[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                   STELAR REVIEW: PROTECTING CONSUMERS IN 
                        AN EVOLVING MEDIA MARKETPLACE

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              JUNE 4, 2019

                               __________

                           Serial No. 116-41


      Printed for the use of the Committee on Energy and Commerce
      
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                                __________

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
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-----------------------------------------------------------------------------------                         

                    COMMITTEE ON ENERGY AND COMMERCE

                     FRANK PALLONE, Jr., New Jersey
                                 Chairman
BOBBY L. RUSH, Illinois              GREG WALDEN, Oregon
ANNA G. ESHOO, California              Ranking Member
ELIOT L. ENGEL, New York             FRED UPTON, Michigan
DIANA DeGETTE, Colorado              JOHN SHIMKUS, Illinois
MIKE DOYLE, Pennsylvania             MICHAEL C. BURGESS, Texas
JAN 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                BRETT GUTHRIE, Kentucky
JOHN P. SARBANES, Maryland           PETE OLSON, Texas
JERRY McNERNEY, California           DAVID B. McKINLEY, West Virginia
PETER WELCH, Vermont                 ADAM KINZINGER, Illinois
BEN RAY LUJAN, New Mexico            H. MORGAN GRIFFITH, Virginia
PAUL TONKO, New York                 GUS M. BILIRAKIS, Florida
YVETTE D. CLARKE, New York, Vice     BILL JOHNSON, Ohio
    Chair                            BILLY LONG, Missouri
DAVID LOEBSACK, Iowa                 LARRY BUCSHON, Indiana
KURT SCHRADER, Oregon                BILL FLORES, Texas
JOSEPH P. KENNEDY III,               SUSAN W. BROOKS, Indiana
    Massachusetts                    MARKWAYNE MULLIN, Oklahoma
TONY CARDENAS, California            RICHARD HUDSON, North Carolina
RAUL RUIZ, California                TIM WALBERG, Michigan
SCOTT H. PETERS, California          EARL L. ``BUDDY'' CARTER, Georgia
DEBBIE DINGELL, Michigan             JEFF DUNCAN, South Carolina
MARC A. VEASEY, Texas                GREG GIANFORTE, Montana
ANN M. KUSTER, New Hampshire
ROBIN L. KELLY, Illinois
NANETTE DIAZ BARRAGAN, California
A. DONALD McEACHIN, Virginia
LISA BLUNT ROCHESTER, Delaware
DARREN SOTO, Florida
TOM O'HALLERAN, Arizona
                                 ------                                

                           Professional Staff

                   JEFFREY C. CARROLL, Staff Director
                TIFFANY GUARASCIO, Deputy Staff Director
                MIKE BLOOMQUIST, Minority Staff Director
             Subcommittee on Communications and Technology

                        MIKE DOYLE, Pennsylvania
                                 Chairman
JERRY McNERNEY, California           ROBERT E. LATTA, Ohio
YVETTE D. CLARKE, New York             Ranking Member
DAVID LOEBSACK, Iowa                 JOHN SHIMKUS, Illinois
MARC A. VEASEY, Texas                STEVE SCALISE, Louisiana
A. DONALD McEACHIN, Virginia         PETE OLSON, Texas
DARREN SOTO, Florida                 ADAM KINZINGER, Illinois
TOM O'HALLERAN, Arizona              GUS M. BILIRAKIS, Florida
ANNA G. ESHOO, California            BILL JOHNSON, Ohio
DIANA DeGETTE, Colorado              BILLY LONG, Missouri
G. K. BUTTERFIELD, North Carolina    BILL FLORES, Texas
DORIS O. MATSUI, California, Vice    SUSAN W. BROOKS, Indiana
    Chair                            TIM WALBERG, Michigan
PETER WELCH, Vermont                 GREG GIANFORTE, Montana
BEN RAY LUJAN, New Mexico            GREG WALDEN, Oregon (ex officio)
KURT SCHRADER, Oregon
TONY CARDENAS, California
DEBBIE DINGELL, Michigan
FRANK PALLONE, Jr., New Jersey (ex 
    officio)
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Mike Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................     1
    Prepared statement...........................................     3
Hon. Robert E. Latta, a Representative in Congress from the State 
  of Ohio, prepared statement....................................     4
    Prepared statement...........................................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
    Prepared statement...........................................     7
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     9
    Prepared statement...........................................    10
Hon. Billy Long, a Representative in Congress from the State of 
  Missouri, prepared statement...................................    81

                               Witnesses

Patricia Jo Boyers, President and Vice Chairman of the Board, 
  Boycom Vision, and Vice Chairman of ACA Connects-America's 
  Communications Association.....................................    12
    Prepared statement...........................................    14
    Answers to submitted questions...............................   128
Robert D. Thun, Senior Vice President, Content and Programming, 
  AT&T...........................................................    26
    Prepared statement...........................................    28
    Answers to submitted questions...............................   132
Gordon H. Smith, President and CEO, National Association of 
  Broadcasters...................................................    33
    Prepared statement...........................................    35
    Answers to submitted questions...............................   144
John Bergmayer, Senior Counsel, Public Knowledge.................    42
    Prepared statement...........................................    44
    Answers to submitted questions...............................   152

                           Submitted Material

Letter of June 3, 2019, from Karyn A. Temple, Register of 
  Copyrights and Director, United States Copyright Office 
  Enclosure, to Mr. Jerrold Nadler and Mr. Doug Collins, 
  submitted by Mr. Doyle.........................................    82
Letter of May 30, 2019, from Dave Loebsack, Member of Congress, 
  to Mr. Pallone, et al., submitted by Mr. Doyle.................    92
Letter of May 2, 2019, from Michael Cloud, Member of Congress, to 
  Mr. Jerrold Nadler and Mr. Doug Collins, submitted by Mr. Doyle    94
Letter of June 3, 2019, from Mike Chappell, Chairman, American 
  Television Alliance, to Mr. Pallone, et al., submitted by Mr. 
  Doyle..........................................................    95
Letter of June 4, 2014, from Jonathan Schwantes, Senior Policy 
  Counsel, Consumer Reports, to Mr. Doyle and Mr. Latta, 
  submitted by Mr. Doyle.........................................   100
Letter of May 31, 2019, from James L. Winston, President, 
  National Association of Black Owned Broadcasters, to Mr. 
  Pallone, et al., submitted by Mr. Doyle........................   103
Letter of May 10, 2019, from Jared Golden, Member of Congress, to 
  Mr. Pallone, et al., submitted by Mr. Doyle....................   105
Letter of June 3, 2019, from Craig Morris, Co-Founder and 
  President, Ride Television Network, Inc., to Mr. Pallone, et 
  al., submitted by Mr. Doyle....................................   107
Letter of June 3, 2019, from American Agri-Women, et al., to Mr. 
  Pallone, et al., submitted by Mr. Doyle........................   111
Statement of June 4, 2019, by Neil Fried, Senior Vice President 
  and Senior Counsel, Motion Picture Association of America, 
  Inc., submitted by Mr. Doyle...................................   113
Article of Sports fans need Distant Network Signals, submitted by 
  Mr. Doyle......................................................   123
Letter of June 4, 2019, from Tom Struble, Technology and 
  Innovation Policy Manager and Jeff Westling, Technology and 
  Innovation Policy Fellow, R Street Institute, to Mr. Doyle and 
  Mr. Latta, submitted by Mr. Doyle..............................   125

 
  STELAR REVIEW: PROTECTING CONSUMERS IN AN EVOLVING MEDIA MARKETPLACE

                              ----------                              


                         TUESDAY, JUNE 4, 2019

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:28 a.m., in 
room 2322, Rayburn House Office Building, Hon. Mike Doyle 
(chairman of the subcommittee) presiding.
    Present: Representatives Doyle, McNerney, Clarke, Loebsack, 
Veasey, McEachin, Soto, O'Halleran, Eshoo, DeGette, 
Butterfield, Matsui, Welch, Cardenas, Dingell, Pallone (ex 
officio), Latta (subcommittee ranking member), Shimkus, 
Scalise, Olson, Kinzinger, Bilirakis, Johnson, Long, Flores, 
Brooks, Walberg, Gianforte, and Walden (ex officio).
    Staff Present: Jeffrey C. Carroll, Staff Director; Jennifer 
Epperson, FCC Detailee; Evan Gilbert, Deputy Press Secretary; 
Waverly Gordon, Deputy Chief Counsel; Alex Hoehn-Saric, Chief 
Counsel, Communications and Consumer Protection; Zach Kahan, 
Outreach and Member Service Coordinator; Jerry Leverich, Senior 
Counsel; Dan Miller, Policy Analyst; Phil Murphy, Policy 
Coordinator; Alivia Roberts, Press Assistant; Mike Bloomquist, 
Minority Staff Director; S. K. Bowen, Minority Press Assistant; 
Robin Colwell, Minority Chief Counsel, Communications and 
Technology; Brannon Rains, Minority Legislative Clerk; and 
Michael Engel, Minority Detailee, Communications and 
Technology.
    Mr. Doyle. The Subcommittee on Communications and 
Technology will now come to order. The Chair now recognizes 
himself for 5 minutes.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Good morning. I would like to welcome everyone to the 
subcommittee's first hearing of the new Congress on STELAR and 
the involving media marketplace. I would also like to thank our 
witnesses for appearing before us today to discuss these 
important issues.
    Five years ago, this committee passed the STELA 
Reauthorization Act. This bill extended the authorization for 
satellite television companies to provide broadcast content to 
unserved households. According to the satellite TV industry, 
this provision enables roughly 870,000 customers in mostly 
rural communities to receive over-the-air broadcast television 
signals.
    These customers fall into a few categories. The first is 
households that cannot receive broadcast content using an 
antenna. The second is markets where a satellite provider does 
not offer local-to-local service, and the third is short 
markets, where there are no local affiliated stations with one 
of the networks. And finally, satellite TV subscribers that 
receive service to a commercial truck or an RV.
    In effect, this provision enables rural customers of DISH 
and DIRECTV to receive content from NBC, ABC, CBS, FOX, and 
other broadcast stations where it isn't otherwise available. 
STELAR also required broadcast stations and MVPDs, cable, 
telco, and satellite companies like Charter, Verizon, DISH, and 
others that offer television service, to negotiate the carriage 
of broadcast television content on their systems which is known 
as retransmission consent, or retrans, under a good faith 
standard to be decided by the FCC.
    This regulatory backstop was and is important because there 
have been allegations that these negotiations have, at times, 
not been carried out in good faith. When negotiations stall or 
break down, broadcasters may pull their signal from an MVPD 
system channel lineup, resulting in a blackout of that content. 
In these circumstances, consumers suffer as a result of the two 
parties' inability to come to an agreement.
    And while it is true that some customers have the ability 
to set up an antenna to get this content over the air when it 
gets pulled off their cable or satellite service, for many, 
this option is too complicated, or they go without this 
broadcast content during the disputes.
    Requiring the parties engage in good faith negotiations was 
intended to reduce the number of blackouts and the resulting 
consumer harm. These were the major provisions of the bill that 
are now set to expire at the end of this year. Some in the 
broadcast industry have argued that this legislation should 
sunset, and that the provisions are no longer necessary.
    While I agree that this law isn't a perfect solution, 
allowing this legislation to sunset would create a crisis that 
could result in nearly a million consumers losing access to 
important broadcast content. Allowing a lapse of the good faith 
standard in retransmission consent negotiation only invites bad 
behavior and consumer harm.
    More broadly, the media landscape has changed a lot in the 
last five years, with major consolidation occurring among 
broadcasters and MVPDs. Ms. Boyers, in her testimony, argues 
that this arms race between the two sides has resulted in 
increased rates for smaller rural cable providers who don't 
have the scale to get preferential rates, and who, oftentimes, 
pay higher rates for the content than their larger rivals,
    However, across the board, we hear from MVPDs that the 
rates for retransmission consent are increasing. In recent 
years, we have also seen the rise of over-the-top providers 
like Sling, HULU, and YouTube, offering live television service 
over the internet directly to consumers. This is a complex 
marketplace that consumers rely on for information and 
entertainment, and Americans pay a lot every year to get access 
to this content.
    [The prepared statement of Mr. Doyle follows:]

                 Prepared Statement of Hon. Mike Doyle

    Good morning, I'd like to welcome everyone to this 
subcommittee's first hearing of the new Congress on STELAR and 
the evolving media marketplace. I'd also like to thank our 
witnesses for appearing before us today to discuss these 
important issues.
    Five years ago, this Committee passed the STELA 
Reauthorization Act. This bill extended the authorization for 
satellite television companies to provide broadcast content to 
unserved households. According to the satellite TV industry, 
this provision enables roughly 870,000 customers, in mostly 
rural communities, to receive over-the-air broadcast television 
signals.
    These customers fall into a few categories. The first is 
households that cannot receive broadcast content using an 
antenna. The second is markets where a satellite provider does 
not offer local into local service. The third is short markets, 
where there are no local affiliated stations with one of the 
networks. And finally, satellite TV subscribers that receive 
service to a commercial truck or RV.
    In effect, this provision enables rural customers of Dish 
and Direct TV to receive content from NBC, ABC, CBS, Fox, and 
other broadcast stations, where it isn't otherwise available.
    STELAR also required broadcast stations and MVPDs, cable, 
telco, and satellite companies like Charter, Verizon, Dish, and 
others that offer television service, to negotiate the carriage 
of broadcast television content on their systems, what is known 
as retransmission consent or retrans, under a good faith 
standard, to be decided by the FCC. This regulatory backstop 
was and is important, because there have been allegations that 
these negotiations have at times not been carried out in good 
faith. When negotiations stall or break down, broadcasters may 
pull their signal from an MVPDs system's channel lineup, 
resulting in a blackout of that content. In these 
circumstances, consumers suffer as a result of the 2 parties' 
inability to come to an agreement. And while it is true that 
some consumers have the ability to setup an antenna to get this 
content over the air, when it gets pulled off their cable or 
satellite service, for many this option is too complicated, and 
they go without this broadcast content during these disputes. 
Requiring that parties engage in good faith negotiations was 
intended to reduce the number of blackouts and the resulting 
consumer harm. These were the major provisions of the bill that 
are now set to expire at the end of this year.
    Some in the broadcast industry have argued that this 
legislation should sunset, and that the provisions are no 
longer necessary. While I agree that this law isn't a perfect 
solution, allowing this legislation to sunset would create a 
crisis that could result in nearly a million consumers losing 
access to important broadcast content. Allowing a lapse of the 
good faith standard in retransmission consent negotiations only 
invites bad behavior and consumer harm. More broadly, the media 
landscape has changed a lot of the last five years, with major 
consolidation occurring among broadcasters and MVPDs. Ms. 
Boyers, in her testimony, argues that this arms race between 
the two sides has resulted in increased rates for smaller rural 
cable providers, who don't have the scale to get preferential 
rates, and who often times pay higher rates for content than 
their larger rivals. However, across the board, we hear from 
MVPDs that the rates for retransmission consent are increasing. 
In recent years we have also seen the rise of over-the-top 
providers like Sling, Hulu, and YouTube offering live 
television services over the internet directly to consumers.
    This is a complex marketplace that consumers rely on for 
information and entertainment, and American's pay a lot every 
year to get access to this content.
    I look forward to the testimony of our witnesses.

    Mr. Doyle. I look forward to the testimony of our 
witnesses, and with that, I yield one minute to my friend from 
California, Ms. Eshoo.
    Ms. Eshoo. I thank the chairman for yielding to me.
    I think today's hearing is not so much about choosing sides 
between broadcasters and cable. I think it is really about 
consumers who I think are losing out in the media market in two 
ways: blackouts and unexpected fees. Too often, consumers are 
held hostage during disputes between broadcasters and cable. In 
2017, there were 213 blackouts, which is more than double the 
number from five years prior. I am pleased to report that Mr. 
Scalise and I have agreed to a champion legislation to end 
blackouts by overhauling outdated regulations.
    Next, I think we should also deal with the hundreds of 
millions of dollars of misleading, below-the-line fees that 
consumers get stuck with every year. My bill, H.R. 1220, The 
True Fees Act, simply requires that cable, phone, and internet 
providers include all fees in the prices they advertise to 
consumers. Kind of a commonsense idea. I think that it would 
ensure that the consumers would then know exactly what they are 
paying when they sign up for a service.
    So thank you, Mr. Chairman. I look forward to a productive 
hearing, and thank you for yielding to me.
    Mr. Doyle. I thank the gentlelady, and now the Chair 
recognizes Mr. Latta, the ranking member of the subcommittee, 
for five minutes for his opening statement.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF OHIO

    Mr. Latta. Well, thank you, Mr. Chairman, and thank you 
very much for holding today's hearing, and thank you very much 
to our panel of witnesses for being with us today.
    Today's hearing, once again, considers the interplay 
between local broadcasters and direct broadcast satellite 
services known as STELAR. Key provisions of STELAR expire at 
the end of 2019, and I am pleased that the subcommittee is 
continuing this process on a question of reauthorization that 
we started last year with a broader hearing examining the 
current state of the video marketplace.
    In the subcommittee's hearing last September, we learned 
about changes in consumers' viewing habits, such as the 
continuing rise of the over-the-top video services, and notable 
shifts of advertising expenditures across the various mediums. 
Nevertheless, while online video services flourish and deliver 
exciting and innovating viewing alternatives, the bedrock of 
our video marketplace remains local broadcast programming.
    All of us rely on our local broadcasters for news, 
emergency updates, weather, traffic, community engagement, and 
local interest programming. Accordingly, this subcommittee has 
a duty to ensure that local broadcasters retain the ability to 
invest in infrastructure and programming that keeps all 
Americans connected to their communities.
    For 30 years, Congress has also played a key role in 
ensuring that rural Americans who are unable to receive an 
over-the-air broadcast network signal are able to receive local 
news and content via direct broadcast satellite services. 
Congress accomplished this in 1988 by creating a statutory 
copyright license for fee, license fee, that helped the direct 
broadcast satellite industry take root.
    But the video marketplace continues to evolve, and 
accordingly, every five years we carefully examine whether this 
model should be reauthorized, repealed, or revised. Through 
each iteration of what we now call STELAR, we ask the expert 
subject matter agencies to report on the effectiveness of 
statutory license fee model, and we hold hearings calling upon 
a broad collection of the stakeholders representing both 
consumers and the industrial participants.
    I am pleased that we have again seated a qualified panel of 
experts who can assist this committee to paint an accurate 
picture of this market. It is important that we foster a 
competitive video marketplace and ensure that all Americans 
continue to receive access to unbiased local news reports, up-
to-the-minute weather updates, and critical information during 
emergencies.
    For example, unfortunately, last week in Ohio, we had a 
series of tornadoes, and folks back home in my district, 
particularly, had to rely on the local broadcast as to what was 
occurring.
    I look forward to working with the chairman and members of 
the subcommittee as we carefully examine reauthorization, and I 
thank our witnesses again.
    And I appreciate the time, Mr. Chairman, and I yield back.
    [The prepared statement of Mr. Latta follow:]

