    [Senate Hearing 117-880]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 117-880

                        BREAKING THE NEWS _ JOURNALISM,
                          COMPETITION, AND THE EFFECTS
                        OF MARKET POWER ON A FREE PRESS

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

                                    HEARING

                                   before the

                      SUBCOMMITTEE ON COMPETITION POLICY,
                         ANTITRUST, AND CONSUMER RIGHTS

                                     OF THE

                           COMMITTEE ON THE JUDICIARY
                              UNITED STATES SENATE

                        ONE HUNDRED SEVENTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                FEBRUARY 2, 2022

                                   __________

                              Serial No. J-117-50

                                   __________

             Printed for the use of the Committee on the Judiciary

        [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                            www.judiciary.senate.gov
                                www.govinfo.gov

                                       _______

                     U.S. GOVERNMENT PUBLISHING OFFICE

    56-410                    WASHINGTON : 2026

                           COMMITTEE ON THE JUDICIARY

                       RICHARD J. DURBIN, Illinois, Chair
    PATRICK J. LEAHY, Vermont            CHARLES E. GRASSLEY, Iowa, Ranking
    DIANNE FEINSTEIN, California             Member
    SHELDON WHITEHOUSE, Rhode Island     LINDSEY O. GRAHAM, South Carolina
    AMY KLOBUCHAR, Minnesota             JOHN CORNYN, Texas
    CHRISTOPHER A. COONS, Delaware       MICHAEL S. LEE, Utah
    RICHARD BLUMENTHAL, Connecticut      TED CRUZ, Texas
    MAZIE K. HIRONO, Hawaii              BEN SASSE, Nebraska
    CORY A. BOOKER, New Jersey           JOSH HAWLEY, Missouri
    ALEX PADILLA, California             TOM COTTON, Arkansas
    JON OSSOFF, Georgia                  JOHN KENNEDY, Louisiana
                                         THOM TILLIS, North Carolina
                                         MARSHA BLACKBURN, Tennessee
                 Joseph Zogby, Chief Counsel and Staff Director
          Kolan L. Davis, Republican Chief Counsel and Staff Director

            .........................................................

                      SUBCOMMITTEE ON COMPETITION POLICY,
                         ANTITRUST, AND CONSUMER RIGHTS

                        AMY KLOBUCHAR, Minnesota, Chair
    PATRICK J. LEAHY, Vermont            MICHAEL S. LEE, Utah, Ranking
    RICHARD BLUMENTHAL, Connecticut          Member
    CORY A. BOOKER, New Jersey           JOSH HAWLEY, Missouri
    JON OSSOFF, Georgia                  TOM COTTON, Arkansas
                                         THOM TILLIS, North Carolina
                                         MARSHA BLACKBURN, Tennessee

                  Keagan Buchanana, Democratic Staff Director
                     Wendy Baig, Republican Staff Director

                                C O N T E N T S

                                  ----------

                               OPENING STATEMENTS

                                                                       Page

    Klobuchar, Hon. Amy..............................................     1
    Lee, Hon. Michael S..............................................     4

                                   WITNESSES

    Bertetto, Jennifer...............................................     8
        Prepared statement...........................................    34
    Francis, Daniel..................................................    11
        Prepared statement...........................................    40
    Gainor, Dan......................................................    15
        Prepared statement...........................................    86
        Reponses to written questions................................   147
    Oxley, Joel......................................................    10
        Prepared statement...........................................    89
    Singer, Hal......................................................    13
        Prepared statement...........................................   100

                                    APPENDIX

    Items submitted for the record...................................    33

                        BREAKING THE NEWS -- JOURNALISM,
                          COMPETITION, AND THE EFFECTS
                        OF MARKET POWER ON A FREE PRESS

                                  ----------

                          WEDNESDAY, FEBRUARY 2, 2022

                                  United States Senate,
                 Subcommittee on Competition Policy, Antitrust,
                                           and Consumer Rights,
                                    Committee on the Judiciary,
                                                        Washington, DC.
        The Committee met, pursuant to notice at 3:00 p.m., in Room
    226, Dirksen Senate Office Building, Hon. Amy Klobuchar, Chair
    of the Subcommittee, presiding.
        Present: Senators Klobuchar [presiding], Blumenthal,
    Booker, Ossoff, Lee, Hawley, and Blackburn.
        Also present: Senators Durbin and Padilla.

                OPENING STATEMENT OF HON. AMY KLOBUCHAR,

               A U.S. SENATOR FROM THE STATE OF MINNESOTA

        Chair Klobuchar. Thank you, everyone. I call to order this
    hearing of the Subcommittee on Competition Policy, Antitrust,
    and Consumer Rights entitled, Breaking the News -- Journalism,
    Competition and the Effects of Market Power on a Free Press.
        I want to welcome our witnesses. We have votes going on
    right now, so Senator Lee and I will be going back and forth,
    as well as some of the other Senators during this time. I want
    to thank him and his staff for working with us to put together
    this hearing as well as my own staff, Marc and Avery and
    Keagan, for the work they do every day.
        Some of you may know my dad was a newspaperman. As a
    reporter and a columnist in the Twin Cities, he covered it all
    in an estimated 8,400 columns and about 12 million words in
    which he interviewed everyone from Ronald Reagan, Senator Lee,
    to Ginger Rogers to Chicago Bears Coach Mike Ditka. I won't say
    which interview was his favorite. He was proud to be a
    newspaperman. As you can imagine, in my house growing up, it
    was impossible to forget the importance of a free press.
        That is what we are here to talk about today, to talk about
    the critical work news outlets around the country are doing and
    explore solutions to some of the existential challenges facing
    journalism.
        It is truly local news that reports on the issues that
    people face in their everyday lives. I think about the Fargo
    Forum in my home State actually of Minnesota, next to North
    Dakota, that includes Moorhead, Minnesota. When the floods,
    catastrophic floods, hit the area, that newspaper and the local
    broadcasters were the one covering it, warning people, giving
    them news updates all the time.
        I think about investigative journalism at the local level
    with everything from city council scandals, not that those ever
    exist, to all kinds of things that would not be covered. I
    think of the sports games for high schools and the pride that
    people have in their local community events.
        All of this brings the community together in different
    ways. They find stuff out. They have common--common information
    that they can look at in addition to what they see nationally,
    which sometimes can seem very distanced and larger than life.
    What our local news does is oftentimes tells a story of what my
    dad called ordinary people doing extraordinary things. As I
    said, this work not only connects communities, it also helps
    policymakers better understand how issues are impacting their
    constituents and helps them to figure out what needs to be
    done.
        That's why it's critical that we ensure that local news
    cannot only survive but thrive, particularly as outlets face
    off with some of the biggest companies the world has ever
    known. Local news is facing a crisis in the U.S.
        Since 2005, about 2,200 local newspapers across America
    have closed, and many of the ones that remain are on life
    support. Between 2008 and 2019, newsroom employment fell by 51
    percent. With much smaller newsrooms, surviving outlets are
    often mere shells of their former selves.
        I was thinking about that really troubling photo from the
    Denver Post where, the journalists, they show a picture of
    everyone happily smiling. Then a few years later, they show the
    hollowed-out images, the silhouettes of the journalists who are
    no longer there. Less than half of them are left.
        As you know, local newspapers aren't closing or drastically
    reducing their coverage because of a lack of talent or a
    passion for the work. Yes, many of them have online presence,
    and they have tried their best to do that. In fact, their real
    problem is a lack of revenue.
        Ad revenue for U.S. newspapers plummeted from over $37
    billion in 2008 to less than $9 billion in 2020. Thirty-seven
    billion in 2008 to less than $9 billion in 2020. What else
    happened during that time? If you see the ad revenues for the
    world's biggest companies, you'll see the exact opposite story
    being told.
        Facebook and Google, worth over $2.6 trillion combined, as
    I speak, became digital advertising titans during that same
    time. Just yesterday, Google reported $61 billion in
    advertising revenue in a single 3-month period, a 33 percent
    jump. I say to my colleagues, ``A 33 percent jump from the same
    period just last year. Look at those numbers.'' $61 billion in
    just 3 months for one company. $61 billion. You have U.S.
    newspaper revenue from 2008 to 2020 going from $37 billion to
    $9 billion. As one of my colleagues said during the
    Presidential race, ``Do the math. It's not that hard to figure
    it out. Do the math.''
        These Big Tech companies are not friends to journalism.
    They are raking in ad dollars while taking news content,
    feeding it to their users, and refusing to offer fair
    compensation. They're making money on consumers' backs by using
    the content produced by news outlets to suck up as much data
    about each reader as they can.
        It's kind of a double whammy, right? They're the big guys.
    They're bringing in the content. They're not compensating for
    it as they should. At the same time, they are getting the
    revenue off the consumers that read the content that then don't
    go to the ones that are producing the content. Then that data
    really exacerbates what is already a huge divide in where that
    revenue goes.
        How much do these companies care about retaining this power
    over the news and reader data? They care a lot, enough to even
    hold entire countries, industrialized nations, hostage as we
    saw happen last year in Australia. When Google was told by the
    government that they would have to pay for the news content
    that they wanted to use--this is the Australian government--the
    company essentially said, ``We're out of here,'' and threatened
    to pull Google search out of an entire country.
        That's what monopolies do. That's what you do when you can
    do it because you have over 90 percent of the search market.
    Google didn't follow through on its threat, in part, because
    there was so much international pressure to stop them from
    doing it. Facebook actually switched off all news on its
    platform to protest the law only reversing course after a few
    days under immense outside pressure.
        What does Big Tech's dominance over the news mean for
    Americans? As I've already noted, less revenue for local news,
    fewer journalists to do in-depth, high-quality reporting, more
    exposure to misinformation, and fewer reliable sources. While
    the rise of these platforms has sometimes meant a larger
    audience for some news outlets, that hasn't translated to
    increased ad revenue.
        For years, I've heard concerns about things like the
    platforms do not provide adequate branding for news outlets'
    original content on the platforms, that they hoard for
    themselves all of the data on the users that access the news
    content produced by news providers through their platform, that
    they publish large snippets of newspapers' content to attract
    users to the platform without any compensation at all to that
    news outlet, and repeated complaints to Google and Facebook
    from newspapers and broadcasters are simply ignored because
    that's what a monopolist does.
        They can ignore things. They can use their market dominance
    to elbow others out and retain their control. That's why we
    need to step in to level the playing field as so many other
    countries are doing.
        We're here today to talk about how we'll give these news
    outlets a fighting chance. I teamed up with my colleague
    Senator Kennedy to lead the bipartisan Journalism Competition
    and Preservation Act. Our bill gives local news outlets the
    ability to collectively negotiate for fair compensation with
    companies like Google and Facebook so they can continue to
    invest in the kind of quality reporting that keeps us all
    informed.
        We're working with our bipartisan partners in the House of
    Representatives on improvements to the bill. We're ready to
    take all ideas and address all challenges raised by our
    colleagues because we believe there's a way to do this fairly
    to make sure that all news outlets are included to better help
    correct the better--imbalance in bargaining power between
    newspapers and Big Tech.
        We're looking at this, a clear framework for good faith
    negotiations between news organizations and Big Tech,
    mechanisms to help make those negotiations go smoothly,
    protections to prevent discrimination against news outlets
    based on the political views that they express, and provisions
    to better ensure that the interest of small independent news
    outlets are paramount in any joint negotiation.
        I also introduced the Future of Local News Act to help
    local outlets chart the path forward as they recover from the
    pandemic. I'm working with my colleagues to pass the Local
    Journalism Sustainability Act to help Americans pay for
    newspaper subscriptions.
        All this said, if we were living in a perfect world where
    we didn't have monopoly search engines and monopoly platforms
    with, in some cases, over 90 percent of the market, and we were
    able to pass some of the bills that I have, my colleagues have
    on a bipartisan basis, Senator Grassley, to even that playing
    field, maybe we wouldn't be where we are.
        We are here because we have a crisis going on when we've
    lost over 2,000 news outlets, and that is why we have come upon
    this targeted approach to protect the First Amendment, to
    protect the news organizations that we believe are so critical
    to making sure that the First Amendment stays strong.
        We need to recognize that what separates the news from the
    vast majority of our other industries is its crucial role in
    our democratic system of Government. That's why our founders
    enshrined freedom of the press in the First Amendment. When the
    exercise of monopoly power results in a market failure in our
    news industry, it's critically important for our democracy that
    we act.
        Local journalism is also important to local communities and
    their economies. The closures of local newspapers can lead to
    higher municipal borrowing cost and increased Government
    inefficiency. This means less money for schools, hospitals, and
    roads.
        Thomas Jefferson said that our first objective should be to
    leave open, quote ``all avenues to truth'', end quote, and that
    the best way of doing that is through, quote ``the freedom of
    the press'', end quote. That rings especially true today.
        As elected leaders, we certainly may not always like what
    we read or hear in the news. I think all of us can relate to
    this. I think we can all agree that ensuring the future of a
    vibrant and independent free press is essential to the fabric
    of our democracy and the American way of life.
        Thank you. I now turn it over to my colleague, Senator Lee,
    for his opening statement.

