    [Senate Hearing 113-691]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 113-691

                       REAUTHORIZATION OF THE SATELLITE
                       TELEVISION EXTENSION AND LOCALISM ACT

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

                                    HEARING

                                   BEFORE THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                   __________

                           WEDNESDAY, MARCH 26, 2014

                                   __________

                              Serial No. J-113-54

                                   __________

             Printed for the use of the Committee on the Judiciary

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                           COMMITTEE ON THE JUDICIARY

                      PATRICK J. LEAHY, Vermont, Chairman
    DIANNE FEINSTEIN, California         CHUCK GRASSLEY, Iowa, Ranking
    CHUCK SCHUMER, New York                  Member
    DICK DURBIN, Illinois                ORRIN G. HATCH, Utah
    SHELDON WHITEHOUSE, Rhode Island     JEFF SESSIONS, Alabama
    AMY KLOBUCHAR, Minnesota             LINDSEY GRAHAM, South Carolina
    AL FRANKEN, Minnesota                JOHN CORNYN, Texas
    CHRISTOPHER A. COONS, Delaware       MICHAEL S. LEE, Utah
    RICHARD BLUMENTHAL, Connecticut      TED CRUZ, Texas
    MAZIE HIRONO, Hawaii                 JEFF FLAKE, Arizona
               Kristine Lucius, Chief Counsel and Staff Director
                  Kolan Davis, Republican Chief Staff Director

                                C O N T E N T S

                                  ----------

                        STATEMENTS OF COMMITTEE MEMBERS

                                                                       Page

    Leahy, Patrick J., a U.S. Senator from the State of Vermont......     1
        prepared statement...........................................    22
    Grassley, Charles, a U.S. Senator from the State of Iowa,
      prepared statement.............................................    24

                                   WITNESSES

    Witness List.....................................................    21
    Minea, Alison A., Director and Senior Counsel of Regulatory
      Affairs, DISH Network L.L.C., Washington, DC...................     3
        prepared statement...........................................    27
    Burdick, Marci, Senior Vice President of Broadcasting, Schurz
      Communications, Inc., Mishawaka, Indiana, on behalf of the
      National Association of Broadcasters...........................     4
        prepared statement...........................................    54
    Stutzman, Ellen, Director of Research and Public Policy, Writers
      Guild of America, West, Inc., Los Angeles, California..........     6
    Bergmayer, John, Senior Staff Attorney, Public Knowledge,
      Washington, DC.................................................     8
        prepared statement...........................................    67

                                   QUESTIONS

    Questions submitted by Senator Grassley for Alison A. Minea......    74
    Questions submitted by Senator Grassley for Marci Burdick........    76
    Questions submitted by Senator Grassley for Ellen Stutzman.......    77
    Questions submitted by Senator Klobuchar for Ellen Stutzman......    78
    Questions submitted by Senator Grassley for John Bergmayer.......    79

                                    ANSWERS

    Responses of Alison A. Minea to questions submitted by Senator
      Grassley.......................................................    80
    Responses of Marci Burdick to questions submitted by Senator
      Grassley.......................................................    86
    Responses of Ellen Stutzman to questions submitted by Senator
      Klobuchar......................................................    92
    Responses of Ellen Stutzman to questions submitted by Senator
      Grassley.......................................................    96
    Responses of John Bergmayer to questions submitted by Senator
      Grassley.......................................................   100

                    MISCELLANEOUS SUBMISSIONS FOR THE RECORD

    Motion Picture Association of America, Inc., March 26, 2014,
      statement for the record.......................................   102

     REAUTHORIZATION OF THE SATELLITE TELEVISION EXTENSION AND LOCALISM ACT

                           WEDNESDAY, MARCH 26, 2014

                                           U.S. Senate,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10 a.m., in Room
    SD-226, Dirksen Senate Office Building, Hon. Patrick J. Leahy,
    Chairman of the Committee, presiding.
        Present: Senators Leahy, Klobuchar, Franken, Grassley,
    Hatch, and Flake.

    OPENING STATEMENT OF HON. PATRICK J. LEAHY, A U.S. SENATOR FROM
                          THE STATE OF VERMONT

        Chairman Leahy. Good morning, everybody. The Senate is just
    opening, and I understand that the visiting chaplain today is
    from Iowa, so obviously Senator Grassley is there on the floor
    and will join us in a while. But my good friend, Senator Hatch,
    is here, the most senior Member of the Republican Party, and my
    friend, Amy Klobuchar.
        You know, it does not seem possible, except for those of
    you in the industry, but five years ago, television
    broadcasters turned off their analog signals. They went to
    digital. It is a different type of business and thus a dramatic
    improvement. But even then, we did not even start to imagine
    how the video market has changed. With online platforms like
    Netflix and Amazon and others, you can watch entire seasons of
    television shows on demand. They have also been doing a lot of
    original programming.
        We have had very rapid innovation like this over the years,
    from the cable industry in the 1970s to the satellite industry
    in the 1980s. New challenges, new opportunities, but it has
    been almost 30 years since we passed the Satellite Home Viewer
    Act to address the challenges of it. Now we have the most
    recent iteration of that law: the Satellite Television
    Extension and Localism Act, or STELA.
        STELA grants the satellite industry a compulsory copyright
    license to retransmit distant broadcast television content to
    consumers who are unable to receive a signal over the air. I am
    not telling you anything you do not know, but I am doing this
    because we stream these online and those who are following us
    online. And this license is going to expire at the end of the
    year. Actually, it was, for many years, the only way the
    satellite industry could provide broadcast television content
    to consumers. But broadcast television is most valuable when it
    is appropriately tailored to local markets and provides local
    news, weather, and sports that consumers want to see. We worked
    in 1999 to create a new, permanent license to allow for the
    retransmission of local content by satellite carriers into
    local markets. And I think that has helped to strengthen the
    local focus of American broadcasting, having this local
    television content and satellites.
        It has put two major, nationwide distribution platforms on
    an equal footing with the cable industry. DISH Network and
    DIRECTV give people more choice, particularly in rural areas
    like Vermont where cable is not always available. Even though I
    live seven miles from our State capital, from the Statehouse
    itself, I am on a dirt road where my nearest neighbor is half a
    mile away. So that gives you some idea of why there is no cable
    television there. And because it is on the side of a mountain,
    there is very little over-the-air television.
        But when I am home, I like to be able to see the local news
    and know what is going on throughout the State of Vermont. That
    is why I have worked to ensure that every single satellite
    subscriber in the State has access to local news and weather,
    as I do as a satellite subscriber.
        In 2010, we extended STELA's distant signal license for
    another five years. We updated all three of the compulsory
    copyright licenses for the digital era. We made changes to
    reduce reliance on the distant signal license.
        Now, I recognize that not everyone sees a need for us to
    reauthorize this license. Compulsory copyright licenses
    inherently restrict the rights of content holders to negotiate
    on market-based terms. And retransmissions of out-of-market
    broadcast stations dilute the value of local stations. And I
    share some of these concerns. I look forward to a time when we
    can let this license lapse because virtually all consumers are
    being served by local stations.
        From what I hear around the country, we are not at that
    moment yet. I will move forward with bipartisan legislation to
    reauthorize STELA, but that is why we are having input here
    today. And I will work closely with Senator Grassley and
    Chairman Rockefeller and our counterparts in the House.
        I have had the chance to work both as Chairman and as
    Ranking Member with Senator Hatch, Senator Sessions, and
    Senator Specter on satellite reauthorizations. And as I see
    Senator Grassley arriving, I will hush up and turn it over to
    him. Otherwise, I will just put his statement in the record.

