[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
           COMPETITION IN THE SPORTS PROGRAMMING MARKETPLACE

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



                                HEARING

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                             March 5, 2008

                               __________

                           Serial No. 110-98


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


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                    COMMITTEE ON ENERGY AND COMMERCE

JOHN D. DINGELL, Michigan,Chairman
HENRY A. WAXMAN, California
EDWARD J. MARKEY, Massachusetts
RICK BOUCHER, Virginia
EDOLPHUS TOWNS, New York
FRANK PALLONE, Jr., New Jersey
BART GORDON, Tennessee
BOBBY L. RUSH, Illinois
ANNA G. ESHOO, California
BART STUPAK, Michigan
ELIOT L. ENGEL, New York
ALBERT R. WYNN, Maryland
GENE GREEN, Texas
DIANA DeGETTE, Colorado
    Vice Chairman
LOIS CAPPS, California
MIKE DOYLE, Pennsylvania
JANE HARMAN, California
TOM ALLEN, Maine
JAN SCHAKOWSKY, Illinois
HILDA L. SOLIS, California
CHARLES A. GONZALEZ, Texas
JAY INSLEE, Washington
TAMMY BALDWIN, Wisconsin
MIKE ROSS, Arkansas
DARLENE HOOLEY, Oregon
ANTHONY D. WEINER, New York
JIM MATHESON, Utah
G.K. BUTTERFIELD, North Carolina
CHARLIE MELANCON, Louisiana
JOHN BARROW, Georgia
BARON P. HILL, Indiana               JOE BARTON, Texas
                                         Ranking Member
                                     RALPH M. HALL, Texas
                                     J. DENNIS HASTERT, Illinois
                                     FRED UPTON, Michigan
                                     CLIFF STEARNS, Florida
                                     NATHAN DEAL, Georgia
                                     ED WHITFIELD, Kentucky
                                     BARBARA CUBIN, Wyoming
                                     JOHN SHIMKUS, Illinois
                                     HEATHER WILSON, New Mexico
                                     JOHN B. SHADEGG, Arizona
                                     CHARLES W. ``CHIP'' PICKERING, 
                                         Mississippi
                                     VITO FOSSELLA, New York
                                     STEVE BUYER, Indiana
                                     GEORGE RADANOVICH, California
                                     JOSEPH R. PITTS, Pennsylvania
                                     MARY BONO, California
                                     GREG WALDEN, Oregon
                                     LEE TERRY, Nebraska
                                     MIKE FERGUSON, New Jersey
                                     MIKE ROGERS, Michigan
                                     SUE WILKINS MYRICK, North Carolina
                                     JOHN SULLIVAN, Oklahoma
                                     TIM MURPHY, Pennsylvania
                                     MICHAEL C. BURGESS, Texas
                                     MARSHA BLACKBURN, Tennessee
_________________________________________________________________

                           Professional Staff

  Dennis B. Fitzgibbons,Chief of 
               Staff
 Gregg A. Rothschild,Chief Counsel
    Sharon E. Davis,Chief Clerk
 David L. Cavicke,Minority Staff 
             Director

                                  (ii)
          Subcommittee on Telecommunications and the Internet

                EDWARD J. MARKEY, Massachusetts,Chairman
MIKE DOYLE, Pennsylvania             FRED UPTON, Michigan
    Vice Chairman                        Ranking Member
JANE HARMAN, California              J. DENNIS HASTERT, Illinois
CHARLES A. GONZALEZ, Texas           CLIFF STEARNS, Florida
JAY INSLEE, Washington               NATHAN DEAL, Georgia
BARON P. HILL, Indiana               BARBARA CUBIN, Wyoming
RICK BOUCHER, Virginia               JOHN SHIMKUS, Illinois
EDOLPHUS TOWNS, New York             HEATHER WILSON, New Mexico
FRANK PALLONE, Jr., New Jersey       CHARLES W. ``CHIP'' PICKERING, 
BART GORDON, Tennessee                   Mississippi
BOBBY L. RUSH, Illinois              VITO FOSELLA, New York
ANNA G. ESHOO, California            GEORGE RADANOVICH, California
BART STUPAK, Michigan                MARY BONO, California
ELIOT L. ENGEL, New York             GREG WALDEN, Oregon
GENE GREEN, Texas                    LEE TERRY, Nebraska
LOIS CAPPS, California               MIKE FERGUSON, New Jersey
HILDA L. SOLIS, California           JOE BARTON, Texas (ex officio)
JOHN D. DINGELL, Michigan (ex 
    officio)


                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................     2
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................   108
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, prepared statement...................................   108
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, prepared statement................................   109
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, prepared statement................................   109

                               Witnesses

W. Kenneth Ferree, president, The Progress & Freedom Foundation..     5
    Prepared statement...........................................     7
Glenn A. Britt, president and CEO, Time Warner Cable.............    11
    Prepared statement...........................................    13
Roger Goodell, commissioner, National Football League............    20
    Prepared statement...........................................    22
George Bodenheimer, president, ESPN, Inc.........................    46
    Prepared statement...........................................    47
Mark Cooper, Ph.D., director of research, Consumer Federation of 
  American.......................................................    49
    Prepared statement...........................................    51
Derek Chang, executive vice president, Content Strategy and 
  Development, DIRECTV, Inc......................................    79
    Prepared statement...........................................    80


           COMPETITION IN THE SPORTS PROGRAMMING MARKETPLACE

                              ----------                              


                        WEDNESDAY, MARCH 5, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:37 a.m., in 
Room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman of the subcommittee) presiding.
    Members present: Representatives Markey, Eshoo, Stupak, 
Stearns, Deal, Cubin, Shimkus, Radanovich, Terry and Barton (ex 
officio).

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Good morning. Welcome to the Subcommittee on 
Telecommunications and the Internet. The subject of today's 
hearing is competition in the sports programming market.
    Competition in sports is the essence of the game. In sports 
there are great teams and dynasties. There are compelling 
stories of underdogs and come-from-behind victories. There are 
perennial favorites to win championships, and there are the 
Chicago Cubs. Yet sporting events are premised upon great feats 
of athletic prowess and competition being performed upon a 
level playing field. That level playing field ensures that 
athletes engage in sporting activities in a manner where their 
God-given talents and a compelling work ethic and practice can 
result in success. Competition in the marketplace, on the other 
hand, is what makes the consumer king.
    In our national video marketplace, many programming 
competitors assert that the playing field is not quite level at 
present. They argue that compelling content and a solid 
business game plan do not even the odds against them. The field 
is unfairly tilted towards cable operators or broadcast 
networks, competitors claim, by a couple of key factors. One, 
an inefficient number of cable providers within a market, 
although there are barriers which as a result competitors can 
reach consumers, and two, by laws or regulations that either 
fail to achieve fairness as intended or serve to reinforce the 
position of incumbent market leaders or risk unduly raising 
prices. The consumer fan, they say, is the resulting loser in 
this environment.
    We have seen several episodes over the last year in the 
sports programming marketplace that highlight policy issues for 
this subcommittee to explore. Early last year there was the 
issue of Major League Baseball's package of Extra Innings, or 
out-of-market games slated to be carried on DIRECTV on an 
exclusive basis, and complaints by Comcast and other cable 
operators that this was unfair. There was the effort by the Big 
Ten conference to successfully launch its cable channel through 
carriage on the most broadly watched tier of major cable 
systems.
    We saw the FCC intervene to declare that the America 
Channel, which has rights to various sports content, was a 
regional sports network for purposes of conditions imposed as 
part of acquisitions of the Adelphia Cable properties by 
Comcast and Time Warner. These conditions permit unaffiliated 
sports networks to seek commercial arbitration when a carriage 
agreement with Comcast or Time Warner cannot be reached. The 
Commission is now considering proposals to adopt an expedited 
dispute resolution process for all such unaffiliated 
programmers, including regional sports networks. And the NFL 
Channel, in a manner similar to those issues raised by the Big 
Ten conference, sought carriage on the most broadly watched 
tier unsuccessfully with several major cable operators.
    Cable operators, for their part, have objected to such 
carriage, arguing that the price that the NFL seeks is too 
high, or point to the NFL's excusive deal with DIRECTV over the 
so-called Sunday Ticket, where consumer fans can see all the 
Sunday football contests, or deals with broadcast networks or 
ESPN as examples demonstrating that the NFL has other choices 
in the marketplace to distribute games.
    Policymakers have sought to remedy the lack of competition 
over the years. The program access provisions that I championed 
as part of the 1992 Cable Act have created competitive 
alternatives to incumbent cable operators, most notably from 
satellite providers, but also from cable overbuilders, 
telephone companies and others.
    Today's hearing will provide the subcommittee with an 
opportunity to examine the effectiveness of these provisions in 
the law. It will also allow us to analyze the current 
marketplace for sports programming and assess the continued 
migration of sports programming from broadcast television to 
pay TV services, exclusive programming packages, the nature of 
cable carriage for sports programming, the emergence of 
conference or league channels and program carriage issues 
generally.
    In the absence of sufficient competition, the role of this 
subcommittee historically and the role generally of the FCC has 
often become that of referee. Most refs simply prefer that the 
athletes just play the game and don't like to intercede, but 
the refs are here to step in when unfair play is perceived and 
to make tough calls at times to safeguard the integrity of the 
game and in this case to ensure fairness in the marketplace and 
consumer welfare.
    I wish to thank all of our witnesses for their willingness 
to testify today. I look forward to their testimony.
    Mr. Markey. And now I turn to recognize the ranking member 
of the subcommittee, the gentleman from Florida, Mr. Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORIDA

    Mr. Stearns. And I thank my distinguished chairman, and I 
thank him for holding this hearing, this very interesting 
hearing, and I want to welcome all our witnesses again. Some of 
them were here I think last week, so it is nice to welcome you 
back.
    My colleagues, the market for sports programming has never 
been more competitive. I remember when we had the game of the 
week on network television over the weekend. In my house, ABC's 
Wide World of Sports was a big deal. But if you didn't like 
what sport or game they showed, well, you were just simply out 
of luck in this case. Fans like me did not have many options 
back then, but that has all changed. Today fans can watch a 
game almost any night of the week. In fact, my wife says there 
is too much basketball, football and baseball on television. 
Many viewers can choose from their cable company, two satellite 
providers are out there, and now their local telephone company 
for subscription TV services. So the burden of proof should be 
on anyone that wants the government to intervene in private 
negotiation between operators and programmers. It is up to 
them.
    I am interested to hear, of course, why at this point the 
government would choose to intervene in private negotiations 
between cable operators and programmers who carry these sports. 
The rationale for such regulation is rooted in statutory 
provisions that go back to 1992, where they were adopted when 
cable operators had 96 percent of the pay television market, 
and now, my colleagues, satellite providers have 29 percent of 
the market. Each have more subscribers than all but one of the 
cable operators today and have much content that cable 
operators don't carry. Sports programming is also available 
from phone companies, and of course, we know it is over the 
Internet, too. The number of nationwide channels has grown from 
145 to 565 today, while the percent owned by cable has dropped 
from 50 to 15.
    Now, what this means is that providers have no shortage of 
content, and programmers have no shortage of outlets, 
suggesting that requesting government intervention may just be 
attempts by parties, companies and individuals to get what they 
want, which they could not obtain through a free market and 
simple negotiations. If this is just about shifting dollars 
between companies, I am not sure why the government would get 
involved also. Distributors and programmers are generally in a 
better position than the United States Government to make 
carriage decisions. If a programmer or distributor is 
dissatisfied, it has plenty of other partners to choose from, 
and if either misjudges the value of its assets or those on the 
other side of the table, viewers have other options to go to. 
In the end, today's market creates the right incentives for 
distributors and programmers to find the approximate mix of 
content, carriage and cost, and more importantly, it encourages 
them to assemble the best packages, or simply create innovative 
new ones, to win those viewers over.
    Now, certain parties argue that a market failure exists and 
the government should get involved, and that is what the 
hearing is all about. You know, there is an old story, be 
careful what you wish for. When it looked like the final 
regular-season game between the Giants and the Patriots would 
only be available to the one-third of the country that has 
access to NFL Network, the NFL put the game on NBC and CBS as 
well. Some may advocate that if the government were to get 
involved, we should always require sports programming to be 
available free on broadcast networks.
    I think one of the questions I have, when the program 
access rules were adopted in 1992, cable had 96 percent, as I 
mentioned earlier, of the pay television market and satellite 
had none at that time, in 1992. In the 16 years since then, 
satellite operators have captured almost 30 percent of the 
market and are the second- and third-largest providers. Is this 
the kind of market where the government needs to be getting 
involved when you see that simple increase in competition? 
Increasingly viewers also get television content from the 
Internet, and so this perhaps is going to be another avenue 
that people who get the new fiber optics into their home can 
simply get it through the Internet.
    So Mr. Chairman, I think this is a very good hearing. I 
think, as many members, I am here to learn and see what should 
be involved, and I appreciate the witnesses here this morning. 
Thank you.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentlelady from California, Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman, and good morning, 
everyone. I want to thank you, Mr. Chairman, for again 
addressing the issue of competition. Today, obviously, we are 
discussing competition in sports programming.
    The Sports Broadcasting Act was passed in response to a 
court decision which ruled that the NFL's method of negotiating 
television broadcasting rights violated antitrust laws. The 
court ruled that the pooling of rights by all the teams to 
conclude an exclusive contract between the league and CBS was 
illegal. The Act overruled that decision and permits certain 
joint broadcasting agreements among the major professional 
sports. It permits the sale of a television package to the 
networks, a procedure which is common today. This package 
system has worked for several decades and allowed the public to 
watch these games on free over-the-air television.
    No longer satisfied with simply selling the rights to games 
for millions of dollars, the National Football League, Major 
League Baseball and other leagues are setting up their own 
cable networks that can bring them millions more in cable 
subscriber fees, even during the off season. The leagues are 
building up entities that could eventually be worth billions. 
These new vertically integrated networks leverage their 
exclusive content to gain access on cable networks. They often 
demand access to the basic tier, even though their channels 
offer very limited new content throughout the year. A policy 
that relies on pay television may alienate the fans who have 
made the NFL so successful. For an industry that is so heavily 
subsidized by the public, I am concerned that it is the public 
that may ultimately pay the price again.
    So I am interested obviously and look forward to the 
testimony that we are going to hear today, and I thank the 
chairman for holding this important hearing. I yield back.
    Mr. Markey. The gentlelady's time has expired, and all time 
for opening statements has expired.
    We will now turn to our very distinguished panel, and we 
will hear from our first witness, Mr. Ken Ferree, who is the 
president of the Progress and Freedom Foundation. Welcome, Mr. 
Ferree.

   STATEMENT OF W. KENNETH FERREE, PRESIDENT, THE PROGRESS & 
                       FREEDOM FOUNDATION

    Mr. Ferree. Thank you, Mr. Chairman. I am Ken Ferree, and I 
am president of the Progress & Freedom Foundation, and I am 
here today to tell a cautionary tale about what can go wrong 
when the government intervenes in the sports programming 
markets.
    Prior to becoming president of PFF, I was chief of the 
FCC's Media Bureau from 2001 until 2005. In that capacity, I 
was at least in part responsible for a set of merger conditions 
that represent the only systematic government intervention into 
sports programming negotiations. I am now left to wince every 
time some new disgruntled programmer attempts to stretch that 
precedent into unrecognizable forms in an effort to strengthen 
its own bargaining hand.
    I said it was a cautionary tale, and caution is what is 
needed. I sit here stunned that an organization like the NFL, 
which is one of the greatest marketing machines the world has 
ever seen, is not above squeezing its imposing presence into a 
hearing room like this to plead with Congress for assistance in 
its marketing negotiations. It would make it a farce if it were 
not so pathetic. In reality, sophisticated entities sit on both 
sides of the negotiating table when sports programming services 
and program distributors bargain over carriage. It is 
unsurprising, therefore, that market negotiations between the 
two can be intense, confrontational and that they sometimes 
involve a degree of brinksmanship. That is not saying, however, 
that the market has failed or that government intervention 
would be necessary or appropriate, which brings me to my story 
of a proposed merger, some well-meaning though perhaps naive 
regulators and the Frankenstein's monster we unwittingly 
created.
    The story begins in the spring of 2003, when News 
Corporation filed an application with the FCC to acquire 
DIRECTV from Hughes Electronics. As chief of the Media Bureau, 
I was asked to oversee the staff work on the application. Over 
the next several months, our staff, in close collaboration with 
the Department of Justice, analyzed, among other things, 
potential foreclosure strategies. Although we found the 
programming market to be greatly efficient and the proposed 
combination untroubling in most respects, one narrow aspect of 
the case did give us cause for concern. Because regional sports 
networks are comprised of assets for which there are no readily 
available substitutes, temporary withholding of News 
Corporation's RSNs from rivals might have been a profitable 
strategy for the merged entity, allowing it to drive 
subscribers to DIRECTV. To address this one potential market 
failure, we crafted what we thought were very narrow conditions 
that required mandatory arbitration in the event of a 
bargaining impasse involving News Corporation's RSNs.
    Whatever the merits of the News-Hughes decision, it at 
least cannot be said that the merged entity would have ultimate 
control both of extremely high value sports programming and the 
distribution platform. Recent efforts to extend the remedy 
adopted in that order cannot be sustained on that ground. For 
example, last year the FCC imposed mandatory arbitration to 
resolve an impasse between cable operators and the Mid-Atlantic 
Sports Network, a non-vertically integrated RSN. Although the 
News-Hughes order was cited as precedent, there was almost no 
similarity between the potential harm sought to be averted in 
the first case and the actual breakdown of market negotiations 
in the second. Most obviously, the MASN case involved no 
foreclosure by a programmer. Instead, it was alleged the 
distributors in the MASN case were engaged in what effectively 
became a lockout, yet we knows from the News-Hughes decision 
that the failure to carry a regional sports network will lead 
to subscriber defections, and quickly. The only conclusion to 
be drawn is not that there was a market failure but that one 
party to the negotiations, the programmer in this case, simply 
was overreaching.
    The FCC recognized that the rationale for imposing the 
arbitration condition in News-Hughes was inapposite and 
stretched in MASN to articulate a new rationale, turning the 
old one on its head. The theory posited was that although the 
distributors would suffer considerable harm in the short term 
by locking out an unaffiliated RSN, they might do so in the 
hope that they some day could force the RSN out of the market, 
acquire the rights to carry the teams involved and then recoup 
earlier losses with rents from the new vertically integrated 
services.
    More recently, even this dubious rationale seems to have 
been cast aside, as others have asked for arbitration simply on 
the basis that a cable operator has not agreed to a 
programmer's demands. For example, as the NFL season neared its 
final weeks this year, there was concern that a subset of games 
would not be readily accessible for some because the NFL 
Network had not reached distribution agreements with several 
cable operators. Whatever the nature of the disagreement 
between the cable operators and the NFL Network, it is clear 
that the dispute did not involve facts analogous to those 
either in the seminal News-Hughes case or in the mutated 
stepchild MASN case. The NFL Network, to be sure, owns the 
rights to some extremely valuable content. The cost then to 
distributors who do not carry the network must be thought to be 
substantial, but because the NFL Network lacks vertical 
integration, the circumstances are not like those in News-
Hughes. Moreover, unlike MASN, it cannot plausibly argue that 
the cable operators are trying to lock the NFL Network out in 
an effort to drive it from the market and obtain access to the 
carriage rights for their own networks.
    So once again the natural conclusion is not that there is a 
market failure requiring government intervention but rather 
that the NFL Network simply was insisting upon rates and terms 
that the market would not accommodate. It is fair to be 
sympathetic to fans who subscribe to cable systems that have 
not acceded to the NFL's demands, but that sympathy is not a 
basis for regulatory intrusion into negotiations between large 
commercially sophisticated enterprises.
    Mr. Markey. Could you please wrap up?
    Mr. Ferree. OK. I am sorry. In conclusion, I recognize the 
disputes involving sports programming often generate emotional 
consumer responses. The fact is, though, that the sports 
programming market generally is competitive and fully 
functioning. Negotiations surrounding sports programming 
carriage involve hard bargaining by sophisticated parties over 
complex sets of interests, but the terms of any such carriage 
are best decided at the bargaining table, not by regulators or 
arbitrators.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Ferree follows:]

                     Statement of W. Kenneth Ferree

    Thank you, Mr. Chairman, for your invitation to testify 
here today on these important issues. My name is Ken Ferree, 
and I currently am President of The Progress & Freedom 
Foundation, a think tank here in Washington that studies the 
digital revolution and its implications for media, 
communications, and technology policy. Prior to joining PFF, I 
was a private practice communications attorney, briefly served 
as the chief operating officer and interim President of the 
Corporation for Public Broadcasting, and, most pertinently, was 
the Chief of the FCC's Media Bureau under Chairman Powell. In 
that role, I lead the staff review of the acquisition of 
DIRECTV by News Corporation and was therefore at least in part 
responsible for the imposition of the mandatory arbitration 
provisions in the Order authorizing that transaction that have 
since been invoked in several other sports programming 
disputes.

