[Senate Hearing 106-1142]
[From the U.S. Government Printing Office]



                                                       S. Hrg. 106-1142
 
         MARKETING VIOLENT MOTION PICTURE PRODUCTS TO CHILDREN

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 27, 2000

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation








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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED SIXTH CONGRESS

                             SECOND SESSION

                     JOHN McCAIN, Arizona, Chairman
TED STEVENS, Alaska                  ERNEST F. HOLLINGS, South Carolina
CONRAD BURNS, Montana                DANIEL K. INOUYE, Hawaii
SLADE GORTON, Washington             JOHN D. ROCKEFELLER IV, West 
TRENT LOTT, Mississippi                  Virginia
KAY BAILEY HUTCHISON, Texas          JOHN F. KERRY, Massachusetts
OLYMPIA J. SNOWE, Maine              JOHN B. BREAUX, Louisiana
JOHN ASHCROFT, Missouri              RICHARD H. BRYAN, Nevada
BILL FRIST, Tennessee                BYRON L. DORGAN, North Dakota
SPENCER ABRAHAM, Michigan            RON WYDEN, Oregon
SAM BROWNBACK, Kansas                MAX CLELAND, Georgia
                  Mark Buse, Republican Staff Director
               Ann Choiniere, Republican General Counsel
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 27, 2000...............................     1
Statement of Senator Breaux......................................    47
Statement of Senator Brownback...................................    43
    Prepared statement...........................................    46
Statement of Senator Burns.......................................    37
Statement of Senator Dorgan......................................    51
Statement of Senator Hollings....................................     1
Statement of Senator Hutchison...................................    49
Statement of Senator Kerry.......................................    38
Statement of Senator McCain......................................     1

                               Witnesses

Friedman, Rob, Vice Chairman, Motion Picture Group, Paramount....     4
    Prepared statement...........................................     6
Gianopulos, Jim, Chairman, Fox Films.............................     7
    Prepared statement...........................................     9
Harris, Mel, President and Chief Operating Officer, Sony Pictures 
  Entertainment..................................................    11
    Prepared statement...........................................    12
Horn, Alan, President and Chief Operating Officer, Warner Bros...    16
    Prepared statement...........................................    18
Iger, Robert, President and Chief Operating Officer, The Walt 
  Disney Company.................................................    20
    Prepared statement...........................................    22
McGurk, Chris, Vice Chairman and Chief Operating Officer, MGM....    23
    Prepared statement...........................................    24
Parkes, Walter Co-Head, Dreamworks SKG...........................    26
    Prepared statement...........................................    27
Snider, Stacy Chairman, Universal Pictures.......................    28
    Prepared statement...........................................    30
Valenti, Jack, President & Chief Executive Officer, Motion 
  Picture Association of America, prepared statement.............     2

                                Appendix

Joint Prepared Statement of Donald E. Cook, M.D., President, 
  American Academy of Pediatrics, Clarice Kestenbaum, M.D., 
  President, American Academy of Child & Adolescent Psychiatry, 
  L. Michael Honaker, PhD., Deputy Chief, Executive Officer, 
  American Psychological Association, Dr. E. Ratcliffe Anderson, 
  Jr. M.D., Executive Vice President, American Medical 
  Association, Bruce Bagly, M.D., President, American Academy of 
  Family Physicians, and Daniel B. Bornstein, M.D., President, 
  American Psychiatric Association...............................    67
Cleland, Hon. Max, U.S. Senator from Georgia, prepared statement.    68
Parents Television Counsel.......................................    65


         MARKETING VIOLENT MOTION PICTURE PRODUCTS TO CHILDREN

                              ----------                              


                     WEDNESDAY, SEPTEMBER 27, 2000

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:30 a.m. in room 
SR-253, Russell Senate Office Building, Hon. John McCain, 
Chairman of the Committee, presiding.

            OPENING STATEMENT OF HON. JOHN McCAIN, 
                   U.S. SENATOR FROM ARIZONA

    The Chairman. Good morning. The purpose of this hearing is 
to further consider the Federal Trade Commission report on 
marketing violent entertainment to children. This hearing is a 
functional extension of the one held 2 weeks ago. I want to 
thank the representatives of the motion picture industry for 
their attendance here.
    It is my understanding that the Democrats will likely 
invoke the 2-hour rule again today. The result is a possibility 
that we will have to conclude at 11:30. As noted, the 
appearance of the motion picture studio executives is somewhat 
overdue, and I am sure everyone is anxious to hear their 
testimony and then move to questions. As such, we will suspend 
opening statements by Members of the Committee and move 
straight to the witnesses, and this will ensure we will have 
adequate time to get through the substance of this hearing 
before 11:30.
    I realize Members have a great deal to say on this subject 
and that this is somewhat unusual, so I want to thank the 
Committee for their cooperation.
    I would like to point out this morning that the front page 
story on the New York Times, Major Studios Use Children to Test 
Market Violent Films, will be addressed today by the witnesses.

             STATEMENT OF HON. ERNEST F. HOLLINGS, 
                U.S. SENATOR FROM SOUTH CAROLINA

    Senator Hollings. Mr. Chairman, I have the statement of the 
distinguished representative of the Motion Picture Association, 
Mr. Jack Valenti, and ask consent that it be included in the 
record.
    The Chairman. Without objection.
    [The prepared statement of Mr. Valenti follows:]

    Prepared Statement of Jack Valenti, President & Chief Executive 
             Officer, Motion Picture Association of America
    In earlier testimony I pledged the Congress that the movie industry 
would treat the FTC report seriously, responsibly and with dispatch. In 
submitting to the Committee the 12-point set of Initiatives set out 
below, we have done just that. But Initiatives are useless unless they 
are understandable, and they cannot be understandable unless they are 
clearly stated. We have tried to do that as well.
    We have received this Committee's comments with the gravity and 
respectful attention that the views of our elected representatives 
deserve.
    These Initiatives are confirmed by the following movie studios:
    The Walt Disney Company, Dreamworks SKG, Metro-Goldwyn-Mayer, 
Paramount Pictures, Sony Pictures Entertainment, Twentieth Century Fox 
Film Corporation, Universal Studios, Warner Bros.
    The Initiatives listed below attach themselves to the three basic 
recommendations of the Federal Trade Commission's Report focusing on 
violence and entitled Marketing Violent Entertainment to Children. 
Items 1 through 5 are connected to the first FTC recommendation, which 
has to do with advertising and marketing; item 6 speaks to the second 
recommendation, that of compliance at theaters and retail stores; and 
items 7 through 12 are fitted to the Report's third recommendation, 
giving parents more information about ratings.
Initiatives of MPAA Member Companies
    1. Each company will request theater owners not to show trailers 
advertising films rated ``R'' for violence in connection with the 
exhibition of its G-rated films. In addition, each company will not 
attach trailers for films rated ``R'' for violence on G-rated movies or 
videocassettes or DVDs containing G-rated movies.
    2. No company will knowingly include persons under the age of 17 in 
research screenings for films rated ``R'' for violence, or in research 
screenings for films which the company reasonably believes will be 
rated R for violence, unless such person is accompanied by a parent or 
an adult guardian.
    3. Each company will review its marketing and advertising practices 
in order to further the goal of not inappropriately specifically 
targeting children in its advertising of films rated R for violence.
    4. Each member company will appoint a senior executive compliance 
officer or committee to review on a regular basis the company's 
marketing practices in order to facilitate the implementation of the 
initiatives listed above.
    5. The MPAA will review annually how each member company is 
complying with the initiatives listed above.
    6. The MPAA will strongly encourage theater owners and video 
retailers to improve compliance with the rating system.
    7. The companies will seek ways to include the reasons for the 
ratings of films in its print advertising and official movie web sites 
for such films.
    8. The MPAA has established or participated in the establishment of 
the following web sites: ``mpaa.org''--``filmratings.com''--
parentalguide.org.'' ``Mpaa.org'', among other things, describes the 
rating system and includes a database listing almost every movie rated 
since the commencement of the rating system in 1968. 
``Filmratings.com'' is a separate site devoted exclusively to providing 
ratings information on all rated movies, including the reasons for the 
ratings on recent releases. ``Parentalguide.org'' was established by 
MPAA in conjunction with the electronic game, music, cable and 
television broadcast industries. The site is intended to provide 
parents with one central site where they can obtain information about 
each of the ratings systems that have been developed in those 
industries. To insure that this information reaches a wider audience, 
each company will link its official movie web site to mpaa.org, 
filmratings.com and parentalguide.org.
    9. Henceforth, each company will include on all packages of new 
rated releases for its videocassettes and DVDs the rating of such film 
and the reasons for the rating.
    10. Henceforth, each company will include in the preface to its new 
rated releases for videocassettes and DVDs the reasons for the rating 
of the film, plus information about the filmratings.com web site.
    11. The MPAA and each company will strongly encourage theater 
owners to provide reasons for the ratings of films being exhibited in 
their theaters in their customer call centers.
    12. Each company will furnish newspapers with the reasons for the 
ratings of each of their films in exhibition and will request that 
newspapers include those reasons in their movie reviews. The MPAA and 
each company will seek newspapers' cooperation in printing a daily 
column listing films in exhibition, their ratings and the reasons for 
the rating.
    It is not a breach of the essentials of this testimony to declare 
that over a span of three decades and more the movie industry has been 
more attentive to the needs of parents than any other enterprise in the 
United States. Amid all the criticism of the film industry, almost as 
harrowing as the travels of Ulysses, perhaps it is reasonable, once 
again, to provision the Committee, the Congress and all who might read 
this paper with a re-statement of how the movie industry has so 
carefully attended to parental concerns.
    Consider the durable success of the movie industry's voluntary 
movie rating system.
    For almost 32 years, through our voluntary movie rating system, we 
have been offering advance cautionary warnings to parents about 
individual films so that parents can more watchfully and with rigor 
make their own decisions about the movies they want their children to 
see or not to see. That is a power only parents are warranted to wield, 
and it is their duty to exercise that power.
    For almost 32 years, the movie industry has been the only segment 
of our national marketplace, including all business enterprises, that 
voluntarily turns away revenues in order to redeem the obligation we 
have to parents. No other non-entertainment American enterprise can 
make that statement.
    For almost 32 years, we have been monitoring parents' reaction to 
movie ratings. In the latest of annual surveys conducted by the Opinion 
Research Corporation of Princeton, New Jersey, just completed three 
weeks ago, the rating system received an all-time high in parental 
endorsement! 81% of all parents with children under 13 found the rating 
system to be `Very Useful' to `Fairly Useful' in helping them choose 
the films they want their children to see. Nothing lasts 32 years in 
this unfaithful, volatile marketplace unless it is providing a benefit 
to the people it aims to serve, in this case, parents. Note: The FTC in 
its own independent appraisal of move ratings found that 81% of parents 
said they were ``satisfied'' with the system.
    That huge parental approval of the movie rating system may be 
derided, it may be distorted, but there it is. It cannot be ignored. 
That unfaltering and ever-rising support of parents for the rating 
system has to influence those who, without evidence, reach a 
fragmentary conclusion that ``the rating system isn't working.'' 
Parents believe otherwise.
    Moreover, too many, too often, imperfectly define the R-rating. 
``R'' does not mean ``adults only.'' That is the province of the ``NC-
17'' rating category which bars children from viewing a movie so rated. 
The ``R'' rating clearly and openly informs parents that children are 
admitted to ``R'' movies if accompanied by a parent or adult guardian. 
Many parents take their children to R-rated movies which parents 
approve. Many parents allow their children to attend R-rated movies 
with other adults. The selection of such movies for attendance by 
children is a choice that only parents, and parents alone, are 
qualified to make. The rating system, most assuredly, does not 
intervene in such choices. All the rating system does in the R-category 
is to illuminate a cautionary warning in advance which is offered to 
parents so they can decide whether or not a specific R-rated movie is 
one they would decide to allow their children to watch. The rating 
system does not issue instructions to parents about R-rated movies. 
That would be both impermissible and impertinent.
    All movies, no matter their rating, are not the same. Each time you 
produce a movie, you start a brand new creative enterprise that never 
existed before. Of the 500 or so films produced each year in the U.S. 
not all win unanimous public approval or cause universal comfort among 
those who watch. But the incontrovertible truth is that no one is so 
divinely anointed as to instruct artists on how to compose their films. 
Some movies are not so good. But more than some are wonderful 
entertainment, and some are truly superior works that inspire audiences 
and will endure. The central fact is that the creative artistry of the 
American film industry, with all its warts and all its splendor, is 
part of America's global glory.
    Finally, many in and out of Congress feel genuine anxiety about 
what they judge to be a persistent decay in the moral code from which 
springs a society's ethical values. It is a question not unsuitable to 
be discussed and ventilated, especially by parents, by religious and 
educational leaders. If there is decay, how do we repair it? If there 
is not decay, how do we make the future proof against such intrusions?
    My answer is: I believe that the survival and durability of a civic 
union depends on building within the breasts of young children a moral 
shield to impress on them what is right, and what is plainly wrong, to 
fortify their instincts and their judgments as they grow to adulthood. 
The construction of that moral shield, against which all the 
blandishments of peers and the enticements of the mean streets will 
crack and shatter, is mainly the duty of the home, the church and the 
school. If that duty is feebly performed or casually regarded by 
parents, clerics and teachers, then no amount of hand-wringing or the 
issuance of laws and directives will salvage a child's conduct or 
locate a missing moral core. We all know that.
    That continuing truth was best expressed a long time ago by Dr. 
Samuel Johnson and is still mightily relevant at this hour: ``How 
small, of all that human hearts endure, that part which kings or laws 
can cause or cure.''

    The Chairman. Our panel this morning is Mr. Rob Friedman, 
vice chairman of the Motion Picture Group of Paramount, Mr. Jim 
Gianopulos, who is the chairman of Fox Films, Mr. Mel Harris, 
president and chief operating officer at Sony, Mr. Alan Horn, 
president and chief operating officer of Warner Brothers, Mr. 
Robert Iger, president and chief operating officer of Disney, 
Miramax, Mr. Chris McGurk, who is vice chairman and chief 
operating officer of MGM, Mr. Walter Parkes, who is co-head of 
Dreamworks, and Ms. Stacy Snider, who is the chairman of 
Universal.
    Welcome to the panel, and because it was very difficult for 
us to understand the pecking order we thought the fairest way 
to begin would be to go by alphabetical order, which means you, 
Mr. Friedman. Welcome.

           STATEMENT OF ROB FRIEDMAN, VICE CHAIRMAN, 
                MOTION PICTURE GROUP, PARAMOUNT

    Mr. Friedman. Good morning, Mr. Chairman, Senator Hollings, 
and Members of the Committee. My name is Rob Friedman. I am 
vice chairman of Paramount Pictures Motion Picture Group, and I 
appreciate this opportunity to appear before you.
    Violence within our society is an issue of concern to all 
of us. In the debate surrounding this subject, however, the 
distinction between film content and film marketing has often 
been obscured.
    Senator Kerry. Can you pull the mike up close to you?
    Mr. Friedman. You, Mr. Chairman, and the FTC are to be 
commended for highlighting the distinction between the artistic 
creation of content, which is so clearly constitutionally 
protected speech, and the marketing of those artistic works. 
Though we firmly believe the First Amendment also protects 
advertising for motion pictures, we want to emphasize that we 
hear your concerns and those of the FTC and are committed to 
strengthening our processes so that parents are provided with 
more information and our advertising messages are heard by the 
appropriate audiences.
    Paramount wholeheartedly endorses the MPAA member company 
initiatives being provided to you today, and believes that they 
address the core concerns raised by the FTC in its report. We 
view these steps as both important and promising. Management at 
the highest levels of our company is committed to making them 
work.
    Already we have organized a Compliance Committee, made up 
of senior legal and marketing executives, which will be 
responsible for implementing these changes to our marketing 
practices and ensuring their success. These individuals have 
already set in motion the initiatives to which we have 
committed. We expect to have each of these changes in place 
very soon.
    Although today's discussion turns on marketing of 
entertainment products, it also touches on issues of content. I 
think we all recognize that violent themes in story telling--
such as war, betrayal, and retribution--are anything but new. 
One need think only of traditional Grimm's Fairy Tales, the 
works of Shakespeare, or the latest New York Times best-seller 
list to realize the interest of these themes spans the 
centuries and crosses into all age groups. What changes is that 
each person tells these stories in the context of his or her 
own environment and experiences.
    Because the range of human experience is rich in variety, 
stories can be, and frequently are, not violent. In recent 
years, for example, Paramount releases have included Runaway 
Bride, the Truman Show, the Rug Rats movie, Titanic, Indian in 
the Cupboard, Forrest Gump, Searching for Bobby Fisher, and 
many other fine movies. The people associated with Paramount 
have built an extraordinary body of work that has enriched our 
culture and should make us all proud.
    However, not every movie is a masterpiece, just as not 
every book wins a Pulitzer prize and not every painting ends up 
gracing the walls of the National Gallery. Movies, like 
paintings, books, plays and songs are art, and there is no 
simple formula that one can apply in making movies or in 
evaluating them.
    There is also no set formula for marketing movies. Over the 
course of a year, any movie company will run hundreds of 
different advertisements in thousands of different outlets. As 
the FTC report indicates, we have not always been as careful as 
we could have been.
    I do not believe, however, that we systematically focus our 
advertising efforts for R-rated films toward young children. In 
fact, our own analysis of the ages of the actual audiences for 
R-rated Paramount films included in the FTC study shows that, 
for our films, on average, less than 10 percent of the audience 
was under the age of 17.
    In closing, I would like to leave you with a few thoughts 
that I hope will lend some useful perspective to this 
discussion. Like many of you, and like many of my colleagues, I 
am a parent myself. I am the father of two wonderful daughters. 
Like so many other parents in America, their mother and I work 
hard to meet the challenges of parenting, at least in part by 
helping our children make decisions regarding what movies and 
television programs they watch, what music they hear, and what 
games they play. That is our job as parents, and we take it 
seriously.
    The current rating system provides a solid foundation for 
helping parents guide their children, and the enhancements that 
we propose today offer substantial potential for improvement. 
As we can see from the FTC's own survey, 98 percent of parents 
responded that they are usually involved in selecting what 
movies their children see, and 90 percent report that they 
restrict the movies their children watch. Those incredibly high 
numbers remind us that parents are already very involved in 
deciding what movies their children see.
    It is in all of our interests to provide the best 
information so that parents can make their decisions freely and 
knowledgeably. We share your desire to find an effective and 
workable solution that protects both our children and our 
Constitution.
    Thank you, Mr. Chairman, for the opportunity to testify. I 
look forward to answering any questions the Committee may have.
    [The prepared statement of Mr. Friedman follows:]

          Prepared Statement of Rob Friedman, Vice Chairman, 
                    Motion Picture Group, Paramount
    Good morning, Mr. Chairman and members of the Committee. My name is 
Rob Friedman, and I am the Vice Chairman of Paramount Pictures' Motion 
Picture Group. I appreciate this opportunity to come before you to 
comment on the Federal Trade Commission's recent report on the 
marketing of motion pictures and other forms of expression.
    Violence within our society is an issue of concern to all of us, 
and questions concerning the possible relationship of societal violence 
to depictions of violence in the media have garnered national 
attention, particularly as we as a nation strive to cope with the 
aftermath of tragedies such as Columbine and to prevent any such 
occurrences in the future.
    In the debate surrounding this subject, however, the distinction 
between film content and film marketing has often been forgotten or 
obscured. In some circles, the result has frequently been hasty 
recommendations for quick fixes that, upon reflection, prove to be 
neither quick nor fixes. You, Mr. Chairman, and the FTC are to be 
commended for a more thoughtful approach in highlighting the 
distinction between the artistic creation of content, which is so 
clearly constitutionally protected speech, and the marketing of those 
artistic works. Though we firmly believe that the First Amendment also 
protects advertising for motion pictures, we want to emphasize that we 
hear your concerns and those of the FTC and are committed to 
strengthening our processes so that parents are provided with more 
information and our advertising messages are heard by the appropriate 
audiences. In doing so, we are pleased to tell you that Paramount 
wholeheartedly endorses the MPAA member company initiatives being 
provided to you today and believes that they address the core concerns 
raised by the FTC in its report. We intend to support fully these 
initiatives, and we are reviewing and will continue to review our 
marketing practices to determine how best to meet the goals that 
underlie these principles.
    I think it is important, though, that we not view violence as a 
problem that lends itself to simple solutions. As a society, we are 
confronted by many serious problems, many of which bear directly on the 
issue of violence, including the easy availability of guns, enduring 
poverty, the scourge of drug abuse, and child abuse and neglect.
    Although today's discussion turns on the marketing of entertainment 
products, it also touches on issues of content, and I feel some 
personal observations could help us better appreciate the context in 
which we are all operating. I think we all recognize that violent 
themes in storytelling are anything but new. From the beginning, 
storytelling has utilized these themes of war, violent acts and 
betrayal. The existence or absence of these themes is not what defines 
art as worthwhile or worthless. Using art and entertainment to explore 
vicariously the varied challenges that these themes present to us as 
individuals and as members of a society is useful and long-established. 
One need think only of traditional Grimms' fairy tales, the works of 
Shakespeare or the latest New York Times bestseller list to realize 
that the interest in these themes spans the centuries and crosses into 
all age groups.
    It should thus not be surprising that storytellers today continue 
to draw on the same themes that have occupied us since the first 
stories were told, and that these stories--told and retold--include 
these themes. What changes is that each person tells these stories in 
the context of his or her own environment and experiences. Contemporary 
storytellers try to tell their stories in ways that speak to 
contemporary society.
    Because the range of human experience is rich in variety, stories 
can be--and today frequently are--not violent. Each year, the movie 
industry creates films that entertain and illuminate us and that become 
part of our cultural and intellectual heritage. In recent years, for 
example, Paramount releases have included Runaway Bride, The Truman 
Show, The Rugrats Movie, Titanic, Indian in the Cupboard, Forrest Gump, 
Searching for Bobby Fischer, What's Eating Gilbert Grape?, and many 
other fine movies. Every person at this table has been involved in 
bringing some wonderful films to audiences around the world. Cinema is 
a particularly American art form. The people associated with Paramount 
and the other studios have built an extraordinary body of work that has 
enriched our culture and should make us all proud.
    However, not every movie is a masterpiece, just as not every book 
wins the Pulitzer Prize and not every painting ends up gracing the 
walls of the National Gallery. Movies--like paintings, books, plays and 
songs--are art and share with those other art forms qualitative 
differences in aspiration and outcome. And, as in art generally, there 
is no simple formula that one can apply in making movies, or in 
evaluating them.
    Similarly, there is no set formula for marketing movies. Over the 
course of a year, any movie company will run hundreds of different 
advertisements in thousands of different outlets. And, in the case of 
television, these ads will air across a wide range of programs. As the 
FTC report indicates, we have not always been as careful as we could 
have been. I do not believe, however, that we systematically focus our 
advertising efforts for R-rated films toward young children. Our own 
analysis of the ages of the actual audiences for the R-rated Paramount 
films included in the FTC study shows that, for our films, on average, 
less than 10% of the audience was under the age of 17.
    In closing, I would like to leave you with a few thoughts that, I 
hope, will lend some useful perspective to this discussion.
    Like many of you, and like many of my colleagues, I'm a parent 
myself. In addition to my role at Paramount, I am also the proud father 
of two wonderful daughters. We all appreciate the challenges of raising 
children today. Like so many other parents in America, their mother and 
I work hard to meet these challenges, at least in part by helping our 
children make decisions regarding what movies and television programs 
they watch, what music they hear, and what games they play. That's our 
job as parents, and we take it seriously.
    The current rating system provides a solid foundation for helping 
parents guide their children, and the enhancements that we propose 
offer substantial potential for improvement. As we can see from the 
FTC's own survey, 98% of parents responded that they are usually 
involved in selecting what movies their children see, and 90% report 
that they restrict the movies their children watch. Those are 
incredibly high numbers, and we should find them encouraging. They 
indicate that the vast majority of American parents take their 
responsibilities toward their children seriously and that they will 
make use of the greater information that we intend to provide them. 
Those numbers should also remind us that parents are already very 
involved in the decisions to guide their children's exposure to movies.
    It is in the interests of all of us to provide the best information 
so that parents can make their decisions freely and knowledgeably. We 
share your desire to find an effective and workable solution that 
protects both our children and our Constitution.

    The Chairman. Thank you, and I thank you and all the 
witnesses for making time to appear before the Committee this 
morning.
    Mr. Gianopulos, welcome.

