Of the federal funds provided for public television, the Corporation is  directed to distribute 75 percent of such funds among licensees of public  television stations and 25 percent for support of national public television  programming. Of the funds allocated for public television, 75  percent is to be made available for distribution among licensees of stations  and 25 percent for national public television programming. However, over 40 percent of licensees in  our survey responded that the projects have not resulted in practical  methods for reducing costs or enhancing revenues in their own operations. Moreover, our legal review of this program determined that the  Corporation’s approach of supporting these projects, in part, with funds  designated for distribution among licensees is not consistent with the  statutory authority under which the Corporation operates. The  Corporation provides PBS with an annual grant to help support its National  Program Service, a package of children’s and prime-time series that are  broadcast by most public television stations. While our survey shows that over half of the licensees indicated that  changes are needed in the selection process for the PBS National Program  Service, most respondents nevertheless indicated satisfaction with the  extent to which the Service’s programming helps them meet the missions of  their stations. After consultation with representatives of  the public television community, the Corporation directed these funds  toward providing grants to licensees for acquiring digital transmission  equipment. However, some licensees did not receive their grants in a timely  manner and cited this as contributing to their failure to meet FCC’s initial  May 2003 deadline for constructing digital transmission facilities. In addition, the Corporation, licensees, and other public  television stakeholders have emphasized the importance of support for the  production of digital content as part of the transition. About 85 percent of the licensees responding to our survey indicated that  successful completion of the digital transition would improve their ability  to serve their communities to a great or moderate extent. The Corporation received an initial $10 million  appropriation for fiscal year 2004 for this purpose. working group—funded by the Corporation and comprised of Corporation  and PBS officials, as well as public television licensees—highlighted this  need in a 2003 report, which stated that the digital transition provides  public television with an opportunity to reposition itself to carry out its  mission if it is willing to create digital services that are “more responsive to  the needs of our constituents and cheaper, simpler, smaller, and more  convenient to use.”
Noting that 2 years’ advance time may be needed to plan, develop, and  launch digital services, and that digital production costs are generally  higher than the costs of creating analog programming, the Corporation has  characterized the need for digital content and research as “even more  pressing” due to the limited availability of past federal funding for the  digital transition. Most licensees responding to our  survey supported the existing statutory allocation of the Corporation’s  television funds between licensees and national programming and were  generally satisfied with the Corporation’s process for periodically  reviewing the eligibility criteria for distributing funds through Community  Service Grants. As for local programming,  most licensees indicated that the amount of local programming they  produced was not sufficient to meet their communities’ needs, largely due  to their limited financial resources. Scope and Methodology

Our objectives were to review the Corporation’s activities and obtain the  views of public television station officials regarding: (1) the statutory  allocations for federal funding of public television; (2) the distribution of  funds by the Corporation through its Community Service Grant and  Television Future Fund programs, including a legal analysis of whether the  funding of the Television Future Fund program is consistent with the  Corporation’s underlying statutory authority; (3) the distribution of funds  by the Corporation for PBS’s National Program Service and for local  programming; and (4) Corporation funding to assist public television  stations in their transition to digital technologies and services. Not all applicants received funding.
Why GAO Did This Study

For fiscal year 2002 (the most recent data), the Corporation for Public Broadcasting provided about 16 percent of public television's revenues of $1.63 billion. GAO agreed to review the statutory allocations for federal funding of public television, the Corporation's distribution of funds through its Community Service Grant and Television Future Fund programs, its distribution of funds for the Public Broadcasting Service's National Program Service and for local programming, and its grant programs for assisting public television's transition to digital technologies and services.

What GAO Found

By statute, 75 percent of the Corporation's annual federal funding for public television is to be distributed among licensees of public television stations, and 25 percent is to be available to the Corporation for the support of national public television programming. In our survey of all 176 licensees, of which 85 percent responded, more than three-fifths favored maintaining the current allocations. Of those favoring a change, most proposed an increase in the allocation for distribution among licensees. The Corporation uses Community Service Grants as the primary means of distributing funding to licensees. Most licensees were generally satisfied with the recent consultation process for reviewing the eligibility criteria for these grants. Another program, the Television Future Fund, awarded grants to projects designed to reduce licensees' operational costs and enhance revenues. Only about 40 percent of the licensees indicated that these projects had resulted in practical methods to help their stations, and only about 30 percent agreed with the Corporation's approach of using funds designated for distribution among licensees to partly support these projects. In our legal view, the use of such funds for this purpose is not consistent with the statutory authority under which the Corporation operates. The Corporation provides an annual grant to the Public Broadcasting Service to help fund a package of children's and prime-time programming that make up the National Program Service. Most licensees favored continuation of the Corporation's funding, noting that this national programming helps them meet their educational and cultural missions and build community support for their stations. Licensees also indicated that local programming is important in serving their communities. However, most responded that they do not produce enough local programs to meet their communities' needs, and many cited a lack of funds as the reason. About 85 percent of the licensees responding to our survey indicated that the congressionally mandated transition from analog to digital broadcasting will improve their ability to provide local services to their communities. The Corporation has received appropriations to help support this transition since fiscal year 2001. In consultation with licensees, the Corporation has used these funds to provide licensees with grants for acquiring digital transmission equipment. Some grantees, however, did not receive their awards in time to meet FCC deadlines for the construction of digital transmission facilities. In addition, the Corporation received only a few grant applications during the latter part of 2003. Our survey indicates that most licensees' priorities now involve other aspects of the transition, some of which (including digital production equipment and development of digital content) were not included in the scope of the grant programs. The Corporation is also seeking funds for digitally based infrastructure improvements for distributing public television programming to stations and is working with public television stakeholders to develop a strategic plan that includes the creation of digital content.