UNITED STATES OF AMERICA

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FEDERAL COMMUNICATIONS COMMISSION

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FIELD HEARING

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BROADCAST OWNERSHIP EN BANC

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RICHMOND, VIRGINIA

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CHAIRMAN POWELL PRESIDING

This transcript was produced from audio tapes. Inconsistencies may occur
between the actual spoken word and the transcription due to recording
impediments.

I-N-D-E-X

[Morning Session]{.underline}

Official Opening, Marlene Dortch, Secretary \...\.... 3

Welcome, K. Dane Snowden, Chief, Consumer

& Governmental Affairs Bureau \...\...\...\...\... 5

Opening Statements:

Michael K. Powell, Chairman \...\...\...\...\..... 7

Kathleen Q. Abernathy, Commissioner \...\..... 12

Michael J. Copps, Commissioner \...\...\...\.... 18

Kevin J. Martin, Commissioner \...\...\...\..... 25

Jonathan S. Adelstein, Commissioner \...\..... 29

Summary of Broadcast Ownership Rules and Key

Issues, Thomas G. Krattenmaker (Moderator)

Mintz, Levin, Cohn, Ferris, Glovsky &

Popeo \...\...\...\...\...\...\...\...\...\...\...\..... 38

Panel Discussion: Diversity Issues

L. Brent Bozell III, Parents Television

Council \...\...\...\...\...\...\...\...\...\... 49

Robert Corn-Revere, Hogan & Hartson \...\...\... 54

Jay Ireland, NBC Television Stations \...\.... 59

Alfred C. Liggins, Radio One, Inc. \...\...\... 65

Victoria Riskin, Writers Guild of

America, West \...\...\...\...\...\...\...\... 70

Andrew Jay Schwartzman, Media Access

Project \...\...\...\...\...\...\...\...\...\... 75

Wendy Thompson, ZGS Broadcast Holdings,

Inc. \...\...\...\...\...\...\...\...\...\..... 79

Public Comments \...\...\...\...\...\...\...\...\...\...\... 111

Lunch Break

[Afternoon Session]{.underline}

Panel Discussion: Competition Issues

David Croteau, Department of Sociology and

Anthropology, Virginia Commonwealth

University \...\...\...\.... 127

Linda Foley, The Newspaper Guild-CWA \...\.... 131

Victor Miller, Bear Stears & Co. Inc. . \.... 136

Ed Munson, WAVY(TV)/WVBT(TV) Norfolk, VA \... 141

Bruce Owen, Economists Incorporated \...\..... 146

Jonathan Rintels, Center for the

Creative Community \...\... \...\...\...\.... 150

James L. Winston, National Association

of Black Owned Broadcasters, Inc. . \... 155

Public Comments \...\...\...\...\...\...\...\...\...\...\.... 188

Break

Panel Discussion: Localism Issues

Frank A. Blethen, The Seattle Times \...\..... 205

Thomas R. Herwitz, Fox Television

Stations, Inc. \...\...\...\...\...\...\..... 209

Mark P. Mays, Clear Channel Worldwide \...\... 212

Deborah McDermott, Young Broadcasting Inc. ..217

Chris Powell, Journal Inquirer \...\...\...\.... 221

John F. Sturm, Newspaper Association of

America \...\...\...\...\...\...\...\...\..... . 225

Jenny Toomey, Future of Music Coalition \.... 229

Public Comments \...\...\...\...\...\...\...\...\...\...\.... 236

Adjourn \...\...\...\...\...\...\...\...\...\...\...\...\...\... 257

P-R-O-C-E-E-D-I-N-G-S

10:00 a.m.

SECRETARY DORTCH: Today\'s hearing will focus on the FCC\'s Broadcast
Ownership rules and will give the public an opportunity to voice its
opinions about the Commission\'s examination to determine whether any of
the rules are no longer in the public interest as a result of
competition. This periodic examination is required by the Communications
Act.

Following are the procedures for today\'s en banc hearing. We will
utilize a time-keeping machine located in front of Chairman Powell to
maintain time limits on each presentation. Panelists will each have a
total of five minutes to make their individual presentations. The green
light will stay lit for the first three minutes of your remarks. When
the yellow light signals, you have one additional minute to sum up your
presentation and close your remarks. The red light signals the end of
your allotted time. Please conclude your remarks at that time.

Following the morning session, a lunch break will be held from 12:10
p.m. to 1:10 p.m.

Information concerning nearby eateries is available on the table to the
right outside of the ballroom doors.

The Convention Center prohibits the bringing in of food and drink from
outside vendors.

The afternoon session of the hearing will begin promptly at 1:10 p.m.
Sign language interpreters are available to assist people with
disabilities. If you need an interpreter, please indicate this now to
the FCC interpreter who is standing with her hand raised.

The transcript of this hearing will be made a part of the record and
will be available on the FCC website, [www.fcc.gov]{.underline}
approximately 14 days from today.

Mr. Chairman and Commissioners, the hearing will now begin.

Mr. K. Dane Snowden, Chief of the Commission\'s Consumer and
Governmental Affairs will serve as our MC.

Thank you.

MR. SNOWDEN: Good morning. On behalf of the Commission I would like to
welcome everyone to the

FCC\'s Broadcast Ownership en banc hearing. In addition, I would like to
thank and extend the Commission\'s thanks and appreciation to all of the
invited panelists and the members of the public for

joining us from the Richmond area and from across the country.

As many of you know, the Commission is in the midst of its most
comprehensive review

of the FCC\'s broadcast ownership rules, some of which date back to the
early 1940s. Every two years the Commission is required by Congress to
examine its broadcast ownership rules and determine whether the rules
are necessary in the public interest as

the result of competition. If a rule cannot be justified, it must be
modified or eliminated.

Today\'s en banc hearing is another example of how the Commission is
interacting with the public on this very important subject. In addition
to participating in the public forum sponsored by Columbia University,
we have received more than 18,000 comments on this subject, the vast
majority of which are from individual citizens.

Our goal today is to hear from the public on the important issue of
Broadcast Ownership currently before the Commission. It should be noted
that the Commission\'s ultimate task in fulfilling its public interest
responsibility is to promote diversity, localism and competition. In
addition, we must craft rules that are sustainable in the eyes of the
courts.

We are very interested in learning how the three prongs of diversity,
localism and competition are promoted under our current broadcast
ownership regime. As the FCC designs rules, we strive to establish a
framework which accounts for the modern day marketplace. All of this
stated, it is important to note that, by the end of this proceeding, the
FCC intends to have broadcast ownership rules that reflect the current
marketplace and are legally sustainable.

Before we begin with our moderator and the panels, I would first like to
turn the floor over to the Chairman and Commissioners for their opening
remarks.

Chairman Powell?

CHAIRMAN POWELL: Thank you, Dane, and welcome everyone to this Federal
Communications Commission field hearing. I\'ll get right to an important
question. It seems like every time we have one of these it\'s snowing. I
don\'t know what that means, but we\'ll fight through it. But I want to
let everyone who has traveled to know that we are going to keep a close
eye on the weather and do what we need to do in terms of adjusting
schedules, if that becomes a problem, just so that you know.

Actually this snow only heightens my gratitude for the sacrifices our
panelists have made to be here today. It is commendable that they agreed
to take time out of their busy schedules to prepare for and participate
in today\'s hearing. Given the weather conditions, their efforts are
deeply appreciated.

I would also like to thank Dane Snowden and his tireless team for making
this broadcast ownership hearing happen. Until you\'ve actually tried to
set up a field hearing like this, you may not appreciate how much work
is truly involved. They did a fabulous job and I appreciate their
efforts.

I am enormously pleased so many people have expressed an interest in the
Commission\'s review of broadcast ownership regulations. The number of
comments we have received is staggering, multiple thousands from the
general public alone. It is gratifying to witness first hand the
unparalleled opportunities technology now provides the American public
to participate in the democratic process. This record combined with the
forum we hold today, will create one of the most exhaustive records in
recent FCC history, one deserving of a proceeding of this magnitude.

I am particularly pleased to see that the staff arranged for the leadoff
presentation to address \"legal issues\" which are often perceived as
pesky to some, but essential to good policy making. There are issues in
media policy far sexier than the legal framework, but none is more
critical if you wish to understand how we will make ownership policy
decisions.

For better or worse, the FCC has hundreds of rules and regulations
currently on its books. Each day, when my colleagues and I come to work
in the morning, we have plenty to do. Thankfully, one thing we don\'t
have to do is re-justify every rule in the book. Each existing rule is
generally presumed to be as valid today as it was yesterday.

Sadly, the broadcast ownership rules are fundamentally different
pursuant to Congress\' design. Every two years without fail, the
Commission is required by statute to review the broadcast ownership
rules. And when it does, it is legally required to presume each rule is
no longer needed unless we find otherwise according to the courts.
Unless we can re-justify each broadcast ownership rule, in short, and
under current market conditions, the rule goes away.

Under this tough review standard of review, courts have become far more
skeptical of FCC rationales for imposing limits on broadcast ownership.
Five times in the past two years we have defended our ownership rules in
court. And sadly, five times we have lost. 0-5 is not an enviable
record.

The common theme of the courts\' criticism is that we have failed to
justify our rules in light of today's media environment. What the courts
have told us, in no uncertain terms, is that the biennial standard is a
rigorous test. Either we produce evidence that the rule is still
necessary, or we must eliminate it and if we do not, they will do it for
us.

If the Commission does the same half-hearted effort it did in the last
Biennial Review, I guarantee you that every one of the broadcast rules
will be swept away in a court of law. Let\'s see if we can put that
Genie back in the bottle.

Yet we all agree that some broadcast ownership limits are indeed
critical if we are to maintain a robust marketplace of ideas. The public
interest is all about promoting diversity, localism, and competition. We
can achieve these goals \-- and the courts will agree with us \-- if we
do it correctly.

The right way is building rules that reflect today\'s media market. We
do that by gathering evidence on the critical questions: How do
Americans use the media? Where do they get their news from? What
industry structure best promotes diverse and innovative media content?

The FCC staff kicked off that effort by conducting a dozen studies on
the workings of the media. Whatever those studies suggest for ownership
policy, they make an important procedural point \-- that this rulemaking
will be driven by evidence, not just intuition or personal preference.
This agency tried personal preference in the last biennial review and
got hammered for it.

That\'s why we have proceeded methodically this time around. The court
cases gave us clear guidance on how to do the biennial review correctly.
We took that guidance to heart, we conducted a large number of studies,
and then we began the biennial. We had a long comment period so
interested parties could formulate their own views and provide us with
them. And several public hearings, including today\'s, are being held
around the nation.

I hope today\'s hearing will build on the enormous record already before
us. We have specifically set aside time for members of the public to air
their views and I very much look forward to hearing them.

Finally, let me once again thank the panelists for agreeing to join us
today to share their views as well as my colleagues for being here. The
speakers with us today are an enormously talented and accomplished
group, and I very much look forward to their statements and the
subsequent dialogue.

Commissioner Abernathy?

COMMISSIONER ABERNATHY: Thank you, Mr. Chairman.

Good morning, everyone. It\'s a pleasure to be here. First, I want to
thank Dane Snowden and everyone involved in organizing today\'s event. I
also want to thank everyone that is taking part in today\'s hearing
whether you are on a panel or you\'re coming here as part of the
audience, you are making an invaluable contribution to the discussion on
broadcast ownership. You braved the elements to get here, as the
Chairman said. So thank you very much.