                 Market Failure, or Failing the Market?

    Indeed, the mandatory arbitration provisions in the FCC's 
conditional grant of authority for the News-Hughes merger have 
proven to be so popular with disgruntled programmers that it is 
a natural place to begin my testimony. Contrary to what 
sometimes is suggested, the FCC did not find in the News-Hughes 
proceeding that the sports programming market generally is 
failing. Rather, in most cases, the sports programming market 
functions quite efficiently, ensuring wide-spread carriage of 
sports programming services, on multiple platforms, to 
consumers at reasonable rates. The specific set of 
circumstances surrounding the proposed acquisition of DIRECTV, 
a program distributor, by News Corporation, which had interests 
in a number of regional sports networks (``RSNs''), defined an 
exception that, we felt, warranted government intervention in 
the form of mandatory arbitration provisions.
    Allow me to emphasize that this was very much of a 
departure for the FCC. Although the Commission has long 
enforced a set of statutorily-defined program access rules, 
which forbid exclusive agreements and certain other 
discriminatory practices involving satellite-delivered, 
vertically-integrated programming, the government generally has 
not otherwise injected itself into contract negotiations 
between programming suppliers and cable or DBS service 
providers.
    The discretion the government has shown has been a proven 
success. In the past ten years, the number of cable programming 
networks has grown from 145 to 565, while vertical integration 
has decreased (in 1996, nearly 50% of networks were vertically 
integrated, today less than 15% are). Simultaneously, 
competition in programming distribution has become a reality 
(DIRECTV and EchoStar are now the second and third largest 
distributors of video programming), and large communications 
companies like AT&T and Verizon have recently entered the video 
market in earnest.
    Having said that, the programming market, like any other, 
can fail under certain circumstances. In the News-Hughes 
decision, the Commission found, following an exhaustive 
examination of the effects of foreclosure by programmers (the 
withholding of programming from one or more distribution 
platforms), that although permanent foreclosure was not likely 
to be a profitable strategy for a vertically integrated News 
Corporation, temporary foreclosure of access to its RSNs could 
be profitable, allowing it to drive subscribers from rival 
distributors to DIRECTV. That is, losses that News Corporation 
might suffer during the withholding period could be more than 
offset by gains in DIRECTV subscriber fees.
    There were important analytical bases for that conclusion. 
First, the FCC found that the temporary foreclosure strategy 
would work only for programming services with the most high-
value content. Based on data from prior cases, the Commission 
concluded that, for the vast majority of program services, 
subscribers simply will not suffer the transactions costs 
associated with changing distribution platforms when faced with 
the loss of a single programming service. Thus, losses incurred 
by a programmer that withholds its content from a distributor 
are normally unlikely to be recouped in any economic time frame 
(and of course, if the content is withheld permanently, losses 
will never be recouped).
    RSNs, on the other hand, are (in the words of the FCC) 
``comprised of assets of fixed or finite supply--exclusive 
rights to local...sports teams and events--for which there are 
no acceptable readily available substitutes.'' Sports 
programming also may be differentiated from general 
entertainment programming in that it is extremely time-
sensitive. There is no substitute for a playoff game on the day 
it is contested. As a result, owners of that content wield a 
significant amount of market power. When regional sports 
programming is withheld from a particular distributor, 
substantial subscriber defections to competing platforms may be 
expected.
    Second, and importantly, for a temporary foreclosure 
strategy to be effective, the programmer must be able to reap 
the benefit of any subscriber defections that it can motivate. 
That is, the programmer must be vertically integrated with the 
competing distribution platform to which disaffected 
subscribers will flee.
    It is fair to argue whether these conditions were met 
satisfactory to warrant imposition of a mandatory arbitration 
provision in the News-Hughes case. Whatever the merits of that 
initial decision, however, it at least cannot be gainsaid that 
the merged entity would have ultimate control both of extremely 
high-value sports programming and a distribution platform in 
the markets in which the programming was most highly prized. 
Recent efforts to extend the remedy adopted in that order 
cannot be sustained on that ground.
    For example, last year, in an order approving asset 
transfers to Comcast and Time Warner as a result of the 
Adelphia bankruptcy, the FCC imposed mandatory arbitration to 
resolve an impasse between the cable operators and the Mid-
Atlantic Sports Network (``MASN''), a non-vertically integrated 
RSN that owned the rights to, among other things, the 
Washington Nationals and Baltimore Orioles baseball games. 
Oddly, although the News-DIRECTV merger order was cited by the 
Commission as precedent for its decision, there was almost no 
similarity between the potential harms sought to be averted in 
the first case and the actual breakdown of market negotiations 
in the second.
    Most obviously, the MASN case involved no foreclosure by a 
programmer--the potential harm sought to be remedied in the 
News-Hughes case. Instead, it was alleged, the distributors in 
the MASN case were engaging in what effectively became a lock-
out. Indeed, because MASN owns no distribution facilities in 
the relevant region, there is no chance that it could have used 
temporary foreclosure to affect the downstream distribution 
market in its favor. Yet, we know from the FCC's findings in 
the News-Hughes case that RSN programming is highly valued by 
subscribers and that the failure to carry the programming will 
lead to subscriber defections. The only conclusion that can be 
drawn is not that there was a market failure or that there were 
anticompetitive forces at work but that one party to the 
negotiations (the programmer in this case) simply was 
overreaching and demanding more than the programming was worth 
in the market.
    The FCC, to its credit, recognized that the rationale for 
imposing the arbitration condition in News-Hughes was 
inapposite in the MASN case and stretched to articulate a new 
rationale by turning the old one on its head. The theory 
posited in the MASN Order was that, although the distributors 
would suffer considerable harm in the short term by locking out 
an unaffiliated RSN, they might do so in the hope that they 
someday could force the RSN out of the market, acquire the 
rights to carry the teams involved for their own vertically-
integrated services, and then recoup earlier losses with rents 
from the new vertically-integrated services.
    Without belaboring the point, there are reasons to question 
the plausibility of this potential scenario, not the least of 
which is that it is completely lacking in any analytical 
foundation. Yet even this dubious rationale seems now to have 
been cast aside, as the NFL Network and others have asked for 
arbitration simply on the basis that a cable operator has not 
agreed to a programmer's demands. For example, as the NFL 
season neared its climactic final weeks this year, there was 
concern among policy-makers and fans alike that a subset of the 
games would not be readily accessible for some because the NFL 
Network had exclusive rights to those games, and it had not 
reached agreement with several large cable operators for 
widespread distribution. Whatever the nature of the 
disagreement between the cable operators and the NFL Network, 
it was clear that the dispute did not involve facts analogous 
to those either in the seminal News-Hughes case or the mutated 
step-child MASN case.
    The NFL Network is not vertically integrated with any 
multichannel distribution platform, and its programming is not 
of such regional interest as to render it vulnerable to a lock-
out scenario such as that posited in the MASN Order. The NFL 
Network, to be sure, owns the rights to extremely valuable 
content. The cost, then, to distributors who do not carry the 
network must be thought to be substantial. Indeed, because the 
network is carried on at least one national distribution 
platform (i.e., DIRECTV), disgruntled consumers have the option 
of changing service providers rather than miss their favorite 
teams or important games. But because the NFL Network lacks 
vertical integration, the circumstances are not like those in 
News-Hughes, where one might fear that the NFL Network was 
engaged in temporary foreclosure in order to benefit its 
downstream properties.
    Moreover, unlike the MASN case, it cannot plausibly be 
argued that cable operators which do not come to terms with the 
NFL Network are trying to lock them out in an effort to drive 
the NFL Network from the market and obtain access to the 
carriage rights for their own networks. There is no evidence to 
suggest that the network's lack of carriage on the cable 
systems in question poses any threat to its existence or, if it 
did fail, that the cable operators would have any realistic 
chance of obtaining the rights to the underlying content.
    That is, once again, the natural and logical conclusion 
from the facts presented is not that there is a market failure 
requiring government intervention, but rather that the NFL 
Network simply was insisting upon rates and terms that the 
market would not accommodate. It is fair to be sympathetic to 
the fans who subscribe to cable systems that have not acceded 
to the NFL Network's demands, but that sympathy is not a basis 
for regulatory intrusion into negotiations between large, 
commercially sophisticated enterprises.
    To the contrary, the cable operators' refusal to accept the 
demands of the NFL Network suggests that the market is working 
efficiently, not that it has failed. The cable industry in 
particular has been struggling to control consumer prices in 
the face of increasing costs for programming and expanded 
services. By holding the line on new programming costs--
particularly programming such as that on the NFL Network which 
appeals to a defined subset of consumers--the cable operators 
may be able to help control against cable rate increases for 
all subscribers.
    In short, there are powerful forces acting on both sides of 
the bargaining equation. On the one hand, sports programming 
networks own extremely valuable content, which, generally 
speaking, distributors wish to carry. On the other hand, 
program distributors are under tremendous pressure to control 
consumer rates; limiting programming costs is perhaps the most 
direct means of achieving that end. The market, not regulatory 
authorities or appointed arbitrators, is best positioned to 
balance those interests.
    This analysis also helps inform the debate surrounding two 
other issues that arise in disputes over the carriage of sports 
programming: whether distributors should be prohibited from 
carrying sports programming on a special tier, and whether the 
government should require programmers and/or distributors to 
offer services on an ``a la carte'' basis. Both queries should 
be answered in the negative.

     Tears for Sports Programmers, or Tiers for Sports Programmers?

    Sophisticated entities sit on both sides of the negotiating 
table when sports programming services and program distributors 
bargain over carriage. Large program distributors obviously 
have a measure of leverage by virtue of their access to the 
end-user viewers. On the other hand, sports programming 
services control uniquely popular programming assets for which 
there are no close substitutes. It is unsurprising, therefore, 
that market negotiations between the two can be intense, 
confrontational, and that they sometimes involve a degree of 
brinksmanship. That is not saying, however, that the market has 
failed or that government intervention in these negotiations 
would be necessary or appropriate.
    As noted above, program distributors are under intense 
pressure to contain subscriber rates. One means of controlling 
base rates that all subscribers pay is to segregate niche 
programming services to special tiers, which allows the 
distributor to pass the costs of carrying the programming on to 
only those who most value it. Niche sports programming 
services, such as the NFL Network, are particularly amenable to 
special tier placement because their most popular content is 
seasonal, it appeals to a well-defined subset of the entire 
subscriber base, and it is expensive to produce and, therefore, 
distribute. In those circumstances, it may well be more 
economical to require those fans that highly value the content 
to bear the cost of its creation and distribution rather than 
requiring all subscribers to shoulder that burden.
    Naturally, that conclusion does not sit well with content 
owners, which would prefer that their services be carried on 
the basic tier. Basic tier carriage provides a much larger 
potential base of viewers, and it allows the cost of producing 
and distributing the content to be subsidized by subscribers 
who would otherwise not be willing to pay separately for the 
programming. One can well understand bare-knuckled bargaining 
by sports programming services in an effort to force basic tier 
carriage. Too often now, though, when such bargaining fails and 
they cannot achieve their sought-after ends in private 
negotiations, programmers raise importunate pleas to Congress 
and the FCC for help. Those pleas should find no sympathetic 
ear.
    Government intervention in programming disputes may be 
appropriate where one party or another will benefit from a 
breakdown of market negotiations. In those cases, a plausible 
argument can be made that the market is prone to fail and that 
consumers will suffer as a result. In the disputes over tier 
placement that we have seen to date, however, there is little 
evidence that any of the parties involved will reap any kind of 
advantage from a bargaining impasse.
    To the contrary, the negotiations in these cases involve 
the balancing of competing interests in providing compelling 
programming to subscribers, controlling basic tier costs, 
managing system capacity, and remaining profitable going-
concerns. And because so much is at stake both for the content 
owners and the distributors, there is tremendous pressure on 
both parties to complete negotiations. Although neither party 
may be entirely satisfied with the result, that is the nature 
of free market negotiations. Government intervention to 
prohibit or limit the use of special sports programming tiers 
can only serve to mute market signals and drive the process to 
a less efficient outcome.

                        Prix Fixe or A La Carte?

    Similarly, just as government intervention into the sports 
programming markets to prohibit or limit the use of sports 
tiers would be unnecessary and potentially counter-productive, 
mandated ``a la carte'' pricing at the wholesale or retail 
level would likely decrease programming diversity, increase 
vertical integration in the programming and distribution 
markets, and increase consumer costs.
    For the majority of programming services, the incremental 
cost of programming and/or the widespread, year-round appeal of 
the programming content make retail bundling an attractive, 
efficient, economical, and consumer-friendly means of 
distribution. Bundling can lower transactions costs, allow 
programmers to achieve economies of scale, enhance consumer 
convenience and, perhaps most importantly, allow for 
appropriate pricing differentiation. In effect, bundling allows 
each of us to enjoy our favorite programming whether or not it 
can alone attract large audiences.
    This model breaks down, however, when a niche programming 
service is both of limited appeal and expensive to produce and 
distribute. This, of course, describes many RSNs and other 
specialized sports programming services. In those cases, as 
explained above, it likely will benefit consumers to allow 
distributors to carry the programming service on a special 
tier. For other types of programming, though, including general 
entertainment programming, consumers likely benefit from 
bundled offerings.
    Similarly, bundling at the wholesale level can facilitate 
the realization of scale economies and lower transactions 
costs, both of which, at least potentially, can redound to the 
benefit of consumers. Further, as the FCC found when it studied 
this issue in 2004, some wholesale bundling is a function of 
the statutory retransmission consent process, which appears to 
be working as Congress intended to facilitate the introduction 
of new programming services and allow for non-cash compensation 
for the carriage of broadcast outlets. Of course, to the extent 
other forms of wholesale bundling or tying arrangements are 
being used for anticompetitive purposes, antitrust remedies 
remain available.

                               Conclusion

    Although disputes involving sports programming often 
generate emotional consumer responses, the fact is that the 
sports programming markets generally are competitive and fully-
functioning. Negotiations surrounding sports programming 
carriage involve hard bargaining by sophisticated parties over 
complex sets of interests. The terms of any such carriage are 
better decided at the bargaining table; government intervention 
rarely should be necessary.
    Thank you.
                              ----------                              

    Mr. Markey. Thank you, Mr. Ferree, very much.
    Our next witness is Mr. Glenn Britt. He is the president 
and the CEO of Time Warner Cable. Welcome, Mr. Britt.