               Prepared Statement of Hon. Robert E. Latta

    Thank you, Mr. Chairman. I appreciate the subcommittee 
holding this hearing today and I thank our panel of witnesses 
for testifying.
    Today's hearing once again considers the interplay between 
local broadcasters and direct broadcast satellite services--
namely the``Satellite Television Extension and Localism Act 
Reauthorization," known as ``STELAR." Key provisions of STELAR 
expire at the end of 2019, and I'm pleased this subcommittee is 
continuing this process on the question of reauthorization that 
we started last year with a broader hearing examining the 
current state of the video marketplace.
    In this subcommittee's hearing last September, we learned 
about changes in consumers' viewing habits, such as the 
continuing rise of over-the-top video services, and notable 
shifts of advertising expenditures across the various mediums. 
Nevertheless, while online video services flourish and deliver 
exciting and innovative viewing alternatives, the bedrock of 
our video marketplace remains local broadcast programming. All 
of us rely on our local broadcasters for news, emergency 
updates, weather, traffic, community engagement, and local 
interest programming. Accordingly, this subcommittee has a duty 
to ensure that local broadcasters retain the ability to invest 
in infrastructure and programming that keeps all Americans 
connected to their communities.
    For 30 years, Congress has also played a key role in 
ensuring that rural Americans who are unable to receive an 
over-the-air broadcast network signal, are able to receive 
local news and content via direct broadcast satellite services. 
Congress accomplished this in 1988 by creating a statutory 
Copyright license fee that helped the direct broadcast 
satellite industry take root. But the video marketplace 
continues to evolve and, accordingly, every five years, we 
carefully reexamine whether this model should be reauthorized, 
repealed, or revised. Through each iteration of what we now 
call STELAR, we ask the expert subject matter agencies to 
report on the effectiveness of statutory license fee model, and 
we hold hearings calling upon a broad collection of 
stakeholders representing both consumers and industry 
participants. I'm pleased that we have again seated a qualified 
panel of experts who can assist this committee to paint an 
accurate picture of this market. It's important that we foster 
a competitive video marketplace AND ensure that all Americans 
continue to receive access to unbiased local news reports, up-
to-the-minute weather updates, and critical information during 
emergencies.
    I look forward to working with the chairman and the members 
of the subcommittee as we carefully consider reauthorization.
    Thank you again to our witnesses and I yield back.

    Mr. Latta. And at this time, I am going to yield to Mr. 
Long.
    Mr. Long. Thank you. I thank my friend for yielding, and I 
would like to thank the witnesses for being here, and I am 
especially happy to see a fellow Missourian, Ms. Boyers, here 
today even though she did make the unfortunate decision to live 
in Jason Smith's district and not mine. But as a real estate 
broker for 30 years, I still have a lot of friends. If you want 
to move into the best of the 435 Congressional districts, we 
can set you up.
    I think we can all agree that the media and entertainment 
marketplace has, and is, rapidly evolving. There is more 
competition than ever, and government intervention is not 
always the answer. It is important for us to examine the state 
of the video marketplace, but as we approach a potential sixth 
reauthorization of STELAR, we need to take a hard look at the 
underlying policy and its relevance today rather than assuming 
its passage is a necessity.
    They say there is only 3 things in life that are certain: 
death, taxes, and the reauthorization of STELAR. We should 
ignore the inclination to rubber-stamp this legislation only 
because this committee has historically done so in the past, 
and I yield back.
    Mr. Latta. Mr. Chairman, at this time--are there any other 
members wishing to claim the remainder of my time? Mr. Scalise?
    Mr. Scalise. Thank you, Mr. Ranking Member and Mr. 
Chairman. I appreciate all of you coming to talk about STELAR, 
and really, not just STELAR in the context of reauthorization 
in that silo, but it is a time that forces us, I think, to look 
at the entire marketplace, the entire video marketplace, and 
all the laws governing it, because I actually share the 
expressions of some of the panelists who talk about why they 
think STELAR should expire.
    It is not because they think it should just go away because 
they want more reforms, and some people might think that STELAR 
going away gets us reform, but it really doesn't. STELAR going 
away just brings us back to the fundamental 1992 Cable Act 
laws, the foundation which is incredibly outdated.
    We have got a marketplace that has changed dramatically 
since 1992. I think everybody knows that. I mean, I literally 
can pull up content on this device right here, and it is not 
governed by--primarily most of what I would pull up is not 
governed by the 1992 Cable Act. Some actually is governed by 
the 1992 Cable Act.
    But if I go on the internet and pull something up, or if I 
am over the top, why do we have such a diverse set of rules and 
laws that apply to a basic industry in our country? We need to 
reform the entire 1992 Cable Act. It is long past time for this 
Congress to do it.
    I applaud Congresswoman Eshoo, and I know she spoke a few 
minutes ago. We have been working very closely, and hopefully, 
we can get to that point where we are reforming the entire 
marketplace that regards video.
    Mr. Doyle. The gentleman yields back. The Chair now 
recognizes Mr. Pallone, chairman of the full committee, for 5 
minutes for his opening statement.

OPENING STATEMENT OF HON. FRANK PALLONE, Jr., A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Pallone. Thank you, Mr. Doyle.
    For nearly 70 years, television has been a unifying thread 
in American society. It brings people together, friends gather 
around to watch the big game, and coworkers share their 
theories about the twists and turns of the moments most-watched 
series. TV is also the place where we get our local and 
national news, and where we turn for emergency information 
during a storm or natural disaster.
    The hearing today may appear to be focused on a few 
discrete, arcane provisions of communications and copyright 
law, but it is fundamentally about consumers getting access to 
broadcast programming, whether they are in urban or rural 
areas. And we should continue to focus on the timeless values 
that inform our media policy, and those are localism, 
diversity, and competition.
    The STELA Reauthorization Act of 2014, or STELAR, and its 
predecessors, established the framework that allows satellite 
television providers to deliver broadcast stations inside, and 
sometimes outside of a subscriber's market to their customers. 
Some so-called unserved subscribers can't receive their local 
stations from an antenna, because they are too far away, or 
they are in a media market that doesn't have a station 
affiliated with one or more of the big four networks, and these 
consumers must be protected.
    At the same time, satellite television providers are not 
required to carry local broadcast networks. As a result, some 
subscribers receive out-of-market network programming from 
their satellite provider instead of local stations.
    Congress also created the good faith negotiation rules that 
underlie the agreements that allow consumers to watch over-the-
air broadcast stations as part of their cable and satellite TV 
packages. As media consolidation has grown, so too have the 
fights over these programming agreements, and unfortunately, 
consumers have been caught in the middle. The number of station 
blackouts has been increasing as have the rates consumers pay. 
Smaller telecommunication companies are facing a choice of 
whether to continue as cable operators, or simply become 
broadband providers.
    So as we begin our examination of STELAR, it is important 
that we ask the ultimate question of how best to put consumers 
first. I expect that my colleagues on both sides of the aisle 
will offer a number of different solutions, large and small, 
tackling different issues cropping up within the media 
landscape.
    In my opinion, we should focus our analysis on the 
consumers, and questions like what are the implications if 
STELAR is not reauthorized, and how are the over 800,000 
consumers currently receiving distant signals be impacted? What 
is the path that gives consumers the ability to access at 
prices they can afford the television content they want? How do 
we ensure that consumers are not rendered pawns in high-stakes 
negotiations between video distribution companies and big 
broadcaster station groups?
    And how can we ensure that broadcast stations remain 
vibrant outlets of expression and trusted sources of 
information for the local communities, while also promoting 
competition to the benefit of consumers? Also, how can we 
encourage the carrying of local programming at reasonable 
rates, and that local programming reflects a diversity of 
views? So this committee will closely examine these issues and 
work together to find a consensus approach of moving forward.
    I want to thank the witnesses for being here today.
    [The prepared statement of Mr. Pallone follows:]

             Prepared Statement of Hon. Frank Pallone, Jr.

    For nearly 70 years, television has been a unifying thread 
in American society. It brings people together--friends gather 
around to watch the big game and co-workers share their 
theories about the twists and turns of the moment's must-watch 
series. Television is also the place where we get our local and 
national news, and where we turn for emergency information 
during a storm or natural disaster.
    The hearing today may appear to be focused on a few 
discreet, arcane provisions of communications and copyright 
law, but it is fundamentally about consumers getting access to 
broadcast programming, whether they are in urban or rural 
areas. We should continue to focus on the timeless values that 
inform our media policy-localism, diversity and competition.
    The STELA Reauthorization Act of 2014, or STELAR, and its 
predecessors, established the framework that allows satellite 
television providers to deliver broadcast stations inside, and 
sometimes outside, of a subscriber's market to their customers.
    Some so-called ``unserved" subscribers can't receive their 
local stations from an antenna because they are too far away, 
or they are in a media market that doesn't have a station 
affiliated with one or more of the ``big four" networks. These 
consumers must be protected. At the same time, satellite 
television providers are not required to carry local broadcast 
networks. As a result, some subscribers receive out of market 
network programming from their satellite provider instead of 
local stations.
    Congress also created the good faith negotiation rules that 
underlie the agreements that allow consumers to watch over-the-
air broadcast stations as part of their cable and satellite TV 
packages. As media consolidation has grown, so too have the 
fights over these programming agreements and unfortunately 
consumers have been caught in the middle.
    The number of station blackouts has been increasing as have 
the rates consumers pay. Smaller telecommunications companies 
are facing a choice of whether to continue as cable operators 
or simply become broadband providers.
    As we begin our examination of STELAR, it's important that 
we ask the ultimate question of how best to put consumers 
first.
    I expect that my colleagues on both sides of the aisle will 
offer a number of different solutions, large and small, 
tackling different issues cropping up within the media 
landscape. In my opinion, we should focus our analysis on the 
consumers:
    What are the implications if STELAR is not reauthorized and 
how will the over 800,000 consumers currently receiving distant 
signals be impacted?
    What is the path that gives consumers the ability to 
access--at prices they can afford--the television content they 
want?
    How do we ensure that consumers are not rendered pawns in 
high-stakes negotiations between video distribution companies 
and big broadcaster station groups?
    How can we ensure that broadcast stations remain vibrant 
outlets of expression and trusted sources of information for 
their local communities, while also promoting competition to 
the benefit of consumers?
    How can we encourage the carrying of local programming at 
reasonable rates and that local programming reflects a 
diversity of views?
    This Committee will closely examine these issues and work 
together to find a consensus approach of moving forward. I 
thank the witnesses for being here today, and with that, I 
yield back.

    Mr. Pallone.I still have--I don't know if anybody wants my 
time. If not, I will yield back. Thank you. Oh, yes. I will 
yield to the vice chair.
    Ms. Clarke. Thank you very much, Mr. Chairman, and I thank 
Chairman Doyle and our ranking member.
    Good morning, and I want to thank you for holding this very 
important hearing. Providing equal television broadcast access 
for consumers is crucial to informing the public, and having 
more competition available will assist our constituents.
    We are not seated here today to discuss satellite and cable 
operators or broadcasters for that matter. We are here today to 
focus on the consumers. Our constituents deserve rules that 
protect them. They deserve rules that protect the diversity of 
voices in media and access to the spectrum. It is my hope that 
your input, as experts in the field today, media marketplace, 
will give us that room and that space to do just that.
    With that, Mr. Chairman, I yield back.
    Mr. Pallone. And I yield back as well, Mr. Chairman.
    Mr. Doyle. The gentleman yields back. The Chair now 
recognizes Mr. Walden, the ranking member of the full 
committee, for five minutes for his opening statement.

  OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF OREGON

    Mr. Walden. Good morning, Mr. Chairman, and good morning to 
our witnesses. We are delighted to have you here today. I want 
to thank you. I know your expertise is going to help us as we 
work on this legislation and review the media marketplace; and 
whether or not the Satellite Home Viewer Act, first passed when 
Ronald Reagan was President, works for television viewers 
today.
    I would especially like to extend a warm welcome to my 
friend and fellow Oregonian, Senator Gordon Smith, who 
effectively served Oregon in the United States Senate for a 
dozen years. It is good to see you over here in the people's 
House, Senator.
    Mr. Smith. Thank you.
    Mr. Walden. Thirty years ago, Congress sought to ensure 
that rural Americans, unable to receive an over-the-air 
broadcast signal, would still be able to view content via 
satellite services. For a large rural district like mine in 
Oregon, which would stretch from the Atlantic Ocean to Ohio if 
you laid it over the east coast, this was critical.
    Congress would go on to bless the budding satellite 
industry with a discounted Copyright license as an alternative 
to individually negotiating with each Copyright holder. While 
the license to provide local-into-local is now a permanent 
fixture, the ``distant network signal'' license is still 
reviewed every five years, along with other elements that 
accompany the extension.
    As I emphasize when we did this five years ago during my 
time as subcommittee chair, this must be a transparent process 
and driven by data. I am encouraged the FCC last year commenced 
its quadrennial review of the media landscape. I am also 
appreciative of the work by the Government Accountability 
Office in drafting its report to Congress, directing--
describing the stakeholders' views on phasing out the statutory 
license. Our goal should certainly be that everyone in the 
country has access to local content and at a reasonable price.
    You all have heard me discuss my background in radio 
broadcasting, and, hopefully, understand that my priority that 
local content is preserved. We must have a model that revolves 
around this concept, because although we might like watching 
the latest shows on Netflix or some other service, it is 
essential that we have access to our local news, sports, 
weather, and emergency information. Whether it is the wildfires 
and smoke warnings in the summer in Oregon, or tornadoes, 
traffic accidents, emergency situations elsewhere in the 
country, local content provides vitally important, trustworthy, 
and timely information to communities across America.
    It is also certainly understandable in our fast-moving 
world to take stock of what has changed. Technological 
developments, paired with changes in how Americans consume 
video driven, in significant part, by online video services, 
have led video distributors to see steep declines in 
subscribers as consumers cut the cord, and broadcasters have 
seen advertising revenues move to digital platforms.
    This fact certainly impacts the distributors, but also 
impacts the broadcasters and their ability to serve their local 
communities with in-depth news programming. Local broadcasters 
expend tremendous resources serving their communities, and they 
deserve a level playing field. Through their FCC licenses, they 
are also trustees of the public's airways, and must serve the 
public's interest. That means they serve the needs and interest 
of their communities. We must be careful not to hamstring with 
them with negotiating restrictions not justified by market 
conditions.
    Most importantly, consumers won't tolerate gaps in 
coverage, blackouts, and arbitrage opportunities that drive up 
prices, and reduce the quality of content. The bottom line is 
that Congress must consider whether a distant network signal 
license extension is a bridge or a blockade to delivering local 
coverage.
    So I am committed to ensuring that all rural communities, 
both in Oregon and across the country, continue to receive 
robust, effective, and affordable local coverage. I am looking 
forward to the hearing today and hearing from our witnesses, a 
cross-section of industry and public interest stakeholders, as 
we move forward in this process and examine the role of 
statutory licensing in today's video marketplace.
    With that, Mr. Chairman, I yield back. Thank you.
    [The prepared statement of Mr. Walden follows:]

                 Prepared Statement of Hon. Greg Walden

    Mr. Chairman, thank you for scheduling this hearing today.
    And thank you to our witnesses for being with us today, I 
know expertise will be invaluable as we move forward in our 
review of the media marketplace and whether or not the 
Satellite Home Viewer Act--first passed when Ronald Reagan was 
president--works for television viewers today.
    I'd especially like to extend a warm welcome to my friend 
and fellow Oregonian, Senator Gordon Smith, who effectively 
served Oregon in the United States Senate for a dozen years. 
It's good to see you over here in ``the people's House."
    Thirty years ago, Congress sought to ensure that rural 
Americans, unable to receive an over-the-air broadcast signal, 
would still be able to view content via satellite services. For 
a large rural district like mine in Oregon--which would stretch 
from the Atlantic Ocean to Ohio if you laid it over the East 
Coast--this was critical.
    Congress would go on to bless the budding satellite 
industry with a discounted Copyright license as an alternative 
to individually negotiating with each Copyright holder. While 
the license to provide local-into-local signal is now a 
permanent fixture, the ``distant network signal" license is 
still reviewed every five years, along with other elements that 
accompany the extension.
    As I emphasized when we did this five years ago during my 
time as subcommittee chairman, this must be a transparent 
process driven by reliable data. I am encouraged that the FCC 
last year commenced its Quadrennial Review of the media 
landscape. I'm also appreciative of the work by the Government 
Accountability Office in drafting its report that Congress 
directed describing stakeholders' views on phasing out the 
statutory license.
    Our goal should certainly be that everyone in this country 
has access to local content at a reasonable price.
    You all have heard me discuss my background in 
broadcasting, and hopefully understand my priority that local 
content is preserved. We must have a model that revolves around 
this concept because although we might like watching the latest 
show on Netflix, it's essential that we have access to our 
local news, sports, weather and emergency information. Whether 
it is the wildfires and smoke warnings in the summer months in 
Oregon, or tornados, traffic accidents, and emergency 
situations, local content provides vitally important, 
trustworthy, and timely information to communities across the 
country.
    It is also certainly understandable in our fast-moving 
world to take stock of what has changed. Technological 
developments paired with changes in how Americans consume 
video--driven in significant part by online video services--
have led video distributors to see steep declines in 
subscribers as consumers cut the cord, and broadcasters have 
seen advertising revenues move to digital platforms. This fact 
certainly impacts the distributors, but also it impacts 
broadcasters in their ability to serve their local communities 
with in-depth news coverage.
    Local broadcasters expend tremendous resources serving 
their communities, and they deserve a level playing field. 
Through their FCC licenses, broadcasters serve as trustees of 
the public's airwaves, and must serve the public interest. That 
means they serve the needs and interests of their local 
communities. We must be careful not to hamstring them with 
negotiating restrictions not justified by market conditions.
    Most importantly, consumers won't tolerate gaps in 
coverage, blackouts, and arbitrage opportunities that drive up 
prices and reduce the quality of local content. The bottom line 
is that Congress must consider whether a distant network signal 
license extension is a bridge--or a blockade--to delivering 
local coverage. I am committed to ensuring that all rural 
communities both in Oregon, and across the United States, 
continue to receive robust, effective, and affordable local 
broadcast coverage. Period.
    So, I'm looking forward to hearing from our witnesses 
today--a cross-section of industry and public interest 
stakeholders--as we move forward in this process and examine 
the role of the statutory license in today's video marketplace. 
Thank you.