I don\'t have to tell any of you about the important role that the media
plays in our education, our entertainment, and in our civic discourse.
For this very reason, the FCC has continually focused on the importance
of promoting localism, diversity and competition when we\'re crafting
media ownership rules. I am committed to furthering these long-standing
goals by re-examining our rules to ensure that our regulations advance
and do not undermine our policy goals.

It is also important to note that Congress instructed us to review our
broadcast ownership rules to determine if they are still necessary in
the public interest in light of the changes in competition. In addition
to this Congressional mandate, however, the courts have also weighed in
and not very kindly, and they\'ve weighed in by overturning some of our
media ownership rules. And as the Chairman mentioned our win/loss record
in the courts over the past two years has been rather pathetic. The
courts have also made clear that we must justify the retention of any of
our rules, or they will be eliminated. We have been faulted for failing
to take into consideration the plethora of voices that are now available
and for failing to take a consistent approach across all of the
ownership rules. These court decisions necessarily provide the context
for any future decisions that the FCC makes.

No one can dispute that the marketplace has changed significantly since
the adoption of many of our ownership rules. We now have a greater
number of choices, as well as increased consolidation. It was not that
long ago that we only had three networks and some independent stations.
Now, in addition to ABC, CBS and NBC, we have UPN, WB and PaxNet
available to us over-the-air. Eighty-five percent of homes, moreover,
have access to hundreds of cable programming networks. I know that some
have expressed concern, however, that 90 percent of the top 50 cable
channels are owned by the television networks and the cable providers.
These kinds of cross-ownership issues are very important and we need to
look at them. But I also want to look beyond the popularity of a program
and ask whether we have a diverse array of choices that can reach small
niche audiences that may be ignored by the mainstream, more popular
programming. So, when discussing choices I will look not just at the top
50 cable networks, but also at the other national and regional networks.

I also recognize that there has been increased consolidation in the
media industry; this is not surprising because companies seek the
benefits of scale and scope unless curtailed by regulators or the
courts. My job is to look at the effects of consolidation and to ask:

How has consolidation affected the amount of diverse programming people
are receiving?

How has it affected the availability of local news and public affairs
programming in small markets?

How has it affected competition in the marketplace?

Restrictions that may have been needed in the past to ensure competition
and diversity may actually make it more difficult for programmers and
station owners to provide compelling quality programming in light of the
significant competition that over-the-air broadcasters are facing from
other sources.

In seeking answers to these and other questions, we need to be wary of
the unintended consequences of changing our rules, as well as of the
unintended consequences of maintaining our rules. I want to ensure that
if we eliminate or modify any of our current rules, we don\'t lose
vibrant voices and diverse sources from our civic discourse. I also need
to know what effect our current rules are having on the survival of the
broadcast industry as they position themselves to compete with cable,
DBS and other services. And while we talk about the 85 percent of people
that have access to cable and satellite, we can\'t forget about the
approximately 15 percent of the American public that only receive
broadcast services. I think it\'s essential that free over-the-air
services remain competitive and viable and continue to provide
programming alternatives. What I don\'t want is for the competitive
environment to drive the migration of quality programming to cable and
away from broadcasting.

No doubt, these are important decisions and we must carefully consider
the regulatory options that are available. But do not worry that we are
rushing to judgment. First, government is simply incapable of rushing.

(Laughter.)

Second, we are responding to the fact that a number of rules that have
been remanded or vacated by the courts, leaving the American people, the
industry and the FCC in limbo. Inaction by the FCC only prolongs the
uncertainty to the detriment of the public and the marketplace.

And third, without question, this is the most robust, detailed
evidentiary record that I have seen in my 20 years of practicing
telecommunications law.

As Dane stated, we sought comment on 12 studies and we have received
over 3000 comments, over 2900 of which are from individual citizens. In
addition, there have been over 10,000 e-mails from the public, and a
number of public hearings have been held and are being held again in the
future. I am taking a hard look at this information as are I know all of
my colleagues. But don\'t forget, the statute and the courts require the
Commission to act on a timely basis, and it is our obligation and duty
to respect and adhere to that schedule. We cannot let fear paralyze us.
There will be no crystal ball available to us six months or a year from
now. And I believe our job, why we were nominated by the President and
confirmed by the Senate, is to make these tough decisions and not simply
hope that they\'ll go away. And while I know that not everyone will
agree with us when we make these decisions, we will be carrying out our
responsibilities.

So thank you for allowing me to take a few minutes to share with you the
questions that I think need to be addressed. I look forward to listening
and learning from all of you, the insight and the viewpoint of the
public and the industry are, as always, an essential part of the FCC\'s
regulatory process. Thank you for your time and your commitment to
working with us to make well informed and well reasoned decisions that
will benefit all of us.

MR. SNOWDEN: Thank you. Commissioner Copps?

COMMISSIONER COPPS: Good morning and welcome. Thank you all for braving
the weather to take part in this important event. Those of you from
Washington have heard me say that, for me, no issue pending before the
Federal Communications Commission is so important as the decision on
whether to eliminate or significantly change our media concentration
protections. I say that because what we decide will have a formative
influence on how our media will look for many, many years to come. I
believe that fundamental values and democratic virtues are at stake here
\-- things like localism, diversity, competition and maintaining the
multiplicity of voices and choices that undergird our marketplace of
ideas and that nourish American democracy. And also at stake is the
quality and type of the entertainment that we and our children watch and
hear. So this is really important work that we are about today. And I
think that despite Mother Nature and other challenges, we have top
quality participation today. So I\'m ready for us to roll up our sleeves
and go to work.

I think that we should have two goals today. Proceeding on an assumption
that some find hard to believe, all expertise on these issues does not
reside within the I-495 Beltway. Our record needs much more breadth than
the capital can provide. So our first goal in coming to Richmond is to
talk with members of this community and this state and to tap local
expertise to help us make the right decisions and have a record of
factual depth and granularity that the courts will accept in reviewing
what we do and that the American people will accept. Secondly, I hope we
can raise the awareness in Richmond that something important is going on
at the FCC, something that each person here in the city and in the state
has a stake in, something that every consumer, every citizen, should
know about.

I am frankly concerned about consolidation in the media, and
particularly concerned that we are on the verge of dramatically altering
our nation\'s media landscape without the kind of broad, national debate
and analysis that these issues so clearly merit.

Why am I concerned? I\'m concerned because I don\'t believe that we yet
know the potential implications of our actions. We do have some
experience to learn from \-- and that is what happened to radio after
Congress and the Commission changed the rules of the game seven years
ago. Many media observers believe that the loosening of ownership caps
and limits that took place then created real problems in radio. We\'ll
hear more about that on today\'s panels. Arguably, consolidation also
created some economies and some efficiencies that allowed broadcast
media companies to operate more profitably and may even have kept some
stations from going dark and depriving communities of service. We need
to take that into consideration. But I think most people would admit
that the consolidation went far beyond what anyone could have foreseen
in 1996. Conglomerates now own dozens, even hundreds \-- and in one
case, more than a thousand \-- stations all across the country. More and
more of their programming seems to originate hundreds of miles removed
from listeners and their communities. And we know this, there are 34
percent fewer radio station owners in February 2003, than there were
before these protections were eliminated. The majority of radio markets
are now oligopolies. And all this in only seven short years!

It raises serious questions. Media watchers like the Media Access
Project, which is here today, Consumers Union, and Professor Robert
McChesney argue that this concentration has led to far less coverage of
news and public interest programming. The Future of Music Coalition in
its multi-year study finds a homogenization of music that gets air play
and concludes that radio seems to serve now more to advertise the
products of vertically integrated conglomerates than to entertain
Americans with the best and most original programming.

So, should we eliminate, or substantially change, the protections that
remain for television, cable, and newspapers? Before we can make that
decision, we need to better understand the current media landscape and
the implications of eliminating concentration protections. Today we know
far too little to make an informed decision. Not only do we not have all
the answers, we haven\'t yet teed up all the questions. Let me list just
a few questions the studies don\'t answer.

What is the likely prospective effect on localism, diversity, and
independence of TV, cable, radio, and newspapers if we eliminate our
protections, especially given our history with radio consolidation?

How much news and public affairs programming was broadcast in the years
immediately before and after elimination of FCC radio concentration
protections?

What effects have recent media mergers, radio consolidation, and TV
duopolies had on the personnel and resources devoted to news, public
affairs, and public service programming, and on the output of such
programming? How about the effect on the creative arts? Will eliminating
our rules result in a crisis in any of those areas?

Do newspapers and co‑owned broadcast stations carry similar viewpoints
more frequently than independent newspapers and broadcast stations? The
one FCC study is criticized as insufficient.

How do consolidation and co-ownership affect the news\' and arts\' focus
on issues important to minorities and to the objective of diversity? And
how about children?

Is there a relationship between the rising tide of media consolidation
on the one hand and the low quality and indecent programming on the
other hand?

How are advertising and small business affected?

The list goes on and on. Today hopefully we can begin to address some of
these questions. We need answers to them before I can feel comfortable
about making an informed decision. We need a diversity of input into the
Commission on these issues that goes beyond anything we\'ve ever had
before. We need to hear from stakeholders of every stripe \-- and as far
as I\'m concerned, anybody that lives in this democracy of ours is a
stakeholder in the future of the media.

So it\'s just not business, although business input is essential. We
want to hear from consumers, labor, educational, religious, and minority
organizations, and Americans who have never heard of the Federal
Communications Commission. We can pretend that these folks read the
[Federal Register]{.underline} and can afford the lawyers to participate
fully in our

inside-the-beltway decision making. But we\'d be kidding ourselves. This
decision is too important to make in a business-as-usual way. We need
America\'s buy-in, and we need your help in answering these questions.
That is why I have put so much emphasis on outreach to those I call
nontraditional stakeholders who have traditionally lacked access to the
FCC. That is why I\'ve been pushing so hard for hearings around the
country.

Something tells me this hearing will not disappoint me and we\'ll walk
away from here knowing some facts, granular facts that we didn\'t know
before we got here and that we\'ll hear some perspectives that don\'t
just automatically float into us at the FCC.

Lastly, I want to note that all of us here today \-- from the Chairman
and the FCC, to media advocacy groups, academics, and industry, we are
all interested in doing what\'s best, together, for the American people
and the American consumer. I note with sadness this morning that Fred
Rogers of Mr. Rogers\' Neighborhood died today. Here was a man who
really used the media to serve the public interest, and his example
would remind us what we\'re all working for, TV, radio, cable, newspaper
and internet, that something that uplifts and informs and serves. We
have some extraordinary people who have made a real effort to debate
this issue today. That means a lot to me. I know that we\'re all after
the same thing and that we can work together to do the best thing.

Thank you, Mr. Chairman, for calling this hearing. Thanks to Dane
Snowden and his capable team for putting it together. Thanks to our
panelists for taking the time to come here. And to the audience also.

MR. SNOWDEN: Commissioner Martin?

COMMISSIONER MARTIN: Good morning and thank you for \-- thanks everyone
as well for braving the weather to join us at this public hearing. And
Dane, I particularly want to thank you and your staff for the incredible
job, as you always do, in putting this together for us.

