FCC announces investigations into NPR, PBS over ‘advertising’ claims

By Michael P. Hill January 30, 2025

Subscribe to NewscastStudio for the latest news, project case studies and product announcements in broadcast technology, creative design and engineering delivered to your inbox.

Donald Trump’s newly installed FCC chair has opened investigations into NPR and PBS over claims that they are breaking the law by airing advertising. 

“I am concerned that NPR and PBS broadcasts could be violating federal law by airing commercials,” wrote FCC chair Brendan Carr Wednesday, Jan. 29, 2025, in a memo to the heads of the two broadcasters.

PBS and NPR member stations are licensed by the FCC to use airwaves to transmit their signals, just like any other television or radio station, but the national organizations themselves are not directly regulated by the FCC. 

One caveat in these licenses, which are considered non-commercial, is that they are barred from airing traditional commercials. Instead, they are permitted to air underwriting announcements for companies and organizations that contribute to them.

The FCC has long differentiated underwriting spots and commercials by one key factor: A direct call to action. A very broad example would, for instance, allow a PBS or NPR station to air a spot with elements explaining what services say, an investment firm, offers. In most interpretations of the law, this could become a commercial if the spot were to encourage viewers to “call now” to open an account. 

Although the investigation is ostensibly targeting PBS and NPR’s use of “commercials,” it’s hard not to see this as a sort of backdoor effort to target federal funding of public broadcasting, which has long been a target of Republicans. 

PBS and NPR member stations receive federal dollars through the Corporation for Public Broadcasting, a publicly-funded non-profit organization that works to support public broadcasting efforts in the U.S. NPR also holds a charter from the U.S. Congress.

CPB, NPR or PBS do not directly hold any FCC-issued broadcasting licenses; those are owned by local stations, which are typically either a non-profit or educational organization. It’s not clear how investigations into NPR and PBS might effect station licenses. 

Advertisement

Instead, NPR and PBS, among other functions, distribute and syndicate programming to its member stations, which are also not considered “affiliates” in the sense of the model used by networks such as ABC, CBS and NBC. 

For fiscal year 2025, CPB was budgeted $535 million. Financial disclosures by CPB reveal that about 95% of that money goes toward helping create programming, community service or a direct allocation to local member television and radio stations. About 5% of that amount ends is considered administrative costs.

In general, though factors and definitions can vary, many experts agree that non-profits should target spending between 15% and 20% of their annual budget on administration. 

Overall, approximately 70% of the budget ends up at local stations. 

CPB’s budget is structured so that it also receives about $10 million in earned interest, so its total revenues and budget are actually around $545 million. Even with the extra $10 million in revenue added in, even though it is not part of what Congress sends CPB, it still spends around 5% of its revenue on administration.

In total, the federal budget for fiscal year 2025 had a total outlay of $1.8 trillion. Using that figure, CPB gets just under 0.03% of total federal spending.

It’s also important to note that local underwriting and contributions from viewers and listeners tend to constitute the bulk of PBS and NPR stations’ budgets. The figure varies by market, but in most cases, every $1 in federal funding a station receives can generate between $5 and $20 in additional revenue from local sources. Many PBS and NPR stations operate with small budget surpluses and may also rely on endowments and other private funding sources. 

There are some PBS and NPR member stations that cannot meet their budgetary needs, which is one of the reasons CPB exists, according to supports. In these cases, the CPB can strategize ways to send extra funding to these stations, which are often in rural areas. This can mean that some other, better-funded stations receive less, but without this model, some local stations would likely not be able to operate.

Full-power commercial TV stations also have an FCC requirement to air educational programming under what is commonly called the “E/I” banner. These blocks of programming typically air on weekends and have restrictions, albeit less stringent, on advertising that airs during them.

Critics of public television often question why the federal government funds the CPB at all. They argue that the stations should be able to operate solely on their own membership drives and local underwriting and that programs created with federal money can generate revenue from separate underwriting agreements, licensing fees, merchandise sales and other sources. 

It’s true that “Sesame Street,” a PBS staple that is produced by the Children’s Television Workshop, a non-profit that receives CPB grants but is otherwise operated separately, generates millions off of selling a wide variety of merchandise featuring its iconic characters and settings. CTW also had a licensing deal with HBO to first air new episodes and offer past ones through the linear network and, later, streaming. This allowed CTW to charge HBO a fee for these rights while then offering the new episodes to PBS viewers a few months later.

Before Warner Bros. Discovery, which owns HBO, announced it would exit the “Sesame Street” deal in late 2024, the model was viewed by some as a creative way for a nonprofit and corporation to partner to offer quality programming in light of changing economics. Others, however, derided the decision as too commercial.

Advertisement

This isn’t the first time the federal government has attacked PBS and NPR. The two organizations, along with CPB, are often the target of criticisms from politicians, largely on the right. Congress has also attempted to reduce or cut CPB’s funding multiple times. 

Subscribe to NewscastStudio for the latest news, project case studies and product announcements in broadcast technology, creative design and engineering delivered to your inbox.