NEWS November 19, 1996 FCC CHAIRMAN HUNDT SAYS FCC HAS JURISDICTION OVER HARD LIQUOR ADS ON TV; SAYS TV INDUSTRY SHOULD REAFFIRM VOLUNTARY BAN "If the public interest would be served by our inquiry into the use of the airwaves by the hard liquor industry and broadcasters who carry their ads, then we have no excuse for inaction," FCC Chairman Reed Hundt said today. "There is no doubt whatsoever about the FCC's jurisdiction in this area." In a speech to the Children's Action Network in Los Angeles, Hundt said that "the first line of defense is the TV industry itself," and he said, "I call on every TV licensee and cable company to just say no to the hard liquor industry's shameful campaign. No one has a constitutional or legal obligation to take the hard liquor industry money for advertising time. I honor the television and cable networks that have refused to take these hard liquor ads." Hundt said, "The second line of defense for protecting the public interest against hard liquor ads on TV is government action," but he added, "We are not at the second line of defense - yet. If the TV business refuses to take hard liquor advertisements, there won't be a need for FCC or FTC action." He said, "The FCC has a legal obligation to consider any and all actions which protect the public interest in the use of the public airwaves." He said the FCC and FTC have "complementary jurisdictions" and said, "If we need to begin government action, the two agencies could conduct parallel or joint inquiries, investigations and hearings. We should also receive guidance from Congressmen and Senators." Hundt said the hard liquor industry earlier policy against broadcast ads "was a sound, ethical, responsible, unwritten rule," and he said, "As recently as 1993, the hard liquor industry sent its representative to Congress to testify to the industry' awareness that it was ethically inappropriate to put hard liquor advertisements on television." Hundt said that by "violating" that rule, "the hard liquor industry is guilty of doing the wrong thing, and the best evidence of that is their own 48 year history of doing the right thing - until now." He added, "The hard liquor companies have gotten away with their new tactics in foreign countries, but it shouldn't happen here," and said, "The large, foreign, conglomerates that dominate the hard liquor industry are far from broke; they just want to make more money." -more- - 2 - Hundt said, "In 1948, the year I was born, the television industry and the hard liquor industry agreed that both pushed products too powerful to be combined. They agreed that millions of children would inevitably be in television audiences and that pitching kids the adult-only products of the hard liquor industry was morally wrong." Hundt said, "We have plenty of other work to do. Although we should be ready to act if needed, I implore the TV businesses to reaffirm the voluntary ban on hard liquor advertisements so that government action won't be necessary," he said. Hundt was speaking to a conference of television producers and writers convened to discuss the kind of children's television that would both meet the requirements of the FCC's new children's television rules and would appeal to children. - FCC - SPEECH BY REED HUNDT CHAIRMAN FEDERAL COMMUNICATIONS COMMISSION CHILDREN'S ACTION NETWORK LOS ANGELES NOVEMBER 19, 1996 (AS PREPARED FOR DELIVERY) The Children's Emmy: An Award Worth Winning I. Introduction Thank you Andy for that kind introduction. It's an honor to address this audience. You do more to affect attitudes, to alter perceptions, to form beliefs than anyone in the country. The rough and tumble competition for ratings leaves you little time to contemplate your role in the country, but you should know that you are terrifically important. You are the storytellers for our popular culture. I'm a huge fan of TV. II. The Role of the FCC I often say I have the greatest job in Washington that you don't have to be elected to. What makes my job so great is that I have as my mission to bring the competition to every sector of the communications market and to ensure public benefits from communications technologies. The key word that should underlie all the Commission's decision making is public interest. Every commissioner, every staff member, should ask with respect to every decision -- and we make literally thousands a year -- what is in the public interest? What do the American people want and need from us? Let me tell what I've heard and learned about the public interest. I have learned that the public interest consists of opening closed markets to competition at home and abroad; and second, guaranteeing that all Americans benefit from the communications revolution both by enjoying the fruits of competition -- lower prices and more choices -- and by getting access to communications technology that the marketplace might not readily deliver. Americans want access to new services, like the Internet and satellite programming. They want cheaper phone bills and more choices. Americans want the information and ability to choose what their kids watch on television and they want quality programming so they have something to choose. And Americans want at least five