[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
BROADCASTING OWNERSHIP IN THE 21ST CENTURY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
SEPTEMBER 25 & DECEMBER 3, 2015
__________
Serial No. 114-77
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Ohio JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California7
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont
STEVE SCALISE, Louisiana JOHN A. YARMUTH, Kentucky
LEONARD LANCE, New Jersey YVETTE D. CLARKE, New York
BRETT GUTHRIE, Kentucky DAVID LOEBSACK, Iowa
PETE OLSON, Texas BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois G.K. BUTTERFIELD, North Carolina
GUS M. BILIRAKIS, Florida DORIS O. MATSUI, California
BILL JOHNSON, Missouri JERRY McNERNEY, California
BILLY LONG, Missouri BEN RAY LUJAN, New Mexico
RENEE L. ELLMERS, North Carolina FRANK PALLONE, Jr., New Jersey (ex
CHRIS COLLINS, New York officio)
KEVIN CRAMER, North Dakota
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
(ii)
C O N T E N T S
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SEPTEMBER 25, 2015
Page
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 1
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 2
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 2
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 3
Prepared statement........................................... 3
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 57
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, prepared statement..................................... 57
Witnesses
Gerard J. Waldron, Partner, Covington & Burling LLP, on Behalf of
the National Association of Broadcasters....................... 5
Prepared statement........................................... 7
Answers to submitted questions............................... 72
Paul Boyle, Senior Vice President of Public Policy, Newspaper
Association of America......................................... 15
Prepared statement........................................... 17
Answers to submitted questions............................... 77
Kim M. Keenan, President and Chief Executive Officer,
Multicultural Media, Telecom and Internet Council.............. 23
Prepared statement........................................... 26
Answers to submitted questions............................... 82
Michael Scurato, Vice President, Policy, National Hispanic Media
Coalition...................................................... 33
Prepared statement........................................... 35
Additional information submitted for the record \1\
Answers to submitted questions............................... 84
Todd O'Boyle, Program Director, Media and Democracy Reform
Initiative, Common Cause....................................... 42
Prepared statement........................................... 44
Jason Kint, Chief Executive Officer, Digital Content Next........ 48
Prepared statement........................................... 50
Answers to submitted questions............................... 89
DECEMBER 3, 2015
Submitted Material
Article of September 21, 2015, ``Who's behind those annoying
political ads?,'' by Newton Minow and Michael Copps, The Hill,
submitted by Ms. Eshoo......................................... 66
Letter of November 3, 2015, from American Civil Liberties Union,
et al., to Mr. Walden, et al., submitted by Ms. Eshoo.......... 67
----------
\1\ The information has been retained in committee files and also
is available at http://docs.house.gov/meetings/IF/IF16/
20151203/104240/HHRG-114-IF16-Wstate-ScuratoM-20151203.pdf.
BROADCASTING OWNERSHIP IN THE 21ST CENTURY--DAY 1
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FRIDAY, SEPTEMBER 25, 2015
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:07 a.m., in
room 2123, Rayburn House Office Building, Hon. Robert E. Latta
(vice chairman of the subcommittee) presiding.
Members present: Representatives Latta, Shimkus, Blackburn,
Lance, Guthrie, Bilirakis, Johnson, Collins, Upton (ex
officio), Eshoo, Welch, Yarmuth, Clarke, Loebsack, DeGette,
Butterfield, Matsui, McNerney, Lujan, and Pallone (ex officio).
Staff present: Ray Baum, Senior Policy Advisor,
Communications and Technology; Rebecca Card, Staff Assistant;
Grace Koh, Counsel, Communications and Technology; David Redl,
Chief Counsel, Communications and Technology; Charlotte
Savercool, Legislative Clerk; Gregory Watson, Staff Assistant;
Christine Brennan, Democratic Press Secretary; Jeff Carroll,
Democratic Staff Director; Jerry Leverich, Democratic Counsel;
Lori Maarbjerg, Democratic FCC Detailee; Timothy Robinson,
Democratic Chief Counsel; and Ryan Skukowski, Democratic Policy
Analyst.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Thank you very much, and I appreciate our
witnesses for being here today and discussing a very important
matter, broadcast ownership. The FCC has been entrusted to
regulate media ownership, ensuring the broadcast industry
remains competitive and meets the information needs of local
communities. However, the FCC has failed to act in completing
its mandatory review of current rules governing this dynamic
marketplace.
As a result, longtime industry participants that are
subject to these rules and regulations are placed at
competitive disadvantage as newer market entrants who are
afforded greater flexibility to compete in an environment
transformed by the Internet. Ignoring the need to make media
ownership rules more relevant only hurts the industry and
public interest. We need updated laws that better reflect the
21st century communications landscape. I look forward to
today's witnesses talking about the current regulatory
framework governing broadcast ownership and the impact that it
is having on businesses, consumers, and on the economy.
With that, I am going to yield my time, and I will now
recognize the gentlelady from California, the ranking member of
the subcommittee.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Latta. I appreciate it.
I just want to make a comment. Yesterday was a day filled
with joy in the Congress. We welcomed the historic visit of
Pope Francis. I think today is a sad day with the news of John
Boehner announcing that he is stepping down as Speaker. He has
my respect and my gratitude for what he has done over the years
in the Congress.
Mr. Chairman, a digital content revolution is underway.
Thanks to the power of broadband, millions of Americans are
using social media and over-the-top video services for original
content, news, entertainment, and sports. A consumer can Hulu
the last episode of ``Glee,'' Netflix ``House of Cards,'' or
stream Major League Baseball games over Apple TV. There is no
doubt that the media landscape is rapidly changing, but
consumers continue to rely on traditional bastions of 20th
century media, including broadcast television, radio, and
newspaper for local news, public information, and weather.
Consistent with the goals of the Communications Act, our
subcommittee and the FCC should remain focused on promoting
localism, advancing competition, and encouraging diversity
across all content platforms. A lack of diversity in particular
continues to plague the industry. Data reported by the FCC this
year shows that just 3 percent of broadcast TV licenses are
held by people of color. Similar challenges exist among the
highest ranks of management, with just 4 percent of TV networks
and studios led by minorities.
A 21st century broadcast system should reflect the
composition of our country. This is not only the right thing to
do, it is good business as well. And this is clearly an area
where little to nothing has changed.
We know that nothing we deal with has easy answers, but one
thing is certain: Relaxing the FCC's media ownership rules will
pave the way for increased industry consolidation, which does,
in my view, nothing to promote localism, competition, or
diversity, and I think it flies in the face of our democracy,
where we believe there should be many voices to the many and
not fewer.
I had a much longer, magnificent statement, but given the
beginning of this hearing later, I will yield back, Mr.
Chairman. Thank you.
Mr. Latta. Thank you very much.
Ms. Eshoo. And thank you to the witnesses for being here.
Mr. Latta. The gentlelady yields.
The Chair recognizes the gentleman from Illinois, Mr.
Shimkus.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
Mr. Shimkus. Thank you, Mr. Chairman.
Welcome to Washington and a subcommittee in Washington
where once you think you have got it figured out, stuff
changes. So I want to thank the ranking member of the
subcommittee for her focusing on obviously a big issue that is
going on here in the House and also the Republican Conference,
and we will miss John.