     OPENING STATEMENT OF HON. CHUCK GRASSLEY, A U.S. SENATOR FROM
                           THE STATE OF IOWA

        Senator Grassley. I had already decided I was going to put
    it in the record, so I think we will go ahead, if that is okay
    with you.
        Chairman Leahy. Okay. It will be in the record.
        Senator Grassley. Thank you very much.
        [The prepared statement of Senator Grassley appears as a
    submission for the record.]
        Chairman Leahy. Okay. We will start with Alison Minea, the
    director and senior counsel of regulatory affairs at DISH
    Network. She is responsible for the company's advocacy before
    the FCC on spectrum, media, and satellite issues. She joined
    DISH in February 2010. She received her bachelor's degree from
    Bryn Mawr College and then went out to Colorado and got her law
    degree from the University of Colorado.
        Please go ahead.

     STATEMENT OF ALISON A. MINEA, DIRECTOR AND SENIOR COUNSEL OF
        REGULATORY AFFAIRS, DISH NETWORK L.L.C., WASHINGTON, DC

        Ms. Minea. Good morning. Chairman Leahy, Ranking Member
    Grassley, and Members of the Committee, I appreciate the
    opportunity to testify today. My name is Alison Minea. I am the
    director and senior counsel of regulatory affairs for DISH
    Network, the Nation's third largest pay-TV provider.
        Should STELA be reauthorized? Yes, of course. If not, over
    1.5 million customers, mostly in rural areas, will lose one or
    more of the Big Four network channels. But just extending the
    Act for another five years is not enough. A so-called clean
    reauthorization of the satellite home viewer law would ignore
    the satellite home viewer's number one problem: the increasing
    threat of blackouts.
        The last few times that Congress took up STELA, it was more
    than a clean reauthorization. In 2009, to benefit consumers, it
    confronted the challenge of how to get local broadcast stations
    carried by satellite in all 210 markets. I am proud to say
    that, as a result, DISH Network is the only provider of local
    television service in all 210 markets.
        With this year's STELA reauthorization, there is once again
    a challenge to be met. We believe that Congress should take
    this opportunity to fix the escalating problem of local channel
    blackouts during retransmission consent disputes. There were 12
    blackouts in 2010, and more than 10 times as many in 2013, a
    record-breaking 127.
        We suggest two possible legislative solutions to end
    blackouts and ensure that consumers have continuous access to
    network programming from the pay-TV provider of their choice.
        First, during a retransmission consent impasse, a mandatory
    standstill should be in place to ensure that the broadcast
    signal stays up. If the parties are unable to agree upon terms,
    they should proceed to so-called baseball arbitration, where a
    neutral arbitrator chosen by the parties evaluates each party's
    best offer and selects the one that most accurately reflects a
    fair market price. In all cases, the final rate would apply
    retroactively, ensuring that the broadcaster is fairly
    compensated. Most important, the consumer would remain
    unharmed.
        Second, a more limited solution would allow pay-TV
    providers to import a distant network station when the local
    network affiliate withholds its signal during a retransmission
    consent dispute. This solution would still leave consumers
    without access to certain local programming, like local news,
    sports, and weather, but it would at least provide network
    programming content.
        The thing is that the television landscape has changed
    dramatically since the Cable Act of 1992 established the
    current system of retransmission consent. In those early days,
    the broadcaster negotiated with a single cable company that was
    likely the only pay-TV provider in the same market. Today cable
    operators no longer enjoy local monopolies, and broadcasters
    can now pit pay-TV competitors against one another, all to the
    consumers' detriment. This is not a free market.
        Meanwhile, mom-and-pop local broadcasters continue to
    disappear, as broadcaster conglomeration accelerates. 2013
    alone saw three large broadcaster mergers. The remaining
    separately owed broadcasters increasingly use sidecar
    agreements that further solidify their monopoly power. As a
    result, pay-TV providers are frequently dealing with one entity
    coordinating retransmission negotiations for many separate
    broadcasters in the same local market.
        Not surprisingly, these market developments have led to a
    dramatic increase in blackouts as the broadcasters leverage the
    market imbalance into higher prices. Fortunately Congress can
    do something about it.
        On behalf of DISH's 22,000 employees and more than 14
    million subscribers across the Nation, I strongly encourage the
    Committee to seize this opportunity and update the law to
    reflect marketplace realities and better protect consumers.
        Thank you, and I look forward to answering any questions
    you may have.
        [The prepared statement of Ms. Minea appears as a
    submission for the record.]
        Chairman Leahy. Thank you. And also thank you for being so
    clear on the position you are in on this.
        Ms. Burdick, it is nice to see you again.
        Marci Burdick is senior vice president for Schurz
    Communications, supervises three cable companies, eight
    television stations, and 13 radio stations. She has been in her
    current role since 2003. She is president of the Television
    Board of the National Association of Broadcasters, serves on
    the South Bend Rotary Club, and, of course, the Museum
    Studebaker, which is most appropriate in South Bend. And, of
    course, you are no stranger to Capitol Hill, so good to have
    you here.

         STATEMENT OF MARCI BURDICK, SENIOR VICE PRESIDENT OF
    BROADCASTING, SCHURZ COMMUNICATIONS, INC., MISHAWAKA, INDIANA,
         ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS

        Ms. Burdick. Thank you, Chairman Leahy, Ranking Member
    Grassley, and Members of the Committee. Good morning. I am
    Marci Burdick. I am senior vice president of the Electronic
    Division for Schurz Communications, a mom-and-pop broadcaster.
    We own eight television stations in six States. We have
    operating partnerships with two others. And we own three cable
    companies and 13 radio stations. I am testifying today on
    behalf of the National Association of Broadcasters, where I am
    the TV Board Chair, and our more than 1,300 free, local, over-
    the-air television station members.
        NAB's position on the STELA reauthorization is simple: We
    ask that the Committee take a hard look at whether the distant
    signal license continues to benefit consumers. The distant
    signal license exists for the benefit of satellite companies,
    and it was enacted in a time where technology did not exist for
    satellite to offer local broadcast TV stations to its
    subscribers. If you conclude that the reauthorization of this
    satellite bill is warranted, NAB will support that effort. But
    any reauthorization should be narrow and not a vehicle for
    additional reforms that expand the scope of the license or
    undermine broadcasters' ability to serve our local communities.
        In 1988, 26 years ago, CDs outsold vinyl records for the
    first time, ``Rain Man'' was at the top of the U.S. box office,
    and the Dow Jones Industrial Average was trading at just over
    2,000 points. Also, 26 years ago, Congress enacted the first
    satellite television authorization, the Satellite Home Viewer
    Act, as a means to help spur competition for home video
    delivery against incumbent cable monopolies. Now, two and a
    half decades later, it is clear that this Committee's work was
    a resounding success as the satellite companies have evolved
    into the country's second and third largest pay-TV providers.
    How times have changed.
        The original 1988 Satellite Home Viewer Act enabled
    satellite carriers to retransmit the signals of distant
    television network stations to satellite owners. This is
    commonly referred to as ``the Section 119 license,'' and it is
    the expiring provision of STELA that is before the Committee
    today.
        At the time it was enacted, the distant signal license was
    needed to provide certain unserved households with network
    programming because satellite companies were unable to provide
    local broadcasters. The distant signal license served an
    important purpose in 1988, when the back-yard satellite
    industry was just getting started, and it served its purpose
    again when DISH and DIRECTV first launched their small-receiver
    services in the 1990s. But in 2014, when DISH and DIRECTV have
    achieved a size and scope that makes them dominant market
    leaders, the distant signal license has become a vestige of a
    bygone era, a time before fiber optics, compression technology,
    and digital.
        Congress anticipated that satellite technology would
    evolve, which is why each of the satellite laws has included a
    five-year sunset. Today over 98 percent of all U.S. TV
    households can view their local network affiliates by
    satellite. Further, as DISH has demonstrated, there are no
    longer technical reasons preventing any market from receiving
    their local TV stations. And no public policy justifies
    treating a satellite subscriber in a local-into-local market as
    an unserved household eligible to receive distant network
    signals.
        Let us be clear. Any viewer served by a distant signal is
    deprived of the benefits of locally focused service. A viewer
    in Vermont or Iowa does not benefit from service from a Denver
    ABC affiliate instead of his or her local WVNY or KCRG.
        Local TV stations deliver high-quality local needs,
    weather, and emergency updates to all Americans. This is
    exactly as Congress intended. This local service is one that
    our viewers, your constituents, continue to rely on and one we
    take great pride in continuing to improve every day.
    Broadcasters are continuously looking for ways to enhance
    newscasts, upgrade weather and emergency services, and provide
    accurate, efficient, and speedy coverage of breaking news
    events and their aftermath. No other medium provides the depth
    of coverage we do for locally focused events paired with the
    most watched entertainment programming on prime-time TV.
        In conclusion, if this Committee decides to once again
    reauthorize the distant signal license, NAB will support that
    effort. But with that support, we ask you to take a hard look
    at whether this license continues to serve consumers and urge
    you to reject calls from satellite providers to expand the
    scope of the compulsory Section 119 license in order to give
    them a leg up in market-based retransmission consent
    negotiations. Moreover, we ask that you reject any attempt to
    add wholly unrelated or controversial provisions to a STELA
    bill.
        Thank you for inviting me here today, and I look forward to
    your questions.
        [The prepared statement of Ms. Burdick appears as a
    submission for the record.]
        Chairman Leahy. Well, thank you very much, Ms. Burdick, and
    it is nice to see you again.
        Ms. Burdick. Thank you.
        Chairman Leahy. Our next witness is Ellen Stutzman. She is
    the director of research and public policy for the Writers
    Guild of America, West. In her role with the Writers Guild, she
    coordinates the development of its public policy agenda. She
    received her bachelor's from Cornell and then crossed the
    country to get her MBA from the University of California in Los
    Angeles.
        Ms. Stutzman, we are glad to have you here. Please go
    ahead.

     STATEMENT OF ELLEN STUTZMAN, DIRECTOR OF RESEARCH AND PUBLIC
      POLICY, WRITERS GUILD OF AMERICA, WEST, INC., LOS ANGELES,
                               CALIFORNIA

        Ms. Stutzman. Thank you. Good morning, Chairman Leahy,
    Senator Grassley, and Members of the Committee. My name is
    Ellen Stutzman. I am the director of research and public policy
    for the Writers Guild of America, West. Thank you for the
    opportunity to testify.
        The Guild is a labor organization representing more than
    8,000 professional writers of feature film, TV series, local
    news, and original video programming now available through
    services like Netflix and Amazon. We support reauthorizing
    STELA because we want broadcast content to be as widely
    available as possible. A clean reauthorization will preserve
    access for subscribers while still protecting localism.
        Because there has been much discussion about using this
    process to weaken retransmission in favor of MVPDs, I will
    focus my comments on why we support the existing rules.
        We do so because we want broadcast television to remain a
    healthy source. Broadcasters also air the most original and
    highest-rated content. Last season, 96 of the top 100 most-
    watched programs were on broadcast television. As such, the
    broadcast networks are responsible for a great deal of the
    must-have programming that makes an MVPD service attractive.
    And of key interest to our members and other entertainment
    workers, broadcast employment standards are the best in the
    industry.
        Broadcasters continue to produce content in a time of
    increased competition from cable networks and online video
    providers. Retransmission allows broadcasters to diversify
    revenue and adapt to a media landscape where they no longer
    account for all of television viewing.
        The existing rules are necessary because four MVPDs control
    two-thirds of the market. DIRECTV and DISH are the second and
    third largest distributors and account for one-third of all
    MVPD customers. And the proposed Comcast-Time Warner merger,
    which we oppose, would combine the first and fourth largest
    MVPDs. Concentration can be even greater at a local level,
    where a single distributor can account for the majority of
    subscribers. Retransmission rules help balance the power
    between broadcasters and MVPDs.
        The Guild is concerned with the rising costs of cable, but
    we cannot deny that television today offers so much more than
    even a few years ago. We have transitioned from a world where
    networks controlled the schedule to where content is available
    whenever and wherever consumers want. Retransmission
    negotiations include the on-demand rights that make this
    possible--rights that provide tremendous value to MVPDs.
        It is appropriate that broadcasters be fairly compensated
    for this contribution. Retransmission fees are a small portion
    of the cable bill, and we do not think weakening the rules is
    the answer to rising prices.
        Many of the proposed changes would simply give more power
    to distributors. Mandatory interim carriage in the event of a
    dispute would significantly reduce an MVPD's incentive to
    engage in good-faith negotiations. Similarly, allowing distant-
    signal importation during a dispute would sacrifice localism in
    favor of enhancing MVPD power.
        It is unfortunate when viewers lose access to the content
    our members create because of a blackout, but we recognize that
    such action is sometimes necessary. The loss of viewers and
    revenue presented by a signal interruption remains a sufficient
    incentive for a broadcaster to make a fair deal.
        In sum, this is not the appropriate vehicle to begin making
    selective changes to industry regulations. The Guild would,
    however, welcome a broader review of the video marketplace. We
    think changes that include requiring networks to air
    independent content, expanding the definition of an MVPD to
    promote more virtual competitors, and changing content bundling
    practices would do more to produce a vibrant, competitive
    market.
        Simply put, there are better ways to increase competition
    and address rising costs to consumers than unfairly and
    asymmetrically gutting the negotiating rights of broadcasters.
        Thank you for your attention, and I look forward to your
    questions.
        [The prepared statement of Ms. Stutzman was not available
    at the time of publication.]
        Chairman Leahy. Well, thank you very much.
        And our last witness is John Bergmayer, senior staff
    attorney at the Washington, DC-based Public Knowledge. He
    specializes in telecommunications and intellectual property
    issues. He is a member of the DC and Colorado Bar Associations,
    received his bachelor's degree from Colorado State University,
    and his law degree from the University of Colorado Law School.
        Mr. Bergmayer, please go ahead, sir.

