN. Well, let's give him a microphone from which to sound less gracious.

Mr. PRESS. That is particularly gracious of you, sir, to give me a microphone with which to be less gracious, but in the few moments I have, I thought perhaps I could speak more usefully to what appear to me to be areas of concern than to the very bold and imaginative initiative this bill clearly represents.

First, H.R. 3333 proposes to distribute station grants to stations proportionate to their population, and further, to divide the funds within a State among the stations or licensees. I am not clear about which, stations or licensees, but in either case, such a distribution plan may very well have the effect, although certainly unintentional, of penalizing those States with sparse, widely scattered populations, which have the greatest need and which have made the greatest efforts to meet those needs.

Kentucky is just one example of the States that have built extensive State networks in order to help raise depressed educational levels and to reach out to communities which will never be able to afford their own public stations.

I would like to commend the committee, Mr. Chairman, on the emphasis on instructional uses of television in your bill. I am particularly pleased and gratified by that, as are all of us, particularly in the State systems, who concentrate on that area. But while the present CSG matching process certainly has imperfections, I do not think that this incentive feature should be completely abandoned.

A better way has been suggested today and previously. Make a direct match to each licensee based upon its non-Federal income rather than on the system's non-Federal income. I do believe such a direct match could have a galvanic effect on State appropriations to public broadcasting.

Second, the authorization proposed by H.R. 3333 seems to put a relatively low cap on Federal support with little or no growth. potential, which has been mentioned. More disturbing, I think, is that the balance has shifted with an effective decrease in support to licensees and a major increase of funds to the national program endowment.

This seems to me terribly much the wrong way to go. While H.R. 3333 may prove to provide improved insulation from official Washington through the program endowment, it also appears to provide insulation from the rest of the Nation. I sincerely believe that no single centralized programer or agency, even with the collective input of a panel of selected advisers, can assure that insulation or that sensitivity to the diversity of national population that the multiplicity of local licensees can.

I do think the national program endowment has a very important role. I think the question is one of how limited the role should be, and I would like to respectfully suggest that the proportion of any Federal appropriation should be more on the order of twothirds in direct match to licensees and one-third to the national program endowment.

Finally, H.R. 3333 proposes limited commercialization. I submit, sir, that we have already gone much too far down this road. I quote from the subcommittee's staff analysis, which says, "The sale of paid announcements is essential to the preservation of the distinctive role of the nonprofit stations."

This seems to me a strange and certainly paradoxical point of view, because it seems to me that nothing is as certain to destroy the distinctive role of the nonprofit station as this proposal. Admittedly, the sale of air time is the most effective way to raise money. What better example, as a matter of fact, than commercial television?

But in terms of trying to maintain our distinctive role, I could also say what better warning?

Thank you again, sir, for this opportunity.

Mr. VAN DEERLIN. Thank you, Mr. Press.

Now, of course, the witness to whom I will really listen attentively, my constituent Mr. Steen.

STATEMENT OF PAUL STEEN

Mr. STEEN. Thank you, Mr. Chairman and members of the subcommittee.

I am the general manager of KPBS-TV and KPBS-FM in San Diego, Calif. I am also director of university affairs at San Diego State University-the university which holds the license of both stations in trust for the Greater San Diego community. The KPBS stations are the heart of a telecommunications complex that includes an SCA or subchannel service, a 16-hour-per-day, 7-day-aweek radio reading service for the print handicapped and the severely disabled, and also a three-channel instructional television fixed service interconnected with a head end of the major cable systems in San Diego, which by fall, with additional links will tie San Diego State University to the Imperial Valley campus as well as North County.

While the KPBS stations are supported in part through the university, more than 80 percent of our $2.5 million operating budget is generated outside the university, through more than 28,000 member families, an annual auction, corporate underwriting, grants and contracts, and of course, our community service grant from the Corporation for Public Broadcasting.

I cite this background on the KPBS stations to underscore two important points. The first is that KPBS, like many other stations, is and has been developing the capability for using alternative technologies as a means for serving specialized audiences through specialized services.

The second point is that the development of a telecommunications complex is possible only through the combined resources of the heart of that complex, the stations. Without the ability to generate funds through a diversity of sources, including the criti

cally important community service grants and the broadcast facilities program, these services would not be available in San Diego today.