So we will do our best to wrap ourselves around your
testimony and the issue at hand, but, please, especially for
folks on this side and probably on both, there is a lot of
other thoughts going through a lot of my colleagues' minds
right now, and we will try to drag them back to this hearing as
soon as possible.
So with that, I yield back my time.
Mr. Latta. The gentleman yields back. And the Chair now
recognizes the gentleman from New Jersey, the ranking member of
the full committee, Mr. Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you. I am going to try to limit it to 2,
Mr. Chairman.
It is easy to say the way we get news and information is
changing. That is certainly true. But it is equally true that
we continue to turn to broadcast TV and radio, and that means a
diversity of voices over the air remains essential. Some say
that we should overlook the need for diverse voices because the
broadcast industry must consolidate if it is going to survive,
but the fact is broadcasters are thriving, even without
consolidation.
The data speaks for itself. The radio industry last year
raised advertising revenue to the tune of nearly $15 billion.
TV broadcasters earned $20 billion from on-air ads in 2014.
Billions of dollars in political ad buying helped drive this
total, and that number will likely skyrocket with the upcoming
2016 Presidential election cycle.
The FCC must continue to serve as a sentinel, protecting
the ideals of localism, diversity of ownership, and diversity
of viewpoints. And given the impact of political ads, the
Commission also has an obligation to make sure the public knows
who is spending that money to control their airwaves.
We do not need to look any further than my home State of
New Jersey to see what can happen when consolidation goes too
far. Nearly 9 million New Jerseyans are forced to rely on
mostly out-of-State stations for news and information. One of
the few New Jersey stations we do have is part of a trio where
one entity owns three TV stations in the New York market, and
this station still does not serve adequate news about New
Jersey for our local residents.
So again, I am pleased we are having this hearing to
discuss these issues, and I look forward to the testimony.
I yield back, Mr. Chairman.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Thank you Chairman Walden and Ranking Member Eshoo for
today's hearing. Thanks also to our witnesses for being here
today.
It is easy to say the ways we get news and information is
changing. That is certainly true. But it is equally true that
we continue to turn to broadcast TV and radio. For instance,
when Pew researchers studied last year how Americans got their
information, 91% of the people they called listened to over-
the-air radio the very week they were surveyed. Similarly,
local TV stations saw an increase in viewership last year.
The fact remains that Americans still rely on broadcasters
to bring them the news. A diversity of voices over the air
remains essential.
We will hear from some today that we should overlook the
need for diverse voices because the broadcast industry must
consolidate if it is going to survive. But the fact is
broadcasters are thriving even without consolidation.
The data speaks for itself. The radio industry last year
raised advertising revenue to the tune of nearly $15 billion.
TV broadcasters saw a 7% increase in advertising revenues-that
means they earned $20 billion from on-air ads in 2014. Billions
of dollars in political ad buying helped drive this total,
which means that number will likely skyrocket with the upcoming
2016 Presidential election cycle.
But while the broadcast industry is doing well without
additional consolidation, a loss of voices over the air would
cause irreparable harm to our democracy. That is why the
Federal Communications Commission must continue to serve as a
sentinel, protecting the ideals of localism, diversity of
ownership, and diversity of viewpoint. And given the impact of
the billions of dollars spent on political ads each cycle, the
Commission also has an obligation to make sure the public knows
who is spending that money to control their airwaves.
We do not need to look any further than my home State of
New Jersey to see what can happen when consolidation goes too
far. New Jerseyans are forced to rely on out-of-State stations
for news and information. Sometimes they serve us well, like
during Hurricane Sandy. But the fact remains that while nearly
9 million people live in New Jersey, we have almost no
commercial TV stations. And one of the stations we do have is
part of a triumvirate where one entity owns three TV stations
in the New York market. And this station still does not serve
up adequate news about New Jersey for our local residents.
Finally, minority and female ownership of stations remain
at abysmal levels--even with recent spin-offs of stations to
minority and female-owned entities. I don't believe that we
should cave into a simplistic call for deregulation to solve
this complex problem.
Again, I'm pleased we are having this hearing to discuss
these issues. I look forward to the testimony.
Mr. Latta. Thank you very much. The gentleman yields back.
And at this time, on behalf of the chairman, I want to
thank all of our panelists for being here today. We really
appreciate your being here and your testimony.
And at this time, the Chair will recognize Mr. Gerald
Waldron of the National Association of Broadcasters for 5
minutes. Thanks very much.
And just turn that mic on and pull it closer to you, and we
will get started.
Thank you.
STATEMENTS OF GERARD J. WALDRON, PARTNER, COVINGTON & BURLING
LLP, ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS;
PAUL BOYLE, SENIOR VICE PRESIDENT OF PUBLIC POLICY, NEWSPAPER
ASSOCIATION OF AMERICA; KIM M. KEENAN, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, MULTICULTURAL MEDIA, TELECOM AND INTERNET
COUNCIL; MICHAEL SCURATO, VICE PRESIDENT, POLICY, NATIONAL
HISPANIC MEDIA COALITION; TODD O'BOYLE, PROGRAM DIRECTOR, MEDIA
AND DEMOCRACY REFORM INITIATIVE, COMMON CAUSE; AND JASON KINT,
CHIEF EXECUTIVE OFFICER, DIGITAL CONTENT NEXT
STATEMENT OF GERARD J. WALDRON
Mr. Waldron. Thank you. Good morning, Chairman Latta,
Ranking Member Eshoo, and members of the subcommittee. My name
is Gerry Waldron. I am a partner at the law firm of Covington &
Burling. I am pleased to be here today on behalf of the
National Association of Broadcasters.
The FCC's broadcast ownership rules were adopted with the
stated purpose of fostering three longstanding policy goals:
Competition, localism, and diversity of voices. But an honest
assessment of the current video environment shows these rules
failed to advance any of those objectives.
I want to make three points for your consideration. First,
the current ownership rules actually inhibit rather than
promote broadcasters' ability to compete in a vibrant video
marketplace. Second, as a result, these rules undermine
broadcasters' uniquely local focus. And third, the rules
actually fail to promote diversity.
The broadcast ownership rules do not serve the public
interest because they are simply out of touch with the reality
of today's media landscape. These days, watching TV frequently
does not mean watching the big screen in your living room.
Consumers are increasingly likely to turn instead to their
laptops or tablets. Millennials do not necessarily watch
channels. Rather, they consume programs whenever they want and
wherever they may be. Consumers create their own content
packages through services such as Amazon Instant Video, Hulu,
and Netflix.
The risk of a powerful broadcast owner, a Citizen Kane, if
you will, that drove the creation of the broadcast ownership
rules in the 1970s, is not just unlikely, it is almost
nonexistent. The media landscape is simply too diverse and
evolving too quickly, both with regard to content creation and
content distribution, to justify the current rules.
Against that backdrop, the FCC's rules pick winners and
losers in this new media landscape. They limit broadcasters'
ability to compete with the cable, satellite, and online media
outlets that face no comparable restrictions. As a result,
these competitors have grown and have taken away both audience
share and advertising revenue from traditional broadcasters.
The reality is that today broadcasters' main competition
for advertising dollars comes from companies such as Google and
Facebook, the newly merged AT&T/DirecTV, and cable companies
like the soon-to-be merged Time Warner. I bring this
information to the committee's attention not to complain about
competition, but rather to underscore that the FCC's rules
pretend this competition does not exist.
