TV CSG Review

Round Robin Meetings

I. Review Previous TV CSG Policy Reviews

II. CSG 101

III. Review CSG Funding & NFFS History

IV. Discussion

OUTLINE FOR TV CSG REVIEW SECTION

THE PUBLIC BROADCASTING ACT OUTLINES THE USE OF PANELS TO REVIEW THE FUNDING OF STATIONS AND THEY HAVE OCCURRED EVERY FEW YEARS

Public Broadcasting ActSection (k) (6) (B)

…the Corporation shall review periodically in consultation with public radio and television licensees…

Past reviews• 1996

• 1998

• 2001

AN ENTIRE CSG REVIEW CYCLE TAKES ABOUT A YEAR TO COMPLETE

Panelists convene & discuss key PTV issues at Meeting 2

System is solicited for

input at Round Robins

Panelists review early

data and determine

addt’l issues at Mtg. 3

Panelists review next

round of data at Mtg.

4

Panelists review next

round of data at Mtg.

5

Panel adopts final recommend-

ations at Mtg. 6

CPB Board votes on

recommend-ations from

CPB managemen

t

September 06 Oct – Nov 06 November 06 January 07 April 07

June 07 July 07 September 07 September 08

Proposed timeline for 2006-2007 Review

Any non-financial

changes are implemented in

FY08 grants

Any significant CSG formula changes take

effect for FY09

CPB and Panel

consult with system

April-May 07

THE 1996 REVIEW MADE SIGNIFICANT CHANGES TO ENCOURAGE STATIONS’ SELF-SUFFICIENCY AND INCREASE FLEXIBILITY IN GRANT DISTRIBUTIONS

Goal

• Adopt and strengthen CSG policies in the face of Congress’s “zero funding” threats

Outcomes

• Reduced base grant from .12% to .11% of appropriation

• Stations with multiple transmitters transitioned to one base grant

• New base grant policy in overlap markets

• New support funds established (Overlap Fund, Transition Fund, Future Fund)

1996 Review

THE 1998 REVIEW MADE RELATIVELY MINOR ADJUSTMENTS TO THE 1996 REVIEW IMPLEMENTATIONS

• Review and evaluate 1996 review policy changes

• Extended support funds• Created Special Assistance Grants (SAG) for small

stations• Reaffirmed 1996 base grant policies• Eliminate capital funds from NFFS

1998 Review

Goal Outcomes

THE 2001 REVIEW MADE MODEST CHANGES TO DEAL WITH CONDITIONS WITHIN THE SYSTEM

• Ensure that all types of stations are supported at the best possible level

• Created Distance Service Grants

• Created Local Service Grants (replaces SAG)

• Developed Program Differentiation Incentive

• Extended Transition Fund (all stations with < $2MM NFFS) and Future Fund

• Created Collaboration Fund

2001 Review

Goal Outcomes

No More Than 5%No More Than 5% 6%6%

25% (of 89%)25% (of 89%)

Television

$276,000,000

Station Grants$200,250,000

Unrestricted CSG

$62,300,000

Programming$75,750,000

Federal Appropriation$412,000,000* (including interest)

Station and Programming Grants

$368,000.000

System Support

$25,600,000

CPB Operations$18,740,000

Radio$92,000,000

Restricted CSG $21,970,000

Programming$7,730,000

THE ALLOCATION OF FUNDS FOR THE CSG IS FEDERALLY MANDATED

*For FY 2007

75% (of 89%)75% (of 89%)

75%75%

25%25%

70%70%

23%23%

7%7%

Not less than 89%Not less than 89%

COMMUNITY SERVICE GRANT POOL CALCULATIONS

TV CSG Pool FY 2007 $200,250,000

Grants Distributed FY 2007:• Base Grant Funds Distributed (153 Grants x $440K) ($67,330,000)• Distance Service Grant ($4,048,000)• Local Service Grant ($3,000,000)