      STATEMENT OF JOHN BERGMAYER, SENIOR STAFF ATTORNEY, PUBLIC
                       KNOWLEDGE, WASHINGTON, DC

        Mr. Bergmayer. Chairman Leahy, Ranking Member Grassley, and
    Members of the Committee, thank you for the opportunity to
    appear here today.
        First, I have a few remarks on issues specific to STELA,
    and then I will present a few broader ideas that will make the
    video marketplace more competitive and affordable.
        Congress must reauthorize STELA. This law ensures that
    satellite television companies can continue to retransmit
    broadcast stations to their customers, and it is an important
    building block of video competition. The success of satellite
    should be a lesson for policymakers about the importance of
    fostering new models of video competition. Congress should not
    put the video competition we have already achieved at risk by
    failing to ensure that satellite viewers can continue to access
    popular programming without interruption.
        Given the importance of STELA to maintaining competition in
    the video marketplace, Congress should reauthorize STELA
    indefinitely and without sunset. There is no reason for
    Congress to create artificial crises every few years. However,
    if Congress does choose to reauthorize STELA for only a few
    years, it should tie its expiration to the expiration of other
    video marketplace rules, such as distant signal rules, basic
    tier buy-through, and similar provisions. This would ensure
    that it is not just the satellite industry that has to come to
    Congress hat in hand on such a regular basis.
        STELA reauthorization also presents the opportunity to give
    customers more reliable and relevant programming with two
    simple reforms. First, Congress can protect consumers from the
    increased rate of programming blackouts due to retransmission
    consent negotiations. Retransmission consent negotiations have
    been compared to a fight between two elephants where the
    consumers are the grass. Ideally a gradual phase-out of the
    retransmission consent regime, coupled with the elimination of
    compulsory copyright licenses, would simplify the system and
    eliminate statutory middlemen. If Congress maintains the
    current system of retransmission consent, it should act to
    prevent consumers from being trampled by the elephants.
        It should direct the FCC to adopt rules prohibiting conduct
    deemed to violate the good-faith negotiation provision and
    clarifying existing FCC statutory authority to mandate
    arbitration and interim carriage. The consumer benefit from
    these reforms is twofold:
        First, they would prevent blackouts, ensuring that TV
    viewers are not held hostage as a negotiating tactic between
    media companies.
        Second, they would slow down the rate of increases in
    carriage fees paid by multichannel video programming
    distributors, or MVPDs, to broadcasters, in turn slowing the
    rate at which consumer pay-TV bills increase.
        A second simple reform that can be tied to STELA would be
    to allow the FCC to modify designated market areas for
    broadcast TV carriage on satellite, as it already can with
    cable. In previous authorizations, Congress has commissioned
    studies of this so-called orphan county issue. This time,
    Congress should empower the FCC to make these corrections.
        The success of satellite TV points to the best long-term
    approach for improving the video marketplace: promoting
    competition from new providers. Technology has dramatically
    changed the possibilities for how the public can watch
    television, and yet many Americans are locked into a television
    business model that limits competition and choice. Most of the
    most popular programming is not available except through
    traditional bundled subscription TV services, and these grow
    more expensive year after year.
        An outdated regulatory structure and a trend toward
    industry consolidation, such as the Comcast-Time Warner Cable
    merger, which we likewise oppose, allows incumbents to protect
    themselves and fend off new competition. It is time to revamp
    that structure. A video marketplace that served the public
    interest would align the interests of viewers, creators, and
    distributors and not set one against the other.
        Online video can provide much needed competition in the
    video marketplace. Congress and the FCC can help it in three
    easy ways:
        First, they can clear away some of the outdated rules that
    hold back competition and keep prices high. I have mentioned
    one example in the dysfunctional retransmission consent system.
    The basic tier buy-through rule that prohibits broadcast
    stations from being offered a la carte by cable companies is
    another. The Congress should be cautious not to weaken parts of
    the statute that benefit consumers, such as Section 629 of the
    Communications Act, which promotes video device competition.
        Second, Congress and the FCC can extend the successful
    policies such as program access to online providers. These
    policies are designed to mitigate market power by large video
    providers. They should not be repealed until effective
    competition develops.
        Third, Congress and the FCC can protect online openness.
    Online video needs an open Internet to thrive. In addition to
    supporting the FCC and protecting the open interest, Congress
    should encourage the FCC to examine whether discriminatory data
    caps hold back online video competition and whether large ISPs
    are using network interconnection agreements, sometimes called
    ``peering agreements,'' anticompetitively. This will increase
    competition, meaning lower prices, better services, and more
    control for consumers.
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Bergmayer appears as a
    submission for the record.]
        Chairman Leahy. Well, thank you very much. Let me start off
    with just a couple questions. Then we will go back and forth
    here. And maybe, Ms. Stutzman, this is best for you.
        Whenever we are considering satellite reauthorization, we
    talk about the importance of competition in the video
    marketplace. The original Satellite Home Viewer Act, I think we
    can all agree, the satellite industry was in its infancy. Now
    the industry has grown into a legitimate competitor to cable.
        How important is a competitive video market to writers and
    creators of content?
        Ms. Stutzman. Thank you for your question. It is incredibly
    important. We currently do not think that the MVPD market is
    competitive enough. In most markets, consumers can choose
    between a cable provider and two satellite providers, and we
    would like to see more competition. But what this amounts to is
    these companies are powerful gatekeepers, and they can decide
    what content reaches consumers, and that has a negative impact
    on the stories that are told, on diverse and independent
    content, and ultimately, you know, what our members do. So a
    competitive marketplace is incredibly important.
        Chairman Leahy. Ms. Burdick, I want to talk about rural
    areas and what might happen in smaller areas, and I know you
    are aware of that. I am not being parochial, but to use an
    example, a State like Vermont could easily be dominated by
    major television markets like New York. How does the system put
    in place by STELA actually help us to have local content?
        Ms. Burdick. Well, I think--and you will remember this
    better than I because you were here--the Section 122 license,
    which requires and preserves localism, has been a wholesale
    success. DISH is now in every local market in the country.
    Direct could be. There is no technological barrier. So localism
    was definitely encouraged and preserved under the Section 122
    license, which is now permanent.
        Our concern is with the distant signal, and as you rightly
    point out, when a Los Angeles or a New York television station
    is imported into Vermont, that localism is undermined when
    local television stations are not seen. And when local
    television stations are not seen, their advertisers are not
    seen. Ninety percent of our revenue comes from advertising, so
    it diminishes our economics.
        Chairman Leahy. Thank you. And, Ms. Minea, we have heard in
    other hearings that there are between 1 and 1.5 million
    customers relying on the distant signal license for broadcast
    television programming. DISH's testimony today is that it
    numbers over 1.5 million. Do you know what the exact number or
    as exact as you can get?
        Ms. Minea. Thank you for your question, Chairman Leahy. I