               OPENING STATEMENT OF HON. MICHAEL S. LEE,

                 A U.S. SENATOR FROM THE STATE OF UTAH

        Senator Lee. Thank you so much, Chair Klobuchar. I think
    today's hearing is important. I look forward to it for a
    variety of reasons. I think it'll be illustrative on a number
    of fronts.
        It first involves what ails the news industry. News
    publishers do, in fact, have a legitimate beef with the Google-
    Facebook ad duopoly. That's a problem, and Google and
    Facebook's unrivaled market power in digital advertising
    imposes a sort of de facto tax on every business that places or
    makes money from ads, which is a large swath of the 21st
    century economy.
        I'm grateful to you, Madam Chair, and along with Senators
    Grassley and Blumenthal for working with me and my office to
    help tackle that two-headed hydra, which does need to be
    tackled, and we have a lot of agreement on that issue. I also
    think that it's important to ask the question whether that's
    really these publishers' only problem. I don't think it is. In
    fact, I think it's far from that.
        Our witnesses today may not exemplify it, and I'll assume
    for purpose of our discussion today that they don't. There are
    a number of voices within the mainstream news media whose
    publications are rife with shoddy and extraordinarily biased
    reporting that many consumers simply don't trust or, in any
    event, don't want to spend money consuming.
        There are too many examples to cite all of them. I think
    it's important to point out at least a few of them. We have the
    Steele dossier, a work of pure fiction, funded by the Clinton
    campaign and breathlessly, dutifully reported on by news media
    outlets across the country. Blinded by their own impassioned
    hatred of President Trump, they helped spread the dossier's
    lies even after it had been proven demonstrably literally
    false. We're still waiting on the retractions.
        What about The Washington Post defamation of Covington
    Catholic High School student Nicholas Sandmann or the Post's
    fawning description of Islamic State leader Abu Bakr al-
    Baghdadi as a, quote unquote, ``austere religious scholar''?
    Who can forget The New York Times reporting that Russia had
    placed bounties on the heads of American soldiers, which was
    quickly, dutifully parroted by other outlets in the run-up to
    the 2020 Presidential election? It wasn't until after President
    Biden was inaugurated that they felt comfortable admitting that
    the story didn't hold up. Mission accomplished, I suppose.
        I know Senator Cotton will recall how his suggestion that
    COVID-19 may have been leaked from a lab in Wuhan was scoffed
    at and derided rather viciously in a series of personal attacks
    against him for saying that. As it turns out, he was right. How
    did the media respond? They stealth-edited their original
    reporting to pretend that it never happened.
        Just last month, just in the last few weeks, the Salt Lake
    Tribune's editorial board literally said that if Utah were a
    more just, decent place that the National Guard would be
    mobilized to, in effect, hold people under house arrest orders
    if they were unvaccinated.
        The fiery but mostly peaceful protests of the summer of
    2020, the denials that Critical Race Theory is being taught in
    the schools, these things add to and constitute part of this
    list along with, quote unquote, ``temporary inflation.'' The
    list goes on and on.
        Look, today's news media is often a source of
    misinformation, and it's one of the leading causes when it does
    this of social discord and political upheaval, especially when
    it doesn't even acknowledge its mistakes and especially when
    its mistakes appear so frequently, so consistently, so
    constantly to lean one direction and not the other.
        The self-proclaimed Fourth Estate loves to preach to the
    masses about democracy dying in darkness while they themselves
    turn out the lights. On top of the fact that the mainstream
    media is selling something that, in many cases, people don't
    want, there are also the series of poor business decisions that
    have been made within that industry. During the years in which
    they made comfortable profits, almost nothing, in some of the
    companies at least, was reinvested into the business to
    innovate and to grow in response to changing technologies.
        When the market changed with the advent of the internet
    forcing newspapers for the first time to face meaningful
    competition for advertising dollars, many publishers just went
    all in on an advertising-only business model, even abandoning a
    subscription revenue, for online content.
        The bottom line here is that whatever the challenges that
    the news publishers are facing as a result of Big Tech's
    dominance over digital advertising, for some publishers,
    perhaps for many, they've got other problems. For some of them,
    perhaps for many, it may involve inferior product quality and
    failure to take into account evolving technologies to adapt
    their business model.
        The second thing to straight--set straight here is that
    what we should do about this or rather what we should not do
    also matters. The last thing I think we should do is try to
    solve this or any other competition problem by saying that it's
    okay to just accept a cartel, that it's okay to make changes to
    the laws to encourage the formation and allow the formation and
    thereby encourage the formation of a cartel as many publishers
    are requesting. Make no mistake that is what this is. That--it
    is what this call is for, and that is what the JCPA would do.
    We're not talking about an arguably procompetitive type of
    competitor collaboration on some sort of run-of-the-mill joint
    venture. This would be competitors themselves colluding with
    the approval of law against a common business partner in order
    to fix problems they're facing.
        There is a lot that Senator Klobuchar and I have agreed on.
    One of the many things that--we've agreed also on a lot of
    areas within antitrust law. We held a fantastic hearing back in
    2013, I think it was, when we talked about cartels. Senator
    Klobuchar said cartels have no other purpose other than to rob
    consumers, and I agree.
        I certainly think that we're not going to be better off by
    giving a cartel formation hall pass to an industry that's been
    ravaged by a number of other problems that I've identified.
    This ends up passing those problems along to consumers, the
    very same consumers that are being forced to, in many cases,
    accept an inferior product and partisan hackery and so much
    else that goes along with it.
        I know publishers, including some of our witnesses today,
    believe that they would benefit. Legislation like the
    Journalism Competition and Preservation Act would do far more
    to help The New York Times and far more to help The Washington
    Post than it would be a benefit for local journalism in Salt
    Lake City or in Minneapolis. The only way to fix this is by
    encouraging competition and allowing it and promoting it, not
    eliminating it, and not--certainly not giving people a hall
    pass to engage in contact that would challenge, threaten, and
    undermine it.
        Finally, as I understand, the authors of the JCPA are
    rewriting that bill in an effort to mirror some reforms in
    Australia and the music licensing system of the United States,
    but I want to register my frustration that the majority hasn't
    shared draft texts with it. We haven't seen that draft text.
    It's nearly impossible for Senators and witnesses to prepare
    for a hearing where a draft of the legislative solution is
    still floating--is floating apparently around K Street, but not
    publicly available for Senators and for the American people,
    for that matter, to review.
        With all that said, I look forward to this hearing and
    hearing from our witnesses and their contributions.
        Chair Klobuchar. Thank you very much, Senator Lee. I'd also
    note that your--the venue bill, we didn't have any hearing on
    that. We are here having a hearing on this, and I'm, of course,
    the lead author of that. I think I went through after our last
    discussion on my innovation bill, and we found dozens of bills
    including led by Republicans where the hearings were either at
    the Subcommittee level or there wasn't a hearing. We were able
    to have a markup and a discussion of the bill based on hearings
    such as the one we're having today.
        I just think it's--after we're done with this hearing, we
    should look at that history because we would be putting on hold
    the venue bill and many others if that was our new standard
    that would be suddenly adopted this week.
        I'm now going to introduce the witnesses that are before us
    today. From the local news area, something near and dear to my
    heart and the reason I feel so strongly about this bill,
    Jennifer Bertetto. Thank you for being here. Did I say that
    correctly? Thank you. Is the president and CEO of Trib Total
    Media located outside of Pittsburgh. The company operates a
    daily paper with a circulation of approximately 35,000, 11
    weekly community newspapers with smaller circulations, and a
    handful of monthly newspapers.
        Mr. Bertetto has been with the company--Ms. Bertetto has
    been with the company for more than 20 years, holding positions
    ranging from regional advertising director to chief operating
    officer to president. Her first job in the news business was
    taking baseball scores for the local baseball and soccer
    leagues at the age of 16. She also serves on the board of the
    News Media Alliance.
        Next up, Joel Oxley. Mr. Oxley is the general manager of
    WTOP News. For anyone in the DC area, you've heard WTOP. It is
    a DC area radio station owned by Hubbard Broadcasting that
    happens to be located in Minnesota. WTOP has over 100 local
    journalists, and it is known for its local news programming.
    The station first went on the air in 1926. Mr. Oxley joined
    WTOP in 1992 and worked his way up the ranks in sales and sales
    management to general manager in 1998.
        Dan Gainor. Mr. Gainor is a vice president of Free Speech
    America and Business for the Media Research Center, a nonprofit
    organization focused on alleged liberal media bias. He is a
    commentator for Fox and has a regular spot on the One America
    News Network. Prior to joining the Media Research Center, Mr.
    Gainor was an editor at several newspapers including the
    Washington Times and the Baltimore News American.
        Next, last but not least, Daniel Francis. Mr. Francis--Dr.
    Francis is a lecturer on law at Harvard Law School where he
    writes about regulation and competition. His research focuses
    on antitrust as well as constitutional and other rules that
    facilitate, constrain, and shape regulatory action and
    competitive processes. He has a particular interest in digital
    and high-tech markets. Dr. Francis previously served at the
    Federal Trade Commission as senior counsel to the director--
    associate director for digital markets and ultimately deputy
    director.
        Another witness that's here with us virtually, Hal Singer.
    Dr. Singer is an economist who has researched, published, and
    testified on competition-related issues in a wide variety of
    industries including media, pharmaceuticals, sports, and
    finance. Late last year, he published a paper commissioned by
    the News Media Alliance about the impact of Google and Facebook
    on newspapers finding that Google and Facebook undercompensate
    newspapers for content and advertising.
        If the witnesses now would please stand and raise your
    right hand.
        [Witnesses are sworn in.]
        Chair Klobuchar. Let the record reflect that each of the
    witnesses answered in the affirmative. You may be seated. I
    will now recognize the witnesses for 5 minutes of testimony
    each. As I noted, Senators have votes. We've invited all the
    Senators on the Committee as we always do to this hearing. We
    will begin with you, Ms. Bertetto. Thank you.