        STATEMENT OF JIM GIANOPULOS, CHAIRMAN, FOX FILMS

    Mr. Gianopulos. Mr. Chairman, Senator Hollings, Members of 
the Committee, I am Jim Gianopulos, chairman of Fox 
Entertainment. I appreciate your time and the opportunity to 
provide my comments on the very important topic.
    The Chairman. Mr. Gianopulos, I apologize, you are going to 
have to pull it even closer. Thank you.
    Mr. Gianopulos. For over 80 years we have taken great pride 
in what 20th Century Fox stands for, and during our long 
history we have consistently produced quality films that have 
entertained, amused, and at times raised the social 
consciousness of audiences in this country and around the 
world.
    We produce movies of widespread appeal such as The Sound of 
Music, Independence Day, and Star Wars. We are responsible for 
bringing to the world socially relevant movies such as The 
Longest Day, Gentleman's Agreement, and Patton, as well as 
literary classics like Romeo and Juliet, the Grapes of Wrath, 
and the Diary of Anne Frank, and in recent years we have 
coproduced two of the last five movies that have won Best 
Picture at the Academy Awards, Titanic, and Braveheart.
    Over these years we have earned the respect and the trust 
of our audiences who have come to associate the Fox fanfare 
which precedes our films with a rich heritage of quality 
entertainment. In light of this proud tradition, we come before 
you prepared to address the questions raised about our 
industry's marketing practices.
    Over the last few weeks we have engaged in many hours of 
intensive discussions and analysis in order to fully respond to 
the concerns raised by the FTC report. This analysis has 
included both an internal review of our marketing practices and 
conduct, as well as an external discussion of industry 
marketing standards with our fellow MPAA members. These efforts 
have led us to take steps to ensure that we market our films in 
ways that fully and responsibly reflect the trust placed in 
others by our audiences and the American public.
    In developing our marketing programs, we must balance our 
social responsibilities with the right to free expression and 
the right of individuals in this country to determine their 
entertainment choices. Maintaining this balance in a complex 
media environment is a subjective and inherently imperfect 
process, but we do our best to achieve it.
    In response to the FTC report we are committed to working 
even harder toward this goal in the future. Specifically, we 
have participated in creating and are fully committed to 
implementing the MPAA's 12-point initiative. We believe it 
addresses the three main areas of concern raised in the FTC 
report.
    We work in an intensely competitive business on a daily 
basis, but today we sit before you committed and united by a 
common goal. By coming together with our competitors on this 
issue, we have taken steps to better serve American parents and 
their children. We appreciate the role this Committee has 
played in enabling us to put aside our differences and achieve 
this consensus.
    In addition, our parent companies, News Corporation and the 
Fox Entertainment Group, yesterday announced a plan to marshall 
their diverse assets to further advance our goal of avoiding 
improper marketing of R-rated films. This plan, which is set 
forth in the news release attached to this testimony, will 
utilize the various resources of News Corporation and the Fox 
Entertainment Group to help educate parents about the movie 
rating system, as well as to restrict the placement of 
advertisement of R-rated movies on the Fox Television Network.
    Finally, we at 20th Century Fox will augment the MPAA 
initiatives to further these important objectives, as set forth 
in the news release attached to my testimony.
    We are firmly committed to taking these actions, and we can 
and must provide parents with the tools necessary to make 
informed decisions about what is best for their families. 
However, we cannot be in every living room or at every box 
office and video store. Ultimately, our success in these 
efforts will depend on the active involvement of parents in 
decisions about their children's entertainment choices.
    Prior to taking my current position 2 months ago, I was in 
charge of our studio's international operations. I can assure 
you that all over the world, audiences embrace and enjoy our 
films and get a window into the values and freedom of our way 
of life. I urge you not to ignore the countless hours of 
entertainment, education, and inspiration we have brought the 
citizens of this country and the world, and not to allow the 
issues before us to diminish the contributions of the many 
talented and hard-working people that create these films.
    Mr. Chairman, Senator Hollings, Members of the Committee, I 
am a proud citizen of this country and, like most of you, a 
loving parent. I share many of the concerns expressed by you 
today, and am personally committed to improving our practices 
and ensuring adherence to the initiatives we have outlined.
    Thank you very much.
    [The prepared statement of Mr. Gianopulos follows:]

         Prepared Statement Jim Gianopulos, Chairman, Fox Films
    Mr. Chairman, Senator Hollings, and Members of the Committee. I am 
Jim Gianopulos, Chairman of Fox Filmed Entertainment. I appreciate your 
time and the opportunity to provide my comments on the very important 
topic before us today.
    For over 80 years we have taken great pride in what Twentieth 
Century Fox stands for, and during our long history we have 
consistently produced quality films that have entertained, amused, and 
at times raised the social consciousness of audiences in this country 
and around the world. We have produced movies of widespread appeal such 
as The Sound of Music, Independence Day, and Star Wars. We are 
responsible for bringing to the world socially relevant movies such as 
The Longest Day, Gentlemen's Agreement and Patton, as well as literary 
classics like Romeo and Juliet, The Grapes Of Wrath and The Diary of 
Anne Frank. And in recent years, we have co-produced two of the last 
five movies that have won Best Picture at the Academy Awards: Titanic 
and Braveheart.
    Over the years, we have earned the trust and respect of our 
audiences, who have come to associate the Fox fanfare, which precedes 
our films, with a rich heritage of quality entertainment. In light of 
this proud tradition, we come before you prepared to address the 
questions raised about industry marketing practices. Over the last few 
weeks, we have engaged in many hours of intensive discussion and 
analysis in order to fully respond to the concerns raised by the FTC 
report.
    This analysis has included both an internal review of our marketing 
practices and conduct, as well as an external discussion of industry 
marketing standards with our fellow MPAA members. These efforts have 
led us to take steps to ensure that we market our films in ways that 
fully and responsibly reflect the trust placed in us by our audiences 
and the American public.
    In developing our marketing programs, we must balance our social 
responsibilities with our right to free expression, and the right of 
individuals in this country to determine their entertainment choices. 
Maintaining this balance in a complex media environment is a subjective 
and inherently imperfect process, but we do our best to achieve it. In 
response to the FTC report, we are committed to working even harder 
toward this goal in the future.
    Specifically, we have participated in creating and are fully 
committed to implementing the MPAA's 12-point initiative. We believe it 
addresses the three major areas of concern raised in the FTC report. We 
work in an intensely competitive business on a daily basis, but today 
we sit here before you united by a common goal. By coming together with 
our competitors on this issue, we have taken steps to better serve 
American parents and their children. We appreciate the role this 
Committee has played in enabling us to put aside our differences and 
achieve this consensus.
    In addition, our parent companies, News Corporation and the Fox 
Entertainment Group, yesterday announced a plan to marshal their 
diverse assets to further advance our goal of avoiding improper 
marketing of R-rated films. This plan, which is set forth in the news 
release attached to this testimony, will utilize the various resources 
of News Corporation and the Fox Entertainment Group to help educate 
parents about the movie rating system as well as to restrict the 
placement of advertisements of R-rated movies on the Fox Television 
Network.
    Perhaps most importantly, we at Twentieth Century Fox will augment 
the MPAA initiatives to further these important objectives in three 
significant ways. First, we will not attach, and we will request that 
theatre owners not show, trailers advertising any of our R-rated films 
in connection with the exhibition of ``G'' or ``PG''-rated films. 
Second, we will not advertise any R-rated movies on any broadcast 
network program in which 35 percent or more of the audience is 
anticipated to be under 17. Third, we will not market or advertise any 
of our R-rated movies to any organization, or in any publication in 
which 35 percent of the membership or audience is under 17.
    We are firmly committed to taking these actions and we can and must 
provide parents with the tools necessary to make informed decisions 
about what is best for their family. However, we cannot be in every 
living room, or at every box office and video store. Ultimately, our 
success in these efforts will depend on the active involvement of 
parents in decisions about their children's entertainment choices.
    Prior to undertaking my current position two months ago, I was in 
charge of our studio's international operations. I can assure you that 
all over the world audiences embrace and enjoy our films, and get a 
window into the values and freedom of our way of life. I urge you not 
to ignore the countless hours of entertainment, education and 
inspiration we have brought the citizens of this country and the world, 
and not to allow the issues before us to diminish the contributions of 
the many talented and hard working people that create these films.
    Mr. Chairman, Senator Hollings, Members of the Committee, I am a 
proud citizen of this Country and, like most of you, a loving parent. I 
share many of the concerns expressed by you today and am personally 
committed to improving our practices and ensuring adherence to the 
initiatives outlined today.
    Thank you.
                                 ______
                                 
                            News Corporation
    News Release
    For Immediate Release
    Contact: Andrew Butcher 212-852-7070
News Corporation and Fox Entertainment Group Announce ``Family-
        Friendly'' Initiatives
Eight-Point Program to Better Protect Children, Inform Parents
    New York, NY, September 26, 2000--News Corporation (NYSE: NWS, NWS/
A; ASX: NCP, NCPDP) and Fox Entertainment Group (NYSE: FOX) today 
announced the immediate implementation of a landmark eight-point 
``family friendly'' policy to better protect children from 
inappropriate material and to assist parents in making more informed 
decisions about movies.
    ``All of us in the media industry have a fundamental responsibility 
to help parents cope with the many entertainment choices facing their 
children,'' said Peter Chernin, President and COO of News Corporation. 
``The plan we are implementing today covers all our filmed and 
broadcast media, and will help parents make more informed decisions.''
    Responding to an FTC report released eight days ago, News 
Corporation quickly moved to enhance its already strong efforts to 
support families. Leading elements of the plan include the following 
actions by News Corporation companies:

   Twentieth Century Fox Film will launch full implementation 
        of the 12-point member company initiatives adopted by the MPAA;

   Augmenting the MPAA plan, Twentieth Century Fox Film will 
        request theater owners not to show trailers advertising films 
        rated R for any reason in connection with the exhibition of 
        both its ``G'' and PG-rated films. Twentieth Century Fox will 
        also not attach trailers for films rated R for any reason on 
        ``G'' or PG-rated movies or on videocassettes or DVDs 
        containing ``G'' or ``PG'' movies;

   The FOX Broadcasting Company will not accept advertising for 
        R-rated films in any family programming, or in any program in 
        which 35 percent or more of the audience is anticipated to be 
        under 17;

   Twentieth Century Fox Film will not advertise any R-rated 
        movies on any broadcast network program in which 35 percent or 
        more of the audience is anticipated to be under 17;

   Twentieth Century Fox Film will not market or advertise any 
        of its R-rated movies to any organization, or in any 
        publication in which 35 percent of the membership or audience 
        is under 17;

   The FOX Broadcasting Company will launch a broadcast 
        campaign to educate parents about the ratings systems;

   The New York Post, a subsidiary of News Corporation, will 
        print a daily column listing all films being exhibited in the 
        New York market and the rating, as well as the reason for the 
        rating, of each; and

   The Fox Family Channel will produce and air a one-hour 
        special aimed at helping parents make better informed decisions 
        about what films, music and video games are appropriate for 
        their children; and to assist parents in better communicating 
        those choices to their children.

    The complete text of the plan is available at: http://
www.newscorp.com/public/news/newscorpplan.htm
    News Corporation had total assets as of June 30, 2000 of 
approximately US$40 billion and total annual revenues of approximately 
US$14 billion. News Corporation's diversified global operations in the 
United States, Canada, continental Europe, the United Kingdom, 
Australia, Latin America and the Pacific Basin include the production 
of motion pictures and television programming; television, satellite 
and cable broadcasting; the publication of newspapers, magazines and 
books; the production and distribution of promotional and advertising 
products and services; the development of digital broadcasting; the 
development of conditional access and subscriber management systems, 
and the creation and distribution of popular on-line programming.

    The Chairman. Thank you, sir.
    Mr. Harris, welcome.

STATEMENT OF MEL HARRIS, PRESIDENT AND CHIEF OPERATING OFFICER, 
                  SONY PICTURES ENTERTAINMENT

    Mr. Harris. Chairman McCain, Senator Hollings, Members of 
the Committee, ladies and gentlemen, good morning. My name is 
Mel Harris. I am president and chief operating officer of Sony 
Pictures Entertainment, a leading creator and global 
distributor of entertainment products, services, and 
technology. I am here before you today not just as an officer 
of a film entertainment company but also as a concerned 
citizen.
    The Chairman. Mr. Harris, I apologize. You are going to 
have to pull it even closer.
    Mr. Harris. I would like to preface my remarks by 
emphasizing the voluntary nature of our motion picture 
business. We are commercial enterprises who only succeed when 
our customers, old and young, volunteer to spend their limited 
money and scarce time to watch our movies in theaters and in 
their homes. That is a precious relationship we have with them, 
so we in return volunteer to have our movies rated, volunteer 
to have our advertising and marketing materials approved, 
volunteer to extend those approvals into the home video 
distribution channels, and volunteer initiatives here today.
    The motion picture rating system in use now for 32 years is 
based on the family while protecting the rights of the creative 
individuals who astound the world with our ability to produce 
movies that entertain audiences across the globe. The rating 
system also seeks to protect the great diversity of family 
values of our audiences in the United States.
    Central to that system is the proper placement for the 
judgment of whether to view our movies on parents rather than 
institutions. This means parents need a lot of information 
about our movies, and we want to give them more, a lot more and 
more ready access to that information.
    I would point out that an ``R'' rating does not mean that a 
film is inappropriate for people under 17, but rather, it 
reflects a determination by the parents who make up the rating 
board that other parents should be cautioned to research that 
film before letting their children see it. The ``R'' rating is 
a helpful service to parents, who are the ones making that 
final decision.
    We are not here to suggest that all of our films are 
appropriate for everyone, but we are here to say we will give 
parents as much information as we can for them to decide if a 
given movie is appropriate for their children. We hope the 
measures we present and discuss today will give parents even 
more choices to learn about those films and to help in their 
decisions with their children's choice of movies.
    Thank you.
    [The prepared statement of Mr. Harris follows:]

    Prepared Statement of Mel Harris, President and Chief Operating 
                  Officer, Sony Pictures Entertainment
    Chairman McCain, Senator Hollings, distinguished Members of the 
Committee, I am Mel Harris, President and Chief Operating Officer for 
Sony Pictures Entertainment.
    Thank you for the invitation to appear at this hearing on this 
important subject. Let me begin by giving you some background on Sony 
Pictures Entertainment. Sony Pictures is a leading creator and 
distributor of entertainment products, services and technology. Our 
global operations encompass motion picture production and distribution, 
television programming and syndication, home video acquisition and 
distribution, operation of studio facilities, digital entertainment 
products, services and distribution of filmed entertainment in 67 
countries.
    Our motion pictures group generates a diverse range of films for 
audiences worldwide. Columbia Pictures is our primary motion picture 
group focusing on widely released films. In addition we operate three 
other groups that focus on specialized markets and films. Sony Pictures 
Classics specializes in acquisition, marketing and distribution of 
prestigious foreign and American independent films. Screen Gems is a 
movie distribution label which provides a haven for the type of film 
that falls between those currently released Sony Pictures Classics and 
the wide release movies that are more traditionally developed and 
released by Columbia Pictures. In addition, Sony Pictures Family 
Entertainment Group creates, produces and distributes television 
programs.
    I think it is important to discuss the rating system for motion 
pictures. From reading the FTC report and accounts of the previous 
hearings in Congress on this issue, there appears to be some 
misunderstanding of the rating system.
    The basic mission of the rating system is a simple one: to offer to 
parents some advance information about movies so that parents can 
decide what movies they want their children to see or not to see. The 
rating program is based on the assumption of responsibility by parents.
    The ratings are decided by a full-time Ratings Board located in Los 
Angeles. There are 8-13 members of the Board who serve for periods of 
varying length. They work for the Classification and Rating 
Administration (CARA). There are now seven full-time and five part-time 
members of the Ratings Board. Two members are designated as Co-Chairs.
    The principal criteria for Ratings Board membership are that the 
individual is a parent of a child under the age of 18, that the 
individual possesses good judgment, and that the individual has no 
other connection with the motion picture industry. In addition, the Co-
Chairs seek to include for service on the CARA Board individuals from a 
broad spectrum of racial and ethnic groups, and educational, 
geographic, and other backgrounds and experiences. CARA contacts 
organizations such as the Parent Teacher Association and other similar 
groups to solicit the names of potential raters.
    The criteria considered by the Ratings Board in making its judgment 
include theme, violence, language, nudity, sensuality, drug abuse, 
among other elements. Part of the rating flows from how each of these 
elements is treated by the filmmaker. There is no special emphasis on 
any one of these elements. All are considered. All are examined before 
a rating is awarded.
    It is important to keep in mind that CARA is operated separately 
from and independent of the operations of the Motion Picture 
Association of America, Inc. (``MPAA''). The sole management link with 
the trade association is the President of the MPAA, Jack Valenti, who 
has steadfastly enforced its walled-off character from the MPAA. The 
President of MPAA selects the Chair, with the concurrence of the 
President of the National Association of Theater Owners (``NATO''). 
CARA supports itself from the fees it charges filmmakers to rate their 
films, and therefore is completely self-supporting. It receives no 
funds from MPAA, nor does it report to MPAA in any other way.
    A producer or distributor of a motion picture (including pictures 
released directly to video) may submit that motion picture to CARA for 
rating. With the exception of member companies of the MPAA, filmmakers 
are free to choose whether or not to submit their films for rating. 
Only member companies of the MPAA are obliged to submit their films for 
rating. Each producer and distributor requesting a rating pays a fee 
which varies by the budget of the picture submitted for rating.
    The members of the Ratings Board view the entire motion picture 
submitted for rating, deliberate about the appropriate rating and then 
vote, with the preliminary rating being determined by a majority vote. 
In certain situations specified by the rules, a particular rating may 
require more than a majority vote of the Board. The Co-Chairs vote when 
there is a close division among members of the Board. The preliminary 
rating is provided to the producer or distributor, who may accept it.
    Upon acceptance of the preliminary rating, the film is rated, a 
Certificate of Rating is issued, and announcement of the rating is 
communicated to theater owners and the media through the weekly CARA 
Bulletin and on the CARA's Internet website. If the producer or 
distributor does not accept the preliminary rating, it has three 
options: (1) It may choose to edit the film to try to seek a different 
rating; (2) it can appeal the rating; or, (3) if it is not a member 
company of the MPAA, it may distribute the film without a rating.
    If a producer or distributor wishes to appeal a rating to the 
Rating Appeals Board, it may do so. The Appeals Board is composed of 
individuals designated by each MPAA member company, by exhibitor 
representatives designated by NATO, and by a representative of the 
American Film Marketing Association (``AFMA''). Members of the Appeals 
Board receive no compensation from CARA for their service on the 
Appeals Board.
    Members of the Appeals Board meet to view the film for which the 
rating has been appealed. Following the screening of the film, the 
Appeals Board members hear presentations on behalf of the filmmaker and 
the Ratings Board, discuss the rating of the film, and then vote by 
secret ballot. The standard for overturning a rating is that the 
original rating of the CARA Ratings Board was clearly erroneous. An 
appeal ballot indicates whether the Appeals Board member favors 
overruling or sustaining the rating, but does not give reasons for that 
vote. A vote of a two-thirds majority of those present and voting is 
required to overturn a rating.
    Of the approximately 15,350 films rated by the Classification and 
Rating Administration, there have been 301 appeals (1.96%). Of those 
301 appeals, the Board's rating has been sustained in 181 cases (60%). 
Thus, from the inception of the system over 30 years ago, only 0.78% of 
the ratings awarded by the CARA Board have been changed on appeal.
    The Ratings Board discusses the rating of each motion picture in 
detail and conducts periodic general discussions of the ratings. The 
CARA ratings are intended to be used by American parents who currently 
have young children as a guide to determine which motion pictures are 
appropriate for their children. Accordingly, the Ratings Board 
membership and procedures are designed to provide ratings that reflect 
the current views of most American parents on what is appropriate for 
their children. To the extent there are changes in the views of 
American parents about the suitability of any type of motion picture 
content for their children, the Board's decisions are intended to 
reflect those changes.
    While we are mindful of the critical role parents play in the 
process of choosing films for their children, we are also aware that 
children may see the advertising for films that their parents may 
believe are not right for them. So we voluntarily submit all of our 
advertising materials, including billboards, trailers and television 
spots, to the MPAA's Advertising Administration for its certification 
that these materials are suitable for viewing by persons of all ages.
    The Advertising Administration is funded through fees collected by 
CARA for the rating of films. No separate fees are charged for 
approving advertising. All films that carry ratings are obliged to 
submit their advertising for approval to the Advertising 
Administration. There are very few appeals in comparison to the number 
of pieces of advertising submitted to the Advertising Administration 
for review. Most producers and distributors whose advertising 
submission is disapproved choose to revise the advertising and resubmit 
it, rather than to appeal.
    The Co-Chairs of CARA have appeared before church groups, bar 
organizations, academic institutions, and others to discuss the ratings 
system. They have contacted various newspapers, magazines, and movie 
web site operators on the Internet that publish information about 
motion pictures, to encourage them to use the CARA ratings in their 
publications and on their website. CARA also monitors reviews and other 
published information about motion pictures to make certain that the 
correct rating and reasons are given and CARA sends requests for 
correction when incorrect information is found.
    To publicize the Ratings System, CARA supplies thousands of posters 
describing the Ratings System to theaters and video retailers, to be 
displayed in the theater or in the store. Since 1997, approximately 
20,000 posters have been distributed to theaters and another 5,000 to 
video retailers.
    Motion picture theater owners, who co-founded the rating system in 
1968, were the first group in the entertainment industry to voluntarily 
enforce its guidelines. In the mid 1980's, as watching movies on 
videocassettes at home soared in popularity, video retailers joined 
theater owners in embracing the voluntary guidelines of the rating 
system. Parents who relied on the rating system to determine which 
films their children viewed in theaters found the information provided 
by the rating classifications equally helpful in home video. To 
facilitate its use, ratings are displayed on both the videocassette 
package and the cassette itself.
    The Video Software Dealers Association (VSDA), which is the major 
trade association for video retailers in the United States, has adopted 
a ``Pledge to Parents'' which strongly endorses the observance of the 
voluntary movie rating system by video retailers.
    It is crucial to make regular soundings to find out how the public 
perceives the rating program, and to measure the approval and 
disapproval of what they are doing. Nationwide scientific polls, 
conducted each year by the Opinion Research Corporation of Princeton, 
New Jersey, have consistently given the rating program high marks by 
parents throughout the land. The latest poll results show that 81% of 
parents with children under 13 found the ratings to be ``very useful'' 
to ``fairly useful'' in helping them make decisions for the moviegoing 
of their children. On the evidence of the polls, the rating system 
would not have survived if it were not providing a useful service to 
parents.
    At Sony Pictures Entertainment, only about one-half our films were 
rated ``R'' in the last few years. The other half were rated ``G'', 
``PG'', or PG-13. We do not distribute films rated NC-17. As those 
ratings suggest, we produce and distribute all kinds of films that, we 
hope, will appeal to all kinds of audiences, including families with 
young children. For example, last Christmas, we released to great 
success Stuart Little, a story about a mouse who was adopted by a human 
family. We also distributed another film, The Adventures of Elmo in 
Grouchland, featuring the ``Muppets'' characters. My point is that Sony 
Pictures produces and distributes all kinds of motion pictures, not 
just those that have drawn the attention of the FTC's study on ``R'' 
and PG-13 films that depict violence.
    Parents believe they should be the ones on the front line in 
deciding what films their children should see. They are not willing to 
cede that responsibility to anyone. They realize that every child is 
different and that a parent is best positioned to know whether his or 
her child is mature or sophisticated enough to handle a particular 
message.
    We believe the current movie rating system, augmented by the 
additional information that we and others provide to the public, gives 
parents the information they need and want to make an informed 
decision. I know that others who have appeared before this Committee 
disagree, claiming that parents somehow do not grasp what the ratings 
mean. Well, surveys demonstrate conclusively that parents do understand 
the rating system. They understand that a ``PG-13'' or ``R'' rating 
does not mean that a movie has been judged ``inappropriate'' for 
children, but, instead, that parents may find aspects of the film to be 
inappropriate for their children. They also understand that only an NC-
17 rating constitutes a statement by the distributor that a film is 
intended only for ``adults'' or is not suitable for children. In short, 
parents know the difference between a yellow light--a caution--and a 
red light--a prohibition.
    I believe that portions of the FTC narrative report operate from a 
mistaken premise that when a film is rated R, it is inappropriate for 
children under 17. That is not the case. Therefore, advertising those 
films rated R does not, as some suggest, undermine the rating system. 
In fact, advertising, with its emphasis on the ``R'' rating, reflects a 
determination that parents should be cautioned to look into the film 
before letting their children see it. The ``R'' rating is a helpful 
service to parents, who are the ones that ought to determine on a 
child-by-child basis whether a given film is appropriate. Let me give 
an example: our recent film about the American Revolution, The Patriot, 
was rated R for violence. Yet, I have spoken to parents of 13 and 14 
year olds who were most appreciative that their children saw this very 
inspiring film.
    Now you might say that it is self-serving for me to say that the 
film is appropriate for 14 year olds, but I want you to know that a 
wonderful independent source, writer Nell Minow, who calls herself the 
``Movie Mom,'' said the same thing. You can find this information on 
her website at www.moviemom.com.
    Similarly, a number of newspapers, including the Washington Post, 
carry a weekly column called The Family Filmgoer, by Jane Horwitz Ms. 
Horwitz lets parents know what current films are appropriate for 
different age groups. In her most recent column she advised parents 
that in her view nine different films were appropriate for children 
aged 15 or 16, even though all nine had been rated R at least in part 
for violence. There are independent sources advising parents that some 
(though certainly not all) films rated-``R'' for violence are indeed 
appropriate for some children under 17.
    Who makes that decision? The parents. Our job in the industry is to 
give them as much information as possible to help them make an informed 
decision. Independent writers like Nell Minow and Jane Horwitz help 
parents make decisions. But we in the industry can and will do more; we 
will more widely disseminate the reasons why a particular rating was 
given; this information is already on our website and we will put this 
information on video cassette boxes, in movie theaters and in ads.
    We are not here to say that all of our films are appropriate for 
everyone; we are here to say that we will give parents as much 
information as we can to decide if a given movie is appropriate for 
their children.
    However, because of the concerns raised by this Committee, the FTC, 
and others, we want to take additional steps to reinforce our rating 
system that many parents have come to rely on. We hope that these 
additional steps will help to make this information accessible to even 
more parents wanting to make these important decisions, as well as to 
address additional concerns:

    1. LEach company will request theater owners not to show trailers 
advertising films rated R for violence in connection with the 
exhibition of its G-rated films. In addition, each company will not 
attach trailers for films rated R for violence on G-rated movies on 
videocassettes or DVDs containing G-rated movies.