    Mr. Doyle. The gentleman yields back.
    The Chair would like to remind Members that pursuant to 
committee rules, all Members' written opening statements will 
be made part of the record.
    Now I would like to introduce witnesses for today's 
hearing. Ms. Patricia Jo Boyers, President and Vice-Chairman of 
the board of BOYCOM VISION. Welcome.
    Mr. Robert Thun, Senior Vice President of Content 
Programming, AT&T Mobility and Entertainment. Welcome, sir.
    Senator Gordon Smith, President and CEO of the National 
Association of Broadcasters. Senator, welcome.
    And Mr. John Bergmayer, Senior Counsel, Public Knowledge. 
Welcome, sir.
    We want to thank our witnesses for joining us today. We 
look forward to your testimony. At this time, the Chair will 
now recognize each witness for 5 minutes to provide their 
opening statement.
    Before we begin, I would like to explain the lighting 
system. In front of you is a series of lights. The light will 
initially be green at the start of your opening statement. It 
will turn yellow when you have 1-minute left, so please start 
to wrap up your testimony at that point, and the light will 
turn red when your time expires.
    Ms. Boyers, you are now recognized for 5 minutes, and 
please make sure your microphone is on.

 STATEMENTS OF PATRICIA JO BOYERS, PRESIDENT AND VICE CHAIRMAN 
   OF THE BOARD, BOYCOM VISION; ROBERT D. THUN, SENIOR VICE 
    PRESIDENT OF CONTENT AND PROGRAMMING, AT&T MOBILITY AND 
  ENTERTAINMENT; GORDON H. SMITH, PRESIDENT AND CEO, NATIONAL 
    ASSOCIATION OF BROADCASTERS; AND JOHN BERGMAYER, SENIOR 
                   COUNSEL, PUBLIC KNOWLEDGE

                STATEMENT OF PATRICIA JO BOYERS

    Ms. Boyers. Thank you. Good morning. I bring you greetings 
from the foothills of the great Ozark Mountains in southeast 
Missouri.
    My husband and I started our mom and pop, BOYCOM, in 1992. 
This meant we had to take out a second mortgage on our home, 
and we used our farm as collateral. It has never been easy. Our 
systems are very rural. In most areas, you need a tomcat if you 
want kittens.
    So our systems are 147 miles from our local NBC affiliate, 
and more than 75 miles away from our local NBC and CBS 
stations. Most of my subscribers can't get these signals free 
over the air, and none of these stations offer our local news, 
sports, or weather, no matter what others might tell you today.
    We have a very price-sensitive population. Four of our five 
counties are perpetually impoverished. This simply means that 
the median annual household income of these counties has been 
below the national poverty level since the 1960 Census. Yet we 
survive.
    All of y'all already know that the retransmission consent 
problems from your constituents, double-digit price hikes, 
blackouts before marquee events, and requirements to carry 
channels that no one has ever heard of. So the reality for us 
and other rural operators is, things have gotten worse since 
the last satellite television reauthorization.
    First, broadcasters increasingly control multiple network 
affiliates within local markets. For instance, in my market, 
the same folks from Atlanta, Georgia, own both the local CBS 
and the ABC affiliates. This naturally leads to higher prices. 
There is no other game in town for us. And these two stations 
air the exact same local broadcast; same weather guy, same news 
guy, same words, same news. So that is one station for the 
price of two, and it is not even my local news, unless we beat 
Cape Girardeau playing football.
    Secondly, broadcasters now control many more stations 
nationally. Years ago, I knew the owners of every broadcast 
station that I dealt with, all three of them. Now I deal with 
huge conglomerates. This means higher rates in the form of 
take-it-or-leave-it prices from the broadcasters who do not 
know where I am at, or anything about my customers.
    And thirdly, broadcasters are acquiring these regional 
sports networks to increase their overall average in these 
bundling of contract renewals. This is especially egregious for 
us when Sinclair finally finishes their purchase of the Fox 
Sports Midwest, home of the Cardinals. Hell, we could drive all 
the way to St. Louis, buy tickets, hot dogs, popcorn, and beer 
for the price of what we are going to be paying Sinclair for 
our subscriber.
    So it is no wonder why the broadcasters want this law to 
sunset. But what is needed is sunshine on their behavior, and 
the practices towards consumers and competition. Their prices 
are especially bad for small operators like me. The FCC reports 
that small cable operators now pay, on average, at least 30 
percent more than large systems pay for retransmission consent. 
For my small system, that percentage is 47 percent. Today, the 
four affiliated broadcast stations make up 20 percent of my 
programming fees, and the rest is for the other 300 channels, 
and that percentage is growing at a rate of more than 200 
percent every renewal cycle.
    So I know that y'all care as much about your constituents 
as I do about my customers, who are elderly, on fixed incomes 
that depend on us for that video service, and who are greatly 
impacted by higher subscription fees. In fact, a lot of these 
folks can't get even satellite for DISH, not because it is not 
available to them, but because they can't afford it. They don't 
have a checking account. They don't have credit cards. They 
don't have credit. Well, they do have credit, but it is bad. 
All they can do is work with a local cable TV provider who will 
work with them. We can work with them. We can even barter out 
sometimes.
    But by turning a deaf ear to my plight today simply ensures 
that those who live in the hills, and the hollows of southeast 
Missouri, and the rest of rural America will be uneconomical to 
reach, and those who do have our service are paying through the 
nose for it. So the mandated regulatory advantages given to 
broadcasters make a free marketplace solution impossible.
    Now, I hate the idea of Congress getting involved in my 
business, but they are already involved in my business, with 
everything from basic tier buyouts through to channel placement 
rules, so I do need your help. One solution of many to help 
mitigate these soaring fees would be to apply the good faith 
rules to negotiations between larger station groups and the 
NCTC, which is a buying group that the small cable TV 
operators, like myself, use. We are affiliated with the 
American Communications Association. We connect. So we have an 
affiliation with the NCTC.
    Regulations and reauthorization reform are desperately 
needed. Together, we can put our shoulder to the plow and 
figure this out now. Thank you.
    [The prepared statement of Ms. Boyers follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Doyle. Thank you very much. The Chair now recognizes 
Mr. Thun for 5 minutes.

                  STATEMENT OF ROBERT D. THUN

    Mr. Thun. Thank you, Chairman Pallone, Ranking Member 
Walden, subcommittee Chairman Doyle, subcommittee Ranking 
Member Latta, and members of the committee. My name is Rob 
Thun, Senior Vice President of Content Programming at AT&T. In 
my current role, I am responsible for securing content rights 
for both the major networks and local broadcast station groups 
for the company.
    AT&T has a 143-year history of innovation that includes 
eight Nobel prizes. We employ more than 200,000 Americans 
across all of the 50 States. We are deeply invested in our 
country, our communities, our employees, and our customers.
    This hearing is aptly focused on protecting consumers in a 
marketplace that is undergoing revolutionary change. It is 
consumers, our customers, and your constituents, who are 
driving these changes. They are demanding high quality video 
content and the ability to watch it where and how they want to.
    It is important for policymakers to ensure that the laws 
reflect a vibrant video marketplace and that all consumers 
benefit from it. At present, they do not, because the legal and 
regulatory framework for licensing broadcast television content 
distorts the market in favor of broadcasters. This framework is 
sorely in need of recalibration.
    The retransmission consent regime that governs the video 
marketplace dates back to the 1992 Cable Act, well before 
today's multitude of competitive platforms and consumer 
options. It was first put in place to help broadcasters obtain 
carriage on cable platforms that, at the time, were the only 
pay TV offering in most areas.
    Despite the competition in the video marketplace, 
broadcaster fees for carrying these stations have roughly 
doubled over the last five years. Since 2008 through 2018, the 
retrans fees have grown from $500 million to $10 billion. That 
is a 2,000 percent increase, which is clearly unsustainable.
    Why is this happening? Because under the current law, MVPDs 
cannot offer their subscribers alternate network programming, 
even temporarily, during an impasse. These laws unfairly 
protect local broadcasters from the changes in the video 
marketplace, harming innovation and consumer choice.
    When MVPDs attempt to limit the increases in these fees, 
local broadcasters, shielded with their statutory protections, 
respond with blackouts. Local broadcasters have shattered 
records for blackouts, and as I testify in front of you today, 
we face blackouts across 33 stations covering 25 markets.
    The cycle of increased local broadcast fees and blackouts 
unfairly penalizes the nearly 90 million pay TV customers that 
have chosen to keep their traditional TV service, which 
includes over 20 million of our premium customers.
    Retransmission consent has become a weapon for broadcasters 
to use to the detriment of these consumers. It is time to 
modernize the law to reflect the current marketplace, and to 
provide distributors a more level playing field with local 
broadcasters.
    The marketplace has seen tremendous change since Congress 
last renewed STELAR in 2014. There are now over 170 million 
over-the-top subscriptions with Netflix having more subscribers 
than AT&T and Comcast combined. As is done in every past 
renewal, Congress should view the STELAR renewal as an 
opportunity to fix the big problem in the video marketplace, 
the broken retransmission consent regime.
    To be clear, AT&T strongly supports the renewal of STELAR. 
STELAR contains provisions that benefit consumers, including 
the good-faith negotiations requirements and the statutory 
copyright license permitting satellite carriers to provide 
network programming to more than 870,000 satellite subscribers. 
Among these are hundreds of thousands of rural homes that 
broadcast stations fail to reach. In addition, it provides 
long-haul truckers, RV enthusiasts, tailgating sports fans, and 
the satellite delivery network TV.
    Congress should take this opportunity to make permanent the 
satellite distant signal license that brings network service to 
hundreds of thousands of rural customers. STELAR's requirement 
that broadcasters and MVPDs negotiate in good-faith serves an 
important backstop that places guideposts on these 
negotiations. We still have issues with stations refusing to 
negotiate fairly, or even respond to offers in certain cases. 
Despite this, the good-faith provisions are important to 
helping these negotiations along. The notion that broadcasters 
oppose this provision is emblematic of the challenges that we 
face under the current law.
    AT&T is grateful to the committee for holding this 
important hearing. We would also like to acknowledge and give 
thanks to the bipartisan efforts of Representatives Eshoo and 
Scalise to reform the broken retrans regime. We look forward to 
working with them and all of you to find a solution. I look 
forward to answering any questions you might have.
    [The prepared statement of Mr. Thun follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Doyle. I thank the gentleman.
    Now, Senator Smith, you are recognized for 5 minutes.

                  STATEMENT OF GORDON H. SMITH

    Mr. Smith. Thank you. And good morning, Chairmen Pallone 
and Doyle, Ranking Members Latta and Walden, and members of 
this distinguished subcommittee. My name is Gordon Smith. I am 
the president and CEO of the National Association of 
Broadcasters.
    On behalf of the free and local broadcast television 
stations serving your hometowns, I appreciate the opportunity 
to testify on how Congress can ensure that viewers are better 
able to access their local news, sports, weather, emergency 
information by allowing the expiring provisions of STELAR to 
sunset this year.
    Today, STELAR is not only unnecessary due to considerable 
advances in the media marketplace, but any reauthorization will 
further harm the satellite viewers that are currently denied 
access to their local television stations as a result of this 
law. For these reasons, broadcasters oppose STELAR's 
reauthorization. Similarly, the copyright office, the expert 
agency charged with administering STELAR's license, released a 
report yesterday calling for its expiration.
    In today's competitive media landscape, local broadcast 
television remains the most watched source of news, emergency 
updates, entertainment, programming, sports, and investigative 
journalism, something that is in trouble in this country. And 
in communities across America, we are their lifeline. Our 
viewers turn to local stations to get weather reports, learn 
how to help neighbors in need, and watch trusted local news 
anchors give an unbiased view of what is happening in their 
communities. Local broadcasting is a critical electronic thread 
that keeps every community together, informed, and safe.
    The exceptions to the benefits afforded by this local 
broadcast system are those communities that continue to be 
served by out-of-market stations as a result of STELAR. In 
1988, when the original satellite law was enacted, viewers had 
two predominant choices for video programming, over-the-air 
broadcasting, television, or subscription cable package offered 
by a single local provider.
    That satellite legislation, a predecessor of STELAR, was 
hugely successful in enabling the Nation's satellite television 
companies to better compete with cable's monopoly, but it was 
never meant to be permanent, and it gave satellite operators a 
crutch, the ability to serve local viewers with out-of-market 
network programming at below-market rates, and without having 
to negotiate for it.
    Thirty years later, today's media market is virtually 
unrecognizable and dramatically different, even compared to 
just five years ago at the last STELAR renewal. Those nascent 
satellite companies that Congress subsidized are now multi-
billion dollar behemoths, and today's competition for viewers 
comes not from those giant pay TV providers and their cable 
brethren, but also by unregulated behemoth tech companies, such 
as Facebook, Google, and online video providers, like Netflix 
and Amazon.
    Most importantly, no technological impediment exists today 
to prevent AT&T and DIRECTV and DISH from providing local 
broadcast channels to their subscribers across the country. 
Yet, STELAR's distant signal provisions incentivize those 
companies to serve a shrinking universe of eligible viewers 
with out-of-market stations because of this subsidy.
    To put this in practical terms, DIRECTV subscribers in 
Ottumwa, Iowa, saw a news story about a garbage truck catching 
fire in Los Angeles. The local news they should have seen is 
that of crop insurance prices rising, and its impact on farmers 
in their State, in the Hawkeye State.
    Well, during times of emergency, the difference between 
what STELAR viewers see versus the local broadcast news is 
stark. This is a business decision that a $200 billion AT&T 
DIRECTV is making in 12 rural markets across America, a choice 
that puts their profits ahead of service to consumers and ahead 
of the safety of communities.
    Broadcast and viewers salute Congressman Loebsack and other 
Members of Congress who have highlighted the STELAR harm. To 
end this consumer harm, and to modernize the video marketplace 
laws, Congress should allow STELAR to expire as it was 
originally intended. There is no policy justification or 
technological reason for this outdated law to be reauthorized. 
The time has come to stop subsidizing $1 billion satellite 
companies, and to instead provide viewers with the most 
accurate, the most watched, the most timely source of community 
news, their weather, their emergency information which is their 
local broadcast stations.
    Thank you for this opportunity.
    [The prepared statement of Mr. Smith follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Doyle. Thank you. We now recognize Mr. Bergmayer for 5 
minutes.

                  STATEMENT OF JOHN BERGMAYER

    Mr. Bergmayer. Thank you, Chairman Pallone, Chairman Doyle, 
Ranking Member Latta, and Ranking Member Walden and all the 
members of the subcommittee.
    Congress must reauthorize STELAR, or even better, make it 
permanent. Eight hundred and seventy thousand satellite 
subscribers should not be a bargaining chip in the decades-long 
disputes between broadcasters and MVPDs. Whether it is called 
SHVA, SHAVIA, SHAVIRA, STELA, or STELAR, it has ensured that 
satellite television companies can continue to retransmit local 
broadcast stations to all of their customers. STELAR is an 
important building block of video competition, allowing viewers 
who live in unserved areas to continue receiving a full range 
of national programming.
    Satellite television has been a success story. Action by 
Congress and the Federal Communications Commission has ensured 
that satellite television, once a new distribution technology, 
could access content and reach viewers. Public policies that 
ensure that new distributors can access content on fair terms 
benefit the public interest, and the success of satellite 
should be a lesson for policymakers about the importance of 
fostering new modes of video competition.
    Congress should make STELAR permanent. There is no reason 
for Congress to create artificial crises every few years, 
jeopardizing the ability of satellite to remain a competitor. 
The reason why Congress enacted STELAR in the first place 
remain unchanged. It remains a necessary part of the current 
overall regulatory system, which otherwise has no clear way to 
deal with the problem of short markets.
    However, if Congress does choose to reauthorize STELAR for 
only a few years, it could consider timing its expiration to 
the expiration of other video marketplace provisions, such as 
distant signal importation rules, or basic tier buy-through. 
This approach would better incentivize all industry players to 
come to the table.
    But fundamentally, if we are to consider reforms in the 
video marketplace rules, they should benefit consumers, not one 
industry sector at the expense of another. For years, public 
knowledge has believed that this is an instance where a 
predominantly deregulatory approach is needed and has a chance 
of bipartisan support.
    In particular, we would like to recognize Representatives 
Anna Eshoo and Steve Scalise for their leadership on video 
marketplace reforms. A promising approach would be to replace 
the cumbersome and duplicative compulsory copyright license 
retransmission consent system with a regime based purely on 
copyright. This would better align the interests of programming 
creators, and distributors, and eliminate duplicative 
negotiations. It would ensure that local broadcasters have the 
incentive to produce original, relevant local programming they 
would own the rights to, that they could then license to MVPDs 
and online distributors. And it would make it much easier for 
non-MVPD video distributors to access programming by 
eliminating the current two-track system where online video 
rights are negotiated one way, and VPD rights another way, and 
where incumbent MVPDs have a structural advantage.
    To eliminate viewer blackouts, such an approach would keep 
good faith requirements in place, as well as institute dispute 
resolution mechanisms, and a gradual phase-in would avoid 
industry and consumer disruption.
    Additionally, it is time to eliminate network non-
duplication and syndicated exclusivity protections as the 
elimination of the sports blackout rule has proven that such 
measures are unnecessary and that the video industry can manage 
its affairs via private contracting alone.
    Ambitious reforms of this kind are the best way to 
streamline the video marketplace and curb bill inflation. While 
public knowledge supports bold changes to the video marketplace 
rules, incremental reform should not be off the table if they 
are more feasible in the short term. The retransmission consent 
regime could be improved through the adoption of clear 
standards of good faith and through the prohibition of certain 
actions that should be considered bad faith, per se.
    Congress should also consider protecting and promoting 
competitiveness by directing the FCC to end the basic tier buy-
through rule, and unjustified policy intervention that makes a 
la carte offerings unlawful. It could also extend the 
successful policies that protect MVPDs from anticompetitive 
conduct to certain online providers.
    Congress should also promote internet openness and prevent 
discriminatory billing practices that can hold back online 
video. In addition to supporting strong open internet rules 
under Title II of the Communications Act, Congress should 
examine whether discriminatory data caps can hold back online 
video competition.
    It is time for Congress and the FCC to revamp the rules of 
the video industry to promote the public interest. A video 
marketplace that serves the public interest would give viewers 
more choice of providers and the ability to watch any 
programming wherever they want, and on the device of their 
choice.
    At the same time, it would ensure that creators and 
distributors are paid a fair price. Congress can begin its 
video reform efforts by making STELAR permanent, or at least 
tying its sunset to the expiration of various other marketplace 
rules. Thank you.
    [The statement of Mr. Bergmayer follows:]
    
