[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



             TRENDS AFFECTING MINORITY BROADCAST OWNERSHIP

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

                                HEARING

                               BEFORE THE

                       COMMITTEE ON THE JUDICIARY
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                              JULY 9, 2009

                               __________

                           Serial No. 111-24

                               __________

         Printed for the use of the Committee on the Judiciary


      Available via the World Wide Web: http://judiciary.house.gov

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                       COMMITTEE ON THE JUDICIARY

                 JOHN CONYERS, Jr., Michigan, Chairman
HOWARD L. BERMAN, California         LAMAR SMITH, Texas
RICK BOUCHER, Virginia               F. JAMES SENSENBRENNER, Jr., 
JERROLD NADLER, New York                 Wisconsin
ROBERT C. ``BOBBY'' SCOTT, Virginia  HOWARD COBLE, North Carolina
MELVIN L. WATT, North Carolina       ELTON GALLEGLY, California
ZOE LOFGREN, California              BOB GOODLATTE, Virginia
SHEILA JACKSON LEE, Texas            DANIEL E. LUNGREN, California
MAXINE WATERS, California            DARRELL E. ISSA, California
WILLIAM D. DELAHUNT, Massachusetts   J. RANDY FORBES, Virginia
ROBERT WEXLER, Florida               STEVE KING, Iowa
STEVE COHEN, Tennessee               TRENT FRANKS, Arizona
HENRY C. ``HANK'' JOHNSON, Jr.,      LOUIE GOHMERT, Texas
  Georgia                            JIM JORDAN, Ohio
PEDRO PIERLUISI, Puerto Rico         TED POE, Texas
MIKE QUIGLEY, Illinois               JASON CHAFFETZ, Utah
LUIS V. GUTIERREZ, Illinois          TOM ROONEY, Florida
BRAD SHERMAN, California             GREGG HARPER, Mississippi
TAMMY BALDWIN, Wisconsin
CHARLES A. GONZALEZ, Texas
ANTHONY D. WEINER, New York
ADAM B. SCHIFF, California
LINDA T. SANCHEZ, California
DEBBIE WASSERMAN SCHULTZ, Florida
DANIEL MAFFEI, New York

       Perry Apelbaum, Majority Staff Director and Chief Counsel
      Sean McLaughlin, Minority Chief of Staff and General Counsel














                            C O N T E N T S

                              ----------                              

                              JULY 9, 2009

                                                                   Page

                           OPENING STATEMENTS

The Honorable John Conyers, Jr., a Representative in Congress 
  from the State of Michigan, and Chairman, Committee on the 
  Judiciary......................................................     1
The Honorable Lamar Smith, a Representative in Congress from the 
  State of Texas, and Ranking Member, Committee on the Judiciary.     3
The Honorable Henry C. ``Hank'' Johnson, Jr., a Representative in 
  Congress from the State of Georgia, and Member, Committee on 
  the Judiciary..................................................     5
The Honorable Melvin L. Watt, a Representative in Congress from 
  the State of North Carolina, and Member, Committee on the 
  Judiciary......................................................     6
The Honorable Sheila Jackson Lee, a Representative in Congress 
  from the State of Texas, and Member, Committee on the Judiciary     7
The Honorable Maxine Waters, a Representative in Congress from 
  the State of California, and Member, Committee on the Judiciary     9
The Honorable Luis Gutierrez, a Representative in Congress from 
  the State of Illinois, and Member, Committee on the Judiciary..    11

                               WITNESSES

Mr. James L. Winston, Executive Director and General Counsel, 
  National Association of Black Owned Broadcasters
  Oral Testimony.................................................    13
  Prepared Statement.............................................    16
Mr. Michael P. Skarzynski, President and CEO, Arbitron, INC.
  Oral Testimony.................................................    23
  Prepared Statement.............................................    25
Mr. Andrew Jay Schwartzman, President and CEO, Media Access 
  Project
  Oral Testimony.................................................    37
  Prepared Statement.............................................    39
Mr. Kendall Minter, Chairman of the Board, Rhythm and Blues 
  Foundation
  Oral Testimony.................................................    43
  Prepared Statement.............................................    45

          LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

Prepared Statement of the Honorable John Conyers, Jr., a 
  Representative in Congress from the State of Michigan, and 
  Chairman, Committee on the Judiciary...........................     2

 
             TRENDS AFFECTING MINORITY BROADCAST OWNERSHIP

                              ----------                              


                         THURSDAY, JULY 9, 2009

                          House of Representatives,
                                Committee on the Judiciary,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:09 a.m., in 
room 2141, Rayburn House Office Building, the Honorable John 
Conyers, Jr. (Chairman of the Committee) presiding.
    Present: Representatives Conyers, Watt, Jackson Lee, 
Johnson, Quigley, Gutierrez, Gonzalez, Smith, Sensenbrenner, 
Coble, Goodlatte, Lungren, Jordan, and Poe.
    Staff present: Jason Everett, Majority Counsel; Stewart 
Jefferies, Minority Counsel; and Benjamin Staub, Majority 
Professional Staff Member.
    Mr. Conyers. Good morning, everybody. Glad you are all 
here. Sorry we couldn't have a little background music before 
we started without violating any copyright law or anything.
    This hearing concerns trends affecting minority broadcast 
ownership, and within it are several issues that to me are 
important. They face minority radio broadcasters in particular, 
but they affect all small radio broadcasters in general.
    One is decreased advertising revenues due to general 
economic recession and the Arbitron Company's Portable People 
Meter. And the fact that advertising revenues from minority and 
small radio broadcasters were always small to begin with would 
make that, from my point of view, consideration number one.
    Then there is media consolidation, and the Committee's 
antitrust and competition oversight are involved in those 
concerns. And then there is House Resolution 848, the 
Performance Rights Act, and what impact that might have on 
small radio broadcasters.
    We are very pleased about having the witnesses with us 
today: Mr. Winston, Mr. Skarzynski, Mr. Schwartzman and Mr. 
Minter--Attorney Minter.
    There are other witnesses that we would have hoped to have 
been able to join us. First is the founder and chairperson of 
the board of Radio One Inc., Cathy Hughes. We also invited 
Alfred C. Liggins, III, president and CEO of Radio One. Invited 
was Reverend Al Sharpton, president of the National Action 
Network. Invited was the Reverend Jesse Jackson, Sr., founder 
of Rainbow Push Coalition.
    Invited was Tom Joyner, syndicated radio host and founder 
of REACH Media. Invited was Mildred Gaddis, radio host, Inside 
Detroit. Invited was David Honig, executive director of 
Minority Media and Communications Council. Invited was Hilary 
Shelton, director of the NAACP Washington Bureau. Invited was 
Francisco Montero, co-managing partner with the law firm of 
Fletcher, Heald & Hildreth.
    Invited was Oscar Joyner, president of REACH Media, who I 
understand is in the hearing room but declines to be a witness. 
And if at any time throughout this proceeding he changes his 
mind, we would be pleased to invite him to the witness stand.
    I have got a much longer than usual opening statement, 
which I will put in the record, and recognize our friend, the 
Ranking Member of the Judiciary Committee, the gentleman from 
Texas, Lamar Smith.
    [The prepared statement of Chairman Conyers follows:]
Prepared Statement of the Honorable John Conyers, Jr., a Representative 
in Congress from the State of Michigan, and Chairman, Committee on the 
                               Judiciary
    Several issues bring us to the Full Committee today for our 
discussion of the range of issues facing minority radio-broadcasters 
today:

    1.  Decreased Advertising Revenues, due to the general economic 
recession and the Arbitron company's Portable People Meter;

    2.  Media Consolidation and the Committee's antitrust and 
competition oversight; and,

    3.  H.R. 848, the ``Performance Rights Act.''

    I am disappointed that several witnesses to whom the Committee had 
extended an invitation have decided not to appear. Nonetheless, we will 
proceed today because the issues facing minority broadcasters are too 
critical to go unheard.

1. Decreased Advertising Revenues

    During the legislative hearing that the Committee held on March 10, 
2009, on H.R. 848, we heard testimony that revenues for AM/FM 
broadcasters may be off by as much as twenty percent this year. A 
confluence of factors has caused these sharp declines, not the least of 
which is the decreased revenues from advertisers suffering from the 
economic recession. Car dealers and the auto-industry have historically 
comprised some of the largest advertisers, and we all are painfully 
aware of the current state of the U.S. auto-industry.
    Compounding the effects of the economic recession, practices within 
the advertising industry have historically undercut the value of 
minority broadcasters' air-time. Federal Communications Commission 
(FCC) studies and investigations have uncovered wide-spread ``No Urban, 
No Hispanic'' dictates under which businesses discourage advertising 
agencies from promoting their products on stations with large African 
American and Latino audiences. An FCC-sponsored study by the Civil 
Rights Forum on Communications Policy in 1998 concluded that minority-
formatted stations earn on average 63% less than their counterparts 
with comparable market shares.
    According to many minority-owned broadcasting companies, audience 
rating companies like Arbitron have further complicated matters. For 
years concerns have surfaced over Arbitron's analyses of minority 
listenership, and the companies development of the Portable People 
Meter, or PPM, has incurred considerable criticism.
    Arbitron's PPM is a cell-phone sized device that electronically 
tracks exposure to radio and other broadcast media as a consumer wears 
it throughout the day. Based on this device's records, Arbitron 
develops ratings figures that advertisers and stations use to negotiate 
advertising prices. As opposed to old diary-based systems that relied 
on people to remember and self-report their media consumption, Arbitron 
argues that the PPM provides more reliable, accurate data for stations 
and advertisers.
    Minority broadcasters and industry experts have raised concerns 
that the PPM methodology is flawed and that minorities are under-
represented in Arbitron's survey samples.
    As a result, I am preparing with other Members of this Committee to 
ask the GAO to conduct a study on Arbitron's survey methodology, share 
of the market, and the effect their data has had on radio's advertising 
revenues.
    In addition to our concerns about the accurately counting minority 
listeners, this Committee is particularly concerned by the antitrust 
implications of Arbitron's rating system. The fact that one company so 
dominates the marketplace negates the market from offering alternative 
ratings schemes for advertisers and radio stations. Accurate or not, 
the broadcast industry has no one but Arbitron to turn to for 
information on its listeners.

2. Media Consolidation

    In addition to the competition concerns the Committee has involving 
Arbitron, we cannot ignore the greater competition concerns within the 
broadcasting industry as a whole. Since the passage of the 
Telecommunications Act of 1996, which deregulated radio station 
ownership rules, the industry has become alarmingly consolidated and 
woefully less diverse. Free Press, a non-profit organization that 
promotes diversity in media ownership, found in 2007 that although 
minorities make up 33 percent of the U.S. population, minorities own 
only 3 percent of full-power television stations and 8 percent of full-
power radio stations.
    Consolidation within the industry has vastly affected consumers' 
listening experiences as programming has become more nationally 
syndicated and less locally generated. National play-lists dominate the 
airwaves, and locally aired programming featuring local personalities 
have become rare exceptions.

3. H.R. 848, the ``Performance Rights Act''

    On May 13, 2009, the Judiciary Committee voted to recommend H.R. 
848, the ``Performance Rights Act,'' favorably to the Full House in a 
bipartisan vote of 21-9. I have championed granting artists a full 
performance right for more than a decade, and I am proud to have joined 
my good friends Howard Berman, Darrell Issa, Marsha Blackburn, Sheila 
Jackson Lee, and many Members of this Committee in sponsoring the 
measure this Congress.
    Those of you who tune-in to AM and FM radio have no doubt heard 
about this bill. The debate on the AM/FM airwaves has been intense and 
critical, and some might say rather one-sided.
    On the one hand, H.R. 848 is about justice: making sure that 
artists are fairly paid for their property--property that radio 
stations use to turn a profit. The United States needs to leave the 
company of countries like North Korea, China, and Iran behind and enact 
a full performance right. Artists, as workers, must receive just 
compensation for their labor.
    On the other hand, radio stations have seen their profits suffer in 
the current economic climate, and no one wants to see the fiscal 
solvency of any radio station put in jeopardy simply because of a 
performance royalty. Minority-format radio is sometimes the only 
broadcast media that covers issues of importance to minority 
communities.
    And so I look forward to hearing the testimony today, but I also 
look forward to all of us sitting down together after this hearing 
concludes to negotiate an amicable, workable compromise.

Conclusion

    We have many issues to discuss today--not the least of which will 
be: what should Congress do? How should Congress react to the antitrust 
concerns that the Arbitron ratings system presents? In the face of 
massive media consolidation, should tax credits and other incentives to 
promote minority ownership be developed?
    I look forward to the testimony and discussion we will have today, 
and thank all of our witnesses for their participation.
                               __________