               STATEMENT OF JENNIFER BERTETTO, PRESIDENT

                    AND CEO, TRIB TOTAL MEDIA, INC.,

                        PITTSBURGH, PENNSYLVANIA

        Ms. Bertetto. Chairwoman Klobuchar, Ranking Member Lee, and
    Members of the Subcommittee, thank you for the opportunity to
    participate in today's hearing.
        My name is Jennifer Bertetto, and I'm the president and CEO
    of Trib Total Media. We are a small publisher that delivers
    news, information, and advertising to four counties in South--
    Southwestern Pennsylvania. Our company is 272 employees strong
    with daily and weekly newspaper circulations and hyperlocal
    community websites that comprise our neighborhood news network.
    Our newsroom is a collective of 88 journalists,
    photojournalists, editors, and designers. Our high-quality and
    award-winning journalism is why our flagship website,
    TribLIVE.com, draws more than 300 million page views each year.
        Trib Total Media's commitment to delivering high-quality
    journalism dates back to our founding in the 1800's. Our
    company was transformed in 1970 when Richard Mellon Scaife
    purchased our local publishing company. We have remained
    focused on providing local news to our communities. With the
    rise of the internet, we recognize that we needed to shift our
    focus from print to digital. Having done that, we're proud to
    provide our flagship website for free, a testament to our
    commitment to the community and to making news accessible.
        I've worked my entire career in the news industry, starting
    out of college and working my way up to president and CEO in
    2015. I've seen firsthand the changing nature of news
    consumption and distribution and can attest that the news
    industry faces a dire and insurmountable challenge: leveling
    the playing field against the vast power exerted by dominant
    digital platforms.
        I'd like to discuss three main points. First, local
    newspapers are under incredible financial pressure, and we must
    ensure that the people who create high-quality journalistic
    content are compensated for it. With the growth of the digital
    platforms, we saw our readership shift to fewer subscriptions
    and then cancellations.
        To become profitable, in 2015, we restructured our
    business. We closed two newspapers, sold three others, and made
    the difficult decision to lay off more than 150 employees. In
    2016, we published our last print edition of the Pittsburgh
    Tribune Review and moved our reporting in that market online.
    These decisions were essential to stay in business, but they
    have ramifications to this day. Several communities in
    Southwestern Pennsylvania are considered news deserts not
    served by any local newspaper.
        Second, access to news online has become concentrated on
    two platforms, Facebook and Google, which serve as gatekeepers
    and determine how news is displaced, prioritized, monetized
    without compensating the journalists that create the content
    they rely on. Tech platforms have become gatekeepers,
    controlling access to news, my company's original content, on
    their sites. Sadly, most Americans get their news from these
    platforms who are raking in record profits by simply curating
    content, a word that has subtly devalued the painstaking work
    of real reporting by journalists.
        On Google alone, 65 percent of users don't leave their site
    to click through to a newspaper's website depriving publishers
    of the traffic and ad dollars it brings. Some say the newspaper
    industry has failed to modernize, and that's nonsense. Even
    with restructuring and enhanced digital offerings, no matter
    what we did, it was not enough to level the playing field.
    Small publishers are stuck between a rock and a hard place. We
    carry no weight in negotiations with platforms. We do not have
    the resources or the stature to bring them to the table.
        There is a solution to the problem. The Journalism
    Competition and Preservation Act would give publishers a seat
    at the table to negotiate fair terms for the value of our
    journalism. Thanks to the leadership of Chairwoman Klobuchar
    and Senator Kennedy, the JCPA would provide a limited safe
    harbor period for news publishers irrespective of size or
    political persuasion to negotiate collectively with the
    platforms for fair compensation for the use of our content.
        It's imperative that journalists are fairly compensated,
    and the JCPA would allow us the opportunity to seek just that.
    The bill does not prescribe the outcome, but it allows the
    opportunity to seek fair compensation, requiring the parties to
    negotiate in good faith. To receive fair compensation for our
    work would enable small publishers like my company to invest
    more in our communities, hire more reporters, increase quality,
    fact-based news.
        Thank you again for the opportunity to testify at today's
    hearing.
        [The prepared statement of Ms. Bertetto appears as a
    submission for the record.]
        Chair Klobuchar. Next up, Mr. Oxley.

                    STATEMENT OF JOEL OXLEY, GENERAL

                   MANAGER, WTOP NEWS, WASHINGTON, DC

        Mr. Oxley. Good afternoon, Chairwoman Klobuchar, Ranking
    Member Lee, and Members of the Subcommittee. My name is Joel
    Oxley, and I am the senior vice president and general manager
    of all-news radio station WTOP-FM, WTOP.com, and
    FederalNewsNetwork.com, which are all owned by Hubbard
    Broadcasting.
        Hubbard Broadcasting is a Saint Paul, Minnesota family-
    owned and operated broadcasting company with 13 television
    stations located in Minnesota, New York, and New Mexico and 50
    radio stations located in Minnesota, Illinois, Missouri, Ohio,
    Arizona, Washington, Florida, and Washington, DC.
        I appreciate the opportunity to testify on behalf of the
    National Association of Broadcasters and its more than 6,600
    free and local television and radio station members in your
    hometowns. Broadcasters represent one of the last bastions of
    truly local unbiased journalism, information that is still
    respected by all Americans. Your constituents turn to their
    local reporters and anchors for voices they trust. Legislative
    action, including swift passage of the Journalism Competition
    and Preservation Act, the JCPA, is needed to preserve this
    central cornerstone of our democracy.
        Local journalists and the communities we serve face an
    existential threat whose fate increasingly rests in the hands
    of a few dominant digital platforms. We applaud this
    Subcommittee's attention to this challenge and your continued
    work in examining the digital marketplace for news and
    journalism.
        The pandemic has shown that, when needed most, local
    television and radio stations provided the civic bond for the
    communities we serve doing incredible work in the face of our
    own enormous challenges. More importantly, we continue to be
    the primary source of the community-focused information on
    which your constituents have relied during this pandemic from
    health and vaccine resources to vital information about schools
    and local businesses.
        I've been in the news business since college, when I wrote
    for the school newspaper and was a sportscaster at the radio
    station. I worked with Scripps Howard. I worked with the
    Chicago Tribune before joining WTOP three decades ago where I
    have worked my way up in sales and sales management before
    becoming the GM in 1998.
        I understand the significant cost of producing quality
    journalism. I'm keenly aware of the significant financial
    resources needed to run a station and invest in the type of
    equipment necessary to serve the public day in and day out 365
    days a year. Quality journalism delivered through our uniquely
    free service has only been made possible over the decades
    through advertising revenues. As you all are aware, these
    revenues have experienced a free fall in recent years, due
    almost exclusively to the rapid often anticompetitive expansion
    of the dominant online platforms who've upended the advertising
    marketplace.
        The market power of the tech platforms undermines the
    online advertising model for local broadcast journalism in two
    important ways. First, the tech platforms' role as content
    gatekeepers stifles our ability to generate user traffic.
    Second, anticompetitive terms of service and a take it or leave
    it approach leave local broadcasters with a below-market sliver
    of those advertising revenues derived through their products.
        For local broadcasters and our viewers and listeners who
    rely on quality journalism, this is a real catch-22. To attract
    online user traffic, we must be accessible through the major
    platforms, yet the terms of access dictated by the online
    platforms devalue our product. For example, not only is WTOP
    being compensated by Facebook and Google for its content, WTOP
    is actually--not being compensated. WTOP is actually paying to
    make sure its content is being accessed on their platforms.
    Even more concerning is the degree to which certain platforms
    commoditize news content with little regard for the quality and
    veracity of the story.
        This puts fact-based reporting like ours on par with
    unsubstantiated clickbait as we fight for user eyeballs in both
    platform newsfeeds and search results. There is no doubt that
    tech platforms and their algorithms prioritize content that
    favors sensationalism over hard journalism. The dominant online
    platforms have flourished, siphoning off huge amounts of
    advertising revenues that are the lifeblood of free, local
    journalism.
        Consider the big storm that just flew through the Northeast
    over the weekend, a nor'easter with blizzard conditions. Tons
    of work at a lot of cost and time for local broadcasters to
    cover for millions of people, but not for Facebook, Google, and
    the like. They simply take our coverage and profit from it, and
    virtually nothing comes back to us. But without local news, my
    guess is a lot of people would have not evacuated places like
    Cape Cod last weekend, and lives would have been risked. We
    just can't have that.
        In conclusion, this Committee can address these concerns
    with the passage of the JCPA. The NAB thanks Chairwoman
    Klobuchar and Senator Kennedy for introducing the JCPA, a
    targeted, commonsense proposal. The NAB strongly supports the
    JCPA, which would level the playing field by creating a
    temporary safe harbor for broadcasters and certain digital
    publications to jointly negotiate with dominant online
    platforms regarding the terms and conditions by which their
    content may be accessed online.
        Thank you again for the opportunity to appear before you
    today. I look forward to your questions.
        [The prepared statement of Mr. Oxley appears as a
    submission for the record.]
        Chair Klobuchar. Thank you very much, Mr. Oxley. Next up,
    thank you for being here, Mr. Francis.