  STATEMENT OF GLENN A. BRITT, PRESIDENT AND CEO, TIME WARNER 
                             CABLE

    Mr. Britt. Good morning, Mr. Chairman, Ranking Member 
Stearns and members of the subcommittee. My name is Glenn 
Britt, and I am president and CEO of Time Warner Cable, the 
Nation's second-largest cable operator, and I want to thank you 
for inviting me here today to share our perspective on the 
evolving sports programming market.
    Americans' love of sports is well documented, and the 
development of cable and satellite television has provided new 
outlets for sports teams and their fans. These new outlets have 
generally been positive, offering viewers opportunities to 
watch sporting events that previously might not have been 
available on broadcast TV. However, the past few years have 
been marked by a new trend, the movement of live sporting 
events from broadcast and broadly themed cable channels to 
league and team-specific channels. The leagues and teams have 
developed a strategy in order to maximize their financial 
returns, and this is perfectly appropriate. And of course, this 
is the goal of all businesses, to do well for their 
shareholders. That is my goal as well. Although negotiations 
between distributors and programmers may seem a little messy at 
times, Congress has wisely recognized that the marketplace, not 
regulation, produces the best results for consumers over the 
long run.
    Lately, however, some parties have been calling for new 
legislative and regulatory involvement in how distributors 
package and price services. These regulatory proposals include 
conflicting demands for mandatory a la carte on one hand and 
forced carriage of services on broadly distributed tiers on the 
other hand. In reality, deciding what services to carry and how 
to price and market them is a very complex process that 
involves lots of editorial and business judgments, and we think 
these judgments are best made in the marketplace. Thus, we 
believe that the NFL in particular is being disingenuous when 
it calls on the government to compel distributors to carry the 
NFL Network on a broadly distributed tier while at the same 
time they limit the distribution of NFL Sunday Ticket to one 
carrier, DIRECTV.
    Our goal at Time Warner Cable is to balance the needs and 
interests of our entire subscriber base to sports fans and non-
sports fans alike, and one way we sought to do that is by 
creating separate sports-themed packages. These packages 
include networks such as NBA TV, the Tennis Channel and other 
high-cost or limited-appeal sports channels. By congregating 
these channels on a separate tier, we are able to hold down the 
cost of the service for most of our subscribers, and more than 
ever we have been talking about competition, and our business 
is driven by competitive necessity to offer consumers the best 
programming options in terms of carriage and packaging. The 
programmers, as well as customers, have a range of options. 
These include over-the-air television, two national satellite 
providers, the two largest phone companies, and of course, 
there is always the Internet, so there is a lot of choice.
    We have got to give our customers the services they want at 
a fair price or they can take their business elsewhere, and 
they do take their business elsewhere. One way we make our 
service appealing to customers is that we invest considerable 
resources in the creation of local channels that provide 
community-oriented news and information not found elsewhere. 
Some of these channels feature high school, collegiate and 
minor league professional sports which are highly valued by the 
local customer base, and these channels wouldn't exist without 
our commitment, and much of this programming simply would not 
be available to anyone. I think this is a good example of a 
marketplace at work as intended by the Congress.
    In conclusion, although many television viewers are 
passionate about sports and sports programming, Congress has 
made the right choice in relying on the marketplace to make the 
best decisions for these viewers. Thank you.
    [The prepared statement of Mr. Britt follows:]
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     ***************Mr. Markey. Thank you, Mr. Britt, very 
much.
    Our next witness is the commissioner of the National 
Football League, Mr. Roger Goodell. We welcome you, sir.

  STATEMENT OF ROGER GOODELL, COMMISSIONER, NATIONAL FOOTBALL 
                             LEAGUE

    Mr. Goodell. Thank you, Mr. Chairman, Ranking Member 
Stearns and members of the subcommittee. Thank you for inviting 
me to testify here today. I am Roger Goodell, and I am 
commissioner of the National Football League. I have filed 
written testimony that I ask be made part of the record. I want 
to highlight a few key points before taking your questions, 
though.
    First, Comcast and Time Warner, the two largest cable 
companies, use their bottleneck power to control access and 
discriminate against independent programmers. The NFL Network 
and consumers who want to view NFL programming have been 
victims of this discrimination. NFL Network has been treated in 
a manner that is sharply different and clearly less favorable 
than the treatment given competing sports networks that Comcast 
and Time Warner own, channels such as Versus, the Golf Channel, 
Sports New York. Those networks are carried on basic tiers, 
while the NFL Network has no carriage on Time Warner and has 
been relegated to a premium sports tier by Comcast.
    Second, beyond the damage this discrimination causes 
independent programmers, it seriously hurts consumers and our 
fans as well. This is true for two reasons: first, because 
these anti-competitive practices stifle the development of 
independent programming like the NFL Network, it could and 
should be made available to the public, and second, because 
these practices drive up the prices that the public has to pay 
for independent cable programming.
    Third, let me be clear on what we are and what we are not 
seeking. The NFL does not seek new legislative remedies for 
these abuses. In 1992, Congress held that this discriminatory 
conduct was illegal and directed the FCC to adopt and 
administer fair, expeditious and effective complaint procedures 
to prevent cable carriage discrimination, but the FCC's 
procedures have turned out to be far too slow and ineffective. 
Only three complaints have been filed, and none has made its 
way to final resolution. The FCC itself has recognized the need 
for reform. We ask the committee to exercise its oversight 
authority to encourage the FCC to adjust its procedures so that 
independent programmers have a meaningful remedy for cases of 
discrimination.
    In similar fashion, we are not asking Congress or the FCC 
to mandate that NFL Network or any other independent programmer 
be carried on a specific tier of cable service or at a specific 
rate or on specific terms. We believe that those decisions 
should be made in negotiations unaffected by discriminatory 
conduct that protects cable companies' own networks. We are 
confident that in an environment free of unlawful 
discrimination, NFL Network and other independent programmers 
will secure fair carriage at a fair price.
    The dominant cable companies will offer a long list of 
excuses. They will call NFL football, the most popular sports 
programming in the country, niche programming. They will say 
the NFL Network is too expensive. They will say they are 
protecting consumers against increasing costs they don't want, 
and they may talk about NFL programming such as NFL Sunday 
Ticket. Each of these excuses should be seen for what it is: an 
effort to divert attention from the real issue, which is 
unlawful discrimination by cable companies in favor of their 
own networks and the resulting harm to consumers and 
independent programmers. Each of these excuses should be 
evaluated in light of how the cable companies treat their own 
networks. If NFL football is niche programming deserving only 
of placement on a premium sports tier, why do Comcast and Time 
Warner carry their own sports channels on basic tiers? Comcast 
and Time Warner treat sports programming as niche programming 
except where they own the sports channel, in which case sports 
programming becomes core programming that must be carried on 
the basic tier and available to all cable subscribers.
    This is not a hypothetical problem or one limited to the 
NFL Network. In a recent arbitration decision, Time Warner was 
found to have discriminated against an independent sports 
programmer, MASN. In the case of NFL Network, the situation is 
almost identical. The NFL should also receive a fair process. 
Comcast and Time Warner either refuse to discuss carriage or 
have insisted on relegating the NFL Network to expensive 
premium tiers in order to protect their own competing services. 
If the NFL Network's highly rated programming can't crack 
cable's bottleneck leverage, other independent programmers like 
the Black Television News Channel, which contributes 
importantly to program diversity, will not be able to do so. 
Congress and the FCC understand this, and the FCC needs to 
apply its procedures in a manner consistent with Congress's 
objectives. NFL Network is only part of our television 
business. The core of that business is and will continue to be 
free, over-the-air television. As a result, as long as there is 
reasonable remedy action available, we can persevere and 
challenge such unlawful conduct where other independent 
programmers cannot.
    Thank you for inviting me to testify. I look forward to 
your questions.
    [The prepared statement of Mr. Goodell follows:]
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    Mr. Markey. Thank you, Mr. Goodell, very much.
    Our next witness is Mr. George Bodenheimer. He is the 
president of ESPN Incorporated. We welcome you back.

     STATEMENT OF GEORGE BODENHEIMER, PRESIDENT, ESPN, INC.

    Mr. Bodenheimer. Thank you, Mr. Markey and other members of 
the subcommittee. My name is George Bodenheimer. I am co-chair, 
Disney Media Networks and president, ESPN and ABC Sports.
    It is really a pleasure to be here today to testify before 
an avid Red Sox fan, although if you believe Hank Steinbrenner, 
all I have to do is walk through our own studios to find those. 
I appreciate the invitation very much to speak with you today 
about sports programming. I have spent my entire professional 
career in the business of providing quality sports programming 
to American viewers. I know the passion that fans of all kinds 
feel about their favorite teams and players, and I also know 
that this passion carries over into issues about how and when 
they are able to watch those teams.
    I believe that the most significant point I can make to you 
today is to affirm that the markets for cable and satellite 
programming and distribution are more competitive than ever 
before. Take a look at the competitive environment for 
distribution of subscription television. There was a time when 
American consumers had few, if any, alternatives to the local 
cable system. Successful public policy initiatives by Congress 
have changed the competitive landscape for the vast majority of 
consumers.
    Today most Americans may choose between multiple 
subscription TV providers, including cable systems, two 
national satellite systems and, increasingly, phone companies. 
As a result of this competition, subscription television today 
is absolutely one of the best entertainment values available to 
American consumers. Likewise, the competition among channels 
offering sports programming is more vibrant than ever. When 
ESPN launched in 1979, there were many skeptics who questioned 
the demand for a broad-based sports channel. Today there are 
dozens of national and regional channels, including those 
launched by major professional sports leagues, college 
conferences and several major cable operators. It is truly a 
great time to be a sports fan.
    In a tough business climate, it is tempting for parties who 
do not get the deal they want to ask the government to 
intervene. I wish I could say that ESPN has been able to get 
every deal we have sought over the years, but that is simply 
not the case. There are lots of other parties out there 
competing for the right to carry games, and there are lots of 
other channels seeking carriage on cable and satellite systems, 
but that is how markets work. Given the fierce competition in 
both programming and distribution, I strongly urge you to 
refrain from intervening in these markets. Several of the 
issues that you are examining today have again raised questions 
about the need for government involvement. Our overarching view 
is that these should be resolved through direct negotiation and 
not government intervention.
    I also want to note that none of these issues directly 
involves ESPN. ESPN is America's most popular national broad-
based sports channel. ESPN is the only channel that includes 
national telecasts from all of the following: the National 
Football League, Major League Baseball, the National Basketball 
Association, men's and women's NCAA college sports, NASCAR, 
plus America's favorite sports news program, SportsCenter. ESPN 
is not a niche channel. We are currently distributed to more 
than 96 million American households, and in the fourth quarter 
of 2007, 87 percent of subscription TV households watched ESPN. 
Eighty-seven percent of subscription cable TV and satellite 
households watched ESPN in fourth quarter of 2007. The wide 
appeal of our programming is undeniable. Through arm's-length 
negotiations with its distributors, ESPN's value as part of the 
expanded basic tier has been well established for over 28 
years. Just last week, cable operators responding to an 
industry survey ranked ESPN as having the highest valuation 
ever for any cable channel.
    We have entered into long-term carriage agreements with 
almost all cable and satellite distributors. We voluntarily 
negotiate for carriage by the country's smallest cable 
operators through the National Cable Television Cooperative. 
This agreement gives small operators the buying power of our 
largest distributors. ESPN does not have exclusive distribution 
agreements with any cable or satellite distributors.
    To be clear, we believe that carriage issues are best 
resolved through free market negotiations, but should the 
committee disagree and believe some action is necessary, we 
urge you to recognize that the remedies proposed to address 
these issues are a particularly poor fit and should not apply 
to ESPN. For example, some have suggested that sports 
programming be relegated to sports tiers. We don't believe that 
tier placement should be mandated for anyone. The market should 
determine these issues, and we think your constituents would be 
particularly concerned about forcing very popular sports 
programming like ESPN on a separate tier.
    Thank you, and I would be happy to answer any questions the 
members of the committee may have.
    [The prepared statement of Mr. Bodenheimer follows:]

                    Statement of George Bodenheimer

    Thank you, Mr. Markey and other members of the 
Subcommittee. It is a pleasure to be with you today. My name is 
George Bodenheimer. I am Co-Chair, Disney Media Networks and 
President, ESPN and ABC Sports.
    I appreciate the invitation to talk with you today about 
sports programming. I have spent my entire professional career 
in the business of providing quality sports programming to 
American viewers. I know the passion that fans of all kinds 
feel about their favorite teams and players. And I also know 
that this passion carries over into issues about how and when 
they are able to watch those teams.
    While we are here to discuss sports on television, it is 
important to recognize that technology is having an enormous 
impact on how fans enjoy sports--while television is still 
critically important, we also reach our consumers on the 
Internet, through mobile devices, on the radio, and in print. 
ESPN's mission statement makes this objective very clear: ``To 
serve sports fans wherever sports are watched, listened to, 
discussed, debated, read about or played.''
    ESPN's efforts are one example of how The Walt Disney 
Company has been a pioneer in finding new ways to get content 
to consumers how, where, and when they want it: not just on 
television, but also on computers, mobile phones, and iPods. 
Technology and robust competition for the attention of 
consumers are changing the ways that content is made available. 
For example, about 18 months ago, ABC television launched an 
online broadband player on ABC.com. Viewers can watch full-
length episodes of primetime television shows for free whenever 
they want to view them. In the short time since its launch, the 
player has served over 240 MILLION episode requests.
    I believe that the most significant point I can make to you 
today is to affirm that the markets for cable and satellite 
programming and distribution are more competitive than ever 
before.
    Take a look at the competitive environment for distribution 
of subscription television. There was a time when American 
consumers had few, if any, alternatives to their local cable 
system. Successful public policy initiatives by Congress have 
changed the competitive landscape for the vast majority of 
consumers. Today most Americans may choose between multiple 
subscription TV providers including cable systems, 2 national 
satellite systems and, increasingly, phone companies. And these 
providers offer a variety of rate plans from basic tiers and 
low cost satellite packages offering 40 channels for $19.99 a 
month, to larger and more expensive packages with hundreds of 
channels. As a result of this competition, subscription 
television today is one of the best entertainment values 
available to American consumers. For sports fans, in 
particular, a typical expanded basic level of service offers 
hundreds of games and thousands of hours of commentary and 
analysis each year at a monthly price that is less that the 
cost of single ticket to many professional sports events
    Likewise, the competition among channels offering sports 
programming is more vibrant than ever before. When ESPN 
launched in 1979, there were many skeptics who questioned the 
demand for a dedicated sports channel. Today, there are dozens 
of national and regional channels with a vast array of sports 
programming. Rights holders--including the major professional 
sports leagues and college conferences-- and several major 
cable operators have launched their own sports channels. Add to 
this the astounding amount of live game, highlight and news 
coverage on the Internet, on radio and in print and it is 
beyond question to say that it is truly a great time to be a 
sports fan.
    In a tough business climate, it is tempting for parties who 
do not get the deal they want to ask the government to 
intervene. I wish I could say that ESPN has been able to get 
every deal we have sought over the years, but that is simply 
not the case. There are lots of other parties out there 
competing for the right to carry games. And there are lots of 
other channels seeking carriage on cable and satellite systems. 
But that is how markets work. Given the fierce competition in 
both programming and distribution, I strongly urge you to 
refrain from intervening in these markets.
    Several of the issues that you are examining today have 
again raised questions about the need for government 
involvment, including: the carriage of channels covering single 
sports, teams or conferences; the carriage of regional sports 
channels; and various exclusive agreements between programmers 
and distributors. Our overarching view is that all these should 
be resolved through direct negotiation and not government 
intervention. I also want to note that none of these issues 
directly involves ESPN.
    ESPN is America's most popular (and for cable companies--
most valuable), national, broad-based sports channel. ESPN is 
the ONLY channel that includes national telecasts from all of 
the following: the NFL, Major League Baseball, the NBA, men's 
and women's NCAA college sports, NASCAR plus America's favorite 
sports news program ``SportsCenter.'' An increasing amount of 
this programming is produced in high definition, which we 
believe has had a profound impact on consumers' decisions to 
purchase high definition televisions.
    ESPN is NOT a ``niche'' channel. In the 4th quarter of 
2007, 87% of subscription TV households watched ESPN. The wide 
appeal of our programming is undeniable. Through arm's length 
negotiations with its distributors, ESPN's value as part of the 
expanded basic tier has been well established for over 28 
years.
    ESPN is not just the most popular sports television 
network. It is among the most popular of all television 
networks--broadcast or cable. Just last week, cable operators 
responding to an industry survey ranked ESPN as having the 
highest valuation ever for any cable channel. Operators rated 
ESPN first in nearly every category, including: ``Importance 
for Subscriber Acquisition and Retention,'' ``Perceived 
Value,'' and ``Programming that Generates Local Ad Sales 
Revenue,'' among others.
    We have entered into long term carriage agreements with 
almost all cable and satellite distributors. We voluntarily 
negotiate for carriage by the country's smallest cable 
operators through the National Cable Television Cooperative. 
This agreement gives small operators the buying power of our 
largest distributors. ESPN does NOT have exclusive distribution 
agreements with any cable or satellite distributors and is 
offered to ALL of these companies.
    To be clear, we believe that the issues raised for 
discussion by the Committee are best resolved through free 
market negotiations. But should the Committee disagree and 
believe some action is necessary, we urge you to recognize that 
the ``remedies'' proposed to address these issues are a 
particularly poor fit for--and should not apply to--ESPN. For 
example, some have suggested that all sports programming be 
relegated to sports tiers. We don't believe that tier placement 
should be mandated for anyone. The market should determine 
these issues, and we think your constituents would be 
particularly concerned about forcing very popular sports 
programming, like ESPN, onto a separate tier.
    Thank you, and I would be happy to answer any questions the 
members of the Committee may have.
                              ----------                              

    Mr. Markey. Thank you, Mr. Bodenheimer, very much.
    Our next witness is Mark Cooper. He is the director of 
research for the Consumer Federation of America, a frequent 
visitor to this committee, and we welcome you back. When you 
are ready, please begin.