percent of the programming of the new media, like satellites and digital TV, set aside for public interest programming, including free time for political debate. And we want communications technology in every classroom. And Americans want rural health care clinics to be linked to academic hospitals. Americans want TV shows to be closed captioned. And do we want hard liquor ads on TV for the first time ever? In 1948, the year I was born, the television industry and the hard liquor industry agreed that both pushed products too powerful to be combined. They agreed that millions of children would inevitably be in television audiences and that pitching kids the adult-only products of the hard liquor industry was morally wrong. As recently as 1993, the hard liquor industry sent its representative to Congress to testify to the industry' awareness that it was ethically inappropriate to put hard liquor advertisements on television. When people break rules --even unwritten rules like the industry agreement not to advertise hard liquor on TV -- they have two basic excuses: "somebody else did it" or "I needed the money." The hard liquor industry is giving us both excuses. They are saying that other products inappropriate for kids are advertised on television and that hard liquor companies want to make more money by pitching their products to a younger generation. But these are just rationalizations. There was a sound ethical, responsible, unwritten rule about hard liquor ads on TV. And the hard liquor industry is violating it. The large, foreign, conglomerates that dominate the hard liquor industry are far from bankrupt; they just want to make more money. In the 18th Century, the famous lexicogragher Dr. Samuel Johnson said that there are few things a man can do that are more innocent than making money. More than 200 years later, the hard liquor industry is proving him wrong. The hard liquor industry is guilty of doing the wrong thing, and the best evidence of that is their own 48 year history of doing the right thing -- until now. The first line of defense is the TV industry itself. No one has a constitutional or legal obligation to take the hard liquor industry money for advertising time. I honor the television and cable networks that have refused to take these hard liquor ads. The hard liquor companies have gotten away with their new tactics in foreign countries, but it shouldn't happen here. I call on every TV licensee and cable company to just say no to the hard liquor industry s shameful campaign. The second line of defense for protecting the public interest against hard liquor ads on TV is government action. There is no doubt whatsoever about the FCC's jurisdiction in this area. We have a legal obligation to consider any and all actions which protect the public interest in the use of the public airwaves. If the public interest would be served by our inquiry into the use of the airwaves by the hard liquor industry and broadcasters who carry their ads, then we have no excuse for inaction. The Federal Trade Commission has jurisdiction over deceptive advertising, but the FCC and the FTC can't play some Alphonse and Gaston routine that leaves the American public confused about who is acting in their interest. Obviously the two agencies have complementary jurisdictions. If we need to begin government action, the two agencies could conduct parallel or joint inquiries, investigations, and hearings. We should also receive guidance from Congressmen and Senators, to whom both agencies should and do report. But none of us in public office should give the American people the run around -- pointing to each other like keystone cops. In any event, we're are not at the second line of defense - yet. If the TV business refuses to take hard liquor advertisements, there won't be a need for FCC or FTC action. We have plenty of other work to do. Although we should be ready to act if needed, I implore the TV businesses to reaffirm the voluntary ban on hard liquor advertisements so that government action won t be necessary. III. How It Could Be If I could produce a television show about the future I'd calls it The CyberCosbys or perhaps, Little House on the World Wide Web. It's not quite the Jetsons, and it's definitely not Lost in Space. It may not sound like much of a plot to you, but it works with all of our traditional sitcom family plots. In this show, when everyone in the house is up at 7 am, there is a smorgasbord of interesting, educational TV shows that kids like Rudy Huxtable and Laura Ingalls want to watch -- and parents like me will encourage them to tune in and not turn off the set. So when the Brady kids fight over the remote, every choice is a good one. Then, when the kids go off to school, they enter the world of wonder that communications technology can bring them -- instead of the blackboard jungle portrayed in the popular show Dangerous Minds. In this show, all the kids in every public school -- not just the kids in Fresh Prince -- are in classrooms that have state of the art computers on networks with Internet access, distance learning, electronic mail, and CD-ROMs. Instead of smoking in the bathroom, these kids are surfing the Net. At night, the family gathers around