My second point is that, while the FCC's rules should be
promoting localism, they have had the opposite effect. A
healthy, vibrant broadcast industry serves the public interest
through locally focused news, sports, public affairs
programming, and emergency services. No other industry has that
responsibility, and most importantly, the ability or incentive
to serve the needs of the public. Yet, the broadcast ownership
rules act to inhibit broadcasters' ability to serve this basic
responsibility by limiting investment and synergies that could
otherwise fuel locally focused programming.
To maintain the ability to provide quality local service,
the FCC's ownership rules must permit reasonable combination of
station ownership. Broadcasters are a critical source of
information and entertainment in every community across the
country, but it takes significant resources to provide up-to-
the-minute news, local and national emergency information, and
highly valued entertainment programs. To compete and serve
their communities successfully, broadcasters should be governed
by regulations that at least account for the new and varied
competition that is all around us.
Finally, the record is clear that the current rules have
failed to promote minority ownership of broadcast properties,
and yet support for these rules is sometimes justified on
diversity grounds. NAB has long supported the goal of diversity
among broadcast stations, and to that end supports the
reinstatement of a tax certificate program. But our industry is
not alone in having a great deal of room for improvement in
this area. However, ownership rules that are out of step with
today's competitive reality only suffocate smaller broadcasters
and limit new entrants.
In conclusion, we are asking Congress for help to hold the
FCC accountable for completing its review of the rules and
making the necessary changes to the benefit of both communities
and consumers across the country.
I thank you for your attention to this important issue and
look forward to your questions.
[The prepared statement of Mr. Waldron follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Well, thank you very much. I appreciate your
testimony.
And the Chair now recognizes Mr. Boyle, who is vice
president of public policy, Newspaper Association of America.
And we appreciate your being here today, and thank you for
your testimony.
STATEMENT OF PAUL BOYLE
Mr. Boyle. Vice Chairman Latta, Ranking Member Eshoo, and
members of the subcommittee, on behalf of my 2,000 member
newspapers, thank you for this opportunity to testify.
Congress and the administration have long been concerned
about the future of newspaper journalism as our industry
adjusts to new economic realities. The challenges that
newspapers face today are well-documented. For the most part,
these challenges are market driven. The one striking exception
is the FCC's ban on cross-ownership that prohibits investors
from owning or investing in both a daily newspaper and a
television or radio station in the same market.
The rule may have been reasonable and appropriate in 1975,
but with the surge of media across multiple platforms--cable,
satellite TV, satellite radio, and the Internet--the cross-
ownership ban no longer makes sense. Today, the American public
has access to more information and more viewpoints than ever
before, including through new digital platforms and social
media Web sites. As the Pew Project for Excellence in
Journalism summarized in its State of the News Media report:
``The pace of technological evolution and the multiplicity of
choices--from platforms to devices to pathways--show no sign of
slowing down.''
Newspapers are investing significant resources of their own
on digital and mobile platforms and applications, providing
consumers with news and information how, when, and where they
want it. Most newspapers are also providing video to enhance
news reports and provide viewers with in-depth features, videos
that closely mirror the work of traditional broadcasters.
For example, the New York Times received a 2013 Pulitzer
Prize for a multimedia project about skiers killed in an
avalanche and the science of such disasters. And the Detroit
Free Press received an Emmy for documentaries that live
exclusively online.
The point is, media companies and consumers have embraced
digital and mobile platforms, yet the FCC is desperately
holding on to a media ownership rule that was constructed 40
years ago.
The FCC's cross-ownership ban is not only outdated, it is
siphoning much needed investment in newspapers. Since 2008,
print advertising in newspapers has decreased by 55 percent.
Yes, digital advertising is a growing source of revenue, but it
only produces a fraction of the resources that newspapers have
historically relied upon to sustain their newsrooms.
In 1996, Congress required the FCC to review its media
ownership rules every 4 years and to repeal or modify any rule
that is no longer in the public interest. The FCC has
consistently ignored this directive.
As this Commission continues to delay, this ban on cross-
ownership is much further removed from the reality of today's
media marketplace. In fact, the FCC inaction has contributed to
the decision by some media companies to either sell their
broadcast stations or to divide their publishing and broadcast
properties. After 20 years of waiting for regulatory relief,
many media companies have moved on from cross-ownership as a
strategy.
These actions do not mean that the rule is irrelevant.
Local newspapers will come on the market, and there will be
situations where the most logical buyer is a broadcaster who
shares a commitment to local journalism. And there will be a
daily newspaper interested in buying a TV station so that it
can diversify its revenue stream in support of journalism.
But let's be clear, the repeal of the cross-ownership ban
will not lead to massive consolidation. More likely, mergers
would occur in a few select markets where it makes economic
sense and where there are synergies that would support local
journalism.
Finally, because the scope of this hearing includes
diversity of ownership in the broadcast industry, I would like
to point out that NAA has consistently supported many of the
diversity proposals put forward by MMTC and others, such as the
incubator program and a reinstatement of the minority tax
certificate.
In the past, some have argued that the FCC should not
change the cross-ownership ban until the Commission takes
certain steps to increase diversity in media. We believe the
Commission is fully capable of doing both at the same time.
Thank you.
[The prepared statement of Mr. Boyle follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you very much for your testimony.
And the Chair now recognizes Kim Keenan, president and CEO
of the Multicultural Media, Telecom and Internet Council.
Thank you very much, and you are recognized for 5 minutes.
STATEMENT OF KIM M. KEENAN
Ms. Keenan. Thank you, Vice Chairman Latta, Ranking Member
Eshoo, distinguished members of the subcommittee, and esteemed
colleagues on the panel. I am honored to appear today to
address the Nation's efforts to promote and preserve
opportunities for diversity in the ownership of our Nation's
airwaves.
My name is Kim Keenan, and I do serve as president and CEO
of MMTC, or Multicultural Media, Telecom and Internet Council.
This nonprofit was founded 29 years ago to promote equal
opportunity and social justice in mass media,
telecommunications, and the broadband industries. We proudly
partner with dozens of national and local civil rights and
advocacy organizations.
In an effort to do our part to increase minority broadcast
ownership, MMTC's nonprofit Media and Telecom Brokerage
division has participated in nearly one-third of all broadcast
station sales to women and people of color since 1997. At MMTC,
we believe that consistent with the mandate of Sections 151,
257, and 309 of the Communications Act, our Nation's media must
reflect the cultural and viewpoint diversity of our Nation.
The late Dr. Everett C. Parker was one of our cofounders
and a minister of the United Church of Christ. He passed away
last week at the age of 102. And he fought very hard to
desegregate both radio and television stations. Why? He said,
``If we want the voiceless to have a voice that everyone can
hear, we must have a robust minority broadcast ownership. It is
essential to our democracy.''
This message of advancing diverse media ownership still
resonates as MMTC and other media advocates push for equity in
representation and participation in the industry. So for the
purpose of this hearing, I want to focus on three things.
First, the FCC has not been proactive in advancing minority
broadcast ownership. First, the FCC must swiftly act upon
proposals and policies that address the market-entry barriers
that limit diversity and inclusion in broadcasting.
