*Pages 1--257 from Microsoft Word - 26715* NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 1 UNITED STATES OF AMERICA + + + + + FEDERAL COMMUNICATIONS COMMISSION + + + + + FIELD HEARING + + + + + BROADCAST OWNERSHIP EN BANC + + + + + RICHMOND, VIRGINIA + + + + + CHAIRMAN POWELL PRESIDING This transcript was produced from audio tapes. Inconsistencies may occur between the actual spoken word and the transcription due to recording impediments. 1 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 2 I- N- D- E- X Morning Session Official Opening, Marlene Dortch, Secretary ....... 3 Welcome, K. Dane Snowden, Chief, Consumer & Governmental Affairs Bureau ............... 5 Opening Statements: Michael K. Powell, Chairman ................. 7 Kathleen Q. Abernathy, Commissioner ........ 12 Michael J. Copps, Commissioner ............. 18 Kevin J. Martin, Commissioner .............. 25 Jonathan S. Adelstein, Commissioner ........ 29 Summary of Broadcast Ownership Rules and Key Issues, Thomas G. Krattenmaker (Moderator) Mintz, Levin, Cohn, Ferris, Glovsky & Popeo ...................................... 38 Panel Discussion: Diversity Issues L. Brent Bozell III, Parents Television Council .............................. 49 Robert Corn- Revere, Hogan & Hartson ......... 54 Jay Ireland, NBC Television Stations ....... 59 Alfred C. Liggins, Radio One, Inc. ......... 65 Victoria Riskin, Writers Guild of America, West ........................ 70 Andrew Jay Schwartzman, Media Access Project .............................. 75 Wendy Thompson, ZGS Broadcast Holdings, Inc. ................................ 79 Public Comments ................................. 111 Lunch Break Afternoon Session 2 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 3 Panel Discussion: Competition Issues David Croteau, Department of Sociology and Anthropology, Virginia Commonwealth University ............. 127 Linda Foley, The Newspaper Guild- CWA ....... 131 Victor Miller, Bear Stears & Co. Inc. . .... 136 Ed Munson, WAVY( TV)/ WVBT( TV) Norfolk, VA ... 141 Bruce Owen, Economists Incorporated ........ 146 Jonathan Rintels, Center for the Creative Community ...... ............. 150 James L. Winston, National Association of Black Owned Broadcasters, Inc. . ... 155 Public Comments .................................. 188 Break Panel Discussion: Localism Issues Frank A. Blethen, The Seattle Times ........ 205 Thomas R. Herwitz, Fox Television Stations, Inc. ....................... 209 Mark P. Mays, Clear Channel Worldwide ...... 212 Deborah McDermott, Young Broadcasting Inc. .. 217 Chris Powell, Journal Inquirer ............. 221 John F. Sturm, Newspaper Association of America ............................. . 225 Jenny Toomey, Future of Music Coalition .... 229 Public Comments .................................. 236 Adjourn .......................................... 257 1 3 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 4 P- R- O- C- E- E- D- I- N- G- S 1 10: 00 a. m. 2 SECRETARY DORTCH: Today's hearing will 3 focus on the FCC's Broadcast Ownership rules and will 4 give the public an opportunity to voice its opinions 5 about the Commission's examination to determine 6 whether any of the rules are no longer in the public 7 interest as a result of competition. This periodic 8 examination is required by the Communications Act. 9 Following are the procedures for today's 10 en banc hearing. We will utilize a time- keeping 11 machine located in front of Chairman Powell to 12 maintain time limits on each presentation. Panelists 13 will each have a total of five minutes to make their 14 individual presentations. The green light will stay 15 lit for the first three minutes of your remarks. When 16 the yellow light signals, you have one additional 17 minute to sum up your presentation and close your 18 remarks. The red light signals the end of your 19 allotted time. Please conclude your remarks at that 20 time. 21 Following the morning session, a lunch 22 break will be held from 12: 10 p. m. to 1: 10 p. m. 23 Information concerning nearby eateries is 24 available on the table to the right outside of the 25 4 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 5 ballroom doors. 1 The Convention Center prohibits the 2 bringing in of food and drink from outside vendors. 3 The afternoon session of the hearing will 4 begin promptly at 1: 10 p. m. Sign language 5 interpreters are available to assist people with 6 disabilities. If you need an interpreter, please 7 indicate this now to the FCC interpreter who is 8 standing with her hand raised. 9 The transcript of this hearing will be 10 made a part of the record and will be available on the 11 FCC website, www. fcc. gov approximately 14 days from 12 today. 13 Mr. Chairman and Commissioners, the 14 hearing will now begin. 15 Mr. K. Dane Snowden, Chief of the 16 Commission's Consumer and Governmental Affairs will 17 serve as our MC. 18 Thank you. 19 MR. SNOWDEN: Good morning. On behalf of 20 the Commission I would like to welcome everyone to the 21 FCC's Broadcast Ownership en banc hearing. In 22 addition, I would like to thank and extend the 23 Commission's thanks and appreciation to all of the 24 invited panelists and the members of the public for 25 5 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 6 joining us from the Richmond area and from across the 1 country. 2 As many of you know, the Commission is in 3 the midst of its most comprehensive review 4 of the FCC's broadcast ownership rules, some of which 5 date back to the early 1940s. Every two years the 6 Commission is required by Congress to examine its 7 broadcast ownership rules and determine whether the 8 rules are necessary in the public interest as 9 the result of competition. If a rule cannot be 10 justified, it must be modified or eliminated. 11 Today's en banc hearing is another example 12 of how the Commission is interacting with the public 13 on this very important subject. In addition to 14 participating in the public forum sponsored by 15 Columbia University, we have received more than 18,000 16 comments on this subject, the vast majority of which 17 are from individual citizens. 18 Our goal today is to hear from the public 19 on the important issue of Broadcast Ownership 20 currently before the Commission. It should be noted 21 that the Commission's ultimate task in fulfilling its 22 public interest responsibility is to promote 23 diversity, localism and competition. In addition, we 24 must craft rules that are sustainable in the eyes of 25 6 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 7 the courts. 1 We are very interested in learning how the 2 three prongs of diversity, localism and competition 3 are promoted under our current broadcast ownership 4 regime. As the FCC designs rules, we strive to 5 establish a framework which accounts for the modern 6 day marketplace. All of this stated, it is important 7 to note that, by the end of this proceeding, the FCC 8 intends to have broadcast ownership rules that reflect 9 the current marketplace and are legally sustainable. 10 Before we begin with our moderator and the 11 panels, I would first like to turn the floor over to 12 the Chairman and Commissioners for their opening 13 remarks. 14 Chairman Powell? 15 CHAIRMAN POWELL: Thank you, Dane, and 16 welcome everyone to this Federal Communications 17 Commission field hearing. I'll get right to an 18 important question. It seems like every time we have 19 one of these it's snowing. I don't know what that 20 means, but we'll fight through it. But I want to let 21 everyone who has traveled to know that we are going to 22 keep a close eye on the weather and do what we need to 23 do in terms of adjusting schedules, if that becomes a 24 problem, just so that you know. 25 7 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 8 Actually this snow only heightens my 1 gratitude for the sacrifices our panelists have made 2 to be here today. It is commendable that they agreed 3 to take time out of their busy schedules to prepare 4 for and participate in today's hearing. Given the 5 weather conditions, their efforts are deeply 6 appreciated. 7 I would also like to thank Dane Snowden 8 and his tireless team for making this broadcast 9 ownership hearing happen. Until you've actually tried 10 to set up a field hearing like this, you may not 11 appreciate how much work is truly involved. They did 12 a fabulous job and I appreciate their efforts. 13 I am enormously pleased so many people 14 have expressed an interest in the Commission's review 15 of broadcast ownership regulations. The number of 16 comments we have received is staggering, multiple 17 thousands from the general public alone. It is 18 gratifying to witness first hand the unparalleled 19 opportunities technology now provides the American 20 public to participate in the democratic process. This 21 record combined with the forum we hold today, will 22 create one of the most exhaustive records in recent 23 FCC history, one deserving of a proceeding of this 24 magnitude. 25 8 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 9 I am particularly pleased to see that the 1 staff arranged for the leadoff presentation to address 2 "legal issues" which are often perceived as pesky to 3 some, but essential to good policy making. There are 4 issues in media policy far sexier than the legal 5 framework, but none is more critical if you wish to 6 understand how we will make ownership policy 7 decisions. 8 For better or worse, the FCC has hundreds 9 of rules and regulations currently on its books. Each 10 day, when my colleagues and I come to work in the 11 morning, we have plenty to do. Thankfully, one thing 12 we don't have to do is re- justify every rule in the 13 book. Each existing rule is generally presumed to be 14 as valid today as it was yesterday. 15 Sadly, the broadcast ownership rules are 16 fundamentally different pursuant to Congress' design. 17 Every two years without fail, the Commission is 18 required by statute to review the broadcast ownership 19 rules. And when it does, it is legally required to 20 presume each rule is no longer needed unless we find 21 otherwise according to the courts. Unless we can re- 22 justify each broadcast ownership rule, in short, and 23 under current market conditions, the rule goes away. 24 Under this tough review standard of 25 9 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 10 review, courts have become far more skeptical of FCC 1 rationales for imposing limits on broadcast ownership. 2 Five times in the past two years we have defended our 3 ownership rules in court. And sadly, five times we 4 have lost. 0- 5 is not an enviable record. 5 The common theme of the courts' criticism 6 is that we have failed to justify our rules in light 7 of today’s media environment. What the courts have 8 told us, in no uncertain terms, is that the biennial 9 standard is a rigorous test. Either we produce 10 evidence that the rule is still necessary, or we must 11 eliminate it and if we do not, they will do it for us. 12 If the Commission does the same half- 13 hearted effort it did in the last Biennial Review, I 14 guarantee you that every one of the broadcast rules 15 will be swept away in a court of law. Let's see if we 16 can put that Genie back in the bottle. 17 Yet we all agree that some broadcast 18 ownership limits are indeed critical if we are to 19 maintain a robust marketplace of ideas. The public 20 interest is all about promoting diversity, localism, 21 and competition. We can achieve these goals -- and 22 the courts will agree with us -- if we do it 23 correctly. 24 The right way is building rules that 25 10 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 11 reflect today's media market. We do that by gathering 1 evidence on the critical questions: How do Americans 2 use the media? Where do they get their news from? 3 What industry structure best promotes diverse and 4 innovative media content? 5 The FCC staff kicked off that effort by 6 conducting a dozen studies on the workings of the 7 media. Whatever those studies suggest for ownership 8 policy, they make an important procedural point -- 9 that this rulemaking will be driven by evidence, not 10 just intuition or personal preference. This agency 11 tried personal preference in the last biennial review 12 and got hammered for it. 13 That's why we have proceeded methodically 14 this time around. The court cases gave us clear 15 guidance on how to do the biennial review correctly. 16 We took that guidance to heart, we conducted a large 17 number of studies, and then we began the biennial. We 18 had a long comment period so interested parties could 19 formulate their own views and provide us with them. 20 And several public hearings, including today's, are 21 being held around the nation. 22 I hope today's hearing will build on the 23 enormous record already before us. We have 24 specifically set aside time for members of the public 25 11 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 12 to air their views and I very much look forward to 1 hearing them. 2 Finally, let me once again thank the 3 panelists for agreeing to join us today to share their 4 views as well as my colleagues for being here. The 5 speakers with us today are an enormously talented and 6 accomplished group, and I very much look forward to 7 their statements and the subsequent dialogue. 8 Commissioner Abernathy? 9 COMMISSIONER ABERNATHY: Thank you, Mr. 10 Chairman. 11 Good morning, everyone. It's a pleasure 12 to be here. First, I want to thank Dane Snowden and 13 everyone involved in organizing today's event. I also 14 want to thank everyone that is taking part in today's 15 hearing whether you are on a panel or you're coming 16 here as part of the audience, you are making an 17 invaluable contribution to the discussion on broadcast 18 ownership. You braved the elements to get here, as 19 the Chairman said. So thank you very much. 20 I don't have to tell any of you about the 21 important role that the media plays in our education, 22 our entertainment, and in our civic discourse. For 23 this very reason, the FCC has continually focused on 24 the importance of promoting localism, diversity and 25 12 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 13 competition when we're crafting media ownership rules. 1 I am committed to furthering these long- standing 2 goals by re- examining our rules to ensure that our 3 regulations advance and do not undermine our policy 4 goals. 5 It is also important to note that Congress 6 instructed us to review our broadcast ownership rules 7 to determine if they are still necessary in the public 8 interest in light of the changes in competition. In 9 addition to this Congressional mandate, however, the 10 courts have also weighed in and not very kindly, and 11 they've weighed in by overturning some of our media 12 ownership rules. And as the Chairman mentioned our 13 win/ loss record in the courts over the past two years 14 has been rather pathetic. The courts have also made 15 clear that we must justify the retention of any of our 16 rules, or they will be eliminated. We have been 17 faulted for failing to take into consideration the 18 plethora of voices that are now available and for 19 failing to take a consistent approach across all of 20 the ownership rules. These court decisions 21 necessarily provide the context for any future 22 decisions that the FCC makes. 23 No one can dispute that the marketplace 24 has changed significantly since the adoption of many 25 13 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 14 of our ownership rules. We now have a greater number 1 of choices, as well as increased consolidation. It 2 was not that long ago that we only had three networks 3 and some independent stations. Now, in addition to 4 ABC, CBS and NBC, we have UPN, WB and PaxNet available 5 to us over- the- air. Eighty- five percent of homes, 6 moreover, have access to hundreds of cable programming 7 networks. I know that some have expressed concern, 8 however, that 90 percent of the top 50 cable channels 9 are owned by the television networks and the cable 10 providers. These kinds of cross- ownership issues are 11 very important and we need to look at them. But I 12 also want to look beyond the popularity of a program 13 and ask whether we have a diverse array of choices 14 that can reach small niche audiences that may be 15 ignored by the mainstream, more popular programming. 16 So, when discussing choices I will look not just at 17 the top 50 cable networks, but also at the other 18 national and regional networks. 19 I also recognize that there has been 20 increased consolidation in the media industry; this is 21 not surprising because companies seek the benefits of 22 scale and scope unless curtailed by regulators or the 23 courts. My job is to look at the effects of 24 consolidation and to ask: 25 14 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 15 How has consolidation affected the amount 1 of diverse programming people are receiving? 2 How has it affected the availability of 3 local news and public affairs programming in small 4 markets? 5 How has it affected competition in the 6 marketplace? 7 Restrictions that may have been needed in 8 the past to ensure competition and diversity may 9 actually make it more difficult for programmers and 10 station owners to provide compelling quality 11 programming in light of the significant competition 12 that over- the- air broadcasters are facing from other 13 sources. 14 In seeking answers to these and other 15 questions, we need to be wary of the unintended 16 consequences of changing our rules, as well as of the 17 unintended consequences of maintaining our rules. I 18 want to ensure that if we eliminate or modify any of 19 our current rules, we don't lose vibrant voices and 20 diverse sources from our civic discourse. I also 21 need to know what effect our current rules are having 22 on the survival of the broadcast industry as they 23 position themselves to compete with cable, DBS and 24 other services. And while we talk about the 85 25 15 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 16 percent of people that have access to cable and 1 satellite, we can't forget about the approximately 15 2 percent of the American public that only receive 3 broadcast services. I think it's essential that free 4 over- the- air services remain competitive and viable 5 and continue to provide programming alternatives. 6 What I don't want is for the competitive environment 7 to drive the migration of quality programming to cable 8 and away from broadcasting. 9 No doubt, these are important decisions 10 and we must carefully consider the regulatory options 11 that are available. But do not worry that we are 12 rushing to judgment. First, government is simply 13 incapable of rushing. 14 (Laughter.) 15 Second, we are responding to the fact that 16 a number of rules that have been remanded or vacated 17 by the courts, leaving the American people, the 18 industry and the FCC in limbo. Inaction by the FCC 19 only prolongs the uncertainty to the detriment of the 20 public and the marketplace. 21 And third, without question, this is the 22 most robust, detailed evidentiary record that I have 23 seen in my 20 years of practicing telecommunications 24 law. 25 16 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 17 As Dane stated, we sought comment on 12 1 studies and we have received over 3000 comments, over 2 2900 of which are from individual citizens. In 3 addition, there have been over 10,000 e- mails from the 4 public, and a number of public hearings have been held 5 and are being held again in the future. I am taking a 6 hard look at this information as are I know all of my 7 colleagues. But don't forget, the statute and the 8 courts require the Commission to act on a timely 9 basis, and it is our obligation and duty to respect 10 and adhere to that schedule. We cannot let fear 11 paralyze us. There will be no crystal ball available 12 to us six months or a year from now. And I believe 13 our job, why we were nominated by the President and 14 confirmed by the Senate, is to make these tough 15 decisions and not simply hope that they'll go away. 16 And while I know that not everyone will agree with us 17 when we make these decisions, we will be carrying out 18 our responsibilities. 19 So thank you for allowing me to take a few 20 minutes to share with you the questions that I think 21 need to be addressed. I look forward to listening and 22 learning from all of you, the insight and the 23 viewpoint of the public and the industry are, as 24 always, an essential part of the FCC's regulatory 25 17 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 18 process. Thank you for your time and your commitment 1 to working with us to make well informed and well 2 reasoned decisions that will benefit all of us. 3 MR. SNOWDEN: Thank you. Commissioner 4 Copps? 5 COMMISSIONER COPPS: Good morning and 6 welcome. Thank you all for braving the weather to 7 take part in this important event. Those of you from 8 Washington have heard me say that, for me, no issue 9 pending before the Federal Communications Commission 10 is so important as the decision on whether to 11 eliminate or significantly change our media 12 concentration protections. I say that because what we 13 decide will have a formative influence on how our 14 media will look for many, many years to come. I 15 believe that fundamental values and democratic virtues 16 are at stake here -- things like localism, diversity, 17 competition and maintaining the multiplicity of voices 18 and choices that undergird our marketplace of ideas 19 and that nourish American democracy. And also at 20 stake is the quality and type of the entertainment 21 that we and our children watch and hear. So this is 22 really important work that we are about today. And I 23 think that despite Mother Nature and other challenges, 24 we have top quality participation today. So I'm ready 25 18 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 19 for us to roll up our sleeves and go to work. 1 I think that we should have two goals 2 today. Proceeding on an assumption that some find 3 hard to believe, all expertise on these issues does 4 not reside within the I- 495 Beltway. Our record needs 5 much more breadth than the capital can provide. So 6 our first goal in coming to Richmond is to talk with 7 members of this community and this state and to tap 8 local expertise to help us make the right decisions 9 and have a record of factual depth and granularity 10 that the courts will accept in reviewing what we do 11 and that the American people will accept. Secondly, I 12 hope we can raise the awareness in Richmond that 13 something important is going on at the FCC, something 14 that each person here in the city and in the state has 15 a stake in, something that every consumer, every 16 citizen, should know about. 17 I am frankly concerned about consolidation 18 in the media, and particularly concerned that we are 19 on the verge of dramatically altering our nation's 20 media landscape without the kind of broad, national 21 debate and analysis that these issues so clearly 22 merit. 23 Why am I concerned? I'm concerned because 24 I don't believe that we yet know the potential 25 19 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 20 implications of our actions. We do have some 1 experience to learn from -- and that is what happened 2 to radio after Congress and the Commission changed the 3 rules of the game seven years ago. Many media 4 observers believe that the loosening of ownership caps 5 and limits that took place then created real problems 6 in radio. We'll hear more about that on today's 7 panels. Arguably, consolidation also created some 8 economies and some efficiencies that allowed broadcast 9 media companies to operate more profitably and may 10 even have kept some stations from going dark and 11 depriving communities of service. We need to take 12 that into consideration. But I think most people 13 would admit that the consolidation went far beyond 14 what anyone could have foreseen in 1996. 15 Conglomerates now own dozens, even hundreds -- and in 16 one case, more than a thousand -- stations all across 17 the country. More and more of their programming seems 18 to originate hundreds of miles removed from listeners 19 and their communities. And we know this, there are 34 20 percent fewer radio station owners in February 2003, 21 than there were before these protections were 22 eliminated. The majority of radio markets are now 23 oligopolies. And all this in only seven short years! 24 It raises serious questions. Media 25 20 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 21 watchers like the Media Access Project, which is here 1 today, Consumers Union, and Professor Robert McChesney 2 argue that this concentration has led to far less 3 coverage of news and public interest programming. The 4 Future of Music Coalition in its multi- year study 5 finds a homogenization of music that gets air play and 6 concludes that radio seems to serve now more to 7 advertise the products of vertically integrated 8 conglomerates than to entertain Americans with the 9 best and most original programming. 10 So, should we eliminate, or substantially 11 change, the protections that remain for television, 12 cable, and newspapers? Before we can make that 13 decision, we need to better understand the current 14 media landscape and the implications of eliminating 15 concentration protections. Today we know far too 16 little to make an informed decision. Not only do we 17 not have all the answers, we haven't yet teed up all 18 the questions. Let me list just a few questions the 19 studies don't answer. 20 What is the likely prospective effect on 21 localism, diversity, and independence of TV, cable, 22 radio, and newspapers if we eliminate our protections, 23 especially given our history with radio consolidation? 24 How much news and public affairs 25 21 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 22 programming was broadcast in the years immediately 1 before and after elimination of FCC radio 2 concentration protections? 3 What effects have recent media mergers, 4 radio consolidation, and TV duopolies had on the 5 personnel and resources devoted to news, public 6 affairs, and public service programming, and on the 7 output of such programming? How about the effect on 8 the creative arts? Will eliminating our rules result 9 in a crisis in any of those areas? 10 Do newspapers and co- owned broadcast 11 stations carry similar viewpoints more frequently than 12 independent newspapers and broadcast stations? The 13 one FCC study is criticized as insufficient. 14 How do consolidation and co- ownership 15 affect the news' and arts' focus on issues important 16 to minorities and to the objective of diversity? And 17 how about children? 18 Is there a relationship between the rising 19 tide of media consolidation on the one hand and the 20 low quality and indecent programming on the other 21 hand? 22 How are advertising and small business 23 affected? 24 The list goes on and on. Today hopefully 25 22 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 23 we can begin to address some of these questions. We 1 need answers to them before I can feel comfortable 2 about making an informed decision. We need a 3 diversity of input into the Commission on these issues 4 that goes beyond anything we've ever had before. We 5 need to hear from stakeholders of every stripe -- and 6 as far as I'm concerned, anybody that lives in this 7 democracy of ours is a stakeholder in the future of 8 the media. 9 So it's just not business, although 10 business input is essential. We want to hear from 11 consumers, labor, educational, religious, and minority 12 organizations, and Americans who have never heard of 13 the Federal Communications Commission. We can pretend 14 that these folks read the Federal Register and can 15 afford the lawyers to participate fully in our 16 inside- the- beltway decision making. But we'd be 17 kidding ourselves. This decision is too important to 18 make in a business- as- usual way. We need America's 19 buy- in, and we need your help in answering these 20 questions. That is why I have put so much emphasis on 21 outreach to those I call nontraditional stakeholders 22 who have traditionally lacked access to the FCC. That 23 is why I've been pushing so hard for hearings around 24 the country. 25 23 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 24 Something tells me this hearing will not 1 disappoint me and we'll walk away from here knowing 2 some facts, granular facts that we didn't know before 3 we got here and that we'll hear some perspectives that 4 don't just automatically float into us at the FCC. 5 Lastly, I want to note that all of us here 6 today -- from the Chairman and the FCC, to media 7 advocacy groups, academics, and industry, we are all 8 interested in doing what's best, together, for the 9 American people and the American consumer. I note 10 with sadness this morning that Fred Rogers of Mr. 11 Rogers' Neighborhood died today. Here was a man who 12 really used the media to serve the public interest, 13 and his example would remind us what we're all working 14 for, TV, radio, cable, newspaper and internet, that 15 something that uplifts and informs and serves. We 16 have some extraordinary people who have made a real 17 effort to debate this issue today. That means a lot 18 to me. I know that we're all after the same thing and 19 that we can work together to do the best thing. 20 Thank you, Mr. Chairman, for calling this 21 hearing. Thanks to Dane Snowden and his capable team 22 for putting it together. Thanks to our panelists for 23 taking the time to come here. And to the audience 24 also. 25 24 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 25 MR. SNOWDEN: Commissioner Martin? 1 COMMISSIONER MARTIN: Good morning and 2 thank you for -- thanks everyone as well for braving 3 the weather to join us at this public hearing. And 4 Dane, I particularly want to thank you and your staff 5 for the incredible job, as you always do, in putting 6 this together for us. 7 I find enormous value in the opportunity 8 to talk to you and actually hear from members of the 9 public, as well as the media industry. Getting your 10 thoughts and insights on the subject our media 11 ownership rules is particularly important to our 12 thorough review. 13 When formulating media ownership rules, 14 three key principles have guided, and will continue to 15 guide, our Agency's decisions: competition, diversity 16 and localism. These core values recognize the 17 tremendous role the media plays in a functioning 18 democracy, where the ability to express diverse 19 viewpoints is essential. Indeed, much of the news, 20 information and entertainment that we receive today 21 are from the media. Thus, any decisions the FCC makes 22 with respect to media ownership will impact our day to 23 day lives, the continued expression of diversity and 24 ultimately our democratic system. Yet, we must 25 25 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 26 address these issues. Congress has required us to 1 review our broadcast ownership rules every two years 2 to ensure that they are still necessary. And the 3 courts have made clear that this cannot be a cursory 4 review, nor can we base our conclusions on 5 unsubstantiated beliefs. 6 As the Chairman has explained, if we don't 7 adequately justify our rules, the courts may eliminate 8 our ownership rules altogether. In that vein, the 9 Chairman should be commended for conducting this 10 comprehensive review. 11 There's no question that the courts have 12 been evaluating our decisions with increasing 13 scrutiny. Indeed, the D. C. Circuit has struck the 14 last five media ownership rules it has reviewed. The 15 court has repeatedly criticized the Commission for 16 failing to consider the competitive forces present in 17 the modern media marketplace and the new voices that 18 have been introduced since the rules were first 19 enacted. 20 Indeed, the media landscape has changed 21 significantly since the adoption of our current rules. 22 The number of broadcast networks has doubled and we 23 now have numerous nonbroadcast networks. There are 24 230 national cable programming networks and more than 25 26 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 27 50 premium networks that regularly rival the broadcast 1 networks in audience share. Their success is 2 naturally due to the introduction of widespread 3 popularity of multi- channel video programming 4 services. In fact, today, over 85 percent of 5 households receive their video programming via 6 satellite or cable. 7 In addition, the growth and popularization 8 of the internet has dramatically changed how people 9 receive and distribute information. The internet 10 represents a significant outlet for diverse use, as 11 well as an important source of news and information to 12 consumers. 13 It is with all these changes in mind that 14 we must conduct our review of the ownership rules. 15 Given all of the developments in the media landscape, 16 one rule in particular is in need of review. The rule 17 which prohibits a company from owning a newspaper and 18 a broadcast station in the same market has not been 19 reviewed in almost 30 years. Today, newspapers are 20 the only media entities that are prohibited from 21 owning a broadcast station, even in the largest 22 markets. Today, two broadcast stations are generally 23 permitted to combine in the largest markets and could 24 own up to six radio stations as well. Yet, newspapers 25 27 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 28 remain prohibited from owning even a single radio 1 station. 2 The Commission has stated several times in 3 the past seven years that this rule might need 4 modifying, but after three notices it has yet to act. 5 At a minimum, I think that so long as a significant 6 number of independent voices remain in the 7 marketplace, we should give broadcast stations and 8 newspapers the same opportunity to combine that two 9 television stations now have in the largest markets. 10 Of course, the introduction of new voices 11 into the marketplace does not necessarily mean that 12 all of our limits need to be relaxed or eliminated. 13 Indeed, I believe that the FCC must be mindful of 14 unintended consequences from any changes to our rules. 15 For example, many people have expressed concern about 16 the increase in consolidation that has occurred in 17 local radio. But some of this consolidation may 18 actually be due to the Commission's rules rather than 19 the numerical limits set by Congress. 20 The problem lies in the FCC's definition 21 of a market and in an obscure counting method for 22 determining how many stations in a market one entity 23 owns. The result of our practice is that the 24 Commission sometimes treats small towns like big 25 28 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 29 markets. We have raised these issues as well in the 1 current proceeding and we need to take this 2 opportunity to address them here as well. 3 Clearly, with the media marketplace 4 becoming more and more complex, there are no easy 5 answers to the task we confront. The ownership rules 6 are in need of review and in some instances revision. 7 But our guiding principles will remain at the heart of 8 all our decisions. 9 I remain committed to doing everything I 10 can to ensure that the FCC adopts ownership rules that 11 protect and promote competition, diversity and 12 localism in today's medium environment and I'm fully 13 aware of how central the decisions will be and will 14 make to the lives of many of you. 15 Thus, I welcome all of your insights and 16 commend the Chairman for instituting this proceeding 17 and scheduling this hearing. And I look forward to 18 hearing from you, both today and in the months to 19 come. 20 Thank you. 21 MR. SNOWDEN: Thank you. Commissioner 22 Adelstein? 23 COMMISSIONER ADELSTEIN: Thank you, Mr. 24 Chairman and Commissioners. I'd like to thank you for 25 29 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 30 convening today's hearing. I really appreciate your 1 leadership in pulling this together and I think it's 2 going to be a very illuminating panel we have and 3 thank you to Dane for pulling this together and to all 4 the staff of the Consumer and Governmental Affairs 5 Bureau for doing this. I'd like to thank Commissioner 6 Copps also for his leadership in calling for all of us 7 to get out of D. C. and to get out of the Beltway and 8 to hear from people that are affected by this and that 9 means everybody because everybody in this country is 10 affected by this. 11 And we have an amazing group of panelists 12 today I'm looking forward to hearing from very 13 shortly. I thank them and the audience for braving 14 the elements to get here. 15 As my colleagues have noted, we are about 16 to make some enormous decisions, some of the most 17 important decisions ever made by this Commission. And 18 yesterday, for example, we had a hearing on 19 telecommunications issues at the House Commerce 20 Committee. A lot of the hearing turned out to focus 21 on media ownership. It turned out Members of the 22 House Commerce Committee are deeply concerned about 23 how this Commission takes its role as people who are 24 charged with protecting the public interest and 25 30 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 31 ensuring that the public interest is served as we are 1 required to do by law in establishing the media 2 ownership rules of this country. Because the media 3 market isn't like other consumer products. It's not 4 like we're dictating the price of candy here. But you 5 could compare it in a sense to candy. Think about the 6 children of this country. I have a new child at home 7 and you don't want them eating sweets all the time and 8 you don't want them watching stuff on television 9 that's like candy. You want them watching the good 10 stuff, things that he's going to learn from, things 11 that are going to help his small mind to grow and to 12 develop. And we need to look at how the rules that we 13 establish affect our children. And we need to look at 14 how it affects all Americans of all ages. The media 15 really dictates the vitality of what the Supreme Court 16 referred to as the "uninhibited marketplace of ideas." 17 So we need to hear from a diverse range of 18 media voices. This is at the very core of our 19 democracy. 20 I'd like to read to you a bit from a 21 Supreme Court decision in the Red Lion case that 22 touches on this issue and really, I think, lays out 23 the role that the Supreme Court sees in law for the 24 Commission. The Supreme Court held, and I quote, "it 25 31 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 32 is the right of the public to receive suitable access 1 to social, political, aesthetic, moral and other ideas 2 and experiences which is crucial here. That right may 3 not constitutionally be abridged by Congress or by the 4 FCC." 5 So the Supreme Court decision is every bit 6 as pertinent to our discussion of the ownership rules 7 as the D. C. Circuit opinions that have asked the FCC 8 to justify our current rules. 9 We've got to build a solid evidentiary 10 record to support our rules as my colleagues have 11 indicated. But we've also got to bear in mind that 12 the Supreme Court mandate to promote the core public 13 interest values is also our job. We need to promote 14 diversity, localism and competition in our media 15 markets. And our decisions can't possibly rest on 16 just empirical evidence alone. We've got to examine 17 in quantitative data and I commend the Chairman's 18 leadership in conducting these FCC sponsored ownership 19 studies. These studies and the critiques of them, I 20 think, offer us a key part of our current record. But 21 these questions do not lend themselves to purely 22 quantitative answers. We need to hear about your 23 experiences as participants in the media marketplace. 24 You know, government rulemaking inherently involves 25 32 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 33 making predictive judgments about what's going to 1 happen as a result of actions that we take now. And 2 how can we possibly say that we can come up with any 3 scientific proof about what's going to happen based on 4 some kind of quantitative data? We've got to look at 5 what's happened in the past. We need to look at 6 history. We need to look at the radio market and see 7 if we're satisfied with what happened as a result of 8 taking the cap off entirely as Congress did to the 9 amount of radio stations that people in this country 10 can own. 11 I don't think a lot of people in this 12 country are happy about what they hear on the radio. 