    2. LNo company will knowingly include persons under the age of 17 
in research screenings for films rated R for violence, or in research 
screenings for films which the company reasonably believes will be 
rated R for violence, unless such person is accompanied by a parent or 
an adult guardian.

    3. LEach company will review its marketing and advertising 
practices in order to further the goal of not inappropriately 
specifically targeting children in its advertising of films rated R for 
violence.

    4. LEach member company will appoint a senior executive compliance 
officer or committee to review on a regular basis the company's 
marketing practices in order to facilitate the implementation of the 
initiatives listed above.

    5. LThe MPAA will review annually how each member company is 
complying with the initiatives listed above.

    6. LThe MPAA will strongly encourage theater owners and video 
retailers to improve compliance with the rating system.

    7. LThe companies will seek ways to include the reasons for the 
ratings of films in its print advertising and official movie web sites 
for such films.

    8. LThe MPAA has established or participated in the establishment 
of the following web sites: ``mpaa.org''--``filmratings.com''--
parentalguide.org.'' ``Mpaa.org'', among other things, describes the 
rating system and includes a database listing almost every movie rated 
since the commencement of the rating system in 1968. 
``Filmratings.com'' is a separate site devoted exclusively to providing 
ratings information on all rated movies, including the reasons for the 
ratings on recent releases. ``Parentalguide.org'' was established by 
MPAA in conjunction with the electronic game, music, cable and 
television broadcast industries. The site is intended to provide 
parents with one central site where they can obtain information about 
each of the ratings systems that have been developed in those 
industries. To insure that this information reaches a wider audience, 
each company will link its official move web site to mpaa.org, 
filmratings.com and parentalguide.org.

    9. LHenceforth, each company will include on all packages of new 
rated releases for its videocassettes and DVDs the rating of such film 
and the reasons for the rating.

    10. LHenceforth, each company will include in the preface to its 
new rated releases for videocassettes and DVDs the reasons for the 
rating of the film, plus information about the filmratings.com web 
site.

    11. LThe MPAA and each company will strongly encourage theater 
owners to provide reasons for the ratings of films being exhibited in 
their theaters in their customer call centers.

    12. LEach company will furnish newspapers with the reasons for the 
ratings of each of their films in exhibition and will request that 
newspapers include those reasons in their movie reviews. The MPAA and 
each company will seek newspapers' cooperation in printing a daily 
column listing films in exhibition, their ratings and the reasons for 
the rating.

    We hope these initiatives will help to reinforce parents efforts in 
this area. Thank you for this opportunity to present these issues to 
the Committee. I will be glad to answer any questions.

    The Chairman. Thank you, Mr. Harris. Mr. Horn, welcome.

STATEMENT OF ALAN HORN, PRESIDENT AND CHIEF OPERATING OFFICER, 
                          WARNER BROS.

    Mr. Horn. Thank you. Good morning, Chairman McCain, Senator 
Hollings, distinguished Members of the Committee. My name is 
Alan Horn, and I am here today as the person responsible for 
the production, distribution, and marketing of feature films at 
Warner Bros. I am also here as a father of two young girls, 11 
and 12, and I believe as a socially responsible citizen. We 
have reviewed the FTC report, and I assure you that I am as 
concerned about the impact of marketing on our children as 
anyone in this room.
    What I do at Warner Bros. with regard to the motion picture 
process is not that much different than what was done at the 
studio 75 years ago. I work with writers, producers, directors, 
actors and actresses, as well as with marketing and 
distribution executives, to deliver what we hope will be 
quality and entertaining films to a worldwide audience.
    This is a creative process, and it does not lend itself to 
quantification easily. Films are not widgets or cans of beer or 
cigarettes. They are the collective voices and visions of the 
talented individuals who create them. They are meant to 
entertain us, to move us, amuse us, amaze us and thrill us and, 
at their finest, enrich our culture and our lives.
    While there are films that I may not like, or that you may 
not like, they are all protected by our Constitution. Having 
said that, I am not shy about denouncing what I believe to be 
gratuitous film violence, and have been known to ruffle a few 
filmmakers' feathers as I go about managing our movie business. 
But words like gratuitous and appropriate and excessive are 
subjective and relative, and every day I struggle with balance, 
if you will. I strongly believe there must be a great variety 
and diversity of films competing in the marketplace, and each 
deserves the opportunity to be discovered and enjoyed by an 
audience.
    The FTC report emphasizes that the marketing of films, not 
their content, is at issue, and though I fear that content is, 
indeed, the agenda of some, it is our marketing practices that 
I am here to address. But underlying the report is a flawed 
premise, that an R-rated film is not appropriate for anyone 
under 17.
    In truth, the ``R'' rating says that those under 17 cannot 
attend unless accompanied by an adult. It means that it is up 
to parents to determine the appropriateness of each film for 
their children. Obviously, we as film producers must provide 
parents with the information necessary to make those decisions, 
but there is nothing illegal or immoral or inappropriate about 
kids under 17 attending R-rated films if their parents allow 
them to do so.
    That being said, we applaud the hard work and well-
intentioned efforts of the FTC and believe this is a serious 
matter that deserves serious consideration. In fact, there is 
common ground between the report and Warner Bros.' own 
marketing practices. Young children have never been the focus 
of Warner Bros.' marketing efforts for R-rated films, and they 
never will be. Our primary target audience for R-rated films 
has always been and will always be those over 17.
    My job is to uphold this longstanding tradition of 
responsible and ethical marketing practices at Warner Bros., to 
be sensitive to our times and the concerns of our audiences, 
and to work with artists, producers, exhibitors, retailers, and 
the media to do our collective part in providing parents with 
the tools and support they need to make informed decisions 
about the films their children see.
    I reject any allegation that we are systematically or 
deliberately trying to circumvent our own rating system and the 
authority of parents. I am neither embarrassed nor do I 
apologize for anything in the report as far as Warner Bros.' 
practices are concerned, but there is always room for 
improvement.
    Toward that end, and in an effort to be responsive to the 
recommendations of the FTC report, we not only fully endorse 
the MPAA initiatives, but also have taken them to the next 
level, as delineated in the attachment to my testimony. We have 
chosen to reinforce and clearly define our practices by 
establishing our own self-compliant set of guidelines which are 
consistent with the overarching values established by Time 
Warner.
    More specifically, we will step up our vigilance in our 
media buys and in our marketing, using the FTC's definition of 
what constitutes a substantial portion of an audience, that is, 
35 percent of the measurable audience. In other words, we will 
not advertise our R-rated movies in venues where more than 35 
percent of the audience is under the age of 17.
    We will continue to be strong supporters of the MPAA rating 
system as a key tool for parents, but we will supplement the 
rating system and the letters with the reason for the rating. 
For example, we will use ``V'' for violence, as well as ``S'' 
for sexual content, and ``L'' for language on every single 
marketing mechanism, as well as on video cassettes and DVD 
packaging and the preface to the film.
    We believe the trailers, commercials, advertisements, 
publicity reviews and Internet sites should serve not only as 
methods for building interest in a film, but also as 
informative tools for parents, and we will not run trailers for 
R-rated movies with films that have either ``G'' or ``PG'' 
ratings.
    Finally, we are strong advocates of enforcing the rating 
system at the box office, and we will work effectively with our 
exhibitors to encourage and support their efforts in that 
regard.
    At the end of the day, ladies and gentlemen, after reading 
the FTC report, discussing it with my colleagues, including 
Chairman Barry Meyer of Warner Bros., we decided, well, either 
has merit or it does not, and we feel that it does, and either 
the recommendations make sense or they do not, and we feel they 
do, and that is why we are trying to be responsive as 
specifically as we can.
    Warner Bros.' past practices and the attached guidelines 
demonstrate with clarity and specificity the sincerity of our 
commitment to our creative pursuits, to helping parents, 
serving our audiences, and to addressing the concerns expressed 
in the FTC report. Our professional obligation is to entertain. 
Our moral obligation is to entertain responsibly, and at Warner 
Bros. we pledge to do both.
    Thank you.
    [The prepared statement of Mr. Horn follows:]

            Prepared Statement of Alan Horn, President and 
                 Chief Operating Officer, Warner Bros.
    I am here today as the person responsible for the production, 
distribution and marketing of feature films at Warner Bros. I am also 
here as the father of two young girls--11 and 12--and, I believe, as a 
socially responsible citizen. We have reviewed the FTC Report and I 
assure you that I am as concerned about the impact of our marketing on 
children as anyone in this room.
    What I do at Warner Bros. with regard to the motion picture process 
is not that much different than what was done at the studio 75 years 
ago. I work with writers, directors, producers, actors and actresses as 
well as with marketing and distribution executives to deliver what we 
hope will be quality films to a worldwide audience. This is a creative 
process and it simply does not lend itself to quantification. Films are 
not widgets, or cans of beer, or cigarettes--they are the collective 
voices and visions of the talented individuals who create them. They 
are meant to entertain us, to move us, amuse us, amaze and thrill us . 
. . and at their finest . . . enrich our culture and our lives. While 
there are films that I may not like, or you may not like, they are all 
protected by our constitution.
    Having said that, I am not shy about denouncing what I believe to 
be gratuitous film violence, and have been known to ruffle a few 
filmmaker's feathers as I go about managing our movie business. But 
words like gratuitous and appropriate and excessive are relative, and 
every day I struggle with balance, if you will. I strongly believe that 
there must be a great variety and diversity of films competing in the 
marketplace and each deserves the opportunity to be discovered and 
enjoyed by an audience.
    The FTC Report emphasizes that the marketing of films, not their 
content, is at issue. And though I fear that content is indeed the 
agenda of some, it is our marketing practices that I am here to 
address. But underlying the Report is a flawed premise--that an R-rated 
film is not appropriate for anyone under 17. In truth, the ``R'' rating 
says that those under 17 cannot attend unless accompanied by an adult. 
It means that it is up to parents to determine the appropriateness of 
each film for their children. Obviously, we as film producers must 
provide parents with the information necessary to make those decisions. 
But there is nothing illegal or immoral or inappropriate about kids 
under 17 attending R-rated films . . . if their parents allow them to 
do so.
    That being said, we applaud the hard work and well-intentioned 
efforts of the FTC and believe this is a serious matter that deserves 
serious consideration. In fact, there is considerable common ground 
between the Report and Warner Bros.' own marketing practices. Young 
children have never been the focus of Warner Bros.' marketing efforts 
for R-rated films, and they never will be. Our primary target audience 
for R-rated films has always been, and will always be, those over 17.
    My job is to uphold this longstanding tradition of responsible and 
ethical marketing practices at Warner Bros.; to be sensitive to our 
times and the concerns of our audiences; and to work with artists, 
producers, exhibitors, retailers and the media to do our collective 
part in providing parents with the tools and support they need to make 
informed decisions about the films their children see.
    I reject and resent any allegation that we systemically and 
deliberately try to circumvent our own ratings system and the authority 
of parents. I am neither embarrassed nor do I apologize for anything in 
the Report as far as Warner Bros.' practices are concerned, but there 
is always room for improvement.
    Towards that end, and in an effort to be responsive to the 
recommendations of the FTC Report, we not only fully endorse the MPAA 
initiatives, but also have taken them to the next level as delineated 
in the attachment to this testimony. We have chosen to reinforce and 
clearly define our practices by establishing our own self-compliant set 
of guidelines, which are consistent with the overarching values 
established by Time Warner.
    We will step up our vigilance in our media buys and in our 
marketing, using the FTC's definition of what constitutes a 
``substantial'' portion of an audience (35% of the measurable 
audience). We will continue to be strong supporters of the MPAA rating 
system as a key tool for parents, and will supplement the rating letter 
with the reason for the rating (in instances of violence as well as 
sexual content and language) on every single marketing mechanism as 
well as on videocassette and DVD packaging and the preface to the film. 
We believe that trailers, commercials, advertisements, publicity, 
reviews and Internet sites should serve not only as methods for 
building interest in a film, but also as informative tools for parents. 
Moreover, we are strong advocates of enforcing the rating system at the 
box office, and will work actively with our exhibitors to encourage and 
support their efforts in that regard.
    Warner Bros.' past practices and the attached guidelines 
demonstrate the sincerity of our commitment to our creative pursuits, 
to helping parents, to serving our audiences and to addressing the 
concerns expressed in the FTC Report. Our professional obligation is to 
entertain. Our moral obligation is to entertain responsibly. At Warner 
Bros., each of us feels a personal obligation to do both.
Warner Bros. Pictures Marketing Guidelines
    Warner Bros. Pictures will continue its commitment to the 
responsible marketing of all the films produced and distributed by the 
Company. Warner Bros. Pictures' target demographic for R-rated films 
will continue to be audiences 17 and over. The following is meant to 
either strengthen or expand upon the Company's current policies and 
guidelines to help ensure self-compliance and to continue to help 
parents make informed decisions about films their children see.
Warner Bros. Pictures
   will not market its R-rated films in print or television 
        where a substantial portion of the audience is under the age of 
        17. For outlets that will not ``guarantee'' time-slot 
        designation, Warner Bros. Pictures will request that spots for 
        R-rated movies be placed only in appropriate programs, using 
        the substantial audience definition as the perimeter for 
        acceptable placement. (Substantial is defined as more than 35% 
        of the measurable audience.)

   will not market its R-rated films to youth organizations or 
        venues where one can reasonably and accurately measure that a 
        substantial portion of that population is under the age of 17 
        (e.g., scouting groups, clubs, in schools).

   will not allow any one under the age of 17 into research 
        screenings or focus groups for R-rated films (or for those 
        films reasonably believed will be rated R), unless accompanied 
        by a parent or an adult guardian.

   will not enter into promotions or toy-driven product tie-ins 
        targeted to children for R-rated films.

   will not license, manufacture or allow to be manufactured 
        merchandise aimed at children for R-rated films.

   will not attach trailers for R-rated films to ``G'' or PG-
        rated films. Warner Bros. Pictures will advise theater owners 
        not to show trailers for R-rated films in connection with the 
        exhibition of its ``G'' or PG-rated films.
Warner Bros. Pictures . . .

   will add the supplemental language designating the reason 
        for ratings on:

      Lall print advertising of a \1/2\ page or greater; for smaller 
ads the designation will simply be ``Rv'' or ``Rs'' or ``Rl.'' The size 
of reason letter (v, s or l) will be no less than 50% of the size of 
the rating identifying letter (``R'');

      all trailers;

      all on-air spots;

      Lall press materials (newspapers and magazines will also be 
encouraged to carry ratings reasons in their stories and reviews);

      Lall marketing materials (standees, poster, one sheets, etc.);

      all websites under control of the Company.

   will carry ratings reasons in the preface as well as on all 
        packaging of all new videocassette and DVD releases

   will link all of its websites to such ratings' information 
        sites as MPAA.org, parentalguide.org and filmratings.com (the 
        latter will also be displayed on the preface of videos and 
        DVDs).

   will work with the networks, creative guilds, parents 
        groups, the media and the MPAA to further educate parents about 
        the ratings system.

   will continue to encourage and support film exhibitors in 
        their efforts to improve compliance of the ratings system, 
        working with theatre owners to create such compliance programs 
        as id checks at the box office, incentives for diligent 
        employees and spot checks at the auditorium doors.

   will continue to closely monitor all the marketing, 
        advertising and research practices of its in-house operations 
        as well as those of third-party vendors. As a regular part of 
        its self-regulating practices, Warner Bros. and Warner Bros. 
        Pictures executives will undertake an annual review to ensure 
        its practices are consistent with the aforementioned 
        guidelines.

    The Chairman. Thank you, Mr. Horn. Welcome back, Mr. Iger.

    STATEMENT OF ROBERT IGER, PRESIDENT AND CHIEF OPERATING 
                OFFICER, THE WALT DISNEY COMPANY

    Mr. Iger. Mr. Chairman, Members of the Committee, good 
morning. I am Bob Iger, president and chief operating officer 
of the Walt Disney Company. After reading the transcript of 
your last hearing on this subject I was struck by a number of 
statements you made. Let me quote a few of them.
    How difficult the challenges are for parents, much more 
difficult than in our generation in raising our own children. 
To the degree that there is a false advertising process, or 
there is marketing to children, that is egregious. It is 
unacceptable, and we should all be against it.
    But on the other hand, let's not sit here and blame it all 
on one entity. Responsibilities accompany rights. You cannot 
regulate decency or legislate taste. What we are asking for is 
not censorship, but simply, better citizenship. The buck always 
stops at the chief executive officer and the president.
    Mr. Chairman, I could not agree more with all of those 
sentiments, especially the last one. The buck does indeed stop 
with the people at the top, which is why I am here today to 
testify in behalf of the Walt Disney Company. We are proud of 
our company's record as a corporate citizen. We are also proud 
of the wonderful, rich array of family friendly, high quality 
entertainment our company creates and distributes.
    But clearly there were times during the period discussed in 
the FTC report when we allowed competitive zeal to overwhelm 
sound judgment, and appropriate standards in the marketing of 
some of our R-rated films released by Touchstone, Hollywood, 
Miramax, and Dimension Pictures. We cannot on the one hand tout 
the effectiveness of our television commercials when we sell 
time to our sponsors and on the other hand disavow the 
effectiveness of our movie marketing.
    As many of you are aware, we have recently undertaken full 
review of our policies and practices with regard to the 
marketing of R-rated films, and have publicly announced a set 
of guidelines to govern the future marketing of all R-rated 
films. We believe these guidelines are a serious and 
significant response to the issues raised in the FTC report.
    To make sure these guidelines are fully adhered to, we have 
instituted an internal compliance process involving a monthly 
review of their implementation by Disney's general counsel. The 
guidelines will be under constant review and, if we find a more 
stringent approach is called for, we will adjust them wherever 
necessary as we go forward.
    Our guidelines are framed in an acknowledgement that the 
world has changed for America's families. There is no question 
that parents face increasing challenges in monitoring the 
content their children are exposed to. We believe the best way 
to address this reality is to be a good partner to America's 
parents, and there are two ways to accomplish this.
    One is to provide a steady flow of family friendly 
entertainment under the Disney banner, and the other is to be 
more responsible in the marketing of a non-Disney 
entertainment. This second point is what our guidelines are all 
about. By marketing R-rated movies more responsibly, we will be 
meaningfully assisting parents in deciding what film 
entertainment is appropriate for their children.
    Along these lines, we would like to state for the record 
our support for the creation of a universal rating system that 
would provide a clear and consistent guide across all 
entertainment platforms. We believe that a universal system 
would represent a significant step toward helping parents make 
informed decisions about the entertainment their children see 
and hear.
    This could be achieved by extending the current MPAA movie 
rating system to television, video games, and music. The MPAA 
system is one that works. People are familiar with it, and they 
understand it. While we acknowledge the practical difficulty of 
implementing a universal system, our company intends to be a 
constructive and ardent industry voice in overcoming the 
hurdles to make this happen.
    I would like to close by citing one more quote from the 
September 13 hearing. Mr. Chairman, in your opening remarks you 
said the industry has a responsibility to refrain from making 
much more difficult a parent's responsibility to see that their 
children grow up healthy in mind and body. We emphatically 
agree with this sentiment, but we believe we can do a better 
job than simply refraining from making a parent's job more 
difficult and instead be constructive partners with parents in 
making their jobs easier.
    Thank you very much.
    [The prepared statement of Mr. Iger follows:]
   Prepared Statement of Robert Iger, President and Chief Operating 
                    Officer, The Walt Disney Company
    Mr. Chairman and Members of the Committee, good morning.
    After reading the transcript of your last hearing on this subject, 
I was struck by a number of statements you made.
    Let me quote a few of them:
    ``How difficult the challenges are for parents, much more difficult 
than in our generation and raising our own children.''
    ``To the degree that there is a false advertising process or that 
there's a marketing to children, that's egregious. It's unacceptable, 
and we should all be against it. But on the other hand, let's not . . . 
sit here and blame it all on one entity.''
    ``Responsibilities accompany rights.''
    ``You cannot regulate decency or legislate taste. What we're asking 
for today is not censorship but simply better citizenship.''
    ``The buck always stops at the chief executive officer and 
president.''
    I could not agree more with all of these sentiments, especially the 
last one. The buck does indeed stop with the people at the top, which 
is why I am here today to testify on behalf of The Walt Disney Company.
    We are proud of our company's record as a corporate citizen. And we 
are also proud of the wonderful and rich array of family-friendly, high 
quality entertainment our company creates and distributes.
    But, clearly, there were times during the period discussed in the 
FTC report when we allowed competitive zeal to overwhelm sound judgment 
and appropriate standards in the marketing of some of our R-rated films 
released by Touchstone, Hollywood, Miramax and Dimension Pictures. We 
cannot, on the one hand, tout the effectiveness of our television 
commercials when we sell time to our sponsors, and on the other hand 
disavow the effectiveness of our movie marketing. And so, we are 
accepting responsibility for instances of inappropriate marketing of R-
rated films and we are now taking measures to see that this does not 
happen again.
    As many of you are aware, we have recently undertaken a full review 
of our policies and practices with regard to the marketing of R-rated 
films and have publicly announced a set of guidelines to govern the 
future marketing of all Touchstone, Hollywood, Miramax and Dimension R-
rated films.
    We believe these guidelines are a serious and significant response 
to the issues raised in the FTC report. To make sure that these 
guidelines are fully adhered to, we have instituted an internal 
compliance process involving a monthly review of their implementation 
by Disney's general counsel. In this way, the guidelines will be under 
constant review and, if we find that a more stringent approach is 
called for, we will adjust them wherever necessary as we go forward.
    Our guidelines are framed in an acknowledgment that the world has 
changed for America's families. There is no question that parents face 
increasing challenges in monitoring the content their children are 
exposed to. We believe the best way to address this reality is to be a 
good partner to America's parents. There are two ways to accomplish 
this--one is to provide a steady flow of family-friendly entertainment 
under the Disney banner and the other is to be more responsible in the 
marketing of our non-Disney entertainment.
    This second point is what our guidelines are about. By marketing R-
rated movies more responsibly, we will be meaningfully assisting 
parents in deciding what film entertainment is appropriate for their 
children.
    Along these lines, we would like to state for the record today our 
support for the creation of a universal ratings system that would 
provide a clear and consistent guide across all entertainment 
platforms. We believe that a universal system would represent a 
significant step toward helping parents make informed decisions about 
the entertainment their children see and hear.
    This could be achieved by extending the MPAA movie rating system to 
television, video games and music. The MPAA system is one that has 
worked; people are familiar with it and they understand it. While we 
acknowledge the practical difficulty of implementing a universal 
system, our company intends to be a constructive and ardent industry 
voice in overcoming the hurdles to make it happen.
    I would like to close by citing one more quote from the September 
13 hearing.
    Mr. Chairman, in your opening remarks at that hearing you said that 
the industry has a ``responsibility to refrain from making much more 
difficult a parent's responsibility to see that their children grow up 
healthy in mind and body.''
    We emphatically agree with this sentiment--but we believe that we 
can do better than simply ``refraining from making a parent's job more 
difficult'' . . . and instead be constructive partners with parents in 
making their job easier.
    Thank you for your time.