STATEMENT OF MARK COOPER, PH.D., DIRECTOR OF RESEARCH, CONSUMER 
                     FEDERATION OF AMERICA

    Mr. Cooper. Thank you, Mr. Chairman and members of the 
committee. I greatly appreciate the opportunity to appear 
before you today to express yet again the consumers' 
frustration with the cable industry. The focal point of today's 
hearing epitomizes the broader problem. The cost of the monthly 
cable bill for the most popular basic bundle has more than 
doubled since the passage of the Telecommunications Act of 
1996. Embedded in those monthly bills are the dramatically 
increasing costs of sports programming, which consumers are 
forced to buy in the big bundle. The incredible escalation of 
sports salaries is funded by the viewing public, the vast 
majority of whom, if given the opportunity, would not in fact 
choose to purchase those channels.
    Competition is the consumer's best friend, but the sports 
video programming market is a rat's nest of anti-competitive, 
anti-consumer structures and practices. On one side we find 
dominant programmers like network broadcasters with carriage 
rights or sports entertainment companies who hold exclusive 
rights to home team broadcasts which are must-have marquee 
programming for local cable operators. On the other side, we 
have gatekeeper cable companies with market power over access 
to local video customers who themselves are increasingly going 
into the regional sports network business. On a third side, we 
find the leagues, who are seeking to monetize their own market 
power in exclusive sports networks.
    The programmers and the cable operators combine to restrict 
consumer choice and increase prices. The programmers ask for 
more and more, and the cable operators give because they know 
they can just pass those costs through to the consumer in the 
price of the bundle, and while consumers suffer pain in the 
pocketbook, independent programmers also suffer at the hands of 
the gatekeeping network operators. Getting into the bundle and 
onto the systems owned by the two dominant cable operators is a 
necessary condition for national programming success. Not one 
national network has achieved an audience reach of sufficient 
size to sustain quality programming without being carried on 
both Comcast and Time Warner. In short, cable operators can 
make or break programming by deciding whether programming is 
carried and where it is placed.
    The best solution to the problem is simple: give consumers 
real choice. Unleash consumer sovereignty in a big way by 
requiring cable operators to allow consumers to buy on a stand-
alone basis any program that the cable operators have chosen to 
put in a bundle. This is called mixed bundling: give me a 
choice for one if they are trying to force me to buy all. Let 
consumers choose the programming they want to pay for, and it 
will become immediately clear that the vast majority of 
subscribers would not pay the current price of the most popular 
sports programming channels that they are forced to buy in the 
big bundle.
    If programmers face the true elasticity of consumer demand, 
prices would decline and choices would expand. As video 
revenues decline, so too would the grossly inflated packages 
that the leagues and the players get, especially the highest 
paid players. The same set of teams and players who take the 
field today would take the field if consumer choice had cut the 
packages in half, because the current packages include a 
substantial excess profit that is extracted from consumers. 
Shaquille O'Neal and Alex Rodriguez would play just as hard for 
1 million as they do for 20 million. In point of fact, there is 
a good theory in labor economics which suggests they would play 
harder if they were only paid $1 million instead of the $20 
million.
    If Congress and the FCC are unwilling to free consumers 
from the broad tyranny of the cable bundle, they could more 
narrowly require sports programming to be pulled out into a 
separate tier. This would at least allow those who have no 
interest in sports programming to avoid paying for it, thereby 
giving the leagues and the programmers a smaller pie to fight 
for. It would also reinvigorate the option of free, over-the-
air programming, because then you would have a real choice 
between selling it to the people who are willing to pay for it 
and making it broadly available.
    If Congress and the FCC are unwilling to empower the 
consumer to choose, thereby unleashing the power of the demand 
side, the least they can do is ensure that there is supply-side 
competition. Broadcasters and cable operators should not be 
allowed to restrict supply-side competition by putting their 
programming in the big bundle and forcing competing programming 
into more expensive tiers. If they offer any sports 
programming, they should offer all of it in the same place so 
that we can have a level playing field for competition. We 
believe that this would enable new programming to reduce the 
market power of programmers with preferred access to carriage. 
Spreading the sports viewing audience across programming that 
is targeted geographically and by sport will erode the 
viewership of the handful of programmers who have been favored 
by access. That would lower prices and expand real choice to 
consumers. Thank you.
    [The prepared statement of Mr. Cooper follows:]
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    Mr. Markey. Thank you, Dr. Cooper, very much.
    And our final witness, Mr. Derek Chang, is the executive 
vice president for content strategy and development for DIRECTV 
Incorporated. We welcome you, Mr. Chang.

  STATEMENT OF DEREK CHANG, EXECUTIVE VICE PRESIDENT, CONTENT 
            STRATEGY AND DEVELOPMENT, DIRECTV, INC.

    Mr. Chang. Mr. Chairman, Ranking Member Stearns and members 
of the committee, my name is Derek Chang, and I am the 
executive vice president of content strategy and development at 
DIRECTV. Thank you for inviting me to the hearing today on 
consumers' access to sports programming.
    DIRECTV strives to compete in the marketplace by providing 
the best television experience in the country. A critical 
component of this strategy is offering more sports programming 
and cutting-edge innovation for subscribers. We carry 29 
regional sports networks on widely distributed tiers. DIRECTV 
offers more live HD sporting events than any other provider. We 
bid on and carry virtually every sports package of additional 
out-of-market games, including those of the NFL, the NHL, 
college football and basketball, and even international soccer.
    In addition to providing more sports content to our 
subscribers, we also strive to add value to much of the sports 
programming that we carry. The introduction of award-winning 
innovations and features has been critical to our ability to 
compete and grow in this increasingly competitive video 
marketplace. For example, nearly all video programming 
distributors carry the YES Network, but only DIRECTV has 
partnered with the channel to add bonus camera angles and 
interactive statistics. Similarly, DIRECTV outbid the cable 
consortium iN DEMAND for exclusive supplemental NASCAR coverage 
last year. For years, the cable industry has carried this 
unique programming but did little with it. DIRECTV immediately 
added multiple camera angles, real-time stats, team audio and 
dedicated announcers. In only its first year, NASCAR Hotpass 
had more than three times the subscribers than when the cable 
industry had rights to this programming. And new this year, 
DIRECTV, working in conjunction with CBS and ESPN, will offer 
an unprecedented level of coverage during the Masters Golf 
Tournament. This new service will combine CBS and ESPN coverage 
of the tournament with additional views of the legendary 
Augusta National Golf Course, hole-by-hole player stats, 
scores, a course tour, and on-demand Masters video clips. All 
of this is a critical component of DIRECTV's success. Obtaining 
the widest range of sports programming made available to 
DIRECTV in the marketplace and adding value and consumer-
friendly features to that programming is precisely how DIRECTV 
has been able to compete and grow. This unique and innovative 
programming enhances competition in the entire video 
marketplace.
    Today, our cable and phone company competitors have 
responded to our leadership in sports programming with unique 
product offerings of their own. This includes on-demand sports 
highlights and footage, but it also includes the highly 
successful bundle of voice, video, and broadband. Dish Network 
has responded by focusing on lower priced offerings and 
providing numerous exclusive international channels.
    These types of battles among multiple distributors offering 
differentiated products and services are exactly what Congress 
envisioned. Increased competition translates into more consumer 
choice, better customer service and greater technological 
innovation. DIRECTV's leadership in sports programming and the 
technical enhancements it has added to that programming would 
not have happened without fair access to the underlying 
content, access that would not exist but for the program access 
provisions of the 1992 Cable Act. In fact, without those 
provisions, satellite television and competition to cable would 
never have gotten off the ground.
    I would not be sitting here today talking about DIRECTV's 
success if Mr. Markey and members of this committee had not led 
the charge to provide consumers with greater access to cable-
controlled programming. Congress recognized that new entrants 
needed programming to survive and also recognized the value of 
exclusives, especially when obtained fairly in the marketplace. 
The 1992 Cable Act jump-started competition in the video 
marketplace. In large part because of the program access 
provisions, DIRECTV was able to provide the first real 
competitive choice to the incumbent cable operators. The 
statute gave DIRECTV and other emerging competitors access to 
must-have programming that cable competitors might have 
withheld but also permitted DIRECTV to differentiate itself 
through exclusive deals negotiated at arm's length with 
independent programmers such as the NFL Sunday Ticket and more 
recently the NASCAR HotPass. The end result is precisely what 
Congress envisioned: a vibrant, competitive marketplace with 
more choice and better service for consumers.
    Thank you, and I look forward to your questions.
    [The prepared statement of Mr. Chang follows:]

                        Statement of Derek Chang

    Mr. Chairman, ranking member Stearns and members of the 
Committee, my name is Derek Chang, and I am the Executive Vice 
President, Content Strategy and Development, at DIRECTV, Inc. 
Thank you for inviting me to testify today on consumers' access 
to sports programming.
    DIRECTV continually strives to offer more sports 
programming and programming-related innovations to our 
subscribers. This improves competition in the entire multi-
channel video marketplace. We carry nearly every regional 
sports network (RSN) made available to us, and we carry all but 
one of these RSNs on our most widely distributed programming 
tier. DIRECTV offers subscribers more live HD sporting events 
than any other provider. We bid on, and carry, virtually every 
sports package of additional, out-of-market professional games 
from the NHL and NBA to international soccer.
    In addition to providing more sports content to our 
subscribers, we also strive to add value to much of the sports 
programming that we carry. The introduction of cutting-edge 
innovations and features has been critical to our ability to 
grow and survive in the increasingly competitive multi-channel 
video marketplace. For example, nearly all multi-channel video 
programming distributors (``MVPDs'') carry the YES Network. But 
only DIRECTV has partnered with the channel to add bonus camera 
angles and interactive statistics for our subscribers. 
Similarly, DIRECTV outbid the cable consortium iN DEMAND for 
exclusive supplemental NASCAR coverage last year. For years the 
cable industry had carried this unique programming but did 
little with it. DIRECTV immediately added multiple camera 
angles, real-time stats, team audio and dedicated announcers. 
In only its first year, NASCAR HotPass has more than six times 
the subscribers than when the cable industry had the rights to 
this programming. All of this is a critical component of 
DIRECTV's success. Obtaining the widest range of sports 
programming made available to DIRECTV in the marketplace, and 
adding value and consumer friendly features to that 
programming, is precisely how DIRECTV has been able to compete 
and grow.
    Today, our cable and phone company competitors have 
responded to our leadership and innovations in sports 
programming with unique product offerings of their own. This 
includes on-demand sports highlights and footage, but it also 
includes the highly successful package of bundled video, phone 
and broadband access, among others. Dish Network has responded 
by focusing on lower price offerings and providing numerous 
exclusive 2nd language channels.
    These types of battles between multiple competitors 
offering differentiated products and alternatives are exactly 
what Congress envisioned. Accordingly, we think the marketplace 
is working on behalf of consumers to ensure fair and equal 
access to critical sports content.
    This success is in large part due to the actions of 
Congress and the ongoing vigilance of the Federal 
Communications Commission (``FCC'') to guarantee such access. 
In 1992, Mr. Markey and members of this Committee led the 
charge to provide consumers with greater access to cable-
controlled programming by enacting narrowly crafted program 
access provisions of the Cable Act. Congress recognized that 
new entrants need programming to survive and that incumbent 
cable operators had sufficient market power to ``kill 
competition'' by withholding key vertically integrated 
programming. At the same time, Congress also recognized the 
value of exclusives--especially when obtained fairly in the 
marketplace by those seeking to compete against vertically 
integrated cable companies with dominant market share. Congress 
thus restricted only incumbent cable operators' exclusive 
arrangements with programmers they owned. It allowed other 
exclusives that would promote competition and serve the public 
interest.
    The 1992 Cable Act kick-started competition in the video 
marketplace. In large part because of the program access 
provisions, DIRECTV was able to provide the first real 
competitive choice to the incumbent cable operators. The 
statute gave DIRECTV and other emerging competitors access to 
must-have programming that cable competitors would otherwise 
have withheld but also permitted DIRECTV to differentiate 
itself through exclusive deals negotiated at arm's length with 
independent programmers, such as The NFL Sunday Ticket and, 
more recently, the NASCAR HotPass. The end result: precisely 
what Congress envisioned--a vibrant competitive marketplace 
with more choice and better service for consumers.

                                 * * *

    I.DIRECTV provides more sports, more HD, and more 
innovative award winning sport programming and features than 
any cable or satellite provider.
    DIRECTV has invested billions of dollars over the past 
three years to vault the company and our subscribers to the 
front of the high definition content line. That investment and 
vision has allowed us to broadcast more HD sports programming 
than any other cable or satellite provider. From fly fishing to 
fencing, our HD sports offerings are unrivaled.
    DIRECTV carries 29 RSNs with the 30th, the Mountain Channel 
(college sports programming from the Mountain West Athletic 
Conference), set to launch before the fall sports season. All 
but one of these are available on our most widely distributed 
tier of programming reaching the largest number of our 
subscribers, and 28 are offered in HD.
    In addition to RSNs, we have successfully secured the 
rights to more out-of- market sport subscription packages than 
any of our competitors, including: NFL Sunday Ticket, NBA 
League Pass, MLB Extra Innings, NHL Center Ice, NCAA Mega March 
Madness, ESPN Full Court, ESPN GamePlan, MLS Direct Kick, and 
CricketTicket. Six of these are offered in HD. We also carry 
national sports channels like the Golf Channel, a suite of 6 
ESPN channels, NHL Channel, NBA Channel, NFL Channel, Setanta 
Sports, Speed Channel, The Outdoor Channel, and Versus. 14 of 
these are offered in HD. And, of course, we offer the local and 
national feeds of the networks, including Spanish language 
networks, to the vast majority of our subscribers.
    But our leadership in sports is not just about carrying 
more sports than our competitors. It is also about innovating 
and creating new sports content through our investment and 
ingenuity. DIRECTV offers a dynamic sports mix channel that 
features 8 different live sports channels that can be viewed at 
once and that allow a subscriber to tune directly to the 
primary channel by clicking on the small picture. The NASCAR 
HotPass offers multiple camera angles, constant coverage of 
four drivers in HD each week at every NASCAR race, and the 
audio and telemetry of 13 different drivers, all while the race 
is going on over the primary network broadcast. Working in 
conjunction with the Masters and CBS, DIRECTV will for the 
first time offer HD bonus coverage of particular holes at 
Augusta National Golf Course and up-to-the-minute statistics 
and leader boards. Countless other award winning innovations 
that bring the passionate sports fan closer to his or her game 
and maximize their viewing experience abound, from ``pitcher 
cams'' to ``bracket trackers'' to ``red zone channels'' and 
``strike zone channels'' that take the viewer to live cut-ins 
of games throughout the country as they happen.
    This is not simply good news for DIRECTV's subscribers. 
This programming, and these innovations, forces our competitors 
to respond in the marketplace. Some do so through their own 
innovations. Others do so through bundled offerings. Others do 
so by cutting prices. Increased competition translates into 
more consumer choices, better customer service, more responsive 
pricing and the technological innovation described above. 
Because of the competitive video marketplace, all Americans--
not just DIRECTV subscribers--are enjoying a better television 
experience.
    II. The Program Access Provisions of the 1992 Cable Act are 
largely responsible for competition in the MVPD marketplace.
    DIRECTV's leadership in sports programming, and the 
technical enhancements it has added to that programming, would 
not have happened without fair access to the underlying 
content--access that would not exist but for the program access 
provisions of the 1992 Cable Act. In fact, without those 
provisions, satellite television and competition to cable would 
never have gotten off the ground.
    The point of these provisions was to ensure that new 
entrants challenging the cable monopoly had access to the 
programming they needed to do so. More specifically, Congress 
sought to:

increas[e] competition and diversity in the multichannel video 
programming market, to increase the availability of satellite cable 
programming and satellite broadcast programming to persons in rural and 
other areas not currently able to receive such programming, and to spur 
the development of communications technologies.

    Indeed, ``the conferees expect[ed] the Commission to 
address and resolve the problems of unreasonable cable industry 
practices, including restricting the availability of 
programming and charging discriminatory prices to non-cable 
technologies.'' Congress hoped that competitors like DIRECTV, 
who sought to compete with the incumbent cable operators, could 
do so on the merits of their offerings, and consumers would 
benefit from their efforts to win customers from each other.
    Congress thus required certain programmers owned by cable 
operators to make their programming available to all at 
nondiscriminatory rates and terms. By doing so, Congress 
specifically ``placed a higher value on new competitive entry 
than on the continuation of exclusive distribution practices 
that impede this entry.''
    Yet, Congress treaded carefully when adopting the program 
access provisions--and rightfully so. It did not prohibit all 
exclusive arrangements. It instead sought to encourage the 
development of unique product offerings, such as local news. 
And, because it was principally concerned about the abuse of 
market power, it only prohibited exclusive contracts by 
dominant cable operators for vertically integrated programming.
    In carefully tailoring its program access rules, Congress 
recognized that exclusive contracts could be a valuable tool to 
enhance the competitive viability of new entrants. As 
Representative Tauzin noted during debate on the House floor, 
``exclusive programming that is not designed to kill the 
competition is still permitted . . .'' Thus, where a new 
entrant seeks to obtain exclusive programming to increase 
competition, the program access rules permit it to do so. And 
even a cable operator is free to bargain for exclusivity to 
differentiate its service--so long as it does so on a level 
playing field with a non-cable-affiliated programmer.
    The program access rules thus work exactly the way Congress 
intended them to. They enable satellite operators and other new 
entrants to provide viewers with ``must-have'' programming that 
cable would otherwise keep for itself. Yet, they allow all 
video distributors to provide a differentiated product that 
spurs competition.
    III. The NFL Sunday Ticket was precisely the type of 
exclusive deal envisioned by the program access provisions to 
spur competition.
    Perhaps the best example of an exclusive arrangement 
helping--not harming--competition is The NFL Sunday Ticket. 
DIRECTV, as a new entrant, was able to get a foot in the door 
of the highly concentrated multi-channel video market in part 
by offering unique content such as The NFL Sunday Ticket. This 
and other unique offerings helped DIRECTV to differentiate 
itself and gain market share. The cable industry, in turn, 
found itself forced to innovate and become more responsive to 
customer concerns. As a result, today cable offers a 
competitive, attractive package that includes its own 
differentiated video-on-demand and bundled Internet offerings. 
This is exactly what Congress had in mind when it enacted the 
program access provisions.
    The NFL Sunday Ticket has helped DIRECTV emerge as a 
competitor to cable. It is critical to note that DIRECTV's 
offering of the NFL Sunday Ticket does not prevent NFL fans 
from seeing their home teams. Local fans still get to see their 
teams through their local broadcast network, a right that 
DIRECTV believes is a fundamental part of America's sports 
culture. Unfortunately, the same cannot be said of some cable 
operators who are withholding vertically integrated sports. The 
most well-known example is Philadelphia, where the incumbent 
cable provider, Comcast, denies access to Comcast SportsNet to 
DBS competitors. As a result, fans who wish to see the home 
teams play, including the Philadelphia Flyers, Phillies and 
76ers, have no choice but to subscribe to Comcast. That sort of 
denial of access to ``must-have'' local content--as opposed to 
the out-of-market premium content offered by DIRECTV--is 
precisely the sort of threat to competition that Congress 
sought to prevent. Indeed, Comcast's anti-competitive practice 
is having its intended effect: the FCC recently found that 
``the percentage of television households that subscribe to DBS 
service in Philadelphia is 40% below what would otherwise be 
expected given the characteristics of the market.'' Likewise, 
DIRECTV's market share in the San Diego DMA is practically half 
the national average due to the local incumbent cable 
providers' denial of access to the home teams' games.