13 I know a lot of Members of Congress have expressed 14 concerns directly to us on the Commission. 15 So we need to make predictive judgments 16 that's done in traditional anti- trust analysis as 17 well, but those judgments have to be rooted in a 18 solid, evidentiary record, but let's not pretend that 19 this is science. The questions before us just don't 20 lend themselves to mathematical proofs. We've got to 21 use our judgment and the courts have time and again 22 affirmed the right of this Commission to exercise its 23 judgments in trying to determine what is the public 24 interest which is our legal mandate. 25 33 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 34 So how do we determine what media 1 ownership rules best promote the public interest? 2 This task is daunting and it's made even more 3 challenging by the short time frame that's been 4 proposed for this proceeding. 5 One panelist in our last hearing observed 6 that the FCC plans to revamp all of its rules in a 7 shorter time frame than an NBA basketball season and I 8 joined the Commission part way into that season. I 9 view this form as another step in our record building 10 efforts and another step getting close to the process 11 of getting ready to make those decisions. The 12 panelists that we have before us are a cross section 13 of some of the many stakeholders in this proceeding. 14 They're journalists, content producers, broadcasters, 15 educators, but even more importantly, they're 16 listeners, viewers and participants in our democracy. 17 You all have a stake in this proceeding and we want to 18 hear your views today. 19 It's been noted that we have over 15,000 20 comments on the record in this proceeding, a huge 21 number by FCC standards, but there's 250 million 22 people in this country and all of them are affected by 23 this. So today is part of an effort and we need to 24 make a lot more efforts just like this to reach out 25 34 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 35 and get more input on these massive decisions that 1 we're about to make. 2 Like I said, your participation is crucial 3 in FCC decision making. The process depends on it and 4 more importantly the outcome depends on it. There's 5 no way the Commission can fully understand the impact 6 that our decisions are going to have on different 7 constituencies unless we hear from them. 8 If we're to craft media ownership rules 9 that best serve the public interest as we're required 10 to do, we've got to hear from the public and that's 11 why I'm here. 12 I don't know yet what media ownership 13 rules will best serve the public interest, but I know 14 that the FCC must proceed with caution as we 15 reconsider our existing rules. Further media 16 consolidation can't easily be undone. Once the 17 toothpaste is out of the tube, it's going to be 18 difficult, if not impossible to put it back in. So 19 thanks again for joining us and let's get to it. 20 MR. SNOWDEN: Thank you, Mr. Chairman and 21 Commissioners. This morning, we will hear from three 22 panels on the specific themes of diversity, 23 localism and competition. The panels will be 24 moderated by Tom Krattenmaker, who will first 25 35 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 36 summarize the key broadcast ownership rules and 1 issues. 2 Before I introduce Mr. Krattenmaker, let 3 me briefly describe the two ways we have provided for 4 members of the public to participate directly in 5 today's program. First, while the panelists are 6 speaking, members of the public are invited to write 7 down any questions for the panelists on the index 8 cards located on the tables at the back of the room 9 when you came in. Those cards will be collected 10 during the panel presentations. The questions will be 11 forwarded to the moderator, who will pose them to the 12 appropriate panelists following their opening 13 statements. 14 Second, we have set aside 30 minutes at 15 the end of each panel as a public comment period. 16 Members of the public are invited to use the open 17 microphones that are located in the middle of the room 18 to offer comments regarding the pending rulemaking 19 proceeding. If you are not able to express your 20 comments today, you are welcome to submit them as a 21 part of the record in the pending broadcast ownership 22 rulemaking proceeding. To file your comments 23 electronically, go to www. fcc. gov and follow the 24 instructions for ECFS Express. 25 36 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 37 Now it is my pleasure today to introduce 1 our program moderator, Mr. Tom Krattenmaker. Tom is 2 Senior Counsel in the Washington office of Mintz 3 Levin, where he focuses on telecommunications 4 transactions and antitrust representation and 5 counseling. Prior to joining Mintz Levin, Tom was 6 Director of Research in the FCC's Office of Plans and 7 Policy under former Chairman William Kennard. In that 8 position, Tom oversaw the Commission's staff review 9 and recommendations to the Commission regarding 10 telephone, cable and satellite industry mergers. 11 Before joining the Commission, Tom served as Special 12 Counsel for Policy and Regulatory Affairs in the 13 Antitrust Division of the Department of Justice. 14 There he oversaw review of several mergers and other 15 transactions in regulated industries. Tom also 16 clerked for Justice John Harlan of the U. S. Supreme 17 Court, and spent several years in academia. He was 18 professor of law and Associate Dean at Georgetown 19 University as well as Dean of the Marshall- Wythe 20 School of Law at the College of William and Mary. He 21 has also taught at the University of Connecticut 22 School of Law and at the University of Natal in South 23 Africa. 24 We are honored and pleased to have Tom 25 37 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 38 join us today and moderate our panel discussions. 1 MR. KRATTENMAKER: Thank you, Dane. It's a 2 privilege and an honor for me to moderate today's 3 hearings and I'd like to give my sincere thanks for 4 that to each of the Commissioners and to the FCC's 5 Media Bureau for inviting me here today and asking me 6 to moderate this session. 7 I'd like to join with the Commissioners in 8 thanking you for attending and also thanks to the 9 people in Richmond for hosting us. For those of you 10 who have not already guessed it from my accent, this 11 is a bit of a homecoming for me. I am not a Virginian 12 by birth, although I was born in South Jersey, but I 13 spent most of my high school years in Richmond 14 attending both Hermitage and Douglass Freedman High 15 Schools. In fact, the high point of my career in 16 public elective office occurred right here in Richmond 17 in 1956 when I was elected President of the 8th Grade 18 at Hermitage. 19 (Laughter.) 20 As you can tell from Dane's excessively 21 kind introduction, my academic career has been in 22 constant decline since then. 23 It is the opinion of a couple of people 24 here that there might be some members of the audience 25 38 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 39 who are not so interested in learning about my 1 fascinating life as understanding why we are here and 2 what the ground rules might be, so why don't I get to 3 that. 4 Today's topics, what are we here for? The 5 Commission is in the midst of reviewing, as you've 6 heard from the Commissioners, in one comprehensive 7 proceeding, all of its rules that limit the extent to 8 which owners of radio and television broadcast 9 facilities can control additional outlets or related 10 businesses. There are essentially six of these rules 11 under review. Now remember, Dane told you I spent 30 12 years in legal education, so you pay attention because 13 there is going to be a pop quiz when I finish. 14 Four of these six rules center around 15 local markets. They are first, the local TV station 16 ownership rule. This rule provides that no one may 17 own more than two TV stations in any one market and 18 may own two only under certain conditions concerning 19 the size of the market and the strength of the co- 20 owned stations. 21 There's also a local radio ownership cap. 22 This provides that a firm may own up to eight radio 23 stations in one market, depending on the size of the 24 market which is to be measured by the number of radio 25 39 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 40 stations in that market. 1 Next we have the local TV- radio cross 2 ownership rule which provides that a firm that owns 3 only one TV station in a local market may own one, 4 four or seven radio stations in that market as well, 5 depending on the size of the local market. In this 6 case that market is measured by taking account of not 7 only the number of radio and TV stations, but also the 8 number of cable systems and newspapers in that market. 9 And the final local rule that's in this 10 proceeding is the broadcast newspaper cross ownership 11 ban, which provides that no one may own both a daily 12 newspaper and either a TV or a radio station in the 13 same market. 14 The other two rules center around national 15 markets. First, there is a limitation on TV network 16 mergers. No merger is permitted between firms that 17 are among the top four television ownership networks, 18 but a top four network may merge with a network 19 outside the top four. 20 In addition, there's a national TV station 21 ownership cap. No company may own a group of 22 television stations that in the aggregate can reach 23 more than 35 percent of U. S. households. There is no 24 corresponding limit on the number of radio stations 25 40 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 41 that any firm can own nationwide. 1 Okay, got all that? It's quite a 2 mouthful. It's easy for me to say. I practiced it. 3 But actually, it's not all that hard. As a summary 4 overview, just think local and national. In local 5 broadcast markets such as Richmond, there are rules 6 limiting TV plus TV, radio plus radio, radio plus TV, 7 and newspapers owning either radio or television. 8 Then at the national level there are limits on TV but 9 not radio network mergers, and total national TV, but 10 not radio ownership. And those are the rules that the 11 Commission is reviewing in this proceeding. 12 Now as you probably have already figured 13 out, and as some of the Commissioners have alluded to, 14 these ownership rules were not all created at the same 15 time. For example, the antecedents of the local radio 16 rule traced back almost all the way to 1927 when the 17 Federal Radio Commission, the precursor to the Federal 18 Communications Commission was set up, while the 19 newspaper ownership rule is relatively new, it's about 20 30 years old. 21 Additionally, they are not only different 22 ages, but these rules grew up in silos, so to speak, 23 not always taking account of one another or not 24 overtly taking account of one another. For example, 25 41 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 42 did you note and if you did you're doing a good job of 1 keeping up, how the local ownership rule usually, but 2 not always, takes account of local market size and 3 when the rule does take account of local market size, 4 they don't all measure the size of the market in the 5 same way. 6 Further, these rules have never before 7 been exhaustively reviewed as part of a single 8 comprehensive package. So it's really quite a 9 daunting task that the Commissioners face and much 10 easier to be a moderator than a Commissioner on this. 11 I think for those of you who are here 12 today, it's important to know not only what the rules 13 are, but why they are being reviewed collectively and 14 so thoroughly today and why the terms, competition, 15 diversity and localism, have come to frame most of the 16 discussion concerning those rules. 17 Let me talk a little bit about why now? 18 Why is the Commission doing this now? You know what 19 rules are on the table. Why are they on the table 20 today? Fundamentally, they're on the table today 21 because of what Congress did in one section of its 22 comprehensive communications law reform legislation, 23 the Telecommunications Act of 1996. 24 When Congress addressed broadcast 25 42 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 43 ownership rules in the 1996 act, it did three things. 1 First, it eliminated the Commission's national radio 2 ownership limits and it raised both the local radio 3 caps and the national TV caps. Then, Congress 4 directed the Commission to immediately tweak a couple 5 of its remaining rules. 6 Finally, and most importantly here, 7 Congress required the FCC to review each of its 8 remaining broadcast rules every two years. What 9 Congress said is that the question the FCC must 10 address in these biennial reviews is whether "any of 11 the rules" that is the six we just reviewed, "whether 12 any of the rules are necessary in the public interest 13 as a result of competition." 14 And the Federal Court that reviews the 15 Agency's ownership rules has construed that provision 16 as "carrying with it a presumption in favor of 17 repealing or modifying the rules." 18 So the Commission has been directed to 19 carry out these reviews now, and then to do it again 20 two years later and again two years after that, 21 etcetera, etcetera. Talk about the communication 22 lawyers perpetual guaranteed income act. I join with 23 all other members of the Federal Communications Bar 24 Association in expressing our undying gratitude to 25 43 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 44 Congress for having dug this very deep trough at which 1 we may feed for years on end, and apparently, my 2 grandson as well. 3 In addition to doing it every two years, 4 according to the courts, the Commissioners have to 5 approach the task with the presumption to at least 6 modify the rules. Now it's also important to note 7 these facts don't tie the Commission's hands and they 8 don't ordain any particular outcome. Presumption 9 doesn't mean fixed determination, but they do place 10 limits both on how long the Commission can wait, 11 perhaps not much longer than the course of an entire 12 NBA season, and on its ability to preserve the rules 13 without identifying evidence that clearly supports 14 them. 15 Now I wanted to say a few words about the 16 terms of the discussion, what you're going to hear 17 from the veterans or the cognicenti here. As I 18 indicated in discussing the rules, we've had limits on 19 radio and TV ownership virtually from the inception of 20 radio and television services in this country. So 21 there's quite a lot of water already over the dam, 22 including discussions, both learned discussions and 23 unlearned discussions, about what is at stake here. 24 Most people, including most Commissioners 25 44 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 45 who think about these issues, tend to conclude that 1 the values at stake are those of competition, 2 diversity and localism. And that these are three 3 distinct values, each focusing on a different aspect 4 of the effects of any media consolidation. 5 Let me try to illustrate this by taking a 6 very simple hypothetical for you. Suppose someone 7 wants to buy two television stations in Richmond, 8 Virginia. Without knowing any further details about 9 the transaction, we can already imagine three 10 different potential opponents of that merger. One 11 might say I worry about the effects of the merger -- 12 [END TAPE 1, SIDE A; BEGIN TAPE 1, SIDE 13 B.] 14 -- is I worry whether the merged firm, 15 after the merger, will be able to behave 16 anticompetitively, for example, by raising ad rates to 17 monopoly levels or by cutting back its program day in 18 order to restrict output. That's our competition 19 issue. 20 A second opponent might say well, I don't 21 really see a problem with competition here. In fact, 22 this merger might be good for competition. It might 23 create a more efficient firm, but competition is not 24 the only value we care about. I worry about 25 45 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 46 diversity. What I mean by that is I worry that the 1 merger might result in fewer distinct points of view 2 being aired in Richmond or in fewer differences in the 3 types of programs being offered over the air to 4 Richmond residents. 5 Now my hypothetical’s third opponent might 6 say I think that after this merger there will be more 7 robust competition and just as much diversity of 8 program and formats, but I worry about the impact of 9 this merger on localism. That is, I worry that the 10 owners and operators of the merged firm, as compared 11 to the previous firms, will not be as deeply rooted in 12 and in touch with the Richmond communities when 13 programs, personnel or formats are chosen. 14 Now of course, certain broadcast 15 combinations, real ones, not hypothetical ones, may, 16 depending on one's point of view, raise significant 17 questions with respect to one, two, three or none of 18 those values. Nor are these categories of concern air 19 tight. For example, as many of you have figured out 20 already, concerns about localism or competition may 21 each translate into a concern over diversity. There 22 may be other value that needs to be accounted for as 23 well. For one time I'll abuse my privilege as the 24 moderator to interject a personal view here is I 25 46 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 47 wonder why media consolidation rules should be seen as 1 an aspect of the Commission's spectrum management 2 duties. But since I seem to stand alone on that, I'll 3 retreat back to my other role. 4 I mean to say, however, that if you think 5 something other than competition, diversity or 6 localism may be at stake, you're not necessarily the 7 only one in the room who thinks that. 8 But the fact remains that most of what 9 you'll hear today will be couched in terms of 10 competition, diversity and localism. And how, if at 11 all, the FCC's ownership rules should be influenced by 12 each of those values. 13 And in fact, the staff has arranged the 14 panels, the formal panels around each of those 15 concepts. 16 So as a gross, but I hope useful over 17 generalization, we're going to spend about six hours, 18 snow willing, talking about radio and television 19 ownership patterns, national and local, actual and 20 potential and how those patterns might positively or 21 negatively affect competition, diversity and localism. 22 Got that? That's what we're all here 23 about. 24 Now how are we going to do that? We're 25 47 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 48 going to do it, please, by following two rules. As 1 your moderator, I'm asking that every participant, 2 panelist, open miker and even Commissioner alike, 3 please agree to abide by two and only two simple rules 4 today. I base these rules on my experiences with 5 public hearings, on my teaching experience and also 6 frankly on my desire to prove that I, too, support the 7 concepts of limited government and freedom of speech 8 from oppressive regulatory oversight. So we'll have 9 only two rules. 10 First rule is please stay strictly within 11 your time limits. You are important. I am important. 12 But she and he are equally important too. Every rule 13 has an exception, of course. Exemptions from this 14 rule will be granted, but only to those who need extra 15 time in order to quote extensively from one of my 16 books. 17 (Laughter.) 18 Or who are Commissioners. Double 19 exemption, if you're both of the above. 20 Secondly, again with the exception of the 21 Commissioners, of course, will you please as a formal 22 matter speak through me. Think of me, if you wish, as 23 a potted plant with a microphone. As moderator, I 24 want to be able to direct the flow of discussion, but 25 48 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 49 I will not cut it off. We don't want the panelists 1 arguing back and forth with each other. I'd like you 2 to come through me so I can bring other people in, if 3 need be. 4 Thank you, in advance, for following these 5 hopefully simple rules. 6 Now let's hear what's on your minds? For 7 your opening statements, each panelist will be given 8 five minutes and as I mentioned before, I would like 9 you to introduce yourselves because you know better 10 than I just what brings you here. 11 MR. BOZELL: Thank you, Mr. Krattenmaker. 12 My name is Brent Bozell. I'm the Chairman and the 13 founder of the Parents Television Council. 14 Good morning, Mr. Chairman, Commissioners 15 and fellow panelists. 16 Mr. Chairman, I thank you for inviting me 17 to address these hearings, but I confess at the start 18 that I do so with a certain degree of trepidation. 19 There is, for starters the angst one feels when his 20 libertarian sensibilities are assaulted by the mere 21 thought of federal intervention into ownership of 22 private property. It's probably safe to say that I 23 have never taken a position that does anything other 24 than advocate open markets unfettered by government 25 49 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 50 regulation. 1 It would follow then that as technology 2 advances in the world of communications and presents 3 new opportunities for expansion, we should all rejoice 4 and not interfere with the opportunities provided by 5 those who would enter into the market. 6 Chairman Powell, I believe, agrees with 7 this. I believe he believes this has been the result. 8 And in Chairman Powell's recent interview with a 9 Hollywood reporter he stated, and I quote, "our 10 statistics are since 1960, there's been something like 11 a 195 percent increase in outlets and 139 increase in 12 independent owners." 13 Chairman Powell went on to say "the truth 14 is, by almost any measure, there are more networks 15 than there ever were before. There are more 16 television stations than there ever were before. 17 There are more independent owners." 18 On the face of it then, it would seem that 19 deregulation has worked and media consolidation is but 20 a mythology. But then one scratches the surface, 21 digging a little deeper, in this case looking at the 22 FCC's own statistics and a different picture begins to 23 emerge. In the past 25 years, the number of TV 24 station owners has declined from 500 to 360. There's 25 50 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 51 been a massive increase in the number of cable 1 channels, yet almost three quarters of them are now 2 owned by six corporate entities, four of which are TV 3 networks. Four entities dominate the most popular 4 cable programming as well as prime time network shows. 5 Six entities control approximately two- thirds of all 6 viewers. 7 The Commission's own research is 8 devastatingly clear. And I quote: "Since there are 9 approximately 106 million TV households, the average 10 number of networks available is over 50 per household. 11 This sounds like a large number. However, when we 12 examine the ownership of these networks, we discover 13 that almost three quarters of them serving 14 approximately 4 billion subscribers are owned by six 15 corporate entities. The four major TV networks, NBC, 16 ABC, CBS, Fox and the two dominant cable providers, 17 AOL- Time Warner and ATT Liberty, completely dominate 18 the tuner." 19 And finally this, "the big three networks 20 went from an ownership share of programming of 17 21 percent in 1989 to 48 percent in 2002 through growth 22 and mergers." 23 This, I believe, is not what deregulation 24 was intended to accomplish. Obviously, the Commission 25 51 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 52 cares a great deal about the diversity issue and 1 obviously the industry cares a great deal about that 2 issue as well. But what about the public which this 3 Commission and the industry profess to serve? The 4 Parents Television Council has over 750,000 members 5 nationwide. I can only venture a guess, but I suspect 6 that if a survey were taken of them asking them what 7 they believe is the most important issue concerning 8 television today, not one percent would point to 9 diversity or competition or localism or media 10 consolidation as an important issue. But I know what 11 does top their list. Like the average American 12 family, they are disgusted, revolted, fed up, 13 horrified, I don't know how else to underscore this, 14 by the raw sewage of the ultra violence, the graphic 15 sex, the raunchy language that is flooding into their 16 living rooms day and night through the television 17 screen and poisoning the minds of an entire generation 18 of youngsters whose parents' concerns are dismissed by 19 an industry that admonishes them instead to stand 20 guard over the TV sets, perhaps with a baseball bat to 21 keep impressionable children away. 22 Now I ask the media behemoths how 23 important the issue of indecency is to them. I wonder 24 if you will find one single executive, I don't know of 25 52 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 53 one, who will even speak out on this issue, much less 1 do anything to stop it. And sadly, the FCC's record 2 on the decency issue is lacking. After all, indecency 3 on broadcast TV between the hours of 6 and 10 p. m., 4 when children are likely to be watching is against the 5 law. And the FCC is charged by Congress with 6 enforcing the law. 7 How many stations in the continental U. S. 8 has it fined over the years since its Enforcement 9 Division was formed for broadcasting indecent 10 material? According to our research of the FCC's 11 website, the answer is none. 12 So I would ask the Commission to consider 13 this. If the public good is what is driving this 14 debate, then the Commission ought to consider what it 15 is the public wants, not what the network elite wants. 16 The public is demanding that television shape up and 17 stop poisoning the culture. 18 Our hope is that as the Commission debates 19 the diversity and media consolidation issue, it keeps 20 at the forefront the one question that really matters. 21 What is the formula that will safeguard the rights of 22 families? 23 Thank you, Mr. Chairman. 24 MR. KRATTENMAKER: Thank you. Mr. 25 53 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 54 Corn- Revere? 1 MR. CORN- REVERE: Thank you, and thank you 2 Mr. Chairman and Commissioners for inviting me to 3 address this very important issue. 4 I am a partner of the Washington law firm 5 of Hogan and Hartson, although I should add as sort of 6 a footnote to my affiliation that that's going to last 7 for exactly one more day. On Monday, I become a 8 partner in the Washington, D. C. Office of Davis Wright 9 Tremaine. I am not speaking on behalf of any clients 10 today. I'm presenting solely my own views. 11 It's interesting this proceeding is about 12 the broadcast ownership rules, but it's remarkable the 13 extent to which it is becoming a discussion of 14 broadcast content more than anything else, as Mr. 15 Bozell's comments just indicated. The common 16 denominator is a purported link to concentration which 17 appears to create a multitude of sins beyond just a 18 generalized concern about diversity. 19 Some participants in this proceeding argue 20 that the media concentration has made television 21 bland. Others claim that it leads to more programming 22 that is decent or violent. Raw sewage, I guess, is 23 the expression that Mr. Bozell used, indicating he's 24 clearly been able to overcome his libertarian 25 54 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 55 sensibilities. 1 Still others suggest that media 2 concentration affects program quality, including the 3 quality of news reports. The latest claim was made 4 this week by Senator Zell Miller of Georgia. In an 5 impassioned speech on the Senate Floor, he sharply 6 criticized CBS for its planned reality show, "The Real 7 Beverly Hillbillies." Senator Miller seemed to blame 8 the advent of the show on media concentration, 9 contrasting the current CBS Viacom Corporation with 10 the CBS network of 1960s when, as he put it, 11 "courageous CBS reporters risked their lives to cover 12 the civil rights struggles in the South." Oddly 13 enough, in 1963, CBS was criticized in Senate hearings 14 for following the NAACP line. 15 Now this example struck me as particularly 16 strange because as a kid growing up in rural Illinois, 17 some of my favorite shows were on CBS and they 18 included "The Beverly Hillbillies," "Petticoat 19 Junction,” and "Green Acres." I still one day aspire 20 to having a cement pond. 21 (Laughter.) 22 Of course, there weren't many alternatives 23 at the time. We received three over- the- air stations 24 and cable was a long way off. Satellite TV, VCRs and 25 55 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 56 DVDs and personal digital video recorders weren't even 1 a gleam in the eye. 2 By comparison, it's difficult to 3 understand some of the current claims about reduced 4 diversity. It's sobering, for example, to realize 5 that when Chairman Newton Minnow called television a 6 vast wasteland in May 1961, fewer programs were aired 7 in New York, the largest medium market in the world, 8 on all of its television stations each week than there 9 are channels today. 10 It seems to me that blaming concentration 11 in the media for the programs we don't like is 12 somewhat like the drunk who searches for his keys 13 under the street light, not because that's where he 14 lost them, but because the lighting is so much better 15 there. 16 (Laughter.) 17 After all, it's clear that the Commission 18 would bump up against the first amendment pretty 19 quickly if it tried to force programming that was less 20 bland or if it tried to, God help us, ban those stupid 21 reality TV shows. 22 There appears to be a belief by some that 23 the government can achieve its goal of content 24 regulation if only it frames its rules as economic 25 56 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 57 regulations. The thought is that programming can be 1 achieved by indirection, rather than by direct 2 regulation. 3 Of course, it's also true that threats of 4 new structural regulations or promises of relaxation 5 of existing rules can become powerful inducements in 6 getting broadcasters to reform their editorial 7 policies. 8 The Commission should bear in mind that 9 such economic regulations are not immune from first 10 amendment scrutiny where their purpose is to affect 11 the programming content on broadcast television. 12 There have been a few examples that we've seen in the 13 past, for example, the U. S. Court of Appeals for the 14 District of Columbia Circuit struck down a provision 15 that prohibited extending any existing newspaper 16 broadcast cross ownership waiver where it was 17 motivated by hostility to the editorial policies of 18 Rupert Murdoch. 19 Similarly, the D. C. Circuit has struck 20 down EEO rules designed indirectly to promote minority 21 viewpoints. The court said that it was too amorphous 22 to simply promote diversity in the abstract, but on 23 the other hand opined that if you were to try and 24 promote specific viewpoints, then you would encounter 25 57 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 58 significant first amendment problems. 1 More recently, the court held that the 2 FCC's general power must be interpreted narrowly when 3 it comes to programming issues, since such matters 4 inevitably raise first amendment questions. 5 Trying to devise regulations with the 6 purpose to improve the quality of broadcast programs 7 is entirely too nebulous a goal and too difficult to 8 attain. The FCC adopted the prime time access rule in 9 the 1970s to promote news events and public affairs 10 and instead brought us "The Gong Show." 11 The current demands to bring back the 12 financial interest in syndication rules face the same 13 problem. We are told that programs will be more 14 creative and less bland if FCC limits the amount of 15 network programming that the networks can own in prime 16 time. But this argument was made to the Commission 17 before in 1991 when the Commission was considering 18 Fin- Syn rules at the time. My boss at the time, 19 Commissioner Quello, addressed the issue of 20 programming quality and creativity in his dissent from 21 the decision in 1991 not to eliminate the rules at the 22 time. 23 And if I can beg your indulgence just to read what he 24 said at the time -- 25 58 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 59 MR. KRATTENMAKER: The objection will be 1 -- cover the quotations from an illustrious 2 Commissioner. 3 MR. CORN- REVERE: Yes, thank you very 4 much. At the time he wrote in his dissent, when 5 presented with the argument that the creativity and 6 quality of network programs would increase only if you 7 retain the Fin- Syn rules he said, "I asked one 8 executive from an independent production company who 9 had been urging me to preserve creativity and quality 10 in television exactly how network involvement would 11 have changed the company's most successful show, 'The 12 A- Team. ' He was stuck for an answer. Yet, even if he 13 had been able to describe the particular ways in which 14 barring a network’s financial interest would improve 15 'The A- Team, ’ I'm not at all certain that I would want 16 my public interest calculated in this proceeding to 17 turn on that answer." 18 MR. KRATTENMAKER: Thank you. 19 MR. CORN- REVERE: Thank you. 20 MR. KRATTENMAKER: Mr. Ireland? 21 MR. IRELAND: Yes, good morning, Chairman, 22 Commissioners, distinguished guests. I'm Jay Ireland, 23 President of the NBC Television Stations and I'm 24 delighted to speak with you this morning regarding the 25 59 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 60 realities of today's media marketplace that we compete 1 in. 2 As you've heard from a number of people, 3 today's world is not the world of forty years ago when 4 markets like Washington, D. C. had fewer than 30 local 5 metropolitan media outlets and Richmond had a mere 6 handful. 7 Today, Washington has 65 broadcast 8 stations alone and literally hundreds of other media 9 outlets including hundreds of cable or satellite 10 television networks, a hundred or more satellite radio 11 channels, dozens more daily or weekly newspapers, and 12 most importantly, the internet which empowers every 13 user to be his or her own programmer, editor or 14 content creator. 15 According to the FCC's own data, there's 16 been nearly a 200 percent increase in the number of 17 media outlets and 139 percent increase in the number 18 of owners since 1960. 19 Let's look at the media landscape today 20 that we compete in. There are over 2200 commercial 21 television stations. Eighty- five percent of TV homes 22 receive their signal from either cable or satellite 23 which we've heard previously. The average number of 24 channels received is 89 of which roughly 14 are 25 60 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 61 over- the- air. 1 Here's another way to look at it. During 2 prime time, the NBC and Telemundo stations attract 3 less than 3 percent of the nation's total television 4 audience. Yet, the FCC rules assume that nearly 35 5 percent of the nation's television audience is 6 continually watching NBC and Telemundo. 7 The programming side is equally 8 competitive. NBC used to compete against two other 9 networks to acquire first run prime time programming. 10 Now it has to compete against as many as six other 11 general entertainment, English language broadcast 12 networks and over 100 targeted cable networks. As a 13 result, on a typical night only 50 percent of the 14 television viewers are watching the four major 15 networks. This unprecedented and ever growing level 16 of media and programming diversity is a reality of 17 today's media marketplace. 18 In this diverse marketplace, it makes no 19 sense to treat the broadcasting industry with 20 ownership rules developed more than a half century 21 ago. Those rules were based on a view of the world 22 where broadcast television was the only source for 23 video programming. That world no longer exists as we 24 know. Therefore, the rules must reflect today's 25 61 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 62 marketplace. 1 Let me now turn to the issue of diversity. 2 Some advocates for more government intervention argue 3 that relaxation of the national cap risk a local 4 viewpoint. The reality is that in large markets there 5 is virtually no solely local ownership of television 6 stations. The only thing the cap does is protect 7 national groups, many of which own 20 or more 8 stations, from having to compete with network owned 9 stations and markets. 10 Some who seek continued government 11 protection argue that the national cap protects the 12 affiliate's ability to pre- empt programming. That's 13 not true. On average, a network affiliate pre- empts 14 about as often as the average network O & O and an NBC 15 affiliate uses only half of its annual pre- emption 16 basket which are the number of hours of network 17 programming an affiliate can pre- empt for any reason 18 at all. 19 Indeed, the network- owned stations 20 broadcast programming that is more local than the 21 programming of the affiliated stations. As an 22 example, NBC has owned Telemundo for less than a year 23 and we have already added many newscasts in several 24 key Spanish language markets. Also, the NBC- owned 25 62 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 63 stations, on average, air more hours of local news per 1 week than the independently owned stations. 2 The real measure of local relevance is the 3 viewership in the community and on average, NBC's 4 owned and operated stations perform at least as well, 5 if not better, than most independently owned stations. 6 There's another way the FCC rules inhibit, 7 rather than promote program diversity. NBC is up 8 against the cap because it wants to make Telemundo a 9 competitive Spanish language network. The cap 10 prohibits NBC from continuing its efforts to acquire 11 stations that might improve Telemundo's ability to 12 provide real diversity of programming. That's the 13 reality of the cap. 14 Let me quickly address ownership, local 15 ownership rules. Some argue that local viewpoint 16 diversity would be lost if any party was allowed to 17 own more than two television stations regardless of 18 the size of the market or the stations involved. But 19 the reality is that every market in the country has 20 plenty of media outlets to ensure viewpoint diversity, 21 even if the local ownership rule is relaxed. 22 Moreover, the FCC's existing rules treat 23 different markets differently. The FCC believes that 24 I can own two of nine stations without risking 25 63 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 64 diversity in a smaller market, but in a larger market 1 with many more stations, I am still limited to two 2 stations. This result defies logic. 3 Some assert the common ownership results 4 in common viewpoint. The reality is viewers demand 5 differentiated content. It would not be in our 6 economic interest to simply offer similar viewpoints 7 on multiple stations. As an example, the NBC and 8 Telemundo stations in the same market, I can tell you, 9 clearly do not offer similar programming. 10 In conclusion, relaxation of the 11 Commission's ownership rules will not diminish 12 diversity. What will diminish diversity is the loss 13 of media outlets because they can no longer compete in 14 today's fragmented marketplace. If those who want 15 more government intervention win, the reality will be 16 that viewers will lose. This is because the broadcast 17 networks will no longer be able to afford to obtain 18 the top quality programming that viewers have grown 19 accustomed to and on the local level, groups will not 20 be able to gain efficiencies needed to compete. 21 The best protection against television 22 becoming an increasingly marginalized source of 23 information and entertainment in today's marketplace 24 is not more regulation, but more competition, 25 64 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 65 nationally, locally and in programming. 1 Thank you. 2 MR. KRATTENMAKER: Mr. Liggins? 3 MR. LIGGINS: Good morning, Mr. Chairman, 4 and to the other Commissioners as well. I am Alfred 5 Liggins, Chief Executive Officer and President of 6 Radio One, Incorporated. Thank you for inviting me to 7 speak before you today on this important issue of the 8 benefit of diversity in media ownership. 