THE COMMUNICATIONS ACT OF 1979 WEDNESDAY, JUNE 20, 1979 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The committee met, pursuant to notice, at 9:30 a.m., in room 2322 Rayburn House Office Building, Hon. Lionel Van Deerlin, chairman, presiding. Mr. VAN DEERLIN. Good morning. Today we begin the last lap of the hearings on the rewrite of the Communications Act, beginning 4 days on public broadcasting. The markup of this legislation will begin the first week after the Fourth of July recess, to wit, on Wednesday, July 11. I think the only adjustment in the markup schedule will be to eliminate the Monday session so we can be certain of the fullest attendance of members. I know that a great many people involved in public broadcasting are concerned as to whether public broadcasting should be included in omnibus legislation or whether we should ride awhile with the Public Telecommunications Financing Act of 1978, which we passed at the end of the last Congress. It seems to me that the real interest of public broadcasting may better be served by keeping it as part of the main package instead of taking chances on what might occur later. In order this morning to get into some of these subjects, we are going to lead off with a panel of public television station managers, who will comment on the legislation as it relates to their operations. The panelists are William McCarter, president/general manager, WTTW in Chicago; John Jay Iselin, president of WNET, New York City; William Hart, president and general manager, WYES in New Orleans; Leonard Press, executive director of the Kentucky Educational TV; and Paul Steen, general manager, KPBS in San Diego. We have asked the panelists to be prepared to discuss a number of questions. What are the advantages and disadvantages of the proposed changes in the Federal contribution to public broadcasting, that is, the creation of the endowment, the method of setting the authorization levels, basic program grants, et cetera? Could existing limitations on the ability of the public television stations to generate non-Federal revenue be reduced without undermining the distinctive nature of the service? If so, in what way? What specific changes, if any, might they suggest in the approach taken by H.R. 3333? We have asked each of the witnesses to make a brief opening statement. Then there will be an opportunity for any discussion they might undertake among themselves, and then finally questioning by members and counsel. Will the panelists take their places? Mr. McCarter, if you will lead off, we welcome you all to the subcommittee. STATEMENTS OF WILLIAM MCCARTER, PRESIDENT, CHICAGO PUBLIC TELEVISION; JOHN JAY ISELIN, PRESIDENT, WNET13, NEWARK/NEW YORK; WILLIAM HART, PRESIDENT/GENERAL MANAGER, WYES-TV, NEW ORLEANS; O. LEONARD PRESS, EXECUTIVE DIRECTOR, KENTUCKY EDUCATIONAL TELEVISION (LEXINGTON); AND PAUL STEEN, GENERAL MANAGER, KPBS-TV, SAN DIEGO Mr. MCCARTER. Mr. Chairman, I am William McCarter, president of Chicago Public Television. I am delighted to appear before the committee and speak to what I think are the imaginative and fresh air proposals contained in the public broadcasting section of the Communications Act of 1979. Public broadcasting across the country is a solid success. As a cost-effective enterprise, it is a long-running hit, as Congressman Russo knows, in our district. And in Chicago the audience has grown in public broadcasting by over 1 million homes in 5 years. It is a vital part of the community across the board. One week ago the station was recognized by the Television Academy for winning more Emmy awards for local programing than any other station in the city outside of nightly news competition. However, the income devices available to us force us to operate at one-third the budget of a major commercial network station in our city. Now, despite the occasional pep rally rhetoric, the system's feeble income base has been stretched to its limit. Most sources have plateaued. System income growth in American public television has stopped cold. Some income devices are slipping badly, and although subscription income is considered a strong device, six healthy stations have lost over 20,000 subscribers in the last year. The net effect of this situation is the American public broadcasting income machine has ground down to a halt at the $500 million level in 1979. As an aside, Federal support hovers at the $160 million level. Pretax profits of one commercial TV network were $187 million last year. H.R. 3333, the rewrite, takes a bold, imaginative, and thoughtful cut at the core of the public broadcasting problem in the United States. The rewrite seems to say this: We are not getting anywhere. The rewrite seems to say we are not closing at all on the generally accepted Carnegie minimum base of $1.2 billion. The rewrite seems to say a new infusion of ideas is needed, and not having heard any from the broadcasting sector, we will try. The rewrite seems to say: First things first; concentrate on program development at all levels. The rewrite seems to say the local public broadcasting stations are the bedrock of the system and it makes a bold attempt at making them more self-sufficient. If the rewrite had an illustration or art work or, indeed, a caricature, it might look like this. On one end of town, a rather handsome building. In any American city you have a commercial television station. There is a sign on the door, depending on the network, that says, "Sold out. Don't call us, we'll call you.' At the other end of town, up a graveled driveway, is a rather seedy building. And out on the lawn is a fellow who calls himself the station manager. He is standing next to a stump with a hat and auctioning off a rusty 1972 washer and dryer. Indeed, we have enjoyed these comparisons over the years. They have been the source of humor. And yet, despite this caricature, public broadcasting is expected to produce the great drama, music, and documentary for the Nation, and often does, on the proposed endowment of $1.50 per capita. I would react that it is an imaginative, objective approach deserving serious study. Indeed, the able new management at CPB has already sensed this and is moving in similar directions. Important to this proposal, however, would be continued multiyear funding, which we have fought so hard to attain, perhaps incorporating the matching incentive to keep the stations earning their way through performance. I would consider the dividing of the fund perhaps into halves rather than into one-third/two-thirds, and holding to the timeproven CSG formula for distribution. On the limited advertising plan: Again, a thoughtful and imaginative plan which, despite initial detractors, has already had an impact on the public broadcasting funding thinking. Again, the rewrite seems to say we haven't heard much from them so we will come up with something. We have to applaud that. If you look at one end of the spectrum you see an advertising plan that could emerge much like the one proposed. At the other end of the spectrum, already there is much activity to liberalize the underwriting rules of public broadcasting. If you begin to move the two toward the center, we could have something rather attractive if we just give the idea time to breathe. Although income potential appears limited, a recent survey of 50 representative stations-a