                 STATEMENT OF DANIEL FRANCIS, LECTURER

                      ON LAW, HARVARD LAW SCHOOL,

                        CAMBRIDGE, MASSACHUSETTS

        Mr. Francis. Chair Klobuchar, Ranking Member Lee, Members
    of the Subcommittee, thank you for having me here to testify
    today.
        As a former Federal antitrust enforcer, I strongly support
    the Subcommittee's focus on digital monopoly, and I want to
    acknowledge the seriousness of the difficulties that many
    publishers are facing across the country today while doing some
    of our most important work. I cannot think of anything the
    country needs less, now or ever, than a national news media
    cartel.
        I want to make just three points. Point number one, cartels
    are the supreme evil of antitrust. They're so reliably harmful
    that we extradite and imprison people who form them, they're
    automatically illegal in civil litigation with no justification
    allowed at law, and for decades, the Justice Department has had
    a flagship policy project of fighting cartels and opposing
    exemptions just like this one. Congress has licensed cartels a
    handful of times over the 130 years of our antitrust laws but
    always with great caution and not always with happy results.
        Point two, I think the real complaint that I hear from the
    publishing industry is not so much about monopoly but is rather
    about property rates on the internet. I appreciate the
    publishers complain that platforms and users can share links to
    websites and can get fair use previews of news websites that
    are a sentence or two long without paying. They argue that
    that's evidence of monopsony power because platforms are
    profiting and they're not paying or not paying nearly so much
    for those rights.
        This is not evidence of monopsony power. Platforms aren't
    linking and previewing for free because they're monopsonists
    exercising buyer power. It's because our property laws very
    wisely don't give a website owner, whether it's an owner of a
    news website or something else, the power to veto or tax
    linking or fair use previewing of that website.
        It's pretty easy to see that this has nothing to do with
    monopsony power because no one pays for it. We could--if
    someone has the coding ability in this room, we could start an
    app today and link and preview websites without paying for that
    privilege. Our law gives everyone that freedom, and I think
    that's a really good thing. Links are the lifeblood of the
    internet. Imagine how hard it would be to write even a
    traditional article or book if you couldn't cite a source or
    quote a sentence or two without paying for that privilege.
    Imagine the consequences of that rule for our internet today.
        Despite the framing, my strong sense is that this is not
    really about monopoly or monopsony at all. It's a request to
    dramatically expand profit rights on the internet and then to
    allow that property right to be sold by a new national news
    cartel with major media conglomerates at the helm. I think
    whatever antitrust reform we need today--and I think we need
    some--this is not that.
        Point three, I think we're going to hear today about
    countervailing power. I think that's a red herring. It's true
    that in economic theory if you have a single dominant buyer
    there is an argument that total welfare can be improved if you
    let the suppliers form a cartel, at least in the perfect world
    of theory. I don't think that's applicable here for two
    reasons. Number one, I don't see evidence of monopsony power
    here at all despite the size of the platforms. Again, platforms
    aren't linking and previewing for free because of buyer power.
    They're linking and previewing for free because that right,
    that freedom is theirs under our property law today.
        This wouldn't be a cartel that would correct buyer power.
    It would create new seller power. That's a monopoly surcharge
    on all the news in the United States cascading down the supply
    chain driving up prices that are already too high.
        Second, the harm would far outweigh any good. Despite the
    size of the platforms, it actually doesn't look a lot like they
    hold monopoly power in markets for news today. A national news
    cartel sure would be a monopolist. I think this Subcommittee
    would be really concerned if even two of the major publishers
    were to propose a merger. The idea that we might put all of
    them together under one roof to agree on rates and terms and
    business models strikes me as a consumer's nightmare.
        Every week the antitrust agencies hear pretty creative but
    sometimes fragile blackboard economic theories about why we
    should tolerate harmful conduct. I don't think the agencies
    would accept this argument, and I don't think Congress should
    either. I think the best thing we can do for competition in
    news is significantly increase our funding for the antitrust
    enforcers. I think that's the most urgent need we face.
        Thanks for inviting me today, and I look forward to your
    questions.
        [The prepared statement of Mr. Francis appears as a
    submission for the record.]
        Chair Klobuchar. Thank you. Next up, Dr. Singer who is here
    in person. Thank you.

                   STATEMENT OF HAL SINGER, MANAGING

                      DIRECTOR, ECON ONE RESEARCH,

                             WASHINGTON, DC

        Dr. Singer. Thank you to the Subcommittee for inviting me
    to speak today on this most serious issue. I want to begin on a
    slightly lighter note however by giving a shoutout to my mom,
    who turned 90 last month, who's watching this hearing the old-
    fashioned way and has not forgiven me to this day for becoming
    an economist rather than a lawyer.
        The economic concepts here are complex and require a lot of
    ink, but I will try to boil them down to just a few by
    answering three questions. One, what is the competition problem
    this bill seeks to solve? Two, what are the social harms that
    flow from the competition problem? And three, how would a
    targeted bill address the competition problem?
        Regarding the competition problem, two platforms, Google
    and Facebook, have monopolized the digital advertising
    industry. Google and Facebook capture approximately 61 percent
    of all digital advertising dollars because of their ability to
    collect consumer data across the web. Seventy percent of
    referral traffic to newspapers originate from just these two
    sites. This market power makes news publishers completely
    beholden to the dominant platforms for viewers and advertising
    dollars. The resulting power imbalance ensures the market rate
    for accessing news content will always be below competitive
    levels.
        Google and Facebook achieved their dominance in the mid-
    aughts with the acquisition of countless competitors,
    complementors like Instagram and YouTube as well as critical
    input suppliers in ad tech like DoubleClick and AdMob. Also in
    the mid-aughts and not by coincidence, newspaper began losing
    advertising mainly to the platforms. According to Pew Research,
    newsroom advertising declined from $37.8 billion in 2008 to
    $8.8 billion in 2020. Over the same time period, newsroom
    employees decline from 71,070 to 30,820. If these trends are
    left unchecked, we might not have local newspapers in the
    recent--in the near future.
        The reason why Google scrapes indexes and posts news
    publisher content for free is because it can. It's like a
    school bully eating a smaller child's lunch. So long as market
    forces are allowed to dictate the payments for accessing news
    publisher content, the access price will remain zero and news
    publishers will be deprived of the billions of dollars a year
    of value created for the platforms.
        Turning to my second question, in addition to the private
    harms, the underpayment to news publishers results in
    underemployment of journalists and other news employees as well
    as a host of other social ills associated with local news
    deserts including less competent local governments, greater
    spread of partisanship and misinformation, removal of economic
    stimulus to local economies, and a reduction in the diversity
    of viewpoints.
        Turning to my third and final question, a targeted
    intervention similar to the negotiation framework adopted in
    Australia would solve the competition problem and mitigate the
    associated social harms by doing three things. First, it could
    permit a coalition of news publishers to form a joint
    negotiating entity to alleviate the power imbalance. No new
    publisher--news publisher would ever unilaterally shut down
    access to Google and Facebook. To do so would be suicidal.
        Second, the bill could compel the platforms to negotiate in
    good faith for the access rights.
        Third, if the good faith negotiation does not produce an
    agreement, the coalition of news publishers, but not
    broadcasters, could invoke arbitration rights. At that point, a
    panel of arbitrators would decide using baseball-style
    arbitration whose estimate of the value added to the platform
    by all the members of the coalition was closest to fair market
    value for accessing the content in the absence of the power
    imbalance.
        Granting a narrow exemption to antitrust laws to address
    underpayments to vulnerable input providers finds precedent in
    both the labor exemption and the farm cooperative exemption to
    the antitrust law. Other countries such as Australia, which
    have employed a similar intervention to what I call for here,
    have seen immediate rewards to publishers for their
    interventions.
        Relative to Australia's model, what I'm calling for would
    be more favorable to small publishers as it would not permit
    any large individual newspaper to avail itself of the good
    faith negotiation or arbitration rights. Only news publishers
    that remain in the coalition would be entitled to those rights.
        Thank you, and I look forward to answering your questions.
        [The prepared statement of Dr. Singer appears as a
    submission for the record.]
        Chair Klobuchar. Thank you very, very much. Now, our
    remaining witness who's appearing remotely is Dan Gainor, vice
    president Free Speech America and Business for the Media
    Research Center. Thank you for being with us Mr. Gainor.