    Mr. Smith. Thank you, Mr. Chairman. And Mr. Chairman, I 
will be briefer than usual, too, simply because I know we have 
a number of votes coming up shortly.
    Mr. Chairman, today we are considering among other things 
the effect of the Federal Communication Commission's media 
ownership rules on competition and minority ownership of media 
outlets.
    The FCC imposes caps on the number of television stations 
that a broadcast network can own nationwide, as well as on the 
number of radio stations and television stations that an entity 
can own in a particular market.
    In addition, the FCC imposes limits on when a broadcast 
station can own a newspaper in a particular market and when a 
television station can own a radio station in a particular 
market.
    These rules were put in place at a time when the options 
were limited to broadcast television, over-the-air radio, and 
newspapers. In the last decade, the options for receiving 
music, sports, news and other programming have increased 
dramatically.
    It was not so long ago that listeners were confined to 
whatever channels they could receive on the AM or FM bands. 
Today, consumers also have the Internet, cable channels 
dedicated to music, high-definition radio, and can download 
legally music and other content to portable devices to enjoy 
whenever and wherever they want.
    Minority ownership is another one of the issues being 
considered today. Minority owned and other small radio stations 
face challenges from changes to the way that listenership is 
measured for advertising purposes.
    Recently, Arbitron, which measures radio listenership, has 
shifted to a new People Meter. These small stations are 
concerned that these changes are disproportionately affecting 
their listener ratings and make it harder for them to compete 
for advertising dollars.
    Specifically, some claim that Arbitron's method for 
recruiting young African-Americans and Hispanics in their 
sample panel is faulty, resulting in lower ratings for the 
stations that these listeners prefer. And minority owned radio 
stations have expressed concerns about the effect of proposed 
changes to the performance royalty structure.
    In May, the Chairman and I joined in requesting a study of 
the economic impact of some of these proposals from the 
Government Accounting Office. The GAO has agreed to study these 
issues for us.
    Americans expect that the publicly owned airwaves will 
serve the needs of all citizens, regardless of race, creed or 
national origin. Whatever Congress does in this arena should be 
done with an eye toward keeping radio and television accessible 
and attractive to all.
    Many issues that are being raised by today's hearing are 
not race specific. Small, locally owned radio stations face 
obstacles due to access to capital, lower ratings, and 
potentially, payment of performance royalties regardless of 
whether the person who owns the station is White, Black, 
Hispanic, male or female.
    Even local religious stations with a long history of 
serving communities have fallen on hard times. In my home 
state, KVTT-FM radio, which serves the Dallas-Fort Worth area, 
recently agreed to be acquired by North Texas Public Radio. The 
loss of such inspirational programming is a blow to their 
devoted listeners.
    Mr. Chairman, this issue extends beyond just minority owned 
radio stations. It is also about the survival of many small 
radio stations across the country. I think you for the time and 
I now yield back.
    Mr. Conyers. Thank you very much.
    I would now like to recognize for an opening comment Hank 
Johnson of Georgia, former magistrate, distinguished lawyer, 
now Subcommittee Chairman of the Courts, Competition, and 
Policy Subcommittee.
    Mr. Johnson. Thank you, Mr. Chairman. And I want to first 
begin by thanking the Chairman for hosting this town hall 
meeting, actually hosting it after calling it.
    And I also want to thank all of the witnesses who are 
present for taking the time out of your busy schedules to come 
and shed the truth on H.R. 848.
    I want to note the absence of a representative from Radio 
One on our distinguished panel today, and it wasn't because 
they were not invited. To the contrary, despite their claims on 
the radio that they have never been invited, that there have 
been no opportunities for them to discuss this issue, it is not 
true. They had many opportunities and many invitations 
throughout this process before the bill actually came to the 
full Committee for markup.
    But informally, what Radio One says is that I am not going 
to pay one penny to the starving artists out there, who deserve 
to be paid for their work. And so they have taken that scorched 
earth approach to dealing with this legislative issue, which 
would simply remove the exemption from the antitrust law that 
the AM and FM radio stations enjoy over other platforms, such 
as satellite radio.
    And the other day I was listening to satellite radio, by 
the way--Whitney Houston, ``I will Always Love you.'' Everybody 
knows that, right? That song was written by Dolly Parton, and 
it went nowhere until Whitney sung it. And it is a very sweet 
song, and Dolly is a great songwriter, no question about that. 
But it is Whitney's version that went over with the people.
    And every time that song is played on XM radio, Whitney 
Houston gets a residual, if you will--gets paid for that 
publication of her version. But if you turn to the AM/FM 
broadcast radio, and you hear the same song, the same version 
by Whitney Houston, Whitney is not getting paid.
    So that is unfair on two levels. One, it gives the AM/FM 
broadcasters an unfair competitive advantage, which they have 
enjoyed for the last 70 years or so during the time when, I 
guess, piano rolls were still in operation back then. The world 
has changed. It is time to make things more fair.
    And it is also not fair that that Whitney Houston and 
others are not able to make any money every time that song 
plays on AM/FM radio. And so this hearing and H.R. 848 are 
based on righting this wrong.
    And you know, we have invited Cathy Hughes. She didn't show 
up again. She is out spending some of that 700 percent increase 
last year in her salary over the previous year, I suppose. And 
then her son, Alfred Liggins, who is the president of Radio 
One, I guess he is out spending the $10 million bonus that he 
received last year in the midst of these difficult economic 
times for everybody else.
    And Reverend Sharpton, my good friend, not here. I know, 
you know, he has got a radio show. I am not sure if it is Radio 
One or not, but I am suspicious of that. And Reverend Jackson--
Jesse Jackson--my good friend, perhaps he has changed his mind 
about this issue and just doesn't want to come. There is no 
need to revisit it.
    And, of course, Tom Joyner, popular radio talk show host, 
makes a lot of money. But we should know that he is owned, 
almost lock, stock and barrel, by Radio One. Cathy Hughes owns 
51 percent of Tom Joyner, and so therefore, she makes the call. 
She makes the decision. She determines what song is going to 
play and how he would dance to the song, either physically or 
just verbally.
    And so Mildred Gaddis, a radio host in Detroit, where they 
have been attacking our great Chairman on radio relentlessly. 
Can you believe that last week during the trauma that the 
Conyers family was going through, a difficult time, and there 
were reports that specifically excluded Chairman Conyers from 
being anywhere near what happened with his wife--no props for 
him, no nothing?
    And despite that assertion on the public record by law 
enforcement, a U.S. attorney who is handling that case up 
there, Radio One puts out an ad saying go to the 
Detroitnews.com and learn about the Conyers corruption, falsely 
demeaning this giant reputation and telling lies, basically.
    It is not right to use your public broadcasting license, 
because the airwaves belong to the public, right? It is not 
fair for a for-profit corporation to use those airwaves in a 
reckless manner. And this has happened repeatedly on this 
issue, particularly by the folks at Radio One.
    And that is something that really needs to be looked into, 
when you couch your discussions in terms of, you know, what is 
the reality or whatever they call it, and then they go ahead 
and lie about things in that, and then style it as a public 
service announcement. So they are just being misleading 
throughout. Everything they do and everything they said is not 
worthy of belief, given their track record.
    And so the other witnesses have not shown. And I understand 
that there is at least one person here. Would everyone who is 
affiliated with the broadcasters raise your hand?
    I say even the one that--even though one who is reported to 
be here representing Radio One refuses to raise his or her 
hand. Isn't that something? You know, I mean that is really 
something. I suppose that there are more than one. I suppose 
that there are probably quite a few broadcast supporters in 
here that are too ashamed to let us know that they are here.
    So ladies and gentlemen, I have spoken long enough. And I 
hope I have not bored anybody. But thank you for your time and 
coming.
    Mr. Conyers. Are there----
    Mr. Johnson. And I will yield back the balance of my time.
    Mr. Conyers. You don't have any balance of your time. 
[Laughter.]
    Do any of my other colleagues wish to make a comment?
    Okay. I turn now to the gentleman from North Carolina, Mel 
Watt, a senior Member of the Committee and Chairman of the 
Domestic Monetary and Policy Committee in the Finance 
Committee.
    Mr. Watt. Thank you, Mr. Chairman. And thank you for 
convening the hearing.
    I am not inclined to box with shadows who are not here, 
so--but I do think the hearing and the purpose of the hearing 
is important, which is examination of minority broadcast 
ownership in the United States and focusing on the impact that 
the recession and lack of access to capital and competition for 
advertising revenue and media consolidation and the change in 
public policies that at one point supported and encouraged and 
incentivized minority broadcast ownership, television and 
radio, are extremely important.
    And if we lose sight of that focus of this hearing, boxing 
with a minor issue of performance rights, which is an important 
issue in which we have had independent hearings about and have 
marked up the bill already, I think we probably do ourselves a 
disservice.
    For that reason I have been able to separate these two 
issues, not that they are completely separate. I am sure that 
the performance rights obligation would have some financial 
impact on minority and non-minority broadcasters. I don't think 
there is any question about that, although I would certainly 
question any notion that passage of the bill out of the 
Judiciary Committee resulted in any collateral damage that has 
already taken place to minority ownership.
    But I think I have the ability to separate these issues and 
deal with the performance rates issue in one context and deal 
with the serious challenges that are being faced by minority 
broadcasters in the general economic environment in which we 
are operating.
    And it was for that reason that I joined in the letter to 
the Administration, encouraging aggressive steps to try to look 
for ways to support minority broadcasters, and will continue to 
pursue those efforts.
    In fact, at this very moment in Financial Services, there 
is a hearing going on about bringing TARP funding to Main 
Street, and I need to be at that hearing as well as I need to 
be at this hearing. Both of them are important hearings.
    And I thank the Chairman for convening this one to address 
some of the challenges that are facing minority broadcasters 
and perhaps stimulate some innovative thinking about how we can 
get back to a time when we used the tax code or tax incentives 
or the kinds of things that we were previously using to 
incentivize and support and expand minority ownership in the 
broadcast industry, which is sorely lacking, if you look at the 
statistical data.
    It is one of those bastions. Even though there are one or 
two minorities that have been successful in the area, they are 
few and far between. So I thank the Chairman. And with that, I 
yield back the balance of my time.
    Mr. Conyers. Thank you, Mel.
    I am pleased to recognize Ms. Sheila Jackson Lee of 
Houston, Texas, senior Member of the House Judiciary Committee 
and Chairperson of the Subcommittee on Homeland Security on 
Transportation Security and Infrastructure Protection. The 
gentlelady is recognized.
    Ms. Jackson Lee. Let me thank you very much for this 
hearing. I know that Members are hearing the bells that are 
calling us to the floor of the House, but I thank you and I 
thank the Ranking Member of the full Committee for what has to 
be an important question on the economic survivability of what 
I view as part of the Nation's jewels of communication.
    Let me first of all note that over these past 2 weeks I 
know that the industry broadly recognizes that we have suffered 
a great loss. And to the musicians in the audience, my deepest 
sympathy and understanding for this iconic figure that has left 
off, but has left us with a legacy that we will forever 
cherish.
    I think it speaks to the point that we are interrelated--as 
Martin Luther King said, that we are with mutuality and we 
cannot do without each other. And I hope the hearing today will 
reflect upon the greatness of someone like a Michael Jackson, 
who has been played consistently now for 2 weeks, and as 
individuals have taken whatever mode or medium that they could 
to listen to his music, that we recognize that music needs to 
be conveyed, but the conveyor has to have music.
    And so there is no doubt that we want to preserve what I 
have grown up to love and to appreciate, and that is minority 
radio. We want it to be balanced economically. We want to have 
insight on how we can improve it.
    I, too, joined with Congressman Watt, as many others, in 
signing on a letter to ensure the provenance and survivability 
of our minority, small, women-owned businesses. The legislation 
that is not before us today clearly had a very, very strong 
protection language for those individuals or ownership.
    I happen to be a very strong supporter for battling 
advertisers, to insist that they advertise on minority radio, 
broadly speaking, because those audiences communicate in the 
same kind of monetary vehicle, a green dollar, unless they are 
trading in gold.
    So I am looking forward to this hearing, because I want the 
insight to make me a better legislator. For those who felt that 
they could not be present today, our offices remain open for 
you to engage and dialogue with us. And I cannot thank the 
Chairman enough for being of that kind of so right leader that 
is welcoming to all.
    My last point is that I hope as we proceed, Mr. Chairman, 
all the friends that we have made throughout all the years, 
through our radio stations at which we have spent so much time 
in and out, particularly our local minority radio stations, all 
those anchors and friends, I hope they will get the message 
today that regardless of what is going on at the top, we still 
love you.
    You are still our constituents. We still believe in what 
you do for our communities. And if we continue to do that, we 
will have the kind of vehicle that is necessary that has 
continued to educate our population throughout the time.
    I yield back, Mr. Chairman.
    Mr. Conyers. Thank you very much.
    I think that we will recess and then start off with 
Subcommittee Chair Maxine Waters when we come back. I would 
like to declare the Committee in recess for 1 hour. And when we 
finish with our responsibilities on the floor, this hearing 
will resume. So we stand at recess now. Thank you very much.
    [Recess.]
    Mr. Conyers. Now that we have covered 15 or 16 votes, we 
are now able to resume our hearing. And I would like to 
continue the hearing by calling on the distinguished gentlelady 
from California, Maxine Waters, who, in addition to being a 
senior Member of the Committee, is the Chair of the 
Subcommittee on Housing and Minority Opportunity in the Finance 
Committee. She hails, of course, from Los Angeles, California. 
I recognize her at this time.
    Ms. Waters. Thank you very much, Mr. Chairman. I thank you 
for holding this hearing for so many reasons. However, this is 
consistent with the work that you have been doing for a 
lifetime. I appreciate the fact that you have been on the 
cutting edge of issues dealing with the criminal justice 
system, dealing with civil rights, and of course, African-
Americans in all aspects of our society.
    So I am appreciative for this hearing today that may have 
been born out of a bill that was in this Committee having to do 
with performance rights. But today we are really talking about 
trends affecting minority broadcasters. And this is extremely 
important.
    This is a busy session. As you know, a lot is going on, and 
there is a hearing going on right now over in the Financial 
Services Committee, where I serve. And we are talking about how 
we are going to take some of the repayment of the TARP money to 
put it back into our economy by way of neighborhood 
stabilization programs to clean up some of these foreclosed 
houses in communities that are devastated by the foreclosures 
and the subprime meltdown and to try and offer some help to 
people who have lost their jobs so that they can pay their 
mortgage payment, the money going directly to their--the banks 
and whatever institution is holding their paper, and of course, 
creating a housing trust fund because of the homelessness and 
the need for housing.
    So we are in a bad economic time, and it is very 
appropriate that we talk about trends affecting minority 
broadcasters. Let me just say that I have alluded to your work 
over the years and your commitment to all of these important 
issues, but, Mr. Chairman, I, too, see as part of my work, an 
important part of my work, a focus on minority institutions.
    And basically, since I have been elected, I have tried to 
do whatever I could to protect and preserve minority 
institutions, and all of them are at risk all the time. All of 
my career, all of my life that I have been involved with public 
policy, I have been forced to have to deal with trying to save 
minority institutions. That is not simply the broadcast 
institutions broadcast community.
    Right now, with this economic meltdown and the problems 
that we are having with the economy, the automobile Black 
dealerships are just about to be wiped out. All of the 
investment bankers on Wall Street are fighting and scratching 
to try and get a part of the asset management business of the 
government based on the billions that we put into the bailout, 
and it is a real struggle.
    So whether I am talking about automobile dealers or I am 
talking about the broadcast community or any of the other 
communities where African-Americans and minorities have tried 
to make a breakthrough, many with extremely important 
entrepreneurial skills, some coming with investments that they 
have hobbled together in any number of ways, we have got a 
problem.
    We have a problem, and today we are focusing on our 
broadcasters and our radio stations. And I want to talk about 
what I know is happening with the minority broadcasters.
    First of all, most of them are small, relatively small. 
They certainly do not attract the kind of advertising dollars 
that are attracted by the majority community and the big 
stations. Many of them have loans with the banks, who are not 
renegotiating those loans, not moderating those loans, not 
doing anything. They are calling them in.
    Many of them are faced with whether or not they are going 
to fail or be caught up in mergers. And so they can't pay the 
bills for the most part, and they are struggling with all kinds 
of issues that cause me great concern, because I feel the loss 
of these minority stations. They are our talking drum.
    You don't see us, no matter what issues we are working on, 
in the corporate media--ABC, NBC, television, radio, you name 
it. We don't have access in the way that we should as public 
policymakers.
    And I think it is just one thing you taught me, Mr. 
Chairman, is that long years ago was the use of our Black radio 
stations. And you taught me in every town that I go to, to have 
them schedule for me the Black radio stations, and you break 
out sometime in between your speaking engagements to do Black 
radio stations and to get that air time to talk about public 
policy issues in between the records and what have you. And I 
have always done that, and I have a great appreciation for 
that, and I don't intend for us to lose it.
    And so today when we talk about trends, we have got to take 
a look at how we are going to preserve them, given the risks 
that they are confronted with. As I understand it, corporate 
mergers have already had a devastating impact on small to 
medium size minority radio broadcasters, and we have to be very 
aware of that.
    We have limited oversight in this Committee of the Federal 
Communications Commission, but some of their actions during the 
previous Administration had very disturbing impact on minority 
broadcasters. And I shared some of these concerns with my 
colleagues last year on the floor. I pointed out that the FCC 
has neglected to deal with the crisis in minority ownership.
    Only 44 of the more than 1,200 TV stations are owned by 
people of color. This situation is particularly rare for the 
African-American community. The number of African-American 
owners has dropped 60 percent from 2006 to 2007, and there are 
only eight TV stations in this country owned by African-
Americans that add to the problem of African-Americans and the 
media, not just radio stations.
    Unfortunately, the FCC's vote in 2007 to let the newspaper 
broadcasts cross ownership rules would take direct aim at 
minority broadcast owners. According to the FCC, the new rule 
allows a newspaper to buy a television station in our Nation's 
largest markets, if the outlet is ranked outside the top.
    I don't want to talk a lot about television today, but I 
just wanted to add to our discussion here today about the 
plight and the trend of what is happening kind of across the 
media landscape here.
    Let me--you have been very generous with me with your time, 
and just as you told one of my other colleagues, there is no 
time to yield back. I won't even say it, because I know I have 
talked over my time. And I thank you very much.
    Mr. Conyers. Thank you. It was very worthwhile. You 
reminded me that since we went to these more than a dozen and a 
half votes, I met with the minority auto dealers. And I can 
echo the concern about their circumstances, as you have.
    I turn now to my dear friend from Chicago, Illinois, the 
Honorable Luis Gutierrez----
    Mr. Gutierrez. Thank you very much, Mr----
    Mr. Conyers [continuing]. Who is the Chair of the 
Subcommittee on Financial Institutions in the Financial 
Services Committee.
    Mr. Gutierrez. Thank you so much, Mr. Chairman.
    So I came today to say thank you to all of those that that 
did decide to accept the invitation to be with us here this 
afternoon and to say to the broadcasters, both those that work 
with the broadcaster and the owners of broadcast stations, that 
you are always welcome here, and you always have our ear, and 
to say to those that measure audience participation, we have 
always had issues with how well you measure audience 
participation and therefore impact the revenue of those radio 
stations and TV stations in our community and the viability of 
which many times directly correlated with numbers that are 
issued in which we have very little or no control.
    I only say that I and many others are a product of minority 
owned radio stations. I know that I am here today because I had 
an opportunity to meet Chairman Conyers back in 1983, because 
there was a small Black radio station called WDON, still in 
Chicago.
    And Lu Palmer actually had a drum, Chairwoman, in the 
morning. And I listened to the radio. I don't know how many 
watts it was. It wasn't very much, but I guess my Volkswagen 
radio was poor enough to hear the poor reception. And so every 
morning Lu Palmer would get out there and say, ``We will see in 
1983.''
    And you know what happened in 1983, right, Mr. Chairman? 
They elected Harold Washington. That is the way it began. That 
is my memory of it.
    I know that today we have radio stations throughout this 
country in the Latino community, who are the first ones to be 
helpful, whether we call public hearings, whether we call 
public meetings, whether we issue demands through the public 
service announcement and through radio time that they afford 
us, being present at the rallies and the activities, and 
informing people and raising a level of consciousness and 
awareness among our people that we would not have.
    I know that Univision doesn't need our help. They are 
prosperous and making money and a powerful institution in terms 
of their both radio and television. But I have to say that 
where would we be in the Latino community and the immigrant 
community that is going through its own civil rights movement 
today without institutions like Univision and Telemundo and 
other smaller radio stations that help us each and every day 
reach a level of awareness and cognizance?
    So we are here with you. And I am here to say that when I 
began this process here in this Committee, I kind of said to 
myself, sounds to me like maybe, you know, the Temptations 
should get more money. Marvin Gaye should get more money. All 
those idols that I grew up listening to when I was young in the 
1960's and the 1970's that maybe didn't--I am not so worried 
about--no offense to Juan and Shakira--they got tens of 
millions of dollars. I am not too worried about them.
    But I am worried about other artists in our community that 
bring forth their fruit so to make sure that they have some 
just compensation, all right? Not everybody can go like Jersey 
Boys and put a musical play back on, right, like Frankie Valle 
and the Four Seasons and see a million people. That just 
doesn't happen. It would be lucky if that could happen to other 
bands and--but that usually doesn't happen.
    So we are here to say that my concern has always been, and 
I know it is a driving concern of this Committee under the 
leadership of our Chairman--it has always been for that--those 
at the bottom rung getting the least out of it, but providing 
in many times the most entertainment value, and in many cases 
driving the whole industry with their music.
    So that is where I am at, and I want to hear from those in 
the radio community to see how we can best address their issues 
and their concerns as we move forward, that we might find a way 
to also help those at the bottom rung, which I am sure, if we 
understand it, we are all in it together.
    And I do want to say one thing to the Chairwoman. And that 
is we both work on Financial Institutions together, and we know 
that loans aren't being reorganized by banks. They are not 
doing it. You owe them a couple of hundred thousand dollars or 
three hundred or whatever you owe them--they just say, ``Pay 
me,'' or they cut off your line of credit. And there is nobody 
else there to offer you another line of credit.
    We deal with that every day in Financial Institutions, and 
we should take that into consideration as we move forward.
    And we know that there are advertisers that the first place 
that they pull their advertising from is from minority owned 
radio stations and minority owned TV stations. That is the 
first place they pull it from and leave it in other places, 
which are already very, very profitable.
    So I just want to say I never hear on the radio or on the 
TV a constant attack against those that have denied us those 
opportunities, and I am here to say in an undefensive manner, 
we understand what we are products of, and we are here to say 
thank you to all of you who have come forward this afternoon to 
be here with us, and want to be helpful.
    Thank you so much, Mr. Chairman.
    Mr. Conyers. Okay. Thank you very much. I remember those 
fondly, those Chicago days, and that was before you came to the 
Congress, as a matter of fact. You were an activist and a 
leader, and so was the gentleman next to you, also from 
Chicago. We have a great team here on Judiciary.
    We welcome Attorney Minter, Attorney Schwartzman, Mr. 
Skarzynski and our first witness, the executive director and 
general counsel for the National Association of Black Owned 
Broadcasters--NABOB--established in 1976 with aims to increase 
the number of African-American broadcast owners and improve the 
climate in which they must operate. He has served as NABOB's 
director since 1982 and is also partner in the Washington law 
firm of Rubin, Winston, Diercks, Harris & Cooke.
    We have all of your prepared statements. They will all be 
entered into the record.
    And we welcome you to become our first witness, Attorney 
Winston.