                                 * * *

    A key development in the American economy over the past 
twenty years has been the rise of a competitive video 
marketplace. Today, competition means: consumers have more 
choices than ever before; customer service and pricing are 
becoming more responsive; technological innovation is 
flourishing; and tens of thousands of jobs have been created.
    This is no accident. Rather, it is the direct result of 
policies that Congress and this Committee have enacted to 
promote competition. In the MVPD marketplace today, consumers 
are courted by multiple providers offering different and unique 
services surrounding a core package of video programming.
    Our cable competitors still possess an overwhelming market 
share, which can distort competition to this day. But the fact 
remains that today there is competition where before there was 
none. This is the success story Congress--and this Committee, 
in particular--helped write. Thank you once again for allowing 
me to testify. I would be happy to take any of your questions.
                              ----------                              

    Mr. Markey. Thank you very much, Mr. Chang, and that 
completes all testimony in opening statement form from our 
distinguished panel. We will now turn to questions from the 
subcommittee, and the Chair will recognize himself for a round 
of questions.
    We will begin with you, Mr. Britt. Now, what are the 
criteria in your view that ought to be employed to determine 
whether a sports channel goes on the most watched tier or a 
special sports tier? Is it price, and if so, what is that price 
point? Is it the nature and popularity of that sport? Is it 
whether the cable operator owns a portion of that sports 
programming? Could you give us your kind of definition of what 
it is that qualifies to be carried on different tiers?
    Mr. Britt. Certainly. I think it is a very complex set of 
decisions. It certainly involves an assessment of the 
attractiveness of the product in a given market, and there has 
been some testimony about regional sports in a local market 
versus national sports. There is certainly consideration of 
which tier of service the programmer is asking it to be carried 
on, and certainly price and conditions are a big part of it, so 
there is all of those things. And quite frankly, there is also 
the activities of our competitors and how they are packaging 
and carrying things.
    Mr. Markey. So could you take the Golf Channel, for an 
example, and give us an analysis of what are the factors that 
determine whether it is placed on expanded basic or in another 
part of the network and contrast that with the Big Ten or the 
NFL channel and why that might be placed on a sports tier?
    Mr. Britt. Sure. Again, it is those factors that I talked 
about, so it is a combination of our assessment of appeal, and 
by the way, the way the market works, we can be wrong about 
that, and maybe Mr. Chang is right and customers move. That is 
part of what happens. So it is appeal, it is price and our 
sense of where it fits. So one point I would make about the NFL 
channel, in Mr. Goodell's testimony he says that the NFL 
channel is not the centerpiece of the NFL programming, and in 
fact, most of their programming is on over-the-air broadcast TV 
or the channels like ESPN. So he is basically saying it is a 
niche channel, and we would like to carry that channel, and we 
would like to carry it on terms that were appropriate for the 
content.
    Mr. Markey. Let me go to Mr. Goodell then. When Disney 
doesn't reach a retransmission consent deal for carriage of 
ABC, its remedy is to deny the programming to cable operators, 
and that is often a very powerful remedy, given the popularity 
of network television, but to a fledgling network or a new 
channel entrant, what is the effective remedy, Mr. Goodell, 
that is available if a carriage deal is not struck? What remedy 
would you recommend?
    Mr. Goodell. Well, the remedy that we recommend is what the 
1992 Cable Act discussed, which was that if a cable operator 
that owns its own channels that are distributing their channels 
more broadly than an independent programmer, that is 
discrimination against that independent programmer, and that 
should not be allowed, that the free market requires that all 
channels be treated equally, not preferenced to the ones that 
are owned by the cable operators. From our standpoint, we are 
not focused entirely on the NFL Network. We have eight games of 
our 256 games that are on the NFL Network. We do not consider 
ourselves niche programming. I have never heard that from 
anyone other than the cable operators who have a great interest 
in our programming also. We have tremendous high-quality 
programs in great demand year round for our consumers, and we 
have gotten great reaction from them and from other programmers 
about the quality of our programming. So from my standpoint, I 
would hope that the FCC would look at the procedures that were 
put in place in 1992 and apply that in this circumstance.
    Mr. Markey. Dr. Cooper, your quick comment, please.
    Mr. Cooper. As I said, I think we need to treat these 
programs in an equal fashion. Our preference would be to treat 
them all equally and let consumers choose the ones they want to 
pay for. If the Congress is not willing to go that far, then we 
have to either get them all into a sports tier and let 
consumers then decide whether they want the sports tier, but if 
we are not going to have a sports tier, the worst possible 
outcome here is to allow cable operators to continue protecting 
the incumbents who basically have carriage rights, and so if a 
cable operator is going to carry its own programming, its own 
sports programming, it should not be allowed to exclude 
competitors for that sports programming.
    Mr. Markey. Thank you, Dr. Cooper.
    The Chair recognizes now the gentleman from Florida, the 
ranking member of the committee, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Goodell, the man on your left and the man on your right 
and Mr. Ferree seem to disagree with you. Dr. Cooper doesn't 
necessarily agree with you, but he is advocating for a la 
carte, and Mr. Chang seems to be a mix. So Mr. Goodell, you are 
the one that is going to have to carry your argument alone 
here, it appears to me. And I always like to think when people 
ask for certain things from the Federal Government, I always 
say to myself, now, if I grant that to him, would it make sense 
to grant it to other people, too, in a sort of philosophical 
statement. If it is good enough for you, is it good enough for 
everybody? So what you are advocating for football, baseball, 
should have the same opportunity, basketball, tennis, 
billiards, NASCAR, soccer, golf, fishing. We could go on and 
on. So what you think is good for the NFL, you also would 
advocate is good for all these other sports that I mentioned. 
Is that true?
    Mr. Goodell. Well, Congressman, I think what we are trying 
to be clear about here is, we are not arguing for government 
legislation, we are not looking for intervention.
    Mr. Stearns. No, but you are asking that pressure be put on 
the FCC to set up an arbitration board.
    Mr. Goodell. Well, I think that the 1992 Act actually----
    Mr. Stearns. So you are extending that?
    Mr. Goodell [continuing]. Established procedures for this 
type of dispute when discrimination occurs.
    Mr. Stearns. You say discrimination, and then you go a 
little further to talk about sharp differences in the 
programming and the carriage and everything, but if you made 
the argument for arbitration, couldn't these other sports also 
make the same argument once they decide, Gee, we are getting 
pretty profitable, we want to have our own broadcast network 
ourselves. Couldn't they go ahead and make the same argument? 
The thing I worry about is, if all these sports go ahead and do 
it, then we are going to see a basic cable rate that is going 
to be so expensive, no one could afford it.
    Mr. Goodell. Well, I understand. We are advocating for all 
independent networks here. We do agree with that in some cases 
here, and we are also advocating, and I agree with everybody at 
this front table, we are arguing for a free market system. That 
is what we want. We do not want government regulation. The 
reality of it is though----
    Mr. Stearns. But you want arbitration?
    Mr. Goodell. Sir, if I can finish?
    Mr. Stearns. Yes.
    Mr. Goodell. What we would like is a free market system 
which allows a market system to work without discrimination and 
preference for their own channels.
    Mr. Stearns. How are you going to get that without 
government intervening?
    Mr. Goodell. Again, in the 1992 Act, there were provisions 
to avoid discrimination that Congress recognized at that time--
--
    Mr. Stearns. If there is discrimination, why don't you sue 
under the 1992 Act and take it to court?
    Mr. Goodell. Well, the reality--and I am not a lawyer so 
let me make that point up front. The reality of it is, Congress 
established a procedure with the FCC to avoid discrimination 
and a process for us to follow that. Our option, as I 
understand it, is to file a complaint with the FCC.
    Mr. Stearns. OK.
    Mr. Goodell. If we go to the court----
    Mr. Stearns. Have you filed that complaint?
    Mr. Goodell. We have not. We are strongly considering that 
at this point.
    Mr. Stearns. Let me--I don't have a lot of time.
    Mr. Goodell. With respect to, if we file a complaint, if 
the FCC system doesn't produce a remedy within a certain period 
of time----
    Mr. Stearns. Then you want the government to step in. You 
want the FCC to step in and force arbitration?
    Mr. Goodell. We want the FCC to come in and make sure that 
it is an open and free market as the Congress asked for.
    Mr. Stearns. Now, Mr. Ferree, I understand you were the 
chief at the Media Bureau at the FCC. Is that correct?
    Mr. Ferree. Yes, sir, that is correct.
    Mr. Stearns. Dr. Cooper has made a very strong argument for 
a la carte, and I understand--maybe you could comment quickly 
on Mr. Goodell's argument about saying this discrimination 
exists just quick, and I don't have much time, and then you 
might want to talk about Dr. Cooper. I understand you wrote a 
report to indicate that a la carte would in fact hurt the 
consumer, so just quickly.
    Mr. Ferree. Yes, sir, I do have some history with a la 
carte. I will just comment briefly on Mr. Goodell's statement. 
Discrimination is--there is nothing with discrimination. It is 
unreasonable discrimination that causes problems, and the 
difficulty here is determining what is unreasonable. As he 
said, they have a handful of games on the network. You know, is 
that the same as an entire golf season on the Golf Channel? 
Making those kinds of determinations is quite difficult, and as 
Mr. Britt said, there are complex sets of factors that go into 
decisions about where programming is going to--I can't sit here 
and tell you I know the right answer to that. That is why we 
have markets. In this case, we have intensely competitive 
markets.
    Briefly on a la carte, in my view, it is a disaster for 
consumers. He said it will increase choice and reduce price. I 
don't know how he came up with that. In fact, it probably would 
increase consumer prices to get anywhere near the kinds of 
programming you get----
    Mr. Stearns. I have got one more question. You are 
basically----
    Mr. Ferree. But more importantly, it would destroy 
diversity, which we all purport to cherish.
    Mr. Stearns. Mr. Chang, I just have one quick question for 
you. DIRECTV is now the second largest pay TV provider, and 
Dish is the third. Each of you have more subscribers than Time 
Warner and are available nationwide rather than just 
regionally. Doesn't that mean if Time Warner decides not to 
carry the NFL Network, the NFL still has more than adequate 
distribution options with you and Dish?
    Mr. Chang. They obviously have distribution options with 
us, because we carry it, and so does Dish. In terms of what is 
adequate distribution, I guess I don't know what the economics 
are of the channel and what they require in order to have a 
successful channel or what they would deem to be success. From 
our standpoint, from DIRECTV's standpoint, we see the NFL 
Network as a channel that makes sense for our customers, which 
is why we have chosen to carry it.
    Mr. Markey. The gentleman's time has expired.
    The Chair recognizes the gentlelady from California, Ms. 
Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman.
    I listened carefully to all the testimony, and I want to 
thank you all for your varying views. It seems to me that the 
consumer can get the squeeze at either end of this thing. I 
think that there are complications at both sides of it, and of 
course in all of this really is money. I mean, that is really 
what drives all of this, and that is what I think is causing--I 
mean, it is great that people make money, I am not opposed to 
that, but it drives the respective parts of this to do what 
they do.
    I have a question for Commissioner Goodell. I think your 
argument is that the cable operators are discriminating against 
the NFL because you are an independent programmer. I mean, that 
is what I am hearing. It seems to me that that is a little hard 
to swallow based on fairness and competition because, coming 
from an organization that has an antitrust exemption when it 
comes to pooling, I think that antitrust exemption was granted 
for that. You are an independent programmer with some of the 
most valuable content on television, and so what I want to ask 
you is, could a plausible answer to the lack of carriage of 
your programming be that you are not offering a competitive 
price? Is that what is----
    Mr. Goodell. It is a very fair question.
    Ms. Eshoo. Is that what you are telling us?
    Mr. Goodell. Let me try to--we have reached an agreement 
with nearly 250 cable operators around the country, all the 
satellite carriers and the telephone carriers. We recognize 
that this is a market issue, and price needs to be determined 
along with distribution. I don't believe this is simply about 
money. I believe this is about the law, and the law says in 
1992 that you cannot discriminate against independent 
programmers in preference of your own channels that you own, 
and we believe that is what the fact is. The fact is, they are 
distributing the channels that they own, their sports channels, 
more broadly on basic services than the NFL Network, and 
obviously they have their choice of doing that, but we believe 
there is tremendous market demand. We believe we have been 
reasonable in our pricing, and that is reflected in the fact 
that 250 cable operators and satellite carriers and telephone 
carriers have picked us up.
    Ms. Eshoo. Let me just ask you the following. You are the 
most successful sports league in our country. Your contracts 
with broadcast, satellite and cable networks obviously amount 
to billions of dollars. This past season you, the NFL, made a 
decision to remove televised games from over-the-air broadcasts 
and place them on your own network. Why did you make that 
decision before you signed the carriage agreements with the 
major cable operators? I mean, it seems to me that there is 
leveraging, and I understand the leveraging because there is a 
ton of money in it, but it also, I think, drove NFL fans to 
clamor that their cable operators carry this. They are really 
essentially left in the lurch, I think. Can you comment on 
that?
    Mr. Goodell. Yes. I think we made this decision 2 years 
ago. This is the second season that we had the eight games on 
the NFL Network, and we think because of the great demand for 
NFL programming year round, that our fans want to see more NFL 
programming on a year-round basis. That is a very smart 
marketing decision for us, and it actually created a new 
national platform to allow more people to see more football. 
The fact is, you can question our business judgment about 
whether that is a right decision or not, but the reality of it 
is, it was a decision that we made, and we should have the 
ability to compete in a fair market where the laws are being 
followed and we have the opportunity just as any other 
independent programmer has and be able to compete in a world 
where we are not at a disadvantage to sports services that are 
owned by the cable operators.
    Ms. Eshoo. Thank you.
    To Mister, is it Ferrer?
    Mr. Ferree. Ferree.
    Ms. Eshoo. Yes. While----
    Mr. Ferree. Ferree, like referee.
    Ms. Eshoo. I don't know whether I would want you to be the 
referee.
    Mr. Ferree. All right.
    Ms. Eshoo. My comment is outside of the scope of this 
hearing. I just want you to know that I have read what I 
consider--well, I guess I shouldn't say ``rants,'' but I still 
will--your local broadcasting in extremis and the other one 
that you wrote. I think that we have a real problem with these 
postcard licenses at the FCC. As a matter of fact, I think they 
are an outrage, and I think that people in our country that own 
the airwaves deserve better, but I want you to know----
    Mr. Ferree. Fair enough.
    Ms. Eshoo [continuing]. That I have read them and obviously 
I don't agree. Thank you.
    Mr. Markey. The gentlelady's time has expired. The Chair 
recognizes the ranking member of the full committee, Mr. 
Barton.
    Mr. Barton. Thank you, Mr. Chairman. You know, when I ask 
myself why I run for Congress, I need to think of a day like 
today. As I look down at this panel and we have got these 
intellectual deep thinkers, we have these business moguls, we 
have these sports czars, these media masters. None of those 
guys would pay any attention to us if we weren't Members of 
Congress, you know. So I want to thank you for this hearing and 
getting these gentlemen to at least for an hour-and-a-half to 
act like they care what we think.
    Mr. Markey. And we wouldn't pay any attention to them if 
they didn't control sports programming, so it is a two-way 
street.
    Mr. Barton. That brings us to the purpose of the hearing. 
Now, in the old days, before radio and TV, when professional 
sports or sports generally got started, if somebody wanted to 
watch that particular sporting event, they went to the stadium 
or the ballpark and they charged them a buck or two bucks, and 
they went in and watched it, and if they didn't want to go, 
they didn't go. And then some bright fellow decided, you know, 
people would listen to baseball. Probably the New York Yankees 
were the first, maybe the Boston Red Sox, I don't know. But lo 
and behold, people would listen. And then when TV came along, 
somebody said, well, if they can't go to the game, maybe they 
would watch it on TV, and they licensed that. Then it has just 
grown and grown, and so now there is value. As the gentlelady 
from California pointed out, we have all these negotiations or 
discussions about who gets that value and how much it is worth 
and things like that. But we have to remind ourselves, we are 
talking about sports. It is not a constitutional right that 
these people force America to watch their activity. You know, 
if the commissioner of the NFL said Mr. Chairman, I think that 
you ought to force everybody in America, whether they watch it 
or listen to it or go to the game, they have to pay so much for 
each game no matter what, we would be outraged. Now, the 
reverse is also true. We don't have a right that they have to 
show us the game, you know. What if I said I have a right to 
all the sports events in this country and I don't have to pay 
anything for it? Well, then they would say well, you are crazy. 
So we get to the purpose of this hearing, which is, where do 
you set the balance point? And the gentleman at the end, Mr. 
Ferree, has pointed out that the market generally is working, 
and I think that is what Mr. Bodenheimer says too, that the 
market is generally working, and I think that is what Mr. Chang 
says. In a way, Mr. Goodell says it is working except they 
won't carry our program on the basic tier so that everybody in 
America has to pay 10 cents a month or 70 cents a month whether 
they watch the NFL Network or not. Now, I speak with some 
trepidation here because Jerry Jones is building his $1 billion 
stadium in my congressional district, and in fact, I see it 
every day when I take my son to daycare, this pavilion for all 
that is positive about America and the extravagance in sports.
    But my question, I guess I would ask Mr. Ferree and then 
Mr. Bodenheimer and Mr. Cooper--who is one of the intellectuals 
who has expertise on lots of things and we love to have him 
come see us--you know, what is broken here? I mean, why 
shouldn't we just let the Mr. Goodells and the Mr. Bodenheimers 
and the Mr. Changs and the Mr. Britts fight it out and whoever 
is the best negotiator, that is what is available in the 
market? What is wrong with that?
    Mr. Ferree. Mr. Barton, I won't take up much of your time. 
I would say nothing is broken here. I would agree with you that 
I am sure there are important and pressing problems that demand 
Congress's attention. The NFL's failure to negotiate carriage 
deals for the NFL Network is not one of them.
    Mr. Barton. Mr. Bodenheimer?
    Mr. Bodenheimer. Congressman, by and large, the American 
public loves our products, and I say our products collectively. 
I mean, this industry didn't exist 30 years ago. Now we have 
nearly 100 million households who are subscribing to 
subscription television, and over the last 5 years, despite the 
Internet, despite video games, despite all the new technology 
offerings, television viewing in this country is increasing. So 
from my perspective, just from the sports perspective, it has 
never been a better time to be a sports fan. You can access 
more product and more distribution manners in more packages for 
more businesses and distributors than ever before in the 
history of our country.
    Mr. Barton. My time is expired, but where the NFL Network 
was available on a sports tier that was discretionary, what 
percent of the viewers in those markets chose the NFL Network?
    Mr. Goodell. Let me try to answer that. Comcast relegated 
us to a sports tier just this past year. I believe that they 
had roughly 750,000 subscribers when they did that. The only 
information that they report publicly that we have, in November 
that more than doubled to probably 1.7 or 1.8, so it is clear 
that they used the NFL programming to drive their digital 
sports tier, which costs the consumers, depending on the market 
you are in, $7 to $9 a month. So the consumers are actually 
paying a larger expense, a larger cost by carrying the NFL 
Network.
    Mr. Cooper. Mr. Barton, let me get the answer. What is 
broken here is in your sentence, why should we make everybody 
in America pay 10 cents? It is the everybody part that we are 
concerned about, and in the case of ESPN it is about 2 bucks, 
or he can correct me, but I think that is about where it is 
these days. It is the everybody part. We shouldn't make 
everybody pay the 10 cents. We should go back to the system 
that you talked about where everybody had the choice, and we 
are at a situation with the distribution network in this 
country where you can in fact give people those choices.
    Mr. Barton. My last question, what does the E in ESPN stand 
for?
    Mr. Bodenheimer. Entertainment.
    Mr. Barton. Entertainment. I couldn't----
    Mr. Bodenheimer. Man does not live by bread alone or 
politics alone, Mr. Barton, so in point of fact, the 
Communications Act, the antitrust laws, they regulate all forms 
of economic activity, so as a capitalist society we have 
decided that we want to meet our needs, whether they are for 
entertainment or food, in a competitive system, and where there 
are market failures, the Congress has stepped in to say wait, 
we care enough about it even though it is only entertainment to 
try and make sure it is a fair market.
    Mr. Barton. Maybe a compromise would be just to have the 
Cowboys carried by everybody. Maybe that is the compromise. 
Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Well, thank you, Mr. Chairman. I am sorry I 
missed part of this hearing, as I was upstairs in a business 
meeting issuing subpoenas. Let me use a little different 
approach from Mr. Barton there. He has the Dallas Cowboys, and 
I have the Green Bay Packers. The Green Bay Packers are owned 
by a community of 100,000 people. We have a great following. We 
are a very storied franchise. Even with the loss of Brett Favre 
yesterday, we will still be there, but how would Green Bay ever 
be able to keep a team if we had to pay at the stadium, because 
we would never be able to afford to with the salaries and 
things like this and salary caps and other things that have 
helped us to keep our team available? But how would Green Bay 
ever get seen outside of Green Bay if we don't have them on, 
let us say, basic cable? And we had a real problem, Joe, this 
year when Green Bay did play Dallas on the Thursday night game, 
just trying to allow us who have grown up with the Packers to 
be able to watch it.
    So I find it troubling that even the Government 
Accountability Office, GAO, report, found that cable networks 
affiliated with cable operators were 31 percent more likely to 
be carried than a network without majority ownership, which is 
in essence the nature of the problem of discrimination against 
independently owned networks. So it seems to me that cable 
should be placing networks on the basic tier based on consumer 
demand. Green Bay certainly would do well no matter where it 
is, because of such a rich history in football, not whether 
they own a stake in that network. So how does consumer demand 
for the NFL Network, Mr. Goodell, compare to that for cable-
owned sports networks on the basic tier?
    Mr. Goodell. I think you have hit right at the heart of 
what our issue here is. We want to operate in a free market 
system. We want to operate because we believe there is 
tremendous consumer demand for our product. The reality of it 
is, despite that demand, there is preference for the cable-
owned channels, the sports tiers, and they are more broadly 
distributed. We believe that is the core of the issue here, 
because we believe that is discrimination in not allowing 
broader distribution for the NFL Network, that we know there is 
great demand for that programming, so I think you hit exactly 
on the point.
    Mr. Stupak. Well, let me ask you this then, because there 
has been a lot of discussion about price. In your view, would 
basic cable go up for consumers if you had the NFL Network on 
the basic tier, and if so, how much?
    Mr. Goodell. I am not sure I understand the question. I am 
sorry, Congressman.
    Mr. Stupak. If the NFL Network is carried on basic cable, 
there has been a lot of discussion that cable rates would go 
up. What would be the estimate?
    Mr. Goodell. That is actually not true, according to the 
facts we have. As I mentioned earlier, we have negotiated with 
over 250 cable operators, satellite carriers and telephone 
carriers. None of them has had a price increase. And in fact, 
with the earlier comment about Comcast relegating us to a 
sports tier, Comcast didn't give a refund to the consumers when 
they took it off of basic television. They in fact had a price 
increase when they did that. So the reality is, they saw a 
motivation here where they could increase their financial 
return by putting us on a sports tier, forcing the customer who 
wants NFL product to increase the price and to create greater 
profits for Comcast.
    Mr. Stupak. Well, let me ask you this. You said you have 
agreements with 250 cable operators. What is the percentage of 
the total cable operators? That 250, what percentage is that of 
the total?
    Mr. Goodell. I don't know the answer to that. We are 
roughly in 37 million homes, so----
    Mr. Stupak. Thirty-seven million. Can anyone give me--how 
many cable operators there are, Mr. Cooper, or how many homes 
have cable? So if they are in 37 million----
    Mr. Cooper. If he is in 37 million cable and that is about 
half----
    Mr. Stupak. About half?
    Mr. Cooper. A little bit less than half probably than all 
the----
    Mr. Stupak. So then the other half is----
    Mr. Goodell. I think the reality of it is----
    Mr. Cooper. That is a third then.
    Mr. Stupak. But it seems like the NFL Network is not 
carried on basic cable by the bigger companies like Comcast, 
Time Warner. Comcast moved it to a tier. How about Time Warner? 
Do you carry it?
    Mr. Britt. No.
    Mr. Stupak. No? Charter doesn't carry it either, do they?
    Mr. Goodell. Charter, we had an agreement with. There was a 
breach of that agreement. We are in discussions. That is 
clearly a market issue that I believe will get resolved. They 
don't have the sports channel. The reality we have to get back 
to here is, it is with Comcast and Time Warner who own sports 
channels, who distribute them more broadly, and we do not have 
a fair opportunity in that case, and that is the discrimination 
we believe is occurring which is against what Congress asked 
for in 1992.
    Mr. Stupak. Now, the NFL is advocating for arbitration.
    Mr. Goodell. We are looking for dispute resolution. It 
doesn't have to be in arbitration. We believe that if we are 
treated with the same open, free market, then our channel will 
not be discriminated against because it is not owned by cable 
operators. We only have two operators really that we need 
agreement here, and it was pointed out by Dr. Cooper, the 
reality is, you can't start the channel successfully without 
getting Comcast or Time Warner to give you distribution. They 
control 40 million homes between the two of them.
    Mr. Stupak. My time is up. Would the Celtics still be going 
if they didn't make that trade in the off season? Because they 
are having a very successful year this year. Do you have your 
own sports carriage up there, Celtics in Boston?
    Mr. Markey. Oh, the Celtics. I am subscribing to the 
Celtics.
    Mr. Stupak. See, Green Bay can't do that. We are just too 
small a market, so that is why we need something on basic 
cable.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Georgia, Mr. Deal.
    Mr. Deal. Thank you, Mr. Chairman.
    The FCC recently completed a comment period on their notice 
of proposed rulemaking regarding the practice of programmers 
tying popular programming with undesired programming. Mr. 
Bodenheimer, does ESPN offer to cable operators a stand-alone 
price for ESPN as opposed to a bundle of programming?
    Mr. Bodenheimer. Yes, we do.
    Mr. Deal. I understand that there are non-disclosure 
agreements that prohibit you from providing exact price quotes 
on the stand-alone versus the bundle, but can you give us some 
idea as to what the comparisons might be?
    Mr. Bodenheimer. Well, like a lot of businesses, our job is 
to distribute as much of our product as we possibly can, as 
widely as we can, so we are owned by the Walt Disney Company. 
So between Disney and ESPN, we have over 20 networks that we 
can package together and offer to Mr. Britt, Mr. Chang, other 
distributors, and we do that frequently. When someone requests 
a stand-alone price, we give that to them, and it is certainly 
within our view a reasonable range, certainly with the law and 
good business practice. It is within a reasonable range between 
the package price.
    Mr. Deal. And everybody is bound by non-disclosure as to 
that. Is that correct?
    Mr. Bodenheimer. That is correct.
    Mr. Deal. Can you tell me if anybody takes the option of 
the stand-alone versus the bundle?
    Mr. Bodenheimer. Yes, they do. We have about 60 affiliates 
that take ESPN solo.
    Mr. Deal. About 60?
    Mr. Bodenheimer. Correct.
    Mr. Deal. I understand from the ACA that none of their 
members apparently take that, so these would be larger cable 
providers then?
    Mr. Bodenheimer. No, I would suspect they are smaller. I 
don't have the detail on that, Congressman. I mean, the good 
news from our perspective is, over almost 30 years we produced 
very popular programming. So we are very infrequently asked for 
a price or a negotiation for just one of our services. I have 
been in the business almost 30 years. I can't recall being in a 
meeting, and I grew up on that side of the business, where 
someone said I only want to buy ESPN. They want ESPN-2, they 
want Classic, they want News, they want the Disney Channel. So 
that is why it is such an infrequent discussion.
    Mr. Deal. Well, of course, one of those might be that it is 
just as cheap to buy the bundle as it is to take your price on 
the separate channels. That is one of the concerns.
    Let me ask you this or any others who wish to comment. Are 
there requirements that cable operators sell the bundled 
channels to a certain percentage of their customers, or are 
they required to be on the expanded basic tier?
    Mr. Bodenheimer. It varies by network, Congressman. For 
ESPN and ESPN-2, we seek to be on expanded basic. For all of 
our other services, and we have carriage in a variety of 
packages within Mr. Britt's distribution system and Mr. Chang's 
for ESPN News and Classic, we are in different package schemes 
throughout the country.
    Mr. Deal. If a cable operator wants to offer ESPN or the 
NFL Network or other sports networks as a part of a sports tier 
or a sports package, why should they not be allowed to do that? 
If they want to use that type of business model, why should 
they not be able to offer it without being forced economically 
to put it on the expanded basic tier along with other bundled 
programs, Mr. Goodell?
    Mr. Goodell. Let me respond to that. We believe that sports 
tiers--we don't believe that the cable operators are actually 
committed to the sports tiers. In fact, it is clear, because 
they put their sports channels on more broadly distributed 
services. That is the point here. They are not taking their 
sports services that they own and putting them on the sports 
tiers. They are broadly distributing in basic cable and forcing 
their customers to buy it. What they do do, and they have made 
comments publicly regarding this, is that because of the high 
quality of NFL programming and the demand for that, putting it 
in a sports tier is like an anchor tenant. What it does is, 
there is so much demand for that that it drives the sports 
tiers. They make a significant amount of money because they 
charge the consumer $7 to $10 a month to get that, and they pay 
us the 60 or 70 cents that they owe us on our distribution, but 
the reality is, the consumer loses, and that is what is lost 
here. The consumer is losing by not having the opportunity to 
get access to that high-quality programming.
    Mr. Deal. Mr. Britt?
    Mr. Britt. Thank you. I would to like to make a couple of 
points that relate to what Mr. Goodell just said. First of all, 
it would create the impression that cable operators control a 
huge number of networks. The reality is, going back to what Mr. 
Stearns said, there are over 500 networks that exist today, and 
the cable operators control just a handful of those. In the 
case of Time Warner, those are things like CNN and TBS and TNT. 
It is pretty hard to suggest those compete with the NFL 
Network. We have a minority interest in the Mets Network in New 
York. That is pretty much the limit of what we own in the 
sports networks. I can't talk for other cable operators. So I 
think this picture that is being painted which maybe in 1992 
was correct but this picture that somehow cable operators 
control all this programming and they are discriminating 
against poor NFL, it just is the wrong picture.
    Mr. Deal. Mr. Chairman, could I ask Dr. Cooper to respond 
quickly to that?
    Mr. Cooper. Yes. The simple fact of the matter is that the 
Congress created a quasi-property right for the broadcasters by 
giving them must-carry and retransmission consent. They have 
become the dominant programmers. If you look at the number of 
eyeballs, particularly in the expanded basic tier, which is the 
most popular package, six entities, five entities dominate the 
viewing and programming in that space. So the other 540 
national networks don't get many eyeballs, they don't get 
carriage. We did a study of minority-owned programming, and we 
find that there are 192 networks which is about 40 percent of 
that total number, and they get about 4 percent of the carriage 
because they get relegated to higher tiers, they don't get 
carriage in the basic tier. So that domination still persists, 
even though you have the 1992 Act which opened up and made, as 
you have heard, some competition possible. The key here is to 
get a level playing field someplace on that dial, so there are 
two possibilities. One, let them compete fairly in a sports 
tier; two, let them compete fairly in the basic tier. The 
fundamental problem of discrimination is that the network 
operators, the cable owners, have dominated the basic tier, 
which is carried to millions and millions and millions of 
households, and they will not let independent programming get 
carriage in that tier. That is the distortion in the 
competition we have in the market.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman. I appreciate that.
    Commissioner Goodell, it is good to see you again this 
week. What hearing are you going to participate in next week? I 
hope you just have a home here that you can stay.
    Mr. Goodell. I appreciate the invitation.
    Mr. Terry. There is a truism on Capitol Hill that while 
everything has already been said, not everyone has said it yet, 
so it is my turn. The NFL Network Web site says it is the most 
widely distributed sports network in the history of cable and 
satellite television. That is a quote off the site. It says 
that more than 240 pay television providers carry the network, 
including DIRECTV, Dish, Comcast, Cox, Verizon, AT&T. It says 
that you are available to 70 million homes and have 41 million 
subscribers. It says in 2 years you have had subscriber totals 
that other successful networks took 5 years to reach. According 
to the Washington Post, the NFL had $3.74 billion in television 
revenue in 2006 alone, with numbers climbing. If that is the 
case, why do you think there needs to be government 
intervention? It seems like everything is working well for you 
without any intervention.
    Mr. Goodell. Well, let me go back a couple points. One is, 
there is a little deception there with available to 70 million 
homes. The fact is, it is not in 70 million homes. The consumer 
would have to pay an additional fee to be able to get that. I 
think what is being lost here is the consumer. We believe, and 
I think the record is clear about the quality and the demand 
for NFL programming on a national basis, absolutely, but 
according to Mr. Britt here, we are looking for sympathy. What 
we are looking for is an open, free market. The Congress 
recognized that discrimination could occur in 1992. They set up 
procedures with the FCC to make sure that it was an open and 
free market. That is all we want is an open and free market. 
The fact that we have arrangements with 240 cable operators and 
satellite carriers and telephone carriers is a reality that 
there is great demand and that we have been correct in our 
negotiations and that true market factors are leaning to 
distribution. But with the two large cable operators, they own 
their own sports networks. They are preferencing those sports 
networks, distributing them more broadly at the expense of the 
NFL Network. That is the issue that we are trying to get at 
here, sir. It is a matter of law. It is a matter of principle. 
We are not looking for sympathy. We are looking for an open and 
free market.
    Mr. Terry. So the open and free market would be on a non-
pay tier, kind of a basic tier then?
    Mr. Goodell. We are not asking that the government 
establish what tier it has to be on. What we are asking for is 
that we are able to negotiate competitively against their own 
sports networks that they own and are distributing more 
broadly.
    Mr. Terry. Mr. Britt, reply?
    Mr. Britt. Yes. Mr. Goodell keeps alluding to this vast 