    believe the number is approximately 1.56. DISH and DIRECTV, in
    an effort to answer this question, confidentially submitted
    some subscriber numbers to the Satellite Industry Association,
    which then compiled them together to arrive at that number.
        Chairman Leahy. But the number of subscribers served with
    distant signals is lower than when we enacted the local license
    in 1999. Is that correct?
        Ms. Minea. Over time, DISH, as you know, has been expanding
    its local-into-local service so that the need for the distant
    signal license has diminished, and I could not agree with Ms.
    Burdick more that localism is important and, wherever possible,
    you know, we want to provide people with their local broadcast
    stations.
        Nonetheless, the Section 119 distant signal license still
    serves a very important role for those approximately 1.5
    million consumers for, among other things, short markets, which
    are markets that are typically smaller and rural markets that
    do not have a local network affiliate. And the distant signal
    license allows DISH to import a replacement network station to
    fill out a complement of Big Four stations for those consumers.
        Chairman Leahy. Some of them are RVs and trucks and things
    like that. Is that correct?
        Ms. Minea. Yes, Chairman Leahy, the distant signal license
    also allows a satellite carrier to provide distant network
    stations to subscribers in recreational vehicles and commercial
    trucks, subject to some paperwork and verification
    requirements.
        Chairman Leahy. We are talking about what we are going to
    do and what House Energy and what Commerce is going to do. Let
    me ask you this: Would DISH oppose a reauthorization of STELA
    that does not address broader issues related to the video
    market, such as retransmission consent?
        Ms. Minea. Thanks for your question, and it is an important
    one. We absolutely want the Section 119 license reauthorized,
    but we believe that more must be done and can be done. As I
    noted in my testimony, blackouts of local network station
    signals during disputes are increasing. There were 12 in 2010
    and 127 in 2013. And consumers cannot wait. Blackouts need to
    be dealt with now, and we believe that the STELA
    reauthorization is extremely the right opportunity to address
    this issue.
        Chairman Leahy. Thank you. I am sure there are going to be
    some more questions on this to all of you. As you know, it is
    going to be a major part of the debate.
        Senator Grassley.
        Senator Grassley. I am going to ask each of you three
    questions, and I would like a short answer because, quite
    frankly, the idea is to summarize some things you have already
    said in your statement.
        The Copyright Office has suggested in their recommendations
    of Section 302 report phasing out three statutory licenses of
    Title 17. Now, I have already heard from you about Section 119,
    so the question of the other three: In your view, is the
    Section 119 statutory license still necessary in today's
    marketplace? We will start with you, Ms. Burdick.
        Ms. Burdick. Is Section 119 still----
        Senator Grassley. Yes.
        Ms. Burdick. We question whether Section 119 is still
    necessary when local broadcasters can be seen in all television
    markets of the country.
        Senator Grassley. Ms. Stutzman.
        Ms. Stutzman. At this point, we are in favor of
    reauthorizing it because we want the content to be available
    where it is not.
        Senator Grassley. Okay.
        Mr. Bergmayer. Senator, in general, we are in favor of
    phasing out compulsory licenses. It just has to be done very
    cautiously, according to a timetable, and we need to avoid the
    situation where an MVPD might be double paying because it does
    not have a compulsory license for the copyright and yet still
    has to negotiate for retransmission consent. And that applies
    to all the cable and satellite compulsory licenses.
        Senator Grassley. Okay. Then for all of you, starting with
    Alison, if Congress were not to reauthorize STELA, how would
    this affect consumers? What sort of disruptions, if any, are
    likely to occur if the three statutory licenses were repealed?
    And if that happened, what are the benefits or harms with
    respect to letting the law expire?
        Ms. Minea. That is a great question. If I could just
    clarify, are you asking specifically with regard to Section 119
    or with respect to other copyright----
        Senator Grassley. Now it is more general. So if I
    misinterpreted your answer to Senator Leahy and you want to
    answer what I previously had asked, I would like to hear your
    view on the question of whether or not Section 119 is still
    necessary in today's marketplace.
        Ms. Minea. Thank you, and I share your concern for making
    sure that consumers are not disrupted as laws are updated.
        We do believe that the Section 119 license continues to
    play an important role, and statutory licensing in general,
    such as the 122 license, I think continues to be necessary to
    ensure that consumers get local broadcast stations.
        There may be possibilities for overhauling the entire
    system and taking away the statutory licenses, but that would
    be a very complex process. There is a thicket of government
    regulations that govern the system, so we would definitely urge
    caution in looking at whether or not the statutory licenses
    could be eliminated.
        Senator Grassley. Ms. Burdick, on my second question.
        Ms. Burdick. I would agree with both ends of the table that
    eliminating all copyright would be exceptionally complex. I
    worry as a local broadcaster--I try to envision a day where I
    would have to go out and negotiate all of those rights as a
    local broadcaster. But since Section 119 is the only provision
    that is sunsetting and the distant signal importation, I would
    say that in terms of the need for that, only DISH and Direct
    know, of that 1.5 million number that we have all heard, how
    many of those customers are grandfathered and actually could be
    receiving local-into-local. So we really do not know. Only they
    know.
        Senator Grassley. So disruption would be the answer, the
    effect on the consumer that I was kind of concentrating my
    question on.
        Ms. Burdick. I think the disruptions would be minimal and
    maybe even less than the 1.5 million.
        Senator Grassley. Okay. Ms. Stutzman.
        Ms. Stutzman. Thank you. We think the statutory licenses
    could be retired, and there might possibly be a marketplace
    solution to negotiating the copyright. And we are not asking
    for that at this time, but certainly if retransmission consent
    rule changes were contemplated, we think that might be an
    appropriate consideration. Thank you.
        Senator Grassley. Mr. Bergmayer, do you have something to
    add?
        Mr. Bergmayer. Sure. Even if you accept the premise that
    the number of customers that would be disrupted is relatively
    small, I would just look to where those customers are located.
    They would be predominantly rural and perhaps low-income
    customers that I think Congress should take extra care to
    protect.
        Senator Grassley. This will have to be my last question.
    Time is running out. Do you have a position on the length of
    STELA reauthorization if Congress decides to extend it?
        Ms. Minea. Senator Grassley, ideally we think that the
    Section 119 license should be reauthorized permanently. Failing
    that, we would like it reauthorized for as long as possible.
        Senator Grassley. Ms. Burdick.
        Ms. Burdick. We would absolutely disagree that a distant
    signal law should be made permanent, and there is less of a
    need every single day. If this Committee thinks it needs to be
    reauthorized for five years, we would support that.
        Chairman Leahy. Okay.
        Ms. Stutzman. We would also support a five-year
    reauthorization.
        Senator Grassley. Mr. Bergmayer.
        Mr. Bergmayer. I think one approach that Congress could
    take is tie its expiration to expiration of provisions from
    around the industry so different people's oxes get gored.
        Senator Grassley. I am done with my presentation today, but
    I will have questions for each of you, and quite a few
    questions for DISH, if you would be willing to answer them in
    writing.
        Ms. Minea. Certainly. Thank you.
        [The questions of Senator Grassley appear as submissions
    for the record.]
        Senator Grassley. Thank you.
        Chairman Leahy. Senator Klobuchar.