9 I'm here today to share with you my 10 experience and views on how diversity and media 11 ownership have positively affected the broadcast 12 industry and the American public. I trust that at the 13 conclusion of this hearing, I will have provided some 14 additional insight as to the difference such diversity 15 can make to the public debate and dissemination of 16 information. 17 This is the twenty- fifth anniversary of 18 the 1978 minority ownership policy statement whose 19 history stands as an example of what creative 20 rulemaking can accomplish. In 1978, there was only 21 one minority owned television station and 59 minority 22 owned radio stations. By 1995, when the tax 23 certificate policy was repealed in comparative 24 hearings basically came to an end, there were 35 25 65 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 66 minority owned television stations and about 320 1 minority owned radio stations. 2 Today, in Richmond, Virginia, Radio One is 3 the only minority owned broadcaster. Prior to 4 deregulation there were numerous other minority 5 owners. The significant decrease in the number of 6 minority owned television and radio stations is an 7 illustration of how federal rules and policy making 8 can dramatically change the landscape of equal 9 opportunity and diversity. 10 I would like to devote a minute or so to 11 providing some background information on Radio One. 12 As Radio One is the largest African- American 13 controlled radio broadcasting company in the United 14 States, this background information will be relevant 15 to our discussion today. 16 My mother, Katherine L. Hughes, founded 17 Radio One in 1980. Owning a radio station was the 18 fulfillment of her goal of increasing the number of 19 African- American voices heard on radio. 20 Interestingly, she was able to realize this goal by 21 taking advantage of the FCC's distress sell policy. 22 Radio One's entre into broadcasting commenced with the 23 acquisition of station WOL- AM in Washington, D. C. For 24 seven years, this was the company's sole station and 25 66 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 67 yet operating at a mere thousand watts it established 1 the cornerstone of the company's core mission, 2 presenting news, entertainment and information from 3 the African- American perspective. It was on WOL- AM 4 that my mother pioneered a new and innovative format, 5 24 hour talk from a black perspective and adopted the 6 slogan, "information is power." 7 The meaning of that slogan was as relevant 8 and important to her generation as it is to mine. The 9 ability to control the airways through ownership gives 10 one the power to proactively inform, educate and 11 inspire one's community. I am certain that if my 12 mother had not been the owner of WOL, she would not 13 have had the opportunity accomplish this important 14 goal. 15 Over the past two decades, Radio One has 16 grown from that single AM station to 65 stations in 22 17 markets and also provides programming to 5 channels on 18 FM satellite radio, one of which is a simulcast of 19 WOL. Radio One's expansion to a company of national 20 scope is attributable in part to the decision to go 21 public in 1999 which made capital more accessible and 22 less expensive and Clear Channel's commitment to 23 divest a number of stations being acquired from its 24 AM- FM acquisition to minority- owned companies, an 25 67 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 68 example of deregulation actually creating more 1 diversity. 2 Through that divestiture, Radio One 3 acquired stations in such major markets as Los 4 Angeles, Dallas and Houston. Although we are a public 5 company, my mother and I continue to retain a majority 6 of the voting control of Radio One. In spite of our 7 significant growth, we have continued to maintain our 8 core focus, providing entertaining and informative 9 content that serves the needs of the African- American 10 community. 11 Of our 65 stations, 60 have formats that 12 are targeted toward the African- American listener. 13 Our diverse programming formats include black talk, 14 hip hop, R & B, jazz and gospel. I believe that 15 unlike many of our majority owned counterparts, we 16 offer to our listeners a viewpoint that is more 17 specifically focused on their community's interests 18 and needs. 19 Studies have shown that there are 20 significant disparities in the treatment of 21 African- Americans in local and national news. In 22 addition, African- Americans still face a lack of 23 quality programming in the media focused on their 24 needs, interests and perspectives. 25 68 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 69 I strongly believe that minority owned 1 radio stations provide more minority focused content 2 and a greater focus on the concerns of the minority 3 community. Likewise, our listeners take great comfort 4 in knowing that the information and opinions presented 5 are derived from a shared perspective that there is a 6 collective stake in the issues being discussed. 7 Perhaps the best way to illustrate this is 8 to point out a few examples of how Radio One uniquely 9 serves the needs of its listeners. Our stations 10 regularly provide important health care information 11 that is relevant to African- Americans, including 12 information concerning the disparity and the quality 13 of health care, the significantly higher mortality 14 rate and the increased risk of heart disease. We also 15 provide information on college admissions, sponsor 16 college scholarship opportunities and help raise funds 17 in support for historically black colleges and 18 universities. We've raised cash and other donations 19 for Princeville, North Carolina, the oldest town in 20 America incorporated by freed slaves which was 21 devastated by flood. 22 On a regular basis, we sponsor job fairs 23 and other events in the African- American community and 24 promote voting and other civic participation. These 25 69 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 70 are just a few of the ways in which we attempt to 1 serve the needs of our listeners. 2 Obviously, I cannot state with certainty 3 that these issues are not of important concern to our 4 nonminority owned companies, however, I can assure you 5 that as an African- American owner, I am committed to 6 ensuring that Radio One continues to focus on the 7 African- American community and to present that 8 viewpoint to the American public. 9 We've also just announced a new cable 10 venture with Comcast Corporation. Comcast 11 Corporation, now the largest cable operator in the 12 country, shares Radio One's view of the importance and 13 of the need for more diverse programming and as a 14 result has committed to a significant investment and 15 resources in this channel in order to make this a 16 reality. Yet another example of deregulation 17 increasing diversity. 18 Thank you. 19 MR. KRATTENMAKER: Thank you very much. 20 Ms. Riskin? 21 MS. RISKIN: Thank you. I am Victoria 22 Riskin, President of the Writers Guild of America, 23 West, which represents the great majority of writers 24 and producers who create prime time entertainment 25 70 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 71 programs and I would like to add the good programs. 1 Thank you for inviting me to speak about 2 the importance to the nation of diversity in media. 3 The media are the modern day American town square, the 4 place where people from different backgrounds and 5 points of view share their stories and the public 6 learns about the world. Here is where American 7 democracy comes alive and the American identity is 8 forged. But today, barriers have been erected to keep 9 all but a handful of voices from being heard in our 10 town square. 11 The Commission and the courts have asked 12 for data about diversity in entertainment programming. 13 As President of the Writers Guild, I can tell you that 14 over the past decade, diversity of production sources 15 in the marketplace has been eroded to the point of 16 near extinction. 17 In 1992, only 15 percent of new series 18 were produced for a network by a company it 19 controlled. Last year, the percentage of shows 20 produced by controlled companies more than quintupled 21 to 77 percent. 22 In 1992, 16 new series were produced 23 independently of conglomerate control. Last year, 24 there was one. 25 71 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 72 The opportunity for access for a broad 1 range of voices has been cut dramatically. The claim 2 has been made that because we now have hundreds of 3 channels on cable, choices abound. But more channels 4 does not really mean more choices. In the past, the 5 FCC has defined a major network as one that reaches 16 6 million or more homes. By that definition, there are 7 91 major networks. But of these 91, 73 or fully 80 8 percent are owned or co- owned by six corporate 9 entities. Five of these six are the same corporations 10 that run the broadcast networks; Viacom, Disney, News 11 Corporation, General Electric and AOL- Time Warner. 12 Any doubt about the control exercised by 13 these five companies was dispelled in a recent report 14 by respected Wall Street media analyst Tom Wolzien 15 which I've attached to my comments. Wolzien points 16 out that a strong programming oligopoly is beginning 17 to re- emerge. For December 2002, he found that the 18 five conglomerates controlled about a 75 percent share 19 of prime time viewing. Wolzien concludes that over 20 the next few years with the further consolidations he 21 expects to occur, these five companies will control 22 roughly the same percentage of TV households in prime 23 time as the three networks did 40 years ago. In other 24 words, the control by a few conglomerates will be as 25 72 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 73 absolute as ever in history. 1 The data we submitted to the Commission 2 documenting the dominance of content by a handful of 3 vertically integrated conglomerates has been 4 corroborated by an independent analyst. No longer can 5 anyone argue that the facts of such control or their 6 potential impact are in doubt. The old programming 7 oligopoly of media content is being rebuilt. 8 The creative community has seen in recent 9 years how increasingly difficult it is to bring 10 innovative shows to the air. All too often, indeed 11 virtually invariably, to get their work on television, 12 writers and producers must cede ownership and creative 13 control to the network or cable companies. Most have 14 no choice, none at all. They must accept the network 15 or cable company as a partner and surrender their 16 independence with the result that if their show does 17 not make the schedule, they are now prohibited from 18 taking it elsewhere. 19 Nearly 100 small and medium size 20 businesses, each with its unique point of view have 21 disappeared in the last 10 years. Why is the 22 disappearance of a small independent producer and 23 writer an issue for public concern? Because with them 24 have gone stories from hundreds of writers and 25 73 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 74 producers who care deeply about original drama, 1 comedy, history, culture and not just, for example, 2 just ratings, ratings, all the time, ratings. 3 We ask you to consider the rules governing 4 media ownership, as you do that you look to expand 5 diversity, not limit it to these gigantic 6 corporations. We ask you to take constructive action 7 to remedy the serious imbalance that has taken root in 8 the programming marketplace. 9 We are asking you to ensure that a few 10 companies do not continue to have a strangle hold on 11 free expression and open debate. 12 MR. KRATTENMAKER: Ms. Riskin, your time 13 is up. 14 MS. RISKIN: Thank you. 15 MR. KRATTENMAKER: Did you wish to 16 conclude? Okay, thank you. 17 I just wanted to remind members of the 18 audience that if you wish to -- there are cards in the 19 back you can fill out if you've got questions you want 20 to ask of the panelists. If we have time, I will try 21 to ask some of these questions. If not, we'll get to 22 them at some other point. So we welcome receiving the 23 cards. 24 That did not come out of your time, Mr. 25 74 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 75 Schwartzman. 1 MR. SCHWARTZMAN: Thank you, Mr. 2 Krattenmaker. Thank you. I believe the Commission 3 and should retain its existing ownership rules, except 4 that it should eliminate the so- called UHF discount. 5 Five minute, five points and a sixth about Telemundo, 6 if there's time. 7 First, while I feel genuinely honored to 8 have been asked to speak today, at the risk of seeming 9 discourteous, I must observe that today's hearing is 10 not likely to be very useful. To develop a complete 11 record, you need to hold more hearings under different 12 conditions and I don't just mean weather. The purpose 13 of field hearings is to paint viewpoints and 14 perspectives which are unavailable at home. This 15 principle is especially relevant to a panel on 16 diversity. But unlike the public forum held at 17 Columbia University last month, today's agenda has too 18 many familiar faces from inside the beltway and too 19 few additional perspective from local residents. 20 Mr. Corn- Revere and I have frequently 21 debated each other in professional meetings in 22 Washington where we both work. 23 Ms. Thompson and Mr. Bozell also work 24 inside the beltway. 25 75 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 76 Mr. Liggins' office is technically outside 1 the beltway, but it's actually within sight of the 2 beltway and for all practical purposes is inside the 3 beltway. 4 We didn't need to brave a snowstorm to 5 present viewpoints available to you back home. 6 (Applause.) 7 Not only that, the structure of today's 8 hearing offers little opportunity for the exchange of 9 ideas. Seven panelists, five minutes each, 50 minutes 10 total, do the math. This is especially disappointing 11 inasmuch as the record developed in this docket as 12 Commissioners Copps and Adelstein have pointed out, 13 raised many questions as to which there is yet not 14 enough answers. This event does little to fill in the 15 blanks and answer those questions. 16 Second, I want to say what I've said to 17 the Commission on other similar occasions. We have 18 the best system of broadcasting in the world because 19 of, not in spite of, the ownership regulations 20 utilized since 1934. The Commission is mandated to 21 ensure that broadcasters serve all members of the 22 public. The marketplace works well in many respects, 23 but it is not perfect. In particular, the market does 24 not recognize and serve the needs of those who are too 25 76 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 77 old, too young, too poor to be demographically 1 attractive. Large group owners who increasingly lack 2 roots in the community they serve are less likely to 3 meet the needs of everyone. 4 Over the last 25 years, I've testified 5 before the Commission and Congress on many occasions. 6 More often than not, I appear as I do today with 7 broadcasters who exemplify the best service standards 8 in the industry. But I urge you to focus on the fact 9 that the Commission must regulate on the proclivities 10 of the worst and most rapacious among them. You need 11 to pay attention to who does not attend these 12 hearings. Relaxation of national ownership caps and 13 creation of larger local ownership combinations has 14 permitted some broadcasters to ignore news programming 15 and to abandon their communities in favor of voice 16 tracking and central casting. 17 Third, I think the Commission has set an 18 artificially high bar for those of us who support the 19 existing ownership rules. We've been told to avoid 20 emotionalism and confine ourselves to presenting 21 empirical data to support the rules. I do not 22 apologize for being emotionally attached to localism, 23 diversity and the first amendment. Moreover, the term 24 empirical has been wrongly equated with statistical. 25 77 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 78 My dictionary defines empirical as meaning capable of 1 being verified or disproved by observation or 2 experimentation. Much empirical evidence is not 3 statistical and the Commission should not be ignoring 4 such observational evidence. 5 Fourth, I believe that at least some 6 members of the Commission and staff have placed an 7 undue emphasis on searching for elusive formulae. The 8 Commission has been created as an expert agency 9 because Congress expects it to make predictive 10 judgments. In calling for you to exercise this broad 11 and necessarily subjective discretion, I'm not 12 offering an excuse to justify a result that I seek. 13 Indeed, such predictive judgments can and have been 14 used over the last 20 years to deregulate more often 15 than they've been used to regulate. 16 Fifth, and not withstanding what I've just 17 said, the civic, consumer, labor and civil rights 18 groups that have filed in this docket have submitted 19 powerful and detailed statistical evidence which 20 strongly supports retaining existing rules. They've 21 also pointed to shortcomings in the study the 22 Commission has generated and unlike the broadcasting 23 industry, they have also responded to the Commission's 24 request for metrics which can be employed to measure 25 78 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 79 concentration. While such formulae should be one of 1 many factors the Commission should consider, my 2 colleagues have presented a scheme based on developing 3 a weighted HHI index which would be a significant 4 improvement over the traditional HHI employed in other 5 economic sectors and I urge you to consider it. 6 Finally, with respect to what's been said 7 about Telemundo and NBC's concern that the ownership 8 cap is holding it down, I think the answer here is 9 waivers and I'll be happy to sit down with Mr. Ireland 10 and Ms. Thompson. If they want to have a waiver of 11 the national ownership cap for second language 12 programming, that's a perfectly legitimate public 13 interest justification to present as a waiver, but 14 it's not a reason to throw the baby out with the 15 bathwater. 16 Thank you. 17 (Applause.) 18 MR. KRATTENMAKER: Thank you. Ms. 19 Thompson? 20 MS. THOMPSON: Buenos dias. It's a great 21 honor for me to have the opportunity to address such a 22 distinguished Commission and audience. I am here 23 representing ZGS Broadcast Holdings which is a 24 minority- owned broadcasting company. 25 79 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 80 E pluribus unum. The strength of this 1 great nation is founded upon the principle of e 2 pluribus unum, out of many, one. The intrinsic value 3 of this coin reflects the progress of this nation 4 throughout history, a prosperity that is clearly 5 rooted in the diversity of its people and consequently 6 of its business community. 7 The Hispanic community has grown to become 8 the largest minority group in this country. However, 9 Hispanic participation and representation in the 10 broadcasting industry continues to decline, which is 11 both a concern for our community and a concern from a 12 public policy perspective. 13 I am here today to express unequivocally 14 the importance of protecting and promoting minority 15 representation in the broadcasting industry. As the 16 Federal Communications Commission considers changes in 17 the current ownership rules, it is my sincere hope 18 that it will not allow conciliation and survival of 19 the biggest to do away with the small and community 20 rooted broadcasters that offer a unique service to the 21 public. On the contrary, it will be my hope that the 22 Commission looks to create and ensure opportunities 23 for small and minority broadcasters to thrive and 24 prosper into the future. 25 80 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 81 Fifteen years ago, Ronald Gordon, 1 President and owner of our company, ZGS Broadcasting 2 Holdings, had the vision and commitment to see that 3 the Hispanic market will someday become a strong and 4 prosperous business opportunity. Born and raised in 5 Peru, Mr. Gordon embraced his Hispanic roots and the 6 potential in serving a community that very few people 7 knew, valued or cared to serve. His pursuit of the 8 American dream -- in Spanish broadcasting -- was an 9 incredible, difficult and challenging task. The only 10 viable financial option was low power television and 11 given the limitations and secondary nature of the LPTV 12 service, no financial institution was willing to back 13 him. Ultimately, not surprising, it was a Hispanic 14 run bank that provided him the funds to acquire ZGS' 15 first station. He risked and personally guaranteed 16 his assets in order to offer our growing community a 17 television station it could call its own. Since then, 18 ZGS' commitment to higher standards and service to the 19 Hispanic community have allowed the company to grow 20 into the largest affiliate of the Telemundo network 21 with LPTV Class A stations in Boston, Hartford, 22 Springfield, Providence, Orlando, Tampa and 23 Washington, D. C., along with radio properties in 24 Washington, D. C. and Tampa. 25 81 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 82 Today, ZGS Broadcast Holdings has over 160 1 employees of which 90 percent are of Hispanic descent. 2 My station, WCDC, has over 25 employees and each one 3 of us has an unwavering commitment to serve our 4 audience. Through our local news and Washington's 5 only Spanish- language public affairs program, Linea 6 Directa, the Hispanic community in this area is kept 7 informed of core issues. We are the community's only 8 vehicle to learn about the services and opportunities 9 available in our region. That is why we devote so 10 much effort to our educational projects such as our 11 Read to Succeed literacy campaign, the focus is on the 12 importance of literacy and scholastic achievement for 13 the success of our community. 14 We are very proud to be a Hispanic- owned 15 broadcaster and prouder still of the difference we 16 make in our communities. Our motto says it all, La 17 Voz de la Comunidad, the Voice of the Community. 18 There are several initiatives that the 19 Commission can consider to encourage and promote 20 diversity in broadcasting. As community broadcasters, 21 we can appreciate the opportunity that an enhanced 22 LPTV service can offer smaller broadcasters and I 23 would encourage the Commission to review how the 24 coverage and the status of this television service can 25 82 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 83 be improved and solidified. 1 Class A was a critical addition for 2 community broadcasters which allow many small and 3 minority players to stay in the game. ZGS' stations 4 are all Class A and as you have just heard, we do more 5 in our communities than many full power stations 6 across the country. Our business is not just about 7 dollars and cents. We would like to think that it 8 represents more public value and better use of the 9 public airways than home shopping. 10 But Class A is simply not enough. Like 11 all broadcasters, small community broadcasters need 12 access to distribution, cable distribution. As Class 13 A stations, we have to comply not only with all the 14 regulatory requirements of full power stations that 15 provide local programming, which full power stations 16 do not need to do. Bigger is not necessarily better 17 and my hope is that the Commission will consider 18 providing Class A community stations which provide 19 local content and local service with the same 20 privileges accorded to full power stations, especially 21 [in Spanish.] 22 MR. KRATTENMAKER: Thank you. 23 (Applause.) 24 MR. KRATTENMAKER: That concludes the 25 83 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 84 panel's remarks. Technically, we have run out of 1 time, but people have done an excellent job of staying 2 within this timeframe, but it's obvious that I'm sure 3 the Commissioners have many questions they want to 4 ask, so why don't we begin with the Commissioners. 5 Commissioner Adelstein? 6 COMMISSIONER ADELSTEIN: Thank you, Mr. 7 Krattenmaker. 8 Mr. Ireland from NBC, I have a question 9 for you, and Mr. Schwartzman, maybe if you could 10 respond as well. 11 You raised a very interesting point. You 12 said the internet can serve, allow people to become 13 their own programmer or editor. You'll be happy to 14 know that my staff person gets her weather from NBC4 15 in Washington, D. C. When she doesn't have the 16 opportunity to get it on television though, guess 17 where she goes? She goes to your NBC4 website. So 18 you win in both cases. 19 The question is she doesn't go to the 20 National Weather Service and do her own forecast. 21 Similarly, today's hearing for example, I doubt many 22 people are going to go to the web and look at all the 23 testimony, read all the testimony. The vast bulk of 24 people that hear the story at all, are going to get it 25 84 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 85 on the Washington Post website or on the website of 1 their local newspaper or in their newspaper itself. 2 They're not going to want to process and be their own 3 programmer or editor, as much as they might like to. 4 So my question is for you, first of all, 5 isn't a lot of what people get over the internet on 6 major sources that are already owned by the major 7 corporations in America and do people really want to 8 be their own editor or programmer? Does the internet 9 really function as a substitute for programming that 10 they get on their news sources? 11 MR. IRELAND: Well, I believe that the 12 internet does provide a varied amount of access to 13 people to a lot of information. Yes, we do have a 14 website that ties into our television station, but it 15 pales in comparison from the standpoint of what The 16 Washington Post gets and what the Weather Channel 17 might get for someone to check weather. 18 There's also many national news services 19 available, as well as information from just knowledge 20 or whatever people may want to look at. 21 There's no way that we can direct the 22 users of the internet to our sites. They have the 23 complete flexibility to cruise. They can google, they 24 can do whatever they want to try to figure out how to 25 85 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 86 get to a site. We hope that they come to our sites 1 because we have compelling content. We address their 2 local issues. We address what their concerns might be 3 around some areas that we deal in. 4 We obviously cannot be everything to 5 everybody, but at least in that specific example, 6 again, the people have the power of choice and we just 7 hope that as they go through that we're able to 8 provide them an alternative for them to choose from. 9 MR. SCHWARTZMAN: The short answer is that 10 the internet has yet to become and may never become a 11 significant source of original, local content about 12 news and information. Virtually all of the locally 13 generated information available on the internet is 14 recycled from local newspaper and broadcast properties 15 who have leveraged their incumbent status. In fact, 16 the three sites just mentioned, Washington Post, NBC4 17 and Weather Channel which is Discovery Communications, 18 excuse me, Landmark Communications, are all major 19 media operators. 20 The Commission's own data about -- 21 [END TAPE 1, SIDE B; BEGIN TAPE 2, SIDE 22 A.] 23 -- reached the conclusion that internet 24 and other sources are not effective substitutes. 25 86 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 87 Professor Owens' study is particularly egregious in 1 failing to take that into account. Even using a .1 2 level of statistical significant, the Waldfogel 3 (Phonetic) study shows almost no substitution. The 4 short way to view it is as follows: when somebody 5 wants to get elected to public office, do they buy 6 internet banner ads or television ads? Thank you. 7 CHAIRMAN POWELL: I'd like to ask a more 8 general question that I think underlies all of that 9 and by the way I would note that a major Democratic 10 Presidential candidate has announced that his 11 Presidential Office is on the internet. It suggests 12 that the internet may not be there yet, but is 13 certainly maturing as a source of political discourse 14 or you wouldn't have a Presidential candidate using it 15 so extensively. 16 I also would note that where most people 17 go to get their weather is the Weather Channel which 18 isn't one of the dominant ones being alluded to so 19 frequently. 20 I think one of the things that is 21 difficult for us and I think difficult for all of you 22 is when is popularity dominant and not just 23 popularity? We talk a great deal about paying 24 attention to what consumers want, but half the time 25 87 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 88 what we're railing against is what consumers chose. 1 Mr. Bozell, I have two young children and 2 I care a lot about what they watch on TV. I don't 3 think I stand there with a baseball bat, but I 4 certainly pay attention to what they see. But I don't 5 know how to dismiss as a government official the fact 6 that there may be a class of programming to which a 7 vast majority of individual American citizens prefer 8 to watch and it may not be the programming that I 9 would choose for my child to see or may not be the 10 programming that certain groups would prefer to see, 11 but there is an element of the public interest that is 12 what interests the public. And I've often heard and I 13 respect the argument there should be some concern 14 about our culture and our society, but it's very 15 difficult to quantify as a matter of governmental 16 action when you're going to take steps to go beyond 17 what it is the public itself responds to. 18 So we can be disparaging of that. We can 19 call it sludge, but it's the sludge people are 20 watching. We could call it dominance, but it's the 21 quality choices that people are making. And where 22 I've always struggled with this is how does government 23 distinguish between what ought to be the rights of 24 individual citizens to watch what they choose, not 25 88 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 89 what the government would prefer that they see. 1 And so help us with that basic underlying 2 tenet. When is it not what interests the public, but 3 it's something that either your group or someone else 4 thinks they would be better served to see? 5 MR. BOZELL: That's a good question, Mr. 6 Chairman, and I'm not sure that there is an easy 7 answer to that question. However, I would submit to 8 you that when you've got a handful of corporations 9 controlling two thirds of the access of the programs 10 of the networks that are out there, then what they 11 determine is going to go on television is what can by 12 itself determine what the market wants. If the 13 market, as this lady, I don't recall her name, she 14 makes the point dramatically, when the public is 15 getting a certain message, a certain kind of program, 16 a certain value system, and is being hammered with it 17 and hammered with it and hammered with it and all the 18 other voices are never presented to it, well, 19 ultimately, there is going to be a significant part of 20 that market that is going to accept that message and 21 want more of it but has no idea that there are other 22 messages. 23 I talk to people who are in the industry 24 who are producers, writers, primarily who are 25 89 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 90 attempting to come out with product and they feel like 1 they're bashing their head against the wall because 2 there's nowhere to go because the corporate mentality 3 of these major corporations is just simply not 4 interested in that voice in that kind of programming. 5 And so it never gets out to the public. So in the 6 final analysis, how do we know what the market wants? 7 MR. KRATTENMAKER: I don't know which is 8 the best way to go, but maybe we'll just work down and 9 we'll talk to Mr. Copps. 10 COMMISSIONER COPPS: Mr. Bozell, you just 11 testified that we're in the midst of a tremendous 12 consolidation in the media and you almost never 13 advocate government intervention on something like 14 ownership. You see a problem here. And you said that 15 your 750,000 members believe that television and radio 16 and other media have taken a sharp turn for the worse 17 in recent years as extreme violence and trashy 18 programming has become more and more endemic, creating 19 risks for our children. 20 Do you believe that it's important that 21 the FCC take the issue of the declining quality of 22 media programming into account in this proceeding on 23 media ownership? 24 MR. BOZELL: Perhaps I would tell you that 25 90 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 91 of the many different things I've observed in my 1 lifetime professionally, I have never in my life seen 2 a more passionate outpouring of concern from the 3 public than over this one issue. 4 COMMISSIONER COPPS: And do you believe 5 that the FCC has taken this subject seriously? 6 MR. BOZELL: I do not. When no one has 7 been fined on television for indecent programming, 8 I've got to conclude that the FCC doesn't believe 9 there's anything indecent on television. But I don't 10 think you would ever allow me to say right here in 11 this hearing some of the language that was used last 12 night on television to your children. 13 COMMISSIONER COPPS: Is there in your mind 14 a correlation between the rising tide of consolidation 15 and the rising tide of indecent programming even if we 16 don't know for sure yet if there's a causal link? 17 MR. BOZELL: I have to be very careful. 18 We have to be very careful. I think we do not want to 19 ascribe a blame where blame ought not to be going. I 20 do not believe there's a conspiracy going on here. I 21 do not believe there are bad people in these 22 corporations. However, the reality is that in the 23 last several years and every study we've done and it's 24 never been questioned shows that it is getting worse 25 91 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 92 and worse and worse when it comes to programming and 1 you're seeing more and more and more consolidation. 2 COMMISSIONER COPPS: Do you think it would 3 be irresponsible for the FCC to decide to scrap or 4 significantly modify our concentration rules that 5 might lead to even more indecency without adequately 6 exploring this possible correlation? 7 MR. BOZELL: For the reasons I've given, 8 yes. 9 COMMISSIONER COPPS: You mentioned you 10 have 750,000 members who are extremely concerned with 11 violence and other forms of indecency in the media, 12 but that they do not even know that the FCC is making 13 this decision, correct? 14 MR. BOZELL: Absolutely. 15 COMMISSIONER COPPS: So it sounds like 16 this issue is not an inside the beltway issue, but 17 probably millions and millions of Americans are 18 concerned, but don't even know that they should make 19 their voice heard, right? 20 MR. BOZELL: Absolutely. 21 COMMISSIONER COPPS: So I guess before 22 we're through, we're going to have to add a few to our 23 18,000 comments if Americans really find out what's 24 going on here. Don't you agree? 25 92 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 93 MR. BOZELL: I hope you will. I hope that 1 indecency and the Commission's role in that will 2 become more important than I believe it has been to 3 date. 4 COMMISSIONER COPPS: Thank you very much. 5 MR. KRATTENMAKER: Mr. Chairman, could I 6 just ask before we leave, because I think all of us 7 have so many questions. Is there a possibility that 8 we could submit some written questions. We don't want 9 to inundate our panelists, but just to flesh out the 10 record and then to ensure that these are part of the 11 record in the proceedings. 12 CHAIRMAN POWELL: Sure. In fact, I've got 13 a whole stack of questions from the audience too so 14 we'll figure out how to do that. 15 If you don't mind, I'd like to follow up a 16 little on Commissioner Copps and ask Ms. Riskin 17 whether she agrees with the responses to his questions 18 that Mr. Bozell provided? 19 MS. RISKIN: I'd like you to know that I 20 have black and blue marks on my head from pounding on 21 the network doors. I think many of our members feel 22 frustrated. They would like to do quality 23 programming, but find themselves in a situation where 24 in order to do work with the networks they have to 25 93 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 94 cede complete control which means that if they want to 1 do a story about a middle- aged person, take for 2 example, a show called "The Comish." I don't know if 3 you remember, it wasn't about FCC Commissioners, it 4 was another kind of Commissioner. 5 CHAIRMAN POWELL: That's probably why it 6 didn't work. 7 MS. RISKIN: Actually, it was quite a good 8 show and the man who created the show insisted on a 9 middle- aged sort of pork bellied lead character. The 10 network demanded that it be a young, handsome Italian 11 and in those days when this show was created, the 12 creator of the show simply went to another network. 13 He could shop his story somewhere else. That does not 14 exist today. 15 I think that the urgency for ratings and 16 bottom line has chased away a majority of good 17 audience for quality programming in the marketplace. 18 We used to have a very rich marketplace 19 for movies for television. If you remember "The 20 Autobiography of Miss Jane Pittman" or "Roots." You 21 don't see those programs today on the networks. They 22 are being done in- house. They are expensive for a 23 major corporation to make. They are not expensive, 24 they are not problematic in terms of making money for 25 94 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 95 a small company that's backed by somebody with a 1 passion to tell a story. 2 So we have chased out of the marketplace 3 people who are important story tellers with the kind 4 of quality programming that Brent Bozell would like to 5 see returned. 6 Just as an added note, one of the 7 executives at ABC was asked why the new series last 8 year, the majority of the pilots were developed by 9 their own in- house production. And the answer was 10 because they wanted all their programs to have the ABC 11 brand or stamp which means that all those shows would 12 be coming from one point of view. This is what's 13 damaging the diversity in the marketplace. Thank you. 14 CHAIRMAN POWELL: Thank you and we will 15 provide an opportunity for Mr. Ireland to respond, but 16 I think we should first see what Commissioner 17 Abernathy and Commissioner Martin wanted to follow up 18 on. 19 Thanks. 20 COMMISSIONER ABERNATHY: Thank you. I 21 still come back to the dilemma that I think as 22 government regulators we face which is there's been a 23 lot of concern expressed that the programming is 24 really rotten, there's not a lot of choice about it. 25 95 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 96 Forget if we change the rules at all. It sounds like 1 this is a general comment about programming today as 2 we see it today. 3 And yet, you also tell me that five have 4 75 percent share of prime time viewing. So there are 5 all these alternative channels. There's the Discovery 6 Channel. There's Children's Channel. There's AMC. 7 There's Biography. There's History. And people 8 aren't watching it, apparently. Apparently 75 percent 9 are watching prime time viewing which then goes back 10 to do I tell them they can't watch this? Do I start 11 trying to force them into these other outlets? Which 12 are there, apparently, but it looks to me like most 13 people are choosing to watch the 75 percent prime time 14 viewing. So I'd like anyone to comment on that. 15 MR. KRATTENMAKER: Mr. Schwartzman? 16 MR. SCHWARTZMAN: Yes, Commissioner. Two 17 points on this. First, this is not just about 18 majority tastes. The market will take care of 19 majority tastes. The Commission's job as Congress has 20 reminded it in the case of children's television is 21 that where the market fails, the Commission can and 22 should and has the power and authority to direct 23 broadcasters to carry certain kinds of content that's 24 a viewpoint neutral content -- 25 96 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 97 COMMISSIONER ABERNATHY: Do you believe 1 the market is failing today? That's what I need to 2 know. 3 MR. SCHWARTZMAN: Absolutely. 