I am fully supportive of the creation of an endowment for program development. There is no question about the need for stable, adequate, funding for national program production. That need is emphasized throughout the Carnegie Commission II, the recent reorganization proposal of the Corporation for Public Broadcasting, and by the recent work of the stations and Hartford Gunn on longrange planning for the Public Broadcasting Service.

I have great concern, however, that the Communications Act of 1979 provides for the creation of an endowment for programing but does not maintain a direct support mechanism, not unlike that in the present legislation, designed to foster the development of the local stations and its diversity of need, as well as provide national leadership.

An endowment for programing without basic station support and without the wider responsibilities presently supported by the Corporation for Public Broadcasting-such as the community service grants, satellite interconnect, and minorities, women's and in service training grant programs-when coupled then with the apparent demise of the broadcast facilities program, provides the prospect of a system out of balance with the overall needs of public broadcasting.

Presumably, allowing public broadcasting to engage in advertising in the form of cluster commercials was intended to address this problem. But this idea is to me philosophically unacceptable and in all likelihood impractical in all but the very largest markets.

To subject alternative public broadcasting to the marketplace forces that drive commercial broadcasting is to unalterably woo it toward programing decisions destined to attract the largest possible audience, and, therefore, a program service quite different from that which is offered today. We should be striving for excellence, diversity and substance in our program efforts, not driven by the need to attract mass audiences for commercial purposes.

A financing strategy based only on the authorization of $1.50 for each person in the United States leaves the needs of the system inadequately funded, without guarantee of adequate appropriation or even long-term authorization. Moreover, it is a strategy unrelated to the specific needs of the system and unrelated to the value of the system as presently evidenced by the contribution of local, State, corporation, and foundation funds.

I urge a Federal financing system that provides for adequate funding levels both for programs and for station operation while maintaining the insulation, diversity, and incentives for other than Federal support that are so critically important.

While I applaud the several recommendations of late for substantially higher funding levels, I am convinced that whatever the funding levels, they must be subject to the decisionmaking processes of the local stations and not centered solely in a central bureaucracy. It is the stations which are responsible for raising matching funds. It is the stations which are responsible for ascertaining community needs and interests. And it is at the grassroots station

level where programing decisions should be made if we are truly concerned about insulation and accountability.

I urge the committee to work with us on a financing strategy that recognizes the needs of the local station through an equitably distributed and adequately funded system of community service grants. I further urge consideration of a direct station match which continues the incentives of local, State, and foundation and corporate contributions.

And finally, I urge the continuation of adequate funding for our facilities programs, support for equivalency between UHF and VHF, and support for the basic ability of the stations to produce programing for distribution on any and all appropriate distribution systems.

I thank you also for allowing me to share these thoughts with you today.

Mr. VAN DEERLIN. Thank you for coming to do just that.

Before asking you to comment on the views expressed by one another, I would like to ask Mr. Press if he would consult his notes. You undertook to quote from the staff analysis of H.R. 3333. I believe you remonstrated with the staff analysis for having offered the selling of commercial time as a means of preserving the distinctive qualities of public broadcasting.

[Mr. Press nods affirmatively.]

Mr. VAN DEERLIN. What the report says is: "By restricting advertising as provided in this section, the distinctive nature of this alternative broadcast service can be preserved." They meant by clustering it in not more than three portions of broadcast time per day and refusing to permit the interruption of programing for commercial time, that it would not intrude unduly on the programing. Now, this may be a mistake in judgment. The entire proposal may have the shortcomings that the later witnesses alluded to, but this is one case in which staff seems to have been justified in its use of the language rather than the way it was quoted in your testimony.

Do you understand that difference?

Mr. PRESS. Yes, sir; I do. I understand what you are saying and I am glad to hear that interpretation of what I read.

Mr. VAN DEERLIN. Fine. One question that is raised, of course, by the suggestion for the $1.50 per capita base for public funds is that it would be based upon the total population. Of course, the total population is not yet served by public broadcasting. It would be taxed equally for it, of course. The amount that would be raised immediately would be about half of what the Carnegie Commission sees as the Government's contribution by the year 1984, was it? Mr. HART. 1985.

Mr. VAN DEERLIN. 1985. I would like to have some discussion among the panelists. Assuming that my view is correct-that the Congress I see gathered about me is not going to be handing out $560 million a year in the foreseeable future-how are we going to bring this off? How are we going to get the financial support that this system so clearly needs to do the kind of job it can do? Who would like to be first?

Mr. ISELIN. I will volunteer because I think we all-at least those of us in New York/Newark-reluctantly share your judgment, Mr.