[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

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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

                              ----------                              

                           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

                              ----------                              


                       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:]
    
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    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:]
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    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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