 TESTIMONY OF JAMES L. WINSTON, EXECUTIVE DIRECTOR AND GENERAL 
   COUNSEL, NATIONAL ASSOCIATION OF BLACK OWNED BROADCASTERS

    Mr. Winston. Okay. I thank you for inviting me to testify 
this afternoon.
    In recent years we have seen a substantial decline in the 
number of minority companies owning broadcast stations. I come 
before the Committee today to discuss the issues that threaten 
to further erode minority broadcast station ownership.
    As a result of these threats, as I shall explain, NABOB 
requested the Committee to consider investigations of the 
principal lenders to the broadcast industry and of Arbitron's 
ratings company, which is a monopoly over radio ratings.
    Broadcast station advertising revenues have fallen 
drastically this year, and minority broadcast companies often 
find themselves unable to maintain the minimum cash positions 
required by their bank loan agreements. These loan agreements 
define failure to maintain these minimum cash positions as an 
event of a default, which means that a company can be placed 
into default even though it has not missed making a single loan 
payment.
    This situation is then made worse because of a new breed of 
lender in the broadcast industry--hedge funds. Because the 
banks brought hedge funds into their bank consortiua, many 
broadcast companies find themselves being threatened with 
foreclosure unless they sell stations at fire sale prices or 
turn over ownership and control of the companies to the 
lenders.
    For some minority owned broadcast companies, a filing under 
Chapter 11 of the Bankruptcy Code may be their only defense. 
Obviously, this situation does not serve the goal of diversity 
of ownership in the broadcast industry.
    Therefore, I am here today to request that this Committee 
investigate the practices of the leading lenders to the 
broadcast industry, such as Goldman Sachs, GE Credit, Wachovia, 
Wells Fargo, J.P. Morgan Chase, and Bank of America.
    While these companies are not hedge funds, they have 
allowed hedge funds into their consortia and now are acting at 
the behest of the hedge funds in refusing to enter into workout 
arrangements that will provide minority broadcasters an 
opportunity to keep their companies intact and restructure 
their loans for a brief period until the economy turns around.
    The reasonableness of this request is underscored by the 
fact that the banks listed above are all beneficiaries of 
government relief through billions of dollars of the Troubled 
Asset Relief Program TARP funds. The purpose of TARP was to 
provide these banks some relief so that they could return to 
financial stability and then begin making reasonable lending 
decisions.
    The relief NABOB is seeking today is exactly the result 
TARP was intended to provide. Thus, it is reasonable for the 
Committee to investigate why these TARP beneficiaries are 
unwilling to restructure the loans of minority broadcasters in 
accordance with the objectives of TARP.
    Alternatively, NABOB requested the Committee help NABOB 
seek assistance from the Treasury Department or Federal Reserve 
under one of their programs such as the Term Asset-backed 
Securities Loan Fund or the commercial paper funding facility. 
These programs provide loan guarantees for businesses.
    In this regard we thank you, Chairman Conyers, 
Congresswoman Waters, Congressman Watt and Congresswoman Sheila 
Jackson Lee, for signing onto Congressman James Clyburn's 
letter to Treasury Secretary Geithner requesting this 
assistance. And we hope to work with you to pursue this 
request.
    Minority broadcasters face an additional threat that is 
equally important for us to bring to your attention. The second 
threat is posed by Arbitron, Incorporated, an audience 
measurement company that for decades has been the sole provider 
of audience measurement data for the radio industry.
    Arbitron maintains a monopoly over the business of 
measuring the audience of radio stations, which means that if 
radio stations do not subscribe to the Arbitron ratings 
service, those stations have no ratings data to present to 
advertisers.
    Recently, Arbitron developed a Portable People Meter, PPM, 
an electronic tracking device which records signals from the 
radio stations to which the wearer is exposed. Initial results 
from the PPM measurement have shown such huge ratings declines 
for stations serving Black and Hispanic audiences that the 
financial survival of the stations is at stake.
    Moreover, the financial survival of every minority station 
in future PPM markets will be at stake, if Arbitron is allowed 
to continue to roll out the PPM across the Nation in the form 
in which it has been initially introduced.
    The damages to which minority broadcasters that I am 
referring to are not theoretical. They are real, quantifiable 
and devastating. Since PPM became operational in New York City 
in October 2008, minority broadcasters have experienced an 
average 40 to 60 percent drop in their Arbitron ratings, 
coupled with the corresponding drop in the average rates on 
which broadcasters are charge to advertisers.
    For example, Spanish Broadcasting System, SBS, owns two 
stations in the New York market. WSKQ reports a 55 percent 
decline in its Arbitron rating, and WPAT has experienced a 67 
percent decline in its Arbitron rating. As a result of the 
decline of revenues precipitated by PPM in the New York market 
alone, SBS has been forced to reduce staff by 37 percent.
    Inner City Broadcasting, owner of radio station WBLS and 
WLIB in New York, reports that advertising revenue in the New 
York market is down approximately 28 percent. However, Inner 
City estimates that the introduction of PPM is responsible for 
an additional 30 percent revenue loss for its stations as 
compared to the general market.
    This means that while the market is down 28 percent, Inner 
City is down 58 percent. As a result, since the introduction of 
PPM in New York, Inner City has significantly reduced the staff 
of its program department, and Inner City's San Francisco 
station, KBLX, has been forced to lay off 13 percent of its 
staff and cut salaries by 10 percent.
    In Los Angeles the situation is just as grim. NABOB member 
KJLH in Los Angeles, owned by Stevie Wonder, has seen its 
revenue fall dramatically--over 48 percent since PPM was 
introduced in L.A., almost twice the average decline in the 
overall Los Angeles market, which is estimated at 29 percent. 
Let me repeat that. The market is down 28 percent. KJLH is down 
48 percent.
    As a result KJLH has been forced to lay off 13 percent of 
its staff, the majority of whom have been cut from its 
programming department, including the elimination of news 
segments, traffic announcers, promotions coordinators, 
producers, a co-host and the overnight disc jockeys.
    Arbitron has been sued over PPM by two attorneys general, 
settled with them and a third attorney general, and is 
currently being investigated by the FCC. This might cause us to 
ask, ``Why is Arbitron putting out a product that is receiving 
such a negative reaction from government investigators and its 
own customers?''
    This is a good question, and the answer will not surprise 
you: money. Many independent researchers have examined the PPM 
system and determined that Arbitron has attempted to create a 
product that can be produced cheaply instead of a product that 
can be accurate. Of course, the PPM product is priced 65 
percent higher than its former diary product.
    In addition, this new PPM product has been denied 
accreditation by the Media Rating Council. The Media Rating 
Council was created at the urging of Congress to prevent the 
kind of situation we are faced with today. NABOB therefore 
requests that the Committee investigate the PPM methodology and 
obtain information on the PPM accreditation process from 
Arbitron and the MRC.
    In conclusion, these two problems--the refusal of lenders 
to restructure broadcast loans to allow these otherwise healthy 
businesses to weather the recession and Arbitron's abuse of its 
monopoly position--are more than an antitrust issue for this 
Committee.
    Mr. Coble. Mr. Chairman?
    Mr. Winston. They are more----
    Mr. Coble. Mr. Chairman? I hate to interrupt Mr. Winston, 
but don't you think it might be about time to wrap up?
    Mr. Winston. I have got two more sentences, Sir.
    Mr. Coble. I am glad to hear that. Thank you. I was 
thinking about the other witnesses.
    Mr. Winston. This is more than a business crisis for 
African-American and Hispanic station owners. This is a civil 
rights crisis for all of America. Without minority communities 
with strong, vibrant, independent voices, America loses an 
important part of what makes our democracy great, a government 
in which all of its people participate and are heard.
    Thank you for the opportunity to be here today. I apologize 
for going over my time.
    [The prepared statement of Mr. Winston follows:]
                 Prepared Statement of James L. Winston



                               __________

    Mr. Conyers. That is okay. There is appropriate punishment 
for that violation. [Laughter.]
    We are now pleased to welcome the president and CEO of 
Arbitron, Michael Skarzynski. He has graduated from Georgetown, 
MBA Northwestern, is currently a member of the National Defense 
Industrial Association, the Navy League of the United States, 
the Association for Corporate Growth, among others.
    We welcome you to this hearing, Sir.

              TESTIMONY OF MICHAEL P. SKARZYNSKI, 
               PRESIDENT AND CEO, ARBITRON, INC.

    Mr. Skarzynski. Thank you, Mr. Chairman. Good afternoon, 
Mr. Chairman and Members of the Committee.
    I am Michael Skarzynski, chief executive officer of 
Arbitron. On behalf of the 1,100 people of Arbitron, I am very 
pleased to have this opportunity to participate in the 
Committee's hearing today and to share with you our commitment 
to help Black and Hispanic owned broadcasters succeed.
    Arbitron is a 60-year-old company with headquarters in 
Columbia, Maryland. We are a leader and innovator in the radio 
ratings business. Arbitron is an integral part of the radio 
industry, with a strong record of community involvement.
    We recognize the critical role and importance of Black and 
Hispanic owned radio. Black and Hispanic radio are the voice of 
their local communities and a trusted and credible source for 
news and information. As the voice of the local community, 
Black and Hispanic broadcasters are a vital link to democracy 
for our country.
    There are three major challenges that, taken together, 
create a perfect storm for radio broadcasters. These include: 
number one, the recession has caused a drastic decline in 
advertising; number two, this drop in advertising has created a 
precipitous decline in radio industry revenue; and number 
three, many radio broadcasters, including Black and Hispanic 
broadcasters, are highly leveraged and are having difficulty 
servicing their debt.
    Against this backdrop, Arbitron is standing with our 
customers to generate new ideas and solutions to help the 
industry weather this storm.
    The radio business model is driven by advertising sales. 
Sixty percent of radio advertising comes from the four 
industries: automotive, real estate, financial services and 
tech. These four sectors have been hit hard by the recession. 
This hit to radio advertising has been devastating to all 
broadcasters, but especially to Black and Hispanic owned 
broadcasters.
    During the first quarter of 2009, the entire radio 
industry, including the general market as well as Black and 
Hispanic owned groups, have all had dramatic and devastating 
declines in revenue in the range of 20 percent to 30 percent as 
compared to the first quarter of 2008.
    Let me cite the declines in revenue for five companies: CBS 
radio down 29 percent, Cumulus down 24 percent, Spanish 
Broadcasting System down 27 percent, Univision Radio down 26 
percent, Radio One down 20 percent.
    Many radio broadcasters are struggling with debt loads that 
can not--they cannot sustain in the current economic 
environment. These companies assumed this debt at a time when 
there was every expectation of continued economic growth.
    In addition to these pressures, radio broadcasters are now 
forced to compete with a host of new audio delivery platforms, 
including podcasting and Internet streaming. These new media 
have the inherent ability to measure themselves electronically.
    Similar to the television industry, radio broadcasters and 
advertisers have made it clear that for radio to survive it 
must have more detailed and timely audience information that 
only electronic measurement can provide.
    Arbitron's Portable People Meter, or PPM, is our company's 
innovative solution to address that need. Arbitron has spent 
over 16 years developing the PPM with input from a wide variety 
of industry players, including radio broadcasters and ad 
agencies.
    Arbitron has been and continues to be engaged with and 
involved with members of the National Association of Black 
Owned Broadcasters and the Spanish Radio Association to address 
their concerns and discuss improvements to the PPM measurement 
service.
    With inputs from our customers, Arbitron is implementing 
several improvements to our PPM service, including expanding 
cell phone only sampling, adding country of origin sampling, 
and working to increase participation of Black and Hispanic 
panelists by providing one-on-one coaching and adding 
recruitment incentives and retention bonuses.
    In this difficult environment, all stakeholders in the 
radio industry--broadcasters, advertisers, ad agencies--must 
work together with policymakers, investors and bank lenders to 
help the radio industry survive.
    Mr. Chairman, allow me to repeat this very important point. 
All stakeholders in the radio industry--broadcasters, 
advertisers, ad agencies--together with policymakers, investors 
and bank lenders, must work together to help the radio industry 
survive.
    In summary, Arbitron is committed to working with all 
stakeholders in the radio industry to help radio broadcasters, 
especially Black and Hispanic owned broadcasters, survive and 
prosper in the face of this perfect storm of economic and 
financial challenges. Arbitron will work with all industry 
stakeholders to demonstrate the value of radio in today's 
competitive marketplace.
    Mr. Chairman, Arbitron welcomes the opportunity to work 
with you and Members of this Committee to address the 
challenges of Black and Hispanic owned broadcasters. Thank you 
very much.
    [The prepared statement of Mr. Skarzynski follows:]
              Prepared Statement of Michael P. Skarzynski



                               ATTACHMENT



                               __________

    Mr. Conyers. Thank you.
    The head of Media Access Project, Attorney Andrew 
Schwartzman, has been leading this nonprofit telecommunication 
group for more than two decades. He teaches at Johns Hopkins 
University and accumulated a lot of awards, and he graduated 
from the University of Pennsylvania Law school.
    Welcome this afternoon.

               TESTIMONY OF ANDREW SCHWARTZMAN, 
            PRESIDENT AND CEO, MEDIA ACCESS PROJECT

    Mr. Schwartzman. Thank you, Mr. Chairman.
    Every now and then someone asks me why I have spent a large 
portion of the last 37 years trying to expand minority 
ownership and employment in the mass media, and especially in 
broadcasting. Sometimes it is spoken, sometimes not. But what 
people really want to know is ``Why is a White guy like you so 
concerned with expanding minority ownership in media?''
    Here is why minority ownership matters to all Americans. 
Ownership influences content by controlling decisions on 
hiring, format, programming and public service. The Supreme 
Court has said that it is the right of the public to receive 
suitable access to social, political, aesthetic, moral and 
other ideas and experiences, which is crucial here.
    A more diverse marketplace of ideas creates a more 
democratic society. Frankly, minorities know a lot more about 
the lifestyle, customs and tradition of the majority White 
culture than White people know about minority cultures. In 
short, I need widespread minority ownership at least as much as 
minorities do.
    I have just a few points to make this morning. First, I 
hope and expect that the Internet will facilitate a more 
diverse mass media environment. This does not make broadcasting 
less important for the foreseeable future. Over-the-air 
broadcasting continues to be the principal source of 
information for Americans, especially at the local level, where 
the Internet has yet to make a big difference.
    Here are a few facts. Some 235 million Americans listen to 
radio every week, a number that has been increasing. In this 
age of multitasking, the amount of time that people watch over-
the-air TV is also going up. Almost half of all TV viewing is 
over-the-air channels, even when cable and satellite offerings 
are available.
    Second, when I say that levels of minority ownership are 
distressingly low, I wish I could provide copious detail. I 
cannot do that, because over the last 8 years minority 
ownership was not a high priority for the FCC. As the GAO said 
in a report issued last year, the FCC's data collection has 
been incomplete and methodologically suspect.
    Under Acting Chairman Copps, and I hope under the new 
Chairman Genachowski, the FCC has now significantly upgraded 
its data collection. More useful information will be available 
in a year or so, but right now the best data comes from a 
private source, which shows that minorities own just 7.7 
percent of full power commercial radio stations and only 3.2 
percent of full power commercial TV stations.
    The single largest obstacle to expanding minority ownership 
in broadcasting by far is substantial deregulation of media 
ownership limits in the 1996 Telecommunications Act. Within a 
few years after passage, broadcasting became dominated by a 
small number of large companies. This has bid up the price of 
stations and created other barriers to entry for new and small 
competitors.
    For years, citizens groups led by the Minority Media 
Telecommunications Council called on the FCC to assess the 
impact of these changes on minority broadcasting. But even 
after the U.S. Court of Appeals agreed and directed the FCC to 
do so, it stalled. Fortunately, new management has arrived, and 
the FCC has already begun the task of completing long delayed 
studies on historic patterns of discrimination.
    What should be done? A lot. Here are several of the most 
important things. Reimpose limits on national radio ownership 
and strengthen existing caps on local and national broadcast 
ownership.
    Reduce the license term to 3 years and enforce meaningful 
rules. This will create opportunities for minorities to obtain 
the licenses that will be forfeited.
    Restore the tax certificate policy, which was repealed in 
1995.
    Grant the pending application of Robert Johnson's 
innovative urban television proposal, which would allow vastly 
increased minority ownership of digital TV multicast streams.
    And enact H.R. 1147, which will expand the low power FM 
radio service and serve as a platform for training a new 
generation of minority radio broadcasters.
    Finally, I want to associate myself with Mr. Winston's 
remarks about the PPM issue. Since the fragility of minority 
owned radio impacts all Americans, the introduction of the PPM 
technology is a matter of legitimate concern for the FCC and 
this Committee. The problem is more with the sampling 
techniques than with the technology itself, so I will limit my 
remarks to this.
    While there is ample reason to be suspicious about the 
validity of ratings obtained using PPM, a best case scenario 
for PPM is that the new ratings are more reliable. That would 
be that the diary-based system used for decades was a fraud. 
Either way, we need answers, and we may well need to regulate 
to ensure the integrity of the system.
    Thank you.
    [The prepared statement of Mr. Schwartzman follows:]
              Prepared Statement of Andrew Jay Schwartzman



                               __________

    Mr. Conyers. Thank you very much.
    Attorney Kendall Minter, head of the Rhythm and Blues 
Foundation, nonprofit, co-founder of the Black Entertainment 
and Sports Lawyers Association. And he graduated from Cornell 
University.
    We are glad to have you this afternoon. Welcome.