number of sports networks we own. I am only here representing 
Time Warner Cable, by the way. I am not sure what those are. We 
do have a minor interest in this Mets Network in New York, 
which by the way is carried by all the multi-channel video 
providers in New York City, and they carry it on their basic 
tier, and we have some other minor things in local sports that 
I talked about before that wouldn't be on TV if we didn't 
create them. We are not a big owner of regional sports networks 
or national sports networks, so I am not sure what this----
    Mr. Goodell. Let me try to give some clarity to it. You 
don't own this, but Comcast does. They own Versus. It is on 
basic. I do believe you have an ownership interest in TBS and 
Turner.
    Mr. Britt. Yes, and those are general entertainment 
channels, not sports networks.
    Mr. Goodell. They do carry sports.
    Mr. Terry. Well, I like this Lincoln-Douglas debate format 
that you have. It helps us. It really does, so I do appreciate 
that. I had a great question, but I got drawn into your 
discussions there. So with that, I only have 37 seconds. There 
is a worry here that with the NFL channel that there is a 
slippery slope that we are already going down that will take 
football off of Fox or CBS or whoever has it this year, and it 
is going to go all to you have to pay for it. What is your 
thought on that, and do you think that is good for the NFL?
    Mr. Goodell. It is not good for the National Football 
League, and I am glad you asked that. It is very important to 
us, and the basis of our broadcast policy is to stay on broad, 
free television. We are the one league that continues to be 
able to do that. All of our games are on free television in the 
two competing markets, and we continue to honor that. It is 
important for our growth, and it is important for our fans, so 
we anticipate and we expect to do that for as long as I can 
foresee. The NFL Network is to complement that. It is to bring 
NFL football 365 days a year to an audience that is seeking 
additional programming which our networks can't carry. They 
have other obligations. They have news, they have other sports, 
they have entertainment. The NFL Network is devoted exclusively 
to NFL football, and we are looking more at college football 
and high school football, football as an industry.
    Mr. Terry. My time is up, but Mr. Chairman, there are 
others that--that seemed to have wanted to pique further 
discussions. Shall I yield back to you and let others----
    Mr. Markey. Please.
    Mr. Cooper. I mean, let me follow up on that. As I said in 
my testimony----
    Mr. Markey. The gentleman's time is expired.
    Mr. Cooper. I am sorry.
    Mr. Markey. The Chair will recognize--Mr. Cooper is a 
veteran of this committee and knows how to squeeze out--there 
is no one who plays the 2-minute clock better than Mr. Cooper 
does in testimony before Congress. The Chair recognizes the 
gentleman from California, Mr. Radanovich.
    Mr. Radanovich. Thank you, Chairman Markey. I appreciate 
the fact that this hearing is being held. On the issue of 
arbitration, Mr. Ferree, you were chief of the FCC Media Bureau 
when the Commission imposed arbitration obligations on DIRECTV 
in their merger with News Corp. Are these situations analogous? 
Can you explain how this might be different than----
    Mr. Ferree. No, they are not analogous. As I said in my 
opening statement, in that case you had a rare combination of 
control of very valuable programming and some regional sports 
networks, RSNs, with vertical ownership of a distribution 
platform that had nationwide distribution, and the concern was, 
even though we spent months going through econometric analysis 
of what would happen with different periods of foreclosure, and 
we found that there was no business reason to do long-term 
foreclosure even under those circumstances, but there might 
have been a business reason to do a short-term foreclosure 
because sports fans are very emotionally attached to their 
teams, and all you have to do is take the programming away for 
a short period of time and you will see marked defections to 
other carriers that have the programming. So the theory was, 
the merged entity could withhold the regional sports networks 
from the cable company in a region, it is a narrow region so 
the losses are not spread over the entire country, and the 
defections would take place over the matter of a few weeks to 
DIRECTV, and then lo and behold they do a deal with the cable 
guy, and they are made whole. In this case, there is no 
vertical integration. I am sorry.
    Mr. Radanovich. All right. Thank you very much.
    Mr. Bodenheimer, this will be a question for you but also 
anybody else who wishes to address it. If this access and 
special privilege, the way I look at it, that we are giving to 
ESPN or anybody else, what is to prevent Disney or Nickelodeon 
or anybody else that wants to have that access into the top 
tier?
    Mr. Bodenheimer. I am sorry. If the question is, are rules 
enacted that enable any programmer to move into the top tier--
--
    Mr. Radanovich. Right, by an act of Congress. I mean, what 
is to say that other interests can't come in and ask for the 
same privilege?
    Mr. Bodenheimer. I suppose there is nothing preventing 
anybody from coming in and asking. You know, we have made a 
living out of producing the best possible product we can and 
working as hard as we can to package it, bundle it, promote it 
and sell it, and it is a--you know, as I said in my opening 
comments, is the most vibrant marketplace we have ever seen, 
and we have been at it almost 30 years now. I think for a 
consumer now, you have more choice than you have ever seen, and 
I only see that increasing.
    Mr. Radanovich. So the market works?
    Mr. Bodenheimer. We believe the market is working 
absolutely very well. As I said, there is product everywhere, 
on the Internet, the 250 million mobile phones in the United 
States. I mean, video is coming to your phone. You know, every 
month inroads are made there in technology. On ESPN.com, today 
you can have 800 videos you can see for free. On the ABC 
Player, which Disney launched 18 months ago, we put our big 
shows, Lost, Housewives, Grey's Anatomy up there, 240 million 
starts off of that player for free for anybody accessing the 
ABC.com Player, so for us, the marketplace is absolutely 
working at lightning speed.
    Mr. Radanovich. Any other comments on that?
    Mr. Cooper. You know, if he has got this incredibly 
wonderful product, why is he afraid to sell it directly to the 
public? He has packaged it, bundled it, sold it to the cable 
operators, all six of them or eight of them, which dominate the 
top 80 percent. Why is he afraid to be told OK, sell it 
directly to the public? It can be bundled too, but give the 
consumer a choice to either get the bundle or buy it or not 
have it. So the simple fact of the matter, why is he afraid to 
actually sell it to the public? He has 96 million homes. Do you 
think he will stay in 96 million homes if he has to sell it to 
the public? I guarantee you he knows he is not going to get 
that many people to actually open their pocket and pay him the 
$2.50 or whatever it costs to get it.
    Mr. Radanovich. Thanks, Mr. Cooper.
    Mr. Goodell, did you want to respond to that as well?
    Mr. Goodell. Yes, I do. I just wanted to make the point 
that you made to George, which is, we do believe that markets 
work. Free markets work though. We think that there is a flaw 
in the market here with respect to the preferences being given 
by cable operators that own their own channels, which is 
something that Congress anticipated in 1992 and put in rules 
with the FCC in 1992. We believe that those rules need to be 
reevaluated, because they are not efficient. They are not 
leading to the outcome that I think the Congress wanted, and 
all we are saying is, we would like to see those rules put in 
place not to force arbitration and not to force us on a 
particular tier. Allow that free market to work. In a free 
market, we believe and we are confident that the NFL product is 
in great demand by everyone, and in that market, we will 
succeed.
    Mr. Radanovich. Thank you. I see my time has expired, Mr. 
Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I got snowed in 
yesterday, Mr. Global Warming. The St. Louis Post-Dispatch 
had--Mr. Markey likes to talk about the hottest days of the 
world in July and says, you know, this is my proof. Well, the 
headline in the St. Louis Post-Dispatch today was, ``Largest 
snowfall since '93,'' and I know that is climate change, and 
that might affect that, I understand that, but that is why I am 
late. I just flew in because we were snowed in. But it is great 
to have you all here.
    I, too, am skeptical about having government get involved 
in this private market, should be able to negotiate contracts 
based upon goods and services and supply and demand works, so 
my line of questioning will be quick. Mr. Ferree, when the 
program access rules were adopted in 1992, there were less than 
150 national networks, and cable owned half of them. Now there 
are 564 national networks, and cable owns only 15 percent. With 
all this additional independent content, isn't vertical 
integration--I thought I heard someone talking about that when 
I walked in--less of a concern?
    Mr. Ferree. Yes, it is. Yes, it is. The markets are 
intensely competitive now. In 2002, when I was at the FCC and 
we looked at extending the program access non-exclusivity 
provisions, it was a very close call on whether it should have 
been extended or not. There are now a lot of places to go, and 
again, it's hard for me to believe that the NFL Network, which 
as Mr. Goodell said has some of the most popular programming, 
sports programming in America, is having trouble at the 
negotiating table getting what they want or getting what the 
market will bear.
    Mr. Shimkus. Mr. Bodenheimer, would you agree that in 
today's market, no matter what kind of programming a consumer 
enjoys, there is a way for a consumer to find it and get access 
to it at an affordable price?
    Mr. Bodenheimer. Absolutely. That goes to the comment I was 
just making. If you want to watch entertainment programming, 
sports programming, movie programming, news programming, the 
consumer has never had more choice in the history of the United 
States than they do today. I mean, it continues to explode.
    Mr. Shimkus. I am older now, and I remember just the major 
networks and, you know, the highlight films that we wanted to 
watch, we were only able to access those on Monday Night 
Football. At halftime, Howard Cosell would do the highlights 
from the games. Now, you stumble all over the highlights. I 
mean, it is impossible not to see somewhere, not only on over-
the-air broadcast sports network, but you are just bouncing 
around even on the Internet.
    Mr. Bodenheimer. And the consumer appears to love it.
    Mr. Shimkus. I bought my wife a laptop for Christmas, a 
very nice thing to do. She asked for it. And we have the 
ability for her to carry it around the house now. We hooked it 
up so she can get it, and my son has been--some archaic 1992 
episode Japanese cartoon that he has been streaming on 
broadband on this laptop watching whatever this weird Japanese 
cartoon show is. So I think where there is a will, there is a 
way, and you can find almost anything you want to see. Do you 
want to chime in, Mr. Goodell?
    Mr. Goodell. Congressman, if I could just make a couple of 
quick points. First off, we agree with your statement that 
highlights are in great demand, other programming. No one ever 
thought 20 years ago that the NFL draft would outdraw games on 
other sports leagues, but they do, and I think that is an 
indication here that we are not niche programming, we are 
actually in tremendous demand because people want to get more 
football. They want to get more inside of the NFL, and we 
respect that, and that is why we created the NFL Network. The 
second point I want to raise is, you mentioned the point that, 
you know, many markets, competition should override, and we 
agree with that. The reality though, there are many markets, 
particularly where Comcast and Time Warner have, I come from 
New York, in New York I can't get satellite in New York City. I 
can't get telephone service yet. There is not great enough 
competition and great enough alternatives for the consumer to 
be able to get that. That is why Dr. Cooper testified earlier 
for an independent channel to make it in today's world, they 
need clearance still from Comcast and Time Warner. Competition 
in that market is not great enough, although it is much better 
and it is certainly improved by all the policies that this 
Congress has taken----
    Mr. Cooper. Mr. Shimkus.
    Mr. Goodell [continuing]. But there is still not great 
enough competition in those markets.
    Mr. Cooper. Mr. Shimkus, brands are made----
    Mr. Shimkus. All right. I am not asking you a question, OK, 
and I know you have been butting in, even in my short time 
here. Mr. Goodell had a chance to respond on the consumer end. 
I will yield back my time, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired, and I am very 
sorry about the snowstorm that you had in Illinois. I just want 
you to know that the winters in Boston are now 4 degrees warmer 
than they were in 1970, so we now have Philadelphia's weather 
in Boston in the winter, which is kind of nice, but thank God 
we don't have Philadelphia's football or baseball or basketball 
teams. So it is kind of working out in the short run, but over 
time we might prefer the Philadelphia sports teams to the 
weather that is perhaps heading our way.
    We are going to go to a quick second round. We will 
recognize the gentleman from Michigan, Mr. Stupak, for a second 
round.
    Mr. Stupak. Thank you, Mr. Markey.
    Mr. Britt, if I may, since you are the cable guy here, how 
many of the channels that Time Warner carries on your basic 
tier does Time Warner have a majority interest in?
    Mr. Britt. You know, I don't know the exact number, but it 
is just a handful.
    Mr. Stupak. OK. How about----
    Mr. Britt. Time Warner owns things like TBS and CNN. Those 
are, by the way, among the very original cable channels from 
the 1970s and 1980s. They have been carried for many, many 
years.
    Mr. Stupak. Let me ask it this way, then. Is it fair to say 
that most of them you carry on your basic cable is network 
programs that you have an interest in----
    Mr. Britt. No, the----
    Mr. Stupak [continuing]. Whether majority or 13 percent or 
17 percent interest?
    Mr. Britt. I am sorry to interrupt. No, that is absolutely 
not the case.
    Mr. Stupak. How about independent----
    Mr. Britt. We actually own interest in a very small 
percentage of the networks we carry. That is why we were saying 
before this 500 networks, Time Warner owns a handful. Actually 
Dr. Cooper talks about this. Time Warner owns a very few number 
of channels relative to number of channels we carry. In fact, 
if we didn't carry the independent----
    Mr. Stupak. Let me ask you this----
    Mr. Britt [continuing]. Networks, we would go out of 
business.
    Mr. Stupak. Comcast owns quite a bit, and I wish they would 
have been here, but I understand they couldn't be here today, 
but is it fair to say that the channels you carry on your basic 
tier are either owned in part by you or by other cable 
companies?
    Mr. Britt. No, that is not correct. Most of----
    Mr. Stupak. Give me a percentage. What is truly independent 
on your basic and owned by another cable----
    Mr. Britt. Well, I guess I have to ask you the definition 
of independent, because most of the cable networks today, the 
big ones, are actually owned by the broadcast networks, and 
that is in Dr. Cooper's appendix. I don't know the percentages.
    Mr. Cooper. And they have a property right you create with 
must-carry for sure.
    Mr. Stupak. Right, they have a property right. OK. Let me 
ask you this. You know, if we are worried about--it seems to me 
if we want to clarify whether Big Cable, if you will, are 
discriminating, if we increase the transparency, so what if we 
required cable to disclose what it charges for its own networks 
and what it would charge for independent network, and then if 
we had that disclosure, wouldn't that see if there is 
discrimination then going on, Mr. Britt?
    Mr. Britt. I think you would see that the programming we 
carry is the result of 30 years of dealmaking and the price is 
all over the place. You would not see a pattern of 
discrimination.
    Mr. Stupak. Don't you think the consumer who is actually 
paying the bill, they should have a right to know that?
    Mr. Britt. You actually should ask Mr. Bodenheimer that 
because every programmer requires us to keep it confidential, 
so we actually----
    Mr. Stupak. Mr. Bodenheimer, can you comment on it? I guess 
I am trying to get to--there is a charge of discrimination, not 
discrimination, we are just doing this. I think Mr. Ferree 
actually said what the market will bear. Shouldn't the consumer 
know what the market is having to bear?
    Mr. Britt. I guess I would--let me answer. You know, we are 
a retailer, so when you go into Macy's and look at shirts, you 
can go to a different store and look at shirts. You don't ask 
them to tell you what the wholesale price is and whether they--
--
    Mr. Stupak. No, but we see the bottom line for that shirt, 
don't we? When I get my cable bill, I don't see the price for 
Golf Channel, I don't see what it is for ESPN, I don't see what 
it is for ABC, CBS.
    Mr. Britt. That is true, because we don't--we sell in lots 
of different packages. We sell some things a la carte. HBO is a 
la carte.
    Mr. Stupak. So why shouldn't I know what it is going to 
cost to buy a package in Northern Michigan?
    Mr. Britt. So we are marketing the way consumers tell us 
they want things, that Derek Chang's company competes with us. 
If they thought it was better to package things in a different 
way, they would do that, and their packaging is different 
than----
    Mr. Stupak. Well, I think that is why the a la carte 
movement is picking up steam, because people do want to have 
the right to pick and choose. I mean, I don't want to watch the 
Food Channel but I certainly want to watch the NFL Network, but 
I can't get the NFL Network, but I can get the Food Channel, or 
home shopping, I couldn't care less. Now, maybe my wife would 
think otherwise. But shouldn't the consumer really be the 
arbitrator of what they receive and not receive? It is almost 
like Mr. Cooper said----
    Mr. Cooper. Mr. Stupak, I suggest you do a little exercise 
about a la carte choice in a digital age. When this hearing is 
over, go back to your computer and go to the Crayola website. 
There was a paper done in Mr. Ferree's proceeding called ``Why 
are crayons sold in packages?'' If you go to the supermarket, 
yes, you will see a box of eight or 12 with different selects 
that it covers. You go to the Crayola website and you can buy 
on an a la carte basis a combination of crayons from two to 
5,000 in a box in colors from one to about 150. It is your 
choice, every possible selection in between, and that is 
Crayola crayons in a digital age. It is a physical commodity.
    Mr. Ferree. Can I----
    Mr. Cooper. That is the real choice.
    Mr. Ferree. Because I actually--I mean, I agree with you, 
and the Internet is the great disruptor here, and it will no 
doubt drive all of this toward more consumer choice. The 
question is whether the government steps in now and starts 
messing with the current packages that again I think are 
evolving in a fairly competitive market between the DIRECTVs, 
the EchoStars and all of----
    Mr. Cooper. The choice doesn't look anything like what I 
can get on the Crayola website.
    Mr. Ferree. I am completely sympathetic to you, and people 
forget that I started out saying publicly I am a big fan of a 
la carte. I would love to have absolute choice. The reality is, 
when we studied it, what the effect in the market would be to 
reduce choice, reduce the diversity that I assume we all love--
I am an opera fan. I know I am not going to get opera.
    Mr. Cooper. Sure, but the FCC changed its mind about that 
as well in a subsequent study.
    Mr. Stupak. But if you were a cable company and you are 
carrying your basic sports network, why can't I have all the 
sports networks there, and I can choose? You carry yours on 
basic, but then you put it up on tiers where I can't reach it. 
OK.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentlelady from Wyoming, Ms. Cubin.
    Ms. Cubin. Thank you very much, Mr. Chairman.
    I know that the bulk of this hearing has been about access 
to sports programming, and I don't want to spend any more time 
on that, as I truly believe that Congress should simply get out 
of the way and let the free market work in these negotiations. 
However, I do want to focus for a minute on a different topic 
that greatly affects consumers' access to local sports, as well 
as news and public television. The current designated market 
area system of copyright protection locks out the consumer from 
making decisions about what programming they would like to 
watch. In Wyoming, there are some counties that are part of a 
local, and I put quotations around local, market, that 
originates nearly 400 miles away and in a different State. That 
would be like the Washington, D.C., market originating in 
Boston, and I am sure that the Red Sox nation would think that 
was OK, but the Nationals' fans might have a different position 
on that, as do the people in Wyoming when it comes to watching 
the television that I cited before. The bottom line is this: 
Just like program access fights, Congress needs to get out of 
the way of market forces on DMA rules as well. We ought to let 
consumers decide what is local, rather than Congress deciding 
what is local for them.
    Mr. Chang, in light of this, I would like to ask you about 
the prospect of DMA reform. As you know, Congressman Ross and I 
have introduced a bill to help open up DMAs to more market 
forces, and in the case of satellite television, would opening 
up the DMA system allow for greater consumer choice in 
programming available? Moreover, what effect would opening the 
DMA system have on your business and your subscribers? In other 
words, I guess I have asked a lot of questions all at once. Can 
you help explain for this committee why opening up the DMA 
system is important policy for us to deal with, if you think it 
is?
    Mr. Chang. Yes. I think you have done a good job explaining 
what the issue is in terms of people. There are designated 
market areas by Nielsen, and that is generally how local 
channels are distributed to those market areas, and if you live 
in one market area, you can't generally see the programming 
from another market area, and I think that from our standpoint 
we clearly abide by those rules and sell our programming that 
way to the extent that it was available to us to sell 
programming in a different fashion that would allow more 
customers to see it from other market areas. You know, within 
the constraints of our technology, we would probably support 
that.
    Ms. Cubin. If the DMA system were open to allow for 
adjacent markets like the Television Freedom Act does, Mr. 
Ross's and my bill, would that allow DIRECTV to offer more 
local stations to your consumers than you currently offer?
    Mr. Chang. Not necessarily in every case, but in a large 
number of cases it probably would, yes.
    Ms. Cubin. Mr. Britt, my intent for the Television Freedom 
Act was to allow both satellite and cable to offer in-State 
television programming to consumers who live in Wyoming but are 
within the DMA boundaries of another State. Can you offer 
suggestions from a cable standpoint on how to realize that 
goal? Could I count on Time Warner to work with me and 
Congressman Ross to help develop a solution to this problem?
    Mr. Britt. Yes, and these are--cable of course is a local 
business, because cables are local by definition, and the 
interplay of the definition of DMAs and the copyright laws, all 
of that is very complex, and I have some familiarity with this 
issue but not complete, and we would be more than welcome to--
eager to work with you on this.
    Ms. Cubin. I think when you learn more of the intricacies 
of this issue, that you will really want to be on board as 
well.
    Does anyone else have anything else they would like to say 
about this?
    Mr. Cooper. Yes. Your dilemma goes back to the property 
right that Congress created, and so Congress should not feel 
hesitant about redefining that property right. The problem is 
the following, is that you took a commercial definition, DMA, 
you linked it to the copyright, to the property right, and said 
a broadcaster could request carriage only in the DMA in which 
they were located, which is your problem. And fixing that to 
say a broadcaster can request carriage in any DMA they want 
would solve your problem, and of course, broadcasters are not 
going to ask for carriage in markets where they don't have an 
audience, so it would free up that market decision from what is 
this misfit between the commercial definition and the property 
right.
    Ms. Cubin. One statement. Mr. Ross's and my bill simply 
allows to work with adjacent DMAs, not any DMA that they 
choose.
    Mr. Cooper. But no broadcaster is going to jump a DMA 
because it just doesn't have an audience that far away.
    Ms. Cubin. Right. Thank you, Mr. Chairman.
    Mr. Markey. The gentlelady's time has expired. The Chair 
recognizes the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Dr. Cooper, just a comment. I remember when we first got 
our TV, and it was black and white, and we had three or four 
channels and then after that it got to be 13 and then 
eventually 30 and now it is 75, and if you are on DIRECTV I 
guess it is many, many more channels. So I think the market is 
moving towards that, and if the consumer demands an a la carte 
and the cable bill keeps getting higher, I think there is going 
to be a blowback here, and the consumers are going to ask for 
some change, or they are going to go to DIRECTV, or they are 
going to go to the Internet. So something is going to happen 
here. There comes a tipping point. But when Crayola came up 
with all these things, they didn't have the government step in 
and claim discrimination for mango color or chartreuse so----
    Mr. Cooper. They face real market competition.
    Mr. Stearns. Yes. Well, I think based upon what I told you 
that there is some market competition out there. For example, 
this is for Mr. Britt and Mr. Chang. I guess DIRECTV now has 
about 17 million subscribers, second only to Comcast. Dish is 
third with 14 million. Do the satellite companies still need 
the protection of the program access rules which were created 
when cable had 96 percent of the market and satellite had none? 
Mr. Britt, I will let you start.
    Mr. Britt. I think that is a good question, and as you 
know, we are essentially in favor of less government 
interference, not more, and we are in favor of whatever rules 
exist being imposed on everybody. So to the extent that there 
was a decision quite a few years ago now, that that was 
appropriate, it would seem to us the market has developed in a 
way that it is no longer appropriate. But----
    Mr. Stearns. So you don't think the satellite companies 
need the protection of the program access rules. Is that 
correct?
    Mr. Britt. I am sorry?
    Mr. Stearns. So you no longer think the satellite companies 
need the protection of the program access rules?
    Mr. Britt. That is correct, because they are bigger than 
everybody except Comcast.
    Mr. Stearns. Mr. Chang?
    Mr. Chang. I think that the satellite companies do still 
need the protection of the program access rules in that the 
program access rules are set up to prevent vertically 
integrated companies from discriminating against others in 
terms of taking their product and using it to their competitive 
advantage, and I don't think the size of a company necessarily 
matters in terms of what the principle there is.
    Mr. Ferree. Mr. Stearns, could I just add one thought to 
that?
    Mr. Stearns. Sure.
    Mr. Ferree. You know, the program access rules of 1992, you 
know, it was genius. It was absolute genius at that time 
because of the way the market was structured. The vision that 
came----
    Mr. Markey. Thank you.
    Mr. Stearns. Mr. Markey was the originator of that so 
genius----
    Mr. Ferree. I realized that. That is why I said it. But the 
vision behind it was that the pipes would all compete based on 
price but all carry essentially the same kind of programming. 
That is not the way the world has to work. The different access 
mechanisms, the different distribution platforms could compete 
on content as well as price, and we may be at a place in the 
market where it is time to start thinking about allowing them 
to do that.
    Mr. Stearns. Here are just two general comments. If, for 
example, everybody is passionate about their sports back in my 
district as I am sure everybody else is, and I think these fans 
would get quite upset, and they would call me or call somebody 
if a highly popular channel like ESPN was moved to a sports 
tier where they would have to pay more for what they are 
already enjoying today. There would be a hell of an uproar. So 
Mr. Bodenheimer, do you agree with that?
    Mr. Bodenheimer. Wholeheartedly.
    Mr. Stearns. But just my last point. As I told the 
chairman, we were just talking informally, there seems to be 
another revolution here. I think all of us are tired of 
flipping through the channels and getting tired with so many 
channels. It must be extremely frustrating, because now you 
have high-definition channels, you flip through 13 or 14, then 
you go back to your analog channels. So once you get all these 
high-definition channels and you are flipping through those, 
you get tired of it, so then you go to the Internet and pull up 
the programming for that day, and then you scroll through all 
that programming, and it is a lot of scrolling, too, and so you 
have to say, you know, what am I looking for. I think the next 
revolution is somehow that you could go to either DIRECTV or to 
cable or to your Internet and give your preference in a program 
way, so that instead of flipping through, you would be down to 
maybe 10, 15, no more than 20 channels through this artificial 
intelligence, which would decide based upon your past 
experience. Instead of an a la carte, you could offer the 
consumer, we will give you a preference price of X dollars 
based upon your preferences and it will tell you every day what 
is something that you would enjoy, and I would like to see 
that. Obviously I would put sports in it, I would put the 
History Channel, I would put the politics, and so that is--I am 
just touching on the base of this because it seems to me it is 
so time consuming to either scroll through looking for the 
program, looking at the TV Guide or possibly looking at the 
television itself.
    Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired, and all time 
for questions has expired. I am going to ask each one of the 
witnesses to give us a 1-minute summation. We will do it in the 
same order as the opening statements to tell us what it is that 
you want us to know as we are completing this hearing. And on 
the issues raised by Ms. Cubin, I think when Congress revisits 
the Satellite Home Viewer Act, that her issues are definitely 
appropriate for that discussion. So we will ask each of the 
witnesses for their final 1-minute summation to us, and as well 
if you would give us your prediction as to who will win the 
NCAA tournament. We will begin with you, Mr. Ferree.
    Mr. Ferree. I feel like Hillary Clinton. Why do I always 
get the first question here? My summation will be quite brief. 
The market generally works here. That is not to say there can't 
be market failures, but the market generally works here. I 
would be hesitant for the government to step in, because God 
knows where it goes once it starts to create something as we 
did with the arbitration provisions and the DIRECTV-News 
Corporation merger. They start to take on a life of their own. 
I actually am sympathetic to the concerns of Mr. Cooper, and I 
think a la carte would be a great thing in theory. In practice 
right now, I don't think it is workable, and it would reduce 
consumer choice.
    Mr. Markey. Thank you, Mr. Ferree, very much. I know 
Hillary Clinton. Hillary Clinton is a friend of mine, Mr. 
Ferree. You are no Hillary Clinton.
    Mr. Britt.
    Mr. Britt. Thank you. I think we have a vibrant market that 
is at work here. There is a ton of programming, a ton of sports 
programming, more every year. There are lots of distributors 
that are competing with each other with varying degrees of 
success. As in any marketplace, not everybody is always happy 
with every outcome, and there is sometimes a tendency for those 
who are unhappy to seek government intervention, but my view is 
that it is certainly not necessary at this point, and let the 
market work.
    Mr. Markey. Thank you, Mr. Britt.
    Mr. Goodell.
    Mr. Goodell. Well, Mr. Chairman, thank you again for the 
opportunity today. I think we all agree that competition is 
beneficial to consumers. I think we all agree that a free 
market is beneficial to consumers and to all of us as 
businessmen. I think the reality here that we have got to keep 
focused on here is that while there is greater competition and 
there are greater opportunities for consumers, the reality is, 
in the 1992 Act there was specific consideration to 
discrimination, and you know this better than anybody with 
respect to channels that are owned by cable operators. The 
facts are clear here that the cable operators' channels, sports 
channels in particular, are getting greater distribution than 
those of independent channels. We will survive this, and we are 
going to succeed long term with greater distribution of the NFL 
Network, but independent programmers can't survive without 
distribution on the two largest cable operators, who own their 
own channels, and we think this is good for consumers. We are 
not looking for new legislation. We are looking for the FCC to 
enforce the procedures and the rules that you established back 
in 1992. Thank you.
    Mr. Markey. Thank you, Mr. Goodell.
    Mr. Bodenheimer.
    Mr. Bodenheimer. Thank you, Mr. Chairman, and thank you 
also for the invitation to be here with you today. I think the 
American consumer is served as well as any consumers in any 
country in the world with the vibrancy of the video marketplace 
we have going in this country, and that comment is intended to 
be beyond just the sports business that we are focusing on here 
today. There has never been more choice advanced by the 
competition we have and the technology advancements, and I only 
see that continuing, and I see more choice for consumers down 
the road, and I think this industry will continue to serve this 
country very well. Now, on the more important question that you 
posed, I believe the Connecticut women Huskies are going to win 
the NCAA championship this year. We televised all 63 or 64 
games on ESPN as part of this beautiful, broad, high-value 
expanded basic package, so enjoy.
    Mr. Markey. Thank you, Mr. Bodenheimer.
    Dr. Cooper.
    Mr. Cooper. More competition is not necessarily enough 
competition. There is clearly more, but is it enough? If cable 
bills hadn't tripled since the passage of the 1996 Act and the 
size of the basic bundle hadn't grown to four times the number 
of programs actually watched, channels watched by typical 
households, you might have a better case that there is enough 
competition out there. There is not enough competition to 
protect the consumer from abuse. The simple solution in today's 
age, where cable operators cover the fixed costs from three 
different services, can sell hundreds of channels on-demand, 
the simple solution is to give consumers choice, make ESPN sell 
their product directly to the consumer, not indirectly through 
the cable operators. If you can't bring yourselves to do that, 
then give me a balanced, level playing field. Let all the 
program channels compete either in a tier or in basic, and at 
least we will get supply-side competition.
    Mr. Markey. Thank you, Dr. Cooper.
    And you have the final word, Mr. Chang.
    Mr. Chang. Thank you. On behalf of DIRECTV, again I would 
just like to thank the committee for the 1992 Cable Act, 
because I think without that, DIRECTV would not be as 
competitive as it is, and it might not even exist, and you 
know, on two fronts, clearly our access to programming owned by 
the cable companies, and on the second, that our ability to 
compete by creating differentiated product and content, whether 
it is through exclusive deals with third parties through 
independent negotiations or enhancements that we do through our 
technology that enabled us to compete in a very competitive 
environment. We at DIRECTV, given the nature of our technology, 
are not, unfortunately, able to provide certain other services 
like voice and broadband to the extent that the cable companies 
and phone companies are, so we pride ourselves on our ability 
to be able to differentiate our content and really drive that 
competition across the board. Thank you.
    Mr. Markey. Thank you very much, Mr. Chang.
    Ms. Cubin. Mr. Chairman.
    Mr. Markey. The gentlelady?
    Ms. Cubin. I just thought that I should give you some 
information that you might need. I am pretty sure that the 
Wyoming Cowgirls are going to beat the Huskies, because we won 
the NIT last year, and so I am pretty sure we will win the NCAA 
this year.
    Mr. Markey. I thank the gentlelady.
    Ms. Cubin. You are very welcome.
    Mr. Markey. And actually the gentlelady's comment is a good 
indication of--you know, there is an old saying that a 
congressional expert is an oxymoron, that Congressmen and 
Congresswomen are only experts compared to other Congressmen or 
-women, not compared to real experts, with the notable 
exception of television and sports, where each of us, like 
every American, has a clicker on average in their home on an 
average of 5 or 6 hours a day, which is why the 1992 Cable Act 
is the only bill which overrode a veto of the first President 
Bush. He vetoed 35 bills. One was overridden, and it was 
because members of this committee of the House and Senate and 
the American people understood that there had been a denial of 
programming to a satellite industry that was now an 8-foot dish 
that required a zoning variance in some backyard in Iowa but 
was really not quite appropriate for Boston or New York on a 
triple-decker home. So this had a broad-based appeal, and we 
were able to override the President's veto and create this 
satellite revolution and many other things that were part of 
that cable bill, and it all goes to access to content, access 
to programming, making the consumer king.
    I think it is telling that the NFL is testifying here today 
and that they are having difficulty in the marketplace. We are 
not talking here about the proverbial kid in a garage or even 
the Big Ten network. We are talking about the NFL, and it 
doesn't appear to me that Mr. Goodell particularly enjoys 
coming back before the Commerce Committee for the second week 
in a row. So this is a subject obviously that has had a lot of 
attention from this committee over the years, and it will 
continue to have our attention because we want to make the 
consumer king and we want the marketplace to work, and that is 
ultimately our goal and the only thing that we can really be 
expected to try to achieve.
    We thank each of you for your testimony here today. It has 
helped us enormously. We will be following up on this hearing 
in the weeks and months ahead. With the thanks of the 
committee, this hearing is adjourned.
    [Whereupon, at 11:48 a.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                   Statement of Hon. John D. Dingell