The FCC has four decades of minority ownership
jurisprudence. In response to a 1973 court decision, the FCC
first began to consider minority ownership as a factor in
comparative broadcast hearings. It followed that decision in
1978 with the famous tax certificate policy, which, until its
repeal in 1995, quintupled the number of bona fide minority-
owned broadcast stations. Unfortunately, since 1978, the FCC's
activity regarding minority ownership has been marked by
inconsistently applied policies and in some cases repeal of
minority ownership initiatives without the implementation of
new or alternative approaches.
In the FCC's most recent media ownership report issued in
2014 and reporting on October 2013 data, people of color,
including Hispanics, held a majority voting interest in only 6
percent of full-power commercial television stations, 11.2
percent of commercial AM stations, and 6.2 percent of
commercial FM stations. And because these stations are mostly
small and underpowered, MMTC estimates that they represent no
more than 2 percent of broadcast industry assets as a whole. It
is well settled that this is an indispensable element of
broadcast ownership diversity.
One of the other things that the FCC did under Michael
Powell in 2004 was to create the Advisory Committee on
Diversity for Communications in the Digital Age to advance
media ownership opportunities for minorities and women.
For our part, MMTC, joined by over 50 national civil
rights, professional, and civic organizations, has placed
before the FCC some 44 race-neutral and almost entirely
deregulatory proposals for rule changes and legislative
recommendations that would advance minority ownership and
participation in broadcasting. Despite clear interest in
promoting ownership by women and minorities, the Advisory
Committee on Diversity has not met since September 17, 2013.
The last Section 257 Market Entry Barriers report to
Congress was due December 31, 2012. The FCC rejected 23 of
MMTC's 44 pending proposals with no analysis or consideration
in the 2014 quadrennial report and order on the theory that
they were beyond the scope of the 2014 rulemaking.
In 2004, and again in 2011, the Third Circuit Court of
Appeals had commanded the agency to consider pro-diversity
proposals as a part of the quadrennial process. MMTC had to go
to court to compel the FCC to simply rule on dozens of mostly
unopposed proposals that have been pending for over a decade.
To be fair, the FCC took a significant step by relaxing its
foreign broadcast investment policy, an action that MMTC
immediately lauded, yet the agency had rejected nearly all of
the other diversity proposals presented to it and has been
consistently tardy in issuing the congressionally mandated
Section 257 reports regarding the status of minority ownership.
My time is running short. I want to make sure I make both
of my final points.
Reform must continue on JSAs and SSAs to ensure that they
promote meaningful ownership opportunities for minorities. We
applaud their long-overdue crackdown on joint service
agreements, JSAs, and shared service agreements, sometimes
called sidecars. They allow one station to sell advertising for
or operate another station in the same market. These
arrangements have almost always been used to evade the TV
duopoly rule.
Although a handful of those selected to operate sidecars
happen to be minorities, these arrangements do not help people
of color advance in broadcasting. As a practical matter, most
sidecar licensees own 100 percent of nothing.
For decades, before sidecars were invented, women and
people of color actually operated real television stations
successfully. The owners hired the staff and chose to address
and put on local programs to address those issues.
We should note that there are rare instances where a JSA or
an SSA can effect a legitimate purpose, and an example is
Tougaloo College's WLOO-TV, which was donated to the college by
Raycom Media and is owned and operated by the college to train
mass communication students. The student is a JSA with American
Spirit's WDBD-TV.
Finally, and I think this is the most important, the FCC
has an immediate opportunity to foster minority media ownership
through its broader efforts to revitalize AM radio. Pending
before the FCC is the proposal to create an AM-only window to
allow AM stations to apply for FM translators as a part of this
proceeding. Last month, in an unprecedented mass letter----
Mr. Latta. Pardon me, Ms. Keenan, if you could wrap up,
because I know they are going to be calling votes here real
quick. So if you can just wrap up in about another 10 seconds.
Ms. Keenan. Excellent. I will do that.
Given this, 12 members of the Congressional Black Caucus
have written to Chairman Wheeler urging the Commission to open
the AM-only translator window. I respectfully urge other
Members of Congress to follow suit and help guarantee that AM
stations obtain the translators they need to remain competitive
and provide our communities with the service that they need.
We respectfully implore the subcommittee to exercise their
oversight powers to ensure that the FCC makes up for lost
ground and takes dramatic and timely steps to increase minority
broadcast ownership. Thank you.
[The prepared statement of Ms. Keenan follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Thank you.
The Chair now recognizes Michael Scurato, who is the vice
president of policy, National Hispanic Media Coalition.
Thank you very much. You are recognized for 5 minutes.
STATEMENT OF MICHAEL SCURATO
Mr. Scurato. Vice Chairman Latta, Ranking Member Eshoo,
members of the subcommittee, thank you very much for inviting
me to testify here today on this important issue of broadcast
ownership in the 21st century.
Broadcasting remains incredibly important in today's media
landscape, yet despite an increasingly diverse population and
near universal recognition of the importance of broadcast
ownership, people of color and women remain shut out. For many
years, the National Hispanic Media Coalition has issued a
number of recommendations that we think would help remedy this.
First, the FCC should tighten and enforce its existing
media ownership rules to create opportunities. Recent action to
close the joint sales agreement loophole has already
demonstrated how further and long-overdue action on this
recommendation can create positive change.
Second, the FCC should aggressively improve its collection
of ownership data and perform analysis that is necessary to
create proactive policies that promote diversity.
And third, Congress should reinstate the minority tax
certificate, which increased ownership diversity before being
abandoned many years ago.
Promoting ownership diversity in broadcasting should be
prioritized given the role of the media in fostering public
discourse on critical issues and providing important local news
and information. The FCC also has a statutory obligation to
promote diversity.
Broadcasting remains the way that most people in this
country access important local news and information. Broadcast
television reaches 98 percent of Americans. Radio is similarly
pervasive. In Los Angeles, over 95 percent of the population
listens to radio on a given week, including 98 percent of
Latinos and 99 percent of Spanish-speaking Latinos.
However, excessive consolidation and lack of diversity has
caused harm to diverse communities and prevented these
communities from fully benefiting from the public resource that
broadcasters use to serve them. Last year, before this
subcommittee, NHMC compellingly recounted the harms that result
from the prevalence of hate speech in the media.
Examples from the past few weeks show this problem remains.
For instance, one host on a conglomerate-owned station in Iowa
recently suggested that all undocumented immigrants be
enslaved. Additionally, the repeated broadcast of the hateful
remarks of a high-profile public figure was recently revealed
to be directly responsible for the violent and vicious beating
and degradation of a Latino in Boston.
While Internet access holds great promise, for two key
reasons it is not yet able to match the power of broadcasting.
First, as many as one in three Americans lack home broadband
access. People living in rural areas, people of color, the
poor, seniors, non-English speakers, and people with
disabilities are far less likely to access the Internet at
home. Second, local news and information online still by and
large originates from traditional media sources, such as local
newspapers and broadcasters.
The FCC's latest diversity statistics are shameful. There
are more than 1,300 full-power television stations in this
country. In 2013, African Americans held the majority interest
in only nine; by early 2014, only four, many of those entangled
in JSAs and other arrangements that limit control or wealth-
generation potential. For Asians, the number of stations owned
is five. Latinos held the majority interest in only 3 percent
of full-power television stations in 2013, despite accounting
for 17 percent of the population.
Female ownership continues to remain low or decrease. Women
owned only 6.3 percent of full-power commercial television
stations in 2013. And radio, once considered a key entry point
for diverse broadcasters, presents a similarly bleak picture.