survey only 10 days old, with one-half the returns in-indicates that 50 percent of the stations would favor a 1- to 2-year experiment by a few selected stations, and those represent responses from stations from all kinds of funding bases, many of which would probably not use the device but are certainly studying it. Next, a bold, non-Federal income source examination. You will hear several fears expressed regarding this legislation, particularly this one piece regarding limited advertising. Many will be real, many will be imagined. What I fear far more is that the great promise of American public broadcasting, now poised to offer so much, will be further enfeebled by research and rhetoric and slowly smothered from the lack of a serious funding base. This feeble state will force further erosion of our air with tasteless and incessant begging, watered down program product, and the gradual loss of our best and our brightest. It will happen. I applaud the overall spirit, initiative, and imagination and, indeed, the fresh air of the rewrite language, particularly the public broadcasting provisions, and urge much continued study and refinement, and I thank you for having the opportunity to appear here, Mr. Chairman. Mr. VAN DEERLIN. Thank you, Mr. McCarter. STATEMENT OF JOHN JAY ISELIN Mr. ISELIN. Mr. Chairman, my colleague from Chicago has anticipated my remarks and stolen my lines. I could probably speed things up by saying "ditto." But perhaps I can also underscore that spirit of anticipation and optimism Bill has so well expressed. It comes very close to exemplifying our own feeling. We too think that this committee has under your leadership, sir, exemplified a positive and constructive approach toward public broadcasting. You clearly believe that public broadcasting, as an important part of the Nation's communications system should actively and positively serve our society. We are very encouraged by the progress we have been able to make. We have only one caveat: The needs of this country still far, far exceed our reach. That reach is substantially limited in a financial sense-not for lack of talent or lack of an understanding. We still face the classic shortfall of being undernourished and unable, frankly, to do what so many of us believe is essential for the future of this country. This committee has, I think, grappled with that conundrum with imagination, perseverance, and tenacity. It is thus an honor to be here today. I believe that this committee has sought to help us think through how we can develop an economic model that conforms to the ethic of our society, and, at the same time, deliver a range of programing services that are seriously needed. When I refer to the ethic, I believe that public broadcasting should always be independent; its obligation is to the public it serves. In receiving support from various sectors of society, we have got to devise techniques to keep that support unencumbered. It has been a key dilemma from the day the proposition of Federal funding was first put forth: How to provide Federal support without, at the same time, encumbering our basic obligation to serve the public rather than any special interest funder? That conundrum applies equally to other sectors of society we have begun to invite in to help us build a dependable funding base. This bill, in my opinion, advances that effort. It advances the effort because it further challenges us to think about techniques for attracting support for public broadcasting. In the first place, it acknowledges a political fact of life. There will not be, at least in the foreseeable future, the amount of Federal support that many of us have hoped for. It establishes, we believe, a worthy target in identifying $1.50 per capita as an interim goal to pursue. More than that, it does something very important. It challenges us to think about fresh techniques. They could be deployed under guidelines well and carefully designed to attract other sectors of society to participate in the full funding of a venture. In this sense, I second the remarks Bill has made about the imaginative and creative introduction of the clustered advertising concept. We think of public broadcasting, quite honestly, as a notfor-profit system. It places us within the classic third sector of society. It is a concept that de Toqueville introduced when he first came to these shores. He identified both public and private sectors but also an important voluntary third sector. It has from the very early days of this country worked innovatively and creatively to solve social problems. There has always been a not-for-profit sector, whether it is universities, schools, hospitals, libraries, or museums, and now, public broadcasting. It is a not-for-profit principle we adhere to. If I may say so, I am less concerned about our noncommercial designation. We have to somehow or another generate a lot of money. The money has to go into our product. It is a product of excellence which has to go back to the public we serve. I think sometimes we get confused by the synonymous use of those two terms. So there is, I think, an understandable confusion on the part of many good friends of public broadcasting and other practitioners in this third sector. They say: "My goodness, advertising means you must clearly be a profitmaking institution subject to profit-and-loss statements." That is not what we are saying. What I hear the committee saying is that this proposal will enable us to invite the participation of the private sector on a limited and controlled basis to assist a not-for-profit broadcasting organization. So we applaud the initiative of this committee. We believe the rules and regulations that would have to govern any kind of a clustering of advertising would have to be fully and carefully devised so the not-for-profit aspect of the system was maintained. But we believe above all that the proposal has challenged us all to think about a variety of means of completing our funding package. If the Federal sector is going to be an important but minority contributor to the total funding package, we have got to continue to develop our own kind of not-for-profit but nevertheless a moneymaking marketplace. We have indeed had to work for a living, we must engage in that voluntary self-help ethic of finding the resources to do the job that has to be done. Whether it is through appeals for direct public support, whether it has been diligent solicitation of gifts from foundations and corporations, whether it has been working at honorable means of attracting corporate underwriting, we have begun to put together a diverse and, I think, healthy funding base. What we need is to keep working at it. Our belief is that this committee, through its challenging legislation, has furthered that process. I have just one critique I would like to stress. I think that there may be a contradiction in at least one provision of the legislation. I refer to the endowment which uses a population formula as the key to an initial distribution of funds. As you know, the endowment would first distribute funds to the States. They would go to States in proportion to their size, and each State would divide 80 percent of the available funds among the television stations in that State. We have tried to work out the implications of this formula. It has seemed to produce a number of |