    From the 1947 World Series between the Brooklyn Dodgers and 
the Cincinnati Reds, to Billie Jean King beating Bobby Riggs, 
to the USA Olympic Hockey team beating the USSR, right up to 
the New York Giants recently beating Chairman Markey's beloved 
New England Patriots in the latest Super Bowl, many of this 
country's greatest sporting events have been broadcast free on 
over-the-air television for all consumers to enjoy.
    My constituents in Michigan have reveled in the broadcast 
of Michigan/Ohio State football clashes, the historic 
interstate basketball rivalries between the Wolverines and the 
Spartans, and the triumphs and travails of our professional 
teams, the Tigers, Red Wings, Pistons, and most recently, our 
women's basketball team, the Detroit Shock. Our high hopes for 
our Detroit Lions remain, well, perpetual.
    My constituents are no different from those in other 
districts that are home to collegiate or professional teams: we 
all want to watch our teams compete.
    Today's hearing asks whether these events will continue to 
be removed from free, over-the-air broadcast television to the 
detriment of our local communities. Monday Night Football has 
moved from network television to ESPN. While new conference 
networks like the Big Ten Network are airing more college 
sporting events like lacrosse and field hockey, they are also 
shifting college football games away from broadcast television.
    Taxpayers have a vested interest in this question. 
Taxpayers finance public universities and approve public 
financing for professional sport venues. Cities, counties, and 
States have provided support in other ways, including financial 
incentives and the use of public resources. It is therefore 
logical and fair that taxpayers should be able to enjoy the 
fruits of their investments and continue to see local teams in 
free, over-the-air broadcasts.
    I am concerned by the ever increasing migration of sports 
programming to pay TV. I hope to hear assurances from today's 
witnesses that marquee sporting events will remain available on 
free, over-the-air broadcast television. I urge my colleagues 
to keep a close eye on this disturbing trend.
                              ----------                              


