[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
         
         
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]         

                       
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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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