        Senator Klobuchar. Thank you very much, Mr. Chairman. I
    always like to follow a statement about goring oxes when I am
    going to ask questions.
        [Laughter.]
        Senator Klobuchar. Thank you for holding this important
    hearing. Satellite service is really important, especially in
    the rural part of Senator Franken's and my State. It is the
    only way that many of the 650,000 satellite subscribers in our
    State can get access to video services.
        I think we have seen subsequent updates to this law that
    give an additional boost to competition by ensuring satellite
    competitors could offer local broadcast channels to their
    customers. I can tell you that local broadcasting is an
    important part of life in America. In our State it is the way
    that many people actually get updates on floods, problems that
    occur in the local areas, tornadoes. It has been actually not
    just key for our local programming and bringing people
    together; it has also been key for some of our emergencies that
    we have had in our State over the years.
        So I want to start here with you, Ms. Minea. Is
    reauthorization of this Act--I think you have made the case--
    still necessary? And what changes would you like to see?
        Ms. Minea. Thanks for your question, Senator Klobuchar. So,
    yes, the Section 119 license continues to be necessary.
    Minnesota actually has a short market. Mankato, Minnesota,
    which does not have an ABC or an NBC affiliate, so one example
    of something that would go away if 119 were not reauthorized is
    our inability to import an ABC and an NBC from the Twin Cities
    market into Mankato.
        More broadly, as I said, we believe that the
    reauthorization of STELA is an important opportunity to fix the
    problem of blackouts. Consumers cannot wait for reforms that
    may come in the future. This is now the time to stop this now.
    So as I said in my testimony, we propose a standstill and
    baseball-style arbitration as our first choice to deal with the
    problem of blackouts now.
        Senator Klobuchar. Okay. Ms. Burdick, one of our goals here
    was to promote localism. Do you think that it has done its job?
    And what more can be done to get at Congress' intent to promote
    localism?
        Ms. Burdick. I think anything you can do to incentivize all
    providers to be in all local markets would be a positive thing.
    As DISH has demonstrated, they are, in fact, in all 210
    markets. If that can be incentivized some other way, that would
    be a good thing, providing choice for consumers and
    competition.
        Senator Klobuchar. As you all know, this Committee is soon
    going to be holding a hearing on the merger between Comcast and
    Time Warner Cable. This combination has the potential for
    profound impact on the competitive landscape.
        Ms. Minea, what is DISH's view on the merger? And are there
    any concerns from your standpoint that the Committee should be
    aware of as we consider the impact the merger will have?
        Ms. Minea. Senator Klobuchar, we have read those news
    reports, and as far as we know, there are not any applications
    before the FCC. At this point we just have not had an
    opportunity to develop a position, so I am not able to comment
    on it.
        Senator Klobuchar. Okay. Does anyone else want to comment
    on it? I just thought you would. I do not know why I thought
    you would.
        [Laughter.]
        Senator Klobuchar. You want to gore another ox, Mr.
    Bergmayer, please.
        Mr. Bergmayer. Yes, I believe that the Comcast-Time Warner
    merger would be disastrous for programmers, for independent
    creators, and for TV viewers. It would raise prices. It would
    create a single gatekeeper for programming in broadband of
    almost unprecedented power, in addition to the vertical
    integration harms which just happened due to Comcast's
    unfortunate acquisition of NBCUniversal. So in that hearing, we
    are looking forward to hearing your views on the dangers of
    this merger.
        Senator Klobuchar. Back to some satellite. Minnesota, as we
    know--I see the satellite dishes all over our State, especially
    in the rural areas. There is certainly a higher percentage of
    rural homes that have satellite. Would that be true, Ms. Minea?
        Ms. Minea. Senator Klobuchar, I want to make sure I
    understand your question. Are you asking specifically about
    rural customers in Minnesota relative to other States?
        Senator Klobuchar. Yes--no, no. I am asking about rural
    areas having more of them than in urban areas.
        Ms. Minea. Of course. Yes, rural customers
    disproportionately depend upon satellite. That was true in the
    early days of satellite, and it continues to be true today.
    Indeed, that is why the expiration of the Section 119 license
    would have a disproportionately larger effect on rural
    subscribers to DISH and DIRECTV, because in many cases, it is
    rural subscribers who live in short markets and rural
    subscribers who live outside of the over-the-air footprint of
    broadcasters.
        Senator Klobuchar. Ms. Burdick, during the last STELA
    reauthorization--I feel that I have been here for not that
    long, but I was here for that, and I am also on the Commerce
    Committee, so I live and breathe STELA--there were concerns
    about the way that DMAs were defined for local broadcasters and
    the issue of orphan counties. This is an issue I spoke about
    during the Judiciary mark-up and in the Commerce Committee
    consideration of STELA five years ago.
        Can you talk about how DMAs are still important to local
    advertising and the economies and what the status is of that?
        Ms. Burdick. As I mentioned earlier, 90 percent of our
    revenue comes from advertising, and the fact is that the DMAs
    were determined where the major population centers were
    concentrated. And so that is still extremely important to us.
        But as it relates to orphan counties, there are provisions
    currently available to solve many of those issues. We have been
    involved with several of them. And as an example, I live--my
    front yard is in Michigan. My back yard is in Indiana. So while
    I vote in Congressman Upton's district, I am served by South
    Bend television. The MVPD in my area reserves a channel for
    unduplicated local programming, so the Michigan broadcaster
    with its local news and information can be on the air while the
    South Bend CBS affiliate is protected with its syndicated and
    network exclusive programming. So there are solutions currently
    available to solve many of those issues.
        Senator Klobuchar. Okay. Thank you very much, and I will
    put some questions on the record for you, Ms. Stutzman. Thank
    you.
        [The questions of Senator Klobuchar appear as submissions
    for the record.]
        Chairman Leahy. Thank you very much.
        Senator Hatch.
        Senator Hatch. Well, I want to thank you all for coming
    today. Thank you, Mr. Chairman. My thanks to all of you for
    coming here today to help us learn about some of these
    outstanding issues, both those that are directly before us in
    deciding whether to reauthorize the Satellite and Television
    Extension and Localism Act of 2010, or STELA, as well as some
    of the broader reforms that have been proposed.
        Now, let me just ask you this, Ms. Burdick--and we welcome
    you especially. I understand that studios own the content and
    should be able to control how it is being used, but we have to
    be realistic about trends toward streaming television online.
        During a dispute between a cable or satellite provider and
    a broadcaster, can online viewers who specifically choose not
    to have satellite or cable, can they also be affected?
        Ms. Burdick. So there are many ways in which content is
    provided online, and as a local broadcaster, I can control my
    content online in a different way than I can offer network or
    syndicated programming online. You know, I think you are
    probably speaking of the CBS issue with Time Warner recently,
    and I think what was lost in all of that is that those
    agreements went back to 2008, before the Internet was
    ubiquitous. And the outcome of that was that a holistic
    agreement was reached in which Internet and video rights were
    resolved. And so the retransmission consent discussion is far
    more robust than just video rights.
        Senator Hatch. All right. Ms. Minea, let me ask you this
    question: As you know, blackouts are related to the issue of
    retransmission consent, and I am trying to understand whether
    there is a need for reform here or not. On the one hand, a