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    Mr. Doyle. We thank all the witnesses for their testimony. 
That concludes opening statements. We are now going to move to 
member questions. Each Member will have 5 minutes to ask 
questions of our witnesses, and I will start by recognizing 
myself for five minutes.
    Mr. Thun, in your testimony, you say that roughly 870,000 
satellite TV subscribers, mostly in rural areas, depend on the 
provisions of STELAR to receive broadcast content. What would 
happen if those provisions expire, and do you think any 
customers would lose programming that they currently receive?
    Mr. Thun. If STELAR were to expire, those customers simply 
would not receive broadcast stations, those signals, and they 
would lose access to that programming.
    Mr. Doyle. Senator Smith, what do you think about that?
    Mr. Smith. Well, right now, there are 12 markets that AT&T 
does not provide local news to that it could. It chooses not 
to. There is no technological reason that they couldn't. The 
market has fundamentally changed, and renewing STELAR just 
simply perpetuates that harm to many communities, specifically 
Mr. Loebsack's. That will continue.
    Mr. Doyle. Ms. Boyers, let me ask you. What would be the 
consequences if Congress allows STELAR to expire, specifically 
the good faith provisions related to retransmission consent 
negotiations?
    Ms. Boyers. Well, thank you, Congressman. It is important 
because the reauthorization gives Congress that ability every 
five years to reexamine the marketplace to make necessary 
changes that protect customers, consumers, your constituents, 
and competition. And less oversight by Congress in its critical 
role means harm to consumers and to competition because the 
broadcast industry, which has already shown a willingness every 
year to raise their prices to consumers, and increase their 
broadband TV, or their broadcast TV blackouts will have no 
check and no balance whatsoever. That is not good for your 
constituents, my consumers, my folks that we provide service 
to.
    It is kind of that David and Goliath thing for us. I have 
got 3,000 subscribers, you know. I am just 3,000 subscribers. I 
am really just a gnat, you know. I said that this morning. I am 
a gnat on the butt of life because whenever you think in terms 
of retransmission consent, they don't care. They don't care 
about me. They don't care that it costs me $12.16 a month for 
my four channels. They don't care. I mean, that is more than I 
pay for ESPN or anything else. It is like David and Goliath, 
you know. David needed God to help him fight Goliath, and we 
need you to help us with retransmission consent. Pretty close 
line drawn there.
    Mr. Doyle. How about you, Mr. Thun? Whether a do you think 
about the good faith provisions related to retransmission 
consent negotiations?
    Mr. Thun. Will, I think they are critical, and as they sit 
today, they are extremely loose. They are a guidepost for 
negotiations, but they don't work perfectly. We are currently 
in a situation where we have blackouts because we put a 
proposal on the table 60 days ago across seven broadcasters. 
They refused to respond. They didn't want to do a deal 
independently of each other. They wanted to do them all 
together. Therefore, they gave us no ability to keep the 
signals up. They took them away. So I welcome divine 
intervention as well on this, because we are having an 
unsustainable path of pricing increases that goes straight to 
the consumer, and that is a bad place to be.
    Mr. Doyle. Senator Smith, what do you think?
    Mr. Smith. I think I have heard from those seven 
broadcasters, all of whom have said that they offered to keep 
the signal up, and AT&T has said no. If we are talking about 
the same ones, I don't know. But I know that if you want to go 
through the lamentable catalog of bad faith, what you will find 
is that there have been very few uses of this good faith 
provision, and never have the broadcasters been found guilty of 
operating and negotiating in bad faith. Never in all the 
history of it. And we are committed to good faith.
    Mr. Doyle. Ms. Boyers and Mr. Thun, I understand that there 
is a large number of TV markets in this country that are 
duopolies, triopolies, and in 2 cases, a single entity owns all 
four of the big four broadcast networks in a single market. 
Tell me. What impact does this consolidation have on you and 
your customers?
    Ms. Boyers. We have one company out of Atlanta, Georgia, 
that owns two of my four, and it creates a much larger price, 
because they can come in and say, you know, little BOYCOM, we 
really don't want to mess with you. Here is a take it or leave 
it. But those good faith regulations help us to still have a 
seat at that table irregardless of how egregious that price is.
    Mr. Doyle. Mr. Boyd, you have 17 seconds left. Mr. Thun.
    Mr. Thun. It absolutely leads to price increases. 
Ironically, one of those markets that has--I believe there are 
two markets that have quadropolies. One of those currently do 
not have signals because the broadcaster has been given too 
much power through the consolidation of those stations in that 
market. I don't think that is the way the law was intended, but 
there are loopholes in it that allow these broadcasters to put 
other signals on low powered station, as well as multi-cast 
signals that create undue market power.
    Mr. Doyle. I see my time has expired, so thank you very 
much to all the witnesses. The Chair now recognizes Mr. Latta, 
the subcommittee ranking member, for 5 minutes to ask 
questions.
    Mr. Latta. Thank you, Mr. Chairman.
    And to Senator Smith, I believe that local broadcasting is 
important to my constituents. It provides vital information and 
services to our communities. As I mentioned a little earlier, 
we all know that weather and traffic reports are the crowd 
favorites, but I appreciate the focus on local news programming 
and interest in building up the local area.
    I also notice in my hometown of Bowling Green and the 
communities nearby, that broadcasters are engaged in community 
activities and put on local fundraisers, toy drives, and other 
charity events. I also held two large public forums in my 
district on the tragic opioid crisis that were moderated by 
local news anchors on their own time. It is evident that local 
broadcasters want to help build and maintain strong communities 
outside the newsroom.
    With that, Senator, I am curious if people want to receive 
out-of-state rather than local broadcast programming and does 
STELAR encourage programming--sorry. Does STELAR encourage 
providers to offer local broadcast signals?
    Mr. Smith. What STELAR enables if it were Bowling Green, 
Kentucky--I don't know if there's a Bowling Green, Ohio.
    Mr. Latta. That is where I am from, the Ohio part.
    Mr. Smith. Well, Bowling Green, Kentucky, for example, is 
not served with a local signal by AT&T DIRECTV, and they are 
complaining about it, and it wouldn't cost AT&T, a $200-billion 
company, a whole lot to negotiate with the local broadcasters.
    To me, the whole point of the distant signal was just to 
give them some breathing space to get big enough to compete 
with cable, so that over time, when technology made it 
possible, and it does, they would then, as they promised to do 
long ago, provide local into local in every one of the 110 
market--212 markets in the country. That has not happened, and 
it should have. There is no reason for it not to.
    Mr. Latta. Let me follow up to you, Mr. Thun. From a 
satellite perspective, what barriers do satellite MVPDs face in 
providing local programming?
    Mr. Thun. Well, in the 12 markets, we do serve those 
constituents with local broadcasting, we happen to have an 
over-the-air solution that is integrated in our set top box 
that provides a seamless experience to our customers. So we do, 
in fact, in those markets, do provide local programming.
    The impediments to providing it are also cost. If we have 
to turn around--and, by the way, of the 12 markets that we 
don't service, they are either, in all cases, except for one, 
all duopolies, double duopolies, or triopolies. And the one 
market that isn't is a short market.
    So when you face that, going into those markets with, 
again, stations somehow circumventing; what I think the laws 
were intended to have, multiple stations, that makes it even 
harder to enter into those markets.
    Mr. Latta. Thank you.
    Ms. Boyers, STELAR was intended to help rural Americans 
receive local news, but your testimony makes it clear that you 
don't believe STELAR is properly serving rural America. How can 
we ensure that constituents like mine in rural areas are not 
disproportionately impacted by either reforming or repealing 
STELAR?
    Ms. Boyers. Well, obviously a rewrite as Mr. Scalise--a 
rewrite of the Communications Act would be awesome. We also 
know that maybe granular level, small changes are what is 
needed in a situation where the signal does get everywhere 
through satellite dishes, and through us, the ever-increasing 
prices. They have the same problem we have in getting that 
signal to our customers because of the price.
    Now, if you are down in the hill in a holler at Clearwater 
Lake in Piedmont, Missouri, you are not getting anything. If 
you don't have BOYCOM, you are not getting anything. If you are 
on a fixed income and your credit's bad, you can't get DISH. 
You can't get, you know, DIRECTV. If you don't have BOYCOM, you 
are not getting anything. So those are the customers that we 
are concerned about. That makes up the bulk of my customers are 
those folks that are economically impaired and don't have the 
ability.
    So STELAR is very important for us with the good faith 
rules that are on the board. That is what makes a broadcaster 
like Raycom or Sinclair come to the table with little 'ole me 
and say, You know, we don't want to talk to you, we don't care 
about you, but the good faith rules say we have got to honor 
good faith.
    When those go away, if they sunset in December, they could 
care less probably whether or not, or they could give an 
exclusivity to DISH or to, you know, the other satellite 
companies that prohibit us from having their local channels at 
all. So therein lies some protection for us, simply because we 
are small and because we are the ruralist of rurals.
    Mr. Latta. Thank you very much. My time has expired.
    Mr. Doyle. The gentleman yields back. The Chair now 
recognizes Mr. McNerney for 5 minutes.
    Mr. McNerney. I thank the chairman. I thank the witnesses. 
I appreciate you coming out here and talking to us.
    Senator Gordon--or Senator Smith. Excuse me.
    Mr. Smith. It works either way.
    Mr. McNerney. What percentage of the retransmission fees 
does the local broadcast affiliate typically receive after 
reverse transmission fees have been accounted for?
    Ms. Smith. What is so interesting, Congressman, when you 
add up these claims of broadcaster gouging for the most 
watched, most important news and entertainment, we represent, 
depending on the company, probably $0.12 on a cable bill. I 
don't think we are the cause of cable inflation or satellite 
inflation.
    And what we do appreciate is the opportunity to negotiate 
in a free market for the value of our content, and that is what 
we do, and that is what supports localism so the news is about 
you, sir, and not somebody at the national level and thank you 
for local journalism.
    Mr. McNerney. Thank you for not filibustering here, Mr. 
Smith.
    Mr. Thun, I am hearing that the retransmission fees have 
been going up over time. What has happened to the share that 
local broadcast affiliates have been getting?
    Mr. Thun. Well, the ratings are down. So to directly answer 
your question, the share is diminishing, but we face an ever-
increasing sea of pricing, and so, I am not sure where the 
$0.12 comes from, but that certainty isn't the bill that we pay 
to any individual station. It is much higher than that. So it 
is a burden that we have to take on, and ultimately our 
consumers take on, and it is a bad policy. It is a bad place 
for our customers to be if their bills are continuously going 
to go up certainly, at the clip that broadcasting fees are 
going up.
    Mr. McNerney. Well, between local broadcast affiliates 
receiving a smaller portion of the retransmission fees and the 
relaxation of media ownership rules over the past two years, I 
am concerned that the principle of localism, one of the core 
principles behind broadcast licenses being undermined, and 
consumers have less access to local.
    Mr. Bergmayer, how does the relaxation of media ownership 
rules over the last two years affect retransmission 
negotiations?
    Mr. Bergmayer. Yes. I mean, I certainly share the goal of 
localism. I think local content is very important to viewers. I 
question whether the current Rube Goldberg-like regulatory 
scheme that we have in place is the best way to promote 
localism. And one of the things that undermines localism the 
most is broadcaster consolidation. When you have broadcasters, 
they are not really local broadcasters. They are owned by a 
national chain that spans the country. Companies like Sinclair, 
Nexstar which are just as big and powerful as any of the other 
media companies that are more, you know, known brand names to 
consumers.
    And I think that structure where different stations are 
linked together as part of single retransmission consent 
negotiations where the carriage of cable content is part of 
local signal retransmission negotiations crowds out small, 
independent programmers which harms the diversity of 
programming generally, and it is really hard to see how this 
system benefits localism in any significant way.
    Mr. McNerney. Well, you're using the word consolidation is 
music to my ears, Mr. Bergmayer. Thank you for saying that.
    Mr. Thun, in your written testimony, you note that while in 
2014, Congress prohibited local stations from jointly 
negotiating for retransmission consent. Broadcasters have found 
ways around these prohibitions. What are the ways that they are 
using to get around the prohibitions?
    Mr. Thun. Sure. Like I said previously, they are using the 
multi-cast fees as a vehicle to put another big four station 
upon their one broadcast stream as well as they are buying low 
power stations and placing these big four networks upon them. 
So we face seemingly more and more markets that have more than 
one station owned by the same company. And that, ultimately, as 
the numbers always prove out, leads to higher prices which is a 
bad thing for our consumers.
    Mr. McNerney. Ms. Boyers, please describe what effect 
blackouts have on your viewers and their relationship to your 
business?
    Ms. Boyers. Well, in my particular neck of the woods, we 
don't have blackouts. We just simply don't. There is no place 
where anything that we have to say or do is controversial 
enough for the broadcaster to cut their signal off to me. In my 
statement, obviously we are 75 to 147 miles away from our local 
affiliates.
    Mr. McNerney. All right.
    Thank you, Mr. Chairman. I will give you nine seconds.
    Mr. Doyle. I thank the gentleman. The Chair now recognizes 
the ranking member of the full committee, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I want to thank you 
all for being here, and as I sit here and listen to this, I 
don't think there is an industry that isn't consolidating 
represented here. Everybody is. And so--and Ms. Boyers, you 
aside there for a second, there are a lot of big players 
represented in this room.
    Ms. Boyers. I am honored.
    Mr. Walden. And so, you, too, could be a big player some 
day if you just keep going out in the hollows and the hills and 
all that. Yes, it is tough serving rural areas. My district's 
enormous, and so, I care a lot about how we get affordable 
programming to consumers, but I also know that programming has 
great value, or you all wouldn't be having this discussion, so 
it is how you set the value.
    In my opening statement, I talked about some of that and 
then, the copyright office just wrote to the Judiciary 
Committee yesterday, and they recommended that the license be 
allowed to sunset, due to its limited current usage, the 
distance signal license. I would like to ask the letter to be 
entered into the record, Mr. Chairman. I think you have a copy 
of that. If not, we will----
    Mr. Chairman. Without objection so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Walden. So according to the copyright office data, 
royalties paid under the license have plummeted since we last 
reauthorized this act in 2014. They are down somewhere around 
85 to 87 percent nationwide. And they say this is, and I quote, 
``due to a dramatic decline in total subscribers which, in 
turn, is affected: by, one, a drop in the overall number of 
distant network stations carried and, two, the disappearance of 
non-network super stations such as WGN,'' close quote.
    Senator Smith, NAB has estimated that about 500,000 
households get at least one distant signal and Mr. Thun, I 
believe, according to your testimony, that number is somewhere 
around 870,000 individuals, or households. Can each of you 
explain what those numbers are based on, and what you think 
explains the discrepancy there between 500,000 households and 
870,000 households. Mr. Smith?
    Mr. Smith. Congressman, I think the only way they could get 
to an 800,000 number is to include the CW Network, which is not 
about localism.
    Mr. Walden. OK. Mr. Thun, is that what happens?
    Mr. Thun. I am not sure of the detail behind all the 
subscribers that go into those numbers. All I know is that the 
numbers are the direct relationships that we have to customers 
related to distant signals and that those numbers are combined 
with dishes, and I assume they use the same measurement and 
have the same number of--or they apply the same standard in 
gathering their numbers, but those are the relationships 
combined between the companies that we have and those 
customers.
    Mr. Walden. And could you look into that more and provide 
it for us, maybe, for the record, after this?
    Mr. Thun. We will have our team work with you guys.
    Mr. Walden. Perfect.
    Now, Ms. Boyers, I want to get back to you because, our 
friend at the end, talked about the importance of net 
neutrality somehow in this hearing, and Title 2, and I am 
curious as a small provider, what net neutrality Title 2 
regulations on you might have meant, and might mean going 
forward if they were restored?
    Ms. Boyers. Well, obviously, we do not favor reinstating 
Title 2.
    Mr. Walden. Why is that?
    Ms. Boyers. That classification of broadband for us and 
hundreds of ACA Connect members do not support YOU enacting 
opening internet legislation that would apply in all 
jurisdictions across the country, and all firms operate in an 
internet ecosystem. No one should be able to block, or 
otherwise impair broadband internet access service subscribers 
from accessing lawful content, subject to reasonable network 
practices. And no one should be able to engage in unreasonable 
discrimination and paid prioritization.
    We follow good faith practices as well in our businesses, 
and so all providers should be required to disclose to 
customers key information about their service. We do all those 
things.
    Mr. Walden. Right.
    Ms. Boyers. We are a good player in that realm, and in 
protecting neutrality on the net is so important. I don't think 
it is productive to consider this issue as parts still are.
    Mr. Walden. All right. All right. So Senator Smith said 
that broadcasters, I think you said, represent about 12 cents 
of the overall cable bill. Is that right? Where do you get that 
number and----
    Mr. Smith. It is a number that is not difficult to 
calculate. We follow it fairly regularly as an association.
    Mr. Walden. Yes. And Mr. Thun, what do you say about that?
    Mr. Thun. I am not sure. I wish they were that low.
    Mr. Walden. Now, this is the overall cable bill, right?
    Mr. Thun. Yes. Our numbers are significantly higher than 
that. I don't have the exact number in front of me. I could 
tell you--the number of 12 cents is dwarfed by what we pay 
overall for retransmission.
    Mr. Walden. For retrans. All right. Ms. Boyers?
    Ms. Boyers. $12.16 a subscriber as of March 31, 2019, right 
off of my P&L.
    Mr. Walden. And that is for retrans?
    Ms. Boyers. Four stations.
    Mr. Walden. Now, what do you pay for other programming 
services?
    Ms. Boyers. $62.12.
    Mr. Walden. OK.
    Ms. Boyers. Seventy nine percent of my retail cable 
programming, 79 percent is programming, and 20 percent of that 
79 percent is four channels.
    Mr. Walden. You know what I really like, Mr. Chairman, 
about a small operator, she knows her numbers.
    Ms. Boyers. Hell, yes.
    Mr. Walden. Hell, yes. You heard it right there.
    Ms. Boyers. It is my pocket.
    Mr. Walden. That is right. I was a small market radio 
station owner. I knew my numbers too. I have gone way over. I 
appreciate all your testimonies as we work on this issue. Thank 
you.