I find enormous value in the opportunity to talk to you and actually
hear from members of the public, as well as the media industry. Getting
your thoughts and insights on the subject our media ownership rules is
particularly important to our thorough review.

When formulating media ownership rules, three key principles have
guided, and will continue to guide, our Agency\'s decisions:
competition, diversity and localism. These core values recognize the
tremendous role the media plays in a functioning democracy, where the
ability to express diverse viewpoints is essential. Indeed, much of the
news, information and entertainment that we receive today are from the
media. Thus, any decisions the FCC makes with respect to media ownership
will impact our day to day lives, the continued expression of diversity
and ultimately our democratic system. Yet, we must address these issues.
Congress has required us to review our broadcast ownership rules every
two years to ensure that they are still necessary. And the courts have
made clear that this cannot be a cursory review, nor can we base our
conclusions on unsubstantiated beliefs.

As the Chairman has explained, if we don\'t adequately justify our
rules, the courts may eliminate our ownership rules altogether. In that
vein, the Chairman should be commended for conducting this comprehensive
review.

There\'s no question that the courts have been evaluating our decisions
with increasing scrutiny. Indeed, the D.C. Circuit has struck the last
five media ownership rules it has reviewed. The court has repeatedly
criticized the Commission for failing to consider the competitive forces
present in the modern media marketplace and the new voices that have
been introduced since the rules were first enacted.

Indeed, the media landscape has changed significantly since the adoption
of our current rules. The number of broadcast networks has doubled and
we now have numerous nonbroadcast networks. There are 230 national cable
programming networks and more than 50 premium networks that regularly
rival the broadcast networks in audience share. Their success is
naturally due to the introduction of widespread popularity of
multi-channel video programming services. In fact, today, over 85
percent of households receive their video programming via satellite or
cable.

In addition, the growth and popularization of the internet has
dramatically changed how people receive and distribute information. The
internet represents a significant outlet for diverse use, as well as an
important source of news and information to consumers.

It is with all these changes in mind that we must conduct our review of
the ownership rules. Given all of the developments in the media
landscape, one rule in particular is in need of review. The rule which
prohibits a company from owning a newspaper and a broadcast station in
the same market has not been reviewed in almost 30 years. Today,
newspapers are the only media entities that are prohibited from owning a
broadcast station, even in the largest markets. Today, two broadcast
stations are generally permitted to combine in the largest markets and
could own up to six radio stations as well. Yet, newspapers remain
prohibited from owning even a single radio station.

The Commission has stated several times in the past seven years that
this rule might need modifying, but after three notices it has yet to
act. At a minimum, I think that so long as a significant number of
independent voices remain in the marketplace, we should give broadcast
stations and newspapers the same opportunity to combine that two
television stations now have in the largest markets.

Of course, the introduction of new voices into the marketplace does not
necessarily mean that all of our limits need to be relaxed or
eliminated. Indeed, I believe that the FCC must be mindful of unintended
consequences from any changes to our rules.

For example, many people have expressed concern about the increase in
consolidation that has occurred in local radio. But some of this
consolidation may actually be due to the Commission\'s rules rather than
the numerical limits set by Congress.

The problem lies in the FCC\'s definition of a market and in an obscure
counting method for determining how many stations in a market one entity
owns. The result of our practice is that the Commission sometimes treats
small towns like big markets. We have raised these issues as well in the
current proceeding and we need to take this opportunity to address them
here as well.

Clearly, with the media marketplace becoming more and more complex,
there are no easy answers to the task we confront. The ownership rules
are in need of review and in some instances revision. But our guiding
principles will remain at the heart of all our decisions.

I remain committed to doing everything I can to ensure that the FCC
adopts ownership rules that protect and promote competition, diversity
and localism in today\'s medium environment and I\'m fully aware of how
central the decisions will be and will make to the lives of many of you.

Thus, I welcome all of your insights and commend the Chairman for
instituting this proceeding and scheduling this hearing. And I look
forward to hearing from you, both today and in the months to come.

Thank you.

MR. SNOWDEN: Thank you. Commissioner Adelstein?

COMMISSIONER ADELSTEIN: Thank you, Mr. Chairman and Commissioners. I\'d
like to thank you for convening today\'s hearing. I really appreciate
your leadership in pulling this together and I think it\'s going to be a
very illuminating panel we have and thank you to Dane for pulling this
together and to all the staff of the Consumer and Governmental Affairs
Bureau for doing this. I\'d like to thank Commissioner Copps also for
his leadership in calling for all of us to get out of D.C. and to get
out of the Beltway and to hear from people that are affected by this and
that means everybody because everybody in this country is affected by
this.

And we have an amazing group of panelists today I\'m looking forward to
hearing from very shortly. I thank them and the audience for braving the
elements to get here.

As my colleagues have noted, we are about to make some enormous
decisions, some of the most important decisions ever made by this
Commission. And yesterday, for example, we had a hearing on
telecommunications issues at the House Commerce Committee. A lot of the
hearing turned out to focus on media ownership. It turned out Members of
the House Commerce Committee are deeply concerned about how this
Commission takes its role as people who are charged with protecting the
public interest and ensuring that the public interest is served as we
are required to do by law in establishing the media ownership rules of
this country. Because the media market isn\'t like other consumer
products. It\'s not like we\'re dictating the price of candy here. But
you could compare it in a sense to candy. Think about the children of
this country. I have a new child at home and you don\'t want them eating
sweets all the time and you don\'t want them watching stuff on
television that\'s like candy. You want them watching the good stuff,
things that he\'s going to learn from, things that are going to help his
small mind to grow and to develop. And we need to look at how the rules
that we establish affect our children. And we need to look at how it
affects all Americans of all ages. The media really dictates the
vitality of what the Supreme Court referred to as the \"uninhibited
marketplace of ideas.\"

So we need to hear from a diverse range of media voices. This is at the
very core of our democracy.

I\'d like to read to you a bit from a Supreme Court decision in the [Red
Lion]{.underline} case that touches on this issue and really, I think,
lays out the role that the Supreme Court sees in law for the Commission.
The Supreme Court held, and I quote, \"it is the right of the public to
receive suitable access to social, political, aesthetic, moral and other
ideas and experiences which is crucial here. That right may not
constitutionally be abridged by Congress or by the FCC.\"

So the Supreme Court decision is every bit as pertinent to our
discussion of the ownership rules as the D.C. Circuit opinions that have
asked the FCC to justify our current rules.

We\'ve got to build a solid evidentiary record to support our rules as
my colleagues have indicated. But we\'ve also got to bear in mind that
the Supreme Court mandate to promote the core public interest values is
also our job. We need to promote diversity, localism and competition in
our media markets. And our decisions can\'t possibly rest on just
empirical evidence alone. We\'ve got to examine in quantitative data and
I commend the Chairman\'s leadership in conducting these FCC sponsored
ownership studies. These studies and the critiques of them, I think,
offer us a key part of our current record. But these questions do not
lend themselves to purely quantitative answers. We need to hear about
your experiences as participants in the media marketplace. You know,
government rulemaking inherently involves making predictive judgments
about what\'s going to happen as a result of actions that we take now.
And how can we possibly say that we can come up with any scientific
proof about what\'s going to happen based on some kind of quantitative
data? We\'ve got to look at what\'s happened in the past. We need to
look at history. We need to look at the radio market and see if we\'re
satisfied with what happened as a result of taking the cap off entirely
as Congress did to the amount of radio stations that people in this
country can own.

I don\'t think a lot of people in this country are happy about what they
hear on the radio. I know a lot of Members of Congress have expressed
concerns directly to us on the Commission.

So we need to make predictive judgments that\'s done in traditional
anti-trust analysis as well, but those judgments have to be rooted in a
solid, evidentiary record, but let\'s not pretend that this is science.
The questions before us just don\'t lend themselves to mathematical
proofs. We\'ve got to use our judgment and the courts have time and
again affirmed the right of this Commission to exercise its judgments in
trying to determine what is the public interest which is our legal
mandate.

So how do we determine what media ownership rules best promote the
public interest? This task is daunting and it\'s made even more
challenging by the short time frame that\'s been proposed for this
proceeding.

One panelist in our last hearing observed that the FCC plans to revamp
all of its rules in a shorter time frame than an NBA basketball season
and I joined the Commission part way into that season. I view this form
as another step in our record building efforts and another step getting
close to the process of getting ready to make those decisions. The
panelists that we have before us are a cross section of some of the many
stakeholders in this proceeding. They\'re journalists, content
producers, broadcasters, educators, but even more importantly, they\'re
listeners, viewers and participants in our democracy. You all have a
stake in this proceeding and we want to hear your views today.

It\'s been noted that we have over 15,000 comments on the record in this
proceeding, a huge number by FCC standards, but there\'s 250 million
people in this country and all of them are affected by this. So today is
part of an effort and we need to make a lot more efforts just like this
to reach out and get more input on these massive decisions that we\'re
about to make.

Like I said, your participation is crucial in FCC decision making. The
process depends on it and more importantly the outcome depends on it.
There\'s no way the Commission can fully understand the impact that our
decisions are going to have on different constituencies unless we hear
from them.

If we\'re to craft media ownership rules that best serve the public
interest as we\'re required to do, we\'ve got to hear from the public
and that\'s why I\'m here.

I don\'t know yet what media ownership rules will best serve the public
interest, but I know that the FCC must proceed with caution as we
reconsider our existing rules. Further media consolidation can\'t easily
be undone. Once the toothpaste is out of the tube, it\'s going to be
difficult, if not impossible to put it back in. So thanks again for
joining us and let\'s get to it.

MR. SNOWDEN: Thank you, Mr. Chairman and Commissioners. This morning, we
will hear from three panels on the specific themes of diversity,

localism and competition. The panels will be moderated by Tom
Krattenmaker, who will first summarize the key broadcast ownership rules
and issues.

Before I introduce Mr. Krattenmaker, let me briefly describe the two
ways we have provided for members of the public to participate directly
in today\'s program. First, while the panelists are speaking, members of
the public are invited to write down any questions for the panelists on
the index cards located on the tables at the back of the room when you
came in. Those cards will be collected during the panel presentations.
The questions will be forwarded to the moderator, who will pose them to
the appropriate panelists following their opening statements.

Second, we have set aside 30 minutes at the end of each panel as a
public comment period. Members of the public are invited to use the open
microphones that are located in the middle of the room to offer comments
regarding the pending rulemaking proceeding. If you are not able to
express your comments today, you are welcome to submit them as a part of
the record in the pending broadcast ownership rulemaking proceeding. To
file your comments electronically, go to [www.fcc.gov]{.underline} and
follow the instructions for ECFS Express.

Now it is my pleasure today to introduce our program moderator, Mr. Tom
Krattenmaker. Tom is

Senior Counsel in the Washington office of Mintz Levin, where he focuses
on telecommunications transactions and antitrust representation and
counseling. Prior to joining Mintz Levin, Tom was Director of Research
in the FCC\'s Office of Plans and Policy under former Chairman William
Kennard. In that position, Tom oversaw the Commission\'s staff review
and recommendations to the Commission regarding telephone, cable and
satellite industry mergers. Before joining the Commission, Tom served as
Special Counsel for Policy and Regulatory Affairs in the Antitrust
Division of the Department of Justice. There he oversaw review of
several mergers and other transactions in regulated industries. Tom also
clerked for Justice John Harlan of the U.S. Supreme Court, and spent
several years in academia. He was professor of law and Associate Dean at
Georgetown University as well as Dean of the Marshall-Wythe School of
Law at the College of William and Mary. He has also taught at the
University of Connecticut School of Law and at the University of Natal
in South Africa.