Remaining Funds = Incentive Funds Pool= $125,872,000 FY 2007

minus

INCENTIVE POOL DISTRIBUTION IS BASED ON NFFS AND IS ABOUT 10 CENTS ON THE DOLLAR IN FY 2007

FY 2007 Incentive Grant = $.0964 x Grantee’s 2005 NFFS

$125,872,000

$1,305,168,073= $.0964

FY07 IRR Formula Calculation

FY07 Incentive Rate of Return (IRR) Formula

Incentive Funds Pool

Total FY05 NFFS= IRR

Incentive Funds Pool = $125,872,000 FY 2007

CSG BASE GRANT CALCULATION

Base Grant = .11% X Federal Appropriation

FY 2007 Base Grant = .11% x $400 million

= $440,000

TV CSG FUNDS ARE DIVIDED INTO THREE CATEGORIES

Definition Calculation

Base Grants

• Flat grant given to all qualifying grantees

• .11% of appropriation($440K per qualifying grantee in FY 2007)

IncentiveGrant

• Variable matching funds based on NFFS and given to all grantees

• Incentive Rate of Return x Two-years Prior NFFS

Special Grants/Funds

• Directed funds typically used to support specific groups of stations

– Distance Service Grant– Local Service Grant– Overlap Program Differentiation

Incentive

• Varies by program

$54 $49 $46 $52 $58 $59 $61 $63 $66

$71$69 $71

$92$103 $107 $105 $112

$124$5

$5

$2$0.1

$8 $3$11

$10

$11

$0

$75

$150

$225

1997 1998 1999 2000 2001 2002 2003 2004 2005

OVER TIME, CPB HAS MOVED FUNDING FROM BASE GRANTS TO INCENTIVE GRANTS

Base Grants

Incentive Grants

Source: CPB

Total CPB TV CSG Grants 1997 – 2005$ millions

Special Grants/ Funds

CHANGES IN CSG AT THE STATION-LEVEL ARE A FUNCTION OF CSG POLICY AND NFFS

CSG Policy NFFS ImpactX

• Size of federal appropriation

• Base grant allocation

• Size of incentive pool

• Special fund eligibility

• Amount/growth of NFFS (avg. growth 1%)

• Change in CSG (avg. growth 6%)

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1997 1998 1999 2000 2001 2002 2003 2004 2005

Station CSG, Indexed to 100, 1997-2005

Station designation based on 1996 NFFS

STATIONS’ GROWTH IN CSG VARIES BY SIZE

Small Stations (NFFS < $3.5MM; 82 stations)

Medium Stations (NFFS $3.5 < $12MM; 69 stations)

Large Stations (NFFS > $12MM;23 stations)

System Total

Source: CPB

Medium

Large Small

System

-1%

1%

0%

2%2%

3%

4%

5%

6%

7%

CORRESPONDING STATIONS’ GROWTH IN NFFS VARIES BY SIZE

0.9

1

1.1

1.2

1.3

1997 1998 1999 2000 2001 2002 2003 2004 2005

Source: AFR

Station NFFS, Indexed to 100, 1997-2005,Station designation based on 1996 NFFS

Small Stations (NFFS < $3.5MM; 82 stations)

Medium Stations (NFFS $3.5 < $12MM; 69 stations)

Large Stations (NFFS > $12MM; 23 stations)

System Total

Medium

Large

Small

System

-1%

1%

0%

2%

3%

0.8

1

1.2

1.4

1.6

1.8

1997 1998 1999 2000 2001 2002 2003 2004 2005

Station CSG, Indexed to 100, 1997-2005

STATE LICENSEES HAVE SEEN THEIR CSGs GROW AT A LOWER RATE THAN OTHER LICENSEES

Source: CPB

University Licensees*

Community Licensees

State Licensees

System Total

State

CommunityUniversity*

System

*includes Local Authority

-2%

0%

2%

4%

6%

8%

0.9

1

1.1

1.2

1.3

1997 1998 1999 2000 2001 2002 2003 2004 2005

NFFS GROWTH DIFFERS BY LICENSEE TYPE

Source: AFR

Station NFFS, Indexed to 100, 1997-2005

State

Community

University*

System

*includes Local Authority

University Licensees*

Community Licensees

State Licensees

System Total

-1%

1%

0%

2%

3%

DISCUSSION: SETTING GOALS FOR THIS REVIEW

• If we assume a flat federal appropriation, will reapportioning the CSG or changing the PBS dues calculation lead the system in a more positive direction? How?

• Are there external forces or events that require our attention?

• Are there pressing issues within the system that need to be addressed?

• What parts of the CSG calculation or program deserve panel attention? What parts of the PBS dues calculation deserves panel attention? Top 3 priorities?