    DIRECTV executive testified in June that, ``Between 2010 and
    2015, DIRECTV's retransmission consent costs will increase 600
    percent per subscriber.''
        On the other hand, Ms. Burdick has testified that, ``While
    only two cents of every dollar of cable video revenue goes to
    retransmission consent, nearly 20 cents goes to cable
    programming fees.''
        Now, Ms. Minea, I realize that I quoted a figure from
    DIRECTV, but assuming that DISH is facing similar increases,
    when we talk about a number like 600 percent, what are we
    talking about in dollars and cents? And how much money per
    subscriber are we talking about here?
        Ms. Minea. Thanks for your question, Senator Hatch. The
    particular breakdown of the numbers is not something that we
    have released for confidentiality reasons. What I can tell you
    is that satellite TV is part of a very competitive market for
    pay-TV providers. We have telephone companies, we have cable
    companies, we have DIRECTV against whom we compete, so we have
    to fight like crazy to keep our costs down. Programming costs
    generally are our biggest cost center, and when we see
    broadcast stations who are asking for 400-percent increases for
    our contract renewal, it really hurts. And at some point we
    have to start passing along some of those costs to our
    subscribers. We do not believe it is sustainable, and that is
    why we think that reform is needed.
        Senator Hatch. Ms. Burdick, could you comment on some of
    these increases?
        Ms. Burdick. Thank you. Math was never my strong suit, but
    when you start at zero, it is pretty easy to get to 400 percent
    pretty darn quickly.
        I am negotiating against a company represented by Ms. Minea
    to my right that said to me at the outset of the negotiation,
    ``I do not care if you are dark because I churn more customers
    in a year than your company represents.'' And you know what?
    That is the truth.
        Broadcasters are never off. We always are on the air, local
    television broadcasters. We may have a contractual dispute from
    time to time with DISH or DIRECT, but the only thing preventing
    a customer from moving to another provider is their late fee
    and termination requirements that one customer told me--because
    I take all those calls from customers. He said, ``It will cost
    me $429 to switch.'' The local broadcasters are always on.
        Senator Hatch. Well, let me just ask you this: While
    retransmission consent may be beyond the scope of our
    reauthorization of STELA, I would like to focus on a proposal
    regarding joint sales agreements. Could you tell us how joint
    sales agreements are helpful for broadcasters?
        Ms. Burdick. Sure. Let me speak from our own experience. We
    have three. We have one in Wichita, Kansas, where we own the
    dominant CBS station, and we helped Entravision enter the
    market faster with a shared service and a joint sales
    arrangement. The net effect of that is we are providing the
    only local news broadcasting in Spanish in the State of Kansas,
    something they could not afford on their own. We helped them
    lower their costs.
        The other side of the equation is in Augusta, Georgia,
    where I had an NBC affiliate, the only one that our company
    owned that was not a leader in its market, and for 12 years
    we--after launching local news, we sustained losses every year
    for 12 years. And when the recession hit and the remainder of
    our company could not prop it up, we had two choices: Go out of
    the local news business because that is where the bulk of our
    expense is, or enter into an agreement where we could share
    costs with other broadcasters. And we did that with Media
    General, preserving a local broadcaster in the market.
        Senator Hatch. Well, thank you. My time is up, but let me
    just give you a chance, Ms. Minea, to respond. Why do cable and
    satellite producers see them as being anticompetitive?
        Ms. Minea. Thanks so much for your question, Senator Hatch,
    and if you would indulge me, I just want to respond briefly to
    what Ms. Burdick said.
        The way that we see it is that blackouts are 100 percent
    the fault of the broadcaster. We never, ever want to take the
    signal down. That is why we are asking for a standstill. Yes,
    it may take time for us to hammer out the deal, but consumers
    should never lose their signal. And in some cases, the signal
    may be free over the air, but consumers should not have to be
    put in the position of choosing which provider to switch to.
    They may have chosen DISH because we have the lowest price and
    the best technology. They should not even have to be in a
    position where they have to switch. Blackouts should never
    happen.
        And as to your other question, Senator Hatch, in terms of
    these joint sales agreements, there are lots of different sorts
    of sidecar agreements. An instance where two broadcasters need
    to share a news helicopter to save costs, we are not concerned
    about that. We can absolutely see why that might make sense.
        Our concern is really just focused on those agreements
    under which separately owned broadcasters get together and
    negotiate jointly for retransmission consent. And, again, this
    all ties back to blackouts. Three stations negotiate jointly.
    That means if we cannot reach a deal by the deadline, that is
    three stations that are blacked out rather than just one. So,
    again, it is an even greater impact to the customer than if we
    were negotiating with just one at a time. Thank you.
        Senator Hatch. Thanks, Mr. Chairman.
        Chairman Leahy. Senator Franken.
        Senator Franken. Thank you, Mr. Chairman, for calling this
    hearing, and thank you all for being here. This hearing marks
    the beginning of a process that will result in more competition
    for consumers, I hope. Congress has passing satellite TV laws
    since the 1980s, but the cable industry remains the dominant
    force in the marketplace. I believe that the cable industry
    could become even more powerful if Comcast is allowed to
    acquire Time Warner Cable. I strongly oppose this acquisition,
    and it is a good reminder that consumers need more competition
    from satellite TV.
        I know that the satellite companies, the cable industry,
    and the broadcasters all have their priorities in this bill,
    but one thing is clear: that the best interests of the
    consumers must guide this process. If Congress does not act
    before this law expires, many people could wake up on January
    1st without access to local stations that they rely on for news
    and programming. And Senator Klobuchar is absolutely right.
    They are very useful in emergencies, and we have had a lot of
    school closings this winter.
        As I said, consumers have to be our focus, and that is why
    I am so concerned about this Comcast-Time Warner Cable
    acquisition. I believe it is a terrible deal for consumers.
        Ms. Stutzman, I am a member of the Writers Guild, so I am
    very sympathetic to anything you say.
        [Laughter.]
        Senator Franken. You recently submitted a filing urging the
    FCC to reject this deal. Can you explain why you did this and
    what the acquisition could mean for both satellite and cable
    customers?
        Ms. Stutzman. Thank you for your question, Senator. We
    share your concern and appreciate how vocal you have been about
    the merger.
        We think the FCC should reject the deal because it is not
    in the public interest, it is anticompetitive, and that is a
    bad deal for content creators as well as consumers.
        Comcast is already the largest cable and Internet service
    provider, and allowing them to get bigger by acquiring eight or
    10 million customers will make them too powerful of a content
    gatekeeper.
        On the cable side, they can use this to cut affiliate fees
    paid to broadcast and cable networks, which reduces the money
    available to invest in content, which harms viewers. The
    company will also control at least one-third of the broadband
    Internet market, and this is where all of the new video
    competition is coming from. And we fear that they will use
    their power in that market to steer the direction away from new
    providers like Amazon and Netflix to favor their own content,
    which obviously limits what consumers will be able to see.
        And the Internet, you know, the broadband Internet market
    is even less competitive than the cable market. Most people
    really have a choice of one or two Internet providers when you
    are talking about high-speed Internet that could be used to