    The Chairman. Thank you, Mr. Iger. Mr. McGurk, welcome.

 STATEMENT OF CHRIS McGURK, VICE CHAIRMAN AND CHIEF OPERATING 
                          OFFICER, MGM

    Mr. McGurk. Good morning, Chairman McCain, Senator 
Hollings, Members of the Committee. On behalf of MGM and as a 
parent of three children ages 15, 12, and 7, I want to thank 
the Committee for focusing on this issue of concern to so many 
of us.
    Perhaps the best use of my time today is not to dwell on 
the role of parents in this issue, or to reiterate the 
importance of the First Amendment. Those are topics you already 
know and appreciate. Instead, I would like to talk about some 
of the causes of the marketing problems referenced in the FTC 
report, the measures we at MGM implemented to address those 
problems long before the report was distributed, and the 
additional steps we intend to take to further address the 
Committee's and our concerns about this issue.
    I would like to emphasize that we at MGM are very committed 
to resolving this issue. MGM enjoys the unique position of 
being the last major American-owned motion picture company that 
is not part of a media conglomerate with cable, broadcast, or 
music interests. Therefore, our company currently concentrates 
almost exclusively on the movie-going audience. With that in 
mind, here is what MGM and our other important production 
label, United Artists, are implementing to address this issue.
    First, 18 months ago our company began a sweeping 
management change and turn-around that gave new direction to 
MGM and United Artists. That management change gave us a unique 
opportunity to critically review from the ground up many of the 
difficulties that arise in the business of producing and 
marketing movies.
    Our review process identified that during the lengthy 
evolution of a film, a communications and coordination gap 
sometimes occurs among the production, marketing, and 
distribution divisions within a studio, and between the studio 
and filmmakers. As a result, completed motion pictures 
sometimes do not exactly conform to the type of film the studio 
believed it was making when it originally greenlit the project.
    In addition, completed pictures often appeal to an audience 
different from the one they were originally supposed to reach. 
Finally, the marketing of a completed film can sometimes be 
directed toward an audience for which the picture should have 
been made rather than the audience for which it was actually 
made.
    We believe that several instances cited by the FTC in which 
R-rated films were targeted to a young audience are an 
outgrowth of this industry-wide problem. Therefore, in 1999 we 
implemented a completely new and carefully designed 
greenlighting procedure for our films. Currently we do not 
greenlight any film until all of the relevant senior executives 
in the company from all disciplines, production, marketing, 
distribution, video, television, finance, and legal, have 
together critically reviewed all aspects of production and 
marketing for a project. This process results in a timely and 
clear understanding across all divisions of our company of the 
film's content, what we want the target audience to be, what 
the rating will be, and how we will market the film.
    Equally important, in 1999 we began holding what we call 
focus meetings with each director and producer on all of our 
films before the start of production. These meetings were 
designed to ensure that there is complete agreement between the 
studio and the filmmakers regarding the content of the film, 
the target audience for the film, and its rating. There have 
been occasions when we have decided not to use a particular 
director as a result of these meetings.
    These new initiatives have gone a long way to alleviate the 
coordination issues in the production and marketing process 
that I described a moment ago. However, even with improved 
procedures and the best of intentions, we may still find 
ourselves with films that unfortunately end up not as expected 
in either their content or their audience appeal.
    In one instance, we were concerned that an R-rated science 
fiction film produced by MGM's prior management would appeal to 
a younger audience. We cut the film to a PG-13, even though the 
company had expended significant sums of money on the previous 
R-rated cut, and directed our marketing efforts in an 
appropriate manner for the PG-13 rating.
    In another instance, an R-rated film that was produced by 
prior management and delivered to us after the management 
change in 1999 contained a level of violence and other content 
so objectionable that we refused to release it and sold it back 
to the producer at a significant financial loss to MGM.
    In addition to the initiatives I just described, last year 
we also instituted the policy of not permitting anyone under 17 
to attend our test screenings unless accompanied by a parent or 
adult guardian.
    Another key factor in the recent turn-around at MGM United 
Artists is a set of business principles that we implemented in 
1999 and obligated all of our employees to follow. It is 
inconsistent with these business principles to target R-rated 
films against an underage audience, and we already appointed a 
Compliance Committee within our company to monitor our 
marketing activities which meets on a biweekly basis.
    Finally, I want to emphasize that this is a very complex 
issue, involving many groups with shared responsibilities, not 
just the motion picture studies, but theater owners, retailers, 
and television and cable networks, all of whom need to take a 
carefully disciplined and responsible approach to give our most 
important partners on this issue, parents, including this 
parent, the information and tools they need to decide what is 
appropriate for their children.
    I appreciate the opportunity to address this very important 
issue with the Committee. Thank you very much.
    [The prepared statement of Mr. McGurk follows:]

         Prepared Statement of Chris McGurk, Vice Chairman and 
                      Chief Operating Officer, MGM
    Good morning Chairman McCain, Senator Hollings, Members of the 
Committee. On behalf of MGM, and as a parent of three children ages 15, 
12 and 7, I want to thank the Committee for focusing on this issue of 
concern to so many of us.
    Perhaps the best use of my time today is not to dwell on the role 
of parents in this issue or to reiterate the importance of the First 
Amendment. Those are topics you already know and appreciate. Instead, I 
would like to talk about some of the causes of the marketing problems 
referenced in the FTC report, the measures we at MGM implemented to 
address those problems long before the report was distributed and the 
additional steps we intend to take to further address the Committee's--
and our--concerns about this issue.
    I would like to emphasize that we at MGM are very committed to 
resolving this issue. MGM enjoys the unique position of being the last 
major American-owned motion picture company that is not part of a media 
conglomerate with cable, broadcast or music interests. Therefore, our 
company currently concentrates almost exclusively on the movie-going 
audience.
    With that in mind, here is what MGM and our other important 
production label, United Artists, are implementing to address this 
issue:
    First, 18 months ago, our company began a sweeping management 
change and turnaround that gave new direction to MGM and United 
Artists. That management change gave us the unique opportunity to 
critically review from the ground up many of the difficulties that 
arise in the business of producing and marketing movies.
    Our review process identified that, during the lengthy evolution of 
a film, a communications and coordination gap sometimes occurs among 
the production, marketing and distribution divisions within a studio, 
and between the studio and filmmakers. As a result, completed motion 
pictures sometimes do not exactly conform to the type of film the 
studio believed it was making when it originally greenlit the project. 
In addition, completed pictures often appeal to an audience different 
from the one they were originally supposed to reach. Finally, the 
marketing of a completed film can sometimes be directed toward an 
audience for which the picture should have been made rather than the 
audience for which it was actually made.
    We believe that several instances cited by the FTC in which R-rated 
films were targeted to a young audience are an outgrowth of this 
industry-wide problem.
    Therefore, in 1999, we implemented a completely new and carefully 
designed greenlighting procedure for our films. Currently, we do not 
greenlight any film until all of the relevant senior executives in the 
company from all disciplines--production, marketing, distribution, 
video, television, finance and legal--have together critically reviewed 
all aspects of production and marketing for a project. This process 
results in a timely and clear understanding across all divisions of our 
company of the film's content, what we want the target audience to be, 
what the rating will be and how we will market the film.
    Equally important, in 1999 we began holding what we call ``focus 
meetings'' with each director and producer on all of our films before 
the start of production. These meetings are designed to ensure that 
there is complete agreement between the studio and the filmmakers 
regarding the content of the film, the target audience for the film, 
and its rating. There have been occasions when we have decided not to 
use a particular director as a result of these meetings.
    These new initiatives have gone a long way to alleviate the 
coordination issues in the production and marketing process that I 
described a moment ago. However, even with improved procedures and the 
best of intentions, we may still find ourselves with films that, 
unfortunately, end up not as expected in either their content or 
audience appeal. In one instance, we were concerned that an R-rated 
science-fiction film produced by MGM's prior management would appeal to 
a younger audience. We cut the film to a PG-13 even though the company 
had expended significant sums of money on the previous R-rated cut and 
directed our marketing efforts in an appropriate manner for the PG-13 
rating.
    In another instance, an R-rated film that was produced by prior 
management and delivered to us after the management change in 1999 
contained a level of violence and other content so objectionable that 
we refused to release it and sold it back to the producer at a 
significant financial loss to MGM.
    In addition to the initiatives I just described, last year we also 
instituted the policy of not permitting anyone under 17 to attend our 
test screenings unless accompanied by a parent or adult guardian.
    Another key factor in the recent turnaround at MGM and United 
Artists is a set of business principles that we implemented in 1999 and 
obligated all of our employees to follow. It is inconsistent with these 
business principles to target R-rated films against an underage 
audience. And we have already appointed a compliance committee within 
our company to monitor our marketing activities.
    Finally, I want to emphasize that this is a very complex issue 
involving many groups with shared responsibilities--not just the motion 
picture studios but theater owners, retailers, television and cable 
networks, and advertisers--all of whom need to take a carefully 
disciplined and responsible approach to give our most important 
partners on this issue--parents, including this parent--the information 
and tools they need to decide what is appropriate for their children.
    I appreciate the opportunity to address this very important issue 
with the Committee.
    Thank you very much.

    The Chairman. Thank you, Mr. McGurk. Mr. Parkes.

                  STATEMENT OF WALTER PARKES, 
                    CO-HEAD, DREAMWORKS SKG

    Mr. Parkes. Thank you, Mr. Chairman. I am pleased to be 
here representing Dreamworks, but I am also here as a parent of 
two children and as someone who shares the Committee's interest 
in this issue. In reviewing the recommendations and findings in 
the Federal Trade Commission's report, I believe there are 
constructive actions we as an industry can take in response to 
the concerns and issues you have raised.
    I agree we must be more diligent in providing information 
to parents to help them make educated choices about the movies 
their children may or may not see. I also agree that children 
should not be targeted in the marketing of movies that were 
made for more mature audiences.
    You have before you today a document that has been prepared 
in concert with the MPAA and specific actions concerning films 
rated R for violence. We embrace these industry-wide 
initiatives, and will work closely with our colleagues in the 
industry and in the MPAA in their implementation.
    I do, however, want to stress that it is the industry and, 
in fact, the individual companies themselves that must take the 
leadership role in implementation of these recommendations. I 
would like to talk about a few of our company's releases to 
illustrate why I believe this is the case.
    Now, as a relatively new studio, we have released only nine 
R-rated films to date. I believe we have acted in a responsible 
manner in marketing these films. We have been conscious of and 
sensitive to not inappropriately marketing these films to 
children, particularly those that were rated R for violence. 
However, we must remember that not all R-rated films are 
created equal. When these movies are released, our marketing 
department must take into careful consideration not just their 
rating but their content.
    Now, a case in point is Saving Private Ryan. This was a 
World War II drama that depicted battle in a very graphic and 
uncompromising way, which justifiably earned it an ``R'' rating 
for violence. Despite its rating, the film is deemed by many 
parents and educators to be appropriate for certain younger 
adults because of its historical significance.
    Nonetheless, Dreamworks, along with Steven Spielberg, the 
film's director, took to the airwaves to warn potential 
audiences of its violent content. In other words, this was a 
case when we went beyond accepted guidelines because we felt 
that the rating itself did not provide sufficient information.
    Now, on the other hand, consider another of our films that 
was rated R for violence, Amistad, which brought to life the 
true story of a struggle for freedom that all but faded from 
the pages of American history. While we did not target 
teenagers in our television advertising, we did work with 
educators who create study guides regarding the Amistad 
incident which were made available to senior classes in high 
school.
    Now, could this be construed as marketing a film rated R 
for violence to teenagers? Well, perhaps, but I doubt anyone in 
this room would argue against making a young adult audience 
aware of Amistad or allowing them to see it with parental 
supervision.
    Again, take American Beauty, which won the Oscar for Best 
Picture last year. Despite the film's artistry, it contains 
themes that are clearly inappropriate for young teenagers, and 
the film was marketed accordingly.
    The point is, there can be instances when ``R'' rating for 
violence should not preclude a teenager from being exposed to 
the advertising of a film or from seeing that film, provided 
that it is with the parent's full and knowledgeable consent. 
Each R-rated film is unique, and therefore presents unique 
marketing challenges. Our job and that of the other studios is 
to meet those challenges responsibly and to provide parents 
with information to make an educated decision.
    In closing, I want to reiterate that Dreamworks has not and 
will not inappropriately target children in our advertising of 
films rated R for violence, but the responsibility of ensuring 
that children ultimately view films that are age-appropriate 
must ultimately be shared by the studios, networks, exhibitors, 
and most importantly, the parents themselves.
    Thank you.
    [The prepared statement of Mr. Parkes follows:]

      Prepared Statement of Walter Parkes, Co-Head, Dreamworks SKG
    Thank you, Mr. Chairman, I am pleased to be here representing 
DreamWorks--but I'm also here as a parent of two children, and as 
someone who shares the Committee's interest in this issue.
    In reviewing the recommendations and findings in the Federal Trade 
Commission's (FTC) report, I believe there are constructive actions we 
as an industry can take in response to the concerns and issues you've 
raised. I agree that we must be more diligent in providing information 
to parents to help them make educated choices about the movies their 
children may or may not see. I also agree that children should not be 
targeted in the marketing of movies that were made for more mature 
audiences. You have before you today a document that has been prepared 
in concert with the MPAA on specific actions concerning films rated R 
for violence. We embrace these industry-wide initiatives and we'll work 
closely with our colleagues in the industry and the MPAA in their 
implementation.
    I do, however, want to stress that it is the industry--in fact, the 
individual company's themselves--that should take the leadership role 
in the implementation of these recommendations. I'd like to talk about 
a few of our company's releases to illustrate why I believe this to be 
the case.
    As a relatively new studio we have released only nine R-rated films 
to date. I believe we have acted in a responsible manner in marketing 
these films. We have been conscious of, and sensitive to, not 
inappropriately marketing these films to children, particularly those 
that were rated R for violence. However, we must remember that not all 
R-rated films are created equal. When these movies are released, our 
marketing department must take into careful consideration not just 
their rating--but their content.
    A case in point is Saving Private Ryan. This was a World War II 
drama that depicted battle in a very graphic and uncompromising way, 
which justifiably earned it an R-rating for violence. Despite its R-
rating, the film was deemed by many parents and educators to be 
appropriate for certain younger adults because of its historical 
significance. Nonetheless, DreamWorks, along with Steven Spielberg, the 
film's director, took to the airwaves to warn potential audiences of 
its violent content; in other words, this was a case when we went 
beyond accepted guidelines because we felt that the rating itself did 
not provide sufficient information.
    On the other hand, consider another of our films that was R-rated 
for violence, Amistad, which brought to life a true story of the 
struggle for freedom that had all but faded from the page of American 
history. While we didn't target teenagers in our advertising, we did 
work with educators to create study guides regarding the Amistad 
incident which were made available to senior classes in High School. 
Could this be construed as marketing a film rated R for violence to 
teenagers? Perhaps--but I doubt anyone in this room would argue against 
making a young adult audience aware of the Amistad, or allowing them to 
see it with parental supervision.
    Then again, take American Beauty, which won the Oscar for Best 
Picture last year. Despite the film's artistry, it contains scenes and 
themes that are clearly inappropriate for younger teenagers--and was 
marketed accordingly. The point is, there can be instances when the 
``R'' rating for violence should not preclude a teenager from being 
exposed to the advertising of a film, or from seeing that film--
provided that it is with parents' full and knowledgeable consent. Each 
R-rated film is unique, and therefore presents unique marketing 
challenges. Our job is to meet those challenges responsibly, and to 
provide parents with information to make an educated decision.
    In closing, I want to reiterate that DreamWorks has not and will 
not inappropriately target children in our advertising of films rated R 
for violence. But, the responsibility of ensuring that children view 
films that are age appropriate must ultimately be shared by the 
studios, networks, exhibitors and most importantly, parents. Thank you.

    The Chairman. Thank you, sir. Ms. Snider, welcome.

             STATEMENT OF STACY SNIDER, CHAIRMAN, 
                       UNIVERSAL PICTURES

    Ms. Snider. Thank you. Good morning, Chairman McCain, 
Senator Hollings, Members of the Senate Commerce Committee. My 
name is Stacy Snider, and I am chairman of Universal Pictures, 
a film company that has a rich and legendary history.
    Universal Pictures creates films that entertain people 
around the world. In a given year and over the course of many 
years our films run the gamut. Our library includes everything 
from The Mummy to Schindler's List, and all varieties and 
genres in between. Our films make people laugh, they make 
people cry, they help people walk in others' shoes, and in so 
doing often shed light on important and difficult social 
issues.
    This past year alone, Universal Pictures released Erin 
Brockovich, U-571, The Nutty Professor II and, coming this 
Thanksgiving, Dr. Seuss' How the Grinch Stole Christmas. This 
cross-section of films reflects the fact that we make our 
movies for a global audience that includes people of different 
ages and backgrounds.
    At the outset, I want the Committee to understand that we 
view your views and those of the Federal Trade Commission 
seriously. This report is comprehensive and important. It has 
already received our attention, and it will continue to receive 
ongoing study. In fact, since the release of the report I have 
met several times with my colleagues at the Motion Picture 
Group. Our discussions have been lively and provocative. Many 
of the ideas that we discussed are on the list of industry 
initiatives presented to the Committee earlier today. They will 
be adopted by the team at Universal Pictures, and will be 
supplemented by other actions both to help parents and to 
refine the marketing of films.
    When it comes to making appropriate choices for children, 
my colleagues and I must balance and weigh the same factors 
that are presented to all parents. I have two daughters myself, 
Katie and Natalie, and I have to review the same sources in 
order to make appropriate choices for them.
    The MPAA rating is my first stop. Virtually every parent is 
familiar with the movie rating system. We support the system, 
and the many web sites that have been created recently to 
bolster it. I can consult parentalguide.com, for example, to 
get descriptions of the movie, TV, video game and music 
ratings. Filmratings.com and MPAA.org enable me to read 
specific explanations of ratings for specific films.
    Next, I will consult the Family Filmgoer column of my local 
newspaper. These columns, which are carried throughout the 
country, provide useful descriptions not only of objectionable 
scenes but also of moral and social issues that my kids may or 
may not be prepared for. I know as a film executive that these 
columns, like all movie reviews, have a tremendous impact on 
our audiences.
    And finally, I can rely on other parents' word of mouth 
recommendations. These resources help parents in their role as 
judges of what their children should and should not see, and at 
Universal we support these resources and others like the V-chip 
which help parents fulfill their responsibility.
    Our commitment to the rating system and to the industry's 
use of the V-chip means that some people who would otherwise 
see Universal movies and TV programs will be unable to do so. 
That means a loss of revenue for the studio. Nevertheless, we 
believe that these tools that support parents should be 
utilized fully.
    I appreciate that parents may often feel overwhelmed by 
contemporary culture. However, everything from the local movie 
critic to ratings information on the Internet means that 
parents have more information than ever on which to base these 
decisions. When it comes to tools and information for parents, 
we are living in an age of abundance.
    In a free society, however, it is impossible to completely 
restrict advertising to people 17 and older. No matter how 
carefully we target our advertising some people under 17 will 
inevitably see ads for R-rated movies in specific media with 
broad demographic reach. In fact, their parents or adult 
guardians might choose to attend those movies with them.
    Monday Night Football is a classic example of that, and 
also a good place to advertise movies. Here we may market 
toward men and young adults, but some younger football fans 
whose parents let them watch will also see our ads. By the way, 
they will also see ads for other products their parents might 
not want them to consume.
    When younger fans see an advertisement for an R-rated film, 
it is important to keep a few things in mind. First, the ad for 
the R-rated film is not itself R-rated. To the contrary, it is 
approved by the MPAA for viewing by a general audience, and it 
carries the restriction that younger film-goers can only attend 
if they are accompanied by a parent or guardian. Incidentally, 
we do not condone underage film-goers sneaking into R-rated 
films, and we support the recent pledge by theater owners to do 
a better job checking ID's and enforcing the ratings.
    Second, there are many films we released in the recent past 
which were R-rated, but that would be more than appropriate for 
certain young film-goers to see with their parents. I am 
referring to thought-provoking stories like In the Name of the 
Father, The Hurricane, or Schindler's List, which derived their 
power from their intensity and still would be suitable viewing 
for certain mature children.
    In balancing all of these complex issues, our 
responsibility to parents, to film enthusiasts, and to the 
community at large, we must also include our commitment to 
support the artistic freedom of writers, directors, actors, and 
all other people who collaborate in the process of making 
movies.
    Before I close, I want to assure the Committee that upon 
returning to my office my colleagues and I will continue to 
invest time addressing the issues raised by the FTC and members 
of this Committee. Universal Studios creates entertainment for 
a global audience. We are very aware of filmmakers' broad range 
of tastes, interests, cultures, and beliefs. Our objectives are 
to continue making films that satisfy and inspire, and to 
support initiatives that ensure informed decisions about 
viewing choices.
    Thank you.
    [The prepared statement of Ms. Snider follows:]

    Prepared Statement of Stacy Snider, Chairman, Universal Pictures
    Good morning, Chairman McCain, Senator Hollings, members of the 
Senate Commerce Committee. My name is Stacey Snider and I am Chairman 
of Universal Pictures, a film company that has a rich and legendary 
history. We create films that entertain people around the world.
    In a given year--and over the course of many years--our films run 
the gamut. Our library includes everything from The Mummy to 
Schindler's List--and all varieties and genres in between.
    Our films make people laugh--they make people cry. They help people 
walk in other's shoes--and, in so doing, often shed light on important 
and difficult social issues.
    This past year alone, Universal Pictures released Erin Brockovich, 
U-571, The Nutty Professor II and, this coming Thanksgiving, Dr. Seuss' 
How the Grinch Stole Christmas. This cross-section of films reflects 
the fact that we make our movies for a global audience that includes 
people of different ages and backgrounds.
    At the outset, I want the Committee to understand that we take your 
views and those of the Federal Trade Commission seriously. The Report 
is comprehensive and important. It has already received our attention; 
and it will continue to receive ongoing study.
    In fact, since the release of the Report, I have met several times 
with my colleagues at the motion picture group. Our discussions have 
been lively and provocative; many of the ideas that we discussed are on 
the list of industry initiatives presented to the Committee earlier 
today. They will be adopted by the team at Universal Pictures, and will 
be supplemented by other actions both to help parents and to refine the 
marketing of films.
    When it comes to making appropriate choices for children, my 
colleagues and I must balance and weigh the same factors that are 
presented to all parents. I have two daughters myself--Katie and 
Natalie--and I have to review the same sources in order to make 
appropriate choices and decisions for them.
    The MPAA rating is my first stop. Virtually every parent is 
familiar with the movie ratings system. We support the system and the 
many websites that have been created recently to bolster it. I can 
consult parentalguide.com, for example, to get descriptions of the 
movie, TV, videogame, and music ratings. Filmratings.com and MPAA.org 
also enable me to read specific explanations of ratings for specific 
films.
    Next, I will consult the family filmgoer column of my local 
newspaper. These columns, which are carried throughout the country, 
provide useful descriptions, not only of objectionable scenes, but also 
of moral and social issues that my kids may or may not be prepared for.
    I know as a film executive that these columns, like all movie 
reviews, have a tremendous impact on our audiences.
    Finally, I can rely on other parents' word-of-mouth 
recommendations. These resources help parents in their role as judges 
of what their children should and should not see. And, at Universal, we 
support these resources, and others like the V-chip, which help parents 
fulfill their responsibilities.
    Our commitment to the ratings system and to the industry's use of 
the V-chip means that some people who would otherwise see Universal 
movies and TV programs will be unable to do so. That means a loss of 
revenue for the studio. Nevertheless, we believe that these tools that 
support parents should be utilized fully.
    I appreciate that parents may often feel overwhelmed by 
contemporary culture. However, everything from the local movie critic 
to ratings information on the Internet means that parents have more 
information than ever on which to base their decisions. When it comes 
to tools and information for parents, we are living in an age of 
abundance.
    In a free society, however, it is impossible to completely restrict 
advertising to people 17 and older. No matter how carefully we target 
our advertising, some people under 17 will inevitably see ads for R-
rated movies in specific media with broad demographic reach. In fact, 
their parents or adult guardians might choose to attend those movies 
with them.
    Monday Night Football is a classic example of that, and also a good 
place to advertise movies. Here, we may market toward men and young 
adults, but some young football fans whose parents let them watch will 
also see our ads. By the way, they will also see ads for other products 
their parents might not want them to consume.
    When younger fans see an advertisement for an R-rated film it is 
important to keep a few things in mind.
    First, the ad for the R-rated film is not itself R-rated. To the 
contrary, it is approved by the MPAA for viewing by a general audience 
and it carries the restriction that younger filmgoers can only attend 
if they are accompanied by a parent or guardian.
    Incidentally, we do not condone underage filmgoers sneaking in to 
R-rated films; and we support the recent pledge by theater owners to do 
a better job checking ID's and enforcing the ratings.
    Second, there are many films we've released in the recent past 
which were R-rated, but that would be more than appropriate for certain 
young filmgoers to see with their parents. I am referring to thought-
provoking stories like In the Name of the Father, The Hurricane or 
Schindler's List, which derive their power from their intensity--and 
still would be suitable viewing for certain mature children.
    In balancing all of these complex issues--our responsibility to 
parents, to film enthusiasts and to the community at large--we must 
also include our commitment to support the artistic freedom of writers, 
directors, actors and all the other people who collaborate in the 
process of making movies.
    Before I close, I want to assure the Committee that upon returning 
to my office, my colleagues and I will continue to invest time 
addressing the issues raised by the FTC and members of this Committee. 
Universal Studios creates entertainment for a global audience. We are 
very aware of filmgoers' broad range of tastes, interests, cultures and 
beliefs. Our objectives are to continue making films that satisfy and 
inspire and to support initiatives that ensure informed decisions about 
viewing choices.