4 COMMISSIONER ABERNATHY: So there's not 5 enough choices -- 6 MR. SCHWARTZMAN: The market -- 7 COMMISSIONER ABERNATHY: People can't turn 8 to history or to American Movie Classics or to PBS? 9 MR. SCHWARTZMAN: You buy circulation and 10 you buy viewers and when you have huge conglomerates 11 which are also the ones programming most channels, and 12 they are leveraging their incumbent status to drive 13 the other content, you don't get the development of 14 programming which serves these different additional 15 tastes and you lose the creative juice. You deplete 16 the creative gene pool by reducing the number of 17 channels for creative people to introduce their 18 programming. This is what happens with concentration 19 of control. You get concentration of taste. 20 COMMISSIONER ABERNATHY: So are you 21 discounting, then you must be discounting cable. Are 22 you just talking about free over- the- air? 23 MR. SCHWARTZMAN: No, no. Who owns the 24 cable channels? 25 97 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 98 COMMISSIONER ABERNATHY: No, but what's on 1 the cable channels that people aren't watching. 2 That's where I keep -- they can turn the channel. 3 MR. SCHWARTZMAN: Some people are watching 4 it, but you've got the large companies using their 5 powers under the -- retransmission consent and so 6 forth, to drive viewers to their own content which 7 they're repurposing and the size of these companies 8 and their promotional capabilities make -- leave 9 viewers unaware of what else is there. This is buying 10 circulation -- 11 COMMISSIONER ABERNATHY: So that's what 12 you'd -- okay. Now I get what you're saying. You're 13 saying it's the promotional capabilities so people 14 don't realize they have a choice. 15 MR. SCHWARTZMAN: Incumbents leverage 16 their power. That's the most important thing that I 17 would say. 18 The second point that I would -- well, I'm 19 taking too much time. Let me leave it at that. 20 COMMISSIONER ABERNATHY: Let me hear what 21 Bob's response would be. 22 MR. CORN- REVERE: Well, as usual, when I 23 hear Andy speak I feel we're on different planets. 24 It's just hard to imagine that people can talk about 25 98 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 99 less choice and less diversity today than at any time 1 in our history. You can talk about the number of 2 owners all you want, but the fact is the average 3 viewer has a myriad of choices that never existed 4 before. And people don't have a hard time finding PBS 5 if they want to find it. And they don't have a hard 6 time finding Discovery Science or Biography or any of 7 the other channels, the History Channel. They can 8 find them and the question is whether they want to 9 find them. 10 But I think this whole colloquy that's 11 been going on underscores the danger of trying to use 12 structural rules to engage in social engineering. 13 There's a serious mismatch going on here because when 14 the Hollywood community talks about creative control 15 and wanting to put on quality programs, they're 16 talking about wanting to put on the very kinds of 17 programs that Mr. Bozell hates. For example, if you 18 look at the comments filed in this proceeding, they 19 talk about being blocked from being able to put on 20 shows like "Murphy Brown" and "Roseanne", shows that 21 Mr. Bozell in the past has criticized and I'm sure 22 would again if they reappeared. 23 The other difficulty is when you start 24 talking about using official pressure to change the 25 99 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 100 kinds of programs that appear on television, then it's 1 hard to predict what's going to happen. If you go 2 back 10 or 12 years ago when "The Simpsons" first 3 appeared on Fox which, by the way, at the time was a 4 fledgling network and wasn't forcing anybody to watch 5 anything. "The Simpsons" appeared and was roundly 6 criticized as being vulgar and in poor taste. 7 President George Bush criticized it by saying that we 8 needed a nation closer to the Waltons than to the 9 Simpsons. I guess he didn't have quite the same 10 concern with bland TV. 11 Drug czar William Bennett engaged in a 12 similar public tirade against "The Simpsons". And Mr. 13 Bozell criticized it in a 1997 column saying that it 14 is "a dysfunctional family" and I believe the same 15 concern you had today about the Hollywood elites 16 forcing their views. You say always the approach is 17 the same. Forget the majority sentiment, aim to 18 capture the avant garde minority. 19 Well, I think if you come back now and 20 look at a program like "The Simpsons" it's clearly 21 stood the test of time. It's the longest running 22 sitcom in TV history. National Review recently called 23 it possibly the most intelligent, funny and 24 politically satisfying TV show ever. Broadcasting and 25 100 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 101 Cable has editorialized in favor of giving it an Emmy 1 and not just as an animated series. And lately, and 2 perhaps surprisingly, religious writers have begun 3 praising "The Simpsons" for the amount of religious 4 content in the show including a recent book that's 5 come out on the subject. There are even websites 6 devoted to the religious references in "The Simpsons." 7 So I think once you start having public 8 officials put their thumb on the scale and try and 9 create structural rules to affect whether or not shows 10 like that are going to succeed or to game the process, 11 then I think you have a very serious problem. 12 MR. KRATTENMAKER: Commissioner Martin? 13 COMMISSIONER MARTIN: Mr. Bozell, you said 14 that you'd never seen an outpouring like this one on 15 this issue. Just help me understand. I was just 16 trying to -- is the issue that you're seeing the 17 outpouring on the decency or indecency of the 18 programming or is it on the ownership issues? 19 And I'm trying to understand what you're 20 actually seeing the outpouring of public comment on 21 and I'm still a little confused about the connection 22 between the two. And then I would hope that maybe Mr. 23 Corn- Revere could respond as well to your comments. 24 MR. BOZELL: I'd be happy to respond. 25 101 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 102 First, let me, in fact, and correct Mr. Corn- Revere 1 and I would ask him not to quote out of context what I 2 have and haven't said. I've also praised "The 3 Simpsons" up and down for a thousand different reasons 4 as well. And we're not debating -- we could debate it 5 some other time, but please don't take my words out of 6 context. 7 On the question of what the public talks 8 about, I travel all over the country. Ladies and 9 gentlemen, you do the same thing. You talk to people. 10 You talk to your friends, you talk to your associates. 11 And on a daily basis, there isn't somebody who isn't 12 going to say to you did you see what was on television 13 last night? Did you see -- and I'm not going to name 14 any shows because it's unfair to pinpoint a show. But 15 did you see this show? Did you see that program? Did 16 you hear what he said on that awards program? Did you 17 hear the F word used last night during the family 18 hour? They're horrified that this is happening. 19 They're horrified that it's happening with increasing 20 frequency. And then they say what can I do? What can 21 one do about this? 22 We are the market. We are the public out 23 there. Look at the national surveys. Ninety- seven 24 percent of families in this country believe there's 25 102 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 103 too much sex and violence on prime time television 1 coming into their living rooms, being broadcast to 2 their children. And then they turn and say what can I 3 do about it? 4 Well, they go to the networks. The 5 networks tell them go pound sand. They don't care. 6 They've got the longevity to withstand any little 7 complaint and they keep it up long enough and sooner 8 or later as Mr. Corn- Revere just said, people start 9 accepting it. And they just resign themselves that 10 that's the way it's going to be. And that's another 11 wall that's just come down. Another sensibility 12 that's been taken care of. 13 There's got to be a politics of shame, I 14 believe. Not just, by the way on the end stream. Not 15 just on the Commission, on the advertisers and on the 16 public as well. This is a very complicated issue, but 17 there's got to be standards. We've got to say to 18 ourselves, we can't put certain messages on license 19 plates. You can't do that. You can't use the N word 20 on a license plate and go down the road with it. You 21 will go to prison or something for that. You can't 22 put certain signs on billboards, but why can you put 23 it on television in front of my children and why is it 24 that it's indecent, uncivilized for me to use certain 25 103 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 104 language in this hearing, but tonight on television it 1 will go to my children. And it's okay? 2 There's a problem. 3 COMMISSIONER MARTIN: I was wondering if 4 Mr. Corn- Revere -- just a comment about -- is the 5 problem the connection between, or whether there is a 6 connection between, indecency and the ownership 7 issues, which is really what is before the Commission. 8 MR. CORN- REVERE: Well, I understand the 9 concerns expressed about indecency, but I just don't 10 understand the connection you're trying to draw 11 between that and media concentration. 12 In fact, again, when you start talking 13 about the different views on this panel, you see very 14 divergent views. A while ago, Ms. Riskin referred to 15 the situation that Stephen J. Cannell had in trying to 16 solve "The Comish" and in the same article that 17 Cannell was writing about that situation, he described 18 another producer being turned down when he took "The 19 Sopranos" to network television and saying that the 20 networks just didn't get it and none of the networks 21 bought it and so in the end the producer was forced to 22 go to HBO and ultimately reform the shape of 23 television. 24 Now there are two points that I think that 25 104 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 105 are important from that anecdote that comes from the 1 article in last week's Broadcasting and Cable by 2 Stephen J. Cannell. The first is that it doesn't see 3 like diversity has been harmed when the networks make 4 a mistake on whether or not to get a show and it turns 5 up someplace else. 6 And the second is I don't think "the 7 Sopranos" is what Mr. Bozell had in mind what he wants 8 to limit concentration so that we have more quality 9 television. 10 It has been one of those shows, it's been 11 a breakthrough show. It's been praised by many, 12 reviled by others because it is a hard edged show. It 13 is on cable and it's forcing the networks now to 14 compete, but again, I don't see the problem with 15 concentration. The problem, if there is one, is that 16 the networks are being forced to compete. 17 CHAIRMAN POWELL: Thank you. One of the 18 things I find interesting is even if I credit your 19 argument about indecency, and I think there's a fair 20 amount of it that's fair commentary about aspects of 21 television, I'm finding it a bit strange the 22 connection to the concentration because I suppose you 23 will be told that the clean era of the 1950s or 1960s 24 is when TV was of the quality that we preferred when 25 105 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 106 there were three networks. So tying it to 1 concentration, there was never a time in history where 2 the media was more concentrated and the period where 3 TV was probably its cleanest. So I don't know that I 4 see the immediate merits of the suggestions that the 5 concentration levels of today are somehow responsible 6 for indecency. 7 I'd only also like to make probably just a 8 personal comment. I think TV right now produces some 9 of the worst ever and I also think it produces some of 10 the best ever. I think what's happened is TV has 11 dramatically increased in abundance. Yes, I do have a 12 lot of neighbors say did you see that terrible show 13 last night? I also have a lot that come in and say 14 did you see the Theodore Roosevelt special, it was 15 brilliant. I also had people come to see me and say 16 did you see Ken Burns' Civil War special? It was 17 brilliant. 18 Every afternoon after Wednesday, my office 19 comes in and says did you see "West Wing" last night? 20 Wasn't that amazing? Or Fox's "24" or I think one of 21 the challenges we all are going to have with citizens 22 as the media continues to explode you're going to have 23 a wider range of diversities in the marketplace from 24 the most shameless to the greatest. 25 106 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 107 But this connection to concentration, I 1 find, to be almost fabricated. 2 MR. KRATTENMAKER: Mr. Chairman, can I 3 treat that as a comment? I think I might do that. 4 We've already cut deeply into the public comment time 5 and I would like to get to that. I'm going to cut 6 into it a little bit more by saying that with all the 7 cards I've gotten, there's a series of questions that 8 aren't being asked here yet that I'd at least like to 9 pose briefly, particularly to Ms. Thompson and to Mr. 10 Liggins. I don't know whether Mr. Ireland would like 11 to comment on it and it is summarizing two or three of 12 these. 13 So far we've been talking almost 14 exclusively about television, what about radio? And 15 perhaps a little bit more specifically what is 16 reminded of the old joke that there are three kinds of 17 lies, lies, damn lies and statistics, but are there 18 certain kinds of ways that the Commission may have of 19 knowing how it is that increased diversity of 20 ownership can lead to diversity of public service 21 activity and diversity of programming? 22 It seemed like Mr. Liggins had, you may 23 want to say you've already addressed that, but I don't 24 know whether you want to follow up with that a little 25 107 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 108 bit or Ms. Thompson? 1 MR. LIGGINS: I'd certainly like to 2 comment. At least from our perspective, we've been 3 the consolidated of African- American oriented formats 4 and so as we've gone in and bought more radio 5 stations, competition is what drives the different 6 voices of the different options in programming. One, 7 you don't want to compete with yourself, so why would 8 you launch a comparable product? You launch something 9 different. NBC has launched Telemundo. In Atlanta, 10 Georgia, we have a gospel FM station. That's -- 11 gospel has typically been relegated to the AM band for 12 the last 50 years and in Atlanta on a very expensive 13 station that we paid a lot of money for, we took a 14 shot and you know what? It was very successful. It's 15 the third highest rated radio station in that market. 16 We have a jazz station. We have a hip hop 17 station. And we also have an R & B oldies station. 18 So ironically enough, when we first went into the 19 market, our first station was hip hop oriented and we 20 got some barbs for that because hip hop music can at 21 times be seen as aggressive. But the same company, 22 Radio One, also has a station, a gospel station that 23 is being praised. So the nature of competition, I 24 think, forces the diversity in format options. 25 108 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 109 I also think the range and the spectrum of 1 some of the best television programming and some of 2 the worst that you've seen, that's what competition 3 also does. It forces people to take chances, whether 4 a television broadcaster or a radio broadcaster, 5 because you are fighting for the attention and the 6 ratings and the votes from the public. So you have to 7 take more shots in order to be successful. 8 And consolidation, I was against 9 consolidation prior to the 1996 act. I lobbied 10 against it, but when I saw that it was going to go the 11 direction that we and NABOB had wanted, we decided 12 that we needed to get in the game and to compete. And 13 it cost money in order to deliver "The Simpsons" and 14 it cost money in order to even deliver this gospel 15 radio station that I told you about. 16 So there is a necessariness to scale in 17 order to deliver quality programming that I think 18 needs to be underscored here. 19 MR. KRATTENMAKER: Thank you. Ms. 20 Thompson, did you wish to comment. 21 MS. THOMPSON: Well, you can certainly 22 sense the kind of pride when Mr. Liggins talks about 23 his company and the products that he provides to his 24 community and you can certainly also see that every 25 109 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 110 product that he is outlining specifically targets the 1 segment of the community that he is serving and that's 2 exactly my point. I think minority- owned broadcasters 3 know how to serve their communities. And if we don't 4 provide support to those minority broadcasters, they 5 would not be able to continue in business, especially 6 with the issues of carriage. Distribution is the key 7 for us. 8 MR. KRATTENMAKER: Thank you. I think the 9 Commissioners should vote with their feet. We have a 10 number of people lined up to make public comments. 11 CHAIRMAN POWELL: We'll continue this 12 until 12: 30 and we'll take a 30 minute lunch break. 13 We'll be back here at 1, but we have at least 20 some 14 odd minutes left to hear from the public. And also 15 some of the cards that you have, Tom. 16 Why don't we start with that process and 17 we'll go left and right, and Tom, please interject 18 with the questions that you have on the cards as we go 19 forward. 20 MR. KRATTENMAKER: Do we have a time 21 limit? 22 CHAIRMAN POWELL: 12: 30 we're wrapping up. 23 MR. KRATTENMAKER: No, for each 24 individual. 25 110 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 111 CHAIRMAN POWELL: If we can keep it down 1 to three minutes, that would be great. If you can 2 state your name and where you come from and who you 3 represent. 4 MR. KRATTENMAKER: When the red light 5 comes on, please stop simply because we want to try to 6 get everybody through. Sorry. 7 Sir? 8 UNIDENTIFIED SPEAKER: Thank you for 9 taking time for those of the public outside the 10 beltway that aren't being paid here today because I 11 think those are the representations that you really 12 are looking for because character of community is so 13 important. And to have given a few communities the 14 power of a light bulb in a low power FM station to do 15 truly community programming by the community, for the 16 community, to have gospel programs that originate in 17 the community, to have working watermen that are -- my 18 waterfront community to have shows is most, most 19 important, to have the storytelling that comes out of 20 your community. This is community programming. 21 I'm offended by the President of NBC to 22 say that he can do community programming for our 23 community. Shame on the National Public Radio for 24 trying to keep my community from having a station, the 25 111 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 112 power of a light bulb that is only meant to have the 1 power to reach half the people half the time. 2 How about all the people all the time? 3 And let's give other communities a frequency. How 4 come corporations have all the frequencies and there's 5 no frequencies left for the communities? 6 I would say the FCC has abdicated their 7 job in that respect. 8 Thank you. 9 MR. KRATTENMAKER: Thank you for your 10 comment. 11 (Applause.) 12 Every once in a while the moderator gets 13 to step outside and I would say that it is interesting 14 that, of course, sometimes you can deal with ownership 15 issues by creating more things for people to own. As 16 I indicated, so I sort of associate myself not 17 necessarily with the conclusion, but the point of view 18 spectrum management may be an issue here as well as 19 competition, localism and diversity. Let me shut up. 20 Yes ma'am.? 21 MS. HALLICK (Phonetic): My name is DeeDee 22 Hallick and I'm a co- author of a book which I 23 recommend to the panel called Public Broadcasting and 24 the Public Interest which just came out. It's M. E. 25 112 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 113 Sharp are the publishers. 1 I am also a former professor of 2 communication at the University of California, San 3 Diego, where I taught for 17 years and also the past 4 president of the Association of Independent Video and 5 Film Makers which is in New York City and has 6 membership of over 6,000 independent video and film 7 makers. 8 I would just like to right now address the 9 problem of getting independent documentaries on any 10 kind of public or commercial television in the United 11 States if your name isn't Ken Burns. With due respect 12 to his work on the Civil War series, 17 percent of the 13 public television prime time is Ken Burns, but where 14 are the voices for everyone else? 15 There are many, many independent producers 16 who do work, who want to work in documentaries and who 17 cannot -- or are completely locked out of the 18 commercial and the public television system; even 19 people who are as popular as for example, Michael 20 Moore, whose recent documentary has just broken all 21 kinds of box office records. He has struggled to keep 22 a very tiny toehold occasionally on any kind of 23 television and right now he is completely locked out 24 from that. 25 113 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 114 I refer to my colleague Lee Lu Lee who is 1 also on the Board of Directors of the AIVF, the 2 Association of Independent Video and Film Makers. 3 He's half Chinese and half African- American. A number 4 of years ago he did a documentary on the history of 5 the Black Panthers in the United States. It was a 6 work he worked on for seven years, had incredible 7 archival footage, was a very in- depth look at the 8 Panthers and often quite critical of the leadership. 9 His program was shown on 37 national systems around 10 the world in Japan, in Holland, in England, in many, 11 many -- Brazil even. And his program could not get on 12 one channel in the United States, not one. 13 Finally, Black Entertainment Network did 14 put it on two and a half years after he had finished 15 making it. Where was the place for people to put on 16 these kinds of programming? If you talk about the 17 History Channel, you should ask Gore Vidal about his 18 history with working with the History Channel. Here 19 is an eminent intellectual, very important -- he was 20 originally hired by them. He completely was disgusted 21 with the way they wanted to portray history. 22 Look at Howard Zen. A number of people 23 had put together a history series with him. He cannot 24 get on anywhere. The History Channel turned it down. 25 114 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 115 MR. KRATTENMAKER: Thank you. Sir? 1 (Applause.) 2 MR. MOBLEY: Thank you. My name is Arthur 3 Mobley and I am a broadcaster and entrepreneur and 4 have been for a number of years. I have been involved 5 also in the advocacy side. I worked for many years 6 with the National Black Media Coalition and was a 7 Western Regional Director for a number of years. 8 Years ago, back when people like Mo Udall were 9 complaining that the combined communications and the 10 Gannett merger were tantamount to a whale swallowing a 11 whale. 12 I think -- and we've come a long way since 13 then. We've had a lot of whales and sharks and 14 piranhas and all kinds of things developed since then. 15 But I think that the missing link in what seems to be 16 a problem with the Commission, with all due respect, 17 is that we're not following the money. There's a 18 money trail, very seriously, and what you've done and 19 what you've reregulated over the last 10 years or so 20 and the change that you've made have not encompassed 21 following the money. You've dealt with the regulation 22 and you've -- how many stations are here and there, 23 but who benefits and how they benefit, how they make 24 money has been left to the FTC and the SEC and other 25 115 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 116 regulatory agencies and perhaps they should be here. 1 Also, and you should have maybe some joint 2 discussions about this since they all are effective 3 and have effect on the interest of all of the people 4 here. But as a broadcaster, I mean it's a simple 5 business situation. You give me an open -- a carte 6 blanche to own as many of any kind of businesses as I 7 want. What I'm going to do is I'm going to buy up as 8 much as I can and then I am going to start minimizing 9 my output of cash. I'm going to become less effective 10 at serving local needs. I'm going to be less 11 effective at getting all of those concerns and 12 interests and those outlets taken care of and I'm 13 going to be making as much money as I can. So I'm 14 going to put a little sawdust in the hamburgers, you 15 know? I'm going to put some junk out there. That's 16 the nature of business in this country and 17 broadcasting is no different. 18 People are putting out junk because they 19 have too much opportunity to own too much and you 20 should not be talking about keeping the standards. 21 You should be talking about cutting them back. These 22 standards need to be rolled back. Some of these big 23 corporations need to get off some of these federal 24 licenses because these licenses again are the property 25 116 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 117 ultimately of the public. They are the people's 1 airways and the Commission seems to have forgotten 2 that or misplaced it somewhere, but please find it and 3 if you have any doubts about where you're going, 4 follow the money. 5 Study a little bit more about how people 6 make money in these big companies and why we have so 7 many attorneys and no one of any content or substance 8 to come and talk to you other than sending their 9 attorneys out. 10 (Applause.) 11 MR. KRATTENMAKER: Thank you. Yes ma'am. 12 The woman at the microphone. 13 MS. CRUMMILLER (Phonetic): My name is 14 Jenny Crummiller. I'm a member of a group from New 15 Jersey, the Antiwar Video Fund. We produced a 16 30- second TV ad and raised money to broadcast it. We 17 contracted with Comcast Corporation to show the ad in 18 Washington, D. C. Comcast is the only cable provider 19 for Washington. Comcast put us in the schedule so our 20 ad would be shown twice during prime time hours for 21 three days in a row beginning the night of the 22 President's State of the Union Address when he was 23 expected to make his case for invading Iraq. 24 However, at the last minute, Comcast 25 117 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 118 pulled our ad, supposedly because it was 1 unsubstantiated. Obviously, the charge was totally 2 arbitrary. Our ad is a montage of ordinary Americans 3 making statements against war. 4 Regardless of whether this was intended to 5 prevent our powerful message from undermining the 6 President's speech, that is what Comcast did, since we 7 had no time to find other ad time. 8 Whether by government or by corporation, 9 centralized control of the media is un- American. When 10 this happened, I felt like I was in Iraq. The ease 11 and nonchalance with which Comcast pulled our ad makes 12 clear this was not an isolated occurrence. Channel 13 choice did nothing to give us a choice. 14 In terms of control over content, in terms 15 of democracy, one corporation is one choice. 16 (Applause.) 17 MR. KRATTENMAKER: Thank you. Yes sir, 18 the gentleman at the microphone. 19 MR. SPRUILL: My name is Lonell Spruill. 20 I live within the 7th District of the House of 21 Delegates. That's a part of Chesapeake and Suffolk, 22 Virginia. I'm worried about the change in the FCC 23 media ownership rules that would allow the newspaper, 24 television, radio station to combine even more. As an 25 118 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 119 elected official I can tell you how important this is 1 to me. 2 There's not enough important about what's 3 happening in our state. If my constituents don't know 4 what's going on, they won't communicate their views to 5 me. If the press only reports one side of the story, 6 how can they reach their own judgment and make 7 important decisions? 8 I'm so concerned, particularly about the 9 issues pertaining to minority race. When it comes to 10 minority race, the press does a poor job when it comes 11 to that. 12 If we allow the media to combine even 13 more, we will have fewer reporters and even fewer 14 coverage on TV. It's most important that we don't let 15 this happen. 16 As you know, in my area, home district in 17 Chesapeake and Tidewater area, in 1996, we had 21 18 different owners of radio stations. Now it has 19 dropped down to 15. That's 20 percent. We have only 20 three TV stations, local stations. I'm also worried 21 about the impact of media concentration on 22 advertising. That competition means air prices will 23 go up. Also, it means it would be more difficult for 24 groups to get heard through paid advertising. 25 119 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 120 As the lady spoke earlier, last month, 1 Comcast refused to air an ad opposed to the war in 2 Iraq on a Washington, D. C. cable station after the 3 State of the Union message. Since cable is a monopoly 4 now, yet it was not heard. Guess what? I did not get 5 aired. 6 As a former member of Bell Atlantic, I 7 never lobbied. I am a lawyer member of the 8 Communication Workers of America and labor disputes, 9 labor often relies heavily on paid advertisement to 10 get their message across. So if we allow this thing 11 to be one sided can you imagine how it is now so far, 12 the way thing are happening on unions? It's important 13 that we let this thing stay open. Please, don't 14 narrow it down any further. Thank you very much. 15 (Applause.) 16 MR. KRATTENMAKER: Thank you. The only 17 way we're going to have an opportunity to try to hear 18 everybody is we change it to a two- minute limit. I'm 19 sorry, but that's what we're going to have to do. 20 Please. 21 MR. PRESTON: My name is Dan Preston. I'm 22 a co- founder of the Anti- War Video Fund and I just 23 want to give you an update on some of our experiences 24 after Comcast censored our ad. To reach the D. C. 25 120 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 121 audience, we did have an alternative, not on cable, 1 but over broadcast. We approached all the network 2 affiliates with our ad. NBC rejected it on grounds 3 they would not specify. ABC never responded. We did 4 get the ad accepted by the CBS affiliate and paid a 5 lot more money to get it broadcast over the air than 6 it would have cost on cable. 7 Now the insidious thing about censorship 8 is this. You and the audience don't know what you're 9 not seeing. You don't hear the voices that have been 10 silenced. If fewer and fewer people own the 11 microphones, the diversity of voices in our democracy 12 will be strangled. 13 Now our story did get heard because it did 14 receive substantial national and international press 15 coverage on PBS, NPR, Canadian, French and Arabic TV, 16 in print, on alternative and trade press, a few local 17 newspapers, but for the most part not on the media 18 properties owned by the major media conglomerates. 19 Now in particular, this one story, on the 20 day of the State of the Union before all this stuff 21 hit the fan, a local Comcast news program prepared a 22 story on our group, a nice peaceful Princeton group 23 and it was going to air it on the Channel 8, the local 24 Comcast news program. But when they heard that their 25 121 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 122 parent company had censored our ad down in Washington, 1 and the controversy then was arising about us, they 2 canceled the story about us. And as they candidly 3 admitted, not because they didn't think it was a good 4 story, they wanted to run the story, but guess what? 5 They told us they wanted to have jobs the next 6 morning. So the censorship is here. It's real. It's 7 not an unsubstantiated claim. It's happened to us. 8 It will happen and it will happen more and more as the 9 media gets more and more concentrated. Thank you. 10 (Applause.) 11 MR. KRATTENMAKER: Thank you. Yes sir. 12 MR. LONG: Hi, my name is Nathan Long. I 13 teach at Virginia Union University, a local 14 historically black college here in town and I'm very 15 happy to come after the delegate who just spoke 16 because when we talk about the public airwaves, I 17 really think we're talking about the public, we're not 18 just talking about individuals, but we're specifically 19 talking about citizens. And citizens, in order to be 20 active in a democratic government, really need to have 21 information and as media critic Robert McChesney says, 22 the role of our newspapers and of our journalists are 23 not to entertain us, not to give us what we want, but 24 what we need. 25 122 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 123 And more and more as corporations own the 1 major ways of providing news, no matter how many news 2 stations or how many newscasts there are, there are 3 fewer and fewer political options and opinions in the 4 news. If you look at the newspapers a hundred years 5 ago, they were mostly owned by small local owners and 6 had very staid positions. Now the majority of news is 7 considered objective which of course means that it 8 takes a very middle of the road politics. I think 9 this is a real problem. 10 The other issue that I just want to bring 11 up is if we hear corporations saying they are going to 12 represent diversity and then you hear citizens saying 13 no, they're not, I ask you seriously think which one 14 is the person to listen to? 15 (Applause.) 16 And what are the motivations of 17 corporations? Newspapers used to be owned because 18 people wanted to say something. Now they're owned to 19 make money. And that's going to effect what gets put 20 out and what doesn't. 21 Thank you. 22 (Applause.) 23 MR. KRATTENMAKER: Thank you. 24 MS. KEKUS (Phonetic): My name is 25 123 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 124 Christina Kekus and I'm a senior consumer studies 1 major at Virginia Tech. Today, I'm delivering a 2 statement to you on behalf of my advisor, Dr. Irene 3 Leach who is the president of the Virginia Citizens 4 Consumer Council, a Virginia statewide consumer 5 education advocacy organization. 6 The Virginia Citizens Consumer Council is 7 very concerned about the changes that you have 8 proposed. We believe that removal of the restrictions 9 on media ownership will have a very negative effect on 10 society. Given the problems that exist even with the 11 restrictions, consumers will be badly harmed if they 12 are removed. 13 It is already difficult to get the media 14 to address consumer concerns, especially when they are 15 complex and big companies have different perspectives 16 from consumers. 17 For example, Virginia has been involved in 18 restructuring its electricity markets for over five 19 years. During that time there has been very limited 20 media coverage. In one media market neither a 21 concerned local legislator, nor myself, were 22 successful getting coverage as the critical decisions 23 were made. They were told that the issue was too 24 complex for people to understand. 25 124 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 125 Recently, in another market, I had an op 1 ed turned down but was told that a 100 to 200 word 2 letter to the editor might be printed. However, it 3 was not printed, even though it supported the 4 editorial view of the newspaper. Several weeks later, 5 a letter from someone else was printed on the topic. 6 In the meantime, other issues were rehashed 7 repeatedly, but electric issues never appeared as a 8 matter to citizens, only to the editors. 9 If one entity is allowed to own multiple 10 media outlets in the same market, it will be far too 11 easy for that entity to totally control the public 12 discourse. Citizens will hear one perspective 13 regardless of whether they read the paper, listen to 14 the radio or watch television. Many voices and 15 perspectives will be lost. Many decisions will be 16 made based on incomplete or incorrect information. 17 Recent consolidation at radio stations has meant a 18 loss of local news and weather reporting. For 19 example, Clear Channel station's news all comes from 20 Texas and my experience has been that there is little 21 news. 22 This week, as I drove across Virginia in a 23 snowstorm and wondered -- 24 MR. KRATTENMAKER: Thank you very much, 25 125 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 126 ma'am. You can submit that for the record. 1 MR. KRATTENMAKER: I'd like to thank 2 everybody very much. One thing I learned when I was 3 dean of a law school is you don't keep the faculty 4 from eating lunch. I'm not going to keep the 5 Commissioners from eating lunch. 6 Those of you who are standing in line, if 7 you'll come up to Mr. Snowden, he'll get your name and 8 guarantee you first spot the next open mike. 9 I'm sorry, we're just way over the time 10 limit. 11 I would like to thank the panel very much 12 and the open mike people very much. You went to a lot 13 of trouble to come here. I must say, I must apologize 14 to Mr. Ireland, I should have had him on as a 15 responder. I didn't get to you and I'm sorry for 16 that. 17 I apologize to everybody who hasn't had a 18 chance to speak yet. Please come back after lunch. I 19 expect that you will. 20 Thank you. 21 (Whereupon, at 12: 30 p. m., the hearing was 22 recessed, to reconvene at 1: 30 p. m.) 23 24 A- F- T- E- R- N- O- O- N S- E- S- S- I- O- N 25 126 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 127 1: 30 P. M. 1 MR. KRATTENMAKER: Welcome back. This is 2 our panel on competition issues. People have asked 3 that I begin with a half hour summary of some of the 4 more interesting aspects of my life before I got to 5 high school, but I've decided to pass that over. 6 A reminder that the rules under which 7 we're operating are a five minute time limit for each 8 of the panelists, strictly enforced, not because 9 you're not important but simply on the grounds that 10 everybody here is important and that we want to hear 11 from everybody. 12 And are the Commissioners here? We're 13 ready, Mr. Chairman? 14 CHAIRMAN POWELL: We're ready. 15 MR. KRATTENMAKER: Okay, Mr. Croteau? 16 MR. CROTEAU: Good afternoon. My name is 17 David Croteau. I am a professor in the Department of 18 Sociology and Anthropology right here in Richmond, 19 Virginia. I think I'm the token local panelist today, 20 I believe. 21 Good afternoon. I appreciate the 22 invitation to comment at today's hearings. I believe 23 local hearings such as this serve an important role. 24 I certainly hope the FCC will sponsor more public 25 127 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 128 hearings throughout the country in the coming weeks 1 that will include more local voices and more time for 2 the public to take part. 3 The media serve a unique role in 4 democracies that value free and creative expression, 5 independent thought and diverse perspectives. In 6 recognition of this unique, public interest role, the 7 free press is the only business explicitly protected 8 in the U. S. Constitution. 9 We cannot, therefore, treat the media like 10 any other industry. It's products are not widgets or 11 toasters. They are culture, information, ideas and 12 viewpoints. Consequently, we must be especially 13 vigilant in protecting and preserving the public 14 interest as it relates to this vitally important 15 industry. 16 Unfortunately, relaxation or elimination 17 of existing ownership regulations would move us in 18 exactly the wrong direction. While increasing the 19 profits of major media conglomerates such changes 20 would, in all likelihood, promote further 21 concentration of media ownership, thereby undermining 22 competition, reduce the already limited diversity in 23 commercial media content, and reduce the quality and 24 sometimes the quantity of locally produced media 25 128 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 129 content. 1 None of these are good for our country or 2 for our democracy. 3 We don't need to speculate about the 4 likely impact of deregulation on ownership 5 concentration. We need only look at past experience. 6 The removal of the national cap on radio 7 ownership in 1996 resulted in the dramatic 8 concentration of ownership in that industry. In six 9 years, the number of radio stations increased over 5 10 percent, but the number of radio owners decreased by 11 more than one third. A single corporation, Clear 12 Channel Communications, went from owning 40 stations 13 before the rule changes to owning over 1,200 stations 14 today, five times as many as its nearest competitor. 