the TV or the PC and calls up the kids' homework on the screen. Parent Teacher conferences take place after dinner on line. They receive e- mails about school projects, soccer games and class plays. With the computer as the backdrop there is a renewed sense of family involvement and community participation. This is my version of Fantasy Island. And in my vision of the future, this TV show would be nominated for the children's Emmy, an award that will be presented for the most creative combination of educationally entertaining programming in any one season. Advertisers will flock to buy time on the show that receives this prestigious award and brag to America about their connection with it. Its characters will be realistic role models for our kids. And the lucky production entity will use this show and other quality programming to establish its reputation as the place to be. Will this work? You will decide. IV. The Role of Television In Our Lives As a parent and as the Chairman of the FCC, I'm completely convinced that popular culture is one of the greatest influences on the physical and psychological condition of children. The impact of popular culture on kids is, of course, at the core of my job description. We all know the value and the impact of television. If it had no impact, companies wouldn't pay 1.2 million dollars for one 30 second Super Bowl spot. And that doesn't include the massive amounts spent to produce those special ads. PepsiCo spent about 15 million dollars this year to produce and air its Pepsi, Pizza Hut and Frito-Lay Super Bowl ads. Nike spent three million dollars to air a 90 second spot. Other big marketers may spend from 500,000 to one million dollars to produce a 30 second spot that will cost 1.2 million dollars to air. And advertisers routinely spend 400 to 600 thousand dollars for a 30 second spot during a Thursday night sitcom such as Friends or Seinfeld. I'm told it costs between 250 and 500 hundred thousand dollars to produce a half hour children's television show. The money used to produce one 30 second Super Bowl ad could produce five episodes of Doug, of Where on Earth is Carmen SanDiego? or Bill Nye the Science Guy. And according to Fortune magazine, advertising revenues from children's programming are up an amazing 70% since 1991 -- $689 million last season. The dollars driving those figures come from cereal companies, toy makers and fast food chains vying to persuade our kids to nag us enough to buy their product. If we are willing to make this kind of an investment trying to sell to our kids, shouldn't we spend at least at much to educate, inform and enlighten them? I know this is not as easy as it sounds. I often hear that the words "educational" and "informational" are thought to be synonymous with unwatchable and unprofitable. I don't agree with that but I do agree that kids' tastes in television are fickle, unpredictable and occasionally disturbing to adults. Picasso said it took him all his life to draw like a child. To create programming that will win our children's hearts and stimulate their minds, Hollywood will have to learn to think like a child. But creativity and imagination alone will not secure a place for these shows on every network line up. Last spring I spoke to a conference of advertisers organized by Children Now. I urged these advertisers to support children's programming. I asked them, who wouldn't want their products identified with the Sesame Street or the Barney of the 21st century? What would be wrong with the Kellogs Hour or the Nestle afterschool special? Joseph Bensman, an advertising executive who became a sociologist, wrote a book called Dollars and Sense some years ago. In it, he said that advertising "takes the world as it is and makes it more so." Today's world is a world of choices. To make it more so --to intensify these choices and to dramatize their selection -- is the job of advertising. The challenge of this job, according to Rosser Reeves in 'Reality and Advertising,' is this: a client puts two identical silver dollars on the table and says, mine is the one on the left, tell me why it's better than the other? If advertising can do that, how can it be that advertising cannot make kids choose family friendly TV? And yet we all hear that familiar refrain. People don't want education or quality. Advertisers can only make money by giving people what they want. Therefore advertisers can't support quality -- unless they are going into a purely eleemosynary line of endeavor. Of course, we have to agree that advertisers give people what they want. But first advertising persuades them to want it. Not too long ago was there anyone saying they wanted personal computers? I was there in the pre-Gates world, reading books and watching foreign language films. I don't remember anyone saying they wanted a personal computer. Apple and Microsoft persuaded us. All the great commercial successes of American business history reflect an underlying vision that people will want something they didn't then have and didn't necessarily ask for. These were the visions of Edison, Ford, Packard. These visionaries were leaders as servants. They made money as a byproduct of their service to people. V. Where Self