TESTIMONY OF KENDALL MINTER, CHAIRMAN OF THE BOARD, RHYTHM AND 
                        BLUES FOUNDATION

    Mr. Minter. Thank you, Mr. Conyers.
    Good afternoon, Chairman Conyers, Members of the Committee. 
I would like to thank you for inviting me this afternoon to 
testify on issues affecting minority broadcast ownership. My 
name is Kendall Minter, and I have the pleasure of serving as 
chairman of the Rhythm and Blues Foundation. I stand on the 
shoulders of our predecessor chairmen, Jerry Butler and Ray 
Charles.
    The R&B Foundation was established about 20 years ago, and 
it continues to serve today as the sole organization worldwide 
that provides financial emergency assistance to pioneer rhythm 
and blues artists as well as honoring and recognizing the 
achievements of those legendary artists and preserving the 
genre known as rhythm and blues.
    In fact, we assist those artists on the bottom rung that 
Mr. Gutierrez spoke about a little earlier. And unfortunately, 
but the reality is, we provide everything from medical 
assistance to burial assistance to financial assistance for 
artists that are being evicted or foreclosed on.
    There is no doubt about the significant progress made by 
minorities in the broadcast industry, but there is also no 
doubt about some of the challenges and the opportunities that 
lie ahead. And I look forward to addressing some of those 
issues with you today.
    One of those issues of concern is that Arbitron's PPM 
system and meter that we have spoken about earlier is under 
representing listeners for certain stations. We understand, 
however, and we agree with broadcasters' interest in receiving 
an accurate accounting of listenership in order to receive the 
proper payment from advertisers.
    Arbitron's PPM certainly may create unfair burden for 
younger, trendy stations due to the size of the PPM unit. Many 
younger and more fashion conscious listeners find the unit 
cumbersome. A technology addition to the PPM that could include 
coverage to a cell phone could help level the playing field 
significantly, and we ask and encourage this Committee and the 
FCC to look into the effectiveness of modifying this device.
    We at the foundation stand with broadcasters on this point, 
because we believe a simple axiom. The use of someone else's 
property should be appropriately compensated. When a broadcast 
signal is being used, a broadcaster should be appropriately 
compensated for that use.
    In that light, the artist community hopes that we can count 
on broadcasters similarly to acknowledge the rights of artists 
to be compensated when artists' music and property is played 
and used.
    Just as advertisers should pay for the appropriate amount 
to broadcasters when broadcasters play music--our music--to 
draw audience and broadcasters, they should serve and share a 
small portion of that revenue derived from broadcasters' 
receipts with the creators of the music that provides a revenue 
source for them.
    And just as broadcasters would like Arbitron to accurately 
represent the number of listeners of their stations, we call 
upon the broadcast community to accurately represent the effect 
that H.R. 848, the Performance Rights Act, which they are now 
calling the performance rights tax, would have on them.
    This legislation, despite proclamations, is not the end of 
Black radio. It is, however, an important component of fairness 
for minority artists, including so many of the artists that we 
represent at the Rhythm and Blues Foundation, and we look for 
some kind of grace so that we can all grow together.
    This is a segment of the symbiotic relationship between 
creators of music and the stations that use their valuable work 
so that we can be in business together as real partners.
    I also want to take this opportunity to address the issue 
of consolidation and its effect on the diversity of music 
broadcasted. Diversity of music is assured by diversity in 
ownership of stations, the ability of different stations 
representing a broad array of tastes within our community to 
select their own playlists and accommodate the preferences of 
their local listeners.
    Unfortunately, however, we have seen an increasing amount 
of consolidation within the broadcast industry as large radio 
corporations acquire those small individual stations that have 
traditionally provided us with the diversity that we need.
    More alarming for those of us who champion the 
accomplishments of Black artists and their contributions to our 
culture is the consolidation that has occurred within the Black 
broadcasting community.
    Large radio corporations now threaten to destroy many of 
the gains minorities have made in our communities by watering 
down and homogenizing their programming. That is unfortunate 
for a developing an aspiring artist, and it is unfortunate for 
consumers.
    Since the mid-1990's, song rotations have quadrupled. In 
the past the top 10 songs might play every 4 hours, at best, 
totalling 35 to 40 spins in a 7-day period. Today, however, 
corporate playlists, which have been homogenized significantly, 
order the play of top titles every 60 to 70 minutes rotation, 
totaling at times an amazing 140 spins of the same song 
throughout a 7-day period.
    Black radio is the most syndicated music format in the 
country. Black adults are 25 times more likely to hear 
syndicated music than the White audience. What syndication is 
effectively does is limit opinions of local news, local 
information and local music.
    The very essence of what has made Black radio special to 
hundreds of communities has been dramatically reduced through 
consolidation of large conglomerates.
    Terrestrial radio today is not the issue. It is a question 
of rights and it is a question of fairness. There have been 
several stations over the past 2 months since May 13th that 
have continuously broadcast misleading PSAs or a commercial 
that talk about the reality of this bill, and we would like to 
set the record straight.
    These campaigns are one-sided and skewed against 848, and 
they are a candid example of how consolidation and limited 
ownership basically equates to an on-air dictatorship aimed at 
only profit and the bottom line.
    Mr. Conyers, you worked hard to provide many accommodations 
to small broadcasters, including minority owned stations, and 
we thank you for your tireless efforts and work on behalf of 
thousands of minority artists, who have created and made 
successful the musical art form which has become not only the 
sound of modern American music, including the music we hear on 
Black-owned stations today, but has also influenced the shape 
of music throughout the globe.
    And we thank you for your ongoing efforts to include 
minority broadcasting representatives to ensure that they have 
a voice in these discussions. And we look forward to working 
with you, your Committee, and our broadcasting brethren in the 
month ahead to find a viable solution for the issues that we 
are all facing. Thank you, sir.
    [The prepared statement of Mr. Minter follows:]
                  Prepared Statement of Kendall Minter
    Chairman Conyers, Members of the Committee, I would like to thank 
you for inviting me to testify today on issues affecting minority 
broadcast ownership. My name is Kendall Minter and I am the Chairman of 
the Rhythm & Blues Foundation.
    The Rhythm & Blues Foundation was established some 20 years ago and 
continues to serve today as the sole organization worldwide that 
provides emergency financial assistance to pioneer rhythm and blues 
artists as well as honoring and recognizing the achievements of those 
legendary artists and preserving the genre known as rhythm and blues.
    There is no doubt of the significant progress made by minorities in 
the broadcast industry, but there is also no doubt about some of the 
challenges and opportunities that lie ahead. I look forward to 
addressing some of these today.
    One of those issues is the concern that Arbitron's PPM system is 
under-representing listeners for certain stations. We understand 
broadcasters' interest in receiving an accurate accounting of 
listenership in order to receive the proper payment from advertisers.
    Arbitron's people meters certainly may create an unfair burden for 
younger trending stations, due to the size of the PPM unit. Many 
younger and fashion conscious find the unit cumbersome. A technology 
addition to PPM that could include coverage to a cell phone could help 
level the playing field, and this Committee and the FCC should look 
into the effectiveness of this device.
    We stand with broadcasters on this point because we believe a 
simple axiom: the use of someone else's property should be 
appropriately compensated. When a broadcast signal is being used, the 
broadcaster should be appropriately compensated for that use. In that 
light, we sincerely hope that we can count on broadcasters to 
acknowledge our right to be compensated when they use our property. 
Just as advertisers should pay the appropriate amount to broadcasters 
when broadcasters play our music to draw an audience, broadcasters 
should share a very small portion of that revenue with the creators of 
the music that provides that revenue source for them.
    And just as broadcasters would like Arbitron to accurately 
represent the numbers of listeners of their stations, we call upon 
minority broadcasters to accurately represent the effect that H.R. 848, 
The Performance Rights Act, would have on them. This legislation is NOT 
the end of black radio. It is the beginning of fairness for minority 
artists, including so many of the artists we represent at the 
Foundation, so we can all grow together. And it is the beginning of the 
true symbiotic relationship between creators of music and the stations 
that use their valuable work, so that we can be in business together as 
real partners.
    I also want to take this opportunity to address the issue of 
consolidation and its effect on the diversity of the music broadcasted. 
Diversity of music is ensured by diversity in ownership of stations--
the ability of different stations representing the broad array of 
tastes within our community to select their own playlists and 
accommodate the preferences of their local listeners. Unfortunately, we 
have seen an increasing amount of consolidation within the broadcast 
industry, as large radio corporations swallow up those small individual 
stations that have provided us the diversity we need.
    More alarming to those of us who champion the accomplishments of 
black artists and their contributions to our culture, is the 
consolidation that has occurred within the black broadcasting 
community. Big radio corporations now threaten to destroy any gains 
minorities have made in our communities by watering down and 
homogenizing their programming. That's unfortunate for aspiring black 
artists, and it's unfortunate for consumers. Since the mid 90's song 
rotations have quadrupled. In the past, a top ten song would play every 
4 hours at best, totaling 35 to 40 spins in a seven day period. Today 
the corporate playlists order the play of top titles every 60 to 70 
minutes, totaling at times and amazing 140 spins of the same songs in a 
7 day period.
    Black radio is the most syndicated music format in the country. 
Black adults are 25 times more likely to hear syndicated music 
programming than white adults. What syndication effectively does is 
silence opinions, local news, information and music. The very essence 
what made black radio special to hundreds of communities has been taken 
away through consolidation by big radio corporations.
    The FCC gives licenses to broadcasters to serve local communities. 
Consolidation has made that task for black radio more difficult.
    Consolidation has also had an effect on artists by allowing massive 
campaigns of misinformation to be spread when it is in the financial 
interest of the big radio corporation. This Committee has 
overwhelmingly approved H.R. 848, the ``Performance Rights Act.'' This 
legislation would help minority artists finally get compensated for 
their work by corporate radio interests. Giant companies who own the 
airwaves directed at black listeners have for months now been using the 
public airwaves entrusted to them by the government to oppose this bill 
for their own financial interests. A series of misleading and 
inaccurate 3 minute commercials airing 10 to 12 times a day on over 50 
stations owned by just one company is proof of how public opinion and 
even Congress can be swayed when listeners get limited or 
misinformation.
    The slanted and skewed promotion against H.R. 848, is a candid 
example of how consolidation and limited ownership basically equates to 
an on air dictatorship, aimed only at profit and the bottom line.
    Chairman Conyers, you have worked hard to provide many 
accommodations to small broadcasters, including minority-owned 
stations. We thank you for your tireless work on behalf of the 
thousands of minority artists who created and made successful the music 
art form which has become not only the sound of modern American music, 
including the music we hear on the black-owned stations we are 
discussing today, but has also influenced the shape of music throughout 
the globe. We thank you for your ongoing efforts to include minority 
broadcasting representatives to ensure they have a voice in these 
discussions. We look forward to working with you--and with our 
broadcasting brethren--in the months ahead.
                               __________