15 Here, in Richmond, this translated into 16 Clear Channel owning six local stations, resulting in 17 a loss of competition and the loss of local content in 18 favor of homogenized national programming. For 19 example, WRVA, a Richmond institution, long known for 20 its emphasis on local news and talk, was gutted after 21 the Clear Channel takeover. Nearly every on- air 22 personality was fired or resigned and public outcry 23 filled local newspaper columns. 24 As one columnist put it, "in its embrace 25 129 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 130 of nationally syndicated personalities to the 1 exclusion of locals, Clear Channel has made it clear 2 that it has no use for this community's talents, 3 viewpoints and flavor." 4 In short, the deregulation of radio 5 ownership has been a disaster for Richmond and many 6 other communities across the country. This experience 7 should be a cautionary tale in considering any future 8 rule changes. 9 There is other empirical evidence which I 10 will skip in the interest of time here today, but 11 despite such evidence, the call to ease regulations 12 continues to come from the corporations who would 13 profit from such changes. These calls are often 14 justified on the grounds that technology has changed 15 our media landscape and therefore has made ownership 16 regulations obsolete. This claim is not new. Every 17 time new media technology has been introduced, whether 18 it is radio, television, cable or the internet, 19 enthusiasts have told us that everything has changed. 20 But in fact, in each case, the fundamental questions 21 about new media technologies have remained the same, 22 including who will own and control them, what purpose 23 will they serve, whose views and visions will be 24 represented in the new medium? 25 130 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 131 Technological changes in the media 1 industry have not reduced the importance of regulation 2 and the public interest. While the expansion of cable 3 and the rise of the internet have produced more 4 outlets, not much has changed in terms of who owned 5 and controls these outlets, as we've heard earlier 6 today. 7 New media outlets often do not mean new 8 media content either. Instead, broadcast TV programs 9 are recycled for cable channels. Newspaper and cable 10 news content is repackaged for the internet and so on. 11 Thus, despite changing technologies, what we still 12 need are multiple, competing, diverse and independent 13 sources of information and entertainment. 14 MR. KRATTENMAKER: Sir, your time is up, 15 are you summarizing now? 16 MR. CROTEAU: Yes, yes. Some of which by 17 the way need to be noncommercial, such as in low power 18 radio. 19 MR. KRATTENMAKER: Thank you. Ms. Foley? 20 MS. FOLEY: Good afternoon, I'm Linda 21 Foley, President of the Newspaper Guild Communications 22 Workers of America. Thank you for allowing me to 23 testify on behalf of the Newspaper Guild, CWA, the 24 union that represents print journalists and their 25 131 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 132 parent union, CWA, representing 700,000 workers 1 including broadcast technicians and other media 2 professionals. 3 Before my tenure with the Newspaper Guild, 4 CWA, I was a reporter with the Knight Ridder Newspaper 5 in Kentucky, so I'm going to talk about the 6 competition for news. 7 The Commission's broadcast ownership rules 8 are based on the first amendment principle that the 9 widest possible dissemination of information from 10 diverse and antagonistic sources is essential to 11 public welfare. 12 First, we acknowledge that the media 13 market is changing. No one knows this better than our 14 members. There are more media outlets today than ever 15 before, but there are fewer owners. And the fact 16 remains that broadcast television and newspapers are 17 probably far and away the dominant sources for local 18 news and information. 19 The Newspaper Association of America 20 reports that more than half the adult population reads 21 a daily paper. Indeed, the Nielsen Study commissioned 22 for this rulemaking shows that 63 percent of those 23 surveyed identified newspapers as their source for 24 local news and information. At the same time, Nielsen 25 132 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 133 also showed that 85 percent rely on broadcast 1 television for local news. Compare that to one third 2 for radio and only 19 percent for the internet and 3 remember, half of America still doesn't have internet 4 access at home. 5 The dominance of TV news and newspapers 6 and local news and information sources is all the more 7 striking because, as the FCC's Waldfogel Study clearly 8 indicates, consumers of news and information do not 9 substitute sources, but rather use other media outlets 10 to complement their primary source of news and 11 information. Therefore, local ownership combinations 12 that allow unfettered mergers of news operations of 13 local broadcasters and daily newspapers, reduce the 14 number of antagonistic news sources available to local 15 citizens. 16 Local television and newspaper media 17 markets are already highly concentrated. Most cities 18 are one newspaper towns. While cable has increased 19 the number of outlets, in most cities the top four 20 over- the- air television stations still maintain more 21 than 75 percent of the market share. 22 Simply increasing the number of outlets in 23 a market does little to produce more antagonistic 24 sources. 25 133 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 134 The networks submitted a study that shows 1 that of all 210 TV markets in the U. S., 70 percent 2 have four or fewer stations carrying original, local 3 news programming and 89 percent have five or fewer. 4 Only 19 markets have local cable news shows and some, 5 such as News Channel 8 in Washington, D. C. are owned 6 by a local broadcaster. 7 Focussing on outlets, without considering 8 market share and ownership, has led proponents of 9 local market combinations to draw some interesting 10 comparisons. For example, the network's brief 11 includes an in- depth analysis of the Milwaukee market. 12 It gives equal weight to the website of the local 13 hurling club and the Milwaukee Journal Sentinel. Now 14 let's face it. It's highly doubtful the Milwaukee 15 Journal Sentinel will ever be scooped by the local 16 hurling society. 17 When it comes to setting the local news 18 agenda and local viewpoint diversity, diverse 19 ownership, not the number of outlets is what matters. 20 The brief filed by the CWA in this proceeding contains 21 numerous examples that illustrate the point. One 22 example, however, provides a striking demonstration 23 about how concentration of media ownership can destroy 24 localism, competition and diversity of viewpoints. 25 134 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 135 In 2001, Canada's second largest 1 commercial broadcast chain purchased Canada's largest 2 newspaper chain and now controls 30 percent of the 3 nation's daily newspaper circulation. Within months 4 of that merger, Canada West Global reversed journalist 5 tradition of local editorial independence by mandating 6 that its largest newspapers and all its broadcast news 7 operations adhere to editorial viewpoints dictated by 8 its headquarters in Winnipeg. It wasn't too long 9 before news stories were being edited and spun to 10 conform to the editorial viewpoints. 11 The FCC should not allow mergers in 12 markets that are already highly concentrated and if 13 mergers are permitted, the Commission should ensure 14 that the combination is in the public interest and 15 that antagonistic sources of news and information are 16 preserved. 17 CWA has proposed one way to do that, by 18 requiring commonly owned media including duopolies to 19 maintain separate newsroom and editorial staffs in 20 order to preserve and promote diversity viewpoint. 21 This language is modeled after the 22 Newspaper Preservation Act passed by Congress in 1970 23 that allows common ownership and joint operation of 24 business functions, but requires separate news and 25 135 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 136 editorial staff. Our journalist members have worked 1 under these arrangements for decades. They report 2 that maintaining separate news operations does, in 3 fact, foster competition among reporters for local 4 scoops and varying news angles on local events. 5 Working reporters are employees of complex 6 organizations and they work under what we call the 7 invisible hand of the newsroom social control. Like 8 athletes, journalists perform their best when they are 9 challenged by competition and encouraged to do their 10 own personal best. It is imperative therefore that 11 the Commission adopt rules that protect the media from 12 consolidation into fewer hands, an outcome that would 13 do serious harm to the free flow of ideas that is so 14 essential to civic participation in our democracy. 15 Thank you very much. 16 MR. KRATTENMAKER: Thank you. Mr. Miller? 17 MR. MILLER: I'm Victor Miller of 18 Broadcast Equity and also for Bear Stearns. I've 19 covered the industry for 15 years in lending an 20 analytic capacity. Today, I'll discuss seven 21 operating pressures facing broadcast networks and 22 local stations as a context for my deregulatory 23 stance. 24 First pressure is audience fragmentation 25 136 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 137 and declining ad share. The national TV marketplace 1 consists of 10 broadcast networks, 1400 commercial TV 2 stations, 287 national and 56 regional cable networks. 3 In 2001, the typical local household had 82 channels 4 available versus 10 in 1980. This robust and 5 option- filled marketplace accelerated by deregulatory 6 changes made by Congress and the FCC has been good for 7 consumers. However, robust competition has impacted 8 TV industry economics. ABC, CBS, NBC networks have 9 seen prime time viewing shares drop to 38 percent this 10 year from 90 percent in 1980. Local TV stations share 11 of media ad dollars has fallen to 15.5 percent last 12 year, versus 18.3 percent in 1980 despite almost a 13 doubling of the number of stations. 14 The second pressure is escalating 15 programming costs. Even in the throes of declining 16 ratings, the cost of network programming has increased 17 by 30 percent for half hour sitcoms and by 50 percent 18 plus for one hour dramas despite networks' increasing 19 ownership stake in these shows after financial 20 syndication rules were struck down in 1994. 21 Escalation of some sports rights have priced sports 22 off broadcast TV all together. Local ABC, CBS and NBC 23 stations in turn on the local level are investing more 24 heavily in local news spending $1.5 billion in the top 25 137 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 138 hundred markets on programming that most differentiate 1 stations from other media. 2 The third pressure is high operating 3 leverage. Recent financial results reported by 4 broadcast TV players suggest that there are few 5 operating efficiencies left in the business. High 6 operating leverage means that the broadcast TV 7 business is exposed to significant cash flow swings 8 with changes in advertising. In 2000, local TV 9 station industry revenues fell by 15 percent, but cash 10 flow plummeted by 25 to 35 percent. The broadcast TV 11 business was not well insulated from short term or 12 long term declines in the business. 13 The fourth pressure is a consolidating 14 cable business. Consolidation of the cable industry 15 may be broadcast TV's greatest threat. In 2002, the 16 top five MSOs controlled 72 percent of the nation's 74 17 million cable households and in 15 of the top 25 media 18 markets, one MSO controls at least 75 percent of the 19 local markets wireline subscriber base. Increasing 20 MSO concentration will make it more difficult for 21 local TV broadcasters to have meaningful 22 retransmission consent discussions. MSO concentration 23 creates competition for TV stations' local ad dollars 24 and programming franchise as well. We estimate one 25 138 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 139 MSO captures $1 billion in local cable advertising, 1 surpassing that earned by the ABC owned and operated 2 TV group. And perversely, 2002's appeals court ruling 3 would allow an MSO to buy a local TV station or local 4 TV and newspaper player is often restricted from these 5 moves by current ownership rules. This anomaly alone 6 begs for significant relief. 7 The fifth pressure is new technology. 8 Early adoption of personal video recorders suggests 9 that users skip ads at a 75 percent clip five times at 10 the level of the previous technology VCRs. 11 Advertising is free over the air TV broadcasting’s 12 sole revenue stream. If the ad only model breaks 13 down, monthly subscriber fees would have to increase 14 by $39 per month to replace broadcast TV's lost ad 15 revenue. 16 The sixth pressure is the lack of return 17 on investment in digital TV. We estimate that local 18 broadcasters will spend $4 to $6 billion rolling out 19 digital TV with little obvious return available to 20 that invested capital. 21 The seventh pressure is poor broadcast 22 network economics. Broadcast networks are not very 23 profitable. From 2000 to 2002, we believe the big 24 four networks generated only $2 billion in profits on 25 139 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 140 approximately $39 billion in revenue, a 5 percent 1 margin. Without the most profitable network, margins 2 fell to 1 percent. 3 My conclusion is if these seven operating 4 pressures continue unabated and no deregulatory relief 5 is afforded the industry, the viability of free over- 6 the- air TV in the median term could be threatened. 7 Deregulation for networks -- I would say 8 that in order to preserve the long term viability of 9 the broadcast networks, we believe the FCC should 10 relax the national station ownership rule to 50 11 percent. 12 In the past, the networks have relied on 13 launching cable networks and syndication to prove 14 their overall TV economics. We believe these options 15 will prove less valuable now, given the oversupply of 16 cable inventory and static demand for syndicated 17 product. 18 For the stations, in order to preserve the 19 long term competitive viability of the local stations, 20 we believe the FCC should substantially relax or 21 eliminate newspaper broadcast cross ownership rules, 22 given newspapers declining circulation, declining ad 23 share and 28 year run without deregulation. A 24 newspaper broadcast combination also has potential 25 140 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 141 local and public service benefits as well. 1 Also, we believe the substantial relaxing 2 of duopoly rules by extending this option to smaller 3 TV markets who are operating in deficiencies is really 4 needed. We support a rule that focuses on cumulative 5 local audience shares such as NAB's 10- 10 proposal, 6 First Argyle's 30 percent local audience share 7 proposal and triopolies in large markets. 8 On radio, we advocate the retention of the 9 FCC's current radio market definition which was in 10 place when Congress modified the local radio limits in 11 1996. Any change now would upset the congressional 12 scheme and potentially introduce new anomalies. 13 Further, a change in market definition would be 14 disruptive to the acquisition of radio properties, 15 relative competitive positions of radio broadcasters, 16 disposition of radio broadcasters and the capital 17 markets. 18 Thank you. 19 MR. KRATTENMAKER: Thank you, Mr. Miller. 20 Mr. Munson? 21 MR. MUNSON: Thank you. Good afternoon 22 and welcome to the other Virginia, Commissioners. We 23 have the Northern Virginia and this is what we call 24 the other Virginia here. So it's good to have you 25 141 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 142 with us. 1 My name is Ed Munson, I'm the Vice 2 President and General Manager of WAVY and WVBT- TV in 3 Norfolk, Virginia. We're two broadcast TV stations 4 licensed to the Norfolk – Portsmouth - Newport News, 5 Virginia market. 6 My testimony today is basically the story 7 of running two television stations in the market. 8 When I arrived at WAVY in 1991 there were six 9 commercial television stations operating in the 10 Norfolk market. The two independent stations were 11 struggling for survival. My recollection is that 12 neither of them was profitable and certainly neither 13 of them had an appreciable share of local viewing or 14 local ad revenue. Despite the difficulties faced by 15 these independents, yet another station went on the 16 area, WVBT and it was launched in 1992. Needless to 17 say, with those two struggling independents already on 18 the air, there really wasn't much interest in WVBT 19 from programmers, advertisers or viewers. The station 20 was able to muster only enough initial capital to 21 build a minimal technical facility whose signal could 22 reach about 65 percent of the homes in the market. 23 Shortly after initiating operations, the 24 station affiliated with the Home Shopping Network. 25 142 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 143 While this business plan enabled the licensee to get 1 on the air and with a small positive cash flow, the 2 station really wasn't a serious competitor for viewers 3 or a significant broadcast voice in our market. The 4 solution was to partner with another local station, my 5 station, WAVY, the NBC affiliate. In January 1995, we 6 entered into a local marketing agreement with WVBT 7 through which WAVY assumed day to day operations of 8 the station under the licensee's supervision. 9 In May of 1996, we relocated the station's 10 antenna to our 1,000 foot tower and increased its 11 power to 5 million watts, for the first time reaching 12 every home in the market. Because of those technical 13 upgrades and the station's new promotion and 14 advertising capabilities, WAVY was also able to land a 15 network affiliation for WVBT with a fledgling WB 16 Network shortly after we entered into the LMA. 17 Through WAVY's programming resources, we 18 were able to assemble a competitive slate of 19 syndicated product in local and regional sports 20 programming the other stations in the market wouldn't 21 want to carry. While we were able to grow our share 22 of local advertising in the market from zero to nearly 23 5 percent, we sustained operating losses of about $2 24 million before becoming cash flow positive in 1998. 25 143 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 144 In 1996, we were approached by the Fox 1 Television Network about switching WVBT's network 2 affiliation to Fox. Fox had undertaken a campaign to 3 have all of its affiliates carry local news at 10 4 o'clock. The Fox affiliate in Norfolk had declined to 5 do so. It wasn't a surprising decision for a single 6 station with virtually no news infrastructure. It 7 would have been years, if ever, before the 10 o'clock 8 news would have been financially viable in the highly 9 competitive Norfolk market. 10 WAVY, however, was already producing five 11 hours of local news a day. Adding a first class local 12 news program at 10 o'clock could be undertaken for 13 fairly modest capital investment and increase our 14 operating costs under $1 million. 15 So in August of 1998, WVBT became the Fox 16 affiliate. At that time, we initiated the first and 17 still the only 10 o'clock broadcast news in the 18 Norfolk market. This newscast which was initially a 19 half hour is now 45 minutes, has given viewers in the 20 Norfolk market an additional news option. Moreover, 21 it unquestionably expanded the local late news viewing 22 in the market. WVBT's newscast has recently generated 23 a Nielsen rating of 4.9 or about 33,000 households. 24 Since the 10 p. m. newscast went on the 25 144 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 145 air, the cumulative total news viewing in late news 1 viewing has grown from 141,000 households to 189,000 2 households in the most recent rating book, an increase 3 of more than 33 percent, substantially faster than the 4 market was growing. 5 Local news is by no means the only 6 contribution WVBT has made to the Norfolk media 7 marketplace. In addition to first class syndicated 8 programming, we've carried a wide variety of local 9 sports and produced a substantial amount of local 10 sports and public affairs programming. And because of 11 WAVY's resources, an investment of over $4 million, 12 WVBT has been able to construct its expensive new 13 digital television facility on time and is now 14 providing Fox widescreen programming to the market. 15 This station combination is emphatically 16 in the public interest. Many, many more such 17 beneficial combinations are being precluded by the 18 actions of outdated local TV ownership rules. This is 19 particularly true in smaller markets where there is 20 simply inefficient resources to support more than one 21 or two high quality news operations. But, as my 22 experience in Norfolk demonstrates, the current rule 23 is preventing efficient and productive combinations 24 and suppressing potentially vital new local voices 25 145 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 146 even in the top 50 markets. 1 I urge you to act promptly to recognize 2 the realities of the new local media marketplace and 3 relax the local station ownership rule by adopting the 4 proposal put forth in the comments of the National 5 Association of Broadcasters and permit common 6 ownership of any two stations provided that no one has 7 more than a 10 percent share of the viewing market. 8 Thank you. 9 MR. KRATTENMAKER: Dr. Owen? 10 DR. OWEN: Thank you, Mr. Chairman, 11 Commissioners, Mr. Moderator. I'm an economist and a 12 competition economist. I was once chief economist of 13 the Antitrust Division of the Justice Department and 14 I'm here to talk about competition because that's what 15 the panel is supposed to be about. 16 I hope after discussing competition 17 briefly to link it to the diversity issues that you 18 face. I don't -- I think the localism issues are 19 impervious to logic, so I won't address those. 20 Competition obviously is an important goal 21 and in fact, your statute that requires these biennial 22 reviews mentions only competition and not diversity in 23 the context of what's necessary to retain the rules 24 for the future. 25 146 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 147 Competition brings benefits to consumers. 1 The point of competition is to benefit consumers, in 2 this case, viewers, readers and listeners. You don't 3 write on a blank slate here. You don't need to invent 4 a new wheel to deal with competition policy analysis 5 when you're analyzing proposed mergers in the mass 6 media. There's a perfectly adequate widely accepted 7 and even admired paradigm for analyzing mergers and 8 that is the merger guidelines that are used as a 9 method of analysis by both the Federal Trade 10 Commission and the Department of Justice. 11 The Commission has, in fact, demonstrated 12 its understanding and ability to use their analytical 13 tools in its recent decision in the Echo Star- Direct 14 TV merger. So I'm not suggesting anything novel. You 15 don't need to invent a new way to think about these 16 things from the point of view of competition in 17 economic markets. By economic markets I mean 18 advertising markets and consumer markets for MBPV 19 services. 20 I think the Commission in approaching 21 media ownership issues, if it's going to pass a 22 rationality test has to employ an approach that is 23 consistent with the method, not necessarily the 24 standard, but the methods in the merger guidelines. 25 147 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 148 And there's no reason to try and do it in a different 1 way. 2 That means that the present rules, if they 3 are put up against that standard, don't make any 4 sense. They don't pass a rationality test. For 5 example, when you apply the method of analysis that's 6 used in the merger guidelines, you're not likely to 7 find that markets are always defined in terms of 8 technologies or means of broadcasting or frequencies. 9 They're defined in terms of the choices that consumers 10 have. And those choices can, and do, cut across lots 11 of different technologies and methods of broadcasting. 12 So any rule that applies only to television, for 13 example, prejudges the market definition appropriate 14 to a particular merger transaction and that doesn't 15 make any sense. You can't do that in advance. 16 So fixed market boundaries as reflected in 17 rules almost by definition can't pass a rationality 18 test. Moreover, even if they did, in this business, 19 market boundaries are changing quickly and have been 20 changing for some years, so a rule that reflects even 21 a correct, analytically correct analysis of where the 22 market boundaries are, will be out of date and as we 23 all know, even though they have to be reviewed every 24 two years, it's hard to change rules. 25 148 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 149 The final thing to keep in mind when 1 thinking about economic markets, advertising markets 2 and consumer markets, is that most mergers, the vast 3 majority of mergers are beneficial, that is, they 4 result in efficiencies or new products or new 5 services. In the economy as a whole, of the hundreds 6 and hundreds of transactions that take place every 7 year, only a tiny fraction of them raise antitrust 8 concerns and they are quite properly reviewed to see 9 if they past muster under the antitrust laws. 10 But the presumption is that a merger is 11 pro- competitive absent a showing by the government 12 that it isn't. It doesn't go the other way around. 13 Now the Commission can apply the 14 guidelines or its own version of the guidelines with 15 its own standards, and the antitrust authorities, of 16 course, have an obligation to do the same thing. That 17 would result in a certain amount of duplication, even 18 a great deal of duplication, whether that duplication 19 is wasteful or not is something for the Commission to 20 consider. I don't offer an opinion on that. 21 If you apply merger guidelines analysis, 22 economic analysis that's designed to tell whether or 23 not consumers are likely to be injured by a particular 24 merger, based on the facts of that merger, then I 25 149 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 150 think you'll find that your diversity concerns are 1 also addressed automatically. In principle, you could 2 have a merger that reduced diversity unduly even 3 though it didn't offend the antitrust laws, didn't 4 reduce competition. 5 MR. KRATTENMAKER: Your time has expired. 6 Are you summarizing? 7 DR. OWEN: Yes. I'll stop there. 8 MR. KRATTENMAKER: Okay, thank you. Mr. 9 Rintels? 10 I'm sorry, this is not part of your time. 11 I should mention here again that one of the things 12 we've done is to provide opportunities for people who 13 would like to propose questions that might be asked of 14 the panel. There are cards in the back of the room, 15 if you want to write a question. People will 16 circulate, pick the questions up and we'll -- there's 17 a woman over there with her hand up. We'll bring the 18 questions up to me and if there's an opportunity, I 19 will ask them. I've already got several for this 20 panel, but I'd be happy to receive more. 21 Excuse me, Mr. Rintels. 22 MR. RINTELS: Thank you, as a Virginian, a 23 native Virginian, I want to thank the Commission for 24 slogging through the Old Dominion slush to be here 25 150 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 151 today to hear our thoughts about media concentration. 1 My name is Jonathan Rintels. I'm a screen 2 writer and the executive director for the Center for 3 the Creative Community, a nonprofit that conducts 4 research, public education and policy development on 5 behalf of the tens of thousands of writers, directors, 6 producers and performers, who create America's popular 7 and literary entertainment. Numerous winners of 8 Oscars, Emmys, Tonys, Peabodys and other awards for 9 creative excellence serve on our Board of Advisors. 10 Today, the conventional wisdom is that a 11 500- channel universe assures viewpoints from a 12 diversity of sources and competition in the 13 marketplace of ideas. But as respected Wall Street 14 analyst Tom Wolzien concludes in his research study 15 dated February 7th and entered in the record this 16 morning, the reality of today's modern median 17 environment is quite different. Five corporations 18 with their broadcast and cable networks are now on the 19 verge of controlling the same number of television 20 households as the Big Three broadcast networks did 40 21 years ago. 22 In the past, when three or four broadcast 23 networks controlled this many households, the 24 Commission protected the public's interest in 25 151 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 152 competition, the marketplace of ideas and diversity of 1 viewpoints by requiring independent production of 2 programming. But today, the American public has no 3 protection. Data in this record prove this 4 programming oligopoly, Wolzien's term, not mine, 5 exists both in the distribution and production of 6 programming. For example, NBC owns outright or holds 7 a significant financial interest in 100 percent of the 8 new series on its schedule this season. The other 9 networks are not far behind. Rather than compete 10 fairly in the marketplace of ideas, the networks 11 leverage their control of the publicly owned airways 12 to take over television program production, driving 13 small businesses and creative entrepreneurs, many of 14 whom were women and minorities, out of business. 15 President Bush recently said small 16 business owners represent the enterprise of the whole 17 nation and the diverse talents of our people. 18 America's economy can thrive only when our small 19 businesses thrive. Television is not different. The 20 near extinction of creative entrepreneurs and small 21 businesses has resulted in corporate homogenized bland 22 programming. Even network executives agree. Their 23 quotes are in this record. 24 While there are many highly regarded shows 25 152 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 153 such as "West Wing" nearly all are independently 1 produced, such as "West Wing,” hold overs from when 2 program source diversity was required. The networks 3 themselves have produced little to take their place as 4 evidenced by NBC's decision to spend $10 million per 5 episode of one more seasons of "Friends." 6 Research shows many Americans receive 7 their information regarding democracy, politics, news, 8 values, history and culture from television 9 entertainment programming. Thus, in this proceeding, 10 the stakes for our nation are far higher than whether 11 we will all be doomed to a future of bland television. 12 When promoting the wide dissemination of information 13 from a multiplicity of sources is a government 14 interest of the highest order, Commission action is 15 indisputably necessary in the public interest as the 16 law requires. 17 Today's internet does not obviate the need 18 for the Commission to act. The same programming 19 oligopoly controls the most visited sites on the net. 20 Moreover, in much of Virginia, including my own home, 21 broadband is a distant rumor. Even among Virginia 22 families fortunate enough to have broadband, I've yet 23 to hear of any that microwave popcorn and gather 24 around the computer to watch internet. They watch 25 153 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 154 television. 1 The reemergence of the programming 2 oligopoly requires that the Commission create a new 3 program source diversity rule that allows independent 4 producers access to network schedules. And there's no 5 question the Commission has the power to create this 6 rule in this proceeding as the Coalition for Program 7 Diversity reply comments demonstrate. Such a rule 8 will meet all the goals of the Commission in this 9 proceeding. It will provide citizens with viewpoints 10 from a diversity of sources. It will enhance the 11 marketplace of ideas. It will reflect the reality of 12 the modern media environment in which the re- emerging 13 programming oligopoly is eliminating both economic and 14 creative competition. It will promote participation 15 in ownership by minorities, women and small businesses 16 in television. 17 This rule, this win- win- win rule will also 18 withstand future judicial scrutiny. This record is 19 full of data and other evidence documenting the re- 20 emergence of this programming oligopoly and the harm 21 it has caused. As with the Commission's legal 22 authority to create this rule, Judge Posner wrote in 23 Schurz Communications, "The Commission could always 24 take the position that it should carve out a portion 25 154 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 155 of the production and distribution markets and protect 1 them against the competition of the networks in order 2 to foster a diversity of programming sources and 3 outlets." 4 It is now necessary in the public interest 5 for the Commission to take that position. Promoting 6 the widespread dissemination of information from a 7 multiplicity of sources is the government interest of 8 the highest order in this proceeding. Increasing the 9 profits of a handful of corporations is not. 10 Thank you. 11 (Applause.) 12 MR. KRATTENMAKER: Thank you. Mr. 13 Winston, welcome back to the Commission. 14 MR. WINSTON: Good afternoon, Chairman 15 Powell, Commissioner Martin, Commissioner Abernathy, 16 Mr. Copps, Mr. Adelstein. Thank you for inviting me 17 to discuss the Commission's pending rulemaking 18 proceeding, examining its broadcast ownership rules. 19 I also thank you for inviting Alfred Liggins, a 20 distinguished member of the NABOB Board of Directors 21 earlier this morning. 22 NABOB is a trade association representing 23 the interests of African- American owners of radio 24 stations and television stations and cable television 25 155 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 156 systems across the United States. NABOB has 1 participated in this proceeding to encourage the 2 Commission not to relax further its multiple ownership 3 rules. Since the passage of the Telecommunications 4 Act of 1996 which significantly relaxed the 5 Commission's ownership rules, the number of minority 6 owners has dropped by 14 percent. 7 The first amendment rights of all 8 Americans to receive a free flow of news and comment 9 from all segments of the population will be damaged if 10 minority ownership continues to be squeezed out of the 11 business. 12 The Commission, the Congress and the 13 courts have historically recognized that the ownership 14 of broadcast stations must be disseminated among a 15 wide number of voices to assure the first amendment 16 rights of the American public are protected. 17 In its comments in this proceeding, NABOB 18 has cited a significant amount of research, 19 demonstrating that minority ownership promotes these 20 first amendment rights by providing viewpoint 21 diversity and promoting competition. 22 For this reason, NABOB has proposed in its 23 comments that the Commission make no further 24 relaxation of its rules. Instead, NABOB has proposed 25 156 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 157 several improvements for the Commission's existing 1 rules. The Commission should make permanent the 2 Commission's interim policy for processing radio 3 assignment of license and transfer of control 4 applications. The Commission should improve the 5 interim policy by flagging all transactions in which 6 one entity will control 40 percent of the local 7 advertising market or two entities will control 60 8 percent of the advertising market and the Commission 9 should use arbitron markets to define radio markets 10 for application of the multiple ownership rule. 11 The Commission should include an interim 12 policy, a review of the impact of minority ownership 13 of flagged transactions. 14 The Commission should eliminate its policy 15 of granting 6, 12 and 18 month waivers of its 16 ownership rules. If a transaction will require one or 17 more stations to be spun off, the parties should 18 submit an application to spin those stations off at 19 the time the transaction is filed. 20 The Commission should treat all local 21 market agreements as attributable and should require 22 that all agreements between noncommonly owned same 23 market stations be filed with the Commission. 24 NABOB has also requested the Commission 25 157 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 158 support reinstatement of the minority cash 1 certificate. NABOB commends the Commission for 2 supporting Senator McCain's Small Business Tax 3 Deferral Bill. We hope that legislation will be 4 amended to specifically promote minority ownership. 5 I would also like to make an observation 6 concerning one of the studies commissioned by the 7 Commission in this proceeding. In that study, the 8 Commission's researcher measured news slanting by 9 commonly owned television stations and daily 10 newspapers. This study is startling not for its 11 conclusions, but for its premise. The study assumes 12 news slanting exists and is a measurable phenomenon. 13 It then proceeds to measure this phenomenon. 14 Regardless of the conclusions reached in the study, 15 the study's principal values demonstrate that news 16 slanting exists. The existence of news slanting in 17 and of itself requires retention of the Commission's 18 ownership rules. Once we accept that news slanting 19 exists as a measurable phenomenon, it becomes 20 imperative to continue the Commission's policy of 21 ensuring the dissemination of ownership control of the 22 nation's airwaves among many different and 23 antagonistic voices. 24 In its comments, NABOB cited research 25 158 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 159 showing that in most major markets the market leader 1 has about 45 percent of advertising revenues and the 2 top two firms control about 74 percent of advertising 3 revenue. The research concluded that this resulted in 4 highly concentrated markets with Herfindahl Hirschman 5 indices exceeding 3,000 in many markets. Thus, NABOB 6 submits that, given examples such as Ann Arbor where 7 Clear Channel Communications currently has over 86 8 percent of the local radio advertising market, the 9 Commission should adjust its flagging procedure to 10 flag transactions which would result in a single 11 entity controlling more than 40 percent of market 12 revenues or two entities controlling more than 60 13 percent. 14 In conclusion, I would like to note that 15 the principal issue before the Commission in this 16 proceeding is what level of industry consolidation 17 should be permitted when the Commission balances its 18 often conflicting goals of promoting diversity, 19 competition and localism. NABOB submits that in 20 reaching a determination of how to balance these 21 competing interests, the Commission should note that 22 diversity and localism are the only two first 23 amendment considerations falling into that balance. 24 The promotion of first amendment rights is the 25 159 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 160 Commission's principal obligation and in the end, the 1 promotion of diversity and localism must take 2 precedence over the promotional competition. 3 Thank you. 4 MR. KRATTENMAKER: Thank you. Mr. 5 Chairman, if I may, I think I'm going to usurp the 6 prerogative of being moderator and ask the first 7 question. And the reason for that is that I have here 8 a stack of cards from the audience all of which ask 9 essentially the same question in different phrase and 10 I think we should start with this question. I'm going 11 to particularly direct it at Ms. Foley and Professor 12 Croteau, but I welcome comments from anybody. As 13 somebody who taught antitrust for a while, I was not 14 surprised by this. 15 How exactly is competition enhanced by 16 removing the number of competitors? That's the way it 17 was put on one of these cards. And I think that's the 18 question that's on the minds of many in the audience. 19 I'd like to say we went alphabetically. 