    The Chairman. Thank you, Ms. Snider. I want to thank all 
the witnesses for coming this morning. I would just like to 
make a couple of comments, and then I have a question, and I 
would like to ask, with the indulgence--since we have so many 
witnesses--of my colleagues that we have a 5-minute rule, and 
then we will have a second round of questions, otherwise some 
Members may not be able to ask their questions.
    First of all, I would like to mention why we are having 
this hearing, because a year ago, after Columbine, the 
President of the United States requested a study by the Federal 
Trade Commission about the marketing of violence and 
inappropriate material to children. That report was issued a 
few weeks ago, and this Committee has the oversight of the 
Federal Trade Commission.
    There have been some allegations about it being an election 
year, or election time. It is our responsibility, as a 
Committee that oversees the Federal Trade Commission, to hold 
hearings on whatever they do and their reports to Congress as 
well as the President of the United States.
    The second thing I would like to do, I would like to thank 
Warner Brothers, Disney, and Fox for their willingness to go 
even further than the recommendations by the MPAA that were 
issued yesterday. I would also like to thank the Directors 
Guild, who have called for a universal rating system. Mr. Iger, 
I appreciate you also doing that.
    I knew that we would hear a lot today about, and it is 
understandable, Schindler's List, Saving Private Ryan, and 
others. That is not a great concern to this Committee, although 
we applaud the artistry there. What concerns this Committee and 
the FTC and, I think, most American parents, is what was on the 
front page of The New York Times this morning, and I will just 
briefly quote from it.
    ``Before the Hollywood Picture Unit of Disney released the 
R-rated Sylvester Stallone movie Judge Dredd about urban 
anarchy and street war the studio tested the film before a 
focus group that included more than 100 youths age 13 through 
16. MGM United Artists tested commercials for Disturbing 
Behavior, an R-rated horror thriller about troublemaking 
teenagers transformed into upstanding citizens, before more 
than 400 12 to 20 years old. The survey reported that they felt 
the stand-out scene was one of a blonde bashing her head into a 
mirror. Columbia-Tri-Star's researchers interviewed 60 children 
aged 9 to 11 to evaluate concepts for the sequel to I Know What 
You Did Last Summer, a tale of a serial slasher who is equipped 
with an outsized ice hook.''
    That is the kind of thing that we and the FTC are concerned 
about, not the content. The content, at least as far as this 
Member is concerned, is a separate issue for which parents will 
make a decision. It is the marketing practices, which the 
chairman of the FTC said could be, as the tobacco company was 
accused of, fraudulent and deceptive practices.
    But that is what this hearing is about. Which is the 
marketing practices. We can have spirited and interesting 
discussions about content and our objections or our approval of 
it. I think that leads us directly into discussion of 
censorship, which I do not believe is productive. So we are 
talking about marketing.
    I would like to read item 3 from the list of new 
initiatives put forth by the industry. Item 3 says, each 
company will review its marketing and advertising practices in 
order to further the goal of not inappropriately specifically 
targeting children in its advertising of films rated R for 
violence.
    My friends, we are in a town where we get into interesting 
discussions about what the definition of ``is'' is. I do not 
understand this language. I think it is filled with loopholes. 
Specifically, not inappropriately specifically targeting 
children. Inappropriateness is a judgment which is clearly 
subjective and not objective, so what I would ask the 
witnesses, why don't you just simply say that you will not 
market to children this kind of R-rated material, that you will 
not market it to children under 17, period? We will begin with 
you, Ms. Snider.
    Ms. Snider. I recognize the sincerity----
    The Chairman. You need to pull it closer, Ms. Snider. I 
apologize.
    Ms. Snider. I recognize the sincerity and the deep 
conviction with which you put forth that question, and I have 
thought about the phraseology of this initiative for many days 
and for a good part of last night and while, in looking at this 
report, there are things in this report that shock me and 
dismay me, and that we can pledge to you sincerely will not 
happen going forward. We are not going to market R-for-violent 
films to 10 and 12-year-olds. These documents were eye-opening 
to me. I take them seriously, and you have gotten my attention.
    At the same time, however, I am reminded of films, not 
merely films like Schindler's List, which I am very proud to be 
associated with, since it was released by Universal Pictures, 
but I am referring to the continuum of R-rated-for-violent 
films, some of which would be suitable for mature teenagers to 
see with their parents.
    I am thinking, for example, of a film like Boyz in the 
Hood. If I were to pitch Boyz in the Hood to the Senators here, 
it might contain graphic violence, it might contain language, 
it would contain gunplay, and yet that is an example of a movie 
that personally was inspiring to me.
    It would be a movie that I might choose to take a mature 
child to, provided I had the proper information of what was 
contained within that film, and so when I think about the 
language of not inappropriately, specifically targeting to 
children, I can tell you that we can apply this standard, 
subjective though it may be, and make appropriate decisions.
    The Chairman. Well, I am sorry to hear your answer, because 
Boyz in the Hood did not have to be marketed to children, 
especially 10 and 11-year-olds, as has been some practice, and 
I believe that there is no way that you can objectively judge 
whether you are inappropriately specifically targeting children 
or not, but I would like to hear from the other witnesses. I am 
sorry, Ms. Snider, that we have different conclusions.
    Mr. Parkes.
    Mr. Parkes. Speaking for Dreamworks, I can be very clear we 
have not, we do not, and we will not target children in the 
marketing of movies that are rated R for violence.
    The Chairman. Thank you. Mr. McGurk.
    Mr. McGurk. We pledge not to target the marketing of our R-
rated films to children for whom they are inappropriate. We are 
going to continue to review every level of our marketing 
operations to assure we are in compliance with the actions 
presented here today.
    We are not going to market R-rated movies in the type of 
locations and magazines that were identified in the FTC report. 
We are not going to market our films on TV programs that have a 
high concentration of audience less than 17. We plan to use the 
35 percent cutoff that was adopted by Fox and Warner as a 
guideline but not as an absolute. We think we need to study it 
more, because we think that 35 percent cutoff may be too high 
or too low for certain movies, and I will give you two 
examples.
    We have two films on the deck for next year which are both 
compelling World War II dramas based on historical events that 
we think are going to get ``R'' ratings for violence and 
language. One is called Wind Talkers, to be directed by John 
Woo, and it is an epic World War II action movie based on the 
battle of Saipan, which centers on the relationship between a 
marine corporal and the Native American code talker that he is 
serving as a bodyguard for.
    The other is Hart's War, and it is based on a novel by John 
Katzenbach, and it chronicles the story of a law student who 
enlists in World War II, is captured, is thrown into a German 
POW camp, and is then assigned to defend an African American 
POW who is allegedly accused of murdering a fellow prisoner who 
was harassing him.
    Like Saving Private Ryan, which I know is probably the most 
overused example that you have heard here, which I took my 
oldest son to at the age of 14, at MGM we believe both of these 
films are going to bear great social significance and could be 
very valuable to some teens, due to their historical context, 
and their themes of loyalty, duty, bravery, and sacrifice.
    These movies could be suitable for viewing in the company 
of a parent.
    The Chairman. Mr. Iger.
    Mr. Iger. Chairman McCain, when we announced our guidelines 
2 weeks ago we said that we were reaffirming our commitment to 
responsible marketing practices. We do not believe that 
targeting children under 17 in terms of our market practices of 
R-rated films would be responsible.
    The Chairman. Thank you, Mr. Iger. Mr. Horn.
    Mr. Horn. Mr. McCain, I believe the best response to your 
question is to simply read from the guidelines attached to my 
statement which I did not have a chance, or have time, to read 
before.
    Warner Bros. Pictures will not market its R-rated films in 
print or television where a substantial portion of the audience 
is under the age of 17. For outlets that will not guarantee 
time slots designation, Warner Bros. will request that spots 
for R-rated movies be placed only in appropriate programs using 
the substantial audience definition, that as, 35 percent, as 
the perimeter for acceptable placement.
    Warner Bros. will not market its R-rated films to youth 
organizations or venues where one can reasonably or accurately 
measure that a substantial part of the population is under the 
age of 17, for example, scouting groups, clubs, or schools.
    We will not allow anyone under the age of 17 into research 
screenings or focus groups for R-rated films or those films 
which we think reasonably might be designated R, unless 
accompanied by a parent or adult guardian.
    We will not enter into promotions or toy-driven product 
tie-ins targeted to children for R-rated films.
    We will not license, manufacture, or allow to be 
manufactured merchandise aimed at children for R-rated films.
    We will not attach trailers for R-rated films to ``G'' or 
PG-rated films.
    Warner Bros. Pictures will advise theater owners not to 
show trailers for R-rated films in connection with its ``G'' or 
PG-rated films.
    The Chairman. Then I will repeat the question, Mr. Horn. 
Will you or will you not market movies rated R to children 
under the age of 17?
    Mr. Horn. We will not, sir.
    The Chairman. Thank you very much, Mr. Horn.
    Mr. Harris.
    Mr. Harris. We subscribe to all of the 12 points that the 
assembled MPAA group developed over the past week.
    You refer, sir, to the difficulty with working with words 
like inappropriately or specifically, or targeting children. 
One of the ways you could say it is, we will only appropriately 
specifically target children, which obviously is not the proper 
way to use that language, so we may have difficulty with a word 
like, inappropriate, but we borrowed it from what we saw in the 
FTC report, at least on our behalf.
    We heard a recitation from Mr. Horn concerning Warner 
Brothers. A number of those items are amplifications of what we 
see in the report in terms of what we will do in our 
advertising, what we will do in our research screenings, and 
where we will apply the information for the parents in terms of 
those movies that are rated R for violence, and I think if the 
specifically targeting children in advertising for films is a 
difficult phrase, we obviously welcome dialog among our friends 
here and also among those of you and others who might offer 
other kinds of language that would help us to give you 
satisfaction on that point.
    The Chairman. Thank you. I now ask the question again. Will 
you or will you not market movies rated R to children under the 
age of 17?
    Mr. Harris. In that question, sir, I cannot answer and say 
that we will not have marketing materials that will be exposed 
to people under the age of 17. That would be impossible for me 
to say.
    The Chairman. Mr. Gianopulos:
    Mr. Gianopulos. Mr. Chairman, we can easily confirm that we 
have not targeted children in the marketing of our R-rated 
films in the past, and certainly have not engaged in any of the 
kind of conduct that you have indicated, but more importantly, 
in the future such conduct would be proscribed both by the MPAA 
agreement that we have reached, and in our own initiatives both 
for our parent company and 20th Century Fox.
    The Chairman. I thank you. Mr. Friedman.
    Mr. Friedman. Mr. Chairman, I, too, confirm my company has 
not focused its marketing efforts against inappropriate 
underage children for its R-rated films, and we will continue 
to monitor our advertising processes. We will, in fact, 
increase our diligence in that process to make sure that we do 
not inappropriately focus our advertising against young 
children for R-rated films.
    The Chairman. Thank you, Mr. Friedman. I again want to 
thank all the witnesses for being here this morning. This is 
very helpful to the Committee and, I think, to the American 
people.
    Senator Hollings.
    Senator Hollings. Well, Mr. Chairman, as a famous Hollywood 
character, Ronald Reagan, said, ``Here we go again.'' It 
started 50 years ago with Kefauver, Senator Kefauver here in 
the Senate, otherwise with the industry itself, the history of 
broadcasting. Here is an example of some marketing practices 
for television broadcasting.
    The directors received the following instructions. Quote, 
``It has been found that we retain audience interest best when 
our story is concerned with murder. Therefore, although other 
crimes may be introduced, somebody must be murdered, preferably 
early, with the threat of more violence to come.''
    And again they (directors, producers and marketing 
executives) appear as loving parents taking the pledge not to 
swig again on violence barleycorn, to stay on the wagon, almost 
like Violence Anonymous, except this time they are not 
anonymous, thanks to the chairman.
    I do not want to go down the side road of marketing. Mr. 
Harris, you answered absolutely accurately, and it is better 
stated by your president, and I read from this morning's New 
York Times, how on earth, Valenti asked, can you advertise 
anything that some kids won't be watching. Impossible, just as 
you said.
    We cannot control advertising, unless it is false and 
deceptive, so if it is true and it is violent, and everything 
else like that, we cannot control advertising in that sense.
    We cannot and would not control content. Producers can 
produce as many violent films as you wish.
    But we can control airwaves. We have already determined 
constitutionally decency, indecency can be controlled for the 
children, and this Committee only last week has voted out 
already now, for the third time, a safe harbor. Like we found 
they experienced in Canada, Europe, down in Australia, they do 
not walk into schools and shoot them up.
    I want to know whether you agree or not with the study that 
was conducted out there on the West Coast, the National Cable 
Television Association Study, and I quote, ``violence on 
television has been shown in hundreds of studies to have an 
influence on aggressive behavior.''
    Over the past 20 years numerous respected academic and 
public health organizations and agencies, including the 
American Psychological Association, the American Medical 
Association, the U.S. Surgeon General, the National Institute 
of Mental Health, have reviewed the existing body of evidence 
in this area and have unanimously affirmed the validity of that 
conclusion. Does anyone disagree with that?
    Mr. Harris. Sir, I would only refer to the FTC's report in 
terms of the body of that work----
    Senator Hollings. I am talking about this report here, that 
you had made. Have you ever heard of Belva Davis, the American 
Federation of Television and Radio Artists; Charles B. 
Fitzsimmons, the Producers Guild of America; Carl Gottlieb, the 
Writers Guild of America; Gene Reynolds, the Directors Guild of 
America; and Ann Marcus, the Caucus of Producers, Writers and 
Directors? Have you ever heard of any of those individuals?
    Mr. Harris. Yes, sir.
    Senator Hollings. Right, and that is their conclusion. Now, 
do you agree or disagree?
    Mr. Harris. I am sorry, sir, I thought you were referring 
to those items that were listed.
    Senator Hollings. No. I am referring to this particular 
report. I am not going down the side road of marketing. I agree 
with Mr. Valenti, you are going to advertise, and there is no 
way to control advertising. We know the V-chip does not work, 
the voluntary does not work, the antitrust immunity does not 
work, or anything else. What works in all of these other 
countries is the safe harbor.
    Does anyone disagree with that conclusion, that violence in 
films propagates violent conduct on behalf of children?
    Mr. Harris. Senator, I thank you for that question. My 
background includes three degrees in the field in which I have 
chosen to exercise my profession, including a Ph.D in mass 
communications, and I spent a lot of time studying these 
problems both professionally and academically over the years.
    I am very familiar with the large body of work, not 
particular to the one that you referred to now, very familiar 
with the practices in other countries and the different 
political systems under which they operate that have those 
types of constraints on their media that they do.
    But I am also very familiar with the difficulties that the 
researchers have in terms of translating their laboratory 
exercise into the real world, and having spent 40 years in this 
business, the observations that I make I try to embellish both 
the ones that I hear from research studies and also the 
observations that we have in our culture.
    We speak of the Kefauver hearings, and I remember those, 
and I remember at that period of time that our screens were 
populated with the western myth, the man carrying the gun. 
There were something like 29 prime time programs on television 
at that time, only on three networks because that is all we had 
at that particular point, and on the film screens, and 
including the most popular one on television, said the only way 
to settle things is with the smell of gun smoke.
    I have wondered over the years if, in the 25 years 
following those hearings, if the trade of the make-believe six-
shooters with the fictitious cowboys on the screen for the real 
automatic weapons in the hands of children on the streets was a 
good cultural trade.
    Senator Hollings. Well, I take that as you could disagree. 
Thank you, Mr. Chairman.
    The Chairman. Senator Burns.

                STATEMENT OF HON. CONRAD BURNS, 
                   U.S. SENATOR FROM MONTANA

    Senator Burns. We all have to go through this thing of 
translating after we hear what we hear. I was struck by the 
number of folks who have all kinds of letters behind their 
names. I am not hinged with that. Behind my name is NDBA, no 
degree but boss anyway, and I have enjoyed that position for 
quite a while.
    I am intrigued by the part of the movie industry, their 
approach of self-regulation rather than regulation by 
Government or any other entity, and I like that approach. I 
agree with that.
    But given that the movie industry has continued to point to 
self-regulation rather than Government action, or any other 
group, outside group as a way to address the issue of marketing 
to children, I think what is in the minds of most of us, what 
is the penalty that you are going to impose upon a colleague or 
your own industry should they knowingly violate the guidelines 
that you have proposed today?
    What can you do in order to bring a colleague or another 
studio or another company into the fold, and what penalty do 
they pay, or what penalty do they pay for playing it loose with 
the guidelines that you have set for yourself today, and 
anybody can address that that wants to.
    Mr. Iger. We fully intend to adhere to the guidelines 
throughout the company, and anyone at the company violating 
those guidelines would face potential termination, or likely 
termination, depending upon how egregious the violation was. We 
take these guidelines very seriously.
    We do not believe that any one individual at the company 
should have the wanton right to put the company's reputation or 
its relationship with its consumers at risk, and therefore we 
intend to hold all of our executives who would in any way be 
responsible for administering or applying these guidelines 
responsible to see to it that they are administered and applied 
fully.
    Senator Burns. Does anyone else want to comment on that, 
because I have a followup question.
    Mr. Horn. Senator, I would say that, as Mr. Valenti pointed 
out, the rating system that we have all adhered to has existed 
for some 32 years, and even in regard to that system we would 
not dream of going outside, violating it, going against a 
provision of the system once it was awarded by the MPAA.
    As Mr. Valenti full knows, we are all dues-paying members 
of the MPAA, and we rely on him and his staff to help us 
monitor our activities, in addition to that which we will do 
within our own companies, and there is always the specter of 
public censorship, and then, of course, you folks, so I think 
that we will be watched very closely as we adhere to these 
guidelines.
    Senator Burns. Anyone else want to make a comment? I would 
say as a followup if I was running a house, and in your 
business, and you found me guilty of willfully violating the 
guidelines that you have set up and so you expel me from the 
group, does that put me out of business or exonerate me from 
some responsibility to the public?
    Mr. Horn. Senator, it certainly does not exonerate, would 
not exonerate anyone with respect to a responsibility to the 
public, and I think it would be hard to conduct business in our 
surprisingly small industry in a way being excluded from the 
rules that the rest of the companies are abiding by. I think it 
would be impossible.
    Senator Burns. Thank you, Mr. Chairman.
    The Chairman. Senator Kerry.

