[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
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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
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
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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