20 As a result of that, we had three different responses 21 to that already from the middle of the panel. 22 Bruce Owen has told us that if you take a 23 competition focus, that means you're looking at the 24 welfare of consumers or people who buy advertising and 25 160 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 161 it may oftentimes be the case that a merger just 1 doesn't harm those interests because it doesn't give 2 anyone power to raise prices. 3 Mr. Munson said that sometimes what a 4 merger can do is it can rescue an otherwise nonviable 5 firm. It can provide resources that another firm 6 might not have had. It can bring somebody from a home 7 shopping network to being a network affiliate. 8 Mr. Miller says that the way competition 9 can be enhanced by having fewer firms is that free 10 over- the- air broadcasting is threatened by a number of 11 economic factors, all of which require some level of 12 consolidation if it's going to survive in the face of 13 these competing new media. 14 Those, in sum, are the kinds of answers 15 that some of our panelists have given and I wanted 16 particularly to ask my wing people, whether you agreed 17 with that or whether instead you do take the position, 18 it would be a perfectly respectable position that 19 competition is the number of people in a market and 20 reducing that number just simply reduces competition. 21 Professor? 22 DR. OWEN: I think one of the interesting 23 issues here that is coming up today is the 24 interrelated nature of diversity, competition and 25 161 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 162 localism, the fact that you can't simply isolate these 1 things. They are interrelated. And so when we're 2 talking about what is competition, it's not just pure 3 numbers, obviously. We can't say in all cases that 4 more necessarily means better content. The recent 5 study from the Project for Excellence in Journalism, 6 for example, showed that in fact when it comes to TV 7 news, local news, smaller broadcast groups had better 8 content in terms of serving the local community than 9 larger ones did. 10 However, at the same time they also 11 realized that sometimes groups do better than 12 individual stations because they have more resources 13 and so forth. And so this issue of competition is not 14 directly tied to the number of entities competing. 15 You have to look at the nuances in all of that, but I 16 think that message that once you get to a certain 17 level, larger and larger companies are not going to 18 help us in terms of diversity and localism. 19 MR. KRATTENMAKER: Thank you. Ms. Foley, 20 would you like to comment? 21 MS. FOLEY: Yes, just briefly. First of 22 all, I come from a journalism background and I come 23 from a news background and so I do care very much 24 about localism and much less about pure competition. 25 162 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 163 And I think that when it comes to news and when it 1 comes to reporting the news and setting the local 2 news agenda it very much depends upon the number of 3 players. Because if you don't have competing 4 antagonistic sources, you're going to have one entity 5 or few entities setting the news, so anybody who's 6 ever worked in a newsroom notes that competition is 7 what drives the news agenda. It's what drives 8 reporters to go out there and beat the competition, to 9 scoop their fellow reporters. So I think from my 10 perspective, it absolutely does matter. 11 MR. KRATTENMAKER: Thank you. Mr. 12 Rintels, did you want to comment? 13 MR. RINTELS: With regard to the 14 nationwide rules, I know the Commission has asked in 15 its notice of rulemaking whether it dare say the dual 16 network rule if two networks would merge together 17 whether they would then discretely target programming 18 to one audience on one network and one audience on 19 another network because that would be in their 20 competitive interests. 21 Prior history has shown that that's not 22 the reality at all, that when CBS and UPN were under 23 common Viacom ownership that UPN simply reran CBS 24 programming rather than get original programming for 25 163 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 164 its own discrete audience. And the same occurs with 1 Mothership Broadcast ABC network than being rerun on 2 satellite ABC Family and other networks owned by the 3 same parent company. 4 MR. KRATTENMAKER: Thank you. Mr. 5 Winston, did you want to comment? 6 MR. WINSTON: Yes. I just wanted to say 7 that as was pointed out a minute ago, the issues 8 addressed by the Commission here, localism, diversity, 9 competition, are interrelated. They can't be 10 separated out. And depending upon how you define 11 competition, it requires diversity and localism and 12 it's not something that can be separated out as simply 13 as might be suggested by someone from the panel. 14 MR. KRATTENMAKER: Dane, can you remind us 15 when are we shooting for public mike comments? 16 MR. SNOWDEN: We're shooting at 2 o'clock. 17 MR. KRATTENMAKER: We'll go somewhat 18 beyond that. I've been keeping you from the 19 Commissioners for a long time. I shouldn't do that 20 anymore. I should turn this over to the 21 Commissioners. 22 COMMISSIONER ADELSTEIN: I had a question 23 for Mr. Owen and maybe Professor Croteau, you could 24 follow up on this. 25 164 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 165 We're both Stanford men. It's good to 1 have you here. I was in the History Department. 2 You're over at Economics and they're not that far 3 apart in the quad, but it seems like they're miles 4 away here because I have a different reading of the 5 statute than you do as far as what it means. 6 You said, if I understood you correctly, 7 that it was about competition, the new standard, but 8 if you look at the broader context it said whether 9 it's in the public interest in light of competition. 10 So we look at, as a historian or somebody is looking 11 at the legal history of this, the Agency traditionally 12 has looked at the public interest as being about 13 competition and localism and diversity. 14 So I'd be curious if you really believe 15 that we don't have to look at those two as issues in 16 the public interest, and then if you could explain 17 that in light of the example that we heard about the 18 Richmond experience, since that's the one local 19 example that we have, as whether or not the public 20 interest was served in this case. I don't think you 21 believe it was. I'd like to hear your response to 22 that. 23 DR. OWEN: I think this is the way legal 24 points should be debated, between economists and 25 165 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 166 historians. 1 (Laughter.) 2 The public interest means whatever the 3 Commission says it means. And then the courts, of 4 course… 5 I think that it's a perfectly sensible 6 thing to worry about diversity from a competition 7 point of view because you can think about the 8 marketplace of ideas metaphor, using the same tools 9 that you do to think about economic marketplaces. How 10 many competitors are there, how many sources are 11 there, what are the barriers to entry, what 12 alternatives are available to consumers? 13 I think if you do that, what you discover 14 is that the choices available to consumers are far 15 wider than the choices available to advertisers and as 16 a result, markets in the marketplace of ideas are 17 going to be defined much more broadly. And therefore, 18 if you worry about economic concentration, economic 19 markets, you'll automatically take care of in most 20 cases, automatically take care of your diversity 21 concerns. 22 The other thing that I would say about 23 that is that measuring market shares in the 24 marketplace of ideas requires you to treat each source 25 166 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 167 equally and not to weight them by their current 1 popularity. The point of the first amendment is to 2 make sure that unpopular ideas have access to the 3 public. The public has choices. In antitrust, there 4 are certain markets where you give every competitor, 5 despite their current market share equal weight. And 6 I think the same principles should apply when you're 7 measuring concentration in the marketplace of ideas. 8 After all, the popularity of a given media 9 outlet is a demand side phenomenon. It's what people 10 like to get, like to read, like to watch. It has 11 nothing to do with the popularity of the source. The 12 unpopular idea that we're trying to protect is by 13 definition got a small audience. It's unpopular. 14 I probably used up more than my share of 15 time here. 16 MR. KRATTENMAKER: Commissioner Copps? 17 COMMISSIONER COPPS: Yes, I'd like to ask 18 Mr. Winston -- 19 MR. CROTEAU: I'm sorry, I was asked to 20 respond. 21 COMMISSIONER COPPS: My mistake, excuse 22 me. 23 MR. CROTEAU: As we all know, there's 24 often the -- 25 167 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 168 [END TAPE 3, SIDE A; BEGIN TAPE 3, SIDE 1 B.] 2 -- my concern here is that there's too 3 much discussion about creating formulas, whether 4 they're economic formulas or otherwise that help to 5 dictate public policy and I think we have to 6 understand economic formulas, formulas to measure 7 competition in the marketplaces and so forth, are 8 useful tools. But they are part of a broader tool kit 9 that we need to use, some of which has to do with 10 experience and some common sense to be blunt about it. 11 And when you look at particular cases, how 12 this actually works and particular markets, what 13 actually happens in localities and I think that's why 14 these sorts of hearings are so important to hear those 15 stories, you find that a decline in numbers does mean 16 something to those communities because it does mean a 17 loss of competition very often and consequently that 18 translates into a loss of local content, a loss of 19 diversity and so on. 20 And so we have to supplement, I think, the 21 economic theory with some other types of information 22 that, in my opinion, are just as valid. 23 MR. KRATTENMAKER: Thank you, and pardon 24 me. Commissioner Copps. 25 168 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 169 COMMISSIONER COPPS: Mr. Winston, we heard 1 earlier in the panel earlier today that a number of 2 radio station owners has dropped by over a third since 3 1996. You pointed out in your eloquent testimony the 4 number of minority owners has decreased by 13 percent. 5 I'm hearing this from so many groups that minorities 6 are now under represented in ownership and are poorly 7 represented by the media and programming. I'm hearing 8 it from your organization and the National Association 9 of Black Owned Broadcasters. I'm hearing it from the 10 Minority and Media in Telecommunications Council. 11 Rainbow, PUSH and National Association of Hispanic 12 Journalists, Church of Christ, Women's Institute for 13 Freedom of the Press. It goes on and on. I'm also 14 hearing that advertisers say that stations are 15 ignoring minority communities that are critical target 16 markets for their products. 17 I gather what you're saying is not only 18 don't abolish these rules, but you're saying we have 19 pretty much reached the limit of what we can tolerate 20 in changing the rules. I know I've talked to a lot of 21 members in your group, as individuals, and some of 22 them have done pretty well for themselves in the world 23 of the media, but so many of them tell me that in the 24 increasingly consolidated environment right now, they 25 169 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 170 could not replicate the progress that they made. They 1 wouldn't be where they are if they were starting out 2 right now. 3 Could you comment on that and also on the 4 question do you think we have really reached the limit 5 on as far as we can go on some of these rules insofar 6 as the impact on diversity is concerned? 7 MR. WINSTON: Well, certainly in the radio 8 area. NABOB has focused primarily its comments in 9 this proceeding on the radio area because we have 10 significant number of stations that are owned by 11 minorities. We have 240 stations that are owned by 12 African- Americans in the radio industry. In 13 television, there are only 20 television stations, 14 some of them are fairly marginal stations. It's 15 probably too late. The industry continues to 16 consolidate. Even if you hold the line on your TV 17 rules, minorities just do not have an opportunity to 18 buy into that business. 19 In radio, as you pointed out, Radio One is 20 our shining star. They're the folks that we all look 21 up to and say we can do that one of these days. But 22 the reality is that most minority owners are not going 23 to be able to do what Radio One has done. And many 24 are trying. But what we have found is that the 25 170 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 171 consolidation rules, the Clear Channels of the world, 1 the Citadels, the Affinitys have too much of a head 2 start. 3 I have current owners who call me all the 4 time, "I bid for a station, Cumulus outbid me, Citadel 5 outbid me, Clear Channel outbid me." So that with no 6 national cap, it's very difficult to see how we're 7 going to be able to continue to grow as owners and 8 further relaxation of the rules only makes it worse. 9 COMMISSIONER COPPS: That's a really 10 dramatic statement that everybody in this audience 11 ought to pause to think about. It's already too late 12 for the television and the radio situation in that 13 dire situation too. Where we are right now, without 14 further relaxing the rules. If that's not a big red 15 stop sign, it's still cautionary in light of the first 16 magnitude. 17 Does somebody else want to comment? 18 MR. VICTOR MILLER: I just want to say 19 that let's not forget that since 1996 Salem, a 20 Christian broadcaster who is now a public company. 21 They weren't before that. Entrevision, an owner of 22 Spanish language newspapers, magazines, outdoor and 23 television stations is now a public company. They 24 weren't before, 1996. Radio One was not a public 25 171 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 172 company. Spanish Broadcasting was not a public 1 company. PAX, a Christian television broadcaster is 2 also in the marketplace. So you can -- some certain 3 broadcasters have taken advantage of the capital 4 markets, like Alfred said this morning, decided that 5 the rules had changed. They got in the game. They 6 went into the public markets and they are now very 7 viable public companies buying stations along with 8 everybody else and outfitting a lot of other 9 broadcasters for properties. 10 So there has been some benefit. We do 11 have five, six public companies that didn't exist 12 before the rules. 13 COMMISSIONER COPPS: I think Mr. Liggins 14 made it pretty clear this morning that was kind of a 15 question of fortuitous timing and taking advantage of 16 some of the programs that we had at the Commission and 17 what I'm hearing from Mr. Winston's members is trying 18 to replicate that is very difficult. 19 Let me ask you another question. Mario 20 Gabelli (Phonetic) who is known for his media 21 expertise is predicting pretty widely that there's 22 going to be a rush of takeovers and combinations in 23 broadcasting and newspapers if we significantly change 24 these rules. You're an expert analyst, but I'd like 25 172 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 173 other people to chime in on this too. 1 What do you think is going on out there 2 right now if we would eliminate some of these caps? 3 Would we have a rush to consolidation or -- what do 4 you foresee and what do some of your analysts see down 5 there? 6 MR. VICTOR MILLER: The bottom line is I 7 think that the Federal Communications Commission has 8 actually sold itself short on how hideously successful 9 some of its changes have been in the marketplace. 10 If you look at newspaper broadcast cross 11 ownership, which has been around for 28 years, no 12 relaxation of that, look at the Atlanta Journal 13 Constitution, the Dallas Morning News, the Chicago 14 Tribune, some of the preeminent newspapers in the 15 United States of America. They have owned TV stations 16 in the same markets. If you actually look at the 17 quality of those newspapers, it is undeniably good. 18 Now if you look at the television stations where 19 there's co- ownership where they have newspapers and 20 television stations, on average, that local news beats 21 competitors in that marketplace by almost 60 percent 22 and the third place operator by 200 percent in the 23 early news, where there's no influence from prime time 24 viewing whatsoever, because of the quality, the 25 173 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 174 increased quality that they can bring to the paper and 1 the newspaper at the same time. 2 Now in terms of the radio, 60 percent of 3 the radio stations were basically not profitable in 4 1991. Now you have a situation where the market is 5 completely stabilized. You've done a great job. 6 There's been 9,000 stations that have transferred 7 hands to $120 billion worth of acquisitions and it's 8 been, I think, a very great success. 9 Duopoly. You want to talk about duopoly. 10 Sixty- five percent of all duopolies, those stations 11 earn less than 5 percent of the revenue share and 80 12 percent of the duopoly are related to the new 13 networks. Telepature (Phonetic), UPN, WB, Univision, 14 Fox, they gave birth to all that, to a very viable and 15 robust and large station group. 16 And lastly, on the retransmission consent 17 rules which you guys changed in 1993, that's added a 18 tremendous number of new cable networks and we talked 19 about diversity in that last panel. I just want to 20 remind you the first 20 weeks of this year, one third 21 of all the audience every night is watching A& E, ESPN, 22 History Channel, Lifetime, American Movie Classics, 23 Bravo, CNBC, MSNBC, Fox News, TVFoodNet, Home and 24 Garden, Cartoons, CNN Headline News, Black 25 174 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 175 Entertainment Television, Nickelodeon. That's a third 1 of the viewers and how can you say that a lot of those 2 networks aren't the kind of programming that you'd 3 like our children to sit down and watch? 4 COMMISSIONER COPPS: That was not my 5 question. My question is -- 6 MR. VICTOR MILLER: No, I understand. 7 COMMISSIONER COPPS: Sitting here trying 8 to judge what are the results going to be, what kind 9 of a mad rush to consolidation are we going to see? 10 MR. VICTOR MILLER: You're going to see 11 increased duopoly. You're going to see increased 12 newspaper broadcast cross ownership because of the 13 benefits we've run through. The marketplace compels 14 change -- 15 COMMISSIONER COPPS: We can debate the 16 benefits and the negatives later on. We need to do 17 that before we make a decision. I'm just trying to 18 see what the market says. You're a guy from the 19 market. You understand the market and you're telling 20 me that there is going to be significant additional 21 consolidation if we significantly change the rules? 22 MR. VICTOR MILLER: When you have 28 years 23 of no rule change, there will be some changes in 24 newspaper and broadcast. I don't think it's going to 25 175 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 176 be a mad rush, no, I don't think. 1 COMMISSIONER COPPS: Mr. Rintels, you 2 wanted to comment? 3 MR. RINTELS: I did. I'm not a man of the 4 markets, but Tom Wolzien is and in his study which I 5 referred to earlier, he pointed out that if the 6 national ownership TV audience ownership cap is 7 lifted, or relaxed, that there will be a mad rush to 8 buy up local affiliates and that will occur 9 particularly where there's overlap with Comcast or one 10 of the other big cable providers because the networks 11 will then use the retransmission consent for the cable 12 operator to use that local station as a baseball bat 13 to force them to take their other cable channels or to 14 move their other cable channels up a tier or into the 15 more basic level of service. 16 And this is something that really hasn't 17 been explored, at least as far as I can see in the 18 comments, that that cap is important in terms of 19 programming diversity and staving off the programming 20 oligopoly. 21 COMMISSIONER COPPS: Thank you. 22 MR. KRATTENMAKER: I was going to move to 23 Chairman Powell, but if you wanted to -- 24 CHAIRMAN POWELL: I just wanted to make a 25 176 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 177 couple of quick points. I thought what we were here 1 to do is to find out what the benefits and detriments 2 of possible changes would be. That is the ultimate 3 question. I think what the panel seems to universally 4 agree with and if they don't, I find it fantastic, is 5 that any given combination could be good or it could 6 be bad for consumers. The only thing we should care 7 about is if it's good for consumers or bad for 8 consumers. There are a lot of groups who may not 9 benefit from a combination, but the one that we care 10 principally about is for consumers. And I think it is 11 relevant, whether any changes that take place would be 12 changes that are positive for the consuming public. I 13 think that it's completely legitimate to point out the 14 detriments that could follow, but I think as Mr. 15 Munson pointed out, other people can also postulate 16 anecdotes where consumers came out better as a 17 consequent of the market structure change. 18 What the government's job is to do is to 19 have a mechanism to filter the one from the other and 20 that's really what we're trying to do, not just win a 21 debate on whether consolidation is bad or not. Even 22 in and of itself. Of course, it's both. It depends. 23 The other thing is I think that we have to 24 accept certain realities. 25 177 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 178 Mr. Winston, the truth is, I think, in 1 radio that the percentage of minority ownership has 2 actually increased principally because of Mr. Liggins' 3 company over all in the last few years and they're 4 taking advantage of the same dynamics that other 5 people are taking advantage of to be successful. It's 6 not enough. I'm one of the biggest supporters of 7 minority ownership policy of anyone as you know, but 8 it is a change in the marketplace and it's real. 9 There's an enormous increase in Spanish language 10 programming that has occurred in the last few years. 11 One of the things that I'm going to throw 12 open wide as a question because Professor, I think you 13 alluded to, which is actually one of the concerns that 14 I have, it's near the end you briefly suggested even 15 noncommercial. 16 Now a lot of what I hear today which is 17 very informative to me suggests that one of the 18 problems isn't so much big, isn't so much corporate, 19 but that it's commercial, but anything by definition 20 that's commercial is profit seeking. I don't know how 21 to differentiate between more meritorious groups, but 22 some of the independent producers we're talking about 23 are Sony Pictures or Carsey- Warner. These are not 24 small, independent little guys seeking and they're not 25 178 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 179 doing it for free. I commend them just as I commend 1 any writer or producer, but we should put on the 2 record there are very few people who are doing this 3 business not for business. 4 But it seems to me one of the things 5 that's very unique in the American system is that our 6 television system is almost totally commercial. Most 7 democracies deal with this threat to democracy by 8 having government- sponsored programming, whether it be 9 the BBC or those kinds of programming in which 10 individuals are taxed and in the case of the U. K. $150 11 roughly a year to support a medium that doesn't have 12 to be bound by these commercials. 13 So I'm curious that if people think the 14 biggest problem in the United States is that as long 15 as we have strong commercial incentives for the 16 production of what we do and see, exclusively, we'll 17 always have this problem and that maybe a greater 18 commitment to public broadcasting or forms of public 19 broadcasting is one of these things this country, the 20 government ought to put more stock in. 21 I heard you mention that in passing, could 22 you -- 23 MR. KRATTENMAKER: I just have to 24 interject. I have the sense that most people on the 25 179 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 180 panel would like to speak to that so I would ask could 1 you each try to keep your remarks brief, because we're 2 trying to get to audience comments. 3 Professor? 4 DR. OWEN: Yes. I think that's a very 5 important point and it speaks precisely to the point 6 that you made earlier which I have to respectfully 7 object with. That is, I don't think the primary 8 responsibility of this Commission is to protect the 9 interests of consumers. That is certainly a piece of 10 it. But it is to protect the interests of citizens 11 and that includes a consumer side. 12 (Applause.) 13 But also includes other features of the 14 media landscape that do not lend themselves to this 15 sort of consumer analysis and your point about public 16 broadcasting is an excellent one. We are not talking 17 about public broadcasting and I think that's a real 18 shame because in fact, a lot of the dynamics that 19 we're talking about today that we're concerned about 20 have to do with how marketplaces operate in general 21 and the kinds of economic forces that influence in the 22 end the content more generally and it is absolutely 23 important to have a noncommercial alternative to that 24 if we're really going to talk about diversity, if 25 180 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 181 we're really going to talk about meeting the needs of 1 minority communities and so forth and that is public 2 broadcasting. It's public radio. It's low power 3 radio which is a piece of this as well. 4 (Applause.) 5 MR. KRATTENMAKER: Thank you. Did any of 6 the other panelists want to comment on the Chairman's 7 question. 8 I'm sorry to be the bad guy in this. If 9 each of you talk for two minutes, we're going to go 10 all through the public comment period. So please try 11 to keep your remarks brief. 12 Ms. Foley? 13 MS. FOLEY: Yes. I was just going to say 14 that there is a point to what the Chairman said in 15 that in other countries like the United Kingdom and 16 Canada there is a strong, public service broadcasting 17 component there. We don't have that in this country 18 and part of the reason we don't have that is that we 19 give our airways away to these commercial broadcasters 20 and so that's why this Commission does have to look at 21 the public interest aspect of this. It isn't a pure 22 economic analysis. We've made a decision as a country 23 to operate our media system this way. It may be a 24 good way to operate. I'm not saying, I'm not arguing 25 181 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 182 against it. I'm just saying that that then argues for 1 us not to do an economic analysis and to really focus 2 on in a proceeding like this the public interest. 3 MR. KRATTENMAKER: Thank you. Mr. Miller? 4 MR. MILLER: Again, all we're talking 5 about when we talk about broadcast free over- the- air 6 broadcast television as its own ecosystem, it has two 7 pieces: a network that produces, that takes $37 8 billion worth of risk over the last three years to 9 produce programs and local stations which try to serve 10 the local marketplace. There are seven pressures that 11 have been bearing down on both of these models and if 12 not addressed in the medium or short term that free 13 over- the- air broadcast system that we don't pay for 14 that only has one single revenue stream will change 15 markedly and we don't know how it's going to change, 16 whether consumers are going to have to pay for that 17 model or whether it's going to degrade the model so 18 much that it's not a viable, robust market and as 19 someone mentioned this morning, 15 percent of America 20 still relies solely on over- the- air broadcasts as 21 their only way of seeing television in their homes 22 because they don't have cable or satellite. 23 MR. KRATTENMAKER: Mr. Munson? 24 MR. MUNSON: I can only say this. I can 25 182 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 183 never be embarrassed by the fact that my television 1 stations make a profit. Part of that profit goes to 2 our shareholders. Part of that profit goes back into 3 the product. We've increased the number of hours of 4 news and public affairs programming and sponsorships 5 of events and been able to employ 200 families to 6 provide a paycheck for them. 7 So any good broadcaster is going to pour 8 part of the money into the product and part of the 9 money into profits. 10 MR. CROTEAU: I agree with the Chairman 11 that the complaints about programming that we've heard 12 have been chiefly about programming that's responsive 13 to what consumers want to see. And that does leave 14 out of the count programs that consumers don't want to 15 see, at least in large numbers. If it's in the public 16 interest to subsidize such programming, that's fine, 17 but public broadcasting is not the way to do it. If 18 you want to subsidize programming, the programming 19 should be subsidized as programming and be available 20 for any kind of outlet. There's no reason to waste 21 scarce spectrum resources on public broadcasting 22 stations that viewers don't know how to tune in. 23 MR. KRATTENMAKER: Mr. Rintels. 24 MR. RINTELS: I take the Chairman's point 25 183 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 184 about Sony, not a small business. But Carsey- Warner 1 certainly was. It was two people with one telephone . 2 And it was by virtue of their innovation and 3 creativity and efforts that they became a large 4 business. 5 So we're not pretending that the creative 6 community or independent producers are not in this to 7 make a profit, but my organization doesn't only 8 represent those producers. We're talking about the 9 people who simply work on shows and we're not able to 10 do our best work when it's the networks who are 11 calling all the creative shots and so I think that 12 independent production was a wonderful way for small 13 businesses, minorities and women to get into the 14 television business. It took very little capital. 15 All you needed was a great idea, but that's gone now. 16 So really, the question for us is by virtue of the 17 networks' control of the airways, should they be able 18 to exclude all the other voices that are out there? 19 We don't think that's right. 20 Should they be able to monopolize the 21 production of programming and not compete in the 22 marketplace of ideas. We just don't think that's 23 right. 24 (Applause.) 25 184 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 185 MR. KRATTENMAKER: Mr. Winston? 1 MR. WINSTON: I just wanted to respond to 2 the Chairman's comment about Radio One. Certainly, 3 we've very happy that Radio One has had all that 4 growth over the last several years, but -- and you're 5 right, the total number of African- American owned 6 stations has grown primarily because of the growth of 7 Radio One. 8 The concern I have, of course, however, is 9 looking at BET. The African- American community pinned 10 all of its hopes in television on one company. That 11 company sold out. Radio One is a publicly traded 12 company like every other publicly traded company, it's 13 under pressure from Wall Street financial sources to 14 keep showing revenue growth or find itself under 15 pressure to sell out too. 16 I think that the African- American 17 community shouldn't say that we're going to pin all 18 our hopes on one company no matter which company it 19 is, no matter how great they are. And I don't think 20 the Commission should ask us to do that either. 21 Thank you. 22 MR. KRATTENMAKER: Commissioner Abernathy? 23 COMMISSIONER ABERNATHY: Thank you. 24 You've brought up a lot of points. I have many 25 185 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 186 questions, but I know where to find you guys. I will 1 submit my questions. I'd rather hear from all of you 2 and if the audience has any questions, I'm happy to 3 jump in, but I'm just going to pass for now. 4 MR. KRATTENMAKER: Thank you. 5 Commissioner Martin? 6 COMMISSIONER MARTIN: I just have one 7 question. 8 Mr. Miller, you talked about the 9 importance of changing some of our rules for the 10 maintenance of free over- the- air broadcasting and 11 talked about the limited revenue stream that they have 12 and yet the increased costs that they've incurred, 13 particularly going through the digital transition. 14 Isn't there an opportunity though for them 15 also to have additional revenue streams from that if 16 they chose to multi- cast in a digital context? If 17 that was the case, are there other things that 18 inhibit, maybe digital carriage issues, or whatever, 19 but are there -- is that not a potential other 20 additional revenue stream for them that would have 21 some positive benefits on the other side? 22 MR. MILLER: When you spent $4 to $6 23 billion are you likely to get a real return on that 24 investment and that's the unanswered question right 25 186 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 187 now. 1 As you know, we have problems with the 2 rights, the rights when you digitally send something 3 over the year that it could be stolen by someone. 4 That has not been fixed yet. 5 We don't have the transmission standard is 6 still not -- we don't know whether it's a robust 7 standard yet and you've certainly helped with tuner 8 issues and cable operability issues which were not 9 solved, even six months ago. And then you have the 10 consumer that now has to spend a lot of money to 11 change a TV set and as you know, the average TV set 12 lasts anywhere between 15 and 20 years. 13 So there's a lot of pieces that have to be 14 solved for it to be a robust system, but yes, 15 philosophically will we be able to multicast? 16 Absolutely. But right now, we don't have all the 17 pieces in place to even approach that yet. 18 MR. KRATTENMAKER: My thanks to the 19 panelists. You all were terrific. Thank you for 20 braving the weather and coming down here. 21 We're now going to turn to a public 22 comment portion of the meeting. I notice that it's 23 supposed to end in 10 minutes. We'll go on for at 24 least 20. 25 187 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 188 Dane, I think you have, are there some 1 people who are waiting from last time to speak? 2 MR. SNOWDEN: Sure. I would ask that 3 Allison Bresnick, Dan Pottle, Christopher Maxwell, 4 Raine Burrows, Silver Persinger and Bob Wolfner be the 5 first to go to the microphones. 6 While they're doing that, I want to have a 7 scheduling update. What we're going to do is we're 8 going to take this all the way to about 2: 40 and then 9 we're going to start the next panel immediately after 10 that so the next panelists please get ready at 2: 40. 11 We're going to begin at that point. So we'll start 12 with Allison. And again, you all have two minutes. 13 MR. KRATTENMAKER: We're going to give you 14 two minutes. The red light will come on and will you 15 please stop at the end of your time so others can 16 speak. 17 MS. BREZENCHEK (Phonetic): My name is 18 Allison Brezenchek and I am the Vice President of 19 Media Reform for the Action Coalition for Media 20 Education. I want to first just specifically thank 21 Commissioner Copps for all of his advocacy efforts 22 regarding the public interest of the mass media. We 23 really appreciate your commitment to that. 24 First of all, I want to say that being 25 188 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 189 able to communicate to the public is power. Mass 1 communication. And one of the things we need to pay 2 attention to is what's not there and I want to 3 specifically talk about what hasn't been paid 4 attention to related to these FCC hearings and media 5 deregulation. Why haven't these issues been in the 6 mass media? The mass media is there to inform us and 7 to let us know about things that are related to the 8 public interest? Why haven't they been covering these 9 issues? 10 The only reason that I can think of is 11 because of the financial interests that they have in 12 getting further deregulation to occur. And that is a 13 big conflict between financial interests and public 14 interests that are not being addressed here. 15 (Applause.) 16 I also wanted to comment on programming 17 content. We've had some controversy in the panel 18 about is programming content appropriate to be 19 discussing here and why is that being commented on? I 20 think that again goes back to the public not being 21 informed. The reason why the public doesn’t comment 22 on programming content is because most of them 23 probably don't know the FCC exists, don't know what 24 deregulation is and don't know the steps to take to 25 189 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 190 voice their concerns. The only thing that they do 1 know is that they don't like what they see on 2 television. What other means do they have to comment 3 about it other than program content? And therefore, I 4 think that's why they comment on that specifically. 5 If the mass media was educating them about 6 deregulation and things of that nature, then they 7 would have more to talk about. 8 Related to consolidation, I think that 9 consolidation leads to the recycling of programming. 10 A specific example is -- 11 MR. KRATTENMAKER: Thank you. 12 (Applause.) 13 MR. PODWELL: Hi. I'm sure some of you 14 are wondering why we dressed like mad scientists 15 today? And it is in response to a comment made by the 16 Chairman that he only wants to hear from media 17 scientists and that our commentary has been too 18 emotional and too political. 19 Well, I'm not a scientist, I am a tech, a 20 very small radio station, WPEB, in West Philadelphia 21 and we don't run plugs. We don't do public 22 fundraising campaigns. We just have benefits, mostly 23 in the forms of parties. Occasionally, we get 24 donations from our friends. We're a very small 25 190 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 191 station and we've had a few grants. 1 I think our existence, it's a leftover 2 from the 1970s. It's an old Class D license and our 3 existence is proof that the public interest is not the 4 same thing as business interest because we're the only 5 kind of voice for the kind of community in which we 6 exist. 7 I know that we're talking about 8 deregulation. I have to say I think that Spectrum 9 Management plays into the equation here. LPFM as was 10 these reforms that happened during Chairman Kennard's 11 administration was a big step forward and it was 12 special interests, it was business interests such as 13 NPR, National Association of Broadcasters that pushed 14 Congress to eviscerate it. There was a rider attached 15 to a budget appropriations bill sponsored by Senator 16 Rod Grahams who not surprisingly soon after lost the 17 election which is what happens -- which is what 18 ideally happens. 19 MR. KRATTENMAKER: Mr. Podwell, thank you 20 very much. 21 (Applause.) 22 Mr. Maxwell. 23 MR. MAXWELL: Thank you. My name is 24 Christopher Maxwell. I'm the Vice President of the 25 191 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 192 Virginia Center for Public Press. We are a low power 1 FM applicant. We train people to create their own 2 television shows and thus tell their stories their way 3 without the filter of too many other influences, 4 editors, owners, advertisers, underwriters, etcetera. 5 So you'll hear a lot of things on our programs that 6 may not be perfectly polished, but we get a lot of 7 viewers because we have authenticity to offer. So we 8 use say, for example, an ancient titler, an omega from 9 1984, but it gets the titles up and it doesn't seem to 10 matter to our audience. 11 A lot of the money problems come from 12 concerns about creating a product for a thin, rich 13 slice at the top or the great masses and not 14 necessarily kind of all the leftover -- people in 15 between. 16 I'm concerned that the studies, however, 17 unfortunately, are irrelevant. They're invalid. 18 Here's the problem. 