               STATEMENT OF HON. JOHN F. KERRY, 
                U.S. SENATOR FROM MASSACHUSETTS

    Senator Kerry. Mr. Chairman, thank you very much. I want to 
thank all of the executives for taking time to be here today 
and contributing to this dialog, which is obviously important, 
and I respect and appreciate the constructive effort made here 
today to see how we can achieve a meeting of the minds.
    I do not think that--while the focus is on marketing, Mr. 
Chairman, and I respect that, and that is our principal concern 
here today, I think in finding a balance we have to understand 
that it is not just the marketing that is at stake for this 
Committee in resolving the issues raised by this hearing, 
because a lot of kids go to these movies, or are exposed to 
some type of this violence, and they never act out. They do not 
behave in a way that promotes the kind of concerns, and parents 
make choices, and they seem to make it through.
    I am particularly concerned about one aspect of the PG-13, 
and I want to ask that in a moment, but I want to make it clear 
to my colleagues the complexity of the relationships that are 
really at stake here, and the responsibility of those of us in 
Congress to see this holistically, not simply as one part, one 
component, one easy target.
    The FBI has done a report in the last year in response to 
Columbine, and they have targeted four specific prongs for the 
identification of why a particular child might respond 
violently, or act out violently in their life and, indeed, one 
component of that might be fascination with violence-filled 
entertainment, and no limits or monitoring of TV or the 
Internet, but I share with my colleagues the other components.
    In prong 1, there are personality traits for behavior. Low 
tolerance for frustration, poor coping skills, lack of 
resiliency, failed love relationship, alienation, anger 
management problems, racial or religious intolerance, and then, 
of course, the fascination with violence-filled entertainment.
    Prong 2 are family dynamics, turbulent child relationship, 
parents' acceptance of pathological behavior, access to 
weapons, and I underscore that one for this Congress, lack of 
intimacy, child rules the roost at home, no limits or 
monitoring of TV and Internet, which is a component of what we 
discussed here today.
    Prong 3, school dynamics. Student detached from school, 
school tolerance for disrespectful behavior, inequitable 
discipline, unsupervised computer access.
    And finally, social dynamics, and there again there is a 
question of images of graphic violence in the media, but also 
change in behavior involving drugs and alcohol, copy-cat effect 
and so forth.
    I would say to my colleagues here, respectfully, that this 
Congress has failed to date to deal with access to weapons, 
simple measures with respect to gun control like closing the 
gun show loophole, or dealing with trigger locks, or even 
ensuring that trigger locks that are sold meet minimum 
standards, recognizing that all the children killed by gunfire, 
nearly two-thirds are victims of homicide and one-third victims 
die by suicide.
    In addition, inadequate after-school programs. Congress has 
not reauthorized the Elementary and Secondary Education Act for 
the first time since the legislation was enacted in 1965, so we 
do not--notwithstanding that we know that violent youth act 
out, the crime that peaks is between the hours of 3 and 7, we 
have done very little for after-school programs to keep kids 
safe and out of trouble.
    We have failed to fund early childhood development 
programs, or to deal with the question of inadequate child 
care, and all of these are components that help provide tools 
to parents to be able to make wise choices.
    Now, I say that because I want to emphasize the complexity 
of how you deal with this holistically, and it is simply wrong 
for us to pretend it is just marketing.
    That said, and I emphasize, that said, marketing remains an 
issue. This has to be achieved cooperatively, with all of us 
working together, and I would ask the executives here, in the 
context of marketing, today's New York Times points out the PG-
13 issue, that a great many kids, that the studios marketed PG-
13 films to children under age 11 45 percent of the time, and 
there was an effort, apparently, by Columbia Pictures to market 
a PG-13 movie, The Fifth Element, to children under 12 on the 
Nickelodeon Network.
    Nickelodeon refused to air the ad because it thought that 
violence and sexual situations were inappropriate for their 
audience, and they ought to be complimented for using that 
discretion.
    There was another report at Universal promoting The Mummy 
on television shows like Pokemon and Power Rangers and Spider 
Man, all of which appeal to only the youngest audiences, not 
even to 13-year-olds.
    So the question is, in the context of sort of that niche of 
marketing where there could be a contributing effort to the 
holistic approach, do the studios perhaps plan to try to limit 
placement of ads for even PG-13 rated movies where they know 
that they may be going to audiences that are not primarily the 
ones that ought to be seeing the film, and I wonder if we could 
sort of run the line and see who might respond to that 
particular component of the issue.
    Mr. Friedman. Senator, I would remind the Committee that 
PG-13 is not a restrictive rating. It is a parental warning 
suggesting parents should pay closer attention, and we fully 
believe in that and support it completely.
    That being said, I would also indicate that from our 
perspective we are going to review the appropriateness of all 
of the advertising we place for all of our movies.
    Senator Kerry. As the others answer, let me just say that I 
recognize the parental component of this. We are all dealing 
with the difficulty of parents who seem not to do it, or do not 
know how to do it, or are not even--and obviously we have got a 
lot of kids in this country who do not have parents who are 
paying attention, and there are not parents around in many 
cases.
    So the question is sort of, just exercising a kind of 
responsibility, is there some responsible way, without unfairly 
curtailing your rights and needs, to try to perhaps hone the 
PG-13 rating somehow further, or to exercise the kind of 
discretion that we just have had articulated with respect to 
the advertising that I mentioned?
    Mr. Friedman. I think we could also take heart in the fact 
that the FTC report indicates that 98 percent of the parents 
are aware of the selection process that their children make and 
90 percent of them are restricting the films they attend.
    We also are, in addition to monitoring exactly where we 
place our advertising for all of our films, going to include 
the reasons for the rating language in all of our print 
advertising for all of our movies as well.
    Mr. Gianopulos. I think, Senator, the notion of restraint 
and inappropriateness in marketing applies to all the rating 
categories and all of our activities, including PG-13, and I 
think we would act accordingly.
    Mr. Harris. Senator, thank you for asking this question, 
because you mentioned one item that was listed in the Columbia 
Pictures documents provided to the FTC, and I think it is 
appropriate that I answer that question directly on that one.
    I looked at that incidence of The Fifth Element advertising 
on Nickelodeon in 1997, and my first reaction was, the system 
worked, and I was very pleased to think the fact that, as has 
been mentioned here today, that this needs to be a cooperative 
effort among both ourselves, the media with which we operate, 
our vendors, such as advertising agencies, our research 
organizations, all of whom we hire, but we have got to be very 
diligent in making sure that all of our wishes and desires are 
properly translated into day-to-day activity.
    When I looked at that Fifth Element issue and we saw the 
exchange of letters between Nickelodeon, which previously had 
carried advertising for PG-13 in all day parts, in some cases, 
and they provided information saying they would allow this 
advertising after 8:30, when the preponderance of their 
audience was over age 17, but our advertising agency buyer, 
whom I do not know by name, pushed against that, that was a 
judgment lapse, and that is the kind of thing that I am 
trusting that our setting up a set of guidelines that operates 
across the MPAA, plus our internal compliance groups and 
Committees and officers, is going to give us a set here.
    We have been very good about following the MPAA rating code 
for the last 32 years. If I am led to understand, we have only 
had a handful--and when I say a handful, only maybe less than 
half-a-dozen noncompliances from the MPAA members out of about 
18,000 films, that suggests to me that when we come together, 
agree and say we will do something, we will.
    And I welcome the opportunity to further clarify the issue 
on the Nickelodeon advertising and tell you that I do consider 
that to have been a lapse in judgment, and it is something we 
have to be sure we are in better control of in the future.
    Mr. Horn. Senator Kerry, as I mentioned in my statement, I 
have a 12-year-old and 11-year-old at home, so it feels like 
when I am home I spend half my life talking about PG-13 movies, 
and I have come to the feeling over time that what is 
appropriate for a 12-year-old, by the way, is not at all 
appropriate for a 6-year-old or a 5-year-old, so the PG-13 
rating is rather broad in itself.
    All I can say is that we at Warner Bros. take special care 
to advertise for the appropriate audience, to not target, 
certainly, 4 or 5 or 6 or 7-year-old children. Not only would 
it be inappropriate, it is also stupid, because we do not want 
or expect to get a big audience among the very youngest 
children for PG-13 movies, which would be an inefficient use of 
our advertising dollars. It would be foolish.
    We will monitor it even more closely.
    Mr. Iger. I applaud your position on this subject and, 
recognizing that causes are violence are complex issues, 
fingers should not be pointed in one direction.
    As it relates to PG-13 movies, as I said earlier, we 
believe we need to act responsibly in marketing all of our 
pictures, even though our guidelines cover just R-rated movies. 
I should point out, all R-rated movies, not just movies that 
are rated R because they have violent content.
    I also believe we ought to exercise the responsibility 
across the board to all ratings. We own the ABC Television 
Network, which I used to run, and we regularly rejected ABC ads 
for PG-13 movies in programs that we do not deem appropriate 
for those ads to run in because we think those programs would 
probably attract a significant audience of kids under 17.
    So I think this is something that needs to be constantly 
monitored and I think, as I said earlier, and we said in our 
guidelines, this is something that in my opinion is likely to 
change as we move forward, because I think we will and should 
discover ways to continue to behave more responsibly as we move 
forward.
    We also need to recognize that the world has, indeed, 
changed, and even though I do not think it is appropriate for 
us to behave as parent, we are well aware that children are 
exposed to our product in substantially different ways than we 
were exposed to product when we were children.
    There is a literal avalanche of information and 
entertainment that comes their way, and oftentimes, as you 
cited, they are consuming this product without the benefit of a 
parent nearby to act as a filter, or censor, and I think we 
need to recognize that, that our product is being consumed in a 
thoroughly different manner today and behave accordingly.
    Mr. McGurk. Senator, at MGM and United Artists we also 
intend to critically review our marketing procedures for PG-13 
films, and we will take the appropriate action steps for 
improvement if necessary.
    Mr. Parkes. Mr. Kerry, I absolutely feel the criteria of 
common sense and common decency should apply to the marketing 
of all movies, regardless of their ratings. We had an 
interesting example of this a few years ago with Dreamworks. We 
made a movie called Small Soldiers. The picture was intended to 
be a PG, but through issues of, well, creative community, and 
the way the picture turned out, it turned out to be PG-13.
    We had already entered into a large tie-in program with 
Burger King which would have, in fact, brought this PG-13 movie 
to young children. At the time, we went back to Burger King and 
we reworked our campaign with them and provided very specific 
and very clear language to parents about the nature of the 
film. I actually brought one of them.
    So in getting the toy for a Happy Meal we included the 
language, Kids meal toys are suitable for children of all ages. 
Small Soldiers may contain material that is inappropriate for 
younger children. Parents should consult movie rating. An 
alternative toy is available upon request.
    So sometimes, as in an ``R'' rating, you have to go beyond 
what the rating does to provide information to the consumer and 
to the parent, so that they can make an informed choice.
    Ms. Snider. I concur with the eloquent statements of my 
colleagues, and we absolutely commit that PG-13, marketing PG-
13 films merits our careful and diligent review.
    We recognize that there are some young kids that it is just 
absolutely inappropriate for them to see these ads, and for 
some older kids, 9, 10, and 11, that it might be suitable, and 
we are going to take it very seriously.
    Senator Kerry. Mr. Chairman, thank you very much. I know I 
went over time, but I appreciate it, and I appreciate the 
answers enormously. I might just point out that the MPAA 
guidelines in front of us at this point do not embrace the 
comments that you just set forth, so perhaps that is something 
that might be an addendum, or contained therein as we go down 
the road, but I do appreciate it very much.
    The Chairman. Senator Brownback.

               STATEMENT OF HON. SAM BROWNBACK, 
                    U.S. SENATOR FROM KANSAS

    Senator Brownback. Thank you, Mr. Chairman, and thank you 
all for being here today.
    I want to followup on the chairman's question about whether 
or not you will market R-rated films to children. I appreciate 
the answers of a number of you, although I note that Universal 
and Sony is not willing to say at this point that they will not 
market R-rated films to children.
    I want to go into some specific questions on the FTC's 
findings. Please just go down the line with this when you 
answer. Will you stop advertising R-rated movies on teen 
Internet sites? And by teen sites, I mean those sites where 35 
percent or more of the audience on that site is a teenage 
audience.
    Ms. Snider. I want to first make very clear that our 
commitment to appropriate behavior is sincere, and the examples 
that I am concerned by, and I do not want to appear 
disingenuous, but are examples, for example, like Erin 
Brockovich, which is rated R.
    That is a movie that our company made, and I was very proud 
of that film, and in that situation I would sit down with our 
marketing executives and go through each and every decision and 
say, is this something that could appear in Seventeen Magazine, 
might that be appropriate.
    And in the same way, there could be a movie that is rated R 
with much rougher content that would absolutely be prohibited, 
and so it is not in an effort to obfuscate, but in an effort to 
actually find instances where we are actually more restrictive, 
that this language permits us that. There may be situations 
where we absolutely will not be on any of the teen sites.
    Additionally, I want to add that on all of our sites right 
now we have taken the steps right away to add ratings 
information on every single one of our web sites, and those web 
sites are already directly linked up----
    Senator Brownback. I have a very short period of time here, 
and a series of questions, so really just yes or no, if you 
could, on the teen Internet sites. Will you stop marketing R-
rated films to teens on teen internet sites?
    Ms. Snider. No. There may be some R-rated films----
    Senator Brownback. That you would take to a teen site?
    Ms. Snider. That we would take to a teen site.
    Senator Brownback. I am sorry to hear that. Mr. Parkes.
    Mr. Parkes. Absolutely, we do not intend to bring R-rated 
movies to teen sites. What I am not comfortable with is an 
arbitrary numerical cutoff as to how to define a teen site.
    I think you can actually sometimes have a false sense of 
security with these things. There could be, as Stacy said, 
films that are very hard ``R'' in their rating that should not 
be on a teen site, a site that only has 15 percent teen 
audience.
    The spirit and the sense of what you are asking I agree 
with completely. We should try to limit the exposure of these 
sorts of films to teenage audiences, whether it is on a web 
site or a network, but I am not comfortable with the numerical 
definition.
    Mr. McGurk. We are not going to market our R-rated movies 
on teen Internet sites, and I think the 35-percent cutoff is a 
good guideline, but maybe not an absolute, because there may be 
instances where that 35 percent is either too high or too low, 
but any exceptions will be subject to the critical review of 
our Compliance Committee.
    Senator Brownback. Thank you.
    Mr. Iger. We are not applying a 35-percent threshold 
because we think at times, not in any way to criticize the 
positions taken by my colleagues, but there are times when that 
could be confusing, so I am not responding to the issue of 35 
percent or not. Our intention is not to market our R-rated 
films in vehicles that are teen-oriented, such as magazines, 
web sites, and any other vehicle that we believe is consumed 
predominantly by teenagers, or is designed to attract 
teenagers.
    Senator Brownback. If I could then get a clear answer on 
that, if it is above a 35-percent teen audience, you will not 
market R-rated films on that site?
    Mr. Iger. We are not really using 35 percent. The reason 
that could be misleading is, there are many instances where we 
would not market on vehicles that had far less than 35 percent 
because we felt it just was not appropriate.
    I could use an example. We have a program on television 
called Millionaire, which the audience composition of kids 
under 17 is somewhere in the neighborhood of 10 percent, yet it 
attracts many more children under 17 than many other programs 
that have an audience composition above 35 percent, so we would 
not believe it would be appropriate for instance, when 
Millionaire is in an 8 o'clock time slot.
    Senator Brownback. I am giving you an easy target here.
    Mr. Iger. We believe there are shades of gray there that we 
intend to examine very carefully and make decisions 
accordingly.
    Senator Brownback. Mr. Horn.
    Mr. Horn. Senator Brownback, we will use the 35-percent 
criterion and not market in venues where we think the 
percentage of folks under 17 will exceed that.
    I would like to point out that 35 percent is almost, by 
definition, arbitrary, but we will observe it.
    I would also like to point out, in response to a comment 
Mr. McCain made earlier, we do not market--when we say market, 
we are using that definition of 35 percent as our criterion. It 
is impossible to avoid some spillover in the marketing of our 
product, since it is exposed very, very widely, but we will 
observe the 35 percent.
    Senator Brownback. Thank you. Mr. Harris.
    Mr. Harris. Senator, thank you for the question. I would 
please put back on the record that our earlier response to the 
question from the chairman having to do with marketing was that 
we could not ensure that there would not be exposure to 
youngsters under 17 years of age to some of our marketing 
materials for pictures rated R. That was the only designation 
we stand firmly behind, not specifically targeting children in 
the advertising of R-rated pictures. I simply put that back on 
the record.
    In reference to your opening remarks, in terms of the teen 
sites on the Internet, we are suggesting in our internal 
compliance guidelines that we will not use teenage sites for 
any advertising and/or marketing, because that includes the 
publicity about the films as well on teenage sites.
    Senator Brownback. Thank you. Mr. Gianopulos.
    Mr. Gianopulos. Senator, as you know, we have adhered and 
submitted the 35-percent guideline in the media that we 
indicated, and we did that because we wanted to set a line of 
demarkation in that media that we could stick to in a very 
subjective area.
    When it comes to the Internet sites, I think--and all our 
marketing is always subject to the sense of propriety that we 
bring to the subject generally. In that context, I do not think 
we would use Internet sites for teenagers, particularly young 
children, for R-rated movies.
    There is, however, the concept that has been mentioned by 
other members of the panel that there are some films that for 
the older ages of teens, say, 15 and older, may be appropriate 
for them to see, or understand what films are about in a 
sanitized advertising, by which I mean advertising that is 
intended and rated for all audiences.
    Next month, we are releasing a film called Men of Honor. It 
is the story of Carl Brashears, the first African American 
master diver. It is not a subject which young people might be 
easily--the film is rated R, and it is rated R solely because 
of the use of language which in context, which the characters 
in the Navy utilize. Other than that, it is a brilliant and 
inspiring and very emotional film, and a film that I plan to 
take my 11-year-old daughter to see.
    We may want younger kids and older teenagers to know about 
that film. We may want them to ask their parents to take them 
to that film, and there may be web sites we would use for that 
purpose, but that is the context in which we would use it, and 
I think always subject to that sense of propriety in what is 
right and what seems appropriate.
    Senator Brownback. Mr. Friedman.
    Mr. Friedman. Senator, we believe that it is important that 
we monitor on a film-by-film basis each and every avenue we use 
to reach the public as it relates to the marketing of our 
movies. We do not believe in an arbitrary level in which there 
should be a break point. We think everything is very specific 
and needs to be looked at on a very specific basis.
    As it relates to Internet materials, we only put out 
materials that are approved for all audiences by the MPAA, so 
there is nothing that would be contained on any site that would 
not be approved by the MPAA for all audiences.
    Senator Brownback. So will you or will you not advertise R-
rated films on teen sites?
    Mr. Friedman. It is possible some R-rated films, if 
appropriate, could appear on teen sites.
    Senator Brownback. Mr. Chairman, I have used my time. I do 
have a series of questions that are specific on marketing that 
I would like to submit to the members of this panel to answer 
within a set period of time, if I could.
    The Chairman. Absolutely.
    [The prepared statement of Senator Brownback follows:]

   Prepared Statement of Hon. Sam Brownback, U.S. Senator from Kansas
    Mr. Chairman, I appreciate your holding this hearing today, and for 
ensuring that we can have this ``full and frank'' exchange of views 
with those in the movie industry. Up to this point, it has been hard to 
do so.
    I assume that just about everyone here is now familiar with the 
FTC's report. In looking at the movie industry, the FTC found that the 
practice of marketing hyper-violent movies to underage audiences is, in 
their words, ``pervasive and aggressive.'' It shows that entertainment 
companies are literally making a killing off of marketing violence to 
kids.
    Each of the witnesses here today represents an enormously powerful 
studio. You head up the companies that shape how Americans think, and 
what they think about--far more so than we do here in the halls of 
Congress. Movies have the power to edify, uplift, and inspire. But all 
too often, that power is used to exploit. I've seen some movies that 
are basically two-hour long commercials for the misuse of guns.
    There are many R-rated movies that are not only marketed to 
children, they appear to be tailor-made for children. So-called ``teen 
slasher'' films, which are set in a high school, and have a cast of 
teen stars, cannot be said to appeal to adults. Many of them glamorize 
violence and trivialize its consequences. They target kids with 
messages that are destructive, debasing, and immoral.
    The target-marketing of violent, R-rated movies to kids is not 
subtle--it is aggressive, relentless, and widespread. Some studios have 
had children as young as ten in focus group meetings. Advertisements 
for these films have run in teen magazines, been posted on teen-
oriented web sites, and aired on TV shows that are the most popular 
with teenagers. Walk into any toy store in America, and you are likely 
to find toys, dolls, Halloween costumes and action figures based on 
characters in R-rated movies.
    I have in my hand, Mr. Chairman, an eye-opening study conducted by 
the Parents Television Council, which tracked how many R-rated movies 
were advertised on network television during the Family Hour over the 
last three weeks. What they found was that of the 54 movie ads that 
aired during the family hour, 45, or 83,% were for R-rated films. I'd 
like to enter this study into the record. And that's just in the last 3 
weeks.
    Yet each time we have heard from any representative of the motion 
picture industry, they have insisted that it is totally up to parents 
to police what their children watch. Of course parents have primary 
responsibility for protecting their kids from harmful, violent 
entertainment. But that doesn't mean that entertainment companies bear 
no responsibility at all. Indeed, the whole point of target-marketing 
to kids is to go around the parents and straight to the kids--to leave 
parents out of the loop. It is disingenuous at best for movie 
executives to insist that parents must shoulder all the responsibility 
and then make it ever more difficult for them to get information on 
violent content.
    Marketing violent entertainment to kids is not just distasteful, it 
is destructive. Common sense tells us that exposing children to 
entertainment which glorifies brutality and trivializes cruelty, which 
glamorizes the abuse of women, and which depicts torture as 
titillating, cannot be healthy for children. We cannot expect that the 
hours spent in school will mold and shape a child's mind, but that the 
hours spent in front of a screen won't. We cannot hope that children 
who are entertained by violence will love peace.
    But this is not only common sense, but a public health consensus. 
In late July, I convened a summit of the most prominent public health 
organizations in the country. They all signed on to a joint statement 
which says, and I quote: ``Well over 1000 studies . . . point 
overwhelmingly to a causal connection between media violence and 
aggressive behavior in some children. The conclusion of the public 
health community, based on 30 years of research, is that viewing 
entertainment violence can lead to increases in aggressive attitudes, 
values, and behaviors, particularly in children.''
    There is not longer a question as to whether exposing children to 
violent entertainment is a public health risk. It is. The question is: 
what are we going to do about it?
    That is why I want to appeal to each of you individually--appeal to 
your sense of conscience and corporate responsibility. Many of you have 
children. You know that exposing kids to violent entertainment can be a 
public health risk. And so I ask you: Why not just stop? Stop marketing 
movies which glamorize violence to kids. Stop making these hyper-
violent ``teen slasher'' movies. Stop putting your formidable resources 
and brigades of lawyers and lobbyists into finding ways around the few 
existing guardrails. Just stop it.
    I don't believe in government regulation; I support industry self-
regulation. But for self-regulation to work, it has to be meaningful, 
and it has to be widely practiced. From what the FTC report shows us, 
the movie industry have has a long way to go. And judging from this 
inadequate response, they show little inclination to get moving.
    I find it amazing that the industry won't simply pledge to stop 
marketing violent, R-rated movies to kids. But so far, they haven't. It 
means very little to say that you'll look into it . . . That you'll 
appoint some staff member to review it . . . . Or that you'll encourage 
retailers to do it. Please don't think you're fooling anyone. If you 
were serious, you would say that you will stop marketing violence to 
kids on TV, on trailers, in teen magazines, on teen internet sites, in 
teen-oriented street promotions, and through toys, dolls, costumes and 
action figures. I hope that you can give us an assurance that you will 
do this before the end of the hearing today.
    It may be naive of me, but I would hope that this report would 
start a movement within your industry to start a race to the top, 
instead of a race to the bottom. That you will start looking at films 
with an eye as to whether they are worthy of the support of a 
responsible company--rather than focusing on what you can get away 
with, or how much money you can make off of an exploitive and 
irresponsible film. You can make a difference. And for the sake of our 
children, I hope you will.

    Senator Breaux.

               STATEMENT OF HON. JOHN B. BREAUX, 
                  U.S. SENATOR FROM LOUISIANA

    Senator Breaux. Thank you, Mr. Chairman, and as all of our 
Members have, I thank the witnesses for being with us today.
    I would like to commend the witnesses for coming forward 
with a 12-point plan. We can debate whether it is sufficient, 
or whether it is enough, or whether it is strong enough, but I 
think it is difficult to get an agreement from a very highly 
competitive industry to agree on 12 points about anything. It 
is kind of like the old saying of trying to get a herd of cats 
to march in the same direction. It is very difficult to do.
    I commend particularly Jack Valenti, who is in the 
audience, for helping bring these cats together and make a 
unified recommendation. We can debate on whether it is 
sufficient or not, but I think at least having this as a 
starting point gives us something to work with, and I am glad 
that it is there.
    I think one of the things that disturbs me on all the 
ratings, we rated cigarettes and tell people that they are 
going to die if they smoke cigarettes, and people become very 
blase about the warning labels and do not pay much attention to 
them, and now we have tried to change that industry with regard 
to their marketing, and I think it has been fairly effective.
    I think the bad news is that there is much more violence 
teenagers and children are exposed to in our society. The good 
news is that violent crime among teenagers is actually down 
substantially in this country. It is something I think everyone 
can be very proud of. It is the lowest it has been since 1987, 
and statistics show that it is down 30 percent since 1994. That 
is real progress.
    I think that any violence is too much. Two children in New 
Orleans shot each other in middle school yesterday, and one of 
those incidents is too much, but progress is being made.
    I happen to think that when it comes to violence, that the 
video game is one that I think is a huge problem, these video 
games, and Sam and I were talking about that yesterday, are 
best summarized as show and shoot. I mean, every video game is 
blood and guts all over the place, and the audience there is 
pretty clearly teenagers.
    You do not see a lot of senior citizens in video game 
parlors, or adults playing video games where everybody gets 
blown up. It is mostly targeted, clearly, to teenagers, and I 
think that is particularly a very serious problem, and as in 
all of our areas there is no one-size-fits all. There is no one 
solution to this problem that is going to solve the problem for 
everyone.
    Theater owners have to be involved. How many theater owners 
look the other way when a teenager comes into an ``R'' or an 
NC-17 movie and just looks the other way and takes the money 
and shows them the film? How many parents do not ever ask a 13, 
14, 15-year-old child which movie they are going to see with 
the group that they leave the house with, and what is the 
rating on that movie?
    There are some very diligent parents, but there is an awful 
lot of them that never ask where their children are going, and 
do not know where their children are going and what they are 
seeing. That is a problem area as well.
    We, in this Committee adopted the V-chip for television--
that was going to be the solution--and said, all right, you can 
take care of your children by blocking out movies coming into 
your house that you do not want your children to see, and yet 
we find out today that 97 percent of families with teenage 
children in the home do not have TV's with V-chips, and the 
ones that do, only about a third of them bother to even use it, 
which means that the total adult population using the V-chip is 
about 3 percent.
    I mean, how do we get parents to be more diligent in using 
the tools that we have given them? The ratings, the V-chips--I 
am not sure how we solve that problem. We are trying here, and 
I happen to think that some children who are teenagers should 
see R-rated movies, especially when accompanied by an adult.
    I want my 16-year-old son to see The Patriot, absolutely, 
Saving Private Ryan, of course, Schindler's List, absolutely. 
Should he be aware that these movies are out there? Absolutely. 
I think there is nothing wrong with that. Those things are 
quality products. There are others that I would not want them 
to see.
    How we solve this is very, very difficult, so I think we 
have made some progress here. I think that--I mean, we had the 
cigarette executives. Everybody in this Committee remembers 
them. What we tried to do is say, all right, we cannot tell you 
not to sell the product. You have got all these labels that 
tell people it is going to kill you. But we can stop the 
advertising that is targeted to children. I think that is 
what's happening.
    I think we can do a better job here, because I think there 
has been a disconnect from your industry and your marketing 
practices. I mean, your industry executives put the rating on 
the movie, and the marketing people have sort of ignored it and 
tried to market to people, in fact, that your own ratings say 
are not suitable, or it is a warning at least.
    So I think what you said today, I think moves in the 
direction of helping to address the basic problem we are 
talking about, and thank you for your statements.
    The Chairman. Senator Hutchison.