    Mr. Conyers. I thank you all.
    Let us begin our discussion and interrogation with Maxine 
Waters.
    Ms. Waters. Thank you very much, Mr. Chairman.
    And let me thank our panelists who are here today. I think 
you have all in some way very accurately described the problems 
that Black broadcasters and minority broadcasters are 
confronted with. Each one of you has described it in some 
particular way.
    And I want you to know that some of the suggestions that I 
have heard can certainly be acted on, and because I am on the 
Financial Services Committee, along with several people on this 
Committee, we are concerned about the banks. And I have been 
troubled about aiding the Black banks, trying to save them, so 
I don't mind adding to my trouble with the banking 
institutions, trying to get them to do the right things.
    But I want to go to Arbitron, because it just so happens 
that despite the fact that you certainly speak with a 
cooperative spirit about all of the stakeholders having to 
involve themselves in the solution, but really you are at the 
core of it. What you do will decide what the advertisers do. 
The advertisers are that which decide whether or not there is 
going to be enough revenue for these radio stations to really 
be in business.
    So there is obviously a great difference of opinion that 
has been developed between you and the Black broadcasters about 
the accuracy of what you are doing. You determine whether or 
not the advertisers--what they buy and whether or not they buy.
    So let me ask you. What can you do to assure us that what 
you are measuring, the way that you are doing it, is the best 
way, even though you described it as creative and innovative 
and cutting-edge? And what can you do, aside from all of the 
other kind of cooperation that you alluded to, what can you do 
to assure the broadcasters that your technology is not denying 
them revenue?
    Mr. Skarzynski. Congresswoman Waters, thank you for the 
question.
    Arbitron is in the audience measuring business, so we are 
focused on looking at metrics or exposure to radio.
    With respect to what can we do to be helpful to Black-owned 
radio stations to show their value to advertisers, we are in 
the process of developing, and will have this month, a 
prototype of an engagement metric, which couples exposure to 
engagement.
    So that if you were to examine a particular audience 
measurement of a particular station in L.A., and it was proven 
by the fact that the station had a great following among Black 
males 26 to 45, and the advertiser who is interested in 
targeting that demographic group could then look at the 
exposure, look at the engagement relative to the desired 
demographic target, and then ideally not only make that 
advertising buy, but in our point of view also reward the 
station for a very focused, targeted reach to that particular 
demographic target.
    So that is one example of----
    Ms. Waters. No, no, no. We understand all of that. What we 
are hearing is that we don't believe that your measurements are 
correct. We think that whether or not you are targeting a 
particular demographic or whether or not you are--I don't know 
about your target--but that is, and what we are hearing is that 
it is not trusted. And because there is a lack of trust, 
because you are driving down advertisement, these broadcasters 
aren't happy.
    What can you do to make us believe that the way that you 
are doing it or your technology or your approach is right? Why 
should they believe you, if they are losing money?
    Mr. Skarzynski. The approach that we take in audience 
measurement is reviewed by and regulated by the Media Ratings 
Council.
    Ms. Waters. Who are they?
    Mr. Skarzynski. They are a group of 111 organizations, 
including broadcasters. For example, one of our customers is 
Inner City Broadcasting. And Inner City Broadcasting, who is 
represented in the hearing room today, is a member of the Media 
Ratings Council.
    Ms. Waters. So they have confidence in you. Inner City has 
confidence that what you are doing is----
    Mr. Skarzynski. I won't make that comment.
    Ms. Waters. I am glad you don't.
    Mr. Skarzynski. What I am saying is because I think Mr. 
Winston would say that, and maybe Mr. Warfield would say 
something to the contrary.
    Ms. Waters. I think so.
    Mr. Skarzynski. But the Media Ratings Council is a group 
that reviews our process. There is an audit of our process that 
is done by Ernst and Young, and it is this body of 
broadcasters, advertisers, advertising agencies that provides 
us accreditation.
    If there are specific areas of concern in how we are 
providing this service--let us take the Los Angeles metro 
market, for example--the concerns can be raised by either our 
customers directly to us or through the Media Ratings Council 
that here is an area for improvement for you.
    So this is the--the framework against which Arbitron and 
other audience services companies----
    Ms. Waters. But the accreditation recognized by the 
government----
    Mr. Coble. Mr. Chairman, the gentlelady's red light 
illuminated some time ago. I think others have questions as 
well.
    Ms. Waters. Unanimous consent for 30 more seconds, Mr. 
Chairman.
    Mr. Conyers. Granted.
    Ms. Waters. Thank you.
    Mr. Skarzynski. The Media--Congresswoman, the Media Ratings 
Council was set up at the behest of the Congress.
    Ms. Waters. So are they in law?
    Mr. Skarzynski. I am sorry?
    Ms. Waters. Are they recognized in Congressional law--in 
law?
    Mr. Skarzynski. I don't believe they are recognized with a 
particular piece of legislation. I do believe that going back 
to the 1960's, there was a Harris committee within the Congress 
that established the Media Ratings Council legal framework.
    Ms. Waters. Thank you, Mr. Chairman. I appreciate it, and I 
yield back.
    Mr. Conyers. Thank you.
    We now turn to Howard Coble.
    Mr. Coble. Thank you, Mr. Chairman.
    Good to have you all with us.
    Mr. Winston, it appears that there is a little or no 
controversy over the payment of performance royalties to 
songwriters and composers, but the payment of such royalties to 
recording artists generate, for want of a better word, 
attention.
    Do you think one group or the other has greater claims to 
such royalties, A? And if not, should not both parties be paid 
when their work is used for commercial purposes?
    I didn't hear you.
    Mr. Winston. I couldn't hear the first part of your 
question.
    Mr. Coble. I said there appears to be little or no 
controversy surrounding the payment of performance royalties to 
songwriters and composers, as opposed to artists. My question 
to you is, does one group share a preference over the other one 
to voice a greater claim to the royalties, or should they both 
be paid?
    Mr. Winston. Well, sir, if I look at what Congress has done 
over the years, Congress has taken that position. And I am not 
here today to say that there is a different position that 
should be taken.
    Mr. Coble. You are not here to do what?
    Mr. Winston. I am not here to say there is a different 
position that should be taken----
    Mr. Coble. Oh.
    Mr. Winston [continuing]. Than the one Congress has taken 
over the years.
    Mr. Coble. Mr. Minter, it has been noted that the United 
States loses an estimated $70 million for $100 million abroad 
for U.S. performers by virtue of there being no performance 
royalty for artists here.
    What guarantee, if any, is there that foreign countries 
will actually provide reciprocity if the law is amended, as you 
support, and that these dollars will be in fact directed to 
American artists?
    Mr. Minter. Thank you, sir. There are several treaties--
WIPO, the Berne and Rome Conventions--that are already in 
effect, which royalties are already being repatriated amongst 
the members of these conventions and these treaties. They are 
not being repatriated back into the United States right now the 
because of lack of reciprocity.
    Once the act is already in place, once it gets passed by 
the full House and the full Senate, then the United States 
would take its rightful place with most other developed 
nations, except for China, Iran and North Korea, and the part 
of the international flow of these royalties, of which $70 
million to $100 million will flow back into the United States 
to compensate American composers and copyright owners for their 
property.
    Mr. Coble. I thank you, sir.
    Mr. Skarzynski, what is Arbitron's relative share of the 
radio rating market?
    Mr. Skarzynski. Congressman Coble, when Arbitron engages in 
its ratings service, we provide to our customers, who are the 
broadcasters, a full account of how we arrived at the data, 
what sort of sample size we have, what particular demographic 
target figures we have, the procedures we use, so in this sense 
we are very transparent in sharing with the market, and also 
with advertisers and ad agencies, how we operate and how our 
methodology executes the audience measurement.
    Mr. Coble. I got you. Thank you, sir.
    Mr. Schwartzman, let me try to beat that red light 
illuminating in my eye. What are the constitutional challenges, 
if any, to creating minority ownership mandates at the Federal 
Communications Commission?
    Mr. Schwartzman. The Supreme Court has upheld the FCC's 
policies with respect to minority ownership in a decision about 
15 years ago, so I think the question is settled that they are 
constitutional.
    Mr. Coble. Thank you, gentlemen.
    Mr. Chairman, I yield back.
    Mr. Conyers. Thank you very much.
    I now turn to the gentlelady from Houston, Texas, a senior 
Member of the Committee, Sheila Jackson Lee.
    Ms. Jackson Lee. Mr. Chairman, again I want to offer my 
appreciation for having the opportunity to use the legislative 
process and the, I think, intentions of the founding fathers 
that we come to this place to solve problems. And we are in 
fact representative of all of our country, both those who agree 
or disagree with us.
    And we find ourselves sometimes having to make hard 
decisions of which maybe the majority of Americans or a large 
portion of Americans may be challenged to agree with. And I 
cite, as I have done often in this Committee room, that there 
was not a groundswell support for the passage of the 1964 Civil 
Rights Act or the 1965 Voting Rights Act. Today we would ask 
how could we live without them?
    So I want to find a way of coming together. And a good 
friend of mine, a congressman from Chicago, quoted another 
great philosopher. I heard him saying it as he was walking. Can 
we all get along? I think Rodney King offered that suggestion 
some time ago.
    So I would like to raise the question to Mr. Schwartzman--
excuse me, am I--and thank you for your presence here, as 
Arbitron is an institution.
    First of all, do you believe that government regulation of 
Arbitron, which in essence has been itself, meaning the 
government, criticized for maintaining a near monopoly with 
Arbitron--can it be helpful in solving the problems of the 
concerns of our constituents, which are small broadcasters, 
minority broadcasters, so that we can go to the heart of the 
issue?
    The heart of the issue is that Black radio, Latino Hispanic 
radio iin particular, and now in a growing market, Asian radio, 
speak to the hearts and minds of a particular community. Now, 
those hearts and minds may not--I don't know how they 
calculate, but when they hear, they run out and repeat and they 
run out and buy. Can we be fair to those entities in this 
present construct that we have?
    Mr. Schwartzman. Congresswoman Jackson Lee, Mr. 
Skarzynski----
    Ms. Jackson Lee. And I want to ask Mr. Schwartzman, but 
also Mr. Skarzynski--excuse me--as well--two S's, but two 
different--go ahead.
    Mr. Schwartzman. Mr. Skarzynski had a colloquy with 
Congresswoman Waters about the Media Ratings Council. What he 
didn't say is that Arbitron has opened up in a number of 
markets, despite rulings Of the Media Ratings Council, which 
say that you should not institute a new technology until it is 
accredited.
    They have received accreditation in only two markets, one 
of which is using a different sampling method than is being 
used in all the other markets which have been opened up.
    If the Media Ratings Council is--it proves to be an 
insufficient basis to restrain the questionable activities of 
Arbitron, then I think regulation would become appropriate.
    Ms. Jackson Lee. And so if you are restrained in this 
present structure, then we need to unrestrain you.
    Mr. Schwartzman. That is right. We should give the Media 
Ratings Council a little more time, but if they are unwilling 
to restrain the activities of Arbitron and they are continuing 
to withhold accreditation, then that means that the self-
regulation system hasn't worked. Regulation becomes 
appropriate.
    Ms. Jackson Lee. Distinguished CEO Skarzynski. I will get 
it right here--Skarzynski. Thank you.
    Mr. Skarzynski. Congresswoman Jackson Lee, thank you for 
the question. Let me first, if I may, respond to the comment 
that was made by Mr. Schwartzman, which was an incorrect 
comment. Under the rules of the Media Ratings Council, and a 
very large document is in the public domain that describes the 
Media Ratings Council that was filed on June 30 with the FCC 
under a notice of inquiry, so I would be happy to make that 
available to the Committee, if that would be of interest----
    Ms. Jackson Lee. Mr. Skakrzynski, I have a short period of 
time, and I want to get to Mr. Minter very quickly, so could 
you----
    Mr. Skarzynski. Under the Media Ratings Council provisions, 
any audience measurement service can provide and can 
commercialize the service before it obtains accreditation, as 
long as it is continuing to work toward accreditation.
    Ms. Jackson Lee. Let me turn to Mr. Minter, but let me 
leave on the table, Mr. Skarzynski, a willingness to talk with 
you. I need to hear a bottom line of how we can get advertising 
dollars to small radio stations. So let me just stop there.
    Mr. Minter, I think you are eloquent in your expression 
about what weaves in and out of this question, the bottom line, 
the economic bottom line of keeping radio doors open all over 
America, including Houston, including L.A., Chicago.
    Why don't you just pose the rights of artists? And I can't 
help but know who has been being played these last 3 weeks, 
what family has been played these last 3 weeks, and this 
concept that I know you have in your heart of keeping the 
stations, who played the R&B and others.
    And let me publicly thank you for helping lay to rest my 
dear friend, Brother Huey Long. If I could hear from you, 
distinguished gentleman, if I could yield to you on that. 
Balance the two interests, please.
    Mr. Minter. Thank you, Congresswoman. Our concern at the 
foundation on behalf of the artist community in general is to 
grab some of the pot that is out there that everybody is 
sharing in. We understand it is a dwindling economy. Everybody 
is affected.
    We are very sympathetic with the concerns of radio, but we 
look at the fact that revenues and advertising dollars are 
flowing into radio predominantly, if it is not talk radio, 
because of the music that is being played. And on behalf of the 
artist community, we are looking to be able to have some of 
those revenues flow through to the artists, who are in need, 
who have earned the right to be compensated for the airplay of 
their work, the same as they are around the rest of the world.
    This is no different. They have already been compensated 
for the same work, the same airplay on digital radio, cable, 
satellite and webcasting. However, the last 70 years, as we 
know, the broadcasters on AM and FM have been able to avoid 
this issue coming up.
    And we are looking for fair compensation. At the same time, 
we want to have a balanced dialogue so that we can take the 
concerns and the issues that the broadcasters are putting in 
front of the Committee today.
    Ms. Jackson Lee. You would be willing to come back to the 
table and say, for example, look at a promotional value 
concept, if they came back to the table so that we could move 
forward in a unified manner.
    Mr. Minter. Absolutely. Every door is still open. We 
realize that the act has not been passed by the full House and 
the full Senate yet, and there is a lot of dialogue that needs 
to be conducted in the meantime, and we remain open to have 
that dialogue at anytime, anyplace.
    Ms. Jackson Lee. Chairman, if I just want to just pose this 
last question because of the economy.
    How much money do we need to just reinforce? How much money 
is less on the table for American artists, who would then come 
and invest in the United States by doing more production, more 
studios? Millions? Billions maybe? Over the period of time, 
they are less on foreign shores because of our lack of 
responsiveness and the legislative construct, because we don't 
have a fix, if you will, to get those dollars back into the 
country.
    Mr. Minter. The estimate that we received at SoundExchange, 
which is one of the performing rights societies, is 
approximately $70 million to $100 million per year.
    Ms. Jackson Lee. Per year. And I could say if we did 20 
years, we could calculate.
    Mr. Minter. Twenty? It would be billions.
    Ms. Jackson Lee. All right.
    Thank you very much, Mr. Chairman. And I am delighted, but 
I would love to ask more, but I yield back. Thank you, Mr. 
Chairman.
    Mr. Conyers. The distinguished gentleman from Iowa, Steve 
King.
    Mr. King. Thank you, Mr. Chairman.
    And I thank all the witnesses.
    And I first start out by something--I looked at the memo 
that we would have this hearing, and I know that we had had a 
hearing on the same subject matter not that long ago. And I was 
a bit surprised that we would have a hearing for minority radio 
operators, because I think all small business people are a 
minority, and they face a lot of the same kind of problems. So 
it raises a question in me on why we do this.
    And I wasn't able to hear all of your testimony, and I want 
to review part of it. So I am interested in exploring what kind 
of discrimination you might be facing that would justify this, 
but I listened to Mr. Schwartzman reference a Supreme Court 
decision from about 15 years ago, I think.
    And could you speak to that, Mr. Schwartzman, that Supreme 
Court decision that addressed, set asides or preferences, so 
that we are aware of the foundation of the discussion here?
    Mr. Schwartzman. Yes, Mr. Congressman. The decision is 
Metro Broadcasting vs. Federal Communications Commission. And 
in that decision the FCC had two policies: one which gave a 
plus to minority owner applicants for broadcast licenses, and 
the second was a minority distress sale policy.
    When the FCC is taking away licenses, it permits a sale of 
license to a minority owned operator. And both of those 
policies were considered and upheld by the Supreme Court, I 
believe in 1993.
    Mr. King. Could you tell me why the FCC would not approve a 
sale to a minority license holder?
    Mr. Schwartzman. It is not a question of whether it would 
not approve it. It is a question of a solid policy to promote 
minority ownership. As I said in my prepared testimony----
    Mr. King. But it permits them to sell to. And that verbiage 
tells me that there must be an implication that there is some 
prohibition.
    Mr. Schwartzman. It is not that there is a prohibition. It 
is that the 1996 Telecommunications Act, as I explained in my 
testimony, by allowing larger companies to buy up properties, 
it bid up the prices and made it less available to new 
entrants, and most especially to minorities.
    Mr. King. And this case that you have referenced--Metro, 
the Metro case--have you evaluated in light of the two Michigan 
cases?
    Mr. Schwartzman. Yes. It is my opinion that the Metro 
Broadcasting case continues to be good law.
    Mr. King. And you referenced a formula that would be used 
by that. My recollection on the two Michigan cases was that the 
formulas were prohibited, but in dealing with individuals they 
were allowed to use judgment exceptions.
    Mr. Schwartzman. Broadcasting licenses are administered 
under the public interest criteria of the Federal 
Communications Commission, and promoting a diversity of voices 
in the mass media is a central component of the public interest 
standard. And that is why the FCC has considered and treated 
broadcasting as essentially different from other forms of 
ownership.
    Mr. King. That is not really the answer to the question, 
but I understand your position.
    So I would like to understand, if I could start with Mr. 
Winston, and I just--I know in business being short of capital 
and having difficulty in marketing the advertising, which is a 
revenue strain that you have to rely on, that it becomes 
people-to-people relations and networking relations and the 
difficulty.
    I spent my life trying to build enough capital that I could 
compete against the big guys. I mean I am very sympathetic to 
that. And we have to have entrepreneurs that are planting seeds 
out there to grow companies that are tenacious and their 
ability to challenge the establishment, whatever their 
particular ethnicity or race might be.
    But could you fill me in a little bit on what you are faced 
with? Are there clear examples that you could help me 
understand what is going on? It would be outside of the 
communities I am familiar with.
    Mr. Winston. Okay. I addressed two subjects in my 
testimony. The first is difficulty with lenders, and the second 
is a problem with Arbitron.
    The first problem is that we are in a recession. There is a 
nationwide recession. We have been through recessions before. 
You go into your bank. You talk to them. You say, ``Look, we 
are down. We need to restructure our loan, maybe extend it for 
another year or 2, adjust the interest and principal 
payments.'' You work it out.
    In this recession we are finding no responsiveness from the 
lenders, and we are talking about the lenders who are the 
principal recipients of TARP funds. They have gotten billions 
from the government. They are making no concessions to 
broadcasters. They are saying, ``Sell off your stations. Turn 
them over to us.'' You know, leaving many of my members looking 
at the possibility of filing Chapter 11 to try to preserve 
their companies.
    You add onto that Arbitron's new rating service, the PPM 
service, which has substantially changed the results for 
audience measurement for radio stations, so that a radio 
station that was targeting the African-Americans in a market 
the day before PPM came in, they could be number one, two or 
three. After PPM came in, they were 15, 16, 17--no change in 
anything the station had done.
    Mr. King. All right. I thank you. And our clock has gone 
red, and I just want to just make a very brief comment on this 
that you are marketing to a minority audience, and it 
accentuates the problems that all small businesses have because 
of that.
    Mr. Winston. Exactly.
    Mr. King. And that is the point that I wanted to 
understand. And I will make the point that however this might 
be resolved, there will also be a lot of non-minority people 
that will end up in a very difficult position that is very 
similar to the ones that you are addressing here. Would that be 
a fair analysis?
    Mr. Winston. Yes, that is fair to say. I mean what we have 
said in the African American community for many years is when 
White America gets a cold, we get pneumonia. And that is pretty 
much where we----
    Mr. King. I let you have the last word, Mr. Winston. Thank 
you for your testimony.