We are honored and pleased to have Tom join us today and moderate our
panel discussions.

MR.KRATTENMAKER: Thank you, Dane. It\'s a privilege and an honor for me
to moderate today\'s hearings and I\'d like to give my sincere thanks
for that to each of the Commissioners and to the FCC\'s Media Bureau for
inviting me here today and asking me to moderate this session.

I\'d like to join with the Commissioners in thanking you for attending
and also thanks to the people in Richmond for hosting us. For those of
you who have not already guessed it from my accent, this is a bit of a
homecoming for me. I am not a Virginian by birth, although I was born in
South Jersey, but I spent most of my high school years in Richmond
attending both Hermitage and Douglass Freedman High Schools. In fact,
the high point of my career in public elective office occurred right
here in Richmond in 1956 when I was elected President of the 8th Grade
at Hermitage.

(Laughter.)

As you can tell from Dane\'s excessively kind introduction, my academic
career has been in constant decline since then.

It is the opinion of a couple of people here that there might be some
members of the audience who are not so interested in learning about my
fascinating life as understanding why we are here and what the ground
rules might be, so why don\'t I get to that.

Today\'s topics, what are we here for? The Commission is in the midst of
reviewing, as you\'ve heard from the Commissioners, in one comprehensive
proceeding, all of its rules that limit the extent to which owners of
radio and television broadcast facilities can control additional outlets
or related businesses. There are essentially six of these rules under
review. Now remember, Dane told you I spent 30 years in legal education,
so you pay attention because there is going to be a pop quiz when I
finish.

Four of these six rules center around local markets. They are first, the
local TV station ownership rule. This rule provides that no one may own
more than two TV stations in any one market and may own two only under
certain conditions concerning the size of the market and the strength of
the co-owned stations.

There\'s also a local radio ownership cap. This provides that a firm may
own up to eight radio stations in one market, depending on the size of
the market which is to be measured by the number of radio stations in
that market.

Next we have the local TV-radio cross ownership rule which provides that
a firm that owns only one TV station in a local market may own one, four
or seven radio stations in that market as well, depending on the size of
the local market. In this case that market is measured by taking account
of not only the number of radio and TV stations, but also the number of
cable systems and newspapers in that market.

And the final local rule that\'s in this proceeding is the broadcast
newspaper cross ownership ban, which provides that no one may own both a
daily newspaper and either a TV or a radio station in the same market.

The other two rules center around national markets. First, there is a
limitation on TV network mergers. No merger is permitted between firms
that are among the top four television ownership networks, but a top
four network may merge with a network outside the top four.

In addition, there\'s a national TV station ownership cap. No company
may own a group of television stations that in the aggregate can reach
more than 35 percent of U.S. households. There is no corresponding limit
on the number of radio stations that any firm can own nationwide.

Okay, got all that? It\'s quite a mouthful. It\'s easy for me to say. I
practiced it. But actually, it\'s not all that hard. As a summary
overview, just think local and national. In local broadcast markets such
as Richmond, there are rules limiting TV plus TV, radio plus radio,
radio plus TV, and newspapers owning either radio or television. Then at
the national level there are limits on TV but not radio network mergers,
and total national TV, but not radio ownership. And those are the rules
that the Commission is reviewing in this proceeding.

Now as you probably have already figured out, and as some of the
Commissioners have alluded to, these ownership rules were not all
created at the same time. For example, the antecedents of the local
radio rule traced back almost all the way to 1927 when the Federal Radio
Commission, the precursor to the Federal Communications Commission was
set up, while the newspaper ownership rule is relatively new, it\'s
about 30 years old.

Additionally, they are not only different ages, but these rules grew up
in silos, so to speak, not always taking account of one another or not
overtly taking account of one another. For example, did you note and if
you did you\'re doing a good job of keeping up, how the local ownership
rule usually, but not always, takes account of local market size and
when the rule does take account of local market size, they don\'t all
measure the size of the market in the same way.

Further, these rules have never before been exhaustively reviewed as
part of a single comprehensive package. So it\'s really quite a daunting
task that the Commissioners face and much easier to be a moderator than
a Commissioner on this.

I think for those of you who are here today, it\'s important to know not
only what the rules are, but why they are being reviewed collectively
and so thoroughly today and why the terms, competition, diversity and
localism, have come to frame most of the discussion concerning those
rules.

Let me talk a little bit about why now? Why is the Commission doing this
now? You know what rules are on the table. Why are they on the table
today? Fundamentally, they\'re on the table today because of what
Congress did in one section of its comprehensive communications law
reform legislation, the Telecommunications Act of 1996.

When Congress addressed broadcast ownership rules in the 1996 act, it
did three things. First, it eliminated the Commission\'s national radio
ownership limits and it raised both the local radio caps and the
national TV caps. Then, Congress directed the Commission to immediately
tweak a couple of its remaining rules.

Finally, and most importantly here, Congress required the FCC to review
each of its remaining broadcast rules every two years. What Congress
said is that the question the FCC must address in these biennial reviews
is whether \"any of the rules\" that is the six we just reviewed,
\"whether any of the rules are necessary in the public interest as a
result of competition.\"

And the Federal Court that reviews the Agency\'s ownership rules has
construed that provision as \"carrying with it a presumption in favor of
repealing or modifying the rules.\"

So the Commission has been directed to carry out these reviews now, and
then to do it again two years later and again two years after that,
etcetera, etcetera. Talk about the communication lawyers perpetual
guaranteed income act. I join with all other members of the Federal
Communications Bar Association in expressing our undying gratitude to
Congress for having dug this very deep trough at which we may feed for
years on end, and apparently, my grandson as well.

In addition to doing it every two years, according to the courts, the
Commissioners have to approach the task with the presumption to at least
modify the rules. Now it\'s also important to note these facts don\'t
tie the Commission\'s hands and they don\'t ordain any particular
outcome. Presumption doesn\'t mean fixed determination, but they do
place limits both on how long the Commission can wait, perhaps not much
longer than the course of an entire NBA season, and on its ability to
preserve the rules without identifying evidence that clearly supports
them.

Now I wanted to say a few words about the terms of the discussion, what
you\'re going to hear from the veterans or the cognicenti here. As I
indicated in discussing the rules, we\'ve had limits on radio and TV
ownership virtually from the inception of radio and television services
in this country. So there\'s quite a lot of water already over the dam,
including discussions, both learned discussions and unlearned
discussions, about what is at stake here.

Most people, including most Commissioners who think about these issues,
tend to conclude that the values at stake are those of competition,
diversity and localism. And that these are three distinct values, each
focusing on a different aspect of the effects of any media
consolidation.

Let me try to illustrate this by taking a very simple hypothetical for
you. Suppose someone wants to buy two television stations in Richmond,
Virginia. Without knowing any further details about the transaction, we
can already imagine three different potential opponents of that merger.
One might say I worry about the effects of the merger \--

\[END TAPE 1, SIDE A; BEGIN TAPE 1, SIDE B.\]

\-- is I worry whether the merged firm, after the merger, will be able
to behave anticompetitively, for example, by raising ad rates to
monopoly levels or by cutting back its program day in order to restrict
output. That\'s our competition issue.

A second opponent might say well, I don\'t really see a problem with
competition here. In fact, this merger might be good for competition. It
might create a more efficient firm, but competition is not the only
value we care about. I worry about diversity. What I mean by that is I
worry that the merger might result in fewer distinct points of view
being aired in Richmond or in fewer differences in the types of programs
being offered over the air to Richmond residents.

Now my hypothetical's third opponent might say I think that after this
merger there will be more robust competition and just as much diversity
of program and formats, but I worry about the impact of this merger on
localism. That is, I worry that the owners and operators of the merged
firm, as compared to the previous firms, will not be as deeply rooted in
and in touch with the Richmond communities when programs, personnel or
formats are chosen.

Now of course, certain broadcast combinations, real ones, not
hypothetical ones, may, depending on one\'s point of view, raise
significant questions with respect to one, two, three or none of those
values. Nor are these categories of concern air tight. For example, as
many of you have figured out already, concerns about localism or
competition may each translate into a concern over diversity. There may
be other value that needs to be accounted for as well. For one time
I\'ll abuse my privilege as the moderator to interject a personal view
here is I wonder why media consolidation rules should be seen as an
aspect of the Commission\'s spectrum management duties. But since I seem
to stand alone on that, I\'ll retreat back to my other role.

I mean to say, however, that if you think something other than
competition, diversity or localism may be at stake, you\'re not
necessarily the only one in the room who thinks that.

But the fact remains that most of what you\'ll hear today will be
couched in terms of competition, diversity and localism. And how, if at
all, the FCC\'s ownership rules should be influenced by each of those
values.

And in fact, the staff has arranged the panels, the formal panels around
each of those concepts.

So as a gross, but I hope useful over generalization, we\'re going to
spend about six hours, snow willing, talking about radio and television
ownership patterns, national and local, actual and potential and how
those patterns might positively or negatively affect competition,
diversity and localism.

Got that? That\'s what we\'re all here about.

Now how are we going to do that? We\'re going to do it, please, by
following two rules. As your moderator, I\'m asking that every
participant, panelist, open miker and even Commissioner alike, please
agree to abide by two and only two simple rules today. I base these
rules on my experiences with public hearings, on my teaching experience
and also frankly on my desire to prove that I, too, support the concepts
of limited government and freedom of speech from oppressive regulatory
oversight. So we\'ll have only two rules.

First rule is please stay strictly within your time limits. You are
important. I am important. But she and he are equally important too.
Every rule has an exception, of course. Exemptions from this rule will
be granted, but only to those who need extra time in order to quote
extensively from one of my books.

(Laughter.)

Or who are Commissioners. Double exemption, if you\'re both of the
above.

Secondly, again with the exception of the Commissioners, of course, will
you please as a formal matter speak through me. Think of me, if you
wish, as a potted plant with a microphone. As moderator, I want to be
able to direct the flow of discussion, but I will not cut it off. We
don\'t want the panelists arguing back and forth with each other. I\'d
like you to come through me so I can bring other people in, if need be.

Thank you, in advance, for following these hopefully simple rules.

Now let\'s hear what\'s on your minds? For your opening statements, each
panelist will be given five minutes and as I mentioned before, I would
like you to introduce yourselves because you know better than I just
what brings you here.

MR. BOZELL: Thank you, Mr. Krattenmaker. My name is Brent Bozell. I\'m
the Chairman and the founder of the Parents Television Council.

Good morning, Mr. Chairman, Commissioners and fellow panelists.

Mr. Chairman, I thank you for inviting me to address these hearings, but
I confess at the start that I do so with a certain degree of
trepidation. There is, for starters the angst one feels when his
libertarian sensibilities are assaulted by the mere thought of federal
intervention into ownership of private property. It\'s probably safe to
say that I have never taken a position that does anything other than
advocate open markets unfettered by government regulation.

It would follow then that as technology advances in the world of
communications and presents new opportunities for expansion, we should
all rejoice and not interfere with the opportunities provided by those
who would enter into the market.

