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PUBLIC BROADCASTERS CAN SOLICIT ADS UNDER CHANGE IN FCC RULES

Public broadcasters will be allowed to accept ad money, as long as they limit those ads to programming on their excess DTV channel capacity that isn’t broadcast to general public, FCC ruled 3-1 Thurs. Commission said public broadcasters could solicit funding outside traditional sources -- donations from viewers, philanthropic organizations, corporate underwriters, govt. subsidies. It said ruling was intended to help public broadcasters make transition to DTV from analog, but it has no sunset provision, meaning alternative revenue streams still will be available after DTV transition is complete. Mass Media Bureau Chief Roy Stuart said money also could go into producing programming. Examples of kinds of services that may be offered as ancillary or supplementary in digital TV signal include subscription video, paging or voice messaging services, computer software distribution, data transmissions, interactive materials. FCC officials didn’t rule out subscription video offerings such as premium services much like HBO or Showtime delivered over cable systems. Commission did rule that noncommercial educational (NCE) TV licensees must pay fee to federal Treasury of 5% of gross revenue generated by those extra services, just like commercial broadcasters. Currently, public TV (PTV) doesn’t run commercials, but conversion to DTV would allow them to support several programming streams.

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Comr. Copps, sole Democrat on Commission and lone dissenter in vote, expressed dismay at what he characterized as decision that “in some respects is contrary to law.” If commercial broadcasters and congressional appropriators see public broadcasters having success with commercial ventures, they may conclude govt. subsidies and charitable donations are unnecessary, precipitating demise of national and local PTV, he said: “It has the potential to warp the nation’s image of public television and to endanger the identity and even the viability of a national treasure.” Congress didn’t intend PTV to “be the same as commercial television, nor even to be a little different,” he said. Copps said when PTV “begins to lose this different identity, it begins to lose its soul.” However, Chmn. Powell insisted that fundamental nature of public broadcasting wouldn’t change. “The soul of public broadcasting is in no way compromised,” he said: “I also think that it’s a mischaracterization to suggest that it’s a radical move to commercialization.” He pointed out that public broadcasters already were conceiving creative ways to generate new revenue, such as using Web sites for advertising.

Although ruling doesn’t mean viewers will see commercials weaved into Sesame St. or NewsHour with Jim Lehrer -- since those shows are part of station’s free over- air broadcast service -- it will allow PBS, for example, to create PBS2 or some other form of brand identity that could contain commercials in shows transmitted digitally for fee. Assn. of America’s Public TV Stations (APTS) Pres. John Lawson said he believed material most likely would be streamed to computers, at least at first. Saying public broadcasters were pleased with FCC ruling, he said revenue from ancillary and supplementary digital services could become important money source in future. Addressing criticism that PTV stations eventually would end up competing with their commercial counterparts, he said that was “gross exaggeration.” Order requires that “substantial majority” of PTV’s digital capacity be set apart for free over-air service, he said. He said possible subscription services for PTV included digital education services such as those for school textbooks and home schooling. Asked whether decision could apply to video-on-demand (VoD) for programs such as Masterpiece Theater, he pointed out that there was no cable carriage of PTV’s ancillary or supplementary services. Even recent digital carriage agreement with Time Warner didn’t include data services, he said.

FCC ratified one big catch for public broadcasters: NCE licensees are required to use their whole DTV bitstream “primarily” for nonprofit, noncommercial, education broadcast services. Commission didn’t create bright line test to define term “primarily” but instead defined it as “substantial majority” of NCE station’s entire digital capacity, as measured on weekly basis. Commission said measuring over weekly period would provide stations with flexibility. Beginning in 2002, NCE licensees will be required to report to FCC on Dec. 1 each year on their use of digital bitstreams in 12-month period ending previous Sept. 30. Under current govt. rules, public stations don’t have to start DTV operation until 2003.

Rep. Tauzin (R-La.), chmn. of House Commerce Committee, said he feared FCC ruling opened door to “creeping commercialization” of PTV, spokesman said. “We may very well ask the agency to tighten its definition of substantial majority,” Tauzin spokesman Ken Johnson said. Tauzin, who often is skeptical about govt. subsidies for public broadcasters, said he would be much more comfortable with ruling if commercials were limited to one or perhaps 2 channels at most. “As written, the ruling is too much of a blank check,” spokesman said.

Public interest groups said they believe FCC decision was illegal. “No advertising means no advertising,” said Andrew Schwartzman of Media Access Project, which represents Center for Media Education, among other parties. Ruling is equivalent of slapping up billboard on side of Grand Canyon to pay for remodeling of camping lodge, he said. Although Schwartzman and his clients said they didn’t doubt good intentions of current public broadcasters, they fear that others with less benevolent intentions some day could gain control of NCE stations. What’s more, they said, public broadcasters were likely to lose current support from NAB because they soon would be competing for same scarce advertising dollars.

Citizens for Independent Public Bcstg. (CIPB) said FCC ruling would give PTV stations “free pass” to become “even more commercial, using the public airwaves to serve the corporations and the affluent.” Saying there were far more democratic ways to fund public broadcasting, CIPB Pres. Jerold Starr said allowing PTV stations to “exploit” additional channels without setting higher standard for public service amounted to saying there was no basic difference between public and commercial broadcasting. In such situation, all communications “become vulnerable to advertiser and government pressures,” he said.