    Thank you, Mr. Chairman.
    Mr. Conyers. Mr. Luis Guitierrez.
    Mr. Gutierrez. Thank you, Mr. Chairman.
    First of all, Mr. Winston, I am going to take this 
opportunity to tell you that Congresswoman Maxine Waters and I 
and others, that happen to fortunately sit on the Financial 
Services Committee and enjoy the seniority that our years of 
service here afford us, to sit down and to talk specifically 
about the financial situation that broadcasters and the owners 
of radio stations, and I think that is very important as we 
start toward the markup. I think we should always try to find 
something useful to do after we listen to testimony.
    Mr. Winston. Thank you, sir.
    Mr. Gutierrez. I am going to tell you that we are going to 
do that. Maxine and I worked very closely in the past, and we 
will work on this one together.
    We want to figure out, Mr. Minter, how we get that money to 
those recording--I mean I understand that if you wrote it, you 
get money, but if you performed it, you didn't. And I think we 
want to find a way to do that. At the same time find out within 
the economic situation that we find ourselves in as we have 
people withdrawing money--that is, fewer loans, especially to 
those in the minority community, and how is it that we get the 
money that is rightfully deserved to people so we understand 
that.
    And we are going to work on that, and I am happy that you 
suggested that we have time and that you are willing to 
continue, because I believe I think that is what this hearing 
is all about, and that is bringing people. And I would have 
been hopeful that others that were invited would have come and 
would have participated, because I think that dialogue is 
always very, very fruitful.
    Lastly, I wanted to say to--I am sorry. Could you say your 
name for me again?
    Mr. Skarzynski. Skarzynski.
    Mr. Gutierrez. Skarzynski. Mr. Skarzynski, if you go back--
when you go back to the office, you are going to find that you 
sent to me two of those little things that you wear in your 
belt about a year and a half ago in Chicago. And we tried it, 
because we wanted to be cooperative. We thought it was kind of 
our responsibility and duty to work with Arbitron.
    But I am going to tell you something. To expect two 
professionals to wake up every morning and to put--and my 
wife's dresses sometimes could not accommodate the little 
gadget on her dress--and to expect me to put--I don't even put 
my cell phone on. I barely take my medicine when I am supposed 
to. I walk around blank, because I am always leaving my 
glasses.
    You know, just think about normal people and what it is 
they have to do already, and to expect us--and we wanted to do 
it in spite of--I think you sent us like five bucks or 
something. I was going to send it back to you. [Laughter.]
    No, that is what you sent. It was like five dollars--oh, 
thank you. We were going to do it for nothing. We would have, 
but it really is very burdensome, your technology. So I called. 
Maybe there is a record of the call.
    I called Arbitron, and I said, ``Listen, I got two boxes 
here from my cable company. Be happy to have you guys put an 
adapter to them. We own two cars. You can put one in each car. 
Any time we turn on that car, any time we turn on those TVs, 
you will know what we are listening to, and you will know what 
we are watching and where we are watching it.''
    And I think that if you go into minority neighborhoods and 
hook them up straight to the TV sets and straight to those 
cars, you are going to get a better reflection. But if what you 
want to do is spend five bucks and this burdensome system, this 
is what you are going to get even----
    I am just trying to tell you I wanted to cooperate with 
you. You can imagine the challenge that I had. You know, I had 
to bring it over here to Washington, put it in at the end of 
the day, carry it all day with me. It is burdensome, especially 
as you want people.
    So I can't see like an auto mechanic using this, you know, 
as he changes. Just think of people and pagers and electronics 
already if you are a nurse, if you are a doctor. Are you really 
going to walk around with this pager all day?
    And I say that so that you can have a system that will 
better provide information, because as you suggested earlier, 
really at the core of democracy is information--from your 
testimony--and that radio and this information, these public 
airwaves really belong to all of us.
    And I think if we do that, we can help these small 
broadcasters, these minority owned broadcasters, very, very 
much in getting the revenue that we want the artist to get, 
because I think there are really two issues here. There are 
artists that deserve the revenue, and then there are the 
broadcasters who own these radio stations that deserve the 
revenue, too.
    So there would be more revenue if we had a better way of 
gauging just listening, so that when they go to corporate 
America and demand the money for our listeners, there will be 
more money to share and spread around. Thank you so much, all 
of you, for your testimony here this afternoon.
    Mr. Conyers. Well, let me ask my two dear colleagues, 
Johnson and Gonzales. Are both of you trying to get your 
comments and discussions in before we go to cast ballots? Is 
that critical to you?
    Mr. Johnson. I would like to have this group released as 
soon as possible, and so therefore I won't take very long with 
my questions. And I kind of--of course, I would love for Mr. 
Gonzales to be afforded time, if he so requests at.
    Mr. Conyers. Well, he requests, and you usually take--never 
take a short amount of time. [Laughter.]
    Mr. Johnson. Well, I will be brief this time, Mr. Chairman.
    Mr. Conyers. Look, I mean we all work during daylight 
savings time. I mean this is a critical hearing. Your 
contributions have been very valuable. I mean, I don't see the 
rush. We got a few more votes. The Committee has royally 
entertained its witnesses, and even its visitors, so I don't 
want to rush to judgment.
    Mr. Johnson. Mr. Chairman?
    Mr. Conyers. Yes?
    Mr. Johnson. I have got a few other things I need to do 
also, so I would--I mean if the hearing will continue or go to 
a second round, I have no problem with that.
    Mr. Conyers. What is Maxine Waters suggesting?
    Ms. Jackson Lee. I have another question, too, so we could 
come back or not.
    Mr. Conyers. Does anyone----
    Ms. Jackson Lee. We will have to come back, Mr. Chairman.
    Mr. Conyers. Yes. I have got a consensus here. It is so 
important that our Committee be run on an exemplary, democratic 
basis so that we will stand in recess till the votes, and then 
we will all have comments to make later. Thank you very much.
    [Recess.]
    Mr. Conyers. The Committee will come to order, and the 
Chair recognizes the distinguished judge from Texas, Mr. 
Gonzalez.
    Mr. Gonzales. Mr. Chairman, thank you very much.
    And I want to thank the witnesses for their patience. But I 
think it is important to have you here, have your written 
statements for future reference, and your testimony today.
    I am disappointed, as has been expressed by other Members, 
that we don't have all the stakeholders that are out there that 
have something to add to this debate.
    The reason you are here is to educate us, to provide us 
with your point of view. You have to advocate in your own 
behalf. No one else is going to do it for you. So when you drop 
out of the debate, I can assure you the voices are not heard, 
and no one can complain at a later date that this Committee did 
not make every attempt to get everyone before them.
    Two different areas of questioning, of course, is going to 
be, first, I know it is performance rights. We have already 
voted the bill out; and there are some differences of opinion, 
Members that have already expressed some of that.
    My concern, and this is probably more directed to Mr. 
Minter than anybody else, and that is, just radio stations find 
themselves in a very strange situation. Technology has changed. 
The way people get their music, as you are well aware of, is 
totally different than it was years ago. Formats, platforms, 
everything is different, and radio stations have certain costs 
in the way they deliver music that other delivery systems, 
platforms and such, don't.
    When it comes to the public airwaves, the big difference is 
that the listener gets it for free. When it comes to satellite, 
there is a subscription. So we start off with such an inherent 
basic difference in business model that advertising has to be 
the revenue source for those that use the public airwaves.
    And so we fast-forward--bad economic times, change in 
technologies and such, and yet there is something that is so 
abundantly right about saying that someone should be 
compensated for their labor, their creation and their 
performance. And we get into the only thing--qualifier to that 
might be, again, promotional value.
    My preference has always been to have someone that knows 
what they are doing evaluate what is going on out there, and be 
able to attribute some value to promotional, a value that we 
could then be part of this whole equation.
    And we are going to have GAO. It is my understanding that 
the Chairman and the Subcommittee and the Ranking Member have 
made that request, and GAO will move forward on that. So I was 
hoping that passage out of the Committee would get the parties 
to the table, but that didn't work.
    But when it is all said and done, Mr. Minter, my only 
question to you, and I want you to be really brief on this one, 
because I want to go on to Arbitron, and that is--and I guess 
we can also, Mr. Joyner and Mr. Minter, Mr. Winston--is the 
recording artist better served with a greater number of radio 
stations out there, public airwaves where people listen to it 
free, or fewer number out there? Because logic would tell me 
you got a lot more play if you got a lot more stations still in 
business.
    Mr. Minter. Thank you, Mr. Gonzalez. Technically, the 
answer is yes. The parties that are performing the music are 
better served by having a broader audience, and an audience 
that can access that music for free.
    The difficulty that we have is the playlist on the stations 
that are broadcasting that music these days are inherently 
being limited and restricted, because they are doing consumer 
research that gives them the top 20, top 30 records that are 
active for that particular week, which means very little access 
to a lot of developing artists, and also gives very little 
access to the more established heritage artists that our 
foundation represents.
    So if you are listening to the radio today, you are going 
to hear predominantly music that is the music of choice for 
younger adults, younger audiences. And ultimately what that 
does, is it then restricts the income earning capabilities of 
those artists who are not being played, and inherently then 
they call on our foundation for financial assistance, because--
--
    [Audio gap.]
    Mr. Gonzalez [continuing]. Attempted to get all the 
stakeholders in one room, and we did. And the only thing that 
took place was a discussion, because there was no meeting of 
the minds.
    The biggest question, and this is going to be, of course, 
to Mr. Skarzynski, and that is, we have minority radio station 
owners that truly believe the manner in which you have selected 
your sample, both as it is constituted and the quality of it, 
is not truly representative of the audience out there, and they 
are now suffering.
    And, as I earlier indicated, these are tough times for 
them, and it is impacting their advertising revenues on what 
they believe are not accurate figures that those advertisers 
are now going to be depending.
    Now, you have indicated that this thing was rolled out 
because the MRC allowed it to be rolled out, even though it 
hasn't been accredited. And I think that was the situation back 
then. It was my understanding that they allowed the rollout as 
long as it was complemented by at which you had already in 
place, which would be the old diary system and such.
    Where are we today, a year later after that somewhat 
frustrating experience over in the Cannon office building?
    Mr. Skarzynski. Congressman, thank you for the question. I 
should note I have been with the company 6 months, so I was not 
participating in that session from 1 year ago. You have made a 
couple of different comments. May I address each in turn?
    Mr. Gonzalez. Yes.
    Mr. Skarzynski. Number one, Arbitron believes that we do 
have a representative sample. We work very, very hard to, for 
example, as we are looking at the San Antonio market, to get a 
representative sample that reflects the metro area of San 
Antonio.
    Point two, on the MRC accreditation process, which I think 
you know very, very well, Congressman, as do Members of the 
Committee, the MRC accreditation process is not simply for 
radio, but it is also for television, for newspapers, for other 
services. The policies, the procedures of the Media Rating 
Council is to allow a audience measurement company to be in the 
market, commercializing the service before accreditation is 
obtained.
    The provision you mentioned, Congressman, about keeping the 
previous service in place before you move into the new service 
is the recommendation of the MRC. And that is still in place. 
We have a diary service.
    We serve over 300 markets in the United States, measure 300 
markets in the United States. The new PPM service is focused on 
the top 50 markets. We are at 18 of the top 50 at this moment 
in time. And we still continue to maintain the diary service in 
markets 51 through 300.
    But when we are making a conversion from a diary market to 
a PPM market, as we are planning to do in San Antonio next 
year, we keep the--at the moment in time that it becomes 
commercial, we keep the previous service, the diary, in place 
for 3 months as the conversion occurs.
    Your final point, where is the company Arbitron now with 
respect to the improvements that you and the other Members of 
Congress asked for from 1 year ago? I can report to you that we 
have made very good progress in improving the sample size and 
improving the sample quality.
    We have made a commitment to improve the sample size by 10 
percent. On the matter of sample quality, we have introduced a 
higher level of cell phone only sampling. I believe 1 year ago, 
Congressman, that we were at about 7 percent as our goal, and 
we are now at 15 percent.
    We have improved the way we--the so-called stratification 
of this sample. How do you go after the Hispanic demographic or 
the Black demographic? We have improved the way that we make 
this recruitment. And further, and the final point, we have 
made a significant number of improvements around maintaining 
the panel when it is in place, extra coaching, extra training. 
So those would be some comments, sir, to your questions.
    Mr. Gonzalez. Mr. Chairman, thank you for your indulgence.
    Mr. Conyers. Thank you very much.
    I wanted the record to show that Reverend Jesse Jackson 
Sr.'s staff person has conveyed his personal regret that he 
could not be with us today. He is in travel, and it was 
impossible for him to make the adjustment.
    Mr. Skarzinsky, maybe I didn't pay as close attention as I 
ought to have, but what was your response to Congressman 
Gutierrez's frustrating description of trying to use equipment 
that he had been sent to measure his use of media? You don't 
remember any of that?
    Mr. Skarzynski. Mr. Chairman, Congressman Gutierrez made 
these comments. He did not ask me to comment.
    Mr. Conyers. Oh.
    Mr. Skarzynski. So I did not.
    Mr. Conyers. Oh.
    Mr. Skarzynski. He did not invite me.
    Mr. Conyers. Okay, well, on his behalf, I invite you to 
respond. [Laughter.]
    Mr. Skarzynski. The congressman made several points. I 
think they are all very, very good points. Number one, that PPM 
device--I am holding one in my hand, Mr. Chairman--is a device 
that was developed, gosh, more than 10 years ago. This is the 
device. It looks similar to a pager. It has a little clip on 
the back. You could put it on your belt.
    Congressman Gutierrez said, ``Gee whiz, I don't like this. 
I don't even put my cell phone or PDA or Blackberry on my belt 
and don't care to do that, and my wife wouldn't put--doesn't 
have a belt when she wears any particular outfit, so this is 
not handy, easy to use.'' It is also--a second comment--it is 
not very interesting looking.
    And other important comments he made were, ``When I am in 
different places, when I am traveling from my home district to 
my office here, I am on the move. I have to remember to bring 
all of the equipment, all of the chargers, all of the car 
chargers.''
    At the time he had this experience, which I think 
Congressman Gutierrez said was about a year and a half ago, I 
don't think the company did a good enough job of giving extra 
travel chargers, giving extra docking stations so that if you 
are on the move or coming from one area to another, that you 
would be covered.
    And all of these points are very good points. We have 
addressed, I think, the point on the accessories and travel 
chargers from a year and a half ago to today. I think we have 
addressed that quite nicely to solve that problem.
    On the matter of ``I don't want to wear it, because it is 
not something I have or a woman doesn't want to wear this 
pager-like device,'' we have from a year and a half or 2 years 
ago developed a brooch pin and other devices that might be more 
interesting for a woman to carry.
    Congressman Gutierrez's final point was you ought to--I am 
using my words, sir--you ought to take this solution and put it 
into software so it fits into a cell phone or fits into a PDA. 
And I guess we should give the congressman some credit for new 
product planning.
    That solution is exactly what we are doing for our next 
generation product, so that rather than have yet an extra 
device, it would be a software only solution that we would put 
into your PDA or your Blackberry or your cell phone, and it 
wouldn't be ``Oh, gee whiz, I have to remember to take this 
darn thing with me when I am traveling from Place A to Place 
B.'' It is in your cell phone, or it is in some other device 
that you have with you at all times.
    So those are my comments to Congressman Gutierrez's points.
    Mr. Conyers. Well, I think you have given me more of his 
questions than you have given me your responses to those 
questions.
    Mr. Skarzynski. I am sorry, sir. I don't follow you.
    Mr. Conyers. I see. Okay. I think you remembered more 
questions that he asked you than answers that you gave me.
    Mr. Skarzynski. I--I----
    Mr. Conyers. You don't understand that, do you?
    Mr. Skarzynski. Congressman Gutierrez made some comments, 
and I remember what those comments were. I was not asked to 
comment on them. You have asked me to comment on them, and I am 
doing so now. So I am sorry I am missing----
    Mr. Conyers. You are missing something.
    Mr. Skarzynski. I am missing the point you are trying to 
make.
    Mr. Conyers. Okay. This is my third attempt. You remembered 
more questions than you gave me answers to his questions. That 
is the fourth time.
    Mr. Skarzynski. Well, Mr. Chairman, I mentioned that 
Congressman Gutierrez made three or four points, and I 
attempted to respond to those three or four points.
    Mr. Conyers. Okay. Well, we have got a record, so we will 
be able to recall it. Let me ask you, is there any way we can 
have you demonstrate this box and how it is used and held by 
the people that are selected for the Arbitron test?
    Mr. Skarzynski. In terms of how the technology actually 
works?
    Mr. Conyers. Yes.
    Mr. Skarzynski. I don't have equipment with me to ship 
demonstrate it for you today.
    Mr. Conyers. Would you be willing to?
    Mr. Skarzynski. I would be happy to do that, sir.
    Mr. Conyers. Okay.
    Mr. Skarzynski. I would have to bring some equipment here.
    Mr. Conyers. Would it fit inside this room?
    Mr. Skarzynski. The equipment I would bring would be 
devices like the PPM device and other equipment that the 
panelists are using. And the way we do so is it would fit on 
top of the table very easily.
    The other equipment that is involved would be the encoding 
devices that we put on at radio stations, which you would have 
to go to the radio station to see. And in terms of how the data 
are brought back to us, each evening the panelists put the PPM 
device into a docking station, and at 4 in the morning, all of 
the data that had been recorded are sent back to our servers 
and are collected and collated. So to see that data center 
operation would be similar to a data center operation that you 
might be familiar with.
    But I could bring it to you and to other Members of the 
Committee the equipment to show you how it would actually work.
    Mr. Conyers. We would be very happy to have you do that.
    Mr. Skarzynski. I would be pleased to do that, Mr. 
Chairman.
    Mr. Conyers. Thank you very much.
    Did you say that there is now a new device for wearing in 
one's lapel or something that facilitates it being worn by 
women?
    Mr. Skarzynski. Yes, Mr. Chairman. A brooch type device 
that a lady might put on her lapel or a blazer or onto a 
garment.
    Mr. Conyers. Would you bring that as well?
    Mr. Skarzynski. Yes, sir. Be happy to do that.
    Mr. Conyers. All right. Do you have any other equipment 
that I may not be familiar with that I could invite you to 
bring along as well?
    Mr. Skarzynski. I will bring along, Mr. Chairman, a whole 
set of things in terms of our travel accessories and our other 
travel chargers so that you could see how the unit might work 
in a different setting versus the office or, you know, in a 
car, in your home.
    Mr. Conyers. I am not doing this just for our own 
edification of the Committee.
    Yes, Mr. Winston?
    Mr. Winston. I am sorry. I thought you were going to leave 
this subject. I wanted to try to respond to something Mr. 
Skarzynski said. May I do that now?
    He commented on the MRC accreditation process. And my 
concern was that he mentioned that the MRC guidelines say that 
if you have an accredited ratings service, that they are 
guidelines say maintain that process in existence until the new 
process is accredited.
    Mr. Skarzynski. It is commercialized.
    Mr. Winston. And--and----
    Mr. Skarzynski. I used the term ``commercialized,'' not 
accredited.
    Mr. Winston. Okay. All right. Well, the fact of the matter 
is, of course, they did not maintain that service until it is 
accredited. And they have discontinued the diary in all these 
PPM markets, so they are offering only an unaccredited service.
    I just thought that that should be pointed out here, that 
Mr. Skarzynski has said a lot of nice things about the MRC, but 
in practice they are ignoring the MRC and going forward with an 
unaccredited service and have no accredited service in these 
markets where the PPM has been rolled out.
    Mr. Skarzynski. May I respond, Mr. Chairman?
    Mr. Conyers. Absolutely.
    Mr. Skarzynski. Jim, I am sorry you misheard me. The word I 
used was that under MRC guidelines the former service, diary, 
is maintained for a 3-month time until the new service, PPM, is 
commercialized.
    Mr. Winston. Sorry. You are saying that is Arbitron's 
practice or is that what the MRC says?
    Mr. Skarzynski. That is the MRC guidelines. So those are 
the words I used, and not the words that you used.
    Mr. Winston. All right. Thank you, Mr. Chairman.
    Mr. Conyers. Okay.
    Mr. Skarzynski, who was in your position before you became 
CEO?
