1. TV CSG Review Round Robin Meetings

2. I.Review Previous TV CSG Policy Reviews II.CSG 101 III.Review CSG Funding & NFFS History IV.Discussion OUTLINE FOR TV CSG REVIEW SECTION

3. THE PUBLIC BROADCASTING ACT OUTLINES THE USE OF PANELS TO REVIEW THE FUNDING OF STATIONS AND THEY HAVE OCCURRED EVERY FEW YEARS Public Broadcasting Act Section (k) (6) (B) …the Corporation shall review periodically in consultation with public radio and television licensees… Past reviews 1996 1998 2001

4. 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 addtl 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 06November 06 January 07April 07 June 07 July 07 September 07September 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

5. 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 Congresss 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

6. 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

7. 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

8. No More Than 5% 6% 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% 25% 70% 23% 7% Not less than 89%

9. 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

10. INCENTIVE POOL DISTRIBUTION IS BASED ON NFFS AND IS ABOUT 10 CENTS ON THE DOLLAR IN FY 2007 FY 2007 Incentive Grant = $.0964 x Grantees 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

11. CSG BASE GRANT CALCULATION Base Grant =.11% X Federal Appropriation FY 2007 Base Grant =.11% x $400 million = $440,000

12. TV CSG FUNDS ARE DIVIDED INTO THREE CATEGORIES DefinitionCalculation Base Grants Flat grant given to all qualifying grantees.11% of appropriation ($440K per qualifying grantee in FY 2007) Incentive Grant 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

13. 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

14. CHANGES IN CSG AT THE STATION-LEVEL ARE A FUNCTION OF CSG POLICY AND NFFS CSG PolicyNFFSImpact X 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%)

15. 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% 3% 4% 5% 6% 7%

16. CORRESPONDING STATIONS GROWTH IN NFFS VARIES BY SIZE 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%

17. 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 Community University* System *includes Local Authority -2% 0% 2% 4% 6% 8%

18. 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%

19. 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?