                     STATEMENT OF DAN GAINOR, VICE

                   PRESIDENT, FREE SPEECH AMERICA AND

                    BUSINESS FOR THE MEDIA RESEARCH

                        CENTER, RESTON, VIRGINIA

        Mr. Gainor. Thank you. Chairperson Klobuchar, Ranking
    Member Lee, and Members of the Committee, thank you for the
    opportunity today to speak about one of my favorite topics,
    local journalism.
        I worked as an editor on three different local daily
    newspapers as well as an editor of two weeklies, an editor and
    associate publisher to third. The best and honestly the most
    fun jobs I've ever had were in local news. If I could snap my
    fingers and fix local news, I would. I would hazard a guess
    that every single Member of this Committee would do the same.
    The Journalism Competition and Preservation Act of 2021 does
    not fix that problem.
        It's a well-intentioned attempt to level the playing field
    between Big Tech and local journalism, but that's not what it
    does. It seems premised on a misinterpretation of history that
    somehow local journalism was killed by a few Big Tech
    companies. It was not. How do I know? I was there. I was there
    working in local journalism as news outlets brought in 20, 25,
    to 30 percent profits year after year and didn't reinvest those
    epic gains. Newspapers consolidated because delivery became
    difficult in rush hour traffic and more readers turned to TV
    news.
        Baltimore, where I grew up, went from three dailies down to
    one in less than a decade. None of that was caused by the
    internet. I was director of Noon Media for a weekly chain as
    the internet began to catch on. I watched as news organizations
    downplayed the threat and posted their content online for free.
    Sclerotic news outlets were unable or unwilling to respond to
    the opportunities online, and so they were dissected by the
    competition. The Great Recession took a particular toll on
    local businesses, and that meant advertisers stopped
    advertising. COVID restrictions were just another example how
    the heavy hand of government harmed local news.
        That's the background that brings us here today to discuss
    the future of journalism. The JCPA allows big media companies
    to ignore antitrust laws and work together. That isn't fixing
    the problem of having a Big Tech advertising cabal. It's simply
    adding another cabal to negotiate with it. Allowing a few of
    the largest and most powerful media companies to act as proxies
    for others only ensures that big firms will secure deals that
    benefit them.
        We all want trustworthy local journalism that helps inform
    the public as well as hold powerful people accountable. Except
    that's not how corporate media have handled local journalism in
    the past. Local outlets were treated as cash cows. Big
    corporations milked them and slaughtered their remains.
        This law would only serve to support huge existing
    corporate media instead of independent media. Corporate news
    organizations don't need our help. The New York Times just
    spent $550 million in cash purchasing The Athletic, which
    according to journalist Aron Pilhofer, covers 270-plus sports
    teams in more than 47 local markets. ``The Times has placed
    itself in direct competition with every local news site from
    the same pool of subscribers,'' he wrote. Times already had
    more than 8 million paid subscribers, and The Times even just
    bought the popular game Wordle for a price in the low seven
    figures. So why are we helping them?
        The Washington area used to have a thriving chain of
    community weeklies. The Gazettes were founded in 1959 and grew
    to 550,000 in circulation in suburban Maryland. They were
    closed down by their owners, The Washington Post, in 2015. In
    2021, The Post achieved record-breaking digital advertising,
    and it's also owned by Big Tech billionaire Jeff Bezos. He
    purchased the company in 2013, 2 years before it killed the
    chain of weeklies. So why are we helping them?
        Corporate media already benefit from better treatment by
    social media algorithms than smaller and independent outfits.
    Consolidating their already enormous advantages only makes them
    even more powerful. This JCPA also treads dangerously in the
    areas best left alone when defining a news content creator as
    one that has a dedicated professional editorial staff.
    Independent journalists still make news, but they would be
    squeezed out by corporate media.
        Last, this issue needs to be seen in context. There are a
    few journalism bills floating around in this Congress. There is
    a concerted effort to get government involved in the practice
    and funding of journalists and journalism. It is unrealistic to
    expect journalists funded or supported by politicians to turn
    around and report aggressively on those same politicians. We
    can't expect journalists to hold powerful people accountable
    when they are accountable to those powerful people for their
    paychecks.
        All this happens at a time when Americans' trust in media
    is near an epic low. According to Gallup, Americans' trust in
    media to report the news fully, accurately, and fairly has
    fallen to just 36 percent. For Republicans, that number stands
    at 11 percent. Why then are we bailing out corporate media when
    ordinary Americans would rather find new sources of
    information?
        Thank you, and I look forward to your questions.
        [The prepared statement of Mr. Gainor appears as a
    submission in the record.]
        Chair Klobuchar. Thank you very much, and thank you for
    appearing remotely. I'll get started here. I'll start with you,
    Ms. Bertetto.
        Google is a search giant. About 90 percent of searches as
    we know, they have 90 percent market done on Google and also
    the largest company in the online advertising space, something
    I know that my colleague Senator Lee is very concerned about.
        For small newspapers, Google takes a large percentage of
    the revenue generated on the newspaper's site. How would you
    characterize your negotiations with Google over the share of
    the advertising revenue it gets compared to what your
    newspapers can keep?
        Ms. Bertetto. Thank you for your question. I guess the best
    way to answer that would be there have never been negotiations
    between my company and Google about the manner in which we get
    paid or how much we get paid. In fact, I've often had my
    company penalized whenever I have had other advertising
    services available on TribLIVE to help fund our free website.
    We get punished in the algorithm. If someone goes to search for
    TribLIVE, because we are using other companies that are not
    Google, our search results are pushed down.
        When we have reached out directly to Google for help to
    improve our search rankings, we have been sent to resellers of
    Google products who charge us anywhere between 12 and 15
    thousand dollars a month, which is a lot for our company, to
    help us solve our problem. The problem is always solved by
    removing other advertising mechanisms that exist on our site.
        When I have attempted to find other ways to monetize our
    content independent of Google, I have hit wall after wall with
    Google. In fact, the resellers have been as brash as to say to
    me, ``Look. I would take off these other platforms that you're
    using on your site.'' When I explain that I actually get a
    higher dollar per click using those resellers, they told me,
    ``Well, Google doesn't like that, and Google owns everything.''
        Chair Klobuchar. Okay. Pretty direct. Okay. Mr. Oxley, in
    your written testimony, you wrote that Big Tech companies like
    Google have adopted anticompetitive terms of service and a take
    it or leave it approach which leaves local broadcasters with a
    below market sliver of the ad revenue derived through their
    products. Can you tell the Committee what's your experience
    been negotiating with Big Tech companies like Google?
        Mr. Oxley. There is no negotiation. There is no
    conversation. There is no emails. There is no back and forth
    whatsoever. They don't really even give you that opportunity in
    any way, shape, or form. Believe me, we've tried every way
    possible with both of them. The bottom line is that they don't
    get back to you. Even worse, they make changes whenever they
    feel like it. We oftentimes over a weekend or overnight or in
    the middle of the afternoon, we'll all of a sudden have changes
    in terms of service just come down to us out of the blue, and
    we just have to deal with it. There is not any kind of
    negotiation. There's not any kind of conversation.
        Chair Klobuchar. Okay. Again, Dr. Singer. News aggregators,
    such as Apple News, Google News, Facebook News, take content
    from various news publishers and give it to consumers. It makes
    it very difficult for newspaper publishers and other news sites
    to establish direct relations with their own readers, which
    cuts into their ability to retain subscribers and improve their
    own advertising operations. Can you talk about the challenges
    faced by smaller media outlets which often find themselves in
    an unevening bargaining position with news aggregators?
        Dr. Singer. Sure. There is--the challenge, of course, is
    more acute for the smaller publishers than the larger because,
    as a matter of bargaining position, they have even less
    bargaining power, countervailing power. I would say that the
    asymmetry or the power imbalance extends across the entire
    industry, not just smalls but the mediums and the large as
    well.
        The fundamental problem is that they cannot summon the
    will--the publishers cannot summon the will to do what's
    necessary to extract a fair market payment for access which is
    to shut down the access to Google or Facebook from their site.
    No one would rationally do that on a unilateral basis. Now, the
    reason why is because they're extremely dependent and beholden
    on Google and Facebook for traffic. Like I said, 70 percent of
    the referrals come from just those two sites.
        What the bill would seek to do to attack this power
    asymmetry, this bargaining asymmetry, is to first allow the
    newspapers and news publishers and broadcasters to bargain
    collectively vis-a-vis the dominant platforms. I think that, to
    answer your question, yes. They are facing dire straits in
    this.
        Chair Klobuchar. All right. I just want to ask one last
    question, and that is this. You've heard from I think it was
    Mr. Francis and my colleague over here with the use of the word
    news cartel about what this bill does. Of course, there's been
    Representative Buck, conservative over in the House, Senator
    Kennedy, not exactly a liberal. Senator Boozman has just been
    added to the bill, and there's a lot of interest in this bill.
        I think it's really important as we look at the changes
    we're making to make clear that there isn't going to be any
    kind of bias here but that also--could you address this
    argument they've made that this creates some kind of news
    cartel? I'm only knowing the supporters of this bill in terms
    of the news organizations that run the gamut from liberal to
    very conservative. I find this impossible to see it that way.
    But could you comment about why this is not a news cartel?
        Dr. Singer. Right. The concept of creating a cartel here is
    laughable and uneconomic. Let me just try to explain why. The
    newspapers and the news publishers generally would not be
    getting coordination rights in their dealings with consumers.
    Would not. If they got together and tried to set prices for end
    users, they would go to jail.
        The coordination rights that are being delivered here are
    narrowly tailored to pertain to only the news publishers'
    dealings with the dominant platforms. They wouldn't have
    coordination rights with respect to workers. They wouldn't have
    coordination rights with respect to buyers or customers. The
    notion of a cartel being created is fanciful.
        I want to just make one other point too. I heard Mr.
    Francis say that it's going to result in higher prices as, you
    know, the cartel is going to exercise presumably its selling
    power vis-a-vis consumers. Well, that's false. Just think about
    what would happen if the news publishers got their way and got
    the bill passed and there was an arbitration hearing and there
    was an award that was given in the billions of dollars to the
    news publishers. What would happen?
        You have a large lump sum payment coming in on the revenue
    side, and there is no theory in economics or no theory in
    pricing, which I happen to teach at Georgetown, that would
    suggest that a big, large increase of a lump sum revenue would
    ever cause a firm to raise its prices to end users. It just
    doesn't make any sense as an economic matter. If someone in my
    class suggested as such, they would fail.
        Chair Klobuchar. All right. Don't worry, Mr. Francis. When
    Senator Lee or another Senator returns, I myself will give you
    a chance to respond. Just hold your beer.
        Okay. We have next up Senator Durbin. We're thankful he is
    here as the Chair of the Judiciary Committee. We're honored to
    have him here since he's not officially a Member of this
    Subcommittee, but he is our Chairman. We also thank Senator
    Grassley, the Ranking Member, for his constant interest in this
    issue and help. Senator Durbin.
        Chair Durbin. Thank you, Madam Chair. I have to leave very
    shortly, and I appreciate your putting me on the queue.
        I recently read about the brown-headed cowbird. It's a
    brood parasite meaning it lays its eggs in the nests of other
    species. A female cowbird quietly searches for female birds of
    other species that are actively laying eggs. Once she's found a
    suitable host, the cowbird will sneak into the resident bird's
    nest when it's away, usually damage or remove one or more egg,
    and replace it with one of her own. The foster parents then
    unknowingly raise the young cowbirds usually at the expense of
    their own offspring.
        It sounds like an analogy to something we're talking about
    here. It appears news sources are creating information which is
    being used by others that they don't pay any money to create.
    The advertising revenue comes their way when they steal that
    content and put it on their own tech boards and such.
        I'm wondering here. Is there a way to deal with this? Let
    me quote one of the friends of mine, Dennis Lyle. You may know
    Dennis, president of the Illinois Broadcasters Association. He
    said to me, ``The economic harm these tech giants are
    inflicting on local broadcast journalists around the country is
    brought out in this testimony where advertising revenues for
    radio broadcasters have experienced a free fall in recent years
    due to almost exclusively the rapid expansion of dominant
    online platforms who have devoured advertising market share in
    the digital marketplace and devised anticompetitive practices
    to protect it.''
        We're discussing the passage of JCPA to level the playing
    field. I'd like to ask Mr. Oxley. Can you discuss how this
    proposal and negotiation framework would help boost small
    Illinois broadcasters like those Dennis Lyle represents?
        Mr. Oxley. Absolutely. I appreciate the question.
    Absolutely. It would help us and all kinds of news operations
    to have a level playing field. I think that's all that we're
    asking for is a seat at the table. We want to be able to
    negotiate. We want to be able to have a conversation. We want
    to be able to jointly work together to try to have an outcome
    that will help small journalistic outfits and, you know,
    including broadcaster--but also including the newspaper
    industry.
        In terms of broadcasting, we desperately need this because
    we're fading away. We're having fewer and fewer people involved
    in the news business. We've seen such a dramatic and steep
    decline in people involved in news that broadcasting has seen
    tremendous amounts of people leave the industry.
        Chair Durbin. You know Chicago.
        Mr. Oxley. Yes, I do.
        Chair Durbin. You've worked in Chicago.
        Mr. Oxley. Yes.
        Chair Durbin. I can tell you in my Senate career of a
    little over 20 years there's been a dramatic change. A press
    conference in Chicago you're lucky to draw one reporter. Lucky.
    Instead, it's a bank of cameras. By union rules or by
    tradition, the cameramen don't ask questions. You make your
    statement, then they look at you, and you look back at them.
    That's the end of the story unless you want to start
    volunteering information and asking yourself questions. That's
    what it's come to in terms of what used to be one of the most
    vibrant news markets and competitive news markets in America.
    It has just disintegrated.
        We now incidentally have a new experiment announced this
    week where WBEZ, the NPR station in Chicago, is joining up with
    the Chicago Sun-Times in a not-for-profit venture to deliver
    regular newspaper journalism with radio journalism through NPR.
    I wish them well. We need some competition. We need some people
    that are asking tough questions of politicians like myself, and
    it's just not the case. If nothing has changed, it's all going
    to go away.
        Mr. Oxley. And----
        Chair Durbin. It's just going to disappear.
        Mr. Oxley. That is my big concern is that, without
    something like the JCPA to help out these journalists, we're
    not going to be able to cover council meetings. We're not going
    to be able to cover press conferences. We're not going to be
    able to cover local weather emergencies or traffic or, you
    know, all of these things are just going to go away. What are
    you going to rely on then? Your local LISTSERV?
        In the way it's been set up over the years is that to make
    a go at it from a digital business, as I know Jennifer could go
    into great detail, but it's very, very difficult. The profits
    just aren't there. You're lucky if you break even. Something
    has to change if we want local journalism to survive. The JCPA,
    I believe, can get that started by having--let us have a seat
    at the table so that we can at least even the playing field.
        Chair Durbin. If we don't do something, the cowbirds won't
    find any nests to raid.
        Mr. Oxley. They will not.
        Chair Durbin. Thank you. Thank you very much.
        Senator Lee. Mr. Francis, first, I'd like to let you
    respond to a point Dr. Singer made a moment ago. I was out in
    the hall, so I didn't hear all of it. He described I think the
    word was--as laughable the point I was making earlier that this
    would authorize cartel behavior. You want to respond to that?
        Mr. Francis. Thank you. Yes. For sure. I understood Dr.
    Singer to suggest two things, both of which were pretty
    surprising to me and I think anybody sort of in the antitrust
    enforcement space.
        Thing number one is the idea that a cartel is only a cartel
    if it deals with your dealings directly with consumers or
    workers. That is really not right, and that would be news to
    the Department of Justice. I think some of the flagship cartel
    enforcement actions have dealt with cartel agreements to
    harmonize on prices for sale to intermediate suppliers. I think
    of the wire harness cartel, the auto parts cartel, the LCD
    cartel. People went to prison for quite a long time for these
    things, even though they didn't involve dealings with consumers
    or workers. It's a routine piece of cartel enforcement.
        Senator Lee. His conclusion is based on a distinction that
    you're saying is not one that's recognized by the antitrust
    enforcers at the Department of Justice?
        Mr. Francis. Certainly, the Department of Justice in cartel
    enforcement absolutely does not distinguish between cartels for
