That sudden cacophony of clanking ceramic coming out of Washington, DC, last month was the sound of matching NewsHour coffee mugs coming together in toasts. Public broadcasters dodged a budget bullet on the Hill, but the impending financial squeeze is far from over for them.
Congress rejected a proposal to take back a $15 million piece of public broadcasting’s regular appropriation, which was originally allocated in 2001. (This is comparable to donors getting caught up in the glamour of the fund drive, only to flee in fright from the follow-up phone calls and letters.)
Public broadcasting will get a regular appropriation of $362.6 million this year ($2.4 million less than Congress approved in 2001, instead of $15 million less). Additionally, President Bush is looking to cut advanced federal funding for 2004 by $100 million, or 20%. Factor in state-level deficits, declining membership rolls, and reduced underwriting, and the impact grows.
What does that mean to you, dear reader, if you’re a broadcast vendor? It means your most consistent customer throughout the DTV transition is facing a hefty financial blow. The good news is that capital outlay for digital compliance is for the most part unaffected. The bad news is that additional investment in HD origination, digital cameras, studio equipment, and automation will diminish.
Why, you might wonder, would a trade magazine that is struggling to stay alive (like many of you) be such a beacon of glad tidings? Because you need to know what public broadcasters are facing. Out of 1,688 broadcast licenses, around 360 are for public television—21%. Vendors tell us that percentage roughly equals the amount of sales public broadcasters generate.
Trades generally ignore public broadcasters, instead preferring the flash of the commercial networks. But this segment of the TV industry does buy equipment—lots of equipment—and we all know that it has contributed mightily to the survival of the vending community through the digital transition, when the promises of the FCC and much of the commercial sector turned out to be so much bunkum. With equipment sales translating to R&D dollars, everyone should care what happens to PBS.
Ah, The Budget
Federal funding accounts for about 15% of the entire budget for public broadcasting, said John Lawson, president and CEO of the Association of Public Television Stations. That percentage varies at the station level, anywhere from 6% to more than 50%, depending on market size and other resources. The 2003 federal pipeline breaks down as follows:
*A two-year advanced regular appropriation of $362.6 million. This funding generally goes toward operating costs. Donors rarely underwrite three days worth of electricity.
*The Corporation for Public Broadcasting (CPB) digital transition fund. CPB requested $137 million. After considering as little as $25 million, the Hill approved $48.7 million.
*The Public TV Facilities Program (PTFP). The total requested was $110 million; $43.5 million was allotted.
*Additional educational funds total $37.5 million.
The 2003 budget has been a particularly sticky wicket for public broadcasting. First of all, DTV funds were supposed to be cut loose last October. Congress didn’t get around to that until last month, meaning grant makers didn’t know how much money they would have to parcel out until one month before disbursements were due. Those disbursements to stations were due in March, just two months before the May 1 digital deadline. As of mid-February, more than 91 out of 357 public stations were digital.
Even with the delay, Lawson estimated that 80% of all public stations will make the deadline, but many with minimal compliance, given that the digital appropriations were less than half of the amount requested. (And boy, do public broadcasters like to remind us who called for digital conversion in the first place.)
"Whether 60% or 80% [of stations] make the deadline, they’re looking at low-power or side antennas," Lawson said. "Making the deadline doesn’t mean their transmission infrastructure needs are met. There’s a huge need for master controls, production equipment, and switchers. When we talked about the higher numbers in the request, it was about originating digital TV."
The proposed $15 million cut to this year’s funds would not have affected digital construction so much as light bills—general appropriation funds are typically used for operations. President Bush has proposed that $100 million be cut from the general appropriation next year to pay for the digital conversion fund. It would hit at a time when stations start getting power bills bloated by digital transmission.
In Nebraska, for example, where electricity is fairly cheap, Nebraska Educational Television (NETV) projects the following additional operating costs incurred from cranking on its digital transmitters:
*FY 2003—$470,000 (July 2002 to June 2003)
*FY 2004—$649,000 (Transmitters on 50% of analog schedule)
*FY 2005—$778,000 (Transmitters on 75% of analog schedule)
*FY 2006—$908,000 (Transmitters on 100% of analog schedule)
"I’ve got nine transmitters and nine translators to reach 1.6 million people. I have to have everything I can get to make it work," said Rod Bates, general manager of NETV. "Even though federal support is 10%, I use all of it for matching funds. The [state] legislature gave a pledge to get [the] maximum amount of federal PTFP funds."
States' Rights
Bates said 34% of NETV’s funding comes from the state which, in special sessions, cut the public broadcasting budget three times in the last year. NETV’s total budget dropped from $32 million to $25 million. The bright side is that one-time digital funds were left alone. The dark side is that operations were squeezed unmercifully.
"We had 66.5 layoffs, some through attrition, but 39.5 [positions were cut]—out of 320 staff [members]. We cut $5.7 million a year out of our operating budget. We’re looking at laying off another eight to 10 people," said Bates. "So we’re renovating the building and buying all these new toys but laying off people left and right."
Support for public stations varies from state to state. Bates’ colleague in Wyoming, for example, got a 40% increase in his operating budget from the state, which provides half of his total budget. Federal funds provide about 33%.
"Wyoming is poised to benefit more than any state in the union because of the oil, gas, and mineral industry. It has a budget surplus instead of a deficit this year," said Dan Schiedel, general manager of Wyoming Public Television. "The state legislature supported initial conversion to digital, and right now we have approval of a $150,000 engineering study to see how to convert the rest of the stations here."
Jerry Carr, president and COO of WXEL, in Boca Raton, FL, can only dream of Schiedel’s predicament. Governor Jeb Bush (the President’s brother) has proposed state support of precisely $0 for public broadcasting for 2004. That translates into a $700,000 hit for WXEL, or around 25 people losing their jobs.
"I remind you that the governor only recommends," Carr said. "It’s legislature that puts the budget together. We’re hoping to get the Senate and the House to fund at last year’s level."
Carr said WXEL is about $2 million shy of digital conversion, "but we’ve got a plan. I’ve already notified our attorneys to file for an extension, but we can do it within that six-month extension."
With the 2003 budget debate finally out of the way, public broadcasters can focus on May 1. After that, the games begin again. Lawson and his colleagues have their lobbying battle ahead over the proposed 2004 cuts, and state level belt-tightening will likely persist. Ramifications will likely reach the vendor community around 2004/2005. In the meantime, vendors tell us they’re still receiving a steady stream of orders from public broadcasters, who led the way into the digital transition. Ideally, commercial broadcasters will ratchet up spending just as public broadcasters pull back, assuming the commercial guys don’t buy their stuff from PBS stations forced to auction off their digital equipment in a fund drive.
Deborah D. McAdams is a contributing editor. She can be reached at: dmcadams@uemedia.com.