19 Mr. Powell, you voted against low power 20 FM, in part, you said because you were concerned that 21 LPFM would take some listeners away from commercial 22 minority broadcasters that were on the edge of 23 bankruptcy and that might push them over or cause 24 other problems. Well, okay, but in band on channel 25 192 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 193 digital audio broadcasting has been proven by tests 1 and by Clear Channel's own testimonies and tests to 2 jam the signals of stations adjacent to an ibox 3 station. That doubling of the stations on the dial 4 then removes those stations from people's selections 5 and choices. That then means we go from say 33 6 stations on a car radio in Richmond down to say 22 or 7 23. And what if that one station that disappeared was 8 the one station that spoke to your soul, the one 9 station that carried your news, your religion, your 10 viewpoint, your ethnic news, your whatever? Then it's 11 a 100 percent loss. 12 So that means that we have already 13 accepted -- 14 MR. KRATTENMAKER: Thank you, Mr. Maxwell. 15 Your time is up. You can submit your information for 16 the record, as you continue. 17 Ms. Burrows, please. 18 MS. BURROWS: Hi. I'm the mother of a 19 2- year- old living here in Richmond and I'm very 20 concerned about the deteriorating quality of 21 television in this country. When I was a child, my 22 parents made educational films and I sometimes 23 appeared in them. They were often shown on 24 television, not only on PBS, but also the networks. 25 193 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 194 I wish I could find programs like that 1 today for my little girl to watch. The point is there 2 were more ways back then for people to produce 3 interesting programs and get them distributed on 4 television. Now the media outlets are pretty much 5 controlled by huge multinational corporations. 6 The best programs don't get aired because 7 of the obsession to maximize profits. 8 Today, we are bombarded with sensational 9 violent mindless shows. The people of this country 10 have no way to use airways that supposedly belong to 11 us except for local cable access TV. The FCC should 12 be deeply concerned about what is happening. They 13 should protect the interests of the people and look 14 for ways to use their regulating power to encourage 15 the independence of the smaller stations throughout 16 the country. We don't want Fox and Viacom owning 17 every station we turn to on the dial. We do not want 18 one corporation quietly buying up 1200 channels so 19 they can maximize profits by making pure programs. 20 This is already happening in radio. 21 Please do not make the same mistake in 22 television. If we do still live in a democracy which 23 is at work in this room today, then we need to keep 24 television open for as many voices as possible. 25 194 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 195 I know I speak for so many parents in this 1 country who grew up loving TV and now worry about 2 letting our kids watch it at all. 3 (Applause.) 4 MR. KRATTENMAKER: Thank you, Ms. Burrows. 5 Mr. Persinger (Phonetic)? 6 MR. PERSINGER: Hello, Chairman Powell and 7 Commissioners. Thank you for the privilege to speak 8 to you today. 9 My name is Silver Persinger. I live in 10 Richmond, Virginia. I come today to tell you to 11 oppose removing restrictions on ownership of media 12 outlets. 13 I come to you today, before you today as 14 an advocate of the golden American ideals of 15 democracy, free speech, freedom of press, liberty and 16 freedom. 17 What we all know, but what hasn't been 18 said is that television is the most powerful source of 19 propaganda in this country, a major source of 20 information, education and social values. Information 21 is power, but information is also wealth. 22 This marketplace of ideas and the funny 23 thing about ideas is it's hard to sell them. Ideas 24 inherently are free and your whole -- all this stuff 25 195 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 196 is centered around the economy and I identify myself 1 as a socialist and I feel real threatened by this 2 dependency on economy to justify every action and I 3 don't know, I just don't see a real place for 4 socialism being discussed in commercial media which 5 looks like the way we're heading. 6 This is an essential tool of political 7 speech and it's largely denied to ordinary people. If 8 you truly want diversity, you need to increase public 9 access to the media. 10 Just look -- just take a look at the rules 11 already enacted by the Commission. One of the 12 Commissioners or panelists mentioned that the first 13 rules banning ownership of multiple radio stations 14 occurred in 1927. I think you would be forgetting the 15 wisdom of previous FCC Commissions. These rules were 16 instituted at a time when there were fewer stations 17 and only about five years after the initial radio boom 18 of 1922 and 1923. The Commission recognized the 19 importance of the distribution of information. 20 MR. KRATTENMAKER: Thank you, Mr. 21 Persinger. 22 Is Mr. Vuckmer there? 23 MR. VUCKMER: Thank you. My name is Bob 24 Vuckmer. I am a citizen or as referred to by a 25 196 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 197 panelist, I'm a consumer. I object to that 1 classification. I'm here as a citizen and a resident 2 of Virginia. I want to state very clearly that 3 perception in my opinion is reality. Everyone creates 4 their own reality, so I'm speaking in terms of my own, 5 really for my wife and I. 6 I'm going to speak about a reality that is 7 my perception and the perception is that what I've 8 heard today, we're really talking about corporate 9 policy as opposed to public policy and when I say 10 public policy I mean citizen policy. I get enough 11 phone calls and attempts to take my money as a 12 consumer. I don't want to be thought of as a consumer 13 by a public agency, the FCC. 14 Secondly, we have lost our ability in 15 America through the media. Free press, in my opinion, 16 is all the media. To agree or disagree, we have come, 17 I think, in a fashion and form now where it's only 18 fashionable to agree. Whatever the opinion is that is 19 being pushed, by the media, by whatever media outlet, 20 is the one which we're expected to agree, with which 21 we're expected to agree. And I disagree with that. 22 I think a free press, a free media means 23 that there's this antagonism that everyone talked 24 about in this room that allows free exchange of ideas 25 197 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 198 whether you agree or disagree, but you come to some 1 resolution as a result of that disagreement. 2 That isn't happening any more. I think 3 what we're finding -- my real concern is news. I find 4 we're getting a lot more entertainment than we are 5 news. The content is awful. For those people who run 6 stations, media outlets, you need to understand we're 7 tired of the garbage, in my opinion, what we're 8 getting served up as news is not news. It is 9 entertainment. 10 Finally, I want to say that the experiment 11 in Richmond was we used to have more than two 12 newspapers. We eventually had two newspapers and 13 those two newspapers were merged. One I found was a 14 little bit more moderate than the surviving entity -- 15 MR. KRATTENMAKER: Thank you, Mr. Vuckmer. 16 You can submit your information for the record as 17 well. 18 We're now going to begin to alternate. 19 We'll start with the right and go to the left. Again, 20 two minutes. Yes sir. 21 MR. LABLAU: Yes, Mr. Commissioner, 22 Members of the Commission, my name is Danny Lablau 23 (Phonetic). I'm President of the Virginia State AFL- 24 CIO that represents over 200,000 working families here 25 198 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 199 in the State of Virginia. These working families 1 depend upon a diverse and free media to participate in 2 our democracy. I'm worried about the concentration of 3 media ownership into fewer and fewer hands. Here, in 4 Richmond, a city of over 200,000 people, the state 5 capital, we have one daily newspaper, The Richmond 6 Times- Dispatch. It's owned by Media General with a 7 circulation of about 200,000 with about 230,000 on 8 Sunday. We have three TV stations, the ABC, CBS and 9 NBC affiliates which produce local news shows four 10 times a day. The Fox affiliate produces a 10 p. m. 11 newscast. There are no locally produced cable news 12 shows. So we have four or five, if you include Fox, 13 as major news sources in Richmond. If you allow any 14 of them to merge, we'd only have three or four. 15 Just look at what happened to radio in 16 Richmond since the 1996 Telecommunications Act dropped 17 its national radioship ownership rule. The four 18 largest radio stations now control 90 percent of the 19 market, according to your study. The number of 20 independent radio station owners in Richmond has 21 dropped 31 percent since 1996. 22 Now I hear that Media General, the owner 23 of the major newspaper is into something called 24 convergence. They want to own a TV station where they 25 199 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 200 own a newspaper and then share the news operation. I 1 fear they have Richmond on their radar screen. 2 I shudder to think what this would mean. 3 They would dominate the news market and drive up ad 4 prices. Working people have a hard enough time 5 getting fair reporting in this state. If we even have 6 fewer media owners, it would be even harder to get 7 fair coverage from workers' point of view. 8 Politicians would have to pay even more 9 for their ads, print and media or electronic media. 10 MR. KRATTENMAKER: Thank you, sir. I 11 remind you to please state your name for the record as 12 well. 13 Ma'am? 14 MS. SMITH: My name is Laura Smith and I'm 15 from Austin, Texas where I'm a doctoral student at the 16 University of Texas at Austin. I also worked in 17 television news for about 13 years before I went back 18 to school to teach the next generation of 19 broadcasters. 20 I would like to actually reference 21 directly the issue of duopolies and much deference to 22 Mr. Munson in what he's doing at WAVY. This is not 23 the case in many duopoly conditions around the 24 country. 25 200 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 201 In Jacksonville, Florida when Gannett 1 purchased the Albritton station in 1999 under one of 2 the first television stations allowed to do this, they 3 immediately dismantled the news operation and fired 4 the majority of the news staff, although they kept the 5 entirety of the sales staff. 6 I would like to say they are now 7 simulcasting one news product on two television 8 stations, one an ABC affiliate, the other an NBC 9 affiliate. They are maintaining the entertainment 10 programming, but they have disassembled entirely the 11 news gathering operation and until those sorts of 12 issues are addressed in what can happen both pro and 13 con, I think that's something that the FCC really 14 needs to take into consideration when it's looking at 15 relaxing its duopoly rules. 16 I also want to mention that in the issue 17 of the national cap, there are many companies such as 18 Sinclair and others who are looking at going to 19 regional casting as a result of being able to purchase 20 more television stations around the country. This 21 means they'll inevitably knock off local producers and 22 reporters in order to go to a regional casting issue. 23 This is something that local citizens need to be 24 aware of and that the FCC, I think, should be 25 201 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 202 responsible for protecting their interests when they 1 get out there. 2 Finally, I'd like to just make a quick 3 statement about the quality of the 12 empirical 4 studies that the FCC is going to base its decision on. 5 I've read all 12 of them and in due deference to the 6 FCC Members who are here who worked on those studies, 7 there is a great deal of missing data in those 8 studies, the theoretical foundations, the social 9 science research there. As a social scientist now and 10 a former journalist, I have great issue with some of 11 the quality controls that were put in place in how 12 this issue is being measured by the FCC. I think we 13 need a great deal more research before you take any 14 further steps and I applaud Commissioner Copps for his 15 willingness to do more public hearings because 12 16 people talking at a hearing like this is not nearly 17 enough. 18 Thank you. 19 (Applause.) 20 MR. KRATTENMAKER: Thank you. This will 21 be the last public comment before we go to the next 22 panel, but I'll ask a member of my staff to come over 23 and get the names so we can start the list again. 24 Yes ma'am. 25 202 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 203 MS. BALATTA- DALY (Phonetic): My name is 1 Darva Balatta- Daly and I'm a volunteer with the 2 Prometheus Radio Project in Philadelphia, although I 3 drove down from Upstate New York where I live to be 4 part of this. Thank you, Commissioner Copps, for 5 giving me the opportunity to drive 800 miles. I 6 appreciate it. I do. 7 How did the FCC get away for 70 years 8 without having any empirical basis to these rules? 9 (Laughter.) 10 Ownership is power that's well understood. 11 I don't think that we need an economist to tell us 12 that. 13 The public interest, diversity and 14 localism, those issues get thrown around and they 15 expand and contract through this room with each person 16 that talks about them. I have my own version of that 17 and I'd like to share an anecdote with you. I was at 18 a low power FM station a couple of years ago. It was 19 unlicensed because the community wasn't served and 20 there wasn't the possibility of getting a license. So 21 they pitched in and got some equipment, put it up in a 22 house and everybody in that neighborhood listened to 23 it. If the police were out, or if somebody would call 24 out, hey the police are out, everybody would be out on 25 203 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 204 the street to see what the police were about. I had 1 the opportunity to see this with my own eyes. 2 A viewer called into the station and said 3 I don't know where my daughter is, has anybody seen 4 her? The DJ announced that. A minute later, the 5 phone rang and she's on her way home. That is the 6 kind of diversity and localism that we're talking 7 about. 8 Two hundred forty- seven different 9 ethnicities that Americans identify, that's what the 10 Census says. You've got the census data available. 11 You can use that. Forty- one different language 12 families. Creole is spoken in the United States, not 13 just Spanish and English. 14 We've got a real different idea of what 15 character of community can be and what localism can 16 be. I hope that the FCC will seriously consider the 17 social science aspect of this and look very closely at 18 what the relationship is between a market area which 19 is created by industry data and is used by the 20 industry and what actually communities are. Okay? 21 Because I don't think that there's a correlation, but 22 it's the FCC's job to prove to the public that there 23 is a correlation. 24 The same thing goes for consumers versus 25 204 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 205 citizens. The FCC, if you believe that consumers and 1 citizens are the same thing, then prove it to us. 2 Show it. Make it transparent. 3 MR. KRATTENMAKER: Thank you very much. 4 (Applause.) 5 MR. KRATTENMAKER: We're going to begin 6 the next panel. Please get ready. 7 (Pause.) 8 As the Chairman explained, we're 9 regretfully trimming you down to four and a half 10 minutes. When the red light comes on, will you please 11 stop and so I shall shut up and give you the time you 12 have remaining. 13 I'm sorry, I'm going to mispronounce, Mr. 14 Blethen. 15 MR. BLETHEN: I'm Frank Blethen. I'm the 16 publisher of The Seattle Times. The Times is a 106- 17 year- old family business. For five generations, my 18 family has passionately pursued a singular obligation, 19 to fulfill our public trust responsibility to serve 20 our communities with independent journalism that's 21 relevant to them. 22 I'm here today because American democracy 23 is in crisis. It is at risk. A democracy needs a 24 free and independent press to survive. In the words 25 205 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 206 of a great journalist, Walter Lipman speaking about 50 1 years ago, "there is, I believe, a fundamental reason 2 why the American press is strong enough to remain 3 free. That reason is the American newspaper, large 4 and small, and without exception belongs to a town, a 5 city, at the most a region." 6 We are long past our free press because 7 few newspapers and few media outlets any longer belong 8 to a town or a region. The loss is being driven by 9 two troubling trends, one is the egregious ownership 10 concentration and loss of local connection for 11 newspapers, television, radio and cable. The other is 12 the insidious transformation of our large media 13 companies into ownership by Wall Street financial 14 investors. Wall Street has a singular -- 15 [END TAPE 3, SIDE B; BEGIN TAPE 4, SIDE 16 A.] 17 -- term earnings and stock price. Not 18 news, not public service and not democracy. 19 The specter of media dominance by a small 20 handful of conglomerates controlled by faceless, 21 financial institutions and driven by CEO stock options 22 is enough to scare George Orwell. 23 When I started with my career, there were 24 about 1500 daily newspapers in the United States, most 25 206 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 207 locally or regionally owned. Today, only 35 years 1 later, there are only about 280 independent daily 2 newspapers left and very, very few serving 3 metropolitan areas. 4 In the old days, long tenured publishers 5 and editors had deep connections with the cities and 6 regions they served. Today, few publishers, editors 7 or station managers even come from the communities 8 they work in. Few of them stay very long. Few 9 publishers have news backgrounds or even news 10 sensibilities. 11 America's news rooms have quietly been 12 transformed from democracy's watchdog into corporate 13 lapdogs. One only needs to ask why FCC pleadings to 14 relax radio and TV concentration rules and to repeal 15 the cross ownership trend have been outside the bright 16 light of press scrutiny. When huge corporations 17 lobbying for their own financial self- interest also 18 control most of our news rooms, does anybody wonder 19 why there is such a chill? 20 I've heard the arguments of proponents of 21 cross ownership repealed. I've noted that they are 22 made only by large companies driven by the quest to 23 grow ever larger. The most frequent argument is that 24 the internet and cable have created information and 25 207 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 208 access proliferation. That is not accurate. There 1 are still limited sources of professional, credible 2 news and opinion. Indeed, the public company quest 3 for ever higher profits have put incredible pressure 4 on our remaining few news rooms. Most journalists 5 believe there has been a serious disinvestment in news 6 and a dumbing down of media, in general. 7 The correct issue is whether we still have 8 and can maintain well- staffed, professional news rooms 9 that can keep Americans informed about their community 10 and about their country. Getting the same often 11 shallow information delivered a thousand different 12 ways does not provide a substitute for robust, 13 independent, news generation. 14 This argument also ignores that single 15 corporate entities are now using their various 16 platforms and extensive control to simply recycle 17 information and programming and to promote their own 18 products often in the guise of news. 19 I urge the Commission to return to your 20 most basic obligation, to ensure we preserve and 21 nurture our democracy. Your obligation is bigger than 22 cross ownership or the other concentration rules, but 23 that's what's in front of us. Repeal of cross 24 ownership and relaxing of the other rules would be a 25 208 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 209 giant crack in the foundation of our democracy. We 1 have seen the unintended consequences of the 1996 2 Telecommunications Act. We're beginning to see the 3 negative consequences of the Commission's relaxing of 4 other radio and TV concentrations -- 5 MR. KRATTENMAKER: Thank you, Mr. Blethen. 6 Your time is up. 7 Mr. Herwitz? 8 MR. HERWITZ: Good afternoon. My name is 9 Tom Herwitz. I'm President of Station Operations for 10 Fox Television Stations. Given our record in local 11 news and service, we at Fox are frankly confounded by 12 the argument that allowing us to own stations that 13 reach more than 35 percent of the country will 14 threaten competition, diversity and localism. I hope 15 I'll show today that the opposite is true. 16 Today, at our stations, 35 stations across 17 the country, we produce and air more than 800 hours of 18 original, regularly scheduled local news per week, 19 more than anybody else in the country. 20 I joined Fox from the FCC actually in 1986 21 when our first six stations were bought. Those 22 stations did 23.5 hours of news and three of them in 23 Dallas and Chicago and Houston aired no news at all. 24 Today, those same stations produce every week 195 25 209 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 210 hours of local news, an eight- fold increase. And on 1 the station in Dallas, for example, we broadcast 43 2 hours per week. 3 In many markets, we've produced and aired 4 more local news by 9 a. m. than our competitors will 5 air all day long. What empirical justification is 6 there to keep Fox from bringing this kind of 7 commitment to additional communities? 8 We also provide local news service that is 9 unique to many communities, often in dayparts where 10 there is no other local news and prime time and in the 11 morning. We're baffled that some broadcasts say 12 they're more local, more dedicated to serving their 13 local communities than Fox because their group doesn't 14 reach 35 percent. The facts completely belie this. 15 Deb McDermott who is down to my left is a wonderful 16 broadcaster, but her Richmond station here is not more 17 local than ours. When I call her, I call her in 18 Nashville and I call Vince Young in New York City. 19 Our local managers, as theirs, have editorial autonomy 20 which we believe benefits the stations as well as the 21 viewers. 22 Secondly, we emphatically dispute that our 23 stations have less than the highest commitment to 24 serving their local communities. Take our station in 25 210 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 211 Detroit, WJBK, which I use because one of our 1 principal competitors there, WDIV, is owned by Post 2 Newsweek station, an outspoken advocate of keeping the 3 35 percent cap, arguing that companies whose stations 4 don't reach the cap are better local operators. But 5 we have 50 percent more news than WDIV. Our station 6 has been chosen Broadcasters Association station of 7 the year four years in a row. Our problem solving 8 news takes on local Detroit issues every day. We shut 9 down prostitution rings near schools. We got the 10 school district to recognize that they were operating 11 abandoned buildings that were drug and prostitution 12 and rat- infested by schools. We brought to the 13 attention of the Detroit Water and Sewage Department 14 that had to clean up their operations after we showed 15 workers spending their days drinking, smoking 16 marijuana and dangerously driving large city- owned 17 trucks while intoxicated. 18 WDIV is a strong competitor and whether 19 they're better or worse than us really isn't the 20 point. It seems that if the Commission's task as the 21 Court seems to order is to find empirical evidence to 22 justify preventing Fox from owning additional stations 23 in light of the facts, the hard evidence of our 24 stations' service in communities like Detroit, it's 25 211 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 212 hard to understand what Post Newsweek or any of the 1 other evidence is or possibly could be. 2 Given this commitment to our local 3 communities, what is the evidence that our ownership 4 harms competition, diversity and localism? Given our 5 track record, how can the government justify a rule 6 that requires us to shut down stations or sell 7 stations in Austin where we do 30 hours; Greensboro, 8 35 hours; Birmingham, 41; we're the news leader there; 9 Kansas City, 48 hours, in order to get below a 35 10 percent cap. 11 MR. KRATTENMAKER: Thank you, Mr. Herwitz. 12 We'll take those last three questions, not as 13 questions, but as statements. 14 Mr. Mays? 15 MR. MAYS: Good afternoon. 16 MR. HERWITZ: I'm sorry, can I just 17 finish. I just want to say that we believe and I 18 think it's shown that what we brought, what Fox has 19 brought through Rupert Murdoch's version through the 20 [Inaudible] deregulation and other things that we have 21 brought to -- 22 MR. KRATTENMAKER: Mr. Herwitz, I'm sorry, 23 I believe that we have heard and I believe that in all 24 fairness to the other members of this panel, I should 25 212 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 213 move along. 1 Mr. Mays? 2 MR. MAYS: Good afternoon, Chairman Powell 3 and Members of the Commission. My name is Mark Mays 4 and I'm the president and chief operating officer of 5 Clear Channel Communications. Thank you for inviting 6 me to testify about the importance of localism in 7 radio broadcasting. 8 Some have spoken of the radio experience 9 as the canary in the coal mine, providing evidence of 10 the dangers of deregulation, dangers, they say, that 11 await other media that would follow in radio's 12 footsteps. But this analogy, although it may be 13 colorful, just doesn't apply for one simple reason. 14 The canary isn't dead. To the contrary, it is alive 15 and well, healthier and more robust than ever before, 16 far from being dead, radio is experiencing a new 17 vitality and is providing excellent service to local 18 communities all over the country. 19 In order to fully appreciate the new 20 vitality of the radio industry, you must remember back 21 to the early 1990s when many stations were simply 22 struggling to survive. It was a different world then, 23 just 10 years ago. Half of all radio stations 24 operated in the red and many others close to it. 25 213 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 214 Of course, the first thing many of these 1 stations did in those rough financial times was cut 2 their local news budget and even shut down a news 3 department entirely. Local audiences suffered. 4 Though with deregulation and the ability to own more 5 stations, companies like Clear Channel could create 6 economies of scale and benefit from cost savings. And 7 we, like many other broadcasters have reinvested those 8 savings in our stations improving technical 9 facilities, hiring better on- air talent and increasing 10 the quality of local programming. 11 Study after study demonstrates that 12 consolidation has led to increases in the diversity of 13 formats available to listeners and local markets, 14 large and small. Here in Richmond, there were only 16 15 different formats in 1995. In 2002, that number has 16 grown to 25. That's more than a 50 percent increase 17 since deregulation. 18 Now it's true that while there are more 19 formats, there are fewer owners. It's also true that 20 Clear Channel owns 1200 radio stations. However, it's 21 important to put those numbers in context. While 22 Clear Channel owns 1200 stations, that represents just 23 9 percent of all the radio stations in the U. S. Put 24 another way, more than 90 percent of U. S. radio 25 214 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 215 stations are owned by nearly 4,000 other companies. 1 I'm not here to dispute the fact that 2 we're a large company or that consolidation has 3 occurred, but I will strongly dispute the notion that 4 consolidation has led to a reduction in localism. We 5 succeed by intimately knowing the local community we 6 serve and tailoring our programming to meet their 7 unique needs and tastes. This is true every minute of 8 every hour of every day. 9 If listeners don't like what they hear, 10 they will turn the dial. It's that simple. One tired 11 song, one commercial break that lasts too long or a 12 failure to provide timely news or traffic and the 13 listener is gone. That's why we run Clear Channel in 14 a completely decentralized manner. We operate like an 15 association of small, local businesses. Our local 16 station managers and program directors make every 17 decision about what music gets played on our stations 18 and how often. They develop the play list based on 19 extensive local audience research, listener requests 20 and first hand knowledge of their own communities. 21 At Clear Channel, there is no such thing as a 22 standardized play list. 23 To those who would say that radio has 24 become more homogenized since deregulation, let me 25 215 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 216 dispel that myth as well. Since 1999, the number of 1 unique songs and artists we play has increased by 30 2 percent, reflecting the fact that Clear Channel radio 3 stations are actually playing a greater variety of 4 music every year. I'm pleased to say that our 5 dedication to localism has been recognized time and 6 time again. Last year, our Richmond stations won 7 awards ranging from best locally produced radio show, 8 to best traffic reports, to best local broadcaster of 9 the year. And our local managers take great pains to 10 introduce listeners to new artists. Here in Richmond, 11 for example, WRXL, there's a one hour program each 12 Sunday night featuring local and regional bands. Up 13 the road in Washington, D. C., DC- 101 New Music Mart 14 every Sunday night. 15 In fact Carbonleaf, an unsigned band from 16 right here in Richmond, has seen its music move from 17 the Sunday night show to DC- 101 power rotation. But 18 we don't just serve our communities by playing the 19 music our listeners want to hear. Clear Channel 20 stations around the country are deeply involved in a 21 wide variety of local, civic and charitable events. 22 The bottom line is that good radio is 23 local radio. 24 MR. KRATTENMAKER: Thank you, Mr. Mays. 25 216 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 217 Ms. McDermott? 1 MS. McDERMOTT: Thank you for conducting 2 today's hearing in Richmond and for allowing me to 3 appear. I'm executive vice president of Young 4 Broadcasting, Inc. which owns and operates 11 5 television stations in various markets, including 6 WRIC- TV, an ABC affiliate in Richmond. 7 I respectfully urge the Commission not to 8 modify or repeal the 35 percent national television 9 ownership cap. The 35 percent cap is essential to 10 localism, the bedrock principle on which the 11 congressionally mandated broadcast system is based. 12 The principle of localism is uniquely American. It 13 has its roots in our federalist system of government. 14 As Virginia's favorite son, Thomas Jefferson warned 15 his friend, Gideon Granger in 1800, our country is too 16 large to have all of its affairs directed by a single 17 government. Public servants at such a distance and 18 from under the eye of their constituents must, from 19 the circumstance of distance, be unable to administer 20 and overlook all the details necessary for the good 21 government of the citizens. 22 For the very same reason, Congress 23 rejected the notion of a highly centralized system of 24 terrestrial broadcasting. Unlike the governments of 25 217 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 218 Europe, Congress opted for a system that would assure 1 to the fullest extent possible that America's 2 television stations would be responsive to the special 3 needs and interests of the local communities they are 4 licensed to serve. As it is self- evident today, as 5 when Congress created the current system of 6 broadcasting, that it is not in the national interest 7 to have all the nation's television broadcast 8 programming dictated each day, every day, seven days a 9 week, 52 weeks a year and year after year by a handful 10 of station owners. 11 Some of you have asked, how would viewers 12 know the difference if the cap were raised? Viewers 13 will know because network owned stations must serve 14 their parent network national and international 15 program distribution interests and the interests of 16 their station's local viewers. Those interests are 17 often in conflict. A non- network owned station in 18 contrast has but a single responsibility to only serve 19 the interests of its local viewers. The interests of 20 local viewers is the essence of localism. 21 Localism has meant that the citizens of 22 Springfield, Missouri were spared an episode of NBC's 23 Fear Factor when the local station determined the 24 program would be offensive to local viewers. No NBC 25 218 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 219 station rejected, to my knowledge, a single episode of 1 that show. 2 Localism has meant that viewers in North 3 Dakota, Virginia, South Dakota, South Carolina and 4 other states have been able to watch Billy Graham on 5 their local stations. That, of course, would not have 6 occurred if these stations had been owned by a 7 network. Localism has meant a Fox affiliate in 8 Raleigh, North Carolina was able to reject Fox's 9 "Temptation Island" because it refused in its words to 10 support a program that could potentially break up the 11 parents of a young child. To my knowledge, none of 12 the Fox owned stations rejected "Temptation Island." 13 Localism has also meant that NBC 14 affiliates collectively were able to persuade NBC to 15 allow them to carry a presidential debate rather than 16 a major league baseball playoff game scheduled by the 17 NBC network. None of that, of course, would have 18 occurred had NBC owned their affiliate. 19 For 20 years, our company's Louisiana 20 station has aired a live broadcast of the rosary in a 21 very Catholic area, early each morning. When we 22 wanted to expand our local news and move the start 23 time of the rosary program, our network vehemently 24 objected because the rosary program would encroach on 25 219 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 220 the network's early national news. If our station 1 were owned by the network, the rosary would not be on 2 the air. 3 An increase in the national cap will 4 reduce the number of television stations to which 5 independent program producers can sell programming and 6 in turn will eventually reduce the already small 7 number of independent program companies. This is, of 8 course, of great concern to our company. Right now, 9 70 to 80 percent of our programming comes from the 10 network and with some companies, 100 percent of our 11 syndicated programming is coming from one syndicated 12 company. 13 The balance of power in the program market 14 has already shifted to the networks. If you raise the 15 cap, you will nationalize the nation's local broadcast 16 system. The network argument for increasing or 17 repealing the cap is purely financial. They claim 18 they can no longer compete unless they acquire 19 ownership of their affiliates. It is a tired and 20 hollow argument. The networks have made it for years. 21 If the networks owned television stations in America 22 they would have the same argument. 23 I don't know what Thomas Jefferson would 24 think about the "Fear Factor" if he were alive today, 25 220 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 221 nor do I know if he would enjoy a Billy Graham 1 Crusade, a presidential debate or a rosary program, 2 but I think he would concur that the local television 3 station in Charlottesville should reflect the core 4 values of the people of Charlottesville and not merely 5 the national and international program interests of a 6 major national television network. 7 Thank you. 8 (Applause.) 9 MR. KRATTENMAKER: Thank you. Mr. Powell? 10 MR. POWELL: Thank you. My name is Chris 11 Powell. I'm the managing editor of the Journal 12 Inquirer in Manchester, Connecticut, the daily 13 newspaper serving 17 towns east and north of Hartford. 14 I'm here to protest Tribune Company's monopolization 15 of the news media in Connecticut and to urge the 16 Commission to enforce the cross ownership rule against 17 Tribune instead of repealing the rule. 18 The Tribune already owned two of the six 19 privately held television broadcast licenses in 20 Connecticut three years ago when it bought the Times 21 Mirror newspaper chain. Acquiring Times Mirror, 22 Tribune became owner of Connecticut's largest daily 23 newspaper, the Hartford Courant, two other Connecticut 24 dailies, the Stamford Advocate and Greenwich Time; the 25 221 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 222 four weekly newspapers of the Advocate chain in 1 Hartford, Fairfield County and New Haven, Connecticut 2 and Springfield, Massachusetts and the Valu- Mail 3 direct mail advertising company in Hartford. When 4 Tribune acquired Times Mirror, news reporting said 5 that a big part of the corporate plan was to obtain 6 control of TV stations and newspapers and overlapping 7 markets and to coordinate their operations in 8 deliberate violation of the cross ownership rule, but 9 in anticipation of the rule's repeal. That is what 10 has come to pass in Connecticut, where the Courant's 11 and Tribune's two TV stations now promote each other 12 constantly and exchange features. 13 As Tribune now uses its grant of 14 government monopoly on two channels on the public 15 airwaves to give the Courant a big advantage over all 16 the other newspapers in Connecticut, the Courant has 17 made exclusionary contracts with newspaper feature 18 syndicates. That is, the Courant has made its 19 purchase of certain newspaper features conditional on 20 promises by the feature syndicates not to sell those 21 newspaper features to my paper. 22 The worsening concentration of ownership 23 in the news media in Connecticut does not end with 24 Tribune Company. In the last few years, the Journal 25 222 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 223 Register newspaper chain has obtained not only the 1 daily newspaper in New Haven, but also the weekly 2 newspapers in New Haven suburbs and the Media News 3 Group newspaper chain has obtained not only the daily 4 newspaper in Bridgeport, but also the weekly 5 newspapers in Bridgeport suburbs, that is, in 6 Connecticut the so- called alternative press is now 7 owned by the same big company downtown. 8 Announcing today's hearing the FCC press 9 release of February 7th said "the FCC's goal is to 10 promote competition, diversity and localism in the 11 media." I'd like to know how competition, diversity 12 and localism in the media are promoted by the FCC's 13 giving two of Connecticut's six privately held TV 14 broadcast licenses to an out of state conglomerate 15 that already owns three major newspapers, three weekly 16 newspapers and a direct mail company in the state when 17 as a practical matter no other newspaper company in 18 Connecticut can have even one broadcast license. 19 Some people say the cross ownership rule 20 should be repealed because the internet and cable 21 television are providing plenty of competition in the 22 news media. I don't know where these people live but 23 they can't be living in Connecticut. The state and 24 local news and advertising provided by the internet 25 223 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 224 and cable TV in Connecticut are negligible. News and 1 advertising in Connecticut are 99 percent matters of 2 TV and radio broadcasters and newspapers. 3 Indeed, if the internet and cable TV were 4 really providing so much competition in the media, the 5 conglomerates would be happy to expand by enterprise 6 that way instead of by acquisition of the existing 7 traditional media properties, existing broadcasters 8 and newspapers. But no, Tribune and other big media 9 companies are expanding through cross ownership of 10 existing properties because the big media companies 11 consider cross ownership to be their best opportunity 12 for growth and gaining control of a market. 13 The awarding of broadcast licenses -- 14 government grants of monopoly on the public airwaves - 15 -can be conducted in only two ways, to diversify 16 ownership of the media or to concentrate ownership. 17 The cross ownership rule has been a small, but clear 18 affirmation that diversification is better than 19 concentration. On a national basis, it has been a 20 guarantee of a little diversification, though only a 21 tiny fraction of the diversification we could have. 22 I have never understood why we let anybody 23 have more than one broadcast license in this country. 