    sales direct to consumers and cartels for sales to an
    intermediate seller like a platform. They are equally illegal.
    In addition----
        Senator Lee. That wouldn't be a defense then.
        Mr. Francis. That would absolutely not be a defense.
    Second, I understood Dr. Singer to suggest that the cartel
    overcharge here wouldn't increase prices. It is absolutely true
    for sure that a one-off lump sum payment would not have any
    effect on downstream prices. If what we're talking about here
    is just cutting a check, a one-time check, to Google and
    Facebook and then it's back to business as usual forever that
    would not as--sorry. From Google and Facebook. That alone is
    unlikely to impact downstream costs.
        I understand that what we're talking about is an agreement
    that would lead to a rolling payment from Google and Facebook
    on an ongoing basis for news-related activity on search engines
    or social media. I think it's a pretty elementary piece of
    textbook microeconomics that if you take a monopolist and you
    increase their costs, then the process maximizing process of
    the monopolist will increase. I understand that, not a single
    one-off lump sum payment, to be what's contemplated here.
        Senator Lee. Thank you. That's helpful. Just to be clear,
    getting back to the earlier point about the cartel, it's not
    like that is just an offshoot ramification of this. That is the
    point of the bill. Isn't that the primary point of the bill is
    to make lawful that which is currently unlawful?
        Mr. Francis. That's exactly how I would understand it.
    Getting competitors together to agree on the prices and terms
    with which they'll deal with a trading partner, that's a
    classic cartel.
        Senator Lee. Thank you. Mr. Gainor, isn't the problem for
    news publishers simply that their value as an advertising venue
    has been diluted by the advent of the internet and targeted
    digital advertising?
        Mr. Gainor. It's been diluted even before the internet. If
    the Congress passed the Newspaper Preservation Act in 1970,
    trying to stop newspapers from going out of business back then.
    We ended up with, I think, more than two dozen joint operating
    agreements back then. You know, people live their lives online
    in much of the country right now, and 2 years of COVID
    restrictions have further encouraged that. When people aren't
    going to advertisers, they aren't going to stores, they aren't
    going to restaurants, those restaurants and stores stopped
    buying ads. That affects everybody, the businesses that we're
    talking about here.
        Senator Lee. I've got a chart up behind me. I don't know
    whether you can see it. Digital advertising revenues have
    increased severalfold while the areas where newspaper is now
    face more competition. Classified ads and retails ads have
    declined precipitously. How much of this is a Big Tech problem
    versus how much of it might be a matter of business choices and
    how they interact with emerging technologies?
        Mr. Gainor. I'd say it's a mix of both. I mean, you look at
    that--look at those numbers. They were all declining--as I
    said, at Baltimore where I grew up had three newspapers.
    Baltimore News-American died in 1986 before the internet. The
    Evening Sun was shut down soon after the internet. That wasn't
    caused by the internet. You know, so the problem also was these
    publishers, the biggest ones, didn't reinvest, you know, for
    the future. You know, now, we've seen that the ones who are
    really doing well are what are called verticals that are very
    specialized. New York Times, a political vertical. Washington
    Post, the same. Sports, other things like that. Local news
    isn't doing as well because it's just not doing well across the
    board.
        Senator Lee. Thank you. Mr. Francis, to be clear when we're
    talking here about what is at risk, what's at stake, what's
    suffering, we're not talking about the death of journalism
    itself. We're not talking about the idea that journalism itself
    can't be economically viable in the absence of this. We're
    talking more I think about whether certain business models
    followed by some in the news publishing industry are viable. Is
    that correct? Is that consistent with your understanding?
        Mr. Francis. I think that's exactly right. I think local
    news is clearly critical. I grew up in a very small English
    village where, when the LIFE Magazine or the Villager or the
    Town Crier or local newspapers would land through our letter
    box, everybody in the house at some point that week would read
    it and we would learn a bunch of things that we wouldn't find
    through alternative channels. Local media, local news are
    clearly critical. Exactly as you describe, what's at stake here
    is the manner in which local news will survive.
        Senator Lee. Right.
        Mr. Francis. It's very clear that the business model is
    responding to competitive pressures.
        Senator Lee. What that suggests is that some--not
    journalism itself is at stake but some business models, some
    businesses will fare better than others in that environment. If
    we--I have no idea. I'm not a businessperson. I'm certainly not
    an expert in the news publishing business. I never purport to
    know the ins and outs of that business.
        I think it's fair to assume that you can identify a certain
    subset--I don't know exactly how big it is--a certain subset
    within the news publishing industry that has adopted a business
    model that's not succeeding. It's not going to succeed. Is it
    generally good policy from the standpoint of promoting
    competition for the Government to step in and sanction the
    formation of a cartel in order to save a particular type of
    business model that's dying?
        Mr. Francis. It's almost always not. That is not to say
    that we look with anything other than horror and sadness at the
    real difficulties that competitive change brings. Particularly
    with the transition to digital business models, we've seen from
    one sector to another legacy business models experiencing real
    difficulty as they transition to something that makes economic
    sense and is sustainable in the economy as it's emerging today.
    But----
        Senator Lee. Horse and buggies to automobiles.
        Mr. Francis. Exactly. Video rental stores, film and camera.
    Like we see this story and there's real suffering associated
    with that. If you believe in antitrust, you have to believe in
    the competitive process that antitrust is there to guarantee.
    Without tolerating and allowing some degree of failure, some
    degree of discomfort, even market exit sometimes, then you
    don't have a competitive process. Then it's not clear what the
    antitrust project is for. As difficult as it is, the pains in
    exactly the way you describe are a necessary part of the
    competitive process.
        Senator Lee [presiding]. I like your comparison to the home
    video industry. The consumption of home video entertainment
    didn't die. Netflix emerged long before it was an online
    streaming company, and it survived where Blockbuster didn't and
    a delivery mechanism. One worked. The other didn't. It wasn't
    the industry itself had died. Particular business models
    succeeded over others. Mr. Blumenthal.
        Senator Blumenthal. Thank you very much, Senator Lee. Thank
    you all for being here today. There are moments in the U.S.
    Senate I have found in my 10 years here that America comes to
    one of our hearings, literally America comes before us. I think
    we have that moment today. It is a moment for America about a
    failing industry that has been the lifeblood of America going
    back to the founding of our republic. It is part of the genius
    of America that we have local journalism which covers local
    stories and provides stories and provides a local form for
    people to be informed.
        One of the ironies here is that Big Tech is using
    information in effect to dominate. It's information that is
    collected in all kinds of ways that local journalism simply
    doesn't have the power to do, and then it is used, in effect,
    to suffocate other sources of information, namely local
    journalism newspapers and now increasingly broadcast. To all of
    the sophisticated economic arguments that might be made against
    this act, I think Ms. Bertetto and her recounting what was told
    to her, I think, by someone who was asked, Google doesn't like
    it and Google owns everything. That's the nature of the power
    here.
        I would like to say that the market will self-correct, that
    we can use existing antitrust law, but it ain't working. It
    isn't working for the Hartford Courant, which was weakened and
    then taken over, and its fate is uncertain. It was taken over
    by a vulture hedge fund, Alden Capital which has been,
    seemingly, selling off its assets, taking advantage of its real
    estate, of other assets in no way caring about, seemingly, its
    journalistic staff or even quality. They've cut staff in fact
    at twice the rate of their competitors.
        On the bright side, The Connecticut Mirror in Connecticut
    has enabled vibrant democratic debate and discussion. It is a
    nonprofit. It depends on donations. It has discussed in recent
    times the importance of local elections and local reporters
    hold public officials including myself accountable to the
    people that we serve.
        Dr. Singer, let me ask you and any of the other panelists
    that want to comment. I'm a supporter of this measure, but I
    wonder are we too late. Can we still rescue American
    journalism?
        Dr. Singer. I don't think we're too late, Senator. What
    this enforcement mechanism would do would provide for a payment
    to a collective or a coalition of newspapers or news publishers
    that would attempt to approximate the fair market value of what
    they are contributing to the platforms in terms of users and
    clicks and the like. If we can put money back into the pockets
    of the news publishers, I think we can breathe life back into
    the industry, and that money would eventually pour down to the
    benefit of journalists and all the other workers and input
    providers that go into the production of news.
        Senator Blumenthal. Ms. Bertetto and Mr. Oxley, same
    question to you.
        Mr. Oxley. Yes. I certainly want to respond to that because
    I think that what's at risk here really is local news. That's
    what's really at risk. The huge news operations, yes, they will
    be just fine. When you talk about local news, local news is in
    a lot of trouble whether it's broadcast or print. I have
    experienced it even in the Washington, DC area that there is
    not a viable economic model that I have ever seen for local
    news to be all digital. It just doesn't work. The money's not
    there.
        That's very distressing. Over time, I think, well, are we
    too late? No, I don't think we're too late. We're getting
    close. We might even be in the 11th hour because it's getting
    there. This is getting very dire. I look at it--you know, we're
    also a platform too. Hey, we're aggregators, and we're good
    with that, and we understand that. And we're a platform that
    pays for news content. I don't think the Associated Press would
    like it very much if all of a sudden we didn't pay for their
    content.
        In many respects, I think that's what's happening here is,
    you know, the Facebooks and the Googles get all the advantage
    of it but don't have to pay for any of the content. To me,
    that's just not fair. It's the downfall--the true downfall
    putting out local news. You're just not going to be able to
    find a revenue model.
        Senator Blumenthal. Ms. Bertetto.
        Ms. Bertetto. You know, I can't sit here and pretend that
    as an industry we have done everything correctly. You know,
    there are certainly things that over time we have made
    missteps, and I feel like the JCPA is one aspect of what needs
    to happen for our business models to be corrected in the
    future. It is one piece, and there is responsibility on each of
    us as publishers to work on other solutions that make our
    business successful.
        Our company, for example, you know, we have gone to great
    lengths to diversify our revenue streams, and I think it's
    creative solutions like that that will be necessary from all of
    us. JCPA won't fix all of our problems, but it will fix one of
    them.
        Senator Blumenthal. Thank you. My time has expired. This
    topic is urgent in my view because I agree that we are in the
    11th hour, maybe even toward the end of the 11th hour, because
    once these institutions are gone, they are gone. There is no
    reconstructing them, at least with the quality of excellence
    that we've seen over so many years in exposing corruption and
    enabling information about school boards and holding
    accountable public officials so importantly at the local level
    because it is irreplaceable and indispensable. Thank you.
        Chair Klobuchar [presiding]. Thank you very much, Senator
    Blumenthal. I believe Senator Blackburn who was here diligently
    early is now on remotely and then we go to Senator Padilla. I
    think he should be fine for voting. I guess that's my promise.
    Okay, Senator Blackburn.
        Senator Blackburn. Thank you, Madam Chairman. I thank you
    all. What an interesting panel, and I really appreciate the
    testimony that you got to us and that you came to give today.
        Mr. Gainor, I think I want to start with you because your
    organization has really put up a lot of attention--a lot of
    attention on bias in the mainstream media and how Big News and
    Big Tech team up and filter the news and really take control of
    what you hear and what you see when it comes to news.
        When I go to Tennessee, I hear a lot about this from
    Tennesseans, and they don't like it. They feel that their views
    are not being represented and that they're very concerned about
    if they can or cannot trust mainstream media. We thank you for
    the work that you're doing on this front, but I'd like for you
    to touch on what small news outlets are doing that will help to
    combat that bias, what you all are seeing that they're doing. I
    think it's important that they do that. If you will just very
    quickly touch on what are the best placed efforts for combating
    this bias from the coziness of Big Tech and Big News?
        Mr. Gainor. First of all, thank you very much, Senator.
    We've seen examples all through, even the recent Presidential
    election, of the problems of Big Tech and then followed up by
    Big Journalism not covering major issues. It's fair to note the
    difference between, you know, corporate media which is what,
    you know, you're talking about there and several people on the
    panel right now. Local journalism is something I think we all
    love and is at the heart of a community. On a national level,
    yes, there is incredible bias from the traditional media, the
    legacy media, and working hand in hand with the same people
    that I think we all want to beat up on right now with Google
    and Facebook and others.
        The scary idea here of creating, you know, a cartel or
    whatever you want to call it, some sort of organized unit where
    the major players in journalism who, you know, The Washington
    Post and New York Times who didn't stand up during the Hunter
    Biden story and cover that story while the New York Post was
    being censored that they're going to stand up and represent the
    little----
        Senator Blackburn. Okay. Let me jump in there because, see,
    it is--what we want to do is make certain that local news--that
    you're going to give local news what they need to be
    competitive, that you're not going to cut them off. I think
    everyone would agree with that. What we don't want to do is do
    something that is going to have the unintended consequence of
    the reverse effect to that.
        Mr. Francis, let me come to you. Do you think that
    companies like Facebook, like Instagram, YouTube would stand to
    benefit from an antitrust exemption and what bad behaviors
    could they get away with if they did get that exemption?
        Mr. Francis. My understanding, Senator, is that this
    proposed exemption would work the other way around. In the
    event that this were created, two things would happen. The
    first is that the most immediate beneficiaries would be the
    participating media companies, obviously including some very
    large conglomerates as well as the smaller publishers that
    we're talking about. Certainly, the cartel overcharge that
    would emerge from agreements on prices would be paid in the
    first instance by Google, Facebook, and then transmitted most
    likely in the form of higher prices for advertising down the
    chain to consumers.
        Senator Blackburn. Okay. Basically, what you see is more
    hands in the pot for the money that is there adding extra
    layers of fees. In the end, you're going to have the originator
    of the content gets no more, but you're going to have the
    conglomerates reaping more profit off of that content. Am I
    following what you're saying there?
        Mr. Francis. That's exactly correct. There would be a new
    monopoly charge at the top.
        Senator Blackburn. Yes. Let me ask you this. Yes. Let me
    ask you this. The music industry. When it comes to royalties
    and some really tricky royalty issues, what we've done through
    the years is look at how they operate under consent decrees. A
    few years ago, we had to work diligently creating the Music
    Modernization Act. It's something that was very important to a
    lot of my Tennessee constituents. Do you see something like the
    Music Consent Decrees being needed if Congress grants an
    antitrust exemption?
        Mr. Francis. My sense is--and I am not an expert. It's been
    many years since I worked on music licensing and the process
    under the consent decrees that you mention. I'll say a couple
    things. Thing number one, I think that has been an extremely
    complicated, difficult, and controversial process for a very
    long time in a way that I think would exemplify some of the
    difficulties if we were to embark on a similar price setting
    mechanism here, for example, with a, you know, compulsory
    arbitration mechanism.
        Thing number two, all the--or many of the music licensing
    examples are distinctively situated because there's a
    compulsory licensing obligation. In other words, the licensor
    has a statutory obligation to issue the license. Obviously,
    that has all kinds of complicated effects for how you want to
    set up your system, and I don't think anybody is talking about
    creating a statutory obligation here on news publishers to
    issue a license. I am really not an expert on music licensing
    in particular. Everything that I say about it should be taken
    with some caution.
        Senator Blackburn. I appreciate your candor. Thank you all.
    Thank you, Madam Chairman.
        Chair Klobuchar. Okay. Very good. Thank you. Senator
    Padilla.
        Senator Padilla. Thank you, Madam Chair. I want to begin by
    thanking all the witnesses for your testimony on this very
    important topic.
        It is not an understatement to say that our democracy
    depends on a healthy and vibrant information ecosystem, and
    this requires, for example, that all of our communities can
    readily access online news via a high-speed internet
    connection, a reliable internet connection, that people are
    equipped with information and media literacy skills responsive
    to today's complex content streams, and that they're served by
    a thriving free press that includes media outlets, journalists,
    and broadcasters that both reflect and are responsive to the
    diversity of our Nation.
        Economic recessions and a loss of advertising revenue has
    devastated the news industry. In the last 20 years, more than a
    quarter of the country's newspapers have disappeared. Local,