    Mr. Skarzynski. Mr. Chairman, a gentleman named Steve 
Morris had been the CEO of the company. He retired at the 
beginning of this year, and he had been the CEO for, gosh, for 
many, many years.
    Mr. Conyers. I see. And you don't happen to know where he 
is at this point in time, do you?
    Mr. Skarzynski. He lives in New York. He is in New York. He 
has retired at the age of 66, and he has a home in New York.
    Mr. Conyers. Well, before I yield to my Subcommittee 
Chairman, I am going to ask everyone here how many African-
American formatted stations are owned by African-Americans?
    Mr. Winston. I can take a stab at that, Mr. Chairman. As 
NABOB, we keep track of the African-American owned stations. Of 
the 245 African-American owned radio stations in the country, 
approximately 90 percent of those are formatted for African-
Americans. We are looking roughly slightly over 200 African-
American owned stations that are formatted for African-
Americans.
    I advise that there are probably an additional number that 
are not African-American owned that target African-Americans, 
so I think that the number may be somewhere in the 400 range. 
That is where we don't keep the general market numbers. That is 
where there is an estimated guess on that number, unless 
somebody else has a more accurate estimate on the rest of the 
market.
    Mr. Skarzynski. Mr. Chairman, when you asked the question, 
African-American stations owned by African-Americans, do you 
mean that they would own 100 percent of it and they would not 
be using any capital from a third party?
    Mr. Conyers. Well, they would have controlling interest. 
They wouldn't have to own 100 percent of it.
    Mr. Skarzynski. Well, for example, Inner City Broadcasting 
is a well-known station, but in its capital structure I don't 
think that the controlling interest is any African-American. I 
believe it is GE Capital, for example.
    Mr. Conyers. Right.
    Mr. Winston. No, I don't believe that is correct.
    Mr. Skarzynski. You don't?
    Mr. Winston. I think Inner City is in control of Inner 
City. The African-American shareholders of Inner City 
Broadcasting are in control. And I think Mr. Skarzynski may be 
highlighting an issue that we are addressing in this hearing, 
which is that companies like GE Capital are attempting to 
assume control of many African-American stations, so that I 
think Mr. Skarzynski may have put his finger on our ongoing 
issue here, which is that we have problems with lenders that 
are trying to exercise unwarranted control over African-
American owned companies.
    Mr. Conyers. What do you say, Mr. Schwartzman?
    Mr. Schwartzman. My understanding is that Inner City 
Broadcasting is controlled by an African-American. Indeed, if 
GE Capital were controlling it, it would be an unlawful 
transfer of control, because that has never been approved by 
the Federal Communications Commission.
    Mr. Conyers. Well, I don't know which of you are correct.
    Attorney Minter, what would you add?
    Mr. Minter. Mr. Chairman, I don't have the exact numbers, 
but I do know that into that calculation we need to talk about 
a number of large group owners--Granite, Cumulus, others that 
do programming for the African-American in urban communities, 
which I think is the bigger picture that you are looking to, as 
opposed to just 100 percent owned and controlled African-
American stations, because we are talking about the programming 
influences lock.
    Mr. Conyers. Mr. Schwartzman?
    Mr. Schwartzman. Yes, there is one other thing I would like 
to add. As I indicated in my testimony, one of the things that 
we don't have are good statistics. And the Federal 
Communications Commission under new management has created a 
new data collection forum, which is going to be operative this 
fall, and I hope that we will finally have good numbers within 
a year or so, and we could give you some meaningful answers to 
those questions.
    Mr. Conyers. We have been joined at the table by a 
gentleman that has stood up quite a long time to indicate that 
he wanted to respond, and we would be welcome to have him 
respond.
    Mr. Warfield. Mr. Chairman, thank you. My name is Charles 
Warfield, and I am the president and CEO for ICBC Broadcast 
Holdings. And I wanted to just make clear on the record that 
Inner City Broadcasting is an owned and operated, 100 percent 
owned and operated, African-American broadcast company. I can 
only speak for our company, but we own 17 radio stations in 
four markets. We are African-American owned and operated.
    Mr. Conyers. Well, I am glad that you are here. What about 
the dash? Someone suggested GE Capital was involved.
    Mr. Warfield. There are banks that have lent money to the 
company. That is correct. But they do not own our company. Our 
company is 100 percent owned and operated by Inner City.
    Mr. Conyers. Right. Okay. And then there was----
    Mr. Warfield. We are trying to keep it that way, Mr. 
Chairman.
    Mr. Conyers. And you are trying--you want to keep it that 
way. Would that mean excluding compensating artists for their 
performances?
    Mr. Warfield. We are trying to keep it that way, Mr. 
Chairman.
    Mr. Conyers. Well, I asked you would that include excluding 
compensating artists for their performances on your 17 
stations?
    Mr. Warfield. We work very well with the artists, and have 
been for the 30 years that I have been in this industry. We 
certainly do not make any payments to them. We are trying to 
keep our company solvent, trying to keep our company active and 
engaged. We can continue to help develop the careers and the 
futures of these artists.
    Mr. Conyers. Well, I will tell all of them that are 
starving that you are concerned with at least the ones that you 
play, except you don't compensate them. But look, we are in a 
modified capitalist system. I mean everybody can make it. I 
mean all artists don't make it, do they? All radios don't make 
it, do they? All Members of Congress don't make it, do they? 
[Laughter.]
    All Presidents don't make it, do they? But then at the same 
time, if we abolished involuntary servitude, where does the 
notion of contributing your work and not getting compensated 
from what capitalist principle does that derive from?
    Mr. Warfield. Mr. Chairman, I just wanted--you know, being 
here, why I was not prepared to make any testimony here today--
I am here as an observer--that from my understanding, this was 
to address the concerns that are facing the viability--
challenging the viability of minority broadcasters, of which we 
are one of those companies.
    The performance tax issue is certainly one that challenges 
us, not directly today as much as PPM is, and as Mr. Winston 
has indicated from NABOB, you know, financial assistance in 
some form.
    We are looking for ways that we can continue to serve the 
communities that we have been licensed to serve. Inner City 
Broadcast is a company that has been in business for over 35 
years, and we would like to continue to have the opportunity to 
serve the communities in New York City and San Francisco and 
Columbia, South Carolina, in Jackson, Mississippi, which we 
have been dedicated to doing.
    And without the issues that are being addressed here today, 
that might not be allowed to continue into the future.
    Mr. Conyers. Well, that is what we want to make sure 
doesn't happen. We want you to continue to operate into the 
future.
    Would you be agreeable to sitting with those of us that are 
negotiating with the distinguished gentlelady from Los Angeles, 
Congresswoman Maxine Waters, and a veteran broadcast person, 
Clarence Avon from New York and other parties that enter into 
discussions about the subject? Oh, and Sheila Jackson Lee, of 
course, entering into discussions about the nature of the 
problem and how we can resolve the issue, because that figures 
into our continued support of the minority radio stations and 
our desire to see them increase in number and in strength?
    Mr. Warfield. Mr. Chairman, I would not be interested in 
participating in that dialogue, to be honest with you. There 
are individuals that you have mentioned, though, that I have 
had dialogue about this issue with, not in an effort to resolve 
this issue, but in an effort to get them to understand the 
position of the radio broadcast industry, the the minority 
broadcast industry itself.
    But in terms of sitting down and trying to find a solution 
to this, I don't believe the solution is one that should be 
found with the broadcasters themselves, but needs to be found 
other ways.
    Mr. Conyers. Well, that is great. Could you tell me what 
other ways you may have in mind that we don't know about?
    Mr. Warfield. Well, I have participated in a hearing in 
this room before, and did not participate today, but I do 
believe that some discussion could be had with the relationship 
that exists between the record labels and these artists who 
have fallen upon hard times and what role they may have played 
in the state that they are in right now that might possibly 
present some other solutions to their plight.
    Mr. Conyers. Okay. Great. Well, I am so glad that you 
offered to come forward today, and we greatly appreciate it.
    My last question is what should I tell all of the people--
oh, and I left out Professor Charles Ogletree of Harvard 
University, who is sitting in this group--what should I tell 
them is the reason that you don't care to sit with them in 
terms of fashioning a response on how to make you more 
sustainable and stronger?
    Mr. Warfield. If the issue is how to help our industry be 
more sustainable and stronger, I would certainly be willing to 
participate in that kind of a dialogue, but if that included 
some other resolution on the performance tax issue, I don't 
believe that is one that is going to be helpful to our future.
    Mr. Conyers. Well, if that is not helpful to your future, 
that would be more reason for you to participate in it and help 
us understand how it would be harmful. I mean you are a veteran 
businessman. How can we work with you and help you out? And you 
are saying you will not sit with us about one part of our 
discussion. That lets you out.
    I mean what are we supposed to do? Guess what you would say 
if you were there? Or assume that you--I mean what is it we can 
do? We hold hearings. We have impartial groups negotiating. You 
come here as a guest. We invite you to participate in the 
hearing that is going on now, and your contribution has been 
very thoughtful. Why can't we enjoy the product of your 
deliberations in a more informal setting?
    Mr. Warfield. I have provided that, Mr. Chairman, on 
numerous occasions in the past.
    Mr. Conyers. You have?
    Mr. Warfield. Yes, sir.
    Mr. Conyers. To whom?
    Mr. Warfield. I have had very recent conversations with 
Clarence Avon, for one, on this issue.
    Mr. Conyers. Good. Well, he is one of the conveners of the 
discussion. Oh, this is so puzzling. You talk to Clarence Avon, 
and yet I tell you Avon and Lee and Waters are all trying to 
work this thing out, and you say, ``Well, I don't want to 
participate in that.'' But you say, ``I talked to Avon. I had 
long, fruitful discussions with him.'' Is there something I am 
missing here at the beat?
    Mr. Warfield. No, sir.
    Mr. Conyers. Oh. Okay. All right. Then on that note, I 
recognize Hank Johnson of Georgia.
    Mr. Johnson. Thank you, Mr. Chairman.
    Mr. Warfield, I have heard it said three times now that the 
performance royalty bill is a tax. And I am going to ask Mr. 
Minter to respond to that mischaracterization of the 
performance right tax.
    Mr. Minter. Thank you, Mr. Johnson. As you know, there has 
been a lot of information that has been disseminated to the 
public, and we in the artist community have consistently looked 
at some of the information that has been out. And the broadcast 
community, strategically and wisely for their position, has let 
the public know that this is a tax.
    Now, in our town hall meetings and our various discussions 
we have had, we have consistently said that a tax is a 
assessment by a government entity for the well-being and the 
fulfillment of government programs for the community.
    And this is actually a royalty. It is not a tax. It is a 
royalty that is already in effect in most of the other parts of 
the world, and it does not go back to any government entity. It 
goes to artists and sound recording copyright owners. So the 
misnomer that it is a tax unfortunately has just displaced 
description of what it really is.
    Mr. Johnson. Seems to be something that they are using 
quite frequently to try to defeat things like health care and 
education, energy. Everybody talks about tax, but it is in no 
way a tax.
    And, Mr. Warfield, I assume that you have not been duly 
educated about that.
    But let me ask Mr. Winston.
    Well, before I do that, Mr. Skarzinsky, are you a publicly 
held corporation?
    Mr. Skarzynski. Yes, Congressman. Arbitron is a public 
company traded on the New York Stock Exchange.
    Mr. Johnson. And are there any broadcast entities that own 
any of your stock?
    Mr. Skarzynski. To my knowledge, Congressman, no broadcast 
entities would own any of our stock unless they owned it 
through a pension fund or an institutional investor. But as an 
investor, there aren't any investors that we would know about 
who owned shares in Arbitron directly.
    Mr. Johnson. Yes, if you could find out directly or 
indirectly, and----
    Mr. Skarzynski. I would be happy to do that. My belief is, 
and I am 99.9 percent sure, that no broadcaster owns any stock 
directly Arbitron. And I would be happy to confirm that for 
you, sir.
    Mr. Johnson. All right. Thank you.
    On the issue of the PPM technology undercounting, as you 
have described, Mr. Winston, minority audience measurement, 
particularly with minorities, with African-American stations, 
can you put your finger upon the precise reason, other than 
methodology and the economic decline, can you put your finger 
right on the heart of why this technology undercounts African-
Americans?
    Mr. Winston. Okay. There are a number of peculiar problems 
with the PPM methodology that have been identified. First of 
all, that diary service that it is replaced, the diary had 
three times more participants in the survey than the PPM system 
does.
    Second, the diary involved you responding to Arbitron for 1 
week. You fill out that diary for 1 week. You mail it back to 
them. Arbitron requests a commitment of 2 years we enter into 
this sample. You heard Congressman Gutierrez do an excellent 
discussion of the problems of wearing that device for any 
extended period of time.
    Mr. Johnson. So your contention is that going to the device 
has operated to skew the numbers as far as listeners of 
African-American owned radio stations.
    Mr. Winston. Very greatly.
    Mr. Johnson. Any other factors that you can point to?
    Mr. Winston. The technique that they use to recruit people 
is a telephone only technique. They call you by phone. They do 
a computerized dialing process to identify phone numbers based 
on telephone exchanges in a given geographic area, so that if 
you don't have a landline phone, the computer doesn't generate 
a phone number for you, so----
    Mr. Johnson. But I just urge you, Mr. Skarzinsky----
    Excuse me, Mr. Winston--say that you are looking at going 
to the cell----
    Mr. Skarzynski. Cell phone only, yes, sir.
    Mr. Johnson. Okay.
    Mr. Skarzynski. So what Mr. Winston said is actually 
incorrect, Jim.
    Mr. Johnson. When will that happen, by the way?
    Mr. Skarzynski. Pardon me, sir?
    Mr. Johnson. When will that happen?
    Mr. Skarzynski. It has already started. It began in 2008. 
So there is a portion. Mr. Winston is absolutely correct that a 
portion of our sample are landline individuals, and a portion 
of our sample are cell phone only households. The method by 
which we contact someone who is a landline only prospect is 
through the method that Mr. Winston described, through our call 
center.
    But the FCC has set up a mandate. I believe it was in 2003, 
Congressman, which said you cannot use a call center technique 
to go reach out to contact a cell phone. So what we and other 
audience measurement companies have to do, given the FCC 
mandate, is to call an individual directly, hand dial the 
number to contact the cell phone only prospect.
    Mr. Johnson. Tell me something, Mr. Skarzynsi. How does 
Arbitron make its money on its audience measurement goal, if 
you will? That is what you all do. How do you make your money?
    Mr. Skarzynski. Congressman, the way that Arbitron makes 
money is to offer these audience measurement systems services 
throughout the country. We----
    Mr. Johnson. Are they on long-term----
    Mr. Skarzynski. We enter into a long-term contract----
    Mr. Johnson. We are talking about what? Five years? 10 
years?
    Mr. Skarzynski. Three to 5 years. We would prefer a longer 
contract than a shorter one, because we want to make sure that 
we have the customers in place to do this. So we would enter 
into a 3-to 5-year contract with the radio broadcasting 
companies. And for example, I had mentioned earlier----
    Mr. Johnson. Would that include the minority broadcasters?
    Mr. Skarzynski. Yes, sir. Exactly right. All broadcasters. 
We have 400 customers.
    Mr. Johnson. Okay. All right. Let me ask you this question. 
How many competitors do you have?
    Mr. Skarzynski. I am sorry, sir?
    Mr. Johnson. How many competitors in the audience 
measurement business?
    Mr. Skarzynski. There are two major competitors, Nielsen 
and a smaller company, Eastland.
    Mr. Johnson. So what percentage of the broadcast business 
does Arbitron enjoy?
    Mr. Skarzynski. Arbitron is not a monopoly, but we do have 
a majority share. It would vary, Congressman, by market. I 
mentioned earlier that there are--we organize the--and think 
about the U.S. market in 300 markets. And Nielsen is focused--
Nielsen just entered the business last year, at the end of last 
year, and they are focused on about 25 percent of the business 
as their market potential.
    And this company Eastland, which is based in Washington 
State, focuses on the smaller markets, so markets 200 through 
300. They would be at the smaller end. That smaller--even 
though it might be 100 metro markets by number, would not 
equate to a third of the market. Their market potential is 
closer to perhaps 15 percent.
    Mr. Johnson. Okay.
    Mr. Winston. Excuse me, Congressman. He didn't answer your 
question. You asked what percentage of this market he has. He 
told you about competitors that may be moving into his market, 
but right now, in the major markets it is only Arbitron.
    Mr. Johnson. In the major markets.
    Mr. Winston. And Nielsen has, and you tell it--I think they 
are looking at markets number 150. So from market one, New 
York, down to the 150th largest radio market, there is only 
Arbitron right now. I believe that is the number that Nielsen's 
at, so--and Nielsen, as he said, just came into the business 
last year. So in all the markets that, you know, that make up 
the vast demographics of America, there is only Arbitron doing 
measurement.
    Mr. Johnson. Do all audience measurements agreements with 
broadcasters cover the same period of time? Or are there 
various due to individual negotiations, which I assume? And if 
it is not, I want you to tell me it is not. But if it is like a 
collective negotiation, tell me do all of your contracts with 
your broadcasters expire generally around that same time?
    Mr. Skarzynski. No, Congressman. They would be, depending 
on the particular broadcaster, they would be termed out at a 
different point in time, meaning it would all end on December 
31, 2009, rather depending on when we entered into an 
agreement, it would be from that point in time out. So it would 
be staggered throughout the calendar year.
    Mr. Johnson. Is it any contention, Mr. Winston, that there 
is some racial animus that would drive the alleged 
undercounting of minority audience participation?
    Mr. Winston. I certainly can't speak to anyone's motives. 
What I can talk about is effect. And the effect is----
    But can I kind of just make one more comment? Because the 
whole question of cell phone only households that Arbitron is 
now beginning to address--there is a better way.
    And the reason that Nielsen decided to get back into radio 
measurement is because they have a better way. And so that 
Arbitron uses the telephone generated information to find their 
panelists. Nielsen uses an address based sample, so you don't 
have to worry about who has a landline home, who has a cell 
phone home. If you are living at 123 Main Street, Nielsen's 
going to identify you, and so you get a better sample.
    And they also do much more in-person recruitment, so a lot 
of people, who might be disinclined to talk to someone on the 
telephone because they don't know who they are and why they are 
trying to get information about them, if someone comes up to 
the front door and knocks on the door and they see somebody who 
looks perhaps like them, maybe they would be more inclined to 
participate in the process so that part of the problem here, 
when you asked are there inherent problems, there are inherent 
problems, and there is a better way. It doesn't have to be this 
way.
    Mr. Skarzynski. Would you care for me, Congressman, to 
respond to that, or shall we leave it?
    Mr. Johnson. Very short response.
    Mr. Skarzynski. Mr. Winston is confusing Nielsen's 
television audience measurement techniques, which cover about 
12,000 panelists, versus Arbitron's radio audience management, 
which today covers about 50,000 panelists. So he is mixing up 
the two services, point one.
    Point two, the way we actually go after cell phone only 
persons for our sample is identical to that of Nielsen's. And 
in fact, we are purchasing the cell phone only numbers from a 
Nielsen entity. So Mr. Winston has some of the comments he just 
made were incorrect.
    Mr. Johnson. All right. We will go on, because we could do 
this endlessly. But let me ask Mr. Winston--and I am sorry to 
exclude everyone else thus far--but Mr. Winston, you are not 
one of those who would mistakenly referred to the performance 
royalty fairness issue as attacks on radio stations, are you?
    Mr. Winston. I am a trained attorney, Sir. I have been 
practicing law for over 30 years. I believe in precise 
language. A royalty is a royalty, the tax a tax.
    Mr. Johnson. And so therefore you understand that there is 
no taxation involved in H.R. 848.
    Mr. Winston. I understand that perfectly, Sir.
    Mr. Johnson. Yes. So it would be misleading, falsely 
misleading, in your opinion, to argue that it is a tax. Isn't 
that correct?
    Mr. Winston. I would not say it is false or misleading. I 
would say it was imprecise.
    Mr. Johnson. I guess that is a technical way of saying that 
it is wrong. But let me ask you this. Can you imagine any 
reason on earth that would prohibit the broadcasters, including 
your organization, from coming to Congress, where the laws of 
the country are made, and participate in a discussion and 
negotiations just like all other businesses have lobbyists?
    Why is it that--I can't imagine why, if this means so much 
to the broadcast industry, that the broadcast industry doesn't 
want to come forward and negotiate. Why is that the case? I am 
not the smartest guy or the sharpest knife in the drawer or I 
know I look stupid, but, you know, and perhaps I am stupid, but 
I just can't see it. Can you clear this up for me?
    Mr. Winston. I can speak with respect to the minority 
broadcast community that NABOB represents, the African-American 
