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.

Chairman. We wish it were otherwise. We would continue to hope that our record of performance will help this Congress and other public bodies such as our legislators revise their judgments about the proportionate share of public resources which might go into a not-for-profit service which we professionally believe provides a return which is about as cost-efficient as any that could be delivered.

We believe that one way to get the $1.50 figure increased would be to get on with the task of doing the best we can. We should demonstrate that we are inherently a self-help organization. We are not going to be thrown by the short-term limitation on funds. Mr. VAN DEERLIN. You mentioned State legislators. In Mr. Steen's case, his State legislators are now under constitutional restraint, something called Proposition 13. What does that cost you, or what will it have cost you directly over a couple of years time?

Mr. STEEN. Over this past year it cost us somewhere in the neighborhood of $60,000 to $70,000 up front, plus the fact that no one received a salary increase. It is hard to tell what the impact will be in the future. It could be much worse.

Mr. ISELIN. The important point, I think, is that we develop alternative fundraising mechanisms. I would stress that it is essential we not treat fundraising as some sort of a pejorative activity. It is an honorable tradition to ask that the society participate in the perpetuation of important social instruments.

There has been a great deal of criticism, and I can understand why, of fund appeals over the air. But if you, in a sense, will look at the surveys of people who have been appealed to, you will find that the vast proportion of them find those appeals quite essential. They are both educational in terms of the nature of our institution and they are also important in that they help us keep in touch with the people we serve.

What I am saying, in effect, is that we should encourage a variety of fundraising techniques as an alternative to the fact that we cannot really anticipate as much money as we might like from the Federal coffers.

Mr. VAN DEERLIN. But questions of propriety aside-and I don't think that is a principal objection--isn't it obstructive to audience building to intrude too often and for too great a length of time with this "tin cup" approach.

Mr. ISELIN. It is a wonderfully self-corrective mechanism, Mr. Chairman. We have our own kind of marketplace. We are the first to learn when we are being counterproductive. Channel 13 has over 300,000 families who now support it regularly with an average contribution of almost $30. It provides 25 percent of our operating

revenues.

That fundraising constitutes roughly 1 percent of our air time. We do not do a great deal of fundraising. We have diminished in the past year the amount of air time we have put into it and found the amounts go up because we have been forced to improve our techniques. We have improved the educational message we put forward.

We have been learning, I think, to be good educators in terms of what it means to attract direct public participation. I would suggest that there is something very healthy here. Of course, we have

to improve our techniques. Many of us, for example, are now broadcasting a very different auction than we did, Bill, in the days of the 1972 washer and dryer. We have discovered that less air time with more educational components can attract substantially greater public support.

So I think we are learning. Our audience is forcing us to learn. We are finding that right now some of our highest audiences tune in during our fundraising weeks.

Mr. VAN DEERLIN. Mr. Press, I know in your area you don't go in for this at all. Are you under some kind of stricture in this regard or have you discarded the idea because you consider it unworthy? Mr. PRESS. No, we are under no strictures, Mr. Chairman. We decided it was inappropriate because where it led was to a shift in concentration from the viewer as client to the underwriter or whoever was going to give us the money as the client, which is a real distortion of our purpose.

We agree with Jay, there is nothing wrong with fundraising. As a matter of fact, it is a very honorable profession and a very great need of ours. But we think that on-air fundraising is very much like rattling a tin cup in a classroom. Universities also raise money. Money is raised for the cure and treatment of cancer, but I wouldn't want to be asked for that money as I was about to get a treatment for cancer as a precondition to getting that treatment. I think we can raise money in the many ways other organizations do, and some $30 billion a year is raised by charitable organizations in this country without using air time. We can use direct mail. We can use appeals to industry for contributions. And I think ultimately we would be able to raise the money we need. It might or might not be quite so much, but as long as the pressure is on to raise the money on the air, the only way to increase that amount of money is to increase the audience. And the only way to increase the audience for certain is to provide more common denominator, more entertaining programs, more programs very much in the mode of commercial television.

I think we would very quickly lose our sense of mission in this regard, and this is a thing which I think it is so terribly important to try to keep.

Mr. VAN DEERLIN. Is Mr. Press the only purist in the group? How do the rest of you feel about this? You all do it, I suppose, which answers the question.

Mr. STEEN. I would take a position somewhere in the middle, I think.

Mr. VAN DEERLIN. That sounds like San Diego.

Mr. STEEN. As a university licensee, I would have a little trouble in going so far as blatant commercialism, I think. And yet, as you well know, we do do a fair amount of fundraising on the air, although we too have curtailed our membership activity, actually, to three periods now this last year, and we actually did better than we did before. So I think that can work.

My concern would be, as I expressed in my comments, that I think the road to blatant commercialism is a very troubling one. I think there are some things, however, that can be done that would help this whole finance problem. One of them would be to relook at the underwriting rules. I think they probably could be liberalized