Interest = Public Interest I am here today to challenge you to aim for the stars. To have as your goal to create the best and most entertaining children's programming for all our kids, toddlers to teenagers. This is a case where the public interest can intersect with your self interest. As parents, and as business people, children's TV makes sense. As parents, you know how important this challenge is. You know the amount of time your kids spend watching TV -- more than three hours a day on average -- nearly half as much time as they spend in the classroom -- and you are the parents with the most resources and the best opportunity to offer your children other activities. In what the New York Times termed a "self described crusade to recapture the family hour," Nickelodeon began airing child-oriented shows at prime time every weeknight and for the first few weeks, these shows drew more kids under 12 than any offering on a broadcast network. The New York Times also reports that for the first six weeks of the new season, Nickelodeon has had more child viewers on Saturday morning than any network except Fox, even though Nickelodeon reaches 30 million fewer homes. Why has Nickelodeon been so successful? First, children (and parents) know they can click on Nickelodeon whenever they want and find a show designed for them. Nickelodeon set out to identify what kids want to watch, tested ideas with children and kept in touch with their young audience through e-mail, a Web site and call in vote shows such as "Kids Pick the President" (President Clinton won) and "Kids Choice Awards" where children vote for their favorite programs, characters and role models. Fox, became the number two network for kids by gradually increasing its children's programming to 19 hours a week. This strategy paid off for Fox, which last season had six of the top ten rated kids shows and their ad revenues from kids programming skyrocketed 530% from 1990-1995. As business people, you know that children represent a developing market. There are 38.9 million children ages 2 to 11 who live in households with TVs, according to Nielsen media research. And they spend an average of 22 hours a week watching television. The FCC's children's television rules are designed not to force the production of programming destined to be ignored but to encourage and challenge programming that, announced in advance, will be eagerly tuned in by children and welcomed by parents. We all know that if educational programs are not also entertaining, then like green vegetables -- kids will only watch them if parents tell them to. In Washington I am never in one room with this many talented and creative people. Sure, there are people there who are creative about things like moves to table the previous question and of course, fundraising, but we do not, intentionally, create the kind of drama and humor that you do on a regular basis. You absolutely and without any doubt are capable of producing shows that educate and enlighten, even as they entertain. I know this room is filled with people who have the talent, imagination and creativity to create shows that expand the horizons of all children -- and not a few adults. And if you produce them, the eyeballs will come. And if you promote them, these eyeballs will return. And if you air them during prime time, young eyeballs will bring along adults. VI. The Rules on Kids TV In August, the FCC achieved something that many thought impossible: we voted unanimously for guidelines calling for a minimum of three hours a week of educational programming for children. This was the first time in the history of television that the FCC passed a rule that asks for a quantified and specific amount of educational television. You can't get it, if you don't ask. We got the educational TV rule only after a long struggle, Washington-style. There was heavy lobbying against these changes in the status quo. There were pressure tactics of many kinds against change. But the new rules protecting the public interest in the media passed because persuasive people asked the FCC Commissioners to do the right thing. You can't get it, if you don't ask. Many inside and outside the Beltway did the asking -- President Clinton, Vice President Gore, a majority of the House of Representatives and a third of the Senate wrote to endorse a three hour per week requirement. But what really pushed the debate in Washington was the more than 20,000 letters the Commission received from parents, teachers children, social scientists, psychologists, and child advocacy groups all demanding better television for America's kids. The fact that so many people asked also means that many will be watching to see how these rules are implemented. What are these rules and how will they jumpstart the market for innovative, educational programming? Under the FCC's new children's television rules, a broadcast licensee that can demonstrate that it has aired at least three hours per week of core children's programming will have its license renewal application approved by the Commission staff. A broadcaster can also qualify under these guidelines if it can show that it has aired a package of different types of educational and informational