Chairman Powell, I believe, agrees with this. I believe he believes this
has been the result. And in Chairman Powell\'s recent interview with a
Hollywood reporter he stated, and I quote, \"our statistics are since
1960, there\'s been something like a 195 percent increase in outlets and
139 increase in independent owners.\"

Chairman Powell went on to say \"the truth is, by almost any measure,
there are more networks than there ever were before. There are more
television stations than there ever were before. There are more
independent owners.\"

On the face of it then, it would seem that deregulation has worked and
media consolidation is but a mythology. But then one scratches the
surface, digging a little deeper, in this case looking at the FCC\'s own
statistics and a different picture begins to emerge. In the past 25
years, the number of TV station owners has declined from 500 to 360.
There\'s been a massive increase in the number of cable channels, yet
almost three quarters of them are now owned by six corporate entities,
four of which are TV networks. Four entities dominate the most popular
cable programming as well as prime time network shows. Six entities
control approximately two-thirds of all viewers.

The Commission\'s own research is devastatingly clear. And I quote:
\"Since there are approximately 106 million TV households, the average
number of networks available is over 50 per household. This sounds like
a large number. However, when we examine the ownership of these
networks, we discover that almost three quarters of them serving
approximately 4 billion subscribers are owned by six corporate entities.
The four major TV networks, NBC, ABC, CBS, Fox and the two dominant
cable providers, AOL-Time Warner and ATT Liberty, completely dominate
the tuner.\"

And finally this, \"the big three networks went from an ownership share
of programming of 17 percent in 1989 to 48 percent in 2002 through
growth and mergers.\"

This, I believe, is not what deregulation was intended to accomplish.
Obviously, the Commission cares a great deal about the diversity issue
and obviously the industry cares a great deal about that issue as well.
But what about the public which this Commission and the industry profess
to serve? The Parents Television Council has over 750,000 members
nationwide. I can only venture a guess, but I suspect that if a survey
were taken of them asking them what they believe is the most important
issue concerning television today, not one percent would point to
diversity or competition or localism or media consolidation as an
important issue. But I know what does top their list. Like the average
American family, they are disgusted, revolted, fed up, horrified, I
don\'t know how else to underscore this, by the raw sewage of the ultra
violence, the graphic sex, the raunchy language that is flooding into
their living rooms day and night through the television screen and
poisoning the minds of an entire generation of youngsters whose
parents\' concerns are dismissed by an industry that admonishes them
instead to stand guard over the TV sets, perhaps with a baseball bat to
keep impressionable children away.

Now I ask the media behemoths how important the issue of indecency is to
them. I wonder if you will find one single executive, I don\'t know of
one, who will even speak out on this issue, much less do anything to
stop it. And sadly, the FCC\'s record on the decency issue is lacking.
After all, indecency on broadcast TV between the hours of 6 and 10 p.m.,
when children are likely to be watching is against the law. And the FCC
is charged by Congress with enforcing the law.

How many stations in the continental U.S. has it fined over the years
since its Enforcement Division was formed for broadcasting indecent
material? According to our research of the FCC\'s website, the answer is
none.

So I would ask the Commission to consider this. If the public good is
what is driving this debate, then the Commission ought to consider what
it is the public wants, not what the network elite wants. The public is
demanding that television shape up and stop poisoning the culture.

Our hope is that as the Commission debates the diversity and media
consolidation issue, it keeps at the forefront the one question that
really matters. What is the formula that will safeguard the rights of
families?

Thank you, Mr. Chairman.

MR. KRATTENMAKER: Thank you. Mr.

Corn-Revere?

MR. CORN-REVERE: Thank you, and thank you Mr. Chairman and Commissioners
for inviting me to address this very important issue.

I am a partner of the Washington law firm of Hogan and Hartson, although
I should add as sort of a footnote to my affiliation that that\'s going
to last for exactly one more day. On Monday, I become a partner in the
Washington, D.C. Office of Davis Wright Tremaine. I am not speaking on
behalf of any clients today. I\'m presenting solely my own views.

It\'s interesting this proceeding is about the broadcast ownership
rules, but it\'s remarkable the extent to which it is becoming a
discussion of broadcast content more than anything else, as Mr.
Bozell\'s comments just indicated. The common denominator is a purported
link to concentration which appears to create a multitude of sins beyond
just a generalized concern about diversity.

Some participants in this proceeding argue that the media concentration
has made television bland. Others claim that it leads to more
programming that is decent or violent. Raw sewage, I guess, is the
expression that Mr. Bozell used, indicating he\'s clearly been able to
overcome his libertarian sensibilities.

Still others suggest that media concentration affects program quality,
including the quality of news reports. The latest claim was made this
week by Senator Zell Miller of Georgia. In an impassioned speech on the
Senate Floor, he sharply criticized CBS for its planned reality show,
\"The Real Beverly Hillbillies.\" Senator Miller seemed to blame the
advent of the show on media concentration, contrasting the current CBS
Viacom Corporation with the CBS network of 1960s when, as he put it,
\"courageous CBS reporters risked their lives to cover the civil rights
struggles in the South.\" Oddly enough, in 1963, CBS was criticized in
Senate hearings for following the NAACP line.

Now this example struck me as particularly strange because as a kid
growing up in rural Illinois, some of my favorite shows were on CBS and
they included \"The Beverly Hillbillies,\" \"Petticoat Junction," and
\"Green Acres.\" I still one day aspire to having a cement pond.

(Laughter.)

Of course, there weren\'t many alternatives at the time. We received
three over-the-air stations and cable was a long way off. Satellite TV,
VCRs and DVDs and personal digital video recorders weren\'t even a gleam
in the eye.

By comparison, it\'s difficult to understand some of the current claims
about reduced diversity. It\'s sobering, for example, to realize that
when Chairman Newton Minnow called television a vast wasteland in May
1961, fewer programs were aired in New York, the largest medium market
in the world, on all of its television stations each week than there are
channels today.

It seems to me that blaming concentration in the media for the programs
we don\'t like is somewhat like the drunk who searches for his keys
under the street light, not because that\'s where he lost them, but
because the lighting is so much better there.

(Laughter.)

After all, it\'s clear that the Commission would bump up against the
first amendment pretty quickly if it tried to force programming that was
less bland or if it tried to, God help us, ban those stupid reality TV
shows.

There appears to be a belief by some that the government can achieve its
goal of content regulation if only it frames its rules as economic
regulations. The thought is that programming can be achieved by
indirection, rather than by direct regulation.

Of course, it\'s also true that threats of new structural regulations or
promises of relaxation of existing rules can become powerful inducements
in getting broadcasters to reform their editorial policies.

The Commission should bear in mind that such economic regulations are
not immune from first amendment scrutiny where their purpose is to
affect the programming content on broadcast television.

There have been a few examples that we\'ve seen in the past, for
example, the U.S. Court of Appeals for the District of Columbia Circuit
struck down a provision that prohibited extending any existing newspaper
broadcast cross ownership waiver where it was motivated by hostility to
the editorial policies of Rupert Murdoch.

Similarly, the D.C. Circuit has struck down EEO rules designed
indirectly to promote minority viewpoints. The court said that it was
too amorphous to simply promote diversity in the abstract, but on the
other hand opined that if you were to try and promote specific
viewpoints, then you would encounter significant first amendment
problems.

More recently, the court held that the FCC\'s general power must be
interpreted narrowly when it comes to programming issues, since such
matters inevitably raise first amendment questions.

Trying to devise regulations with the purpose to improve the quality of
broadcast programs is entirely too nebulous a goal and too difficult to
attain. The FCC adopted the prime time access rule in the 1970s to
promote news events and public affairs and instead brought us \"The Gong
Show.\"

The current demands to bring back the financial interest in syndication
rules face the same problem. We are told that programs will be more
creative and less bland if FCC limits the amount of network programming
that the networks can own in prime time. But this argument was made to
the Commission before in 1991 when the Commission was considering
Fin-Syn rules at the time. My boss at the time, Commissioner Quello,
addressed the issue of programming quality and creativity in his dissent
from the decision in 1991 not to eliminate the rules at the time.

And if I can beg your indulgence just to read what he said at the time
\--

MR. KRATTENMAKER: The objection will be

\-- cover the quotations from an illustrious Commissioner.

MR. CORN-REVERE: Yes, thank you very much. At the time he wrote in his
dissent, when presented with the argument that the creativity and
quality of network programs would increase only if you retain the
Fin-Syn rules he said, \"I asked one executive from an independent
production company who had been urging me to preserve creativity and
quality in television exactly how network involvement would have changed
the company\'s most successful show, \'The A-Team.\' He was stuck for an
answer. Yet, even if he had been able to describe the particular ways in
which barring a network's financial interest would improve \'The
A-Team,' I\'m not at all certain that I would want my public interest
calculated in this proceeding to turn on that answer.\"

MR. KRATTENMAKER: Thank you.

MR. CORN-REVERE: Thank you.

MR. KRATTENMAKER: Mr. Ireland?

MR. IRELAND: Yes, good morning, Chairman, Commissioners, distinguished
guests. I\'m Jay Ireland, President of the NBC Television Stations and
I\'m delighted to speak with you this morning regarding the realities of
today\'s media marketplace that we compete in.

As you\'ve heard from a number of people, today\'s world is not the
world of forty years ago when markets like Washington, D.C. had fewer
than 30 local metropolitan media outlets and Richmond had a mere
handful.

Today, Washington has 65 broadcast stations alone and literally hundreds
of other media outlets including hundreds of cable or satellite
television networks, a hundred or more satellite radio channels, dozens
more daily or weekly newspapers, and most importantly, the internet
which empowers every user to be his or her own programmer, editor or
content creator.

According to the FCC\'s own data, there\'s been nearly a 200 percent
increase in the number of media outlets and 139 percent increase in the
number of owners since 1960.

Let\'s look at the media landscape today that we compete in. There are
over 2200 commercial television stations. Eighty-five percent of TV
homes receive their signal from either cable or satellite which we\'ve
heard previously. The average number of channels received is 89 of which
roughly 14 are

over-the-air.

Here\'s another way to look at it. During prime time, the NBC and
Telemundo stations attract less than 3 percent of the nation\'s total
television audience. Yet, the FCC rules assume that nearly 35 percent of
the nation\'s television audience is continually watching NBC and
Telemundo.

The programming side is equally competitive. NBC used to compete against
two other networks to acquire first run prime time programming. Now it
has to compete against as many as six other general entertainment,
English language broadcast networks and over 100 targeted cable
networks. As a result, on a typical night only 50 percent of the
television viewers are watching the four major networks. This
unprecedented and ever growing level of media and programming diversity
is a reality of today\'s media marketplace.

In this diverse marketplace, it makes no sense to treat the broadcasting
industry with ownership rules developed more than a half century ago.
Those rules were based on a view of the world where broadcast television
was the only source for video programming. That world no longer exists
as we know. Therefore, the rules must reflect today\'s marketplace.

Let me now turn to the issue of diversity. Some advocates for more
government intervention argue that relaxation of the national cap risk a
local viewpoint. The reality is that in large markets there is virtually
no solely local ownership of television stations. The only thing the cap
does is protect national groups, many of which own 20 or more stations,
from having to compete with network owned stations and markets.

Some who seek continued government protection argue that the national
cap protects the affiliate\'s ability to pre-empt programming. That\'s
not true. On average, a network affiliate pre-empts about as often as
the average network O & O and an NBC affiliate uses only half of its
annual pre-emption basket which are the number of hours of network
programming an affiliate can pre-empt for any reason at all.