            STATEMENT OF HON. KAY BAILEY HUTCHISON, 
                    U.S. SENATOR FROM TEXAS

    Senator Hutchison. Mr. Chairman and members of the panel, 
for other industries, we pass laws. And we say it will be 
against the law to have an unsafe workplace. We delegate the 
regulatory authority to an agency to make the specific 
regulations about what is an unsafe workplace.
    We could pass a law that says that no person under 17 would 
be able to attend a movie or be sold a video game that was R-
rated. The law would not prohibit the creation and distribution 
of any kind of movie you want to make. And then we could 
delegate to an agency the authority to determine what is an 
``R'' rating and set penalties for violation of marketing or 
selling tickets to people under age.
    I would like to ask you what you think that would mean to 
your industry and if you think that would violate your First 
Amendment rights to create whatever you want to create? And you 
can start, Mr. Friedman.
    Mr. Friedman. Senator, I am probably one of the few people 
in the room who is not an attorney, and I feel that it would be 
improper of me to try and discuss First Amendment law. On the 
surface, it does not sound to me like it fits in with my 
personal definition of freedom of speech.
    Senator Hutchison. Mr. Gianopulos.
    Mr. Gianopulos. I think, Senator, it would be extremely 
difficult for the government to undertake that role. And I 
think in all the discussion, both in the FTC report and from 
the hearings, the past one and this one, I think there has been 
an acknowledgment that the rating system as it exists works. 
That to the extent that there have been areas of concern and 
areas that need to be addressed in the future, it has to do 
with the way marketing has taken place or the constraints that 
we need to apply to that marketing.
    But the definition of what is a film that is appropriate to 
each rating category has been in place for some time. And I 
think everyone has quoted the statistics and we all know them. 
Parents understand this rating system. They understand when you 
tell them a PG-13 and what that rating really means.
    Now, they may want to know more about why it is a PG-13. 
They may want to know more about whether it is appropriate to a 
given child at a given age, and similarly with the ``R'' 
system.
    But I think it would be difficult for legislation or a 
government to replace something that is already governed by 
parents, by concerned citizens and more importantly has worked 
so long.
    Senator Hutchison. M.r. Harris.
    Mr. Harris. Senator, thank you for posing the question in 
the fashion that you did. Because it is something that I have 
wrestled with for a lot of years in terms of how the older 
generations wished to control in as many possible ways as they 
can the culture that the next generation creates for 
themselves.
    I remember the time when this country had its biggest scare 
from youth violence which was during the 1960's, particularly 
in the late 1960's. And a lot of it was credited to the 
underground music, to the underground newspapers, to the 
exposure to motion pictures and to the Smothers Brothers on 
television among other kinds of things.
    And we had young people, teenagers, who were expressing 
through their new culture a lot of things that we did not like 
at that time. And I remember getting off the airplane from my 
tour in Vietnam, going back to campus to finish up my 
education. And the campus was occupied by armed troops 
dispersing teenagers who wanted to peacefully gather with tear 
gas.
    And that image has never left my mind since that time. So I 
am always very protective of a younger generation's ability to 
state their purposes. And I may be over dramatizing this in the 
moment. But I am making the point because it is personal for 
me. And it also is I think professionally appropriate. Because 
if we start dictating what our young people think, we will turn 
them into things I do not think we, in our country, would like 
them probably to be. But thank you for the question.
    Senator Hutchison. Mr. Horn.
    Mr. Horn. Senator, I also am not a lawyer. But my gut 
reaction to what you have suggested is that it would be 
inappropriate and wrong for the government to involve itself in 
these issues of content and marketing of our movies. These are 
very subjective issues. And I find that I am on the--even on 
weekends, I am out on the soccer field with my oldest daughter 
who is a goalkeeper. And I have talked to parents on the side 
about the movie business. And most of them have no idea what I 
do, do not know I am involved with Warner Bros. They are just 
parents watching their kids.
    And I find that there is an amazing disparity between what 
concerns one parent and what concerns another parent. Some just 
abhor violence and just cannot stand the fact that lots of 
motion pictures have violent content, but do not care about sex 
and do not care about language.
    Others care a great deal about sex and do not care about 
the violence. They feel, well, it is not an issue for them. But 
they just do not like seeing that sexual expression on screen.
    Others seem OK with both of those, but they hate the use of 
the F word and other words. They just cannot stand that. And I 
find that there is no unanimity, no homogeneity among these 
people. And I think that trying to regulate it, especially by 
the government, would be a mistake. I feel that is my job. And 
I do it to the best of my ability every day. You wrestle with 
these issues every day. And I think that is where it should 
stay. Thank you.
    Senator Hutchison. Mr. Iger.
    Mr. Iger. I think Mr. Horn articulated my position almost 
to a T. I would say or add that as a parent I would object 
vehemently if the government stepped in and determined what was 
appropriate or inappropriate for my children to watch. That is 
a decision I would like to make with them. I also think, as Mr. 
Horn stated, that such laws would completely and totally ignore 
issues like context and content which are so subjective as he 
stated. And therefore, I would oppose them both from a personal 
standpoint and a professional standpoint.
    Senator Hutchison. Mr. McGurk.
    Mr. McGurk. Senator, I believe in the First Amendment. I 
believe the current film rating system that we have in place 
now works quite well. I believe the steps that we at MGM and 
United Artists and the other studios are undertaking that we 
described today will improve that system and make it work even 
better. And they will help better inform our parents and better 
protect our children. And I believe no additional steps are 
necessary at this time.
    Senator Hutchison. Mr. Parkes.
    Mr. Parkes. Yes, I concur with my colleagues completely, 
beyond any discussion of the First Amendment. There are 
objective criteria regarding say safety in other industries 
which simply do not apply to the movie business. It is not an 
objective issue.
    Senator Hutchison. Ms. Snider.
    Ms. Snider. I would just add to my colleague's comments, 
and to respond to your direct question can we legislate this 
decision, I would say to you that we do not need to. That we 
have adhered to this rating system for 32 years voluntarily. 
And our goal today is to give more information to parents 
everywhere that they could possibly want it. You know, on the 
advertisements, on the web sites, on the video cassette boxes. 
We want to provide ubiquitous information to parents everywhere 
so that they can make these informed decisions. And what I 
would say to you is that the same dedication that we have 
followed the MPAA regulations for 32 years as it relates to 
marking the product, we will follow these initiatives with the 
same dedication.
    Senator Hutchison. Mr. Chairman, I just want to make the 
point that many of us have been looking for ways to have some 
control over what our children are seeing in our culture. And 
we do not want to violate the First Amendment. But the question 
I raised is a legitimate one. And I am not satisfied that 46 
percent of children under 17 are able to buy tickets to violent 
R-rated movies under a rating system that you all have said is 
working, I do not think it is working. And we are looking for 
ways to make it work. And I am sending a signal that if you do 
not try to make this really work, that you are going to see 
some kind of legislation. Because parents are throwing up their 
hands in frustration. Thank you, Mr. Chairman.
    Senator McCain. Senator Dorgan.

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, thank you very much. Let me 
indicate, as you said when you started the hearings, this is 
not about censorship. It is not about content. It is not about 
the thought police. It is about an FTC report that says that 
there have been marketing practices that are inappropriate. 
Marketing movies that are R-rated, for example, to young 
children. And that report is fairly alarming.
    And I want to make just a comment and then ask a question. 
We should be able to entertain adults in this country without 
injuring children. Some of the art that is produced is so 
moving and so breath taking, the language for it has not yet 
been uttered. And some is disgusting and trash in my judgment. 
And you probably agree that both sides are produced in this 
country. And people have a right to produce both.
    But I, like you have children. I have a 13 year old and an 
11 year old. And you have no idea how often the subject of 
movie ratings comes up on a Friday evening in our home. And we 
are very strict about this. And yet, movies are marketed all 
the time to my 13 year old son over the television and other 
various things. And so he is coming to us with all of these 
movie requests and the ratings are not appropriate for him. And 
he does not see them.
    But a second grade teacher in Bismark, North Dakota told me 
1 day that a third of her class--she did a survey of her second 
grade class--a third of those children are able to watch PG-13 
movies. And a smaller percentage are able to watch ``R'' 
movies. Second graders. And she said there is a real parenting 
issue. And she said, those kids go to those movies that are 
inappropriate. They bring all that language to school. They 
bring the aggression to school.
    So parenting is one side of this equation and all of us 
should understand that. But it is increasingly difficult to be 
a good parent in today's pop culture when you have these kinds 
of things, inappropriate movies and so on, marketed at 
children, violence on television and movies.
    And I want to try to understand how all of this happened. I 
am talking about that which is described in the FTC report and 
whether steps have been taken to prevent it. First of all, let 
me say I appreciate the announcement today that some of you, 
most of you, are taking steps to deal with it. But the report 
talks about the research that is done. The National Research 
Group, which apparently many of your corporations employ. Now, 
they have been gathering 9, 10, 11, 12, 13 year old kids for 
research exercises to market test movies and so and so forth. 
That is wholly inappropriate. I mean, aside from the fact that 
the FTC says internal documents suggest that the companies have 
actually been strategizing that we are marketing this ``R'' 
movie to under age kids is wholly inappropriate.
    But let me ask about the research. You are talking about 
discontinuing those marketing strategies. Have all of your 
companies discontinued the research strategies using national 
market research--National Research Group from Los Angeles. Have 
all of you discontinued now the use of 9 year olds, 10 year 
olds, 13, 15 year olds?
    Because Mr. Farrell said, well, gee. I did not know that 
was going on. His company was doing it. He said, whatever we 
were doing, we were doing at the direction of the movie 
company.
    So, the question is has all of this stopped immediately? Or 
is it still happening?
    Ms. Snider. I can answer that. I mean, it has stopped 
absolutely for Universal.
    Senator Dorgan. When did it stop?
    Ms. Snider. In fact, the day that the report was issued and 
I read the report and I saw some of that information, I was 
appalled by it. And I knew that that week we had a movie that 
was being tested that had not yet been rated. And so often 
times what happens in these research preview screenings is that 
they are not yet rated. But it was a film that was intended to 
be an R. We knew it was going to be an R. And I called the 
marketing department right away. And I said, listen. Everybody 
has got to be carded. And they were carded. And it showed up on 
the Internet. They were surprised that that happened. But it is 
an absolute policy at Universal. And I cannot speak for my 
colleagues.
    Senator Dorgan. Others--has the policy changed? I mean, the 
policy existed apparently to allow this national marketing 
group and others, National Research Group, to bring young kids 
in, 9 year olds, 10 year olds, 11 year olds, one group of 100 
of them, to market test or do research on what parts of an 
``R'' movie excite them or create passion. Has all of that 
stopped? Mr. Parkes.
    Mr. Parkes. Well, speaking for DreamWorks, we have never 
included children in the test marketing of R-rated movies for 
violence and we never will.
    Senator Dorgan. Have you employed National Research Group 
of Los Angeles?
    Mr. Parkes. Yes.
    Senator Dorgan. So you have employed them with specific 
instructions not to include these kids?
    Mr. Parkes. Correct.
    Senator Dorgan. And they have not?
    Mr. Parkes. Yes.
    Senator Dorgan. Thank you. Mr. McGurk.
    Mr. McGurk. As I described in my remarks, at the beginning 
of this year, we unilaterally stopped that practice that you 
described.
    Senator Dorgan. Mr. Iger.
    Mr. Iger. We have been applying our new guidelines 
vigorously since they were announced and are in full compliance 
with them in the regard that you asked or inquired.
    Senator Dorgan. With respect to the rest of you, are any of 
you still using children or having a research group that uses 
children to evaluate ``R'' movies? Or have all of you taken 
these steps?
    Mr. Horn. Senator, I would like to first say we have not 
employed that practice, even though we do employ National 
Research Group. It is we who decide who attends our research 
screenings. But now in our guidelines, we are specifically 
stipulating that we will not allow anyone into the research 
screening under the age of 17 unless accompanied by a parent. 
In which case, we will.
    Mr. Friedman. Senator, I would also like to indicate that 
Paramount Pictures is not using that 9, 10, 11, 12 range in any 
of our market research screenings. That would be totally 
inappropriate. And we will not allow young people under the age 
of 17 into our market research screenings without a parent or 
guardian.
    Mr. Gianopulos. And I can represent the same on behalf of 
20th Century Fox, Senator.
    Mr. Harris. Senator, I have waited until my other 
colleagues had responded because I know the particular item 
that was in the New York Times this morning addressed a 
Columbia Pictures' document that was--turned in to the FTC for 
its report. And I think it would be only appropriate that I 
give a little background on that.
    That was a research study that was not commissioned or paid 
for by our company. However, it was commissioned and paid for 
by an independent film producer for whom we were going to 
produce--I mean, deliver, distribute the film and market it. So 
we did not have it removed from our files because it was part 
of the record.
    The questions that you posed earlier and that have been 
posed by other Senators today concerning parents is one that we 
may have much dialog about. My colleague Mr. Horn just 
mentioned seeing the variety of things that happened.
    In the New York Times article there, you will take note--
which means I do not have to explain in full--that in this 
particular instance, the first film in a pair of films was 
attended by young people under the age of 12. The film producer 
was surprised by that. The research organization said we can 
find out about that. And the parents of those individuals who 
saw that first film were asked if they would let those children 
be interviewed on the film that they had seen some months or 
some time before. Those parents all said yes and the research 
was conducted by telephone. I believe the FTC summary refers to 
it as having been a focus group. But the actual physical method 
was by telephone.
    Now, the parents who authorized the children to go the 
first time, who authorized the interviews to take place, one 
may have much dialog about what parenting is about today, but I 
totally defend their choice.
    Having said that about something that took place a couple 
of years ago, we totally subscribe to what we have placed with 
the MPAA members, that we will not, as Alan Horn just 
described--have any research groups where any recruited viewer 
under the age of 17 will not be accompanied by a parent or 
guardian.
    Senator Dorgan. Mr. Chairman, most parents if they were 
able to have access today to these microphones would say to 
this industry don't target kids. Help us be good parents. I 
mean, it is tough enough to be a good parent in today's pop 
culture. They need your help as well. The Chairman has called 
this hearing for which I am very grateful. And many of our 
colleagues have provided some leadership on this issue.
    But we must see action. Your discussions today are a step 
in that direction. None of us, however, should have been 
surprised by what the FTC said. Every parent out there knows if 
they have got 10, 12 or 14 year old kids, that this sort of 
thing has been targeted to kids time and time and time again. 
And it is not right. And every parent would say that. And so 
you create good art for which, you know, I commend you and I 
say I want to be proud of the art you produce. But if you are 
going to produce entertainment for adults, help us protect 
children. It is inappropriate for children.
    Senator McCain. Thank you, Senator Dorgan. I would like to 
thank you all for being here. I know that all of you have very 
heavy responsibilities. And I want to thank you for taking the 
time to be here before the Committee. We are going to ask the 
FTC to continue to monitor--I would like to turn to Senator 
Hollings first. Senator.
    Senator Hollings. You refer, Mr. Iger, to the Walt Disney 
Company announcement of its policies for marketing its motion 
pictures, paragraph two. The ABC television network will not 
accept advertisements for R-rated films in prime time 
entertainment programming prior to 9 p.m. Why?
    Mr. Iger. We looked at the audience makeup of programs 
prior to 9 p.m. and felt that more children under 17 were 
consuming our programs in the earlier evening time period and 
decided to establish 9 o'clock as the cutoff for that reason. 
That does not mean that we are not open to considering banning 
certain ads for R-rated films in certain programs after 9 p.m. 
as well and we will continue to monitor that.
    Senator Hollings. But prior to 9 p.m., what does that prime 
time entertainment program include?
    Mr. Iger. It does not include news or sports.
    Senator Hollings. That includes ESPN, Lifetime also?
    Mr. Iger. That is talking about the ABC television network 
in those guidelines.
    Senator Hollings. How about ESPN and Lifetime?
    Mr. Iger. Well, in ESPN's case, we consider it sports. And 
it does no include ESPN. However, there are certain programs 
that air on ESPN at varying times of the day that are consumed 
by more people under 17. And in those cases, we will refrain 
from airing commercials for R-rated films in those programs. 
For instance, they cover the little league world series. Even 
though it is a sports program and our guidelines do not include 
sports programs, we feel it would be inappropriate to put ads 
for R-rated films within the body of that program.
    It does not include Lifetime. Lifetime is a cable entity 
that we own 50 percent of that is governed by a set of rules 
that allows the management of Lifetime a level of autonomy 
reporting to the board which is made up of 50 percent of 
executives of the Walt Disney Company. They have not subscribed 
to our guidelines.
    Senator Hollings. Prime time, is that just an hour, 8 to 9 
p.m.? Or when does it commence up to 9 p.m.? I agree with you 
on the after 9 p.m.
    Mr. Iger. Prime time is 22--in the case of the ABC 
television network is a 22 hour block between 8 and 11 p.m. on 
Monday to Saturday and 7 to 11 p.m. on Sunday. That is prime 
time.
    Senator Hollings. That is prime time. Now, as I understand 
it then, you do not think it is good policy to advertise 
violence during prime time. Accepting that principle for 
advertising, how about the showing of the film itself?
    Mr. Iger. Well, when the film runs on ABC, it is heavily 
edited. It began its life as an R-rated film and in terms of 
motion picture distribution. But once it runs on the ABC 
television network or on other commercial broadcast networks, 
not just ours, it is no longer an R-rated film. It was branded 
an R-rated film when it was first distributed. But a 
substantial portion of the content within that film that caused 
it to get an R-rated rating was excised.
    Senator Hollings. You cannot tell me that the advertisement 
would have violence, but the film itself would not? Is that 
right? That is false and misleading advertisement.
    Mr. Iger. I am not sure I understand your question. When 
the film itself runs on the ABC television network, it is 
heavily edited. Therefore, in the form that it actually runs on 
ABC, it would not qualify as an R-rated film. When the movie is 
distributed to motion picture screens across the country as an 
R-rated film, then our guidelines suggest that we will restrict 
the advertising and marketing of that film in certain prime 
time hours on ABC.
    Senator Hollings. But I am making progress. I see that you 
agree with the safe harbor during prime time up until 9 
o'clock.
    Mr. Iger. No----
    Senator Hollings. The advertising of violence. Is that not 
what your section two says?
    Mr. Iger. No, I do not agree with your safe harbor bill.
    Senator Hollings. Well, what does that prescribe? You just 
said the ABC television network will not accept advertising for 
R-rated films in prime time entertainment programming prior to 
9 p.m.
    Mr. Iger. That is correct. That is advertising for R-rated 
films that did not air on----
    Senator Hollings. Well, that is a safe harbor for 
advertising, is it not?
    Mr. Iger. Well, my understanding is that your safe harbor 
initiative stretches well beyond advertising to include the 
programs themselves.
    Senator Hollings. Oh, yeah. It does. You are exactly right. 
That is what I am trying to get to. Since you agree it applies 
to advertising, why not to the film itself? That was my 
question. It is a wonderful principle. And I am glad to see at 
least you making progress.
    Mr. Iger. If you are asking me whether we would run an R-
rated film in the prime time period----
    Senator Hollings. I am asking you about the principle that 
you have adopted here in paragraph two that you do not think 
that Walt Disney should accept advertising violence during 
prime time up until 9 o'clock. Now, that is what it says as I 
am reading it.
    Mr. Iger. Advertising. That is correct.
    Senator Hollings. And that is correct. So if you do not 
want to accept the advertising for that violence, why not adopt 
that principle for the film itself?
    Mr. Iger. Well, that is advertising for R-rated films.
    Senator Hollings. That's right.
    Mr. Iger. We do not air R-rated films on the ABC television 
network.
    Senator Hollings. You do not.
    Mr. Iger. That's correct.
    Senator Hollings. Well, excuse me, that is my----
    Mr. Iger. What we air on the ABC television network, they 
would no longer qualify as an R-rated film.
    Senator Hollings. Then that is what Mr. Patton, the 
Executive Vice President, is getting to when he sent me this 
and he said, ``We are honestly trying to do the right thing for 
the right reasons on violence. Michael Eisner worked hard 
within our organization to get agreement on our new marketing 
guidelines for R-rated films. The other networks though are not 
following our lead and instead are accusing us of unworthy 
motives.'' And he asked me any help that you can give would be 
greatly appreciated.
    I love your comment. You are a good man. All of you all are 
good. But I can see our Senator friends here talking about 
families and how we have got to get your help and everything 
else like that. Violence pays. There is not any question about 
it. Over the 50 year period, there is no question. And we do 
have the First amendment so we cannot control content. It is 
absolutely futile to think that families are going to run 
around and set V-chips around. They do not do it. In other 
areas, like in Europe, and down in New Zealand, Australia and 
Canada, we had one witness at the last hearing who said, wait a 
minute. It is a cultural difference. In Detroit, they have all 
this violence. But if they cross over the river to Windsor, 
Canada, they do not. Well, Canada has got the safe harbor. What 
is the objection to the safe harbor?
    Mr. Iger. I believe decisions in terms of what programs air 
on the ABC television network should be made by ABC and the 
Walt Disney Company. And that it is not, in my opinion, 
appropriate for the government to start making program 
decisions for us. And that is my objection to the safe harbor. 
I stand completely behind the program practices of the ABC 
television network. I believe we exercise our responsibilities 
to the highest degree. I have no reason to in any way become 
overly defensive about the quality of the programming that airs 
on ABC prior to 9 o'clock. I believe we are doing our job in 
that regard. And I do not believe we need government 
intervention to in any way govern the programs that we are 
making available to the American public.
    Senator Hollings. We cannot govern the programs you make 
available. We can govern the free airwaves coming into the 
homes of America. We found out constitutionally that the FCC 
with respect to that eliminates obscenity. And the question is 
can we extend that now to violence? But I do appreciate it, Mr. 
Iger, that you do believe in a safe harbor for advertising. 
Thank you very, very, much.
    Senator McCain. You are welcome.
    Senator Brownback. Mr. Chairman.
    Senator McCain. Senator Brownback.
    Senator Brownback. I wonder too if I could enter two 
documents into the record and actually applaud Mr. Iger on 
their statement that you will not advertise R-rated films 
during the family hour. Is that a correct statement of your new 
policy, Mr. Iger?
    Mr. Iger. We will not advertise R-rated films prior to 9 
o'clock. Using the term family hour is yours.
    Senator Brownback. It is even further----
    Mr. Iger.--But I do not mean to become argument over your 
choice of words.
    Senator Brownback. You have expanded the definition there. 
I appreciate that. I want to enter into the record if I could a 
Parents' Television Council finding. Of the 54 movies 
advertised that aired during the family hour, 45 or 83 percent 
were for R-rated films. The family hour is 8 to 9 o'clock. You 
have said before 9 p.m., you will not advertise any R-rated 
movies. I hope that the rest of the companies would follow your 
lead and not advertise R-rated films prior to 9 p.m.
    A second document I want to enter into the record is a 
joint statement on the impact of entertainment violence on 
children. This is a document signed by six of the major public 
health organizations saying that exposing children to violent 
entertainment is causing increased aggressive behavior among 
some children. I am sure this is a cause of great concern for 
each of you that this is taking place and signed by American 
Psychiatric Association, American Academy of Pediatricians, 
American Medical Association amongst others. And I will provide 
a copy to each of you.
    I want to follow up on Mr. Horn's statement. You said you 
would go beyond the MPAA's guidelines. And you said you would 
not advertise R-rated films during both ``G'' and ``PG'' 
movies. Mr. Horn and I applaud you for doing that. Will the 
rest of you follow suit on that as well and not advertise R-
rated films as trailers in a ``PG'' film? Can I get agreement 
that if somebody is not willing to do that, would you speak 
now?
    Mr. Friedman. Senator, I would say to you that our 
guidelines are again to review each film individually with 
specific attention given to who is an appropriate audience. 
Because a film is rated ``PG'' does not necessarily mean it is 
a family oriented picture. It can very likely be an adult 
oriented picture, and we have had experience with that. So we 
might choose on an adult oriented ``PG'' film to attach certain 
R-rated trailers. Now, understand that those trailers are 
approved by the MPAA for all audience viewing.
    Senator Brownback. So you are going to continue to do it. 
Are others of you willing to say you will not?
    Mr. Gianopulos. Senator, we made that commitment on behalf 
of 20th Century Fox yesterday.
    Senator Brownback. Thank you, very much.
    Ms. Snider. I just wanted to concur that Universal is 
prepared to make that commitment.
    Senator Brownback. Very good.
    Mr. Parkes. The same with Dream Works, yes.
    Senator Brownback. Thank you, Mr. Parks.
    Mr. McGurk. MGM and United Artists are also making that 
commitment.
    Senator Brownback. Thank you.
    Mr. Iger. As is the Walt Disney Company.
    Senator Brownback. Thank you.
    Mr. Harris. As part of our continuing review on trailer 
placement, we will also be applying those same criteria to 
``PG'' films.
    Senator Brownback. Okay. So you will not be advertising 
``R'' films during ``PG'' movies.
    Mr. Harris. As trailer attachments to them. That's correct.
    Senator Brownback. Thank you, very much. Well, we got quite 
a ways on that. Now, let me press for the family hour 
advertising of R-rated films. The family hour is that time 
between 8 and 9 p.m., network television. Will you agree not to 
advertise R-rated movies during the family hour as the Walt 
Disney Company has agreed not to?
    Ms. Snider. Nothing would make me happier than to be able 
to agree to it in a blanket way and absolutely. I would want to 
know what the shows and the demographics of those shows are on 
at 8 o'clock to know if whether or not there might be instances 
of movies like saving Private Ryan or Erin Brokovich or Almost 
Famous that might be suitable. And if it did not fit that 
criterion, we would avoid that family hour.
    Senator Brownback. I am just asking if you would follow 
along the lines of what Disney has agreed to do.
    Mr. Parkes. I am not prepared to categorically make that a 
policy of our company.
    Senator Brownback. Mr. McGurk.
    Mr. McGurk. At MGM and UA, we think it is a very 
interesting proposal, but we think we need to study it further 
before we decide whether we are going to adopt it or not.
    Senator Brownback. Mr. Horn.
    Mr. Horn. Senator, we are not prepared to do that. We are 
prepared to adhere to our guidelines, which is the 35 percent 
criterion. We are not willing to designate it by hour, sorry.
    Senator Brownback. Mr. Harris.
    Mr. Harris. Senator, thank you for the question. I think 
one of the things that you are finding here----
    Senator McCain. Mr. Harris, could you answer the question?
    Senator Brownback. Yes or no will do just fine. Yes would 
be the best.
    Mr. Harris. Since we have two networks at this table who 
have announced that they do not plan to accept advertising for 
R-rated films or violence before 9 p.m. in their prime time 
programing, we will obviously adhere to those two networks as 
they now exist. On the other networks who have not yet 
established such policies, we will also have it under study.
    Mr. Gianopulos. Senator, yesterday, our parent company, 
News Corporation, announced on behalf of the Fox Broadcasting 
Company that they will not accept advertising for R-rated films 
in any family programming or in any program in which 35 percent 
of the audience or more is anticipated to be under 17. In 
addition, the Fox Family channel will produce and air a 1-hour 
special aimed at helping parents be better informed and make 
better informed decisions about films, music and video games.
    Senator Brownback. Let me go to the next person if you 
could just because my time is very short.
    Mr. Friedman. Senator, I would just call your attention to 
the fact that not all 8 p.m. shows in fact have high family 
viewing indices, that some 8 p.m. shows actually have a lower 
child rating than shows after 9 o'clock. And Paramount will 
take it on a case-by-case basis.
    Senator Brownback. Mr. Chairman, you have been kind to let 
me have a second round of questions. I agree with what Mr. 
Dorgan has said. And as a parent, we have constant discussions 
in our family about this. And the problem is that you make it 
more difficult for parents to keep on top of what is going on 
when you target market this to children. You have said that it 
is a parent's responsibility to decide--so why not target--
market to parents, instead of kids. What you're doing now is 
targeting the child to try to force the parent to take the 
child to the movie. You are blaming parents for not making wise 
decisions, and then circumventing them to get at their kids. It 
needs to stop.
    And I think we have made some progress here today. I think 
we have got a long ways to go. And I do not support censorship. 
I think it would be absolutely the wrong way. It is 
unconstitutional and un-American. But you have really got to 
help us out. Because parents are really struggling out there to 
try to raise their children.
    So many of them come up to me anymore and say thank 
goodness I have got my kids raised. The pressure parents face 
is so intense. And you are part of the solution and part of the 
problem. Because you can produce beautiful stories. I love a 
number of your movies. You can also really, really mess with 
kids' minds. And it really troubles parents. And it troubles 
the kids. And it hurts us as a country.
    Senator McCain. Senator Breaux.
    Senator Breaux. Thank you, Mr. Chairman, for the second 
round. I am a big believer in the fact that the government does 
not raise children. Parents raise children. And that is where 
the first line of responsibility should be. And I think that we 
should give parents all the tools that they can possibly have 
in order to make sure they make the right decisions in 
selecting what their children are exposed to as they attempt to 
raise them in a very difficult society. But we cannot make 
those decisions as a government. Those are parental decisions. 
And parents raise children, not government.
    It seems to me that one of the areas where there is a 
breakdown is in the actual theaters themselves that sell the 
tickets and admit children and everyone else into their 
theaters to see the products that you produce. If you go into a 
convenience store, it is replete with signs saying we card 
everyone. We card anyone under 25 before we sell them 
cigarettes or before we sell them alcohol or products that 
cannot be sold to minors. It seems to me--and I have seen it 
happen time and again, and I am sure everybody here in the 
audience has seen, those prohibitions in effect and working.
    I do not see that in theaters. It seems to me that most of 
the people I see selling tickets in the theaters many times 
themselves are teenagers and part-time jobs in the evening. 
They may be 18 and they're not really, I think, enforcing the 
NC-17 rating that says you cannot come in or an ``R'' rating 
that says you cannot come in without a parent or an 
accompanying adult.
    And then sometimes when they get in the larger theaters, 
they may have a ``PG'' movie and they may have an ``R'' movie 
and an NC-17. And too many times the kids just duck out of the 
``PG'' movie into the ``R'' movie or into the NC-17 movie. 
There is nobody watching who is going into what particular 
theater in the complex.
    You all provide those films to those theaters. They cannot 
exist without you. Sometimes you own some of the chains. What 
can be done, if anything, to ensure that after the ratings--
which I think are pretty effective are in place on a movie that 
you send to a theater--what can be done to assure that the 
theaters do what I guess they are supposed to do in the absence 
of a parent doing it before? What can you all say to the 
theaters who run your movies about making sure that they do not 
admit children to NC-17s and to ``R'' movies without an 
accompanying adult? I do not think it is working at that stage 
very well at all. Any suggestions?
    Mr. Friedman. Senator, as part of the 12 point initiatives 
that we have agreed upon, we have talked about discussing with 
our exhibition partners their diligence in, as you say, carding 
the attendees of our films, especially R-rated films, to try to 
help in preventing inappropriate attendance to our films. In 
addition to that, we are suggesting that they increase the 
exposure to our ratings information through their telephone 
banks and through displays within theaters, lobbies, etc.
    Senator Breaux. Would it be possible for you--because these 
theaters do not exist without you. I mean, that is clear. The 
movie theaters by and large do not make pictures. Would it be 
permissible or appropriate or could you in fact say that we 
will supply no theaters our pictures who do not have an 
enforcement procedure that they have developed to ensure that 
children who are not rated as suitable for the movie can still 
get in? I mean, you can do that. I mean, if you do not supply 
them films, folks, they are out of business. And if they do 
not--under this concept, if they do not present a plan about 
how they are going to enforce the ratings, you are not going to 
give them any movies. You know how fast they would come up with 
a plan? Before the day is over. Can you do that? Would you do 
that? Is it a good idea? Any comments? Ms. Snider.
    Ms. Snider. I think it is a very interesting idea. And the 
only caveat and challenge to the idea is that many of our 
partners in exhibition or the companies that are involved in 
exhibition are already if not out of business very much 
struggling. And so in the past when we have mentioned the idea 
of hiring more ushers, it has been an idea that has been 
discussed, but to which there has not been an adequate 
response. And I think what these meetings that we will put 
forth will encourage are other ways to require enforcement. 
There may be a ten cent solution to a ten dollar problem. It 
may be requiring carding. It could be changing the colors of 
certain tickets. It could be requiring stamps. And I think that 
in addition to providing information in theaters that would 
help inform parents of when not to even come at all when they 
should exercise their judgment, we can also work with our 
friends in exhibition to provide a meaningful response to this.
    Senator Breaux. My time is practically up and it is up now. 
The point I am trying to make is that it seems to me that that 
is one of the break downs in this chain. I mean, I remember 
when I was a youngster trying to get into the movies, I was 
always trying to buy the children's ticket. And I was a little 
taller than some of my 12 year olds. And they kept carding me 
to make sure I was not 13. I was trying to get in on a cheap 
ticket and they wanted me to buy an adult ticket and I was not 
there yet. And it was pretty effective with regard to the 
price. But no one has ever asked me, probably my children 
either, about their age, being eligible to see the actual 
movie. And it seems to me that someone of responsibility at the 
ticket counter when they sell the ticket could ask for a card 
just like they ask for an ID to purchase cigarettes or to 
purchase alcohol. And if it is an NC-17, are you 17? Or are you 
15? And if you do not show proof, you do not get in. And if it 
is an R-rated movie, they can say who is accompanying you. And 
if you do not have someone, well, then you cannot buy the 
ticket. I mean, it would seem to me that would be something 
that would be effective. And I just throw it out as a 
suggestion. Thank you, all.
    Senator McCain. Thank you, Senator Breaux. And, Senator 
Breaux, along with what you are talking about, according to 
this FTC report, and I quote, ``In a June, 1999 public 
announcement with President Clinton, the National Association 
of Theater Owners promise stricter enforcement of the MPAA 
guidelines. Specifically, NATO announced that all its member 
theaters would require, at the box office, photo identification 
of unaccompanied young patrons seeking admission to R-rated 
films.'' And yet, after that announcement was made, there was a 
survey, part of the survey done by the FTC, where the 
enforcement is--well, it is about half. And I think that we 
ought to have some dialog with the theater owners.
    Senator Breaux. Senator, if I could just make a quick 
comment on one thing. You know, if a liquor dealer sells to 
minors one, two, three times and they are caught, they lose 
their license to sell. And with their power of supplying the 
theater owners, theater owners cannot exist without these 
people. And if it is a hard and fast rule that a certain 
percentage of violations loses your right to show movies, I 
guarantee you, they are going to jump as quickly as they can to 
enforce it. Otherwise, they are out of business.
    Senator McCain. I thank the witnesses. And I want to thank 
you for your patience. And I would like to make a couple of 
comments. First of all, I still am concerned about the language 
in some of the initiatives.
    In number 2, it says no company will knowingly include 
persons under the age of 17 in research screenings for films 
rated R for violence or in research--what is this knowingly 
about? I mean, if you commission the report, you are 
responsible for it. If anyone in a position of responsibility, 
something happens on their watch, whether they knowingly or 
unknowingly know about it, then they are responsible. I hope 
you could remove the word no company will knowingly include 
persons in research screenings. Because if you are responsible 
for the screenings, then you should know about it.
    I think the second issue I would like to just mention 
again, this language that each company will review its 
marketing advertising. But in order to further the goal of not 
inappropriately specifically targeting children, my friends, 
that language is not good enough. Because it leaves a 
subjective decision in your hands. And clearly, some very bad 
subjective decisions were made in the past as far as marketing 
this material to young children.
    And I want to applaud again Warner Bros., Disney, Fox and 
clearly Dream Works from their testimony. They have not worried 
about inappropriately specifically. They just said they won't 
do it. I hope that the rest of the industry would follow their 
lead.
    And by the way, on the issue of advertising, we know that 
advertising has an effect. Already we have seen an effect when 
they have banned some forms of alcohol advertising. And, we 
have seen an effect in some states where they have devoted--as 
every state should--a lot of the money that they got from the 
tobacco settlement to anti youth tobacco use advertising. It 
has worked in California. It has worked some in my state. And 
it is clear that advertising does work. And sending messages to 
children which is being, again, done in some states, about the 
effects of the use of tobacco, has worked and has reduced the 
use of tobacco on the part of children in places where they 
have had active programming. That is I think something that is 
important here.
    Finally, when I tune into HBO and before the movie starts, 
there is a list of what is contained in that movie. It is very 
clear to me and it is very clear to parents. And we hear 
violence, graphic sexual language, et. cetera, et. cetera. 
There are about four or five categories. I am sure you are as 
familiar with it as I am.
    One of the complaints that we hear all the time is parents 
say they do not understand the present rating system. Perhaps 
they should, but they do not. And I hope that we could work out 
a rating system, as the Director's Guild has called for, that 
is clearly understandable by parents, by children, by everybody 
who is going to make a decision as to whether to view a film or 
not. Or to buy a CD or buy a video game.
    And I think it would be very helpful if we had this 
universal rating system. And I hope all of you would seriously 
consider that. It does not matter to me if the present rating 
system has been in for 32 years or 300 years. We still hear 
from parents and families and parental organizations and family 
advocacy organizations that there is a lack of understanding 
about the present rating system.
    So I also agree with Senator Brownback, and I think we made 
significant progress. I think some segments of the industry 
have made more progress than others. I hope that we could have 
everyone make the same progress at Warner Bros., Disney, Fox, 
and Dream Works have done.
    And so we are not going to pass legislation that requires 
you to have a universal rating system. I am not sure how we do 
that. But I think that the FTC will continue to be involved in 
monitoring what goes on. And we will be working with the FTC.
    And I want to finally end up again, there are many who 
oppose this hearing and what we are trying to achieve here and 
channeling it off into the argument about censorship. This 
hearing, as far as this member is concerned, was not about 
censorship. It was all about an FTC report which was given to 
this Committee as is our responsibility, not our privilege, but 
our responsibility, as the Committee that oversights the 
Federal Trade Commission. And then we obviously need 
information and consider various courses of action. Really the 
future of your business lies in your hands.
    But I also would remind you when many families read this 
story that is on the front page of the New York Times this 
morning--and I think you have some work to do. And I think you 
have done some work. And I appreciate what you have done. But I 
would argue that you perhaps should work a little more 
assiduously so that parents again can have the kind of trust 
and confidence in you that they deserve and frankly is a result 
of the quality product that you have produced for many 
generations.
    So I thank you for being here. I look forward to working 
with you, both collectively and individually. And we appreciate 
your patience in this very long hearing. Thank you. This 
hearing is adjourned.
    [Whereupon, at 12 p.m., the hearing was adjourned.]
                                Appendix