There was a 20 percent decrease in African American owners and
a 10 percent decrease in Asian owners between 2011 and 2013.
These numbers are persistently bad at a time when nearly 38
percent of the population is comprised of people of color, and
they have remained bad for quite some time. There is a strong
possibility that these numbers could decline further following
the upcoming incentive auction.
NHMC envisions a world in which broadcasters reflect the
diversity of our population and adequately serve the needs of
all communities. Congress should promote diversity in
broadcasting by encouraging the FCC to strengthen its media
ownership rules and perform the research and analysis necessary
to create new diversity initiatives. Congress should also
reinstate the minority tax certificate. These are important
steps towards achieving NHMC's vision.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Scurato follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[Additional information submitted by Mr. Scurato has been
retained in committee files and also is available at http://
docs.house.gov/meetings/IF/IF16/20151203/104240/HHRG-114-IF16-
Wstate-ScuratoM-20151203.pdf.]
Mr. Latta. Well, thank you very much.
And the Chair now recognizes for 5 minutes Mr. Todd
O'Boyle, who is the program director, Media and Democracy
Reform Initiative, at Common Cause.
Thank you very much. You are recognized for 5 minutes.
STATEMENT OF TODD O'BOYLE
Mr. O'Boyle. Good morning, Mr. Vice Chairman, Ranking
Member Eshoo, and members of the subcommittee. Thank you for
inviting me to be a part of this discussion about the future of
broadcast ownership. Former FCC Commissioner Michael Copps
leads our media reform work at Common Cause, and he sends his
warmest rewards.
Mr. Latta. Thank you.
Mr. O'Boyle. At Common Cause we advocate for inclusive,
responsive governance and a diverse local media ecosystem that
informs the electorate. Therefore, we oppose further relaxation
of media ownership rules and support the unwinding of shell
operations that undermine lively civic discourse. Waves of
mergers and consolidation, too often with the blessing of the
Federal Communications Commission, have eroded the vitality of
local communications media to the detriment of our electorate.
In recognition of the special compact at the heart of
broadcasting, Congress wisely empowered the FCC to prevent
local broadcast monopolies, and the diversity of voices
enlivens the marketplace of ideas in which democracy depends.
And competition for news-gathering resources means more
newsroom jobs as rival news crews hustle to get the scoop. More
local journalists, in turn, means more sunlight, the best
disinfectant for corruption and graft.
In other words, localism increases employment and enhances
the quality and quantity of news--a win, win, win. But the
inverse is also true. Consolidation wreaks havoc on journalism.
The record is grim. The FCC has for many years sanctioned
merger after merger, formally entrenching local information
monopolies. And to be clear, this has been a bipartisan problem
that has facilitated an arms race between big cable and big
broadcast at the expense of audiences everywhere.
Meanwhile, the agency has regularly looked the other way as
media monopolists found and exploited loopholes to effect a
covert consolidation through shared services and joint sales
agreements.
The consequences have been staggering. Diverse and female
ownership took a nosedive. Is it any surprise that minorities
and women still struggle with backwards portrayals in the media
when they control so little of it? Clearly, ownership matters.
There is scant evidence that these arrangements promote the
public interest and reams of data that they harm it.
Researchers at the University of Delaware found that SSAs
resulted in duplicated content in every market they studied.
They found stations sharing anchors, graphics, videos, and
scripts. In some markets, such as Honolulu, broadcasters simply
simulcast the exact same content on multiple channels. In
short, more shells mean fewer journalists and less journalism.
While we are disappointed the FCC has not yet reined in
SSAs, thankfully, the agency has addressed JSAs. Last year
Common Cause applauded when the Commission took an important
first step back to media diversity. It brought more parity
between radio and television broadcasters by making joint sales
agreements attributable in ownership calculations. Within
months of the FCC's action, the agency reported 10 new
minority/female ownership arrangements, the first meaningful
gains in years.
This represented a great first step, but should be viewed
as only the beginning of pro-diversity reforms. Indeed, the
FCC's own ownership data paint a dire picture. Female minority
ownership still lags in the single digits.
Broadcasters frequently defend these tricks of the trade as
essential to keeping the lights on. They often claim that
without these financial instruments, broadcasters would go
dark. On the contrary, the bevy of recently announced mergers
illustrates the broadcast business is booming thanks to record
ad sales, the bulk of which come from political advertising.
Presently, Congress is considering legislative vehicles to
eliminate JSA reform. We call on you to halt them forthwith. A
reversal would be a staggering step backwards and foreclose
future pro-local, pro-diversity policies. Indeed, the rule in
question includes a waiver process that broadcasters can make
the case to keep the arrangements if they truly are serving the
public interest.
There are other areas where the FCC could improve. We have
long urged the agency to do a better job of collecting
ownership data with Form 323. The reporting tool itself is
cumbersome and the agency has been known to grant extension
after extension, rendering the underlying data of questionable
quality. Notably, the courts twice previously rejected attempts
to relax cross-ownership rules, citing insufficient record on
ownership and how proposed changes would affect historically
disadvantaged groups. Regardless of where each of us stands on
ownership, any change would require more and better data.
I close with this observation. The present moment is one of
opportunity. Will the FCC, with your oversight, approve another
slew of broadcast consolidations, or will it go down a
different path, one of diverse voices and an informed
electorate, the path of local and diverse ownership? Let's hope
it seizes the opportunities before it, first by putting the
brakes on media consolidation, and then by building on its JSA
reform to rein in SSA abuses.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. O'Boyle follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Well, thank you very much, and I appreciate your
testimony.
Our next witness is Jason Kint, who is the chief executive
officer, Digital Content Next.
We appreciate your being here, and you are recognized for 5
minutes.
STATEMENT OF JASON KINT
Mr. Kint. Thank you. Vice Chairman Latta, Ranking Member
Eshoo, and the members of the subcommittee, it is my honor to
appear here before you today.
I am the CEO of Digital Content Next, DCN, formerly known
as the Online Publishers Association. We are the only trade
group dedicated to serving high-quality digital content
companies that manage trusted relationships with both consumers
and advertisers.
By way of background, I have spent over 20 years in digital
media in a number of executive roles, operating both
established and native digital companies and brands. Much of
that work involved shifting these brands into multiplatform
brands in a short period of time based on consumer demand. I am
proud now to represent media companies from every segment of
the market, from large to midsized companies, to newer upstarts
that are carving niche market in the delivery of original
content over the Internet.
The members of DCN reached 230 million unique visitors,
over 100 percent of the U.S. online population, and they are
leading the revolution of the marketplace.
In the late 1990s, consumers turned to the disruptive power
of the Internet because of the ease of access to content and
the availability of this content on new platforms. As we have
all witnessed over the course of nearly two decades since the
beginning of this transformation, the current media landscape
looks vastly different than it once did. When we examine where
consumers turn for news and information, even more consumers
are now turning online.
In my full testimony, I provided some data on this
transition, but I would like to highlight two important
findings here. According to a 2015 Reuters Digital News Report,
74 percent of respondents got their news online, compared to 64
percent on television, 26 percent on radio, and just 23 percent
from print media. If you look at the under-35 audience, less
than 25 percent still get news from television. These
statistics inform the debate.