    Mr. Doyle. The Chair now recognizes Mr. Loebsack for 5 
minutes.
    Mr. Loebsack. Thank you, Mr. Chair and ranking member, for 
having this hearing today and all the witnesses here. I really 
appreciate it. It is always enlightening to hear from different 
points of view, because this is a pretty complicated topic and 
we have got a lot of different points of views represented. 
And, unfortunately, the consumer is the one who is in the 
middle of all this, and those are the folks, the consumers I 
think, that we need to be focusing on, my constituents, the 
constituents of all of us here. I did write a letter recently, 
which I think was mentioned by Mr. Smith and I appreciate that, 
to this committee, to the Judiciary Committee, last week 
raising an issue that is facing many of my constituents who 
have DIRECTV, and I do ask unanimous consent if I could submit 
that into the record, I would like to do that.
    Mr. Doyle. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Loebsack. Thank you. And what I am talking about is 
folks who live in Ottumwa, Iowa. They subscribe to DirecTV, 
those folks do. They are not able to receive local broadcast 
unless they have an antenna. In fact, I was interviewed by one 
of those stations over the weekend and they asked me what I 
thought about all of this, I said, Well, we are having this 
hearing, and we will let you know more about what comes of it, 
but they knew about my letter, obviously.
    And in many places, even an antenna, won't pick up the 
local broadcast and this, again, is Ottumwa, Iowa, southeast 
Iowa. Some of you may be aware of that.
    Mr. Thun, one of the things I talked a lot about on this 
committee is rural broadband. In many rural areas, the business 
case to build out broadband is very difficult, if not 
impossible, because there isn't enough infrastructure there, it 
costs a lot of money obviously, but with satellites, it seems 
the business case for local and the locals shouldn't be all 
that hard. Again, that DIRECTV is already beaming signals into 
Ottumwa. So does AT&T/DIRECTV have any intention of bringing 
local service to my constituents in the near future?
    Mr. Thun. Well, we think we do. We provide it through a 
local antenna. We have an integrated solutions in our set top 
box that takes the signals over the air, pumps it through our 
set top box, and subscribers can enjoy a DVR functionality, 
closed captioning, parental controls. So we do have that in 
place, and we also, for those customers, we take $3 off their 
bill regardless of the package that they are in.
    Mr. Loebsack. What solution is there for your customers who 
can't access a signal via antenna?
    Mr. Thun. I think it is partially incumbent on the 
broadcasters as well. They could invest it in their broadcast 
stations and put more into putting out a broader signal. They 
don't do that. They are not incented to do that because they 
want to rely on us to pay them hefty retransmission consent 
fees. So, I don't know if all of the blame should be shouldered 
upon us in this regard.
    Mr. Loebsack. Right. Ms. Boyers, I do want to ask you and 
Mr. Bergmayer a question if I could. I love your perspective. 
Thank you so much for being here today. You clearly, I think, 
have unique insight when it comes to serving rural areas, and 
my district and I was very rural, so thank you.
    And Mr. Bergmayer, I think this committee is familiar with 
Public Knowledge and their advocacy on behalf of consumers, so 
I would like to address my next question to both of you. Do you 
believe there is a harm for customers who don't have access to 
local broadcasts through available MVPDs in their area? What 
kind of harm are we talking about?
    Ms. Boyers. Well, do you mind if I go first? Ladies first.
    Mr. Doyle. Excuse me. Could the witnesses pull the 
microphones a little closer to you. We are having trouble 
hearing you on the streaming.
    Ms. Boyers. I am sorry.
    Mr. Doyle. Yes. Thank you.
    Ms. Boyers. On the outside, I will tell you that BOYCOM is 
not coming to Iowa, just to let you know. Don't wait for us. 
Yes, I do believe that as a general global statement, yes, I 
believe every customer has--should have the opportunity to 
receive local broadcast, and we do every daggone thing we can 
to make sure that happens.
    Mr. Loebsack. And what about you, Mr. Bergmayer?
    Mr. Bergmayer. I would agree, all things being equal, it is 
better to have access to local programming. I think the only 
question is, how best to get there, whether it is STELAR 
expiring or being renewed may not even make or break the 
system. I think, basically, the current regulatory system as we 
see at the debates today is really not serving the interests of 
viewers of local programming. It is really not serving the 
interest of people who pay bills.
    So that is why in our written testimony, we have a lot of 
specific detailed policy proposals, and we have supported some 
pretty radical approaches that I think would, in fact, promote 
localism better than these incremental kinds of----
    Mr. Loebsack. Well, my interest is asking you what counts 
as first priority for guaranteeing improving locals and for 
rural consumers should be--can you specify a little bit?
    Mr. Bergmayer. I think that the first thing is to make 
STELAR permanent, just so that this crisis goes away, and we 
can address the underlying fundamental issues with the video 
marketplace. I think one way is to--we started the compulsory 
copyright licenses for television signals back in the 1970s. We 
then layered retransmission consent on top of that already 
existing system. Every little step made sense over the years, 
but I think we really need to radically rethink the ways that 
MVPDs and broadcasters and video distributors interact, and I 
think in doing that we will better align the interests of local 
broadcasters to produce local programming----
    Mr. Loebsack. Thank you. And Mr. Chair, I am sorry. I do 
have questions I would like to submit for the record for Mr. 
Smith and Mr. Thun.
    Mr. Doyle. Yes.
    Mr. Loebsack. Thank you.
    Mr. Doyle. OK. The Chair now recognizes Mr. Shimkus for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. Just some historical 
remembering of a committee. I think we went to the digital 
transition, and away from analog, and I think we lost some 
distance because there is a digital cliff, just kind of 
information for some of my colleagues who weren't here during 
those battles.
    So some of the rural areas, you know, had trouble getting 
their signal where they used to be able to. Clearly, we have a 
difference of opinion on reauthorization of STELAR and the 
question is, is this just a binary choice?
    So let me ask this question: Senator Smith, good to see 
you. We had a chance to serve together when you were a Senator 
and happy to have you here. Can you briefly describe in more 
detail how you envision a negotiation process between 
broadcasters and satellite operators for local programming if 
STELAR expires?
    Mr. Smith. Probably not unlike what occurs now through 
over-the-top offerings. There are market solutions to fix this, 
but as long as the incentive is given to not bring local into 
local, they have no incentive to come and talk to us.
    Mr. Shimkus. Mr. Thun, same question.
    Mr. Thun. I think it would be of tremendous harm to us in 
our negotiations at the good faith provision with Sunset from 
our perspective and when we are negotiating, we feel like the 
minimum is being set here and it is, in certain cases, not 
being met.
    So that would be harmful. Ultimately, if that went away, I 
am not sure how broadcasters would behave, presumably more 
aggressively than they are now, and in a regime where we have 
those policies in place, we have seen the increases that I 
talked about, 2,000 percent over 10 years.
    Mr. Shimkus. I want to go back to Senator Smith to respond 
to that.
    Mr. Smith. Well, when you start from nothing, getting to 
2,000 percent isn't all that hard, particularly when what we 
are offering is the most important, most valued, most watched 
programming. We appreciate the opportunity to negotiate for its 
value in a free market. That isn't reflected. In other words, 
what they pay for our content is way below what they pay for 
much less watched other content that they pay for.
    But I would like to speak, and I don't mean to filibuster, 
there has to be a way, in this expanding telecommunications 
market, to pay for localism and investigative journalism. We 
are one of the last ones standing. We have two revenue streams, 
the advertising model, which is being cannibalized by the big 
digital companies, the tech companies, every transmission 
consent. We don't want to be like the newspapers, but that is 
where we are heading if we can't negotiate for the value of our 
content.
    Mr. Shimkus. My district's changed quite a bit over the 
years because of just redistricting and the like, and when I 
first came here, I had much of the upper Mississippi or St. 
Louis north, and there was a local TV station there in Quincy 
that was on the levy when the levy broke, so I am torn. I 
believe in the need of local broadcasters and local 
programming. I fear consolidation in purchasing power where we 
lose the stories of local high school teams and emergency 
activity and stuff.
    So we want to, as much as we can, keep that localism, and 
sometimes consolidation helps, because it does provide more 
dollars to coverage. There is some consolidation in that part 
of the State and you get better weather coverage because of the 
competition. But let me turn to Ms. Boyers. The current system 
is challenging for you in negotiations currently, right?
    Ms. Boyers. Yes, sir.
    Mr. Shimkus. So you are caught between a rock and a hard 
place.
    Ms. Boyers. Yes, sir.
    Mr. Shimkus. And I would ask you to, if it is a keep it or 
not keep it, maybe there is a middle ground of where you think 
the small providers are adequately listened to versus--again, 
if it is just a binary choice between one or the others, I 
don't see how you are served by either.
    Ms. Boyers. Well, for one second, if I could defer a little 
bit to----
    Mr. Shimkus. Well, you got 10 seconds to defer.
    Ms. Boyers. We did a survey in 2018 on my broadcast 
channels. All of my customers, 47 percent returned on a survey 
on a daggone postcard, 61 percent watch our CBS affiliate, 21 
percent watch our NBC affiliate. I am sorry, reverse that ABC 6 
percent watch the affiliate that is 147 miles away, so I beg to 
differ that it is the most important programming.
    However, in my neck of the woods, if your horse dies, you 
wait till it is dead before you take your saddle off. All of 
the things that have been happening in every revision of STELAR 
has incrementally helped through some retransmission consent, 
just little idiosyncrasies that have helped the process along 
for me, and to sense that this without anything to provide for 
that, I have no place to move my saddle.
    Mr. Doyle. The gentleman's time is expired. The Chair now 
recognizes Mr. McEachin for 5 minutes.
    Mr. McEachin. Thank you, Mr. Chairman, and thank you for 
holding this hearing. Local broadcast television remains a 
vital resource for consumers to receive information about their 
communities, including times of severe weather and natural 
disasters. This role will only grow more important in time as 
climate change worsens, and severe weather becomes more 
frequent and dangerous. Local broadcasters must be able to 
continue to get timely information to their communities in 
order to help keep them safe.
    Despite the important role played by local broadcast 
television, especially in times of danger, retransmission 
blackouts remain a problem. In 2017 and 2018, there were 
approximately 213 and 165 disruptions of service to consumers 
nationwide respectively.
    In the six months of 2019, we have already had 62 blackouts 
across the Nation. While blackouts have fluctuated annually, 
these numbers in comparison to 2010 with only eight blackouts 
are unacceptable.
    Senator Smith, first of all, thank you for being here. I am 
going to ask the same question of Mr. Thun in just a moment, 
but I would like to start with you. Why do you believe 
blackouts are occurring despite existing good faith provisions, 
and what would be the effect on markets and consumers were the 
STELAR provisions to expire?
    Mr. Smith. First of all, Congressman, I would make the 
observation that 99 percent of them are negotiated successfully 
without any interruption. We also point out that if people just 
want to keep the digital antenna that comes with their TV set, 
all they got to do is plug that in to the other output, hit 
input, and they got all the local television that you can get 
over the air.
    I don't know where retrans is in terms of it finding its 
market. I leave that to business people that I represent, that 
he represents. At the end of the day, we don't like them but we 
are always on, we are always available if people want to use 
their antenna, and we think it is really important that we have 
the ability to negotiate for the value of our content.
    Mr. McEachin. Mr. Thun?
    Mr. Thun. We fully support localism. Our service is 
available to 99.58 percent of satellite reaches broadcast 
stations across the country that capture that. I am the 
business person on the other end of the stick in these 
negotiations, and I can tell you that absent good faith rules, 
I can only predict that rates are going to go up. There is no 
other way to think that--if we think that you take those away 
and the rates are going to somehow stabilize and blackouts are 
going to go down, we are fooling ourselves.
    Mr. McEachin. Thank you. Mr. Bergmayer, is beefing up the 
good faith requirements the solution to blackouts? Is there 
more Congress should consider?
    Mr. Bergmayer. I think that beefing up the good faith 
requirements would be an important component as well as interim 
carriage. We just need to make it so that blackouts aren't used 
as a tactic in negotiations to kind of harm the other side and 
bring them to the table to pay more than they otherwise would, 
but for, you know, the local emergency that you have.
    Mr. McEachin. Would you define interim carriage for me, 
please?
    Mr. Bergmayer. So interim carriage would just mean that 
while negotiations are ongoing between 2 parties, and they just 
haven't decided to part ways, then the signal just continues 
being carried under the terms of the previous agreement.
    Mr. McEachin. Thank you. And I thank all the witnesses. And 
Mr. Chairman, I yield back.
    Mr. Doyle. The gentleman yields back.
    The Chair now recognizes Mr. Olson for 5 minutes.
    Mr. Olson. I thank the chair. Senator Smith, it is good to 
see you again.
    Mr. Smith. Thank you.
    Mr. Olson. Welcome Mr. Thun and Mr. Bergmayer, and from the 
Shelby City of Texas 22, Missouri City, how the heck you doing, 
Ms. Boyers?
    Ms. Boyers. I am doing wonderful, sir.
    Mr. Olson. I hope my questions knowing firsthand how 
important local broadcast is during a disaster. Y'all recall 
that almost two years ago to the very day, April of 2017, 
almost my entire State, certainly my district, was hit hard by 
Hurricane Harvey. Parts of the district had five feet of water 
in less than two days dramatic flooding.
    People turned to local news to get their weather 
information, road closures, where they should go, where those 
recovery operations. They, too, did the KPLC 2, NBC 2, CBS 11. 
One of them actually had the main studio flood, but the back-up 
studios they kept on air during the storm, which was just 
amazing. ABC-13, Fox 26, Independent TV 39, and also don't 
forget, be it the most diverse county in America, two big 
Spanish language stations stayed online. Univision 45 and 
Telemundo 47.
    And this question is for you, Mr. Smith, and you Mr. Thun, 
Senator Smith, your testimony you detailed the legislative 
history of STELAR and how Congress always meant for it to 
expire at some point in the future. I know that Mr. Walden, a 
member of the head of our committee on our side of the aisle 
has said it is an open question as to whether we should 
reauthorize it as well.
    And Senator Smith, we all know my former boss, your 
colleague, Phil Gramm, very well, and in this issue, he would 
say, it is easy to kill a vampire than a bad government 
program. So my question is, if we decide that STELAR is a bad 
Government program that should be killed or allowed to expire, 
how that impacts local TV during a time of crisis?
    Mr. Smith. I would just remind the committee and thank you 
for the question, Congressman, broadcasters have every 
incentive to be viewed on as many platforms as possible. We 
don't want disruptions. We are there in good faith. We have 
never been found to be otherwise, and your question perfectly 
points out how vital a lifeline my members are in times when my 
wonderful AT&T Apple phone crashes, and the only thing you can 
get is your local television or radio. And so, as you tinker 
with the economics around here, I would just remind you of the 
importance of our lifeline, and the revenues that we have to 
support journalism and localism come from 2 sources. 
Advertising is being cannibalized, retransmission is where we 
go and it is very important that that not be upset if having 
the news about you Members of Congress and for your 
constituents remains important.
    Mr. Olson. And one comment that as well, my family tune to 
8613 Doppler radar, we could see it real time what was out 
there as opposed to going to the weather channel, or some other 
channel that would drift in and drift out. It was very 
important to have those local TV stations.
    Mr. Thun, how about you? Once you deal with disasters, how 
important is local TV during a disaster if we let STELAR 
expire?
    Mr. Thun. Well, as I testified earlier, I certainly do not 
think that STELAR should expire. I think it will be bad for 
consumers and it will increase pricing. As it relates to 
getting programming during disasters, as it pertains to 
weather, I think in a lot of cases people are used to 
watching--looking at their weather on these, actually.
    I don't know many people who sit around waiting for weather 
on the 8s. It does happen. But more and more you are looking at 
your Weather Channel app, or your weather app, to see what is 
happening and when it is going to happen. That is not the 
solution necessarily. We do have other national programs that 
is available, but in these cases, we certainly would rather be 
up than down with your broadcast partners, but unfortunately 
that is not always the case. We have contentious relationships 
with them because of the prices that they seek, and the 
services go down during bad weather, but they also go down 
during times when broadcasters are being unreasonable.
    Mr. Olson. One further question, Mr. Smith. I am sorry, 
ma'am. I am sorry about that, but I got to ask this question. 
Victoria, Texas, is a--colleague there named Representative 
Michael Cloud. He sent a letter to judiciary leadership asking 
about making sure STELAR was allowed to expire. He talked about 
how bad it is for his town Victoria. I submit this for the 
record, please, Mr. Chairman, if that is all right.
    Mr. Doyle. Without objection, so ordered.
    [The information appears at the conclusion of the hearing.]
    Mr. Olson. Victoria is not a small town. Population of 
62,592 with a Census of 2010. San Angelo, Texas, out that west 
is no small town either. Population 100,450, the Census 
modified in 2014. Both these towns have issues with TV 
reception because of STELAR. So Senator Smith, can you explain 
how STELAR is responsible for 170,000 Texans in Victoria and 
San Angelo for not having access to local news----
    Mr. Doyle. If you can do that in five seconds, I will let 
him answer, but we are 45 seconds over your time.
    Mr. Smith. Well, if I understand your question, 
Congressman, obviously we want your constituents to have our 
product, is to negotiate it with the satellites and cable 
providers and then hopefully they can put up an antenna, if all 
else fails, and get it for free. I am the only one up here 
offering everything for free if you don't want to pay a 
subscription paid TV thing.
    Mr. Doyle. The gentleman's time is expired.
    The Chair now recognizes Mr. Soto.
    Mr. Soto. Thank you, Mr. Chairman.
    I bring greetings from Orlando, the 18th largest media 
market in the Nation and growing. In our area, we are really 
worried about diversity in programming, and increasing local 
content, and I worry about the modernization of programming 
across the Nation. There are so many great local towns across 
this Nation that really need to have a voice. I also worry 
about Spanish language in Creole stations. Every couple of 
years, we seem to have a crisis about certain programs being 
blocked, either in Florida, Puerto Rico. I wanted to start with 
you, Mr. Thun, regarding basic diversity requirements, if we 
were to put some in place as a condition of reauthorization of 
STELAR, would that be something that you all would be 
supportive of?
