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A $5 Billion Proposal

PBS chief Pat Mitchell posits plan to free public stations from federal funding 6/13/2004 08:00:00 PM Eastern

Public Broadcasting System President Pat Mitchell is quietly pushing an audacious plan that would free public-TV stations from their annual federal allowance. But there's one very pricey condition: The government makes a one-time $5 billion payment to PBS.

The profits from investing this ocean of money would largely replace the $300 million PBS gets yearly from the federal government, and fulfill a dream that supporters have held since the 1960s: getting PBS out from under the thumb of penny-pinching appropriators and censors on Capitol Hill.

Mitchell, who became PBS's fifth president four years ago, faces huge hurdles in selling her idea to Congress—not to mention to skeptical public-TV stations. In Mitchell's vision, the $5 billion could be offset by proceeds from the early giveback of analog spectrum that the government is planning to auction in the next two to three years.

Today, public-TV stations are sitting on 350 channels of prime analog spectrum that the government desperately wants to auction off to wireless companies and other cutting-edge communications firms. How much the government could raise from auctioning all the returned analog channels is unknown, but the $5 billion estimate Mitchell offers is a fraction of the most optimistic predictions, which go higher than $100 billion.

Whether Congress will buy Mitchell's pitch is a crapshoot. Mitchell says she hasn't broached the plan with anyone on Capitol Hill yet. Instead, she's floating the idea privately with various TV-industry executives.

The $5 billion would provide a secure source of funding that would allow PBS to make bigger investments in programming, funding more and better shows, Mitchell argues, without having to find deep-pocketed partners for shows like Frontline
and Nova. PBS would also be in a stronger position to retain merchandising rights to spin successful programming into DVDs, stuffed characters, and other licensed products that have been pipelines of cash for partners like Sesame Workshop and Ken Burns—but rarely for PBS itself.

"Right now," she says, "we're always a minority funder, and it's hard to participate in the backend [licensing] with other producers."

The ability to grow internally is critical for PBS, says Mitchell, who has been hammered mercilessly by many of public TV's supporters for cozying up to corporate underwriters, who typically eschew hard-hitting, controversial programming.

"We must figure out a more sustainable model for public broadcasting to work in this country," she says, noting that the government's annual contribution to PBS, which covers about 15% of its budget, lags far behind that of most other countries. "It's astonishing that we've survived this long with so little coming from Congress. It's a fundamental flaw. We can't have such a small foundation."

After decades of efforts to find new funding, why does Mitchell believe a trust fund could find support on Capitol Hill today? "For years, public broadcasters have talked about a lot of models," she says, "but here comes this unique opportunity to turn back spectrum and get something in return."

Senate Commerce Committee members didn't mention her idea last week during a hearing on the DTV transition, even though they grilled John Lawson, president of the Association of Public Television Stations (APTS), about his much less ambitious plan to use auction proceeds to set up a $500 million fund dedicated solely to public stations—not PBS. The money would fund programming for schools, work force training, and adult-education programs. A few Capitol Hill aides say they've heard of Mitchell's plan but haven't been briefed directly.

Mitchell acknowledges that, in an era of mounting deficits, earmarking spectrum-auction profits for public television is a hard sell on Capitol Hill. But she insists public-TV stations can leverage their hold on the old analog channels into cash by offering to exit quickly. That's an offer commercial broadcasters' can't—or perhaps won't—match. "A lot of people are lining up for the proceeds, but public broadcasting has unique assets," she explains. "Our stations are prepared to do the analog giveback sooner than others."

Numbers from public stations back her up. A survey conducted by APTS indicates that 81% of public-TV outlets could go all-digital and give back their analog channels by the end of 2007. Commercial stations, on the other hand, are balking at FCC plans to reclaim all analog channels two years later.

To relinquish analog channels by 2007, public stations have some controversial demands of their own, however. For example, they insist that cable operators be forced to carry not only the main channel that stations offer today but also the extra "multicast" channels that going digital lets them add. The cable industry, however, is dead set against multicast rights. Such a dispute could take years to settle. Also, stations insist the government ensure that viewers without DTV or cable or satellite service have some way of getting local channels when analog broadcasts end, perhaps by subsidizing the cost of new digital set-top converters.

Mitchell says she is still working out many of the specifics, such as how much of an annual budget would go to PBS directly and how much would go straight to local stations, or how much would be earmarked for locally originated programming.

One thing Mitchell is certain of is the impact of such a radical change on corporate funding. By fully funding new programs and retaining the licensing rights, there's a greater chance that taking risks on untried shows will pay off for PBS. "We need to optimize content and the ability to make it available over other platforms," she says. The current model of doling out 15% of its annual appropriation to local stations—much of which comes back to PBS when stations buy its shows—ties the system to tame crowd-pleasers like The Three Tenors
but leaves little cash for untested ideas.

Mitchell dismisses talk that the trust fund is intended to insulate PBS from the Republicans now controlling Congress and demanding more conservative voices on PBS. Despite her liberal leanings personally, Mitchell says she's committed to diversifying points of view aired in PBS public-affairs shows and documentaries.

Her toughest sell, however, appears to be the 350 public-television stations themselves, which wield a strong grassroots presence in the halls of Capitol Hill. Lawson and the stations he represents remain wary of her grandiose plan. He is concerned that the enormous size will take attention away from his more modest goals or, worse, ultimately doom any set-aside at all.

Furthermore, no one knows what the spectrum is worth or how much the government will have available, Lawson says: "What PBS wants is a long shot."

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