                     Statement of Hon. Bart Stupak

    Thank you, Mr. Chairman, for holding this hearing on 
competition in the sports programming market.
    While it has never been a question that Northern Michigan 
residents like their football, last November's Green Bay 
Packers vs. Dallas Cowboys game proved how much. The game, 
which was carried by the NFL Network, was almost completely 
missed by Northern Michigan fans despite a broadcasting 
agreement the local station had made.
    The situation was resolved by last minute cooperation 
between the local broadcaster and the NFL Network. However it 
does show how important this issue is to people, and it also 
shows that with cooperation these types of disputes can be 
resolved.
    In 2006, the NFL Network channel was carried by several 
cable companies on the basic tier of cable service. However, in 
2007, cable companies decided that NFL Network would no longer 
be viewable on the basic tier by being moved to a new digital 
sports tier.
    As a result, consumers are now required to pay additional 
monthly fees to enjoy a service that originally was given to 
them at the most basic tier.
    The current disagreement between cable companies and the 
NFL Network limits the availability of several NFL games. This 
prolonged dispute has frustrated fans all across the country, 
and they want it to end. Because these two sides cannot come to 
an agreement, the consumer is forced to pay the price.
    To help resolve this issue, I have written the FCC to 
request that they appoint an arbitrator to serve as an 
independent 3rd party. No side is guaranteed an outcome through 
this process, but it will hopefully bring about an agreement 
which I think is long overdue.
    The NFL Network is not the only independently owned channel 
to face difficulties in securing carriage agreements.
    The FCC has opened a rulemaking proceeding to consider 
program carriage of independently owned channels. Chairman 
Martin stated that the current process does not work, and I 
think we should consider changes that facilitate carriage 
negotiations to find a common ground.
    Under the current process, many independently owned 
channels feel compelled to consider selling themselves to 
larger companies in order to increase their leverage. This will 
lead to further concentration of ownership and will reduce 
diversity in media and negatively affect consumer choice.
    While Congress cannot and should not force a cable or 
satellite station to carry a certain network, it is my hope 
that the cable companies and independently owned channels like 
the NFL Network can negotiate carriage deals that allow 
consumers more access to programming and sporting events.
                              ----------                              


                       Statement of Hon. Ed Towns

    Thank you Chairman Markey and Ranking Member Stearns. I am 
very pleased that the Subcommittee is holding this hearing. I 
look forward to learning how our sports programming marketplace 
is working. Our constituents want to know that they will have 
access to the games of their choice at a reasonable price.
    I also want to welcome the witnesses and thank them for 
their assistance. Sports programming is some of the most 
popular on TV. I know I love it. There are many more options of 
how we can receive it now, too, which reflects the innovation 
that has happened in the video market in such a short time. 
Because it is so popular and high quality nowadays, it is also 
expensive.
    Sports fans are an incredibly passionate group, so I look 
forward to hearing from the witnesses on what role, if any, 
they think government should play. We must maintain a balance 
that keeps access to the programming as widespread as possible 
but maintains the innovation and high quality we have become 
accustomed to.
    Thank you, and I yield back the balance of my time.
                              ----------                              


                     Statement of Hon. Eliot Engel

    Chairman Markey, Ranking Member Stearns--
    Thank you for holding this hearing today.
    With the increase in televised sporting events coinciding 
with the increase in sports networks in recent years, this is 
an issue well worth examining.
    Flipping through my television listings, it seems like 
there's a new sports channel popping up every day. There are a 
wide variety of sports channels to choose. From the old standby 
ESPN, to the Golf Channel, to the relatively new NFL Network, 
to the ever more popular regional New England Sports Network, 
which, Chairman Markey, I'm sure you're familiar with, it is no 
wonder that consumers are confused or have trouble finding the 
broadcast of the games of their favorite teams.
    Today, I hope we can sort through some of the confusion 
that broadcast, cable, satellite, and now FIOS customers are 
feeling. Some games are only broadcast on cable, and some are 
only on satellite.
    It should be our goal to make it as easy as possible for 
sports fans to find the games they want to watch. I'm gratified 
to see such an excellent panel of experts here today. I am 
eager to hear their testimony.
    Early this year, the Patriots' final game of the season was 
to be broadcast only on the NFL Network, which many people 
across the country cannot access. NFL Commissioner Roger 
Goodell wisely decided to share the broadcast with CBS and FOX, 
in addition to the NFL Network. This was an historic game that 
millions of people wanted to watch, and your cooperation and 
agreement to share the broadcast no doubt won you the goodwill 
of many fans across the country. It is my hope that networks 
and cable and satellite providers can work together to ensure 
that everybody, especially the consumer, wins.
    As a diehard sports fan myself, I want to make sure that 
the millions of other fans across the country are able to watch 
their favorite team play. If we can do that, then a nation of 
sports fans will thank us.

                                 
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