Indeed, the network-owned stations broadcast programming that is more
local than the programming of the affiliated stations. As an example,
NBC has owned Telemundo for less than a year and we have already added
many newscasts in several key Spanish language markets. Also, the
NBC-owned stations, on average, air more hours of local news per week
than the independently owned stations.

The real measure of local relevance is the viewership in the community
and on average, NBC\'s owned and operated stations perform at least as
well, if not better, than most independently owned stations.

There\'s another way the FCC rules inhibit, rather than promote program
diversity. NBC is up against the cap because it wants to make Telemundo
a competitive Spanish language network. The cap prohibits NBC from
continuing its efforts to acquire stations that might improve
Telemundo\'s ability to provide real diversity of programming. That\'s
the reality of the cap.

Let me quickly address ownership, local ownership rules. Some argue that
local viewpoint diversity would be lost if any party was allowed to own
more than two television stations regardless of the size of the market
or the stations involved. But the reality is that every market in the
country has plenty of media outlets to ensure viewpoint diversity, even
if the local ownership rule is relaxed.

Moreover, the FCC\'s existing rules treat different markets differently.
The FCC believes that I can own two of nine stations without risking
diversity in a smaller market, but in a larger market with many more
stations, I am still limited to two stations. This result defies logic.

Some assert the common ownership results in common viewpoint. The
reality is viewers demand differentiated content. It would not be in our
economic interest to simply offer similar viewpoints on multiple
stations. As an example, the NBC and Telemundo stations in the same
market, I can tell you, clearly do not offer similar programming.

In conclusion, relaxation of the Commission\'s ownership rules will not
diminish diversity. What will diminish diversity is the loss of media
outlets because they can no longer compete in today\'s fragmented
marketplace. If those who want more government intervention win, the
reality will be that viewers will lose. This is because the broadcast
networks will no longer be able to afford to obtain the top quality
programming that viewers have grown accustomed to and on the local
level, groups will not be able to gain efficiencies needed to compete.

The best protection against television becoming an increasingly
marginalized source of information and entertainment in today\'s
marketplace is not more regulation, but more competition, nationally,
locally and in programming.

Thank you.

MR. KRATTENMAKER: Mr. Liggins?

MR. LIGGINS: Good morning, Mr. Chairman, and to the other Commissioners
as well. I am Alfred Liggins, Chief Executive Officer and President of
Radio One, Incorporated. Thank you for inviting me to speak before you
today on this important issue of the benefit of diversity in media
ownership.

I\'m here today to share with you my experience and views on how
diversity and media ownership have positively affected the broadcast
industry and the American public. I trust that at the conclusion of this
hearing, I will have provided some additional insight as to the
difference such diversity can make to the public debate and
dissemination of information.

This is the twenty-fifth anniversary of the 1978 minority ownership
policy statement whose history stands as an example of what creative
rulemaking can accomplish. In 1978, there was only one minority owned
television station and 59 minority owned radio stations. By 1995, when
the tax certificate policy was repealed in comparative hearings
basically came to an end, there were 35 minority owned television
stations and about 320 minority owned radio stations.

Today, in Richmond, Virginia, Radio One is the only minority owned
broadcaster. Prior to deregulation there were numerous other minority
owners. The significant decrease in the number of minority owned
television and radio stations is an illustration of how federal rules
and policy making can dramatically change the landscape of equal
opportunity and diversity.

I would like to devote a minute or so to providing some background
information on Radio One. As Radio One is the largest African-American
controlled radio broadcasting company in the United States, this
background information will be relevant to our discussion today.

My mother, Katherine L. Hughes, founded Radio One in 1980. Owning a
radio station was the fulfillment of her goal of increasing the number
of African-American voices heard on radio. Interestingly, she was able
to realize this goal by taking advantage of the FCC\'s distress sell
policy. Radio One\'s entre into broadcasting commenced with the
acquisition of station WOL-AM in Washington, D.C. For seven years, this
was the company\'s sole station and yet operating at a mere thousand
watts it established the cornerstone of the company\'s core mission,
presenting news, entertainment and information from the African-American
perspective. It was on WOL-AM that my mother pioneered a new and
innovative format, 24 hour talk from a black perspective and adopted the
slogan, \"information is power.\"

The meaning of that slogan was as relevant and important to her
generation as it is to mine. The ability to control the airways through
ownership gives one the power to proactively inform, educate and inspire
one\'s community. I am certain that if my mother had not been the owner
of WOL, she would not have had the opportunity accomplish this important
goal.

Over the past two decades, Radio One has grown from that single AM
station to 65 stations in 22 markets and also provides programming to 5
channels on FM satellite radio, one of which is a simulcast of WOL.
Radio One\'s expansion to a company of national scope is attributable in
part to the decision to go public in 1999 which made capital more
accessible and less expensive and Clear Channel\'s commitment to divest
a number of stations being acquired from its AM-FM acquisition to
minority-owned companies, an example of deregulation actually creating
more diversity.

Through that divestiture, Radio One acquired stations in such major
markets as Los Angeles, Dallas and Houston. Although we are a public
company, my mother and I continue to retain a majority of the voting
control of Radio One. In spite of our significant growth, we have
continued to maintain our core focus, providing entertaining and
informative content that serves the needs of the African-American
community.

Of our 65 stations, 60 have formats that are targeted toward the
African-American listener. Our diverse programming formats include black
talk, hip hop, R & B, jazz and gospel. I believe that unlike many of our
majority owned counterparts, we offer to our listeners a viewpoint that
is more specifically focused on their community\'s interests and needs.

Studies have shown that there are significant disparities in the
treatment of

African-Americans in local and national news. In addition,
African-Americans still face a lack of quality programming in the media
focused on their needs, interests and perspectives.

I strongly believe that minority owned radio stations provide more
minority focused content and a greater focus on the concerns of the
minority community. Likewise, our listeners take great comfort in
knowing that the information and opinions presented are derived from a
shared perspective that there is a collective stake in the issues being
discussed.

Perhaps the best way to illustrate this is to point out a few examples
of how Radio One uniquely serves the needs of its listeners. Our
stations regularly provide important health care information that is
relevant to African-Americans, including information concerning the
disparity and the quality of health care, the significantly higher
mortality rate and the increased risk of heart disease. We also provide
information on college admissions, sponsor college scholarship
opportunities and help raise funds in support for historically black
colleges and universities. We\'ve raised cash and other donations for
Princeville, North Carolina, the oldest town in America incorporated by
freed slaves which was devastated by flood.

On a regular basis, we sponsor job fairs and other events in the
African-American community and promote voting and other civic
participation. These are just a few of the ways in which we attempt to
serve the needs of our listeners.

Obviously, I cannot state with certainty that these issues are not of
important concern to our nonminority owned companies, however, I can
assure you that as an African-American owner, I am committed to ensuring
that Radio One continues to focus on the African-American community and
to present that viewpoint to the American public.

We\'ve also just announced a new cable venture with Comcast Corporation.
Comcast Corporation, now the largest cable operator in the country,
shares Radio One\'s view of the importance and of the need for more
diverse programming and as a result has committed to a significant
investment and resources in this channel in order to make this a
reality. Yet another example of deregulation increasing diversity.

Thank you.

MR. KRATTENMAKER: Thank you very much. Ms. Riskin?

MS. RISKIN: Thank you. I am Victoria Riskin, President of the Writers
Guild of America, West, which represents the great majority of writers
and producers who create prime time entertainment programs and I would
like to add the good programs.

Thank you for inviting me to speak about the importance to the nation of
diversity in media. The media are the modern day American town square,
the place where people from different backgrounds and points of view
share their stories and the public learns about the world. Here is where
American democracy comes alive and the American identity is forged. But
today, barriers have been erected to keep all but a handful of voices
from being heard in our town square.

The Commission and the courts have asked for data about diversity in
entertainment programming. As President of the Writers Guild, I can tell
you that over the past decade, diversity of production sources in the
marketplace has been eroded to the point of near extinction.

In 1992, only 15 percent of new series were produced for a network by a
company it controlled. Last year, the percentage of shows produced by
controlled companies more than quintupled to 77 percent.

In 1992, 16 new series were produced independently of conglomerate
control. Last year, there was one.

The opportunity for access for a broad range of voices has been cut
dramatically. The claim has been made that because we now have hundreds
of channels on cable, choices abound. But more channels does not really
mean more choices. In the past, the FCC has defined a major network as
one that reaches 16 million or more homes. By that definition, there are
91 major networks. But of these 91, 73 or fully 80 percent are owned or
co-owned by six corporate entities. Five of these six are the same
corporations that run the broadcast networks; Viacom, Disney, News
Corporation, General Electric and AOL-Time Warner.

Any doubt about the control exercised by these five companies was
dispelled in a recent report by respected Wall Street media analyst Tom
Wolzien which I\'ve attached to my comments. Wolzien points out that a
strong programming oligopoly is beginning to re-emerge. For December
2002, he found that the five conglomerates controlled about a 75 percent
share of prime time viewing. Wolzien concludes that over the next few
years with the further consolidations he expects to occur, these five
companies will control roughly the same percentage of TV households in
prime time as the three networks did 40 years ago. In other words, the
control by a few conglomerates will be as absolute as ever in history.

The data we submitted to the Commission documenting the dominance of
content by a handful of vertically integrated conglomerates has been
corroborated by an independent analyst. No longer can anyone argue that
the facts of such control or their potential impact are in doubt. The
old programming oligopoly of media content is being rebuilt.

The creative community has seen in recent years how increasingly
difficult it is to bring innovative shows to the air. All too often,
indeed virtually invariably, to get their work on television, writers
and producers must cede ownership and creative control to the network or
cable companies. Most have no choice, none at all. They must accept the
network or cable company as a partner and surrender their independence
with the result that if their show does not make the schedule, they are
now prohibited from taking it elsewhere.

Nearly 100 small and medium size businesses, each with its unique point
of view have disappeared in the last 10 years. Why is the disappearance
of a small independent producer and writer an issue for public concern?
Because with them have gone stories from hundreds of writers and
producers who care deeply about original drama, comedy, history, culture
and not just, for example, just ratings, ratings, all the time, ratings.

We ask you to consider the rules governing media ownership, as you do
that you look to expand diversity, not limit it to these gigantic
corporations. We ask you to take constructive action to remedy the
serious imbalance that has taken root in the programming marketplace.

We are asking you to ensure that a few companies do not continue to have
a strangle hold on free expression and open debate.

MR. KRATTENMAKER: Ms. Riskin, your time is up.

MS. RISKIN: Thank you.

MR. KRATTENMAKER: Did you wish to conclude? Okay, thank you.

I just wanted to remind members of the audience that if you wish to \--
there are cards in the back you can fill out if you\'ve got questions
you want to ask of the panelists. If we have time, I will try to ask
some of these questions. If not, we\'ll get to them at some other point.
So we welcome receiving the cards.

That did not come out of your time, Mr. Schwartzman.

MR. SCHWARTZMAN: Thank you, Mr. Krattenmaker. Thank you. I believe the
Commission and should retain its existing ownership rules, except that
it should eliminate the so-called UHF discount. Five minute, five points
and a sixth about Telemundo, if there\'s time.