The underlying intent of the media ownership rules is to
ensure diversity of independent voices is available to
consumers. However, the rules have also served to limit
investment in media companies, which for newspapers in
particular has made their transition to a digital world much
more difficult.
At its core, the Internet is an innovative, and
importantly, open platform that has produced a diverse
ecosystem that allows businesses small and large to engage with
consumers in a variety of ways, limited only by their creative
capacity. It allowed a variety of consumer and professional
voices to flourish. Recognition of what the Internet delivers
and its potential is critical to analyzing the media ownership
rules.
I understand that developing the rules in this environment
is difficult. On the one hand, consumers are increasingly
moving online for their news and entertainment, as demonstrated
by the data I have previously shared. On the other hand,
broadband adoption to access that consent is not ubiquitous
yet, although that is changing.
Moreover, there has been a decades-long decline in ad
revenue for newspapers that digital ad revenue has not offset.
That decline has resulted in job cuts and other reductions
impacting their available news resources. However, there are
new digital native news sites providing coverage from a variety
of perspectives. Pew estimates that as many as 400 new native
digital news sites now exist.
Of course, others suggest that absent the ownership rules
the growth in digital news sites may have been even greater.
Balancing these competing data points and many others that
speak to the levels of competition, localism, and diversity in
media should provide an impetus for the FCC to decide what
modifications to the media ownership rules should be made to
reflect the new reality.
In a digital age, consumers have even more access to a
diverse amount of content than 20 years ago. DCN's members have
been at the forefront of this change. We have venerable
institutions attempting to reform their business models and
adapt their trusted brands to this digital ecosystem. We also
have new digital native companies challenging the assumptions
for how news should be covered and delivered.
The Internet has been the great equalizer as content
creators are able to access markets on a global scale while
still having the ability to reach hyperlocal markets with
original and compelling content.
As any DCN member can tell you, there is no business model
that can succeed long term without being built around the
consumer demand. It should be no different in this case. It
starts with the consumers. The key to any assessment of media
ownership rules should be rooted in the answer to this
question: Are consumers getting the news and content they want,
and are those business models sustainable? My answer is that
they are and that the offerings and offerors continue to
proliferate.
It is important to the marketplace, and ultimately
consumers, that the Commission update and relax the ownership
rules to reflect the media landscape as it exists today. I fear
that expansion of outdated regulations to the online
environment could stunt the growth of online content in a way
that will prove detrimental to the consumer experience.
DCN looks forward to working with this committee and
engaging with policymakers and regulators on this issue, and I
thank you for the opportunity to testify before you today.
[The prepared statement of Mr. Kint follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Latta. Well, thank you very much for your testimony. We
appreciate it.
And in the interest of where we are right now, because we
are almost at the end of this first vote, we are going to
recess the subcommittee at this time, and committee staff will
be back with you, because with all of the other events that
have happened today, probably we won't have members coming back
in. So what we will do, we will recess the hearing and then be
back in touch with you all as to furthering the committee
hearing at that time.
We appreciate your testimony and--sorry, the gentlelady
from California.
Ms. Eshoo. Thank you, Mr. Chairman. What I would like to
suggest, given 11 votes coming up, and we are very late for the
first one, and the importance of the testimony and the issues
that are embedded in the testimony, I would request that this
hearing be continued until a date certain is set rather than
members just submitting questions to the witnesses. I really
think we need to have an exchange, and it would be a healthy
and worthy one.
So that is the preference on this side, and I hope that
that could be honored. Thank you.
Mr. Latta. So I think what we can do, both committee staffs
will work to get that put together.
I thank you.
Ms. Eshoo. Good. Wonderful.
Mr. Latta. And again, we appreciate your time this morning.
And we will recess the committee at this time.
[Whereupon, at 10:50 a.m., the subcommittee was adjourned.]
Prepared statement of Hon. Fred Upton
Our conversation today offers us a great opportunity to
discuss ways we can modernize our laws to better reflect a
media industry that serves consumers in the innovative and
dynamic 21st century How people get their news has changed
dramatically and continues to evolve on a near daily basis. But
the media ownership rules in place today have failed to keep
pace. Local broadcast stations and newspapers are now in direct
competition with not only traditional national media outlets,
but also a wide variety of nontraditional outlets as well as
social media sites like Facebook and Twitter. Growing up in
Southwest Michigan, you could count on one hand the source of
news that was available--with the only options being local TV
evening news, radio, or the morning hometown newspaper. Now, we
have access to unlimited sources of real time information, 24
hours a day. But our laws are stuck in the 20th century,
desperately needing an update that reflects the ever-changing
market.
Without relief, media companies have slowly sold off their
newspaper and print operations, and it is unclear still what
fate ultimately awaits many of our daily newspapers.
Competition from the Internet has eroded traditional media
companies' market share and ad revenues--a point made even
clearer as a result of the Great Recession. Modern laws might
have allowed broadcasters and newspapers to better weather the
rise of the Internet or the economic impact of the recession,
but that relief has not been forthcoming.
We are all committed to fostering competition, localism,
and diversity of perspectives in a healthy and vibrant media
industry. The parties here may not agree how best to achieve
those goals, but we have the obligation to push forward and
find agreement on something better because the status quo is
unacceptable.
Prepared statement of Hon. Greg Walden
Good morning and welcome to today's hearing on broadcasting
ownership in the 21st century. For the last century,
broadcasting and newspapers have been the media that connect
communities. Whether it's the local radio call-in show that
amplifies the voices of average citizens, the local television
news that's ``live, local, and late-breaking,'' or the
newspaper column that has everyone talking, broadcasters and
newspapers are a part of our communities. These voices have
served as the primary way Americans' news needs were met for
the majority of our republic's history, but times have changed.
The current broadcast ownership laws reflect a
significantly different time in American history. Cable,
satellite, and the Internet have become integral parts of our
communications infrastructure and our daily lives, changing the
way we consume news and giving national scope to their voices.
But despite the massive changes to the communications
marketplace and American consumption of news, our laws are
stuck in a bygone era.
Our laws were written for an era of limited voices. But
this is an era of communications competition. Competition
between broadcast news and cable news; competition between
print journalism and online journalism; and competition between
traditional media and new media. In an era of such intense
competition, our laws should not unduly hamper the ability of
any one segment to provide the high-quality content consumers
have relied on for decades.
But that's exactly what our laws do. Our laws limit the
number of households a broadcast station group can reach; our
laws hold on to artificial distinctions between AM and FM radio
stations; and our laws prevent broadcasters dedicated to
serving their communities from saving local newspapers from
extinction. These laws must change.
While we work to change the laws to empower broadcasting
and newspapers for a new era of American media, we must also
look to empower our Nation's minorities in the traditional
media marketplace. Despite the wealth of voices and viewpoints
in our society, ownership of traditional media by minorities
remains low. Empowering broadcasting for the 21st century means
embracing policies that diversify it to reflect the society it
serves. I look forward to hearing from our witnesses on ways
that we can encourage greater minority ownership in
broadcasting.
We all share the same goal of promoting localism in our
communities. Broadcasters and newspapers play a critical role
in ensuring Americans have reliable news sources and work to
bring us all together whether you live in the largest city or
on the most rural of ranches. As technology continues to change
our society, it is important that we ensure our laws keep pace.