    Mr. Thun. I think we would have to see everything to know 
what we are considering here. We are certainly big proponents 
of diversity. I think our record in providing television 
content that is diverse is unassailable. I think, by our 
measure, we think we distribute more diverse programming than 
any other distributor. So if there is a poster child for 
somebody as a good actor in that space, we believe DIRECTV, 
AT&T would be that.
    Mr. Soto. Thank you for that, and Senator Smith, if STELAR 
were to sunset, how would that affect diversity in programming?
    Mr. Smith. I think what is really important about what we 
do is, if you look at the percentages of people wholly reliant 
upon over-the-air broadcasting that tends to be minority 
communities, we are very anxious to keep our content appealing 
to all and that is why we also have networks that are 
specifically targeted to some in the Hispanic community.
    Mr. Soto. And how would it affect original, local content 
if STELAR were to sunset?
    Mr. Smith. What I have noticed, Congressman, is that if one 
of my members is going to succeed, they succeed when they focus 
on local. When they do otherwise, they are less successful and 
they can't sell ads unless they focus on local.
    Mr. Soto. Sure. Thank you.
    Mr. Bergmayer, you mentioned changing the compulsory 
copyright license with the reform to pure copyright, can you 
explain in more detail, I guess, the increased profits, or 
payments to artists and local providers, how that would work, 
and what would the incentive be?
    Mr. Bergmayer. So the idea is that the people who are 
creating content should just sell content directly to the 
distributors instead of through various layers of middlemen 
like we have, and then, again, the thought is; if you are a 
local broadcaster and one of your primary revenue streams comes 
from creating local programming that is relevant to your 
community, that is relevant to the people who live there, then 
you have every incentive to make that programming the best you 
can and to make as much of it as you can, rather than the 
current system where, you know, the local content is there, but 
also, you know, a lot of the primary leverage that happens from 
retransmission consent is from reselling national programming.
    Mr. Soto. So would this help out local broadcasters and 
local artists and producers?
    Mr. Bergmayer. I believe the overall approach would end up 
certainly helping the production of local content, local 
artists by basically streamlining the system.
    Mr. Soto. What about local sports or more diversity 
content?
    Mr. Bergmayer. I think that there is this notion that if 
you got the government out of the way somehow that 
automatically localism would be fixed, you know. I am looking 
at how online video works today. I am noticing that CBS has CBS 
All Access that they are distributing without any local 
broadcasters at all. You have virtual MVPDs, like YouTube TV, 
DIRECTV now. A lot of them are missing the local broadcast 
content. I think that, you know, if we want to promote 
localism, it is going to require a lot. I think an important 
step would be streamlining the regulatory system, but I don't 
think it really can end there, because I think that we have 
seen that a lot of the online providers simply aren't providing 
the local programming without being caused to.
    Mr. Soto. Thank you, and Ms. Boyers, other than Ozark on 
Netflix, which I have watched multiple episodes on, has STELAR 
assisted in local content for the Ozark Mountains in your 
region?
    Ms. Boyers. Diversity--absolutely. We offer everything that 
is available to us through the NCTC.
    Mr. Soto. What is some local programming that you all 
provide?
    Ms. Boyers. We have Telemundo and B.E.T., which both come 
from the NCTC. We do not receive those from an off-air station.
    Mr. Soto. But, like, from the Ozark Mountain areas, is 
there any local programming you develop for your region?
    Ms. Boyers. No, sir. There is no local programming even 
being developed. Our closest local programmer is 75 miles away.
    Mr. Soto. What would help with that?
    Ms. Boyers. Funding, obviously. Money is always the bottom 
line. But for me, the tree transmission consent fees are--
prohibit me from--I only have so much of a budget.
    Mr. Soto. Sure.
    Ms. Boyers. And where I am at, I can't raise my rates and 
so those folks--I just have a certain amount of dollars I can 
pay for programming.
    Mr. Soto. I understand.
    And I yield back.
    Mr. Doyle. Thank the gentleman. The Chair now yields 5 
minutes to Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman, and I appreciate the 
panel being here. This is a really important hearing. I 
represent a very rural district in Appalachia. It is the 
longest district east of the Mississippi, and we have many 
technological challenges. This is one of the biggest ones. We 
are here today to discuss the STELAR Act, which expires at the 
end of this year, and I have heard many different perspectives 
as to whether it should be considered must pass, or whether it 
should be allowed to sunset.
    As we all know with the increase in new technologies, the 
media marketplace has changed substantially, since STELAR was 
first passed by Congress in the late '80s. I appreciate all the 
perspectives that I have heard today. Let me go to some very 
basic questions.
    Mr. Thun, in your testimony, you explain that there are a 
number of people that still receive broadcast channels because 
of STELAR. I know many of my colleagues in both the House and 
the Senate have asked you for the specific breakdown of the 
markets for those subscribers that receive out-of-market 
channels because of STELAR.
    While this committee considers whether or not this 
legislation needs to be reauthorized, it would be extremely 
helpful to understand what benefit the expiring provisions of 
STELAR are providing, how they are being used, and what the 
consequences would be should Congress allow STELAR to sunset.
    Would you be willing to work with my staff and the 
committee staff to supply us with the specifics of what 
subscribers receive--which subscribers receive what channels 
and from where on DIRECTV?
    Mr. Thun. Yes, we would be willing to help provide you some 
more information related to your question.
    Mr. Johnson. OK. All right. We will call on you for that.
    Senator Smith, my district partially encompasses the 
Zanesville market, which I know only has one local broadcast 
affiliate, the NBC station.
    Can you explain to me where satellite TV subscribers in 
Zanesville will receive their other broadcast channels from? If 
Congress does not reauthorize STELAR, will they still receive 
those stations?
    Mr. Smith. I know my local broadcasters will be anxious to 
talk with them and make them a fair price to make sure that 
rural constituents can get their signal. We have an incentive 
to make sure that people see what we produce and what we put 
over the air, and I know it is hard for you to manage the food 
fight up here with my friends, but the truth is, we all need 
each other and, ultimately, everybody has to make a buck.
    And we are not trying to put anybody out of business, but 
we are trying to preserve localism, which is under threat.
    Mr. Johnson. That is a really good point. You kind of threw 
me off my questions because you said everybody needs everybody 
up here. You are exactly right. We do. It would seem to me that 
common sense should prevail at some point, and rather than 
Congress having to mediate and solve this problem, it seems to 
me the industry ought to be able to come together and come up 
with some commonsense solutions where everybody walks away a 
winner.
    Senator Smith, moving on. In his testimony, Mr. Thun spoke 
about how the number of impasses between local broadcast 
stations and cable and satellite television seemed to peak a 
couple of years ago and how that resulted in some stations 
going off the air. What is your response to that testimony?
    Mr. Smith. I think it is a marketplace finding its level, 
and at the end of the day, I just remind you, we have an 
incentive to make sure more people see our stuff. We sell 
advertising off of that, and, obviously, retransmission is a 
piece of it, a vital piece, to keeping local television 
available to all these communities and to these wonderful 
platforms that are represented here.
    Mr. Johnson. OK. Mr. Thun, do you have anything to add to 
that?
    Mr. Thun. I agree. We both need each other. They are an 
important part of our business, but finding the level ground is 
what we are fighting over, I think.
    Mr. Johnson. Yes.
    Mr. Thun. And in any rational case, even though we did 
start a low place, I should remind everybody that we were 
amongst the first, if not the first to start paying for 
retransmission, so we didn't start at the baseline that a lot 
of others did.
    Mr. Smith. You are a great American.
    Mr. Thun. But we can't sustain these kinds of prices and 
hold that back from hitting consumers, and that is bad for all 
of us in here.
    Ms. Boyers. Congressman, can I comment to that?
    Mr. Johnson. I am coming to you, Ms. Boyers. You stated 
that retransmission consent fees deter broadband deployment. 
So, in addition to commenting on what I just said, or just 
asked, what do you mean when you say that video revenue support 
broadband deployment?
    Ms. Boyers. Video revenues, however small they may be, 
y'all care about closing that digital divide, and every 
precious dollar that we could put towards deployment by them 
back even further into the woods is being sucked up by these 
ever-increasing retransmission consent fees.
    Now, rural and small cable operators, independent guys like 
me, we are the ones that are out there already on that digital 
divide. We operate leaner, we operate meaner, and we are 
already on those front lines for the deployment of this 
broadband, so every stinkin' dollar that goes to retransmission 
consent, I could be deploying--costs about $25,000 a mile to 
build aerial, $32,500 to build underground, if you can do it in 
the Ozark Mountains; however, they would rather string it on a 
pole between the trees or a fence post to get it back there 
because where we are at, we only have a certain amount.
    Now, I would like to speak to Mr. Smith on that 12 cents. I 
want that deal.
    Mr. Doyle. The gentlelady's time is expired.
    Mr. Johnson. I am going to have to yield back.
    Mr. Doyle. As much as I love spending time with all of you 
here, we are going to be here for a long time if we keep going 
minutes over peoples' time.
    Mr. Johnson. I will let you, arm wrestle Ms. Boyers.
    Mr. Doyle. Yes, yes. I know.
    The Chair now recognizes Ms. Eshoo for 5 minutes.
    Ms. Eshoo. I thank the gentleman. Thank you to the 
witnesses, and I am sorry I have to bounce back and forth 
between Health Subcommittee hearing downstairs, and this very 
important one.
    Senator Smith, it is wonderful to see you, a longtime 
friend, and someone that has served people in our country 
really so--so well.
    Mr. Smith. Thank you.
    Ms. Eshoo. Thank you, and each one of the witnesses. What 
were you going to say, Ms. Boyers, when our distinguished 
chairman said we are going to be here all day? I will give you 
a little bit of my time so that you can share your thought.
    Ms. Boyers. I appreciate it. I appreciate it so much. Mr. 
Smith spoke to everybody needs to make a buck. Let it be known 
right now on your record, we don't make a buck on 
retransmission consent. What the big guys charge me gets passed 
to my consumer. That $12.16 BOYCOM does not make a buck on. 
Simple pass-through, 100 percent to my consumer and they know 
what they are paying for their broadcast channels. That being 
said, I don't know where the $0.12 is coming from but I want 
that deal, and we shall talk after the committee meeting 
convenes because--I mean, dismisses because I want that $0.12 
deal.
    Ms. Eshoo. I think you are one hell of a witness, I tell 
you.
    Ms. Boyers. Thank you, ma'am.
    Ms. Eshoo. I would love to be there with you, and Senator 
Smith, but I think I am going to have to go back downstairs.
    Ms. Boyers. I got your back.
    Ms. Eshoo. Yes. OK. To Mr. Thun, you have argued for 
regulatory overhaul, and I agree with you, and specifically, 
you state that retransmission consent is in dire need of 
reform. I have thought this for a long time. It is not any 
secret. Now, I understand why AT&T doesn't like the current 
regime. Tell us, through your experience, how it affects your 
customers? Is it the same whether it is a small cable operator 
and, you are a giant and everyone in between? This is all 
passed to the consumer?
    Mr. Thun. I think it affects us similarly in that we are 
offering a video product to our consumers, and it is predicated 
upon what we are charged to program that, and if those prices 
go up, our prices correspondingly go up, and that happens for 
years.
    What we have hit is a wall. Consumers aren't willing to pay 
anymore, and so the plight that we face is, this is not a win-
win where money--where our revenue is going up and their 
revenues are going up. This is simply margin shrinking to the 
point where certain businesses, especially rural cable 
operators, are going out of business because they can't afford 
the programming costs.
    So this goes straight to the consumer and that is what we 
are here to protect.
    Ms. Eshoo. And it is where we need them because the larger 
guys don't go out to where Ms. Boyers is.
    Ms. Boyers. Yes, ma'am.
    Ms. Eshoo. Senator Smith, let me ask a really obvious 
question, maybe it has already been asked. Every five years, 
you know, this comes up, and now we are reauthorizing, and it 
seems to me that there is a pattern here and that is the year 
or the year before reauthorization comes up, the numbers dip a 
little on retrans and then afterwards, it is just jacked up all 
over again.
    I can't imagine that this is comfortable for you, you in 
the broader sense of broadcasters. Have the broadcasters 
thought of some other kind of model? I mean, this is not 
sustainable, and, most frankly, and you are a very reasonable 
and intelligent man, it is not defensible. It is not 
defensible. You know, it keeps going up, up, up. The blackouts 
increase. People are ticked off. They are still paying. They 
are still paying while there is a blackout. I don't know anyone 
in the country that has gotten a refund when there is a 
blackout. So are you thinking of something else? Are you just 
going to hold on to this thing that is kind of a homely child?
    Mr. Smith. I would just share with you, Congresswoman, the 
STELAR reauthorizations are not my favorite time of year, every 
five years.
    Ms. Eshoo. I can imagine so.
    Mr. Smith. It usually amounts to an opportunity to pound 
away at retransmission consent, and the point I keep making is, 
this is one of 2 ways in which we support localism. It is the 
way you have----
    Ms. Eshoo. Yes, but at what price, though, localism?
    Mr. Smith. You can get it for free. I am the only one up 
here that offers everything we do for free. If they want it 
that way, if they can get a signal.
    Mr. Doyle. The gentlelady's time is expired.
    The Chair now recognizes Mr. Scalise for 5 minutes.
    Mr. Scalise. Thank you, Mr. Chairman. I guess I will 
follow-up where my colleague and dear friend, Ms. Eshoo, left 
off, and you are right, the signal is available for free and 
you are seeing more people choose that option. The reason you 
are seeing such a growth in people cutting the cord, which 
means you don't get any retransmission consent dollars is 
because the laws don't work for today's marketplace, and so, if 
you can go one place and have a broader experience and a wider 
array of options than the other place that is confined by the 
1992 Cable Act, you are seeing consumers walk.
    And so what I have been suggesting is, when STELAR comes 
up, you shouldn't look at it in a negative way. I mean, it 
absolutely is an opportunity for us to look at the video 
marketplace. If we look at the video marketplace and recognize 
that the laws just don't work for today's world, then maybe we 
can also help solve the problem of why you are getting less 
retransmission consent dollars because people are cutting the 
cord. They are walking away from the entire system.
    And so, if we say, OK, maybe you want to cherry-pick and 
say let STELAR expire. I don't associate myself with that 
because I do think we shouldn't just look at STELAR, we should 
look at the whole thing, and maybe in 1992, they wrote a 
perfect law. There is no such thing, but let's say they did in 
1992.
    Does anybody want to come up to this table and suggest that 
when they wrote the law in 1992, they took into account how the 
world works today, how people get their video content today? Of 
course they didn't. You can talk to the people who wrote the 
law. We weren't around when it happened, but the people that 
were there when it happened, they recognize that the world's 
different today. Why hasn't the law been updated?
    And so, what I would suggest is, as we talk about 
retransmission consent or any other, you ought to get paid for 
your content, that is the bottom line of it. The deal with 
retransmission consent, and again, when you talk to the people 
that created it, was that they wanted to help keep that local 
content that you talked about.
    The problem is, I think Mr. McNerney talked about this 
earlier, more and more you are seeing the motherships, the 
national networks, take a bigger and bigger chunk of the 
retransmission consent. So your local stations aren't even 
getting that money, and that was the deal for the free spectrum 
that is out there that--again, the reason why you have to make 
it available for free, people can go buy a $30 dish and get a 
better high definition signal off of the local stations than if 
they went through their local cable company.
    And so, all I would ask, and I would like to ask everybody 
to comment on this: If you look at STELAR in a silo, regardless 
of where you are on expiring or being renewed, do you think the 
current laws, especially the foundational 1992 Cable Act, needs 
to be updated to reflect the world we live in today? I will 
start with you, Ms. Boyers?
    Ms. Boyers. Thank you, Congressman. Absolutely. I would 
love to be part of that.
    Mr. Scalise. I would love for all of you, including Mr. 
Smith. I know we have had some conversations. We might not 
always be in the same place, but I do think we want to get to a 
similar place, and can get to a better place; and I know Ms. 
Eshoo and I have worked very hard on how we can have a 
bipartisan approach that, hopefully, every member of the 
committee that wants to be a part of it as well as everybody 
here that wants to be a part of updating and modernizing our 
laws to reflect the world we live in. Mr. Thun?
    Mr. Thun. Absolutely. We commend your efforts with 
Representative Eshoo's efforts to try to modernize these laws. 
They are clearly outdated, they are broken, and they need to be 
fixed, so----
    Mr. Scalise. Thanks. Mr. Smith?
    Mr. Smith. Congressman, I really appreciate your noting 
the, sort of, symbiotic relationship between my network members 
and my affiliate members. They actually really need each other. 
Affiliates need the networks for their sports programming and 
their weekly shows and they have very high ratings, and yet the 
networks really need the locals to provide the tornado alerts. 
They need this lifeline.
    Mr. Scalise. Don't sell yourself short. I want my local 
broadcasting brother in local sports. I want to know--when I 
watch the Saints and the LSU Tiger updates, I am not going to 
get that from Iowa, I want to get it from my local station.
    Mr. Smith. Exactly, and they are mindful----
    Mr. Scalise. And the Warriors. They go up 2-1. So would you 
be open to working with us on reforms to the 1992 Cable Act 
that create some of these problems?
    Mr. Smith. Of course. I am tempted to quote Reagan, there 
is nothing permanent----
    Mr. Scalise. You are always in a good place if you quote 
Reagan.
    Mr. Smith. With that said, we are always open to new ways 
to do it, but what I want to emphasize is that the earlier Act 
created a system that is a benefit and a blessing to the 
American people.
    Mr. Scalise. I only have 12 seconds left. I do want to get 
to Mr. Bergmayer.
    Mr. Smith. And my concern is that somehow a reform would 
just focus on national and forget the local.
    Mr. Scalise. We absolutely want the local content. Ms. 
Eshoo does--she has talked about blackouts for that very 
reason. Don't sell yourself short. People want that content. I 
am sorry. Finally, Mr. Bergmayer.
    Mr. Bergmayer. Yes. I think you need a lot of policy 
measures to promote localism, address consolidation, increase 
diversity to programming, but absolutely, an important first 
step is to totally rethink the 1992 Cable Act, and we are with 
you on it.
    Mr. Scalise. Thank you so much. Appreciate it, Mr. 
Chairman.
    Mr. Doyle. The Chair now recognizes Ms. DeGette for 5 
minutes.