    regional, community, and independent media are understaffed,
    underresourced, and in need of assistance as they work to
    identify new sustainable business models. It's critical that
    Congress explore how we can assist the news industry as it
    tries to find its footing during this transition period.
        Ms. Bertetto, I know from personal experience that local
    news is so vital to keeping communities in California informed
    particularly during elections, for example, or during and after
    natural disasters. You touched on it during your opening
    statement. Can you discuss what's at stake if local and
    community-facing news outlets disappear particular when it
    comes to our democracy or public safety?
        Ms. Bertetto. Of course. Our readers, again being a small
    publisher in Southwestern Pennsylvania, rely on us for the
    information they are literally not going to get anywhere else.
    That is covering school board meetings. That is covering city
    government. That is letting them know when the bridge is out in
    their community. That is letting them know when the senior
    citizens' center is going to be open during the cold winter
    months as heating stations. We often provide that very content
    as well to the television broadcasters. Often, they're relying
    on us to inform them so they can spread the message through
    their channels.
        Obviously, as newspaper staffs continue to dwindle, what
    will become very problematic is there will be no one. You know,
    The Washington Post and The New York Times will probably be
    fine no matter what is decided, but New Kensington,
    Pennsylvania won't be. Who is going to report on New
    Kensington, PA if my company isn't doing that? How are we going
    to have an informed electorate, how are we going to have a
    society that understands what is happening in local government,
    State government, and national Government if my company is not
    providing them those resources?
        Senator Padilla. Thank you. Those are great examples. I
    mean, I appreciate that not every bridge failure makes national
    cable news.
        Ms. Bertetto. Exactly.
        Senator Padilla. God only knows how contentious school
    board meetings are in this day and age. Given the importance of
    local newsrooms to our democracy, I'm deeply concerned that
    newsroom employment in the United States has dropped by 26
    percent since 2008. Ms. Bertetto, in your testimony, you stated
    that the Journalism Competition and Preservation Act, the JCPA
    as we're referring to it, would help small publishers make
    additional investments into the community and hire more
    reporters. A question for Ms. Bertetto and Mr. Oxley. Can you
    discuss the importance of explicitly tying benefits from the
    bill to job creation and retention?
        Ms. Bertetto. Presently in our company, about $7 million is
    paid out in salaries to journalists on staff. To give you some
    sense of what we earn presently from Google, it is $144,000 a
    year. I really feel I'm starting at zero, and any additional
    moneys that could come in could certainly help to first keep
    reporters on so we can stop this decline because it's
    astronomical the number of reporting positions I'm seeing leave
    our market.
        I also think that with a hundred--you know, when you're
    looking at $144,000 and say I can get $600,000, just for
    example, I could cover more communities. I could add beats. I'm
    presently making decisions every single day about which
    communities we can afford to have a reporter in on a full-time
    basis and where we have to decide to have a part-time reporter
    or no reporter at all. Any additional economic relief to help
    me avoid those decisions would certainly be welcome.
        Senator Padilla. Mr. Oxley.
        Mr. Oxley. The same goes for us. Our sizes aren't all that
    different. Our newsroom is about--costs about $12 million to
    run every year. What we're finding is more and more has to be
    switched to the digital side even though the digital side
    really doesn't make us money. At best, over the years, we've
    broken even. In the last 10 years, our digital overall revenues
    off of our website have barely moved and the costs have gone up
    a lot. If we were able to have money come in--and I think that
    the JCPA could provide that by having a level playing field,
    having a seat the table--then we would be investing in
    reporters.
        The very thing I get all the time from all of the people on
    the content side and the programming side is, you know, can I
    add people. Of course, we would like to add people. Also, our
    area has grown exponentially. It wasn't that long ago that the
    whole area in Washington, DC was 3 million people. Now, it's
    about 6 million people yet our newsroom has not been able to
    grow in size because we have not been able to really change in
    terms of growing our people. The very first thing we would do
    would be to add more journalists.
        The one other thing I would say about the journalists that
    we would add is they're professional journalists, and I think
    that is a huge point here. These aren't people who are doing
    clickbait or they're people who are researching these stories.
    They've been educated to do that. They know what they're doing.
    They make sure to get it right. We have a saying at our
    operation, ``Before you get it first, first get it right.'' And
    that means getting good sources. That means verifying. That
    means doubling, tripling, quadrupling your efforts to make sure
    that you've got it right before you put it out. That way,
    people get the facts. That's what people need in local news.
        Senator Padilla. Thank you very much. Madam Chair, just in
    closing, I know that the conversation has also gone in the
    direction of what else the industry is doing to find solutions,
    short term and longer term, during this transition period. I
    invite the ongoing conversation of what else Congress can be
    doing both in the short term and the longer term to help the
    news industry. Thank you very much.
        Chair Klobuchar. Okay. Thank you very much, Senator
    Padilla. I think it's down to just Senator Lee and myself here.
    I'm going to have to leave at about five to five. I'm going to
    let him maybe do 5 minutes or so. I'll have two more questions
    and we can go from there.
        Senator Lee. Thank you. Mr. Gainor, let's go back to you if
    that's all right. How do you believe consumer trust or distrust
    of news publishers might impact their success? I ask because
    the Edelman Trust Barometer as displayed in the chart behind me
    shows a growing mistrust of the media across the globe. Edelman
    reported this year that 46--46 percent of people around the
    world view government and media as divisive forces in society
    and 74 percent of Americans worry about fake news.
        How do you think political bias or, you know, including
    anticonservative censorship might have contributed to that
    mistrust?
        Mr. Gainor. I think it helps contribute to it a lot both on
    the, you know, Big Tech side and on the media side. Again,
    that's--you know, you're talking about large media outlets,
    corporate media. It's not a slam on local news. When people,
    when ordinary Americans think about media, they're generally
    not thinking about their local news outlet, their weekly
    newspaper, their radio station. They're thinking about larger
    media. They're thinking about the media they see on TV, and
    then they're also thinking about the problems of Big Tech.
        I don't know if this Committee or others want to go to war
    with Big Tech. I think conservatives would be very happy about
    that. The question is does this bill work to do that? You know,
    when you look at the years of, you know, gradual decline of
    people's interest at media and then you also look at people's--
    the rising tide of people distrusting media, the two track very
    similarly.
        Senator Lee. That makes some intuitive sense, and there
    seems to be anecdotal support for that. At least intuitively,
    it makes sense to me. The Congressional Research Service has
    noted that 70 percent of daily newspapers are owned by private
    equity firms, hedge funds, or other investment groups. Nothing
    wrong with those business models, but those are the data that
    I've got.
        Do you think these owners are necessarily going to be more
    concerned about investing in journalists and quality journalism
    than they are about getting a return on investment? Regardless,
    would the JCPA make a difference in that regard? Is the JCPA
    going to change the incentives in place for the owners of these
    businesses one way or another?
        Mr. Gainor. It certainly doesn't seem like it. I mean, you
    look at, you know, just The Washington Post, for example. The
    Post--its identity is as a national newspaper. When it owned a
    chain of weeklies that were very popular in suburbia, it shut
    it down. When Tribune owned the Baltimore Sun, they had a chain
    of weeklies that they gutted to the point where they're largely
    nonexistent now.
        That's been an ongoing problem, you know, not necessarily
    the local ownership. You know, local ownership, which I think
    is reflected on this panel, local ownership tends to care about
    the local community. You know, but when its national ownership
    that you were saying 70 percent, then they're not necessarily
    loyal to their readers or their viewers.
        Senator Lee. Mr. Oxley, while I'm never going to support
    legislation that I believe attempts to improve competition by
    forming a cartel as this one does, if the purpose of something
    like the JCPA is to protect small and independent local
    publishers, then why not at least limit the bill's scope? Why
    not limit its application to small and independent local
    publishers?
        Mr. Oxley. I don't know the ins and outs of that as well as
    an awful lot of people in this room. I don't know--I haven't
    been able to look at the ins and outs of this bill and how it
    works. But----
        Senator Lee. Are you saying that you would support it if it
    were so limited?
        Mr. Oxley. I would certainly support anything that would
    help local news. I feel at this point that we're in a really,
    really tough spot with local news. That's to me what we're
    really talking about here. We're not talking about the national
    news players. Local news players are still some of the most
    trusted in America, you know? Study after study shows that your
    local news people are trusted and that there is actually a very
    favorable view of them, you know? The national is a different
    story. But locally--we need something to truly help out the
    local news providers.
        Senator Lee. If that's the case, if we are going to make as
    most of this discussion today has been, if we are going to make
    it about the local folks, then why not limit it to them? Dr.
    Francis, I assume you'd agree with this suggestion that if you
    buy into the notion that creating a cartel or a type of cartel
    permission slip is acceptable for one universe you could reduce
    the harm inflicted by that universe where cartels are
    authorized by reducing the scope. In this case, since most of
    the discussion has focused around small, independent, local
    publishers, couldn't that have that effect?
        Mr. Francis. I think that's exactly right, Senator. As
    you've heard, I have pretty strong feelings about cartels. I
    don't object in principle anything like so much to the idea of
    supporting local struggling news publishers. At a minimum,
    restricting the scope of what you were describing--sorry.
    Restricting in the way you described the scope of the exemption
    so that it's truly targeted at small, struggling publishers,
    that means we can avoid conferring the ability to, you know,
    add a cartel overcharge to large, very profitable media
    companies. That would really help.
        I am pretty uncomfortable at this moment in our sort of
    political life about taking a big bite out of antitrust when we
    should be reinforcing it. I would love to be talking about
    other ways to support local news. Any support mechanism should
    be targeted to those who really need it, not to the most
    prominent publishers.
        Senator Lee. Is there a risk that by focusing on this
    particular issue it might draw attention away from other
    things, other things that also need to be addressed including
    the problem we've got with Google and Facebook?
        Mr. Francis. I think digital monopoly and monopoly in
    general is a problem that at the minute vastly overmatches the
    ability of our antitrust agencies. I would love to see more
    funding and more resources. I think that's the most urgent need
    we have as, you know, a competition policy community in this
    country even more urgent than antitrust reform is money and
    personnel for the agencies. That's where I would love the focus
    of the conversation to be. That's what I think is top of the
    wish list.
        Senator Lee. Thank you.
        Chair Klobuchar. Thank you very much, Senator Lee, and
    thank you for--I'm sure you have other questions for the
    record. Thank you. Mr. Francis, that's something where we agree
    on the funding for the Agencies. As you probably know, Senator
    Grassley and I have a bill that passed the Senate actually to
    change the merger fees actually make it easier for smaller
    mergers and harder for bigger ones, maybe not harder but just a
    little more expensive, to help pay for the agencies to be able
    to do their reviews as well as some other funding mechanisms
    that we're working on.
        A few things. I'm just going to ask a few questions here at
    the end. Be brief here, Dr. Singer. I have to go now work on
    the Electoral Count Act. Dr. Singer, in your opinion, should
    news organizations have a right to be compensated when digital
    platforms take in profit from detailed snippets--I think it's a
    little more than snippets--of their copyrighted content?
    They're claiming it's fair use, and I'd like your response.
        Dr. Singer. Right. Yes, they should be compensated for any
    value that is being conferred from the newspapers to the
    platforms including when the platforms scrape and index and use
    Rich Text and images to decrease the likelihood of a user
    actually clicking on the link.
        I'd like, if I could, just to address the cartel pricing
    increase that Mr. Francis keeps saying which doesn't make sense
    as an economic matter. He did admit, I think his most important
    admission today, that if there was a one-time lump sum transfer
    from the platforms to the newspapers, as a coalition, there
    would be no price increase by the newspapers. I think he did
    admit that. That's the most important admission that we heard
    today.
        What he said next, which was uneconomic again, was that if
    it were to recur every 5 years then there would be a price
    increase of some sort. I can't follow what the economic logic
    is, and I start--maybe he's talking about a price increase by
    the platforms. I want to rebut that as well because the
    platforms, as you know, Senator, has used a free price--a zero
    price model to consumers. The notion that the platforms having
    to write a check of say $5 billion every year for the payment
    of access is going to induce them to suddenly abandon their
    free model and start charging consumers access for search or
    charging consumers access to the Facebook social platform is
    uneconomic. I can't say it any nicer than that. There will be
    no cartel price effect from this lump sum transfer. You can
    take my word for it.
        Chair Klobuchar. Okay. Thank you. Dr. Singer, just some
    questions about some of the concerns that we've heard. Of
    course, I mentioned we're making revisions with the House to
    the bill. Are there changes we should consider to ensure that
    small and local organizations benefit from joint negotiations
    and can exert an appropriate level of control over the process?
        Dr. Singer. Yes, I understand there are certain provisions
    in the bill that would protect small publishers that you were
    asking, and the most important that comes to mind is the
    nondiscrimination provision. A newspaper--a small newspaper
    that wanted to apply to become a member of the coalition could
    not be discriminated against based on its size or on its
    viewpoint. That's very important. That is they could access to
    the bargaining coalition.
        The second thing I understand there are voting rights. One
    member, one vote. It's very important that smaller newspapers
    who are members of the coalition must be protected and their
    interests must be protected that way.
        Chair Klobuchar. Should we also consider changes to prevent
    discrimination--this has been raised by some of my colleagues--
    in the joint negotiation process against news outlets carrying
    content that expresses different or even unpopular views
    whether they are from the left or the right? I know that we
    have support for this bill, some of my colleagues have noted,
    from news organizations that they consider left and then we
    have support from--that are in support of the bill, Washington
    Examiner, Washington Times, Daily Caller, not exactly a bastion
    of liberal organizations. Could you respond to that if there's
    some provision we could put in to ensure that there is no bias?
        Dr. Singer. The provision again is the nondiscrimination
    provision. Any coalition of newspapers that forms would not be
    able to exclude a member based on their viewpoints, plain and
    simple.
        Chair Klobuchar. Okay. If joint negotiations with the
    dominant platforms stall, should Congress consider providing
    for binding arbitration to resolve the impasse?
        Dr. Singer. Yes. Binding arbitration is critical here
    because it is possible for Google or Facebook to check all the
    boxes and abide by the good faith protections during the good
    faith negotiation period. It's very important that they look
    down the road and see that, if they do that, they're going to
    be faced with binding arbitration again at which point a panel
    of, say, three arbitrators would make a determination as to
    whose estimate of the fair market value was fairest of them
    all, most closely approximated the value being conferred by the
    news publishers onto the platform.
        Chair Klobuchar. Okay. That's one proposal--thank you--as
    we finish up this bill. I also would like to enter a set of
    more than three dozen letters from newspapers, news
    organizations into the record.
        [The information appears as a submission for the record.]
        Those letters focus on the state of competition in
    journalism and the need for solutions like the Journalism
    Competition and Preservation Act, which is bipartisan both in
    the Senate and the House. We also have a letter from Lee
    Enterprises, no relation, discussing the challenges the
    industry faces from those who would exploit it for short-term
    profit opportunities as well as a few others.
        Chair Klobuchar. I'll put those in the record. I want to
    thank you all for being here. Local news is of foundational
    importance to our democracy. I want to thank our witnesses
    today for their testimony. Many Senators from different
    parties, different views as you can see came together today.
    That's part of the exercise of free speech and part of being a
    Senator. Senator Lee and I truly enjoy doing these hearings and
    really appreciate it. I want to get something done here. That
    is my goal, and we want to make it work for this country.
        The record will remain open for 1 week until February 9th.
    Thank you. Do you want to add anything, Senator Lee. Okay.
    Thank you very much to all of you.
        [Whereupon, at 4:55 p.m., the hearing was adjourned.]
        [Additional material submitted for the record follows.]