First, while I feel genuinely honored to have been asked to speak today,
at the risk of seeming discourteous, I must observe that today\'s
hearing is not likely to be very useful. To develop a complete record,
you need to hold more hearings under different conditions and I don\'t
just mean weather. The purpose of field hearings is to paint viewpoints
and perspectives which are unavailable at home. This principle is
especially relevant to a panel on diversity. But unlike the public forum
held at Columbia University last month, today\'s agenda has too many
familiar faces from inside the beltway and too few additional
perspective from local residents.

Mr. Corn-Revere and I have frequently debated each other in professional
meetings in Washington where we both work.

Ms. Thompson and Mr. Bozell also work inside the beltway.

Mr. Liggins\' office is technically outside the beltway, but it\'s
actually within sight of the beltway and for all practical purposes is
inside the beltway.

We didn\'t need to brave a snowstorm to present viewpoints available to
you back home.

(Applause.)

Not only that, the structure of today\'s hearing offers little
opportunity for the exchange of ideas. Seven panelists, five minutes
each, 50 minutes total, do the math. This is especially disappointing
inasmuch as the record developed in this docket as Commissioners Copps
and Adelstein have pointed out, raised many questions as to which there
is yet not enough answers. This event does little to fill in the blanks
and answer those questions.

Second, I want to say what I\'ve said to the Commission on other similar
occasions. We have the best system of broadcasting in the world because
of, not in spite of, the ownership regulations utilized since 1934. The
Commission is mandated to ensure that broadcasters serve all members of
the public. The marketplace works well in many respects, but it is not
perfect. In particular, the market does not recognize and serve the
needs of those who are too old, too young, too poor to be
demographically attractive. Large group owners who increasingly lack
roots in the community they serve are less likely to meet the needs of
everyone.

Over the last 25 years, I\'ve testified before the Commission and
Congress on many occasions. More often than not, I appear as I do today
with broadcasters who exemplify the best service standards in the
industry. But I urge you to focus on the fact that the Commission must
regulate on the proclivities of the worst and most rapacious among them.
You need to pay attention to who does not attend these hearings.
Relaxation of national ownership caps and creation of larger local
ownership combinations has permitted some broadcasters to ignore news
programming and to abandon their communities in favor of voice tracking
and central casting.

Third, I think the Commission has set an artificially high bar for those
of us who support the existing ownership rules. We\'ve been told to
avoid emotionalism and confine ourselves to presenting empirical data to
support the rules. I do not apologize for being emotionally attached to
localism, diversity and the first amendment. Moreover, the term
empirical has been wrongly equated with statistical. My dictionary
defines empirical as meaning capable of being verified or disproved by
observation or experimentation. Much empirical evidence is not
statistical and the Commission should not be ignoring such observational
evidence.

Fourth, I believe that at least some members of the Commission and staff
have placed an undue emphasis on searching for elusive formulae. The
Commission has been created as an expert agency because Congress expects
it to make predictive judgments. In calling for you to exercise this
broad and necessarily subjective discretion, I\'m not offering an excuse
to justify a result that I seek. Indeed, such predictive judgments can
and have been used over the last 20 years to deregulate more often than
they\'ve been used to regulate.

Fifth, and not withstanding what I\'ve just said, the civic, consumer,
labor and civil rights groups that have filed in this docket have
submitted powerful and detailed statistical evidence which strongly
supports retaining existing rules. They\'ve also pointed to shortcomings
in the study the Commission has generated and unlike the broadcasting
industry, they have also responded to the Commission\'s request for
metrics which can be employed to measure concentration. While such
formulae should be one of many factors the Commission should consider,
my colleagues have presented a scheme based on developing a weighted HHI
index which would be a significant improvement over the traditional HHI
employed in other economic sectors and I urge you to consider it.

Finally, with respect to what\'s been said about Telemundo and NBC\'s
concern that the ownership cap is holding it down, I think the answer
here is waivers and I\'ll be happy to sit down with Mr. Ireland and Ms.
Thompson. If they want to have a waiver of the national ownership cap
for second language programming, that\'s a perfectly legitimate public
interest justification to present as a waiver, but it\'s not a reason to
throw the baby out with the bathwater.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. Ms. Thompson?

MS. THOMPSON: Buenos dias. It\'s a great honor for me to have the
opportunity to address such a distinguished Commission and audience. I
am here representing ZGS Broadcast Holdings which is a minority-owned
broadcasting company.

E pluribus unum. The strength of this great nation is founded upon the
principle of e pluribus unum, out of many, one. The intrinsic value of
this coin reflects the progress of this nation throughout history, a
prosperity that is clearly rooted in the diversity of its people and
consequently of its business community.

The Hispanic community has grown to become the largest minority group in
this country. However, Hispanic participation and representation in the
broadcasting industry continues to decline, which is both a concern for
our community and a concern from a public policy perspective.

I am here today to express unequivocally the importance of protecting
and promoting minority representation in the broadcasting industry. As
the Federal Communications Commission considers changes in the current
ownership rules, it is my sincere hope that it will not allow
conciliation and survival of the biggest to do away with the small and
community rooted broadcasters that offer a unique service to the public.
On the contrary, it will be my hope that the Commission looks to create
and ensure opportunities for small and minority broadcasters to thrive
and prosper into the future.

Fifteen years ago, Ronald Gordon, President and owner of our company,
ZGS Broadcasting Holdings, had the vision and commitment to see that the
Hispanic market will someday become a strong and prosperous business
opportunity. Born and raised in Peru, Mr. Gordon embraced his Hispanic
roots and the potential in serving a community that very few people
knew, valued or cared to serve. His pursuit of the American dream \-- in
Spanish broadcasting \-- was an incredible, difficult and challenging
task. The only viable financial option was low power television and
given the limitations and secondary nature of the LPTV service, no
financial institution was willing to back him. Ultimately, not
surprising, it was a Hispanic run bank that provided him the funds to
acquire ZGS\' first station. He risked and personally guaranteed his
assets in order to offer our growing community a television station it
could call its own. Since then, ZGS\' commitment to higher standards and
service to the Hispanic community have allowed the company to grow into
the largest affiliate of the Telemundo network with LPTV Class A
stations in Boston, Hartford, Springfield, Providence, Orlando, Tampa
and Washington, D.C., along with radio properties in Washington, D.C.
and Tampa.

Today, ZGS Broadcast Holdings has over 160 employees of which 90 percent
are of Hispanic descent. My station, WCDC, has over 25 employees and
each one of us has an unwavering commitment to serve our audience.
Through our local news and Washington\'s only Spanish-language public
affairs program, Linea Directa, the Hispanic community in this area is
kept informed of core issues. We are the community\'s only vehicle to
learn about the services and opportunities available in our region. That
is why we devote so much effort to our educational projects such as our
Read to Succeed literacy campaign, the focus is on the importance of
literacy and scholastic achievement for the success of our community.

We are very proud to be a Hispanic-owned broadcaster and prouder still
of the difference we make in our communities. Our motto says it all, La
Voz de la Comunidad, the Voice of the Community.

There are several initiatives that the Commission can consider to
encourage and promote diversity in broadcasting. As community
broadcasters, we can appreciate the opportunity that an enhanced LPTV
service can offer smaller broadcasters and I would encourage the
Commission to review how the coverage and the status of this television
service can be improved and solidified.

Class A was a critical addition for community broadcasters which allow
many small and minority players to stay in the game. ZGS\' stations are
all Class A and as you have just heard, we do more in our communities
than many full power stations across the country. Our business is not
just about dollars and cents. We would like to think that it represents
more public value and better use of the public airways than home
shopping.

But Class A is simply not enough. Like all broadcasters, small community
broadcasters need access to distribution, cable distribution. As Class A
stations, we have to comply not only with all the regulatory
requirements of full power stations that provide local programming,
which full power stations do not need to do. Bigger is not necessarily
better and my hope is that the Commission will consider providing Class
A community stations which provide local content and local service with
the same privileges accorded to full power stations, especially \[in
Spanish.\]

MR. KRATTENMAKER: Thank you.

(Applause.)

MR. KRATTENMAKER: That concludes the panel\'s remarks. Technically, we
have run out of time, but people have done an excellent job of staying
within this timeframe, but it\'s obvious that I\'m sure the
Commissioners have many questions they want to ask, so why don\'t we
begin with the Commissioners.

Commissioner Adelstein?

COMMISSIONER ADELSTEIN: Thank you, Mr. Krattenmaker.

Mr. Ireland from NBC, I have a question for you, and Mr. Schwartzman,
maybe if you could respond as well.

You raised a very interesting point. You said the internet can serve,
allow people to become their own programmer or editor. You\'ll be happy
to know that my staff person gets her weather from NBC4 in Washington,
D.C. When she doesn\'t have the opportunity to get it on television
though, guess where she goes? She goes to your NBC4 website. So you win
in both cases.

The question is she doesn\'t go to the National Weather Service and do
her own forecast. Similarly, today\'s hearing for example, I doubt many
people are going to go to the web and look at all the testimony, read
all the testimony. The vast bulk of people that hear the story at all,
are going to get it on the [Washington Post]{.underline} website or on
the website of their local newspaper or in their newspaper itself.
They\'re not going to want to process and be their own programmer or
editor, as much as they might like to.

So my question is for you, first of all, isn\'t a lot of what people get
over the internet on major sources that are already owned by the major
corporations in America and do people really want to be their own editor
or programmer? Does the internet really function as a substitute for
programming that they get on their news sources?

MR. IRELAND: Well, I believe that the internet does provide a varied
amount of access to people to a lot of information. Yes, we do have a
website that ties into our television station, but it pales in
comparison from the standpoint of what [The Washington Post]{.underline}
gets and what the Weather Channel might get for someone to check
weather.

There\'s also many national news services available, as well as
information from just knowledge or whatever people may want to look at.

There\'s no way that we can direct the users of the internet to our
sites. They have the complete flexibility to cruise. They can google,
they can do whatever they want to try to figure out how to get to a
site. We hope that they come to our sites because we have compelling
content. We address their local issues. We address what their concerns
might be around some areas that we deal in.

We obviously cannot be everything to everybody, but at least in that
specific example, again, the people have the power of choice and we just
hope that as they go through that we\'re able to provide them an
alternative for them to choose from.

MR. SCHWARTZMAN: The short answer is that the internet has yet to become
and may never become a significant source of original, local content
about news and information. Virtually all of the locally generated
information available on the internet is recycled from local newspaper
and broadcast properties who have leveraged their incumbent status. In
fact, the three sites just mentioned, [Washington Post]{.underline},
NBC4 and Weather Channel which is Discovery Communications, excuse me,
Landmark Communications, are all major media operators.

The Commission\'s own data about \--

\[END TAPE 1, SIDE B; BEGIN TAPE 2, SIDE A.\]

\-- reached the conclusion that internet and other sources are not
effective substitutes. Professor Owens\' study is particularly egregious
in failing to take that into account. Even using a .1 level of
statistical significant, the Waldfogel (Phonetic) study shows almost no
substitution. The short way to view it is as follows: when somebody
wants to get elected to public office, do they buy internet banner ads
or television ads? Thank you.

CHAIRMAN POWELL: I\'d like to ask a more general question that I think
underlies all of that and by the way I would note that a major
Democratic Presidential candidate has announced that his Presidential
Office is on the internet. It suggests that the internet may not be
there yet, but is certainly maturing as a source of political discourse
or you wouldn\'t have a Presidential candidate using it so extensively.