    Ms. DeGette. Thank you, Mr. Chairman. So I hear all of my 
colleagues here and I completely agree that local broadcasters 
provide great coverage of local events, weather, disasters, as 
well as, Senator, you talked about holding elected officials 
accountable for their actions because they are invested in the 
community. I think that is really an important role, and one 
that we continue to see dissipate.
    Something else we have seen in the Denver media market and 
I know we are seeing this around the country, is we are seeing 
venture capital and private equity start to buy up some of the 
media outlets, in particular, in the print industry, we saw 
with this with the Denver Post and we have seen it other 
places. And so, I want to start with you, Mr. Bergmayer. How do 
you think the incentives of venture capital and private equity, 
the financial incentives, align with this other incentive that 
I am talking about that local TV provides, which is coverage of 
local events, weather, in-depth coverage of politics and other 
issues? How do you think that the profit motive and those--and 
the need to staff up and invest in the local news weigh, and 
how is that going to work in the long run?
    Mr. Bergmayer. Absolutely, I agree. A huge problem 
throughout the economy, but it is particularly noticeable in 
media is when you have these investors who take over companies, 
and they just have such a short-term perspective. They are just 
interested in extracting as much cash in the short-term from 
these businesses as possible, and just walking away and 
forgetting that, you know, particularly with media, with 
newspapers, with local broadcasters, it is really about a long-
term commitment to serve the community.
    Ms. DeGette. How do those goals--how do those challenges 
line up as we look at reauthorization of STELAR?
    Mr. Bergmayer. Well, I think STELAR offers an opportunity 
to look at a wide range of different media and video industry 
policies, including media ownership rules, and I think 
something like, you know, the short-term investor kind of 
thing, that sort of relates to the broader media ownership and 
consolidation points that have come out in today's hearing.
    Ms. DeGette. Senator, do you have anything to add to that?
    Mr. Smith. Yes. I would just re-emphasize to those who may 
want to invest in broadcasting. If you invest and you not focus 
on local, you are not going to make any money because people 
are going to change the channel. And what I am telling you is 
that my members who are successful financially are the ones 
that keep a focus on local to avoid the Denver Post kind of 
situation.
    Ms. DeGette. Well, but that is assuming that there is that 
competition, and that if there is no channel to change it to, 
then that is where you run into that trouble, and so that kind 
of----
    Mr. Smith. We have lots of competition, I will tell you 
that, particularly from over-the-top now and we have got--some 
of our members do and people are going right directly to the 
internet to get--to get our product, and there is lots of ways 
to get our product. We want people to see it, but where others 
try to sell our product to their advantage, we are entitled to 
retransmission consent.
    Ms. DeGette. So, I do want to talk a little bit about this 
consolidation issue that I kind of alluded to a minute ago. Mr. 
Thun, you said that some ownership groups are using loopholes 
to get around the FCC rules, prohibiting a single owner from 
controlling more than one station affiliated with a major 
network in some of the areas. Can you talk very briefly about 
that?
    Mr. Thun. Yes, and I am not sure if that ownership changes 
the emphasis on localism between those broadcast stations, but 
what I am discussing is, in the negotiations that ensue when we 
go into a renewal of a particular deal, if the broadcast 
station owns more stations in that particular market beyond 
what they were initially entitled to, or what the law intended 
for them, it makes it more challenging.
    They hold on to their positions, they hold on to their 
economics, and they are extremely stubborn, and it often yields 
blackouts.
    Ms. DeGette. And I want to, of course, close with you, Mrs. 
Boyers, and ask you what does media consolidation do to 
consumers when broadcasting groups can't reach agreement of 
video providers?
    Ms. Boyers. Well, it removes the local programming from 
them, because if they were to turn the signal off because we 
couldn't reach any kind of an agreement, but I would tell you 
that the broadcasters themselves, the big affiliates, and the 
local broadcasters, are biting their own noses off to spite 
their faces. They have got over-the-top competition with 
themselves.
    I mean, you got CBS All Access, for God sake. I mean, those 
kinds of things are competing with your own local stations, and 
I would tell you that if y'all are listening to the underlying 
current here, my esteemed friend down here with the 
broadcasters, he is only sitting on a stool with 2 legs. He has 
got his advertising and he has got me, and he is--and he is 
utilizing the captured marketplace, which is the passively tree 
transmitters to send our signal down to his eyeballs that he 
needs to see, and so his only 2 revenue streams today are 
advertising, which is dwindling, and me.
    So the only people who are cutting their cords are the ones 
that can. The ones who can't cut that cord is Betty Duck out 
there on county road 450 who doesn't have a credit card, 
couldn't get Dish. She has to have me and she is 90 days past 
due all the time. The one that brings me eggs. I am just 
telling you. They are utilizing me as their revenue source.
    Mr. Doyle. The gentlelady's time has expired. Good Lord. 
OK. Where we at?
    The Chair now recognizes Mr. Long.
    Mr. Long. Thank you, Mr. Chairman. Ms. Boyers, I want to 
remind you that the IRS does monitor these hearings.
    Ms. Boyers. Yes, sir.
    Mr. Long. Talking about taking eggs for payment, you might 
want to----
    Ms. Boyers. I report all my income.
    Mr. Long. You might not want to go there 1974, George 
Foreman was going to fight Muhammad Ali and Muhammad Ali came 
up with a strategy to fight a younger George Foreman, and that 
is exactly right. That is the Rope-a-dope. He would cover up 
and back in to the ropes and let George just pummel away on 
him, and that is kind of like what I felt like the last few 
weeks with the broadcasters and AT&T, and there were people 
coming into my office. Everybody just wants to pummel on us and 
figure out, you know, how this thing is going to come out in 
the end.
    Mr. Bergmayer, what is a local broadcast station? You 
referenced a local broadcast station earlier, what is a local 
broadcast station?
    Mr. Bergmayer. Well, I guess there is two ways--any 
broadcaster serves a specific geographic region so it is local 
to that region, so I think that if you are in that region, that 
is your station. I think the problem is when there is--when you 
are short a market where there is no affiliate for a particular 
broadcaster, then you just need some kind of station. I suppose 
it is not going to be local to your particular market, but, 
nevertheless, that station in its own market is still thought 
of as a local station.
    Mr. Long. So Mrs. Boyers, I believe said that--I am still 
with you, Mr. Bergmayer, Ms. Boyers said that her local 
affiliate Cape Girardeau is like 147 miles away. Is that a 
local station?
    Mr. Bergmayer. Well, I think the definition of local might 
get stretched a little bit in rural areas where the stations 
are, yes, fewer and far between, just due to geography and 
population density, but, you know, it is certainly closer than 
a station in Los Angeles or New York.
    Mr. Long. When I go home on the weekends 2 or 3 days a 
week, whatever we get to spend at home, I sit down to watch the 
local news with my wife, and I will say who is that? Who is 
that? Who is that? I mean, all the reporters are, you know--
when I was growing up, you had the same reporters, same news 
people, same sports people, like, your whole life and now every 
time you go home, they have got new young kids out of college 
because apparently that is who they can afford to pay, and it 
is just constantly shifting.
    And with that, Senator Smith, you are talking about 
bringing local into local, walk me through that. What does that 
look like, bringing local into local?
    Mr. Smith. It means where there is a demographic area that 
is served by a television station, that the people within that 
area get that signal and not something from Los Angeles or New 
York.
    Mr. Long. But if there is not, I mean, if you are Ms. 
Boyers in--and it is 147 miles away, I thought you were saying 
there was a way to bring local broadcast into that market?
    Mr. Smith. There are translators that help beam our signals 
to rural areas over mountains and into valleys. They are all 
over this country, if they don't want to have a subscription. I 
don't know her--in the Ozarks, whether there are a sufficient 
number of transmitters to get it for free, but we offer it for 
free.
    Mr. Long. I was a little bit confused on bringing local 
into local in the fact of--like I said, I go home and we are in 
a town of 160,000 people, 250,000 people, we have got ABC, CBS, 
NBC, local, but two of them, we fought this battle before, have 
gone into together, NBC and the ABC affiliate moved into the 
same building, they are run by the same people.
    For a while, they tried to keep their news people separate 
and all that, but now they are all piled in there together. 
There is not a real way to bring a local station that would be 
functioning and make a profit into Ms. Boyers' area, correct?
    Mr. Smith. I think what you are speaking to is just the 
expense of running a newsroom. Journalism is expensive. 
Localism is expensive.
    Mr. Long. Yes, but I mean, somebody that doesn't have a 
local station like Ms. Boyers doesn't. What did y'all--moving 
to you, Ms. Boyers, what did you do during the tornado--recent 
tornadoes in your area? I know we were hit. Does Cape Girardeau 
cover the tornadoes over in Poplar Bluff?
    Ms. Boyers. Whenever you watch the weather, and it is the 
same on the CBS station as it is on KBI 5 Fox, it is the same 
news team once again. They--but the only time you are going to 
hear Poplar Bluff is when that radar dips way off down there in 
the southwest part of the circle. They call themselves Tri-
State area. But the local news is Cape Girardeau.
    Mr. Long. One quick last question, you came by my office 
the other day and in your testimony today you mentioned this 47 
percent. Tell me, you are paying 47 percent more than your 
competitors and that is because of what?
    Ms. Boyers. Yes, sir, based on the FCC's report, the study 
they put together at the end of the year last year.
    Mr. Long. But why? Because the quantity--they have more 
accounts than you do or what? I am sorry.
    Ms. Boyers. That is what I am offered in my negotiations 
with the off-air channels, 47 percent more.
    Mr. Doyle. The gentleman's time has expired. The Chair now 
recognizes Mr. Flores.
    Mr. Flores. Thank you, Mr. Chairman. I appreciate the 
hearing this morning.
    Mr. Thun, I have a quick question I would like you to 
answer supplementally for me, if you would. AT&T and DIRECTV 
have made 2 commitments to serve all 210 DMAs with local 
channels. I would like--and each--none of those commitments 
have been met, so I would like for you to supplementally 
respond as to why those haven't been done. If you would, also, 
put the markets where you down convert the HD signals, and what 
the plans would be to remove the down conversion features 
moving forward.
    I want to continue on to talk about the subject that Ms. 
Eshoo and Mr. Scalise have introduced, and that is, what should 
the statutory framework look like for video moving forward with 
the reemergence of over the air, with OTT, with the MVPD 
options that we have today.
    And then, there are things that are gleams in people's eyes 
today that are going to totally transform this business space. 
I would like some ideas from you as to what the statutory 
framework would look like for the video market of 21st century, 
not relying on the 1992 Act, not relying on STELAR. What should 
the statutory framework look like? And so I will give each you 
about 45 seconds starting with Mr. Bergmayer.
    Mr. Bergmayer. I believe it should start with copyright as 
the fundamental unit of negotiation, and let's build from 
there. Right now, we have a system where copyright, you have a 
compulsory license, and then on top of that, you have 
retransmission consent, which is negotiated in the marketplace. 
I think this adds too much complication, too many layers. I 
think you simplify things. You start with copyright, and you 
see if that improves things for consumers. And you know, I just 
think that offers a more sounder starting point, you know, for 
addressing the market. That is how it works everywhere else.
    Mr. Flores. Thank you. Thank you for staying within 45 
seconds.
    Ms. Boyers.
    Ms. Boyers. For us, it would be choice. Choice for the 
consumer, choice for us as the provider. In today's framework, 
we are mandated by Federal law to provide those off-air 
stations, first and foremost, to every one of my subscribers. 
If they don't want to watch them, they shouldn't have to pay 
for them. Choice is part of that, and just absolutely, more 
choice. Let the marketplace set the demands.
    Mr. Flores. By the way, you have been a great witness. I 
appreciate you being here today.
    Mr. Thun. I think for us, we are open to any and all ideas. 
I mean, one of the things that has brought us here today is 
that retransmission consent needs to be fixed somehow. The 
exact measures around that, I am not sure. But I think it 
starts with working on the 1992 Act, starting from scratch and 
seeing laws that could create marketplace conditions that are 
not punitive to our consumers.
    Mr. Flores. I don't really want to start with the 1992 Act. 
I want to start with a blank sheet of paper. What would that 
look like?
    Ms. Boyers. Amen.
    Mr. Flores. I mean, does anybody disagree with that 
approach?
    Ms. Boyers. No, sir.
    Mr. Flores. I mean, because the market is totally different 
than it was in 1992. It is totally different than when I was a 
kid, and I had three channels located 80 miles from the three 
broadcast channels, and I would have to get up on a 45-foot 
tower to adjust or fix the antenna after a storm.
    Ms. Boyers. If the President was on, you were screwed. You 
didn't get to watch anything else. You had to watch the 
President on all 3 channels.
    Mr. Flores. Secretary Smith.
    Mr. Smith. Congressman, you know, basically, you have 2 
options. You can have the Government manage prices and these 
negotiations, which I would strongly oppose.
    Mr. Flores. Yes, I am opposed to that.
    Mr. Smith. Or you can allow the retransmission consent 
process to go on, which I think is always kind of a food fight 
when people are freely trying to bargain for the value of 
content. And my own view is that the dollars should follow the 
eyeballs. We have got the eyeballs.
    Mr. Flores. OK. I think retransmission consent is part of 
it, but at the same time, I do think it is thinking too small. 
There is a new technology that is going to come in, and it is 
going to wire around retransmission consent, and I think we 
need to figure out what the statutory infrastructure looks like 
so that we create the video marketplace of the future that puts 
consumers first.
    And with that, Mr. Chairman, I yield back the balance of my 
time.
    Mr. Doyle. The gentleman yields back, and the Chair thanks 
him. The Chair now recognizes Mr. Cardenas for 5 minutes.
    Mr. Cardenas.T1 Thank you, Mr. Chairman, and thank you to 
the ranking member for having this important hearing.
    I would like to point out that earlier today, there has 
been testimony that no broadcaster has been fined for violating 
the good faith rules. I want to point out that there was an 
investigation and a settlement of $9.5 million with Sinclair. 
So I just wanted to state that for the record.
    The way that many consumers watch video is changing, but 
for a lot of folks, they still receive local news, local 
weather, emergency alerts, and local entertainment over the 
air, and by way of cable and satellite. I know that this is a 
complicated issue for those in the video market, so I am glad 
to see so many stakeholders at the table so we can get this 
right.
    Above all, we need to remember the bottom line, that 
consumers have access to local diverse programming. That is 
important to me and to millions and millions of Americans.
    And my first question is to Senator Smith, the CEO of NAB. 
I understand that significant populations of Latinos and other 
communities of color depend on free local broadcasts to stay up 
to date on local news, disaster alerts, and other educational 
and entertainment programming. Can you discuss the rate of 
viewership amongst communities of color?
    Mr. Smith. Yes, and it is one of the proudest things we 
have to offer as free local broadcasters is that those who 
exclusively rely on us tend to be minority communities and the 
economically disadvantaged. And we are very proud of Univision 
and Telemundo, members of our association. I think we are doing 
everything we can to make sure that there is content available 
to them free over the air, and those communities 
disproportionately rely on us.
    Mr. Cardenas.T1 Thank you for that testimony. With all of 
the big players in the field, it is important that we don't 
lose sight of the independent programmers who bring quality, 
local, diverse content to their communities. In a space where 
we see more and more consolidation, we need to make sure that 
local networks can continue to operate and that there is room 
for new entrants into the markets.
    Ms. Boyers, we have heard from independent networks that 
the retransmission consent process can cut into programming 
budgets that could otherwise be used to create content that 
showcases diverse and unique voices. In your experience, is 
that accurate?
    Ms. Boyers. Absolutely. We only have certain buckets of 
money for programming, and retransmission consent fees take 
away funds in my small business to provide compelling 
independent programming. We are on the same side of this issue 
with the independent programmers. We all have the same 
financial straps. We have the same, you know, too much month at 
the end of the money, and we have the same problems the 
independent programmers have. We want to do everything we can 
to get those folks on our station, but we only have so many 
dollars.
    Mr. Cardenas.T1 Well, you mentioned buckets, but I have 
been visited by some of the small players in the field, and it 
looks like they go around with a little tin cup.
    Ms. Boyers. Yes, sir.
    Mr. Cardenas.T1 Hoping they will get something to rattle in 
there, and that is one of the things that really, really 
concerns me, because the smaller the player, the more likely 
that they are not going to be able to play, that they will just 
go away. And I think one of the saddest things that we could 
see in America is to see someone who is passionate, who is 
heartfelt about wanting to be that, to do that as a career and 
realize that there is no room on the playing field for them 
because it just doesn't pencil. They can't eat and do the 
beautiful, wonderful content that they can and are capable of 
producing, but if you can't eat, you do something else.
    Ms. Boyers. Yes, sir. That is right.
    Mr. Cardenas.T1 That is one of things that is a big concern 
of mine.
    Ms. Boyers. Yes, sir.
    Mr. Cardenas.T1 Mr. Thun, same question.
    Mr. Thun. We, I believe, have an excellent track record 
carrying independent channels, hitting diverse audiences. As I 
testified earlier, I think we have an unassailable record. As 
far as I know, we distribute more diverse content than any 
other distributor in the marketplace, so we want to reach all 
the different audiences. We have national platforms so that we 
can touch people across the country in those different pockets, 
and we try to do so with providing a robust experience for them 
to touch different pieces of content that aren't from the same 
voices.
    Mr. Cardenas.T1 OK. Thank you.
    Mr. Bergmayer, do you have anything to add to this?
    Mr. Bergmayer. In think the current regulatory system as 
well as just the market structure benefits primarily just the 
most major programmers. It also doesn't particularly harm, I 
think, the very largest MVPDs, the Comcasts, the Charters. You 
have a system where you have these large players fighting each 
other all the time in the interest of smaller diverse 
programmers, as well as small cable systems, just simply often 
get forgotten.
    Mr. Cardenas.T1 So perhaps the system's not broken-broken, 
but some tweaks here and there by Congress might be welcome?
    Mr. Bergmayer. Well, I would favor some pretty fundamental 
changes to the system, but I am totally open to lots of small 