community. We are struggling to survive. It is just that 
simple.
    Mr. Johnson. Why can't you come and talk to us about 848? 
Why?
    Mr. Winston. Because we are struggling to survive, sir.
    Mr. Johnson. Well, that doesn't mean that survival doesn't 
have anything to do with 848.
    Mr. Winston. Sir, it has everything to do with 848. You are 
asking us to pay more money when we can't pay the money we 
are--you know, if we can't pay our current bills, asking us to 
come talk about paying more is a nonstarter, sir.
    Mr. Johnson. You are making something off of these artists 
and their versions of songs, but broadcast radio does not pay 
the artists. So are you saying that the artists should bear the 
brunt of your economic decisions to purchase--to leverage your 
companies with debt and the chicken came home to roost and the 
performers should bear the brunt of that?
    Mr. Winston. Well, I think your question assumes some facts 
that are not, but----
    Mr. Johnson [continuing]. There is truth in.
    Mr. Winston. But let me say this. The broadcasters don't 
have to say that. Congress has said that for 40 years, so we 
don't have to say that. Congress has been saying 40 years this 
is the way, this is who has copyright rights, these are how 
these rights will be distributed.
    Mr. Johnson [continuing]. Incentive for about 170 for their 
anti-trust exemption for you guys.
    Mr. Winston. A hundred seventy years?
    Mr. Johnson. No, no, no, no. Seventy of the 100 years.
    Mr. Winston. Okay. I am sorry. The anti--what anti-trust 
exemption are we talking about, sir?
    Mr. Johnson. What?
    Mr. Winston. What anti-trust exemption are talking about?
    Mr. Johnson. Well, we are talking about your exemption from 
the competitive laws of this country, anti-competition laws 
with respect to having to pay performance royalties to 
performers. You don't have to do that.
    Mr. Winston. Okay. I think that is a copyright law, not an 
antitrust law, sir.
    Mr. Johnson. Okay. One for you, ten for me. [Laughter.]
    Anything else you would like to add on that? I told you I 
am not that smart.
    But I think that is probably about all I have, Mr. 
Chairman.
    Mr. Conyers. May I recognize the gentlelady from Houston, 
Sheila Jackson Lee?
    Ms. Jackson Lee. Mr. Chairman, you have been more than 
generous with your time. I hope that those who have had an 
extended visit with us today realize that we are serious about 
the multiple issues that are before us.
    Mr. Skarzynski, if I don't look at your name, I am not 
going to get it correct, so let me get it correctly. 
Skarzynski, excuse me. Mr. Skarzynski, let me acknowledge Mr. 
Michael Frasier, who has been very committed to having the 
information about Arbitron explained to Members. And so I do 
appreciate the fact that you have made effort to provide an 
explanation. And he has provided an explanation on behalf of 
Media Access.
    And so we have heard--without being unfair, we have heard 
issues that have given us a sense of balance: what you do, what 
the necessities of Media Access, what they do. And I will come 
back to my original premise. I think we have solutions here. I 
think the very fact that you are at the table together there 
are a reasoned response to what the concerns are.
    The bottom line is Arbitron is a business, and you want to 
survive and be financially successful. But you have the key 
that speaks to the constituency that Mr. Winston represents, 
because if your numbers are low, you in essence can alter the 
destiny of Mr. Winston's constituents, because you will provide 
numbers to advertisers, or radio stations will take your 
numbers and use them to accelerate or to enhance the amount of 
money they get from advertising or the range of advertising 
that they get.
    So let me tell you what we are facing. It is interesting. 
We actually are facing questions of systemic discrimination. I 
am sure people will run out of the room if I say ``racism.'' 
But really, as most people today would say, ``It is not my 
fault. I wasn't involved in it.'' But it is systemic.
    It is a mindset that those who listen to previously called 
Black radio, but now minority radio, are not purchasers. They 
are not astute. They don't listen to news. And all of that now 
in the 21st century has been dispensed with. We know that the 
market that small radio stations and arty radio stations are 
engaged in is a huge market.
    So let me raise this question to you, Mr. Winston. We are 
sort of talking about the Performance Rights Act, and thank 
you.
    Mr. Chairman, I want to thank Mr. Winston, because he has 
acknowledged that it is a royalty, it is not a tax. And that is 
on the record. And we appreciate that.
    One of the thoughts about this whole issue, and you are 
here in the representation manner and I hope that you will 
share the comments of the Chairman, which is the idea of coming 
to sit around the table, and if you would add my voice to it, 
can we engage in discussions with some of the principals that 
the Chairman had mentioned?
    Well, one of the ideas is to add to the Performance Rights 
Act, as it goes to Ways and Means, a tax certificate, which I 
have been hearing the broadcasters speak about. Now, I know we 
are in different economic times, but that is in essence a idea 
of which one can adjust legislatively.
    So the question is if you look at a tax certificate idea 
and then maybe an Arbitron fix that deals with the economic 
aspects of what Arbitron does in terms of real bottom-line, a 
very reasonable approach to begin looking at all these issues 
by discussing what can be done.
    Mr. Winston?
    Mr. Winston. I would love to have a conversation that puts 
all these issues on the table.
    Ms. Jackson Lee. And the idea of a tax certificate, the 
idea of an Arbitron fix, is that--and the idea of the 
Performance Rights Act for its value, which is establishing a 
writer performance. You could be in a room with a number of 
principals and have that discussion.
    Mr. Winston. I could have that discussion.
    Ms. Jackson Lee. And as a lawyer of 30 years, and a 
proficient one at that, you could see how there is a 
possibility of that being intertwined. Am I correctly assessing 
your bottom line as to what Arbitron does to the whole 
advertising dollar?
    Mr. Winston. I can--yes, these things are very much 
related.
    Ms. Jackson Lee. Okay. And in your client, is the 
advertising dollar the bottom line of your income? Or do you 
also get in essence the fees that artists pay--play--pay to 
have to be paid? I mean to be played.
    Do you also get--excuse me--I am talking to Mr. Winston. Is 
the advertising dollar the basic profit mode, or do you also 
count in the dollars that artists pay to get on the air?
    Mr. Winston. There are very few artists I am aware of that 
pay to get played. I think the 99 percent of the revenue that 
broadcast stations earn is earned from advertising revenue.
    Ms. Jackson Lee. But if we were in a meeting and we had 
these issues on the table, such as fees that artists pay, we 
could reasonably be in a room to assess that. I know that in 
smaller markets, I am told, that there are fees that artists 
pay to be played. It may be a different terminology, but it 
does occur.
    Mr. Winston. Yes, I think that could be part of any 
conversation.
    Ms. Jackson Lee. Mr. Minster, you have heard what I just 
said.
    I am going to get to the two gentlemen in the middle here 
for just a moment, Mr. Chairman.
    But you have heard what I have listed tax certificates. 
That has to do with getting credit or getting some relief for 
buying stations from tax relief.
    The whole idea of an Arbitron fix--we don't know exactly 
what that might be, but you understand that it does impact 
their bottom line about if their numbers are low, advertisers 
don't want to address or advertise there. You understand that. 
So that is a reasonable issue.
    Discussing the given issue of there is a performance right, 
recognizing that performance right is not a tax. And then the 
issue of putting all the money issues on the table, such as--I 
guess it is called a fee--that artists may have to pay to play.
    Now, there is also another point that I didn't mention to 
Mr. Winston, which is the value of a promotional fee of sorts 
that an artist would get if they are being played. I mean that 
is a money thing that one could include or discuss in the 
performance rights.
    My list was about five, but can you see the idea of looking 
at these issues as it relates to putting a final package 
together, even though as the bill has passed out of this 
Committee.
    Mr. Minter. Absolutely, Madam Congresswoman. And I would 
add a couple of other items that would be subject to discussion 
that I think would move the discussion along in a productive 
manner. One would be further looking at the manager's amendment 
to extend the delay of the implementation of the payment dates 
so that we can get out of this economic crisis that the country 
is in currently right now, which is on the minds of every 
business owner, which is very valid.
    Also by staggering the rates--cable and satellite radio 
right now are paying approximately 5 to 6 percent of revenues. 
There is no reason to have the negotiation and discussion in 
good faith amongst all the parties, why it would have to begin 
at that rate. It could begin at a very low rate and then 
increase gradually as the years go by to give everyone an 
opportunity to rebound economically, but most importantly at 
that point recognizing the intellectual property right and 
valuing it versus not valuing it at all and saying there is no 
right and no rate.
    Ms. Jackson Lee. Thank you. I am going to finish with Mr. 
Skarzynski and Mr. Schartzman.
    Mr. Skarzynski, things have been twirling around you, and 
we have a mixed, I would say, subset issues, but we have a 
general broad question of how you can do business, but how we 
can preserve a very valuable asset for our diverse community, 
and it is the minority stations.
    But we recognize that you are in business. You are loosely 
regulated. Would you be willing to participate in a discussion 
for a construct that would allow you to do business, but to in 
essence cure Mr. Winston's problem? No numbers is no revenue, 
because it sends advertisers running for the hills.
    Can you see the need for some fix that addresses, even 
beyond the technology that you are offering. I think Mr. 
Gutierrez has been mentioned several times. He was eloquent in 
terms of how different communities respond to some of the 
preciseness that you need. So that means you may lose.
    My constituents get on buses at 4 and 6 in the morning, so 
they are hard pressed to carry things around or find things. A 
lot of them are working in jobs that don't uphold them to keep 
phones on their belts, or they go through security, and they 
have to leave everything at the front door. So there is a lot 
of different styles that we are addressing. Can you see trying 
to look at a more regulatory structure for what you are doing?
    Mr. Skarzynski. Madam Chair, I would be happy to work with 
you and Members of the Committee to work on such a construct.
    Ms. Jackson Lee. You--and you have gotten from sitting 
here, and there have been different things, but you understand 
the bottom line issue that when you produce your numbers, it 
does impact the bottom lines sometimes of minority radio 
stations.
    Mr. Skarzynski. That is clear.
    Ms. Jackson Lee. All right.
    Mr. Skarzynski. And I believe that my goals and my friend 
Jim Winston's goals are the same. They are identical. Arbitron 
wants minority broadcasters to be successful and prosperous.
    Ms. Jackson Lee. Thank you for that.
    And let me--and you have been very generous.
    Mr. Schwartzman, you have been very articulate on these 
issues. Help me out on what I have just constructed here. How 
can we move this ball forward?
    Mr. Schwartzman. First, I would note that there is a 
process for Arbitron. It is a voluntary process. It is the 
ratings council. They have punted to the Ratings Council's 
accreditation system. They are continuing to roll out the 
services despite guidelines which, as I understand it----
    Ms. Jackson Lee. Could you yield just for a moment? The 
Ratings Council is how old? How long has it been in place?
    Mr. Schwartzman. Since about 1960.
    Ms. Jackson Lee. And did members come from----
    Mr. Schwartzman. They have come from all manner of 
industries, but their activities are secret, and it is a closed 
system. We note, however, that Arbitron has been denied--not 
just failed to obtain, but has been denied accreditation in the 
very largest markets, but they continue to operate the PPM 
system and have discontinued the diary system.
    So they are flouting an existing system. So with regret, I 
have to say that Mr. Skarzinsky's assurances that he is willing 
to cooperate with the system has to be compared with the 
failure to work with the with the ratings council, the----
    Ms. Jackson Lee. But what is your solution? What is your 
solution? That is an advisory council. What is your solution? 
What do you suggest that we do?
    Mr. Schwartzman. I think because--and again, although there 
was a little bit of a dance--I am not sure you were here for 
it--Arbitron functions as a monopoly in the very largest 
markets in this country and has effectively no competition. If 
the situation continues, I think legislation will be necessary.
    Ms. Jackson Lee. Okay. So there is an existing board that 
has been going on since 1960. That is 40 years plus, or almost 
50 years, if you will, from 1960. That is a long time. It is 
more than 50 years or so. But in any event, and you are saying 
that Arbitron has managed in the 21st century to operate in 
essence independently and without subjecting itself to the 
advisory comments were accreditation of the board. Is that my 
understanding?
    Mr. Schwartzman. That is correct. And indeed, as I have 
said, my understanding is they have been denied accreditation 
in a number of these markets. So they are continuing to 
operate, continuing to roll out the PPM technology, despite its 
evident shortcomings.
    And there are things that could be done to improve it. Mr. 
Skarzynski talked about a lot of things that are on the drawing 
board as if they were--who present today, improvements in this 
cell phone acquisition and new brooches and so forth for 
technology.
    My understanding is that these things are on the drawing 
boards, but are not yet in the field. The bottom line is they 
are trying to do this on the cheap. The sample sizes are far 
too small. It would cost a lot of money, which Arbitron 
evidently doesn't want to do, to increase the sample size, 
which would remediate a large number of these problems.
    And having failed to satisfy their own industries self-
regulatory mechanism, as I said, I fear legislation may be 
necessary in order to address this problem.
    Ms. Jackson Lee. That may conclude, Mr. Chairman. I see 
your----
    Mr. Skarzynski. Congresswoman, may I make a response to----
    Ms. Jackson Lee. If it will be brief. And I want to 
conclude. And I thank the Chairman.
    Mr. Skarzynski. The last three paragraphs that Mr. 
Schwartzman uttered contained many falsehoods, and I would like 
the opportunity--not now, since we don't have the time----
    Ms. Jackson Lee. If you have a brief answer to put on the 
record, just do you subject yourself to this advisory board 
that Mr. Schwartzman speaking of?
    Mr. Skarzynski. We do indeed. We have been following the 
Media Ratings Council for the entire existence of the company. 
Mr. Schwartzman doesn't know what he is talking about, so he 
uttered a number of falsehoods. I would be happy to take the 
time with you and other Members of the Committee to go through 
it point by point.
    Ms. Jackson Lee. I have delicate feelings, so I would like 
you to say that maybe Mr. Schwartzman has spoken his 
interpretation and interpreted it incorrectly. I know that you 
view him as----
    Mr. Skarzynski. That is a better way to say it.
    Ms. Jackson Lee. I know he knows what he is generally 
speaking about, so thank you for my delicate sensitivity. But 
let me end on this note. I would happy to have that 
information.
    Mr. Chairman, I do believe that we have a mixture of a fix 
or collaboration. I respect all these gentlemen that are here, 
and I think they have offered the four corners of moving 
forward, because we have an economic theme here. Everybody 
wants to survive and make money. And I think there are some 
elements that would answer the concerns of Mr. Winston's 
constituents.
    Arbitron has a valuable purpose, and a system like this has 
existed for a period of time. And I would like to hear more 
about what Mr. Skarzinsky could do to fix this. And legislation 
has its strengths, but I see that this is an opportunity for a 
meeting as well.
    So my class question will be, Mr. Winston, you will come to 
meeting to be part of a solution on behalf of your 
constituents?
    Mr. Winston. I would be happy to come to meeting, ma'am.
    Ms. Jackson Lee. Mr. Skarzynski?
    Mr. Skarzynski. No. Yes. Yes, Congresswoman Jackson Lee, I 
would be happy to participate.
    Ms. Jackson Lee. Mr. Schwartzman?
    Mr. Schwartzman. Congresswoman, I really don't have a 
constituency to represent in this----
    Ms. Jackson Lee. But we welcome you anyhow.
    Mr. Schwartzman. And as I have been studiously silent, I 
have no position and no expertise whatsoever with respect to 
one piece of this, which is the performance rights----
    Ms. Jackson Lee. Absolutely.
    Mr. Schwartzman. I more than willing to talk about things, 
but I have nothing to contribute on the performance right 
issue.
    Ms. Jackson Lee. But you have something to contribute on 
the overall Arbitron issue.
    Mr. Schwartzman. Yes, indeed.
    Ms. Jackson Lee. This meeting is multitask. So you would be 
willing to come?
    Mr. Schwartzman. Yes.
    Ms. Jackson Lee. Thank you.
    Mr. Minter?
    Mr. Minter. Absolutely, Congresswoman.
    Ms. Jackson Lee. I know, Mr. Chairman, we have had meetings 
before, but this may be a little light at the end of the 
tunnel. And I do believe that the gentleman who was here 
previously could be encouraged, as could the others. And I just 
frankly hope we have the opportunity to do so.
    Mr. Chairman, I yield back, and I thank you.
    Mr. Conyers. Closing up, how many African-American format 
stations are owned by African-Americans?
    Mr. Winston. Mr. Chairman, of the 245 radio stations owned 
by African-Americans, approximately 90 percent of them are 
African-American formatted, so roughly 200, I would say.
    Mr. Conyers. And do you have--can you volunteer a number?
    Mr. Skarzynski. Mr. Chairman, I don't know the numbers. The 
FCC does not track the numbers. Jim gave an estimate, which 
sounds like a reasonable estimate, but the FCC doesn't track 
those numbers, and my company does not track them.
    Mr. Conyers. Mr. Schwartzman--Attorney Schwartzman?
    Mr. Schwartzman. Well, as I have indicated, the FCC is 
starting to collect useful data, so we may get some real 
numbers in a year or so, but in the meantime I think Mr. 
Winston's numbers are the best we have got.
    Mr. Conyers. Attorney Minter?
    Mr. Minter. Mr. Chairman, I don't have the exact numbers, 
but I would defer to Mr. Winston as the representative of 
NABOB, which does represent collectively the majority of 
African-American owned stations.
    Mr. Conyers. Well, let me ask this question. How many 
stations are owned by Clear Channel?
    Mr. Winston. Clear Channel at one time owned 1,200 radio 
stations. It is my understanding now that they have sold off 
some of their stations there now--somewhere in the neighborhood 
of 800 radio stations, I believe, so roughly four times. Clear 
Channel, one company, owns more--four times more stations than 
all the African-Americans in America.
    Ms. Jackson Lee. Is that an African-American owned station?
    Mr. Winston. Clear Channel is not an African-American owned 
company. It is owned by a couple of, I believe, investment 
companies and/or hedge funds.
    Mr. Conyers. How many small radio stations could anyone 
help us out on--that are not African-American owned? Are there 
around?
    Mr. Winston. Okay. The question is how many small radio 
stations are there that are not African American owned? The 
total number of radio stations in America, I think, is about 
13,000. Does that sound right, Andrew? So if you take 13,000, 
you subtracted 245 that we own, so you are roughly, you know, 
13,000--I mean 12,500 of them are not African American owned.
    And how you define ``small'' could be a question to be 
determined, but I would assume at least half of those would be 
characterized as half as small radio stations. There has got to 
be at least 6,000, I think, would be small radio stations.
    Mr. Conyers. This has been very helpful, and I am pleased 
with your contributions, as well as your stamina. Did anyone of 
the four of you want to make any closing comment or observation 
before we bring the hearing to a close?
    Mr. Winston. Only to thank you for holding the hearing, 
Congressman Conyers. I am very pleased that Clarence Avon told 
me to bring a delegation in to meet with you, and in doing so, 
you offered to hold this hearing, and we are delighted you gave 
us the opportunity to be heard.
    Mr. Schwartzman. I would like to thank you, Mr. Chairman, 
and your Committee. And I am hopeful that sooner rather than 
later, all the parties that have a vested interest in this will 
have some meaningful dialogue to move the process along on all 
these issues that we discussed today.
    Ms. Waters. I would like to thank you for your holding the 
meeting, Mr. Chairman.
    Mr. Conyers. Thank you. I hear the dulcet tones of the 
gentlelady from Texas.
    Ms. Jackson Lee. I think you are being at peace today, but 
I just wanted to add another point on the table here, because 
it is about new artists. I know that I am mixing apples and 
oranges, but it is Mr. Winston and Mr. Minter's point on this.
    When we have this roundtable, I think it is important to 
get all of the different deficits, the loss of revenue issues 
that are very important to our minority radio stations, because 
I want their doors open, but then also to try and have the 
financial structure that we need to understand.
    There is something called promotional money--I have to have 
the right term--upwards of $2 million that would be paid to 
radio stations so that artists can be heard. So I think it is 
important that people have the whole financial scheme.
    It may not impact Mr. Minter's station--excuse me, Mr. 
Winston's station, but you understand what I am saying, Mr. 
Winston. There are all kinds of schematic costs that if we were 
to talk about fixing the overall structure, we need to have all 
that information.
    I understand it is called independent record promoters that 
have to pay these fees. So want to make sure that we have all 
those schematic numbers on the table.
    Mr. Winston. Okay. The independent record promoters are not 
addressed in H.R. 848, so I assume you are saying this is 
another issue to be added into the mix.
    Ms. Jackson Lee. Yes, because it is a revenue stream. And I 
think you are making the point that 848 deals with the revenue 
stream, if I am not correct.
    Mr. Winston. Correct.
    Ms. Jackson Lee. Okay.
    Mr. Chairman, I yield back.
    Mr. Conyers. Well, thank you all very, very much and I 
declare this hearing to be concluded.
    [Whereupon, at 4:35 p.m., the Committee was adjourned.]

                                 
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