    watch video.
        And so we just think this will limit choice. It will
    probably increase prices, and it will harm the content that
    consumers can see.
        Senator Franken. And, Mr. Bergmayer, you talked about
    peering agreements, and I think when we talk about an open
    Internet, we want to be talking about that.
        This is about blackouts again. There is a basic dispute
    here, I guess, and so I will--Ms. Minea, you have your
    position, and, Ms. Stutzman, you have yours. And anybody can
    weigh in on this. Can anybody here get to the nub of the
    difference? And how can we avoid blackouts for consumers? But
    what is the disagreement here? Go ahead.
        Mr. Bergmayer. Senator, I think everyone at this table
    agrees that broadcasters ought to be paid a fair value for
    their content. I think the disagreement is about whether
    basically pulling the signal during the course of a contract
    dispute is a legitimate negotiating tactic or not. I happen to
    think that it is not, especially because the way that TV works,
    you have these must-see events that happen periodically, and I
    do not think it is a coincidence that very often these disputes
    are timed to happen near those events, which I think leads to
    an unfair situation. But ultimately I am not saying that I
    think that cable or satellite ought to get access to this
    content for free.
        Senator Franken. I know that Ms. Minea talked about a
    baseball sort of arbitration, a way of resolving this. Ms.
    Stutzman, Ms. Burdick, do you have opinions on that?
        Ms. Burdick. Yes, arbitration will not resolve blackouts
    any more quickly. It will lengthen the process, and it will add
    expense to local broadcasters like me. I do not have a phalanx
    of attorneys who negotiate these deals 24/7, like the bigger
    MVPDs.
        I would like to correct one thing John said. Both parties
    in a contract negotiation determine its length of time. So to
    suggest that broadcasters are somehow pulling a signal before a
    must-see event is not correct. Both parties agree to the length
    of terms, and they both know what that is.
        Ms. Minea. May I briefly respond?
        Senator Franken. I would say yes.
        [Laughter.]
        Chairman Leahy. I will say yes, too, but votes have
    started, and we are going to have to wrap up all of this in
    seven minutes.
        Senator Franken. Really?
        Chairman Leahy. But go ahead.
        Senator Franken. Okay. Well, I actually----
        Chairman Leahy. And we have to have Senator Flake have a
    chance, but go ahead and respond.
        Ms. Minea. I will be very brief. We do not want blackouts,
    and the reason we have proposed baseball-style arbitration in
    conjunction with the standstill is there will be no blackout.
    Consumers will not be impacted. They will not lose their
    programming, and the arbitration will produce a fair market
    prices, because both sides will have an incentive to submit
    their best offer, and the arbitrator can choose. But in the
    meantime, consumers are not harmed.
        Ms. Stutzman. But content continues to be available over
    the air, and I really think that needs to be promoted to
    consumers because most households can receive broadcast
    programming using a digital antenna. And so it remains there
    rather than giving more power to an MVPD in a negotiation.
        Chairman Leahy. Thank you.
        Senator Franken. Thank you, Mr. Chairman.
        Chairman Leahy. Senator Flake.
        Senator Flake. Thank you. I apologize if I am plowing old
    ground here, and I apologize for not being here. But if you can
    just tell me--and let us start with Ms. Minea--the structure
    that we have, the retransmission structure, started in 1992
    with the goal of maintaining or enhancing local content, do you
    feel that it has achieved that goal, the structure that we
    have?
        Ms. Minea. Thanks for the question, Senator Flake. Yes, in
    the sense that local broadcast stations are more available now
    on DISH Network than they ever have been before. We offer local
    broadcast stations in all 210 markets. So the current statutory
    framework has allowed us to do that, and all I would say is
    that, unfortunately, because of the increased competition among
    pay-TV providers, meanwhile there is only one NBC affiliate,
    for example, per market, it is not a level playing field. That
    is what is causing the blackouts.
        So we believe in localism, we believe it is working, and we
    just think that STELA could do more to protect consumers.
        Senator Flake. Okay. Ms. Burdick.
        Ms. Burdick. So it was 1992 that broadcasters were allowed
    to negotiate for their signal. It was really not until 2006
    that any broadcaster was paid, and that really was a benefit of
    satellite increasing its presence in each of the markets so
    there was a competitor.
        Retransmission consent is working, although while broadcast
    television accounts for about 40 percent of the viewing, we get
    about six to seven percent of the revenue. So we still have a
    ways to go in trying to negotiate a fair value for the product
    we bring, investing back into local communities with local
    news, weather, and sports.
        Senator Flake. All right. Ms. Stutzman.
        Ms. Stutzman. I think retransmission consent negotiations
    are very important because broadcast stations operate in a
    television landscape where there are hundreds of cable channels
    that consumers can choose from, and those cable networks have a
    dual revenue stream. And so this is really broadcast adapting
    to that model, diversifying their revenue sources, and keeping
    broadcast healthy. So we think it is very important.
        Senator Flake. All right.
        Mr. Bergmayer. And I think a lot of aspects of the 1992
    Cable Act were successful. However, I think that the general
    approach that Congress took in 1976 of first creating the cable
    compulsory license and then, fast-forward, creating a new right
    that is sort of layered on top of that, so we have the
    simultaneous existence of copyrights and then a broadcaster has
    a signal right and that is where the negotiation takes place,
    is just a little too complicated. That is why we have advocated
    simplifying the system.
        Senator Flake. Thank you, Mr. Chairman.
        Chairman Leahy. If there are no further questions, then I
    would thank you all. But I know that some will have questions
    for the record, and I would ask you to return them as quickly
    as you can.
        Thank you all very much for being here.
        [Whereupon, at 11:06 a.m., the Committee was adjourned.]

                                A P P E N D I X

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                  Prepared Statement of Chairman Patrick Leahy

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              Prepared Statement of Ranking Member Chuck Grassley

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                     Prepared Statement of Alison A. Minea

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                      Prepared Statement of Marci Burdick

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                      Prepared Statement of John Bergmayer

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          Questions submitted by Senator Grassley for Alison A. Minea

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           Questions submitted by Senator Grassley for Marci Burdick

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           Questions submitted by Senator Grassley for Ellen Stutzman

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          Questions submitted by Senator Klobuchar for Ellen Stutzman

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           Questions submitted by Senator Grassley for John Bergmayer

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    Responses of Alison A. Minea to questions submitted by Senator Grassley

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     Responses of Marci Burdick to questions submitted by Senator Grassley

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    Responses of Ellen Stutzman to questions submitted by Senator Klobuchar

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     Responses of Ellen Stutzman to questions submitted by Senator Grassley

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     Responses of John Bergmayer to questions submitted by Senator Grassley

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                    Miscellaneous Submissions for the Record

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