tweaks within the current framework, as well as addressing the 
consolidation issues, which I don't think help either.
    Mr. Doyle. The gentleman's time has expired. The Chair now 
recognizes Mr. Walberg for 5 minutes.
    Mr. Walberg. Thank you, Mr. Chairman, and thanks to the 
panel. This has been one of the most interesting panels I have 
had the privilege of listening to with a lot of good humor, 
good information, and I just have to tell you. I agree with all 
of you. I want you all to be satisfied. Is that OK, Mr. 
Chairman? I am not sure if that will happen, but I have learned 
some great new words I can use at my town halls too. Dadgummit. 
I appreciate that.
    Mr. Thun, one of the counties in my district, in my home 
county, in fact, Lenawee County in Michigan, is an orphan 
county. It is in the Toledo market, and as great as Mr. Latta's 
local broadcaster's content may be, I am sure my constituents 
would prefer to be watching the Michigan-Ohio State game from a 
local Michigan affiliate.
    Mr. Latta. They would lose anyway.
    Mr. Walberg. And we have such comity.
    Localism will be especially appreciated during the football 
season, as Chairman Wheeler used to put it.
    Mr. Thun, can you help me understand why DIRECTV can't just 
import local out-of-market signals to serve subscribers in 
Lenawee County, for instance, or what would it take to ensure 
subscribers in Lenawee are able to receive local content?
    Mr. Thun. In terms of the orphan counties, I think in every 
instance that a broadcast station has come to us, we have 
complied and been able to distribute it, except in cases where 
it was technically not feasible. In certain cases, our spot 
teams don't cover a particular area, so therefore, technically, 
we wouldn't be able to deliver it.
    In the case of your particular example, I am not exactly 
well-attuned to what that particular area is, or what has been 
spoken to us, but we are absolutely, you know, receptive to 
looking at that. And if a broadcaster comes to us for the 
distribution there, to provide you with a Michigan point of 
view instead of the Ohio point of view, nothing against the 
Buckeyes or nothing for necessarily the Wolverines.
    Mr. Walberg. You are starting out well.
    Mr. Thun. We are happy. We are supportive of that.
    Mr. Walberg. Senator Smith, do you have anything to add to 
that?
    Mr. Smith. Yes. I would just note that in the last STELAR 
bill reauthorization, there was a provision, an authority given 
to the FCC to deal with orphan county issues. We supported 
that. We worked with them. We hope that your county, if they 
are orphaned, will work through that process, and we have been 
able to address a number of these issues for a number of orphan 
counties.
    Mr. Walberg. Senator Smith, can you walk me through how the 
distant signal compulsory copyright works versus the 
retransmission consent process?
    Mr. Smith. Well, what it means, if, for example, Mitch 
McConnell's Bowling Green area, for some reason, that is not 
served with the local stations that are there. A distant signal 
is brought in from New York City to them. There are 12 markets 
like that. These are ones that AT&T, DIRECTV has not provided 
local, the way outlined in STELAR. And if STELAR went away, I 
am sure they would work with us, and I think local stations 
there would be anxious to find a price that they could deliver 
local into local. But as long as STELAR remains, they have an 
easy out.
    Mr. Walberg. Could I assume that that sounds something like 
a subsidy if they could negotiate directly?
    Mr. Smith. It is a subsidy. And if you add up all the 
market capitalization of every broadcaster in America, it will 
not equal the market capitalization of AT&T. So the question 
becomes, do they need a subsidy?
    Mr. Walberg. Mr. Thun, your thoughts?
    Mr. Thun. As I testified earlier, we do serve those 
communities. We do have a solution, which is an over-the-air 
antenna, and part of that falls, is incumbent upon the 
broadcaster to provide a signal that is strong enough so that 
other people, other folks can receive it. They are not incented 
to provide a very strong signal, and we come in. We actually 
don't get paid for delivering them beyond their footprint that 
they are able to do, and so, they enjoy rates from us that are 
very handsome and continue to go out of control.
    Like I said previously as well, the 12 markets that we 
don't serve, 11 of them are either duopolies, double duopolies, 
or triopolies, and every time we go into those kinds of 
negotiations, the prices somehow are higher. So the 
deauthorization of STELAR or the lack of reauthorization 
wouldn't ensure that we would go into those 12 markets by any 
stretch.
    Mr. Walberg. OK. Thank you. I yield back.
    Mr. Doyle. Thank you. The Chair now recognizes Mr. 
Butterfield for 5 minutes.
    Mr. Butterfield. Thank you very much, Mr. Chairman, and let 
me join my colleagues in thanking the witnesses for your 
testimony today. I have been ping-ponging between 
subcommittees, and I think Gordon understands that drill and 
how that works, but thank you for your patience.
    Let me begin by making an observation. My district, as many 
of you may know, is very rural. Many of my constituents in the 
1st District of North Carolina rely on satellite to receive 
their local news, to receive their content that really matters 
to their families.
    And so, Mr. Smith, let me ask you: How would allowing the 
relevant provisions of STELAR to expire promote access to local 
programming in rural communities? Help me with that.
    Mr. Smith. Well, if Mr. Walden were still here, I would 
share with him and you a similar thing. I have a place up in 
the Blue Mountains of Oregon. I am a good DIRECTV customer, and 
we get L.A. News there. So I think if STELAR continues, that 
will continue. And I think if it goes away, I am sure Mr. Thun 
and I could work out a deal that we can fix these 12 markets, 
but that is left to people at a higher pay grade than we are, 
and our companies hopefully can get that done unless there is 
an out that allows them to bring in a distant signal.
    Mr. Butterfield. My staff has very faithfully gone through 
your written testimony. I have not, I acknowledge that, but I 
depend on them greatly. They tell me that you question whether 
the good faith requirements currently imposed by Congress are 
necessary for fair and fruitful negotiating. Without the good 
faith rules, what would change from the consumers' perspective?
    Mr. Smith. I think that a good side of the retransmission 
consent process now is that both sides are incentivized to come 
to a deal. We want them to have our product. We appreciate the 
resources it brings to us. It helps support local journalism. 
And they want more eyeballs, too, so we actually have a 
community of interest, but these are not things Mr. Thun or I 
are involved in.
    Mr. Butterfield. Hopefully, Mr. Bergmayer can help us with 
that.
    Mr. Bergmayer. Yes, sure. I mean, first, my read of the 
statute and the FCC's rules is that good faith does apply to 
both sides, both MVPDs and broadcasters. I would say that just 
saying that negotiations have to happen in good faith without 
really clarifying what that means doesn't really get you that 
far, so that is why we have advocated that, you know, we 
actually put some teeth behind it so that you find that certain 
kinds of negotiation tactics that tend to harm consumers and 
drive up bills be considered bad faith, per se.
    Mr. Butterfield. All right. Let me go to the other side of 
the spectrum, no pun intended. Mr. Thun, let me ask you: How 
does the distant signal license provided by the current 
regulatory framework benefit rural consumers?
    Mr. Thun. In a lot of rural areas, consumers are not able 
to get an over-the-air signal. And for those pockets that they 
can, we are able to provide a distant signal so they can get 
network programming, not local, but network programming, so 
that they can see the various pieces of content that they 
enjoy.
    Mr. Butterfield. Would expiration of that affect local 
programming for the customer?
    Mr. Thun. I don't know if it would do anything for local 
programming, but what it would do for those customers who can't 
get local programming because they get it through a distant 
signal, that would sunset, and I am not sure what process would 
take place for them to get that content.
    Mr. Butterfield. Let me try this one: How do increasing 
programming fees affect your efforts to deploy broadband in 
currently underserved areas?
    Mr. Thun. Well, like Ms. Boyers said earlier, we have 
multiple revenue streams, and one of them being video, and if 
that revenue stream is shrinking, that affords us less money to 
invest in other areas of the business, one of them being 
broadband. So just intuitive financial principle would dictate 
that if you are making less money in your business, you are 
going to have less money to spend in other areas.
    Mr. Butterfield. Now, Ms. Boyers, you are in a rural 
community. Is that right?
    Ms. Boyers. Yes, sir.
    Mr. Butterfield. How would this affect your universe?
    Ms. Boyers. How would the sunsetting----
    Mr. Butterfield. Yes. As an operator, how would it would 
affect your community?
    Ms. Boyers. It would affect us dramatically. They keep 
talking about this no good faith complaints as a way of saying 
you don't need good faith rules. Rule breaking--rules aren't 
made for breaking, so I think that it is a testament that we do 
all come to the table together under the guise of these, you 
know, mandated good-faith rules. And to be able to allow even 
other folks to come in under the guise guys of the good-faith 
rules, I find groups like the NCTC, on our behalf, would help 
us have lower rates, possibly, for those so we could have more 
money to deploy. But the good-faith rules are, you know, an 
important hanger for us.
    Mr. Butterfield. Thank you.
    Mr. Doyle. The gentleman's time has expired. The Chair now 
recognizes Mr. Gianforte for 5 minutes.
    Mr. Gianforte. Thank you, Mr. Chairman, and thank you to 
the panel. This has been very insightful, your testimony today. 
I appreciate getting the sides.
    Consumers should have access to their local news. Our local 
stations provide--serve a critical function in our communities 
in keeping public informed, connecting rural communities. In 
Montana, they really rely on the local stations for news and 
weather. Some communities in our State, including our State 
capital, Helena, however, does not receive their local station 
through DIRECTV.
    What local news can DIRECTV subscribers in our State 
capital get? Well, New York or Los Angeles. People in Helena 
care about their community events, local weather, the coming 
wildfire season, not necessarily about standstill traffic on I-
5, or the subway breakdown in New York City.
    As more consumers look to cut the cord, I think providing 
viewers with their local broadcast stations would be an 
effective way to keep consumers. As we look at the TV 
marketplace, we should consider how to lower the cost to 
consumers and increase competition, all while making sure 
neglected markets like Helena and Glendive are covered.
    First, I would like to focus on getting prices down for 
consumers. I see constant news stories and I hear directly from 
my constituents that their pay TV bills are continually on the 
rise. Ms. Boyers, I appreciate your testimony today. Can you 
help us with this? How can we get consumers relief on the 
prices?
    Ms. Boyers. To lower them. I mean, honestly, we are being 
pushed into a vacuum as the passive retransmitter of broadcast 
signal. We are their eyeballs. In a lot of areas, that is the 
only eyeballs they have because they can't do an antenna. They 
don't offer it on broadcast. So we are being penalized for 
being small and for being rural, and we are subsidizing the 
lack of the revenue generating in their business model. Now, if 
they can come up with a different business model and lower my 
rates, then I pass it on to my customer. We don't make a buck 
on retransmission consent.
    Mr. Gianforte. And you testified earlier that 79 percent of 
your total P&L expenses are related to programming, not in 
local?
    Ms. Boyers. Yes, sir.
    Mr. Gianforte. OK. Thank you for that.
    Mr. Thun, as I mentioned, there are two markets in my 
State, including our capital, where DIRECTV does not provide 
local into local. Now, you have mentioned that you have an 
antenna option. The challenge we have, Montana, mountains, the 
broadcast doesn't work. So why can you not provide local 
stations to our State capital?
    Mr. Thun. Well, I think we can. Just to be clear, we don't 
bring the distant signals into the heart of Helena. It is going 
into the outskirts where the white areas are. So our solution, 
as I said previously, is the over-the-air antenna that is 
integrated into our set top box.
    Mr. Gianforte. But those over-the-air antennas don't work 
when you are in the mountains. Why can those citizens not get 
access to local news? What is the impediment today?
    Mr. Thun. The impediment is that in certain cases, the 
broadcaster's signal technically probably can't get to certain 
of those areas. There are probably areas within the DMAs that 
you are----
    Mr. Gianforte. But what is preventing it from going over 
your network?
    Mr. Thun. What is preventing it? We have explored looking 
into these 12 markets, and as I testified previously, they are 
rife with duopolies, dual duopolies, and triopolies. So, in the 
absence of putting the signal over the air, it makes it very 
challenging for us to come to a market when we see what kind of 
prices that are being extracted in the regime.
    Mr. Gianforte. Senator Smith, would you like to provide the 
broadcast perspective on this?
    Mr. Smith. Yes. I think there is no technological 
impediment any longer to AT&T's being able to provide this. 
There is plenty of competition. You have got to support the 
local stations there in Montana. We do that. Obviously if 
people in Helena want our stuff directly that is supported by 
advertising revenue, they just put up their digital antenna, 
but I do think the way you make sure AT&T does not provide it 
over their system is to renew STELAR.
    Mr. Gianforte. Well, clearly, we have difference of 
opinions. I appreciate the transparent testimony today. I look 
forward to working with you all to figure this out so our 
constituents are better served at prices they can afford. Thank 
you. I yield back.
    Mr. Doyle. I thank the gentleman.
    Mrs. Brooks, 5 minutes.
    Mrs. Brooks. Thank you. Thank you, Mr. Chairman, and I, 
too, apologize. I have been running between a couple of 
different hearings, but what has been pretty clear to me is 
that there is not a lot of agreement from the panel, and so, I 
guess, I would like to start out by asking, and because I have 
kind of gone in and out of this hearing.
    Senator Smith, could you please share with us--and I 
apologize if this has been asked. Can you explain how 
retransmission consent prices are actually decided, because as 
I have come in and out of this, that seems to be the sticking 
point, or one of the sticking points. So can you talk about how 
those prices get decided?
    Mr. Smith. Obviously, I don't negotiate them, and if Mr. 
Thun and I did, I am sure we would come up with a deal.
    Ms. Boyers. $0.12.
    Mr. Smith. Their business people and our business people, 
my members, they sit down and negotiate, and I would just make 
the point that they pay for their own content far more than 
they pay for ours which is much higher watched. And so our 
members try to get the dollars reflected by the eyeballs that 
we bring to their system and ours.
    Mrs. Brooks. And is that why prices might vary based on the 
size of the MVPD?
    Mr. Smith. Of course.
    Mrs. Brooks. OK. And any disagreement, Mr. Thun? Anyone 
else on that answer? I am just trying to see if there is any 
agreement on----
    Mr. Smith. Well, I mean, I would just say I have some 
sympathy for Ms. Boyers, because I am from a very rural part of 
Oregon. I know what it is like to be rural and left out, and 
yet, the economics of going into those places sometimes make it 
very difficult.
    Ms. Boyers. I emphatically disagree. It costs absolutely no 
more from my head end to pick up that signal once it comes from 
their transmitter to my receiver. It comes down into my head 
end, and there is where I incur the expense, by the mile, to 
get an aerial air underground to that customer. What they are 
charging me for is what gets to my head end, and then I turn 
around and passively retransmit for them. So it costs--they 
have no more for me to get that signal than for them to 
transmit it right there in Cape Girardeau itself. However, I am 
paying 47 percent more. I don't understand that. I was really 
interested in that answer that is what we were supposed to get 
that you just asked. I have no idea other than the fact that we 
have no leverage, no bargaining power when we sit down, and it 
is take it or leave it.
    Mrs. Brooks. And going back a little bit to, and while I 
appreciate you aren't actually, Senator Smith, in the 
negotiations, in those discussions, and in, you know, good-
faith discussions, what are the factors as we have to explore 
how to go forward with this incredibly changing landscape?
    Mr. Smith. I don't know because I am not in there, but I 
can imagine that comparables for other programming are 
evaluated, viewership, and ratings. Those probably come in to 
bear on what a broadcaster would ask, but I am just assuming 
that. I have never been involved in those negotiations.
    Mrs. Brooks. I have a concern about blackouts as we have 
all heard from various communities and what happened, 
particularly as it relates to public safety. And can we talk a 
little bit more about the public safety issues that are created 
when we go into blackouts? And what is the longest period of 
blackouts we have had, and you know, what a kind of rules 
should we have around this issue of blackouts as it relates to 
public safety? Sure. All of you. I would like to finish with 
each of you very briefly talking about that.
    Ms. Boyers. Blackouts are happening to other ACA members as 
well. I represent about 700 moms-and-pop, baby companies, and 
blackouts are happening. It is an issue, and it seems to me 
that although they say that even if there is a threat of a 
blackout, 99.9 percent of those contracts are made, 
miraculously, you know. We have a member, Liberty, in Puerto 
Rico threatening of a blackout before the dadgum hurricane. 
Now, do you think that the leverage of Liberty saying yes, I 
will pay your high prices we are much more able to do that 
because they had a hurricane coming, and they wanted to be able 
to watch the radar. I find it compelling that all these 
additional blackouts seem to hover around times of negotiations 
of retransmission consent.
    Mrs. Brooks. My time has expired, but I would certainly be 
interested in any other answers in written form on how we 
resolve the issue of blackouts relative to public safety.
    Mr. Smith. We would be pleased to provide that.
    Mr. Doyle. The gentlelady's time has expired. The Chair now 
ask unanimous consent to enter the following documents into the 
record: A letter from the American Television Alliance; a 
letter from Consumer Reports; a letter from the National 
Association of Black-Owned Broadcasters; a letter from 
Representative Golden; a letter from Ride TV; a letter from 
Rural Group Coalition; a statement from the Motion Picture 
Association of America; a broad post from Sports Fans 
Coalition; and a letter from R Street. Without objection, so 
ordered.
    Mr. Doyle. I want to thank all of the witnesses, and Ms. 
Boyers, you can come and testify for me any time you want.
    Ms. Boyers. Just ask and I will be here.
    Mr. Doyle. I want to thank you all for being here today. 
And I want to remind Members that pursuant to committee rules, 
they have 10 business days to submit additional questions for 
the record to be answered by the witnesses who have appeared, 
and I ask each witness to respond promptly to any such 
questions you may receive. At this time, the subcommittee is 
adjourned.
    [Whereupon, at 12:59 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared Statement of Hon. Billy Long,

    I'd like to thank the witness' for being here, and I'm 
especially happy to see a fellow Missourian (Patricia Jo 
Boyers) testifying before us today.
    I think we can all agree that the media and entertainment 
marketplace has and is rapidly evolving. There is more 
competition than ever, and government intervention is not 
always the answer.
    It is important for us to examine the state of the video 
marketplace but as we approach a potential sixth 
reauthorization of STELAR, we need to take a hard look at the 
underlying policy and its relevance today rather than assuming 
its passage is a necessity. We should ignore the inclination to 
rubber stamp this legislation only because this committee has 
historically done so.

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