programming that, while containing somewhat less than three hours per week of core programming, demonstrates at least an equivalent level of commitment to educating and informing children. In the latter case, specials, PSAs, short-form programs, and regularly scheduled non- weekly programs with a significant purpose of educating and informing children can count toward the three hour per week processing guidelines. Airing kid's TV during prime time will also be a relevant factor, as will investing a substantial amount of money in developing core programming aired on the broadcaster's channel. Licensees that do not satisfy this commitment will be referred to the full Commission for consideration. The public will play a critical role in helping to enforce these rules. Beginning in January of 1997, broadcasters must identify upcoming fall shows that are educational. Stations must place, on a quarterly basis, programming reports in public FCC files. We will make these reports available over the Internet. The programs themselves also must be identified as core programs, for example by using an announcement or an icon at the beginning of the program. Commercial stations must also provide information identifying these programs to publishers of program guides along with an indication of the age group for which the program is intended. Families for the first time will know which programs broadcasters have designated as educational and informational and can decide for themselves whether these programs meet that description. We define core children's educational programming as serving the educational and informational needs of children ages 16 and under. To qualify a program must be specifically designed to meet the educational needs of children as opposed to general audience programming that has some incidental educational value. The programming must air at times when kids actually watch TV -- between the hours of 7:00 a.m. and 10:00 p.m and it must be a regularly scheduled weekly program. The programs must be at least 30 minutes in length; and the educational and informational objective and the target child audience must be specified in writing in the licensee's Children's Educational Television Report. The new definition of core programming and the processing guideline take effect September 1, 1997, and will apply to renewal applications filed on or before October 1, 1997, for stations whose license terms expire February 1, 1998. Renewal applications filed earlier than September 1, 1997, will be reviewed exclusively on the basis of the previous rules. The FCC, with help from the general public, will monitor industry performance under new rules over the next three years and conduct a review at the end of this period to assess this performance. FCC staff will also conduct selected individual station audits during the next three years to assess compliance with new rules. VII. Another Opportunity Although the main purpose of today's gathering was to discuss children's television, there is another important medium that was featured in my feature length futuristic movie -- the information highway. Today, only 9% of all the classrooms in American are connected to the information highway. The President and Vice President have repeatedly challenged us to get all our children and teachers on-line by the end of the century. Vice President Al Gore coined the term, "information highway," and long ago he articulated the vision of the child in Carthage, Tennessee, who could go to the Library of Congress to get the learning not available in her small town in rural America. Every town should be that Carthage. On November 7 a panel of federal and state regulators,that I chaired voted to do the right thing. We voted to provide schools and libraries with the financial support to get every schoolhouse and classroom in America online. But this is just the beginning. The Commission has less then six months to set in stone all the fine print that will confirm this deal. I'm convinced we can do it. Unless we lose or even fail to build on the support we've had. Your community is perfectly positioned to get involved. California is ground zero for on-screen discoveries. The PC is just another version of a small screen production. We need your help to guarantee that every child can have access to communications technology in every classroom, to guarantee that every child can learn about modern technology with modern technology and develop the skills they'll need to live, work and communicate in the 21st Century. Once again, this is a place where your self interest meets up with the public interest. If we don't prepare our young people for the future, our society will suffer as will our ability to attract qualified employees and interested audiences. VIII. Conclusion Let me say thank you in advance for creating the programs that millions of parents will welcome into their homes and millions of children will grow up with and learn from. Given the talent, creativity and imagination of the people in this room, I know that we have much to look forward to. I promise that when you make it, we will watch it and when the winner of the first children's Emmy is announced, I hope it's one of you. - FCC -