                                A P P E N D I X

    Miscellaneous submissions:

     Alliance for Audited Media.......................................   166

     America's Newspapers.............................................   167

     Arkansas Press Association.......................................   169

     Association of American Publishers (AAP).........................   153

     Association of Magazine Media (MPA)..............................   234

     Authors Guild (AG)...............................................   155

     Bay Area News Group..............................................   171

     California News Publishers Assocation............................   175

     Cherry Road Media................................................   178

     Copyright Alliance...............................................   180

     Dallas Morning News..............................................   196

     Deseret News.....................................................   184

     Electronic Frontier Foundation (EFF).............................   157

     Georgia Press Association........................................   185

     Journalism Competition & Preservation Act (JCPA).................   159

     Kansas Press Association, Inc....................................   194

     Lee Enterprises..................................................   163

     Manchester Cricket...............................................   189

     Minnesota Newspaper Association..................................   198

     Missouri Press Association, January 7, 2022......................   205

     National Newspaper Association (NNA).............................   188

     National Press Photographers Association (NPPA)..................   209

     NewsGuard........................................................   207

     Various Newspapers Letter, May 7, 2021...........................   190

     Radio Television Digital News Association and Radio Television
        Digital News Foundation.......................................   212

     South Dakata Newspaper Association (SDNA)........................   214

     Southern California News Group...................................   213

     StarTribune......................................................   215

     Summerland Advocate-Messenger, Clearwater, Nebraska..............   219

     Support Letter for Journalism Competition and Preservaton Act
        (JCPA)........................................................   217

     Tampa Bay Times..................................................   220

     Tennessee Press Association (TPA)................................   221

     Tennessee Press Association (TPA), Letter to Senator Cornyn......   224

     Tennessee Press Association (TPA), Letter to Senator Cruz........   229

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