                       Parents Television Council
    On Wednesday, September 27th, the U. S. Senate Commerce Committee 
will hold hearings with the major movie studios regarding the Federal 
Trade Commission's report on the marketing of violent entertainment to 
children.
    The Parents Television Council looked at how many advertisements 
for R-rated films aired during the family hour on the broadcast 
networks from September 1 to September 20, 2000. The study covers only 
movies playing in theatres, not videocassette releases.
    Of the 54 movie advertisements that aired during the family hour, 
45, or 83%, were for R-rated films.
    Network breakdown: Number of advertisements for R-rated films on 
each network during the family hour.

   LCBS: 3, or 7% of family-hour advertisements for R-rated 
movies.

   LNBC: 4, or 8%.

   LABC: 5, or 11%.

   LWB: 9, or 20%.

   LUPN: 11,or 24%.

   LFOX: 13, or 29%

    Movie studios: Number of advertisements for R-rated movies placed 
on the networks during the family hour.

   LArtisan: 5, or 11% of family-hour advertisements for R-
rated movies.

   LTime Warner (New Line Cinema, Warner Bros.): 5, or 11%.

   LSony (TriStar, Columbia): 6, or 13%.

   LDreamWorks: 7, or 16%.

   LSeagram (Universal. USA Films): 9, or 20%.

   LDisney (Disney, Buena Vista, Touchstone, Hollywood, 
Miramax, Dimension) 13, or 29%.


----------------------------------------------------------------------------------------------------------------
                 Show                                 Rating                            Movie Company
----------------------------------------------------------------------------------------------------------------
Mysterious Ways-NBC
Bait                                  R                                     Warner Brothers
 
Moesha-UPN
Urban Legends                         R                                     Columbia Pictures
 
Dharma and Greg-ABC
Nurse Betty                           R                                     USA Films
Almost Famous                         R                                     DreamWorks
 
That 70s Show-Fox
The Watcher                           R                                     Universal
Duets                                 R                                     Hollywood
The Way of the Gun                    R                                     Artisan
 
Titus-Fox
The Way of the Gun                    R                                     Artisan
The Watcher                           R                                     Universal
Nurse Betty                           R                                     USA Films
 
Buffy the Vampire Slayer-WB
The Way of the Gun                    R                                     Artisan
 
Family Guy-Fox
Bait                                  R                                     Warner Brothers
 
Seven Days- UPN
The Way of the Gun                    R                                     Artisan
The Watcher                           R                                     Universal
The Cell                              R                                     New Line Cinema
 
Dawson's Creek-WB
Urban Legends                         R                                     Columbia Pictures
 
Friends-NBC
The Watcher                           R                                     Universal
Duets                                 R                                     Hollywood Films
 
Smackdown!- UPN
Urban Legends                         R                                     Columbia Pictures
Bring It On                           PG-13                                 Universal
The Way of the Gun                    R                                     Artisan
Get Carter                            R                                     WB
Boy Meets World-ABC
Bring It On                           PG-13                                 Universal
 
Secret Agent Man-UPN
Scary Movie                           R                                     Dimension
 
ABC Special-Emmy's
Remember the Titans                   PG                                    Disney
Almost Famous                         R                                     DreamWorks
 
Touched By an Angel-CBS
Remember the Titans                   PG                                    Disney
 
The PJ's- WB
Scary Movie                           R                                     Dimension
 
Moesha-UPN
Remember the Titans                   PG                                    Disney
 
Dharma and Greg-ABC
Almost Famous                         R                                     DreamWorks
Duets                                 R                                     Hollywood Pictures
 
That 70's Show-Fox
Almost Famous                         R                                     DreamWorks
Urban Legends                         R                                     Columbia Pictures
Duets                                 R                                     Hollywood Pictures
 
Titus-Fox
Nurse Betty                           R                                     USA Films
 
3rd Rock from the Sun-NBC
Almost Famous                         R                                     DreamWorks
 
Grown Ups-UPN
Scary Movie                           R                                     Dimension Films
 
Buffy the Vampire Slayer-WB
The Watcher                           R                                     Universal
Scary Movie                           R                                     Dimension
 
Dawson's Creek-WB
Scary Movie                           R                                     Dimension
The Watcher                           R                                     Universal
 
Smackdown-UPN
Urban Legends                         R                                     Columbia Pictures
 
Charmed-WB
Scary Movie                           R                                     Dimension Films
Scary Movie                           R                                     Dimension Films
Beautiful                             PG-13                                 Destination
 
Survivor-CBS
Get Carter                            R                                     WB
Almost Famous                         R                                     DreamWorks
Duets                                 R                                     Hollywood
 
Fox Special
Almost Famous                         R                                     DreamWorks
Scary Movie                           R                                     Dimension
 
The Parkers-UPN
Remember the Titans                   PG                                    Disney
 
The PJ's-WB
Pay It Forward                        PG-13                                 Warner Brothers
 
Moesha-UPN
Urban Legends                         R                                     Columbia Pictures
 
Seventh Heaven-WB
Remember the Titans                   PG                                    Disney
----------------------------------------------------------------------------------------------------------------

                                 ______
                                 
 Joint Prepared Statement of Donald E. Cook, M.D., President, American 
 Academy of Pediatrics, Clarice Kestenbaum, M.D., President, American 
  Academy of Child & Adolescent Psychiatry, L. Michael Honaker, PhD., 
 Deputy Chief, Executive Officer, American Psychological Association, 
Dr. E. Ratcliffe Anderson, Jr. M.D., Executive Vice President, American 
Medical Association, Bruce Bagly, M.D., President, American Academy of 
 Family Physicians, and Daniel B. Bornstein, M.D., President, American 
                        Psychiatric Association
    We, the undersigned, represent the public health community. As with 
any community. there exists a diversity of viewpoints--but with many 
matters, there is also consensus. Although a wide variety of viewpoints 
on the import and impact of entertainment violence on children may 
exist outside the public health community, within it, there is a strong 
consensus on many of the effects on children's health, well-being and 
development.
    Television, movies, music, and interactive games are powerful 
learning tools, and highly influential media. The average American 
child spends as much as 28 hours a week watching television, and 
typically at least an hour a day playing video games or surfing the 
Internet. Several more hours each week are spent watching movies and 
videos, and listening to music. These media can, and often are, used to 
instruct, encourage, and even inspire. But when these entertainment 
media showcase violence--and particularly in a context which glamorizes 
or trivializes it--the lessons learned can be destructive.
    There are some in the entertainment industry who maintain that 1) 
violent programming is harmless because no studies exist that prove a 
connection between violent entertainment and aggressive behavior in 
children, and 2) young people know that television, movies, and video 
games are simply fantasy. Unfortunately, they are wrong on both counts.
    At this time, well over 1000 studies--including reports from the 
Surgeon General's office, the National Institute of Mental Health, and 
numerous studies conducted by leading figures within our medical and 
public health organizations--our own members--point overwhelmingly to a 
causal connection between media violence and aggressive behavior in 
some children. The conclusion of the public health community, based on 
over 30 years of research, is that viewing entertainment violence can 
lead to increases in aggressive attitudes, values and behavior, 
particularly in children.
    Its effects are measurable and long-lasting. Moreover, prolonged 
viewing of media violence can lead to emotional desensitization toward 
violence in real life.
    The effect of entertainment violence on children is complex and 
variable. Some children will be affected more than others. But while 
duration, intensity, and extent of the impact may vary, there are 
several measurable negative effects of children's exposure to violent 
entertainment. These effects take several forms.

       LChildren who see a lot of violence are more likely to 
view violence as an effective way of settling conflicts. Children 
exposed to violence are more likely to assume that acts of violence are 
acceptable behavior.

       LViewing violence can lead to emotional desensitization 
towards violence in real life. It can decrease the likelihood that one 
will take action on behalf of a victim when violence occurs.

       LEntertainment violence feeds a perception that the 
world is a violent and mean place. Viewing violence increases fear of 
becoming a victim of violence, with a resultant increase in self-
protective behaviors and a mistrust of others.

       LViewing violence may lead to real life violence. 
Children exposed to violent programming at a young age have a higher 
tendency for violent and aggressive behavior later in life than 
children who are not so exposed.

    Although less research has been done on the impact of violent 
interactive entertainment (video games and other interactive media) on 
young people, preliminary studies indicate that the negative impact may 
be significantly more severe than that wrought by television, movies, 
or music. More study is needed in this area, and we urge that resources 
and attention be directed to this field,
    We in no way mean to imply that entertainment violence is the sole, 
or even necessarily the most important factor contributing to youth 
aggression, anti-social attitudes, and violence. Family breakdown, peer 
influences, the availability of weapons, and numerous other factors may 
all contribute to these problems. Nor are we advocating restrictions on 
creative activity. The purpose of this document is descriptive, not 
prescriptive: we seek to lay out a clear picture of the pathological 
effects of entertainment violence. But we do hope that by articulating 
and releasing the consensus of the public health community, we may 
encourage greater public and parental awareness of the harms of violent 
entertainment, and encourage a more honest dialogue about what can be 
done to enhance the health and well-being of America's children.
                                 ______
                                 
                Prepared Statement of Hon. Max Cleland, 
                       U.S. Senator from Georgia
    Mr. Chairman, thank you for gathering these representatives from 
the movie industry to testify today. The motion picture ratings system, 
established in 1968, is the oldest such system and the best known of 
all the entertainment ratings systems. However, popularity does not 
excuse the actions revealed in the FTC report. I am talking about using 
children as young as 10 in focus groups reviewing R-rated movies. I am 
talking about attempts to market a film showing devastating bomb blasts 
and using strong language and sexual innuendo to children 6-11 on 
Nickelodeon. I am talking about one studio's internal marketing report 
which states, and I quote:

    L``Our goal was to find the elusive teen target audience . . . To 
do so, we went beyond the media partners by enlisting young, hip ``Teen 
Street Teams'' to distribute items at strategic teen ``hangouts'' such 
as malls, teen clothing stores, sporting events, Driver's Ed classes, 
arcades and numerous other locations.''

    This type of behavior is inappropriate if not ethically 
questionable. The marketing areas over which this industry has control, 
it should control.
    Although there is a role for parents in this mix, the industry can 
act as well. I am encouraged by the early decision by Disney not to 
show trailers for R-rated films on its ABC network before 9 p.m. I am 
also encouraged by the 12 initiatives the MPAA announced yesterday in 
response to the FTC report. These initiatives seek to provide more 
information to parents about the degree of violence in movies and to 
provide more studio oversight over internal marketing and advertising 
practices. They include efforts to encourage their vendors--theater 
owners and video retailers--to better enforce the rating system, and to 
include on video cassettes and DVDs of new releases not just the 
movie's rating, but also the reasons for the rating.
    Last week, I offered an amendment that this Committee supported to 
allow the FTC to re-visit the issue of marketing violence to children 
in 18 months. This amendment offers the industry opportunities to show 
through action your support for vigorous and vigilant self-regulation. 
In closing let me repeat what I said earlier: I sincerely believe that 
the industry can make money and still offer a socially responsible 
product to our children. Mr. Chairman, I look forward to hearing from 
our witnesses.