Our priority should be to encourage innovation and diversity
within communities without placing more restrictions on
businesses. I thank our witnesses for being here today and
offering your valuable input.
BROADCASTING OWNERSHIP IN THE 21ST CENTURY--DAY 2
----------
THURSDAY, DECEMBER 3, 2015
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:17 a.m., in
room 2123, Rayburn House Office Building, Hon. Greg Walden
(chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Lance,
Johnson, Ellmers, Eshoo, and Pallone (ex officio).
Staff present: Ray Baum, Senior Policy Advisor,
Communications and Technology; Andy Duberstein, Deputy Press
Secretary; Kelsey Guyselman, Counsel, Communications and
Technology; Grace Koh, Counsel, Communications and Technology;
Charlotte Savercool, Professional Staff, Communications and
Technology; Gregory Watson, Legislative Clerk; Christine
Brennan, Democratic Press Secretary; Jeff Carroll, Democratic
Staff Director; Ashley Jones, Democratic Director of
Communications, Member Services and Outreach; Jerry Leverich,
Democratic Counsel; Lori Maarbjerg, Democratic FCC Detailee;
and Ryan Skukowski, Democratic Policy Analyst.
Mr. Walden. We will call the Subcommittee on Communications
and Technology to order.
And, by unanimous consent, Ms. Eshoo and I would like to
ask our colleagues to waive opening statements so that we can
actually resume this hearing or have the new hearing of the
resumption of the hearing going forward.
And I would suggest that if the panel members who had the
opportunity to give your opening statements before, if you want
to share a few comments, that would be fine, but if you want to
kind of move through them rapidly, that would be fine. I tell
you all that because they just called votes on the House floor.
So, best-laid plans. There will be seven votes.
And I understand you all have agreed to waive statements,
so thank you. We could just pass bills and get everything done
this morning at this rate.
So, with that, thank you for returning. As you know, this
is a resumption of the hearing on ownership. And so, with that,
I guess we go right into Q&A then, right?
So let me start with a question to Mr. Waldron.
Tax incentives are generally considered a relatively
efficient way for the Government to encourage certain policies.
The minority tax certificate is a voluntary instrument that
entities can take advantage of or not, depending on whether the
situation is appropriate.
Do you think the FCC would be able to structure a program
around the minority tax certificate that would prevent
arbitrage?
And then I would like to get the views of the other panel
members as well.
So, Mr. Waldron, what do you think of that?
Mr. Waldron. Thank you, Mr. Chairman.
Yes, NAB has long supported tax certificates, and we think
they can be structured in a fair and balanced way. I do want to
emphasize that tax certificates did exist, and there were more
than 50 tax certificates that were done. And so we think it can
be structured.
And, as you point out, it is a voluntary program, really a
market-based program, to incentivize minorities to get into the
business. So we think it is an excellent idea and a step that
the Commission and the Congress should take.
Mr. Walden. Mr. Boyle?
Mr. Boyle. Mr. Chairman, NAA has supported the tax
certificate and some other proposals that the MMTC has put
forward to increase diversity of ownership. So we think it can
be done, and we hope Congress would enact it.
Mr. Walden. Ms. Keenan?
Ms. Keenan. Hello.
Mr. Walden. Good morning.
Ms. Keenan. I am president and CEO of MMTC, Multicultural
Media, Telecom and Internet Council.
I absolutely concur with what has been said. MMTC has long
been in the forefront of pushing for these tax certificates.
They are the right way to handle this at the right time.
If you were to do a bar graph of what it looks like when
you have tax certificates and when you don't, this is what it
looks like when you don't. Imagine the bottom. But when you
have it, this is what it looked like. If you were to go back,
you would see that the highest period of growth in ownership by
women and people of color was under the tax certificate
program. And those were bona fide people who entered at that
level. But, once that program was taken away, we are back at
those levels that were negative.
So, absolutely, this is the right way, and it is the right
time.
Mr. Walden. Thank you.
Mr. Scurato?
Mr. Scurato. Yes, the National Hispanic Media Coalition, we
support the idea of reinstating the minority tax certificate.
Moreover, we would hope that Congress could reinstate it in a
way that is race-conscious, as the prior tax certificate was.
We think that would have the most impact on ownership
diversity.
Mr. Walden. OK.
Mr. O'Boyle?
Mr. O'Boyle. Common Cause also supports the reinstatement
of the minority tax certificate program. I think this is a
consensus position, not only because raising diverse ownership,
increasing diverse ownership is an important public interest
goal, but because we believe the evidence shows that female and
diverse ownership drives more and better representative content
of female and minority populations and that there is a problem
with misogynistic and racist characterizations in the media
because there is such a limited ownership of the media by
females and minorities.
Mr. Walden. Got it.
Mr. Kint?
Mr. Kint. My name is Jason Kint. As CEO of Digital Content
Next and kind of representing the future of digital media, any
issue around promoting the voice of minorities is of paramount
importance to us. And the details on that, I would like to
follow up with you, if that would be all right.
Mr. Walden. All right. Thank you.
I am going to yield back the balance of my time so we can
get to Ms. Eshoo for her questions, as well, and to Mr. Latta.
Ms. Eshoo. Thank you, Mr. Chairman.
First, I would like to ask for unanimous consent to place
two pieces in the record.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. Thank you. Do I need to name them?
Mr. Walden. No.
Ms. Eshoo. No. OK. Save that time. All right.
Thank you to all the witnesses.
And I want to thank the chairman for agreeing to reschedule
the rest of this hearing. I thought that it was important, and
I thank him for agreeing and doing so.
To Mr. O'Boyle, can you tell me how many shared services
agreements, the SSAs, and joint sales agreements still remain
in place today? And does the Commission require broadcasters to
disclose the existence of such agreements?
Mr. O'Boyle. Thank you for the question.
Determining the precise number of these arrangements is
surprisingly difficult. Credit to Free Press for doing some
good research to try and infer, by looking through SEC filings,
the exact number. But it should not be this hard.
The FCC's Form 323 is a problematic reporting tool. It is
complex and cumbersome. And noncompliance is also an issue. So
there are issues with the reporting tool itself.
But, more broadly, to take another issue, the 2014 JSA
Reform Order, which Common Cause supported, did not actually
require broadcasters to disclose SSAs. So we feel the most
direct and easiest way for us to get a handle on a census, the
number of arrangements out there, is to require they be
disclosed.
And I would offer that this bespeaks the bigger problem,
that we need better data, and that regardless of where
panelists----
Ms. Eshoo. Sounds like it is an area that really needs some
work----
Mr. O'Boyle. Yes, ma'am.
Ms. Eshoo [continuing]. From what you have said.
To Mr. Scurato, how do you respond to those that suggest
that the JSAs and the SSAs actually increase broadcast
ownership diversity?
And I appreciate the comments, the responses to the
chairman's question a moment ago. That was terrific.
Mr. Scurato. So, looking at the available data, we don't
actually think that the advent and rise of these types of
sharing arrangements do anything to help support greater
ownership diversity. In fact, if you look at the data, you
know, these agreements have really come to prominence over the
last 10 years or so, going from about 37 agreements----
Ms. Eshoo. What do you think, shorthand, they actually
produce?
Mr. Scurato. Well, what they do is they allow current
owners in the market to circumvent media ownership rules and
own more. And that is at the expense of opportunities for
people of color and women that may want to enter the market.