24 Repeal the cross ownership rule and we are 25 224 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 225 sure to get a lot of the concentration that it was 1 meant to prevent. That is precisely why the FCC is 2 being asked to repeal the rule. Repeal the cross 3 ownership rule and by government decree and patronage, 4 Connecticut will be awarded the Tribune Company. 5 We're a small state, but we deserve better public 6 policy than that. 7 Thank you. 8 (Applause.) 9 MR. KRATTENMAKER: Thank you. Mr. Sturm? 10 MR. STURM: Good afternoon. I'm John 11 Sturm, president and CEO of the Newspaper Association 12 of America. I'm grateful for the opportunity to 13 appear before you this morning, this afternoon, 14 because in the 28 years since the newspaper broadcast 15 cross ownership rule went into effect, my association 16 has never had an opportunity before to bring our view 17 of this issue in front of the Commission. 18 I will take the next few minutes to 19 demonstrate the important role that newspaper 20 broadcast cross ownership can play in enhancing the 21 quality and the quantity of news and other local 22 content available to the public. Once upon a time, 23 long ago, the FCC affirmatively encouraged the 24 participation of newspaper publishers in the broadcast 25 225 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 226 industry. Even in its 1975 order adopting the ban, 1 the FCC expressly recognized the traditions of service 2 that newspaper publishers brought to the broadcasting 3 industry. These facts have not changed. 4 The Commission also found in 1975 that 5 there was no evidence that commonly owned newspaper 6 and broadcast stations posed any threat of any 7 competitive behavior and that, on average, stations 8 co- owned with local, daily newspapers, provided more 9 news and nonentertainment programming than other TV 10 stations. Happily, these facts too have not changed. 11 It makes perfect sense that newspaper 12 owned broadcast stations would excel in news coverage 13 and informational programming given their extensive 14 news gathering resources and their strong ties with 15 the community. Indeed, daily newspapers are by their 16 very nature more deeply involved in and aware of the 17 activities, concerns, and issues affecting their local 18 communities. 19 The best evidence of the impact of cross 20 ownership can be found in another set of facts, the 21 records of the 40 grandfathered newspaper broadcast 22 accommodations that exist today, representing the full 23 gamut of market sizes from Mile City, Montana to 24 Chicago, Illinois. These co- owned facilities 25 226 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 227 consistently have provided their home communities with 1 unmatched levels of service. By way of example, in 2 the Cedar Rapids, Iowa market, KCRG- TV, KCRG- AM, which 3 are jointly owned by the Cedar Rapids Gazette, offer 4 more news than any other stations in their markets. 5 The stations make use of a wide array of newspaper 6 resources, including an ombudsman employed by the 7 Gazette to review the fairness and accuracy of the 8 news reports offered by both the TV station and the 9 newspaper. 10 Similarly, WEOL- AM, co- owned with the 11 Chronicle Telegram in Lorraine, Ohio, provides an 12 impressive 24 hour news service with the local news 13 every hour on the hour as well as news summaries every 14 half hour during the morning and afternoon drive. 15 And finally, in the much smaller Sioux 16 City, Nebraska market, WJAG, Inc., owns both the 17 Norfolk Daily News and WJAG- AM. As a result of this 18 cross ownership, WJAG has built a solid reputation for 19 its news reporting, operations, earning it more than 20 35 awards in the past several years. 21 These and the numerous other firsthand 22 experiences in other markets have been filed in the 23 Commission's record by NAA and many other parties such 24 as Gannett in Phoenix, Media General in Tampa, Belo 25 227 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 228 (Phonetic) in Dallas and Tribune in Chicago, Los 1 Angeles and other markets. 2 These results are confirmed by the FCC's 3 sponsored studies that have been conducted on 4 newspaper broadcast cross ownership. Indeed, while 5 there have been some criticisms of some of these 6 studies, the evidence that broadcast stations jointly 7 owned with daily newspapers provide your communities 8 with both more and higher quality news and 9 informational programming has not been seriously 10 questioned. 11 Specifically, the Spavins Study found that 12 affiliates co- owned with newspapers experience 13 noticeably greater success under our measures of 14 quality and quantity of local news programming than 15 other network affiliates. 16 Ladies and gentlemen, the Commission's 17 record establishes this set of facts that must guide 18 your decision on this matter. The media world is 19 totally different now as compared to when this ban 20 went into effect in 1975; no one can seriously suggest 21 otherwise. Second, the experiences in the 40 22 grandfathered markets over 28 years have demonstrated 23 a complete absence of harm. And third, the 24 Commission's record and your own studies, reveal an 25 228 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 229 abundance of superior service by newspaper- owned local 1 stations. The ban is long outdated, has no current 2 basis and should be immediately repealed in full. The 3 only thing proven that this ban has done is deny 4 public interest benefits to the great number of 5 markets in this country. 6 MR. KRATTENMAKER: Thank you, Mr. Sturm. 7 Ms. Toomey? 8 MS. TOOMEY: Good morning. On behalf of 9 the Future of Music Coalition, I want to thank you for 10 the honor of testifying today and I also want to thank 11 the inspiring audience for coming out and letting 12 their voices be heard. 13 My name is Jenny Toomey. I'm a rocker and 14 a businesswoman and an activist and I speak to you 15 today as a working musician and the executive director 16 of the Future of Music Coalition. Most working 17 musicians aren't super stars. Rather, they're 18 independent and local. For the past three years, the 19 Future of Music has worked on issues from webcasting 20 to health care, but one issue unites our entire 21 constituency and that's lack of access to the radio. 22 Given these concerns, last February we 23 began an 8- month research project to examine the 24 problem. In the study we asked the basic questions, 25 229 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 230 how has ownership of commercial radio changed and does 1 the radio serve the essential regulatory priorities of 2 localism, competition and diversity? 3 Our study finds the following: there is 4 scant evidence that these priorities are improved in 5 any way by the radical restructuring of the industry 6 that has taken place over the past six years. Rather, 7 this restructuring has damaged a precious public 8 resource. Localism has withered. The industry has 9 lost one third of its owners and every local market is 10 controlled by four companies or fewer. 11 Those few independent operators who are 12 less concerned with reaching the most attractive 13 demographics cannot compete in an environment where a 14 handful of media corporations control every local 15 market. And there is scant evidence that radio 16 listeners, radio talent, government, social service 17 agencies and the music community does not benefit from 18 these changes. 19 The fundamental regulatory structures that 20 have governed radio for decades are overturned and the 21 public deserves an accounting of the impact of these 22 changes and a true seat at the table as further 23 changes are debated. 24 The radio industry defends its 25 230 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 231 consolidated state by pointing at the other industries 1 and saying we're not as bad as those guys, but they 2 aren't those guys. Radio is not private property. 3 Radio is a public resource, regulated by the 4 government on behalf of citizens. The question is not 5 the gross number of owners. The question is how many 6 owners exert control in a local market. 7 When measured according to market 8 concentrations of both listenership and advertising 9 dollars, radio demonstrates the same principles of 10 oligopolistic control now. 11 In virtually every local market of the 12 country, four companies or fewer control over 70 13 percent of the market and in most cases those owners 14 are not local. 15 The broadcast industry claims this 16 reduction in local ownership is not a problem. In 17 fact, they say fewer owners in a market leads to more 18 diversity. They say radio companies will avoid 19 competing with themselves in single format in a single 20 market. Yet, our study found regular and substantial 21 overlap between supposedly distinct formats. In the 22 most extreme case, in the week of August 2, 2002, the 23 national charts for two supposedly distinct formats 24 overlapped at a 76 percent level. In other words, 38 25 231 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 232 of the 50 songs on the to play list were the exact 1 same songs. 2 Furthermore, this argument misses the 3 fundamental logic of the value of the station group. 4 The primary goal of the station group is to (1) 5 attract the largest possible number of listeners and 6 the most attractive demographics and (2) to ensure 7 that if a listener changes a station, they change it 8 to another station owned by the parent company. In 9 other words, the incentive is not to provide a 10 diversity of programming to serve local communities 11 with a range of news, entertainment and information. 12 The economic incentive is to assemble a homogenous 13 landscape of overlapping and economically lucrative 14 audiences that generate the most revenue. 15 In the February 18th issue of Fortune 16 Magazine, Clear Channel CEO Lowery Mays articulated 17 the importance of revenue generation at his company. 18 He said "we're not in the business of providing news 19 and information. We're not in the business of 20 providing well researched music. We're simply in the 21 business of selling our customers products." This, I 22 would argue is the fundamental problem at the heart of 23 the media deregulation. The stated effort to promote 24 competition, localism and diversity through less 25 232 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 233 oversight has merely led to an increased emphasis on 1 the bottom line. On the expense side, the incentive 2 for radio companies is to centralize operations, 3 increasing the use of syndicated programming, applying 4 new technologies like voice tracking and cutting 5 costs. In many cases, this syndicated programming is 6 also owned by the radio parent company. 7 These strategies increase profit of the 8 parent company, while diminishing the local connection 9 between the citizen and locally licensed station. 10 Our radio study makes a strong case that 11 concentration has distorted the health and functioning 12 of the radio market, but there are signs of this 13 negative change that go beyond the numbers in our 14 study. At the most recent Future of Music policy 15 summit, Congressman Mark Foley explained that as a 16 result of radio deregulation, the number of local 17 stations that would provide him access to his 18 constituents has diminished from five to one. I 19 suspect the station owners like Mr. Mays who decided 20 that the kind of local news programming that would 21 have previously welcomed the Congressman on to the 22 airways is now not cost effective. 23 If this is happening in Florida, we can 24 bet it's happening all over the country and if this 25 233 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 234 doesn't raise questions about the damage that 1 increased consolidation could inflict upon our 2 participatory democracy, I don't know what does. 3 (Applause.) 4 MR. KRATTENMAKER: Thank you. I would 5 like to thank the entire panel and two particulars. 6 One, I've noticed that all the Commissioners have said 7 will you please bring us facts and data with which we 8 can assess our rules and I think every single one of 9 ou really listened to that. I think you really need 10 to be commended for it. 11 Secondly, I'm not going to apologize for 12 the weather because I didn't create it, but I do want 13 to say that I'm sorry, I appreciate the way you all 14 condensed your remarks to 90 percent of the already 15 condensed that you intended to bring here and I think 16 you showed great good spirit and good charm about it. 17 Thank you very much. 18 We turn to questions from the 19 Commissioners now. I realized I'd been going in the 20 same direction every time. That's not fair to 21 Commissioner Martin, so I thought I'd start with you, 22 sir. 23 COMMISSIONER MARTIN: In the interest of 24 letting the public go ahead and comment as much as 25 234 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 235 possible, I'll pass. 1 MR. KRATTENMAKER: Commissioner Abernathy? 2 COMMISSIONER ABERNATHY: I'm going to do 3 the same thing. 4 MR. KRATTENMAKER: Chairman Powell? 5 CHAIRMAN POWELL: I'll pass too. I had 6 one status report though that I wanted to share with 7 Mr. Mays because it was Commissioner Adelstein that 8 sent that canary down into the mine to test the air 9 down there and we just heard back from him this 10 morning and you're right, he's not dead. Actually, 11 what happened when he flew into the mine, he 12 immediately got acquired and he's now programming 12 13 radio stations from the coal mine. 14 (Laughter and applause.) 15 MR. KRATTENMAKER: Commissioner Adelstein? 16 COMMISSIONER ADELSTEIN: I guess Mr. Mays 17 didn't think that the canary image flew. It just 18 didn't fly. I'm going to pass in the interest of time 19 so we can hear from the public. 20 MR. KRATTENMAKER: As much as I would like 21 to turn some questions to the Panel too, I think 22 we'll, if we have time later we'll come back to them. 23 Let's go to the public. 24 People who want to make comments, please 25 235 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 236 move up to the microphone. Watch the signal here. At 1 the end of one minute you're going to be given a red 2 light and we are going to cut you off, not because we 3 don't like you, but because we want everybody to have 4 a chance to speak. 5 Sir, please state your time. 6 MR. MAZURSKY (Phonetic): Michael 7 Mazursky, second generation of broadcasters. I thank 8 all of the Commissioners for coming to our city today. 9 Welcome. My partner and I put a radio station that 10 was on silent status back on the air. We own four AM 11 radio stations here with the construction permit to 12 build a fifth radio station right now. Of Mr. Mays' 13 comments, of the diversity of formats in Richmond, 14 we're proud to have three of those formats that we 15 serve and we're the only ones that do that in the 16 market. 17 My comment also is on what Mr. Mays was 18 saying about how they helped the local market. They 19 immediately, when they consolidated a few more of 20 their stations, took off an oldies format so we have 21 no oldies station in Richmond. They put on an urban 22 format to compete against Radio One because they 23 needed to do that for their national dollars -- to try 24 to gain some of the national dollars, just is my 25 236 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 237 opinion. 1 My father was one of the founders of Lotus 2 Communications, a broadcaster since 1962 in Los 3 Angeles. I had the opportunity with my partners to 4 buy a broken radio station here, 990 AM and I just 5 want to tell you since 1997 we put the station back on 6 the air. We have 35 employees. We have grouped 7 together our stations so we do gain some efficiencies, 8 but we have been trying since 1997 to add a night time 9 signal on this station and we did get a construction 10 permit. 11 MR. KRATTENMAKER: Thank you, sir. Your 12 time is up. 13 What we're going to do, as I promised 14 earlier -- 15 MR. MAZURSKY: Can I say just one more 16 thing? 17 MR. KRATTENMAKER: I'm sorry, sir -- 18 MR. MAZURSKY: That it took from January 19 of 2000, a 5- day window to accept 200 applications 20 from AM guys like me to fix theirs so I can do more 21 local high school sports at night, to May of 2001 22 until I got the construction permit and I'm still just 23 trying to get it on because of all the zoning and land 24 issues, but I just want to tell you that we're working 25 237 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 238 hard as local guys to serve the community. 1 MR. KRATTENMAKER: Please submit your 15 2 second statement for the record. Thank you. 3 MR. SNOWDEN: We're going to now go to 4 Arthur Mobley who was in line first at the last public 5 comment, if he's in line. Mr. Mobley? 6 You have two minutes, sir. 7 MR. MOBLEY: Yes, I'm going to yield most 8 of my time, but I did want to again reiterate that if 9 the Commission can look at how economically stations 10 make money, they'll find a better answer to some of 11 the dilemma that they're sharing. And I'd love to 12 come back and testify with a bunch of facts that I've 13 compiled also, but I'll yield the rest of my time 14 because I got to comment this morning. 15 MR. KRATTENMAKER: Thank you. Mr. 16 Barrett? 17 MR. BARRETT: I'm Alan Barrett, President 18 of the Richmond Branch of the NAACP and the NAACP 19 wants to issue a brief to statement in strong 20 opposition to mergers and consolidations that would 21 undermine minority opportunities and we also want to 22 appeal to the FCC to not threaten the diversity and 23 democratic ideals that are the philosophic foundations 24 of this country. 25 238 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 239 FCC's support for these kind of mergers 1 have done damages earlier presenters have stated. The 2 ethnic, social and cultural pluralism will suffer from 3 [Inaudible] broadcasts and print journalism supported 4 by the FCC. More restrictive control of popular 5 culture will not benefit diversity and in fact, they 6 will undermine [Inaudible] culturalism. News events 7 will become commodities that are subject to the whims 8 of corporate ownership. Controversial issues will be 9 diluted or filtered out all together. This means that 10 minority views would have less of a chance of being 11 presented. What happened to Bill Maher and 12 "Politically Incorrect" is but one example. We risk a 13 situation when indoctrination can become the 14 intentional or unintentional product of oligopolistic 15 media markets. 16 MR. KRATTENMAKER: Thank you, Mr. Barrett. 17 (Applause.) 18 MR. KRATTENMAKER: Mr. Richmond? 19 MR. RICHMOND: Yes, good afternoon. My 20 name is John Richmond and the only reason I'm here 21 today is normally I'd be teaching school but we got 22 snowed out so I find myself here and I'll just try to 23 get through as many as five observations as I can. 24 Observation 1. If you all are interested 25 239 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 240 in finding a larger slice of the public, including a 1 larger slice of people that listen to the various 2 types of media that are out there, hold hearings in 3 the evenings and on weekends. That's when most of us 4 can come out. 5 (Applause.) 6 Number two, I find myself less able to 7 find out what's going on locally than nationally 8 because I see the media already as nationalized. 9 There seems to be a formulaic approach to local news 10 coverage. In the morning and again during the 11 evening, I flip back and forth between the three major 12 stations here. They have virtually the same stories 13 on at virtually the same time and I don't need to know 14 about a rescue in North Dakota or a unique pie 15 throwing contest in Texas and this type of story 16 inevitably takes up at least two minutes of the 17 newscast. And also an extra hour of news doesn't 18 necessarily mean an extra hour of news. Here's why. 19 A lot of times stories get introduced or summarized 20 that are going to be covered in more depth later on. 21 Three. I use radio for most of my media 22 entertainment and in this market it seems like the 23 same songs are playing on every station, several of 24 which are owned by Clear Channel and so a format does 25 240 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 241 not necessarily mean diversity because as Ms. Toomey 1 said, formats overlap. 2 Observation four. As a principal, I 3 believe that you must resist corporate, NPR and any 4 other pressure to restrict in any way the right of low 5 power broadcasters to set up as long as they don't 6 interfere with other low power broadcasters. 7 I look for views and news from all over my 8 locality, from left, right, up, down, center and the 9 restrictions that need to be loosened are those on the 10 establishment of low power stations such as Prometheus 11 Radio in Philadelphia -- 12 (Applause.) 13 MR. KRATTENMAKER: Thank you, Mr. 14 Richmond. 15 Mr. Boone? 16 MR. BOONE: I am Raymond H. Boone, editor 17 and publisher of the Richmond Free Press, the loyal 18 opposition to monopoly journalism, represented by the 19 Richmond Times Dispatch. I'm also a former journalism 20 professor at Howard University and I'm also a former 21 Pulitzer Prize juror on two separate occasions. 22 I stand here to reinforce a lead editorial 23 this morning that was titled "Stop Monopoly in 24 Journalism". I also stand to reinforce my letter to 25 241 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 242 the Commissioners calling for the end of the abuse of 1 the first amendment which is the cornerstone which is 2 the source or the protector of our democracy. If we 3 do not do that, we are fueling an internal enemy. 4 I think it is appropriate that you meet in 5 Richmond, a city that has suffered much because of the 6 abuse and a newspaper not respecting the first 7 amendment. 8 To give you an idea of the conditions that 9 an independent newspaper like the Free Press faces it 10 is not only the monopoly, but the kind of influence 11 that it has entrenched in the environment. An 12 example, the main library tossed out our three 13 volumes, original volumes, simply because we expressed 14 the view that was not consistent with that of the 15 monopoly publication. Just two or three weeks ago, our 16 photographer was restricted -- 17 MR. KRATTENMAKER: Thank you. 18 MR. BOONE: One last sentence, please. 19 Restricted from photographically covering a historical 20 swearing in ceremony of the Chief Justice while the 21 monopoly press was allowed to do that. 22 MR. KRATTENMAKER: Thank you, sir. 23 MR. SNOWDEN: We're going to go for 24 another 15 minutes. 25 242 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 243 Sir. 1 MR. BENNETT: My name is Hans Bennett. 2 I'm an independent photojournalist and editor of 3 Insubordination Magazine from Philadelphia. I'd like 4 to talk about the issue of diversity and in 5 particular, the availability of news that challenges 6 President Bush's current war campaign. In my opinion, 7 the corporate media's reporting on the U. S. wars has 8 never been good, but this current consolidation 9 threatens to make it even worse. 10 Despite the millions around the world that 11 marched on February 15th against the war, Bush has 12 said he will attack without U. N. support, despite the 13 fact that this violates international law, the 14 mainstream media is essentially supporting Bush in his 15 war drive. This very scandaled, illegal war has not 16 been addressed. 17 One of the clearest empirical examples of 18 U. S. military ties to the media machine is the fact 19 that FCC Chair, Michael Powell, is the son of a war 20 criminal, Colin Powell. When Colin Powell presented 21 supposed rock solid proof of Iraq's deception at the 22 U. N. earlier this month, we did not have a critical 23 media to challenge his statements. How many people 24 supporting the U. S. massacre of Iraq know that -- 25 243 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 244 MR. KRATTENMAKER: Thank you, sir, that is 1 two minutes. 2 Yes ma'am. 3 MS. EWELL: Hello, my name is Katie Ewell 4 and I work and live in Richmond and I was lucky enough 5 to catch an article about the hearings. I had no idea 6 that media ownership deregulation might happen. And 7 so I took it upon myself to do a lot of research after 8 I read the article and in a lot of my research I found 9 a lot of the opposing views. I guess I'm a consumer 10 activist or a citizen activist now. I don't know what 11 you would call it, but I am not for the deregulation. 12 I see a lot of -- I don't like to have 13 everything coming from one or two corporations. And 14 I'd just like to say I wish that more people were 15 here. 16 I wrote a letter to the editor of the 17 Times Dispatch and unfortunately it wasn't printed and 18 it's unfair to assume that that's because Media 19 General might have opposing views, but it's easy to 20 assume that that's why it was not printed. 21 And the biggest thing is, Chairman Powell, 22 I know that you wanted us to bring evidence and I'm 23 just an individual and I want to ask what can we do as 24 individuals or concerned citizens to help you guys 25 244 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 245 fight the courts, to gather the evidence that you need 1 to support our views? 2 I could do a telephone survey or you know, 3 would you like me to document all my media intake for 4 a month. What can the public do to help you guys 5 because apparently you don't have enough time to get 6 all the studies done together. I'm just trying to ask 7 for help so that we can help you guys. 8 Thank you very much. 9 MR. KRATTENMAKER: Thank you. Yes sir. 10 MR. PARISH: My name is James Parish and 11 I'm co- founder of the Richmond Image Moving Co- op 12 which is a nonprofit here in Richmond that promotes 13 and supports independent media makers. 14 I took the day off work so I could be 15 here. I had planned to be here a couple of hours, but 16 was so encouraged by the public support that I had to 17 call in and say I needed to be somewhere else today. 18 And I'm glad that I have the flexibility to do that in 19 my job and not everybody does. 20 And I would encourage you to hold some of 21 these hearings in the evenings and on the weekends. 22 I'm guessing if you're listening to my voice, you may 23 have some idea where I am from at least that I grew up 24 in the South. I grew up in a little town, Benson, 25 245 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 246 North Carolina. And when I'm in the South and when 1 I'm in North Carolina, I like to turn on the radio and 2 the TV and hear people that sound like me and when I'm 3 in New York, I want to hear people who sound like they 4 are from New York. 5 So I am for the local and last night I was 6 in a club showing a bunch of films through my 7 nonprofit to focus, showcase independent film makers, 8 media makers here in Richmond. And to highlight this 9 event so media makers would know to be here and we're 10 doing that because it's hard to have a voice and to 11 show our work elsewhere, so we gather in clubs with 12 100 to 200 people at a time. But we can do that and I 13 encourage you to think about the local in this issue. 14 It's important. Thank you. 15 MR. KRATTENMAKER: Thank you. Yes sir. 16 (Applause.) 17 MR. MAZZA (Phonetic): Hi, my name is 18 Anthony Mazza. I come from Philadelphia and my 19 comment pertains to -- well, we've been here since 20 about 10 o'clock this morning for approximately six 21 hours of testimony and we've briefly heard from the 22 public 20 minutes before lunch, about 20 minutes a 23 little while ago and now, where we've heard four or 24 five hours of testimony from experts and the panelists 25 246 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 247 and I'm just wondering if this is all we have to offer 1 as far as inviting the public into this process, then 2 I just think that it's really deficient. 3 The other comment that I wanted to make 4 was that I thought it was curious that we heard some 5 testimony from people from NBC and from Fox and from 6 Clear Channel about how consolidation promotes 7 diversity and protects localism and we've heard some 8 very heartfelt stories from Detroit and some other 9 areas. But I'm just curious where the representatives 10 of these communities are that are the cheerleaders of 11 this corporate protection that there are communities 12 and representation that they're getting in these 13 corporate forums because even groups like the tobacco 14 industry can trot out their corporate- funded grass 15 roots groups to talk about the evils of smoking laws 16 and anti- smoking laws, but we haven't heard from one 17 citizen who wasn't on the payroll of these companies 18 come in and testify that media consolidation has done 19 great things for my local area. 20 (Applause.) 21 And I'm just wondering, I just hope that, 22 I really hope that we have another opportunity, 23 another public forum to hear the full range of 24 opinions because I'm sure that they exist, but I just 25 247 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 248 don't feel that we've been given the opportunity to 1 hear them here today. 2 (Applause.) 3 MR. KRATTENMAKER: Yes sir. 4 MR. COLLIER: My name is Chris Collier, I 5 live in Plymouth, New Hampshire and I have 20 years' 6 experience in broadcasting. I then became a parent 7 company and I have a subsidiary now. I have a child, 8 he's 22 years old, but he has autism and he's very 9 literal. And when he heard about the angel of public 10 interest I couldn't explain what that was because he 11 wanted to know is that like Gabriel the archangel or 12 what is that? So I began to look into what was going 13 on and I noticed there is a particular fondness for 14 faith- based metaphors. So I'd like -- 15 [END OF TAPE 4, SIDE A; BEGIN TAPE 4, SIDE 16 B.] 17 -- if we're to believe that market can be 18 a religion, then we can take that to be the church 19 started by David Zarnoff. David and his well- financed 20 legion of corporate lawyers who are responsible for 21 keeping FM radio out of our hands for decades. David 22 told his followers the following parable: what's good 23 for RCA is good for the USA. That breaks most of the 24 Commandments. 25 248 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 249 The 1996 Telecommunications Act allowed 1 the money changers back in the temple and today 2 they're here with a vengeance. The angel of public 3 interest hasn't got a prayer of being heard, much less 4 seen. The only place we can eavesdrop is a 50 watt FM 5 station just outside Modesto. 6 Further deregulation is an indulgence 7 followed by a transgression. If there's to be anyone 8 with a flaming sword guarding the American public, let 9 it be the institution, the FCC, that has the power to 10 shape what we see, what we hear and how we think. 11 That's the cannon and creed that will define us, our 12 values and our society. 13 Thank you very much and I appreciate the 14 chance to be here today and to talk to you. 15 Thank you very much. 16 (Applause.) 17 MR. KRATTENMAKER: Thank you, sir. Yes 18 ma'am. 19 MS. RANNELL (Phonetic): Good afternoon. 20 My name is Deborah Rannell and being a former teacher 21 I do know that people can only focus for about 20 22 minutes so I do appreciate you staying with us for the 23 whole day. 24 If I heard correctly, Commissioner Copps, 25 249 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 250 you said that you were interested in the person who 1 didn't know the FCC existed. Well, I am that clueless 2 person that you were looking for because up until 3 about two weeks ago I didn't know this issue even 4 existed. So I did come here today to learn. And this 5 is what I've learned. 6 Whatever side you all decide to vote on, 7 you have your empirical evidence. I have heard some 8 great speakers today. I think, as I said, whatever 9 you decide to do you will have the empirical evidence 10 to back you up. 11 So then what I'm thinking is that you're 12 going to have to go to your relationships, the people 13 you trust to make your decision. I want to be one of 14 those people that you trust, one of those people that 15 you listen to because I think of you as the steward of 16 my voice. 17 So let me share a fear I have. I am very 18 mainstream and conservative, at least I've been told 19 so, so sometimes that one voice that we hear is real 20 warm and fuzzy for me. I like that. I can go with 21 that. But it scares me to death to think that I won't 22 have all these other voices coming at me because those 23 other voices give me the luxury of deciding if I'm 24 wrong and making a change. 25 250 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 251 They also give me the pleasure of deciding 1 I'm right and I should stick with what I believe. And 2 I do believe that what you have heard today is that we 3 want you to trust us. We want you to listen to us. 4 You are the steward of our voice. And if we haven't 5 given you a good enough picture of the American 6 citizen -- 7 MR. KRATTENMAKER: Thank you, ma'am. 8 MS. RANNELL: Then go get it. 9 (Applause.) 10 MR. KRATTENMAKER: Thank you. Yes sir. 11 MR. BRIDGES: My name is Alex Bridges. 12 I'm a reporter for a small newspaper just south of 13 Richmond and I've been there about four years, got 14 there straight out of college, actually. Went here to 15 VCU and I noticed that while I was at VCU there 16 weren't any places really to work straight out of 17 college that were of the calibre of say the Times 18 Dispatch or any of these other newspapers, so you had 19 to think small and that's how most journalists get 20 their start. 21 But I've noticed that the diversity in the 22 area, across the state, I guess, has dwindled. And 23 I'm not here to argue against corporations owning 24 several newspapers across the country because they can 25 251 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 252 still do a fine job covering local events, but I think 1 that if you lift this cap, if you allow newspapers and 2 television stations and radio stations to get gobbled 3 up by the large corporations, eventually it's not 4 going to work well and there's been a lot of evidence 5 to show that diversity is dwindling. When you cut 6 away from the diversity, you also start to cut away 7 from the dissemination of information which is 8 generally the main goal of a journalist. And if you 9 cut away from the dissemination of information, you 10 have a less educated public, a less informed public. 11 A less informed public means you have less of a 12 democracy than you had before. 13 In my history lessons, I vaguely recall 14 that the Soviet Union had, I believe, two media 15 outlets for its entire country and that also included 16 the Eastern Bloc and if you want to talk about 17 diversity, obviously that wasn't very diverse, 18 especially since it was controlled by the government. 19 Well, eventually you'll have that same diversity here 20 in America. You'll have Clear Channel and you'll have 21 maybe even Media General owning everything in the 22 country and then you will not have any diversity. 23 Thank you. 24 (Applause.) 25 252 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 253 MR. KRATTENMAKER: And for our final 1 public comment, yes sir. 2 MR. MILKUS (Phonetic): My name is Chuck 3 Milkus. I'm a former FCC attorney turned broadcaster. 4 You heard from my partner, Mike Mazursky. We're 5 independent AM broadcasters here in Richmond and I 6 want to make sure that the contribution of independent 7 broadcasters to diversity and localism is not 8 overlooked. We're doing a lot of good things here 9 bringing new formats to the market. 10 I urge you that in this rulemaking, if you 11 decide to toughen up and take some action against 12 deregulation in response to some of the things you're 13 hearing, please don't do it in the way that will harm 14 small independent broadcasters who are doing the best 15 we can to try and compete against the large group 16 operators. 17 One additional comment to Mr. Mays, who 18 made a comment about the contribution of Clear Channel 19 to localism. An anecdote that came to mind for me is 20 I have two children, ages 13 and 10. They prefer to 21 listen to FM music stations, not my radio station, 22 unfortunately, but there's a pop station in the market 23 here, Q94. Whenever we go to another city, the first 24 thing they do is we get in the car and they're like 25 253 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 254 Dad, where's the Q94 in this city? And it usually 1 takes me about anywhere from 10 to 30 seconds to scan 2 the dial and find it and stations just sound the same 3 when they're owned by the group owners, regardless of 4 what city you're in and I don't think that speaks very 5 well for localism. 6 Thank you. 7 (Applause.) 8 MR. KRATTENMAKER: Sir, may I ask you to 9 submit your information for the public record. 10 Thank you very much and you have the 11 floor. 12 MR. BEST: My name is Glen Best and I'm 13 representing the Sierra Club and the reason I'm late 14 is because I actually got tied up in Memphis. 15 MR. KRATTENMAKER: Will you please give us 16 your remarks, sir? 17 MR. BEST: Yes sir, I will. Before the 18 FCC considers any change that would further 19 consolidate media ownership, it needs to investigate 20 instances of censorship by owners such as those 21 recently experienced by the Sierra Club. In the past 22 eight months, the Sierra Club has had two radio 23 campaign ads rejected by stations, a radio ad produced 24 by the club last June urging Bill Ford, CEO of Ford 25 254 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 255 Motor Company to produce more fuel efficient vehicles 1 was rejected by Detroit stations, but later aired by a 2 station in neighboring Canada. We shouldn't have to 3 go to Windsor to have our ads run. 4 In September, another ad, critical of 5 pollution from large dairy operations in Twin Falls 6 and Jerome, Idaho was pulled by station owners, Clear 7 Channel Communications one week after the station 8 started getting -- was pulled by the station one week 9 after they got a lot of calls in an orchestrated 10 effort by advertisers complaining about the Sierra 11 Club ad. 12 Now this isn't directly related to the 13 FCC, but it involves Clear Channel. In October of 14 last year, Clear Channel Communications and Viacom 15 which own billboards in New Mexico rejected billboard 16 ads by the Sierra Club in support of the Zuni Native 17 American Tribe and critical of plans for an 18,000 18 acre strip coal mine that would harm the Zuni salt 19 lake in western New Mexico. 20 I ask you this question in my closing 21 remarks here, how can the marketplace of ideas which 22 you're so concerned about legitimately operate in an 23 environment where access to public airways is owned by 24 fewer and fewer corporations that view public 25 255 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 256 discourse as a threat to their bottom line? 1 Thank you. 2 MR. KRATTENMAKER: As the moderator of 3 this session I would like to thank all of the 4 panelists and all the contributors from the public. I 5 thought the woman, the schoolteacher said it best, 6 we've heard a lot of very good talks here today, not 7 only from the panelists, but also from the members of 8 the public. 9 I don't know how many public hearings at 10 the FCC I've participated in, watched or even set up a 11 couple. I don't think any of them were as robust or 12 as informative as this and I think that's all due to 13 the efforts of the Commissioners and of Dane Snowden 14 and his staff. And I wanted to thank you, Dane, very 15 much and give this to you to wrap up. 16 MR. SNOWDEN: Thank you, Tom, and thank 17 you very much for all of your good work in moderating 18 our panel and thank you all for coming today. If you 19 did not have an opportunity to make a public comment 20 and you would like to submit a comment, you can go to 21 the FCC website at fcc. gov and click on the icon that 22 says ECFS Express where you can file your comment for 23 the record. 24 Madam Secretary? 25 256 NEAL R. GROSS COURT REPORTERS AND TRANSCRIBERS 1323 RHODE ISLAND AVE., N. W. (202) 234- 4433 WASHINGTON, D. C. 20005- 3701 www. nealrgross. com 257 SECRETARY DORTCH: This concludes the 1 Commission's Broadcast Ownership En Banc hearing. The 2 Commission thanks the panelists and the public for its 3 attendance. We are now adjourned. 4 (Whereupon, the public hearing was 5 concluded.) 6 7 8 9 10 11 12 13 14 15 16 17 18 257