Ms. Eshoo. To Mr. O'Boyle, I know that you know that there
have been efforts from this side of the aisle, led by Mr.
Yarmuth, earlier this year in introducing legislation to
require the disclosure of the true sponsors of political ads on
the public airwaves. We have a huge problem in our country,
obviously, especially on the heels of Citizens United.
Now, in the absence of any newly enacted law--which,
obviously, is not going to take place, I mean, because there is
opposition from our friends on the other side of the aisle--
what do you think the FCC can do? What steps do you think they
should take, in terms of disclosure relative to the airwaves?
Mr. O'Boyle. Well, section 317 of the Telecommunications
Act empowers the FCC to write sponsorship identification
rules--that is, to write rules requiring the disclosure of the,
quote, ``true identity'' of that sponsor. And the FCC, in
interpreting its own authority decades ago, said that the name
of the sponsoring committee was----
Ms. Eshoo. How long ago was that?
Mr. O'Boyle. I can get the exact year, but I think it was
in the seventies. At the time, that may have----
Ms. Eshoo. Almost a half-century ago.
Mr. O'Boyle. But times and circumstances have changed.
Ms. Eshoo. I think so.
Mr. O'Boyle. And in the post-Citizens United world, we have
unprecedented amounts of unaccountable spending. Voters don't
know who is trying to persuade them.
Ms. Eshoo. Well, that is the problem. What would you
recommend?
Mr. O'Boyle. I would recommend that the FCC undertake a
notice of proposed rulemaking to begin to rewrite the
sponsorship identification rules, updating them for----
Ms. Eshoo. So an update of that section.
Mr. O'Boyle. That is right. And we could do that in time
for the 2016 general election.
Ms. Eshoo. I will yield back, Mr. Chairman. Thank you.
Mr. Walden. The gentlelady yields back the time.
And we now go to Mr. Latta.
Mr. Latta. Well, thank you, Mr. Chairman.
And, Mr. Waldron, in your testimony, you noted that the FCC
has not completed its statutorily mandated quadrennial review
of ownership rules in a timely manner.
Can you explain how the FCC's failure to complete its
quadrennial review affects the ability of broadcasters to
effectively compete in the marketplace and why it is important
to get this done?
Mr. Waldron. Thank you, Mr. Latta.
It has been more than 12 years since the FCC actually has
given a thorough look at ownership. Think about how the
landscape has changed in that time. We have Facebook and Google
that are a significant source of competing ad space for local
broadcasters. We have cable companies that have formed
interconnected pacts, so they compete against broadcasters for
advertising, for audience and eyeballs.
And, in that environment, we still have an ownership rule
which exists as if a broadcaster only competes with
broadcasters. It does not acknowledge that your local car
company can go place an ad on Facebook or they can place an ad
with Google or they can place an ad with other broadcasters or
they can place an ad with every cable company.
And so we think if the FCC actually did the job that
Congress gave it, to look at its ownership rules and look at
the current environment today, we think that they would
actually come out with a sensible rule that would allow
reasonable combinations of TV stations. But looking at the
prism through 2003 distorts what the rules should be.
Mr. Latta. Thank you.
Mr. Chairman, I think I am going to yield so maybe the
gentleman from New Jersey can get his questions in. Thank you.
Mr. Walden. The Chair recognizes the gentleman from New
Jersey.
Mr. Pallone. Thank you.
Mr. Chairman, I just wanted to follow up to some extent on
what Ms. Eshoo was asking, because the broadcasting industry,
particularly TV stations, have benefited greatly from billions
of dollars in revenue from political advertising every cycle.
And although the FCC took a step forward by putting the public
and political file online for TV stations, I am concerned that
isn't enough for consumers.
Are consumers able to easily use these online political
files to determine who is behind the issue ads that they see?
And, you know, don't Americans have the right to know who is
behind these ads? If you can comment on, you know, the access
to finding out the information about who is doing these ads.
I was going to ask Mr. O'Boyle.
Mr. O'Boyle. Thank you, Mr. Pallone.
We feel that there are important steps the FCC could take
to improve the quality of the online public file by making it a
searchable, queryable database that, as other Government
agencies make their data machine-readable so that you can
search----
Mr. Pallone. Well, you agree that right now it is hard to
find?
Mr. O'Boyle. It is not particularly useful. In many cases,
we have public files that have been handwritten, scanned into a
PDF, and uploaded so that they can't actually be searched and
you have to decipher sort of a scrawl. And that could be made
much more usable.
More broadly speaking, even if that were made as usable as
we would like, it still would not disclose the true identity of
an actual sponsor of an ad.
And to your question about whether voters are able to
determine who is trying to persuade them, no. To get that, we
need to get the FCC to undertake a rulemaking updating its
sponsorship identification rules for 2015.
Mr. Pallone. OK.
I have one more question. Do we have time?
Mr. Walden. We have let the cloakroom know that we are
trying to finish.
Mr. Pallone. All right. Then let me stop. Thanks.
Ms. Eshoo. No, ask it.
Mr. Pallone. All right. All right. Well, this is a New
Jersey question, though.
Mr. Walden. Oh, forget that.
Mr. Pallone. I can wait till we come back.
Mr. Walden. No, no, we are not coming back.
Mr. Pallone. Oh, all right.
Well, I am just worried that in New Jersey--you know, this
is from Hurricane Sandy and the local broadcasters--in New
Jersey, we already have too few TV stations. And one of them is
owned by an entity that already owns two other stations in the
same market.
So I was going to ask either Mr. O'Boyle or Mr. Scurato,
can you elaborate on whether joint ownership as well as
situations where there are sharing agreements between stations
produces more local news and information for consumers? This is
our concern in New Jersey.
Mr. O'Boyle. Briefly. And I will allow Mr. Scurato to
respond, as well.
University of Delaware Professor Danilo Yanich has studied
extensively the nature of nested ownership structures and the
impact they have on content. And in every market they have
studied, they yield homogenization of content.
So, rather than plowing the efficiencies into new
investigative local reporting that holds local officials
accountable and informs the local electorate, instead, they are
padding the bottom line.
Mr. Pallone. OK.
Mr. Scurato. Further, I would just add that, you know,
there is evidence that, as these agreements are entered into,
these sharing agreements, that newsrooms shrink and there are
fewer jobs at these stations. And so that has a pretty direct
impact on the quality of local news and information.
Mr. Pallone. I think you are right.
All right. Thank you very much.
Mr. Walden. We want to thank our panelists.
We have seven votes, so the intent would be to adjourn,
unless there is an objection.
I am getting mixed signals.
Ms. Eshoo. Well, I wish we could stay all morning because
there is so much that we can be discussing, but, you know, all
the well-laid plans in the world.
I don't see any other members that showed up from our side
for the hearing. So do you anticipate any? Because if you
don't, then----
Mr. Walden. I don't believe so. So I think other questions
can be submitted for the record.
Ms. Eshoo. Yes.
Mr. Walden. Otherwise, they are going to be here another
hour before we get back.
Ms. Eshoo. I have some more questions, so I am going to
submit them to you.
Mr. Walden. Thank you for your participation. Sorry this
hearing was abbreviated, as well. We appreciate your input, and
maybe we can have a further discussion on these issues down the
road.
We are adjourned.
[Whereupon, at 10:33 a.m., the subcommittee was adjourned.]
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