I also would note that where most people go to get their weather is the
Weather Channel which isn\'t one of the dominant ones being alluded to
so frequently.

I think one of the things that is difficult for us and I think difficult
for all of you is when is popularity dominant and not just popularity?
We talk a great deal about paying attention to what consumers want, but
half the time what we\'re railing against is what consumers chose.

Mr. Bozell, I have two young children and I care a lot about what they
watch on TV. I don\'t think I stand there with a baseball bat, but I
certainly pay attention to what they see. But I don\'t know how to
dismiss as a government official the fact that there may be a class of
programming to which a vast majority of individual American citizens
prefer to watch and it may not be the programming that I would choose
for my child to see or may not be the programming that certain groups
would prefer to see, but there is an element of the public interest that
is what interests the public. And I\'ve often heard and I respect the
argument there should be some concern about our culture and our society,
but it\'s very difficult to quantify as a matter of governmental action
when you\'re going to take steps to go beyond what it is the public
itself responds to.

So we can be disparaging of that. We can call it sludge, but it\'s the
sludge people are watching. We could call it dominance, but it\'s the
quality choices that people are making. And where I\'ve always struggled
with this is how does government distinguish between what ought to be
the rights of individual citizens to watch what they choose, not what
the government would prefer that they see.

And so help us with that basic underlying tenet. When is it not what
interests the public, but it\'s something that either your group or
someone else thinks they would be better served to see?

MR. BOZELL: That\'s a good question, Mr. Chairman, and I\'m not sure
that there is an easy answer to that question. However, I would submit
to you that when you\'ve got a handful of corporations controlling two
thirds of the access of the programs of the networks that are out there,
then what they determine is going to go on television is what can by
itself determine what the market wants. If the market, as this lady, I
don\'t recall her name, she makes the point dramatically, when the
public is getting a certain message, a certain kind of program, a
certain value system, and is being hammered with it and hammered with it
and hammered with it and all the other voices are never presented to it,
well, ultimately, there is going to be a significant part of that market
that is going to accept that message and want more of it but has no idea
that there are other messages.

I talk to people who are in the industry who are producers, writers,
primarily who are attempting to come out with product and they feel like
they\'re bashing their head against the wall because there\'s nowhere to
go because the corporate mentality of these major corporations is just
simply not interested in that voice in that kind of programming.

And so it never gets out to the public. So in the final analysis, how do
we know what the market wants?

MR. KRATTENMAKER: I don\'t know which is the best way to go, but maybe
we\'ll just work down and we\'ll talk to Mr. Copps.

COMMISSIONER COPPS: Mr. Bozell, you just testified that we\'re in the
midst of a tremendous consolidation in the media and you almost never
advocate government intervention on something like ownership. You see a
problem here. And you said that your 750,000 members believe that
television and radio and other media have taken a sharp turn for the
worse in recent years as extreme violence and trashy programming has
become more and more endemic, creating risks for our children.

Do you believe that it\'s important that the FCC take the issue of the
declining quality of media programming into account in this proceeding
on media ownership?

MR. BOZELL: Perhaps I would tell you that of the many different things
I\'ve observed in my lifetime professionally, I have never in my life
seen a more passionate outpouring of concern from the public than over
this one issue.

COMMISSIONER COPPS: And do you believe that the FCC has taken this
subject seriously?

MR. BOZELL: I do not. When no one has been fined on television for
indecent programming, I\'ve got to conclude that the FCC doesn\'t
believe there\'s anything indecent on television. But I don\'t think you
would ever allow me to say right here in this hearing some of the
language that was used last night on television to your children.

COMMISSIONER COPPS: Is there in your mind a correlation between the
rising tide of consolidation and the rising tide of indecent programming
even if we don\'t know for sure yet if there\'s a causal link?

MR. BOZELL: I have to be very careful. We have to be very careful. I
think we do not want to ascribe a blame where blame ought not to be
going. I do not believe there\'s a conspiracy going on here. I do not
believe there are bad people in these corporations. However, the reality
is that in the last several years and every study we\'ve done and it\'s
never been questioned shows that it is getting worse and worse and worse
when it comes to programming and you\'re seeing more and more and more
consolidation.

COMMISSIONER COPPS: Do you think it would be irresponsible for the FCC
to decide to scrap or significantly modify our concentration rules that
might lead to even more indecency without adequately exploring this
possible correlation?

MR. BOZELL: For the reasons I\'ve given, yes.

COMMISSIONER COPPS: You mentioned you have 750,000 members who are
extremely concerned with violence and other forms of indecency in the
media, but that they do not even know that the FCC is making this
decision, correct?

MR. BOZELL: Absolutely.

COMMISSIONER COPPS: So it sounds like this issue is not an inside the
beltway issue, but probably millions and millions of Americans are
concerned, but don\'t even know that they should make their voice heard,
right?

MR. BOZELL: Absolutely.

COMMISSIONER COPPS: So I guess before we\'re through, we\'re going to
have to add a few to our 18,000 comments if Americans really find out
what\'s going on here. Don\'t you agree?

MR. BOZELL: I hope you will. I hope that indecency and the Commission\'s
role in that will become more important than I believe it has been to
date.

COMMISSIONER COPPS: Thank you very much.

MR. KRATTENMAKER: Mr. Chairman, could I just ask before we leave,
because I think all of us have so many questions. Is there a possibility
that we could submit some written questions. We don\'t want to inundate
our panelists, but just to flesh out the record and then to ensure that
these are part of the record in the proceedings.

CHAIRMAN POWELL: Sure. In fact, I\'ve got a whole stack of questions
from the audience too so we\'ll figure out how to do that.

If you don\'t mind, I\'d like to follow up a little on Commissioner
Copps and ask Ms. Riskin whether she agrees with the responses to his
questions that Mr. Bozell provided?

MS. RISKIN: I\'d like you to know that I have black and blue marks on my
head from pounding on the network doors. I think many of our members
feel frustrated. They would like to do quality programming, but find
themselves in a situation where in order to do work with the networks
they have to cede complete control which means that if they want to do a
story about a middle-aged person, take for example, a show called \"The
Comish.\" I don\'t know if you remember, it wasn\'t about FCC
Commissioners, it was another kind of Commissioner.

CHAIRMAN POWELL: That\'s probably why it didn\'t work.

MS. RISKIN: Actually, it was quite a good show and the man who created
the show insisted on a middle-aged sort of pork bellied lead character.
The network demanded that it be a young, handsome Italian and in those
days when this show was created, the creator of the show simply went to
another network. He could shop his story somewhere else. That does not
exist today.

I think that the urgency for ratings and bottom line has chased away a
majority of good audience for quality programming in the marketplace.

We used to have a very rich marketplace for movies for television. If
you remember \"The Autobiography of Miss Jane Pittman\" or \"Roots.\"
You don\'t see those programs today on the networks. They are being done
in-house. They are expensive for a major corporation to make. They are
not expensive, they are not problematic in terms of making money for a
small company that\'s backed by somebody with a passion to tell a story.

So we have chased out of the marketplace people who are important story
tellers with the kind of quality programming that Brent Bozell would
like to see returned.

Just as an added note, one of the executives at ABC was asked why the
new series last year, the majority of the pilots were developed by their
own in-house production. And the answer was because they wanted all
their programs to have the ABC brand or stamp which means that all those
shows would be coming from one point of view. This is what\'s damaging
the diversity in the marketplace. Thank you.

CHAIRMAN POWELL: Thank you and we will provide an opportunity for Mr.
Ireland to respond, but I think we should first see what Commissioner
Abernathy and Commissioner Martin wanted to follow up on.

Thanks.

COMMISSIONER ABERNATHY: Thank you. I still come back to the dilemma that
I think as government regulators we face which is there\'s been a lot of
concern expressed that the programming is really rotten, there\'s not a
lot of choice about it. Forget if we change the rules at all. It sounds
like this is a general comment about programming today as we see it
today.

And yet, you also tell me that five have 75 percent share of prime time
viewing. So there are all these alternative channels. There\'s the
Discovery Channel. There\'s Children\'s Channel. There\'s AMC. There\'s
Biography. There\'s History. And people aren\'t watching it, apparently.
Apparently 75 percent are watching prime time viewing which then goes
back to do I tell them they can\'t watch this? Do I start trying to
force them into these other outlets? Which are there, apparently, but it
looks to me like most people are choosing to watch the 75 percent prime
time viewing. So I\'d like anyone to comment on that.

MR. KRATTENMAKER: Mr. Schwartzman?

MR. SCHWARTZMAN: Yes, Commissioner. Two points on this. First, this is
not just about majority tastes. The market will take care of majority
tastes. The Commission\'s job as Congress has reminded it in the case of
children\'s television is that where the market fails, the Commission
can and should and has the power and authority to direct broadcasters to
carry certain kinds of content that\'s a viewpoint neutral content \--

COMMISSIONER ABERNATHY: Do you believe the market is failing today?
That\'s what I need to know.

MR. SCHWARTZMAN: Absolutely.

COMMISSIONER ABERNATHY: So there\'s not enough choices \--

MR. SCHWARTZMAN: The market \--

COMMISSIONER ABERNATHY: People can\'t turn to history or to American
Movie Classics or to PBS?

MR. SCHWARTZMAN: You buy circulation and you buy viewers and when you
have huge conglomerates which are also the ones programming most
channels, and they are leveraging their incumbent status to drive the
other content, you don\'t get the development of programming which
serves these different additional tastes and you lose the creative
juice. You deplete the creative gene pool by reducing the number of
channels for creative people to introduce their programming. This is
what happens with concentration of control. You get concentration of
taste.

COMMISSIONER ABERNATHY: So are you discounting, then you must be
discounting cable. Are you just talking about free over-the-air?

MR. SCHWARTZMAN: No, no. Who owns the cable channels?

COMMISSIONER ABERNATHY: No, but what\'s on the cable channels that
people aren\'t watching. That\'s where I keep \-- they can turn the
channel.

MR. SCHWARTZMAN: Some people are watching it, but you\'ve got the large
companies using their powers under the \-- retransmission consent and so
forth, to drive viewers to their own content which they\'re repurposing
and the size of these companies and their promotional capabilities make
\-- leave viewers unaware of what else is there. This is buying
circulation \--

COMMISSIONER ABERNATHY: So that\'s what you\'d \-- okay. Now I get what
you\'re saying. You\'re saying it\'s the promotional capabilities so
people don\'t realize they have a choice.

MR. SCHWARTZMAN: Incumbents leverage their power. That\'s the most
important thing that I would say.

The second point that I would \-- well, I\'m taking too much time. Let
me leave it at that.

COMMISSIONER ABERNATHY: Let me hear what Bob\'s response would be.

MR. CORN-REVERE: Well, as usual, when I hear Andy speak I feel we\'re on
different planets. It\'s just hard to imagine that people can talk about
less choice and less diversity today than at any time in our history.
You can talk about the number of owners all you want, but the fact is
the average viewer has a myriad of choices that never existed before.
And people don\'t have a hard time finding PBS if they want to find it.
And they don\'t have a hard time finding Discovery Science or Biography
or any of the other channels, the History Channel. They can find them
and the question is whether they want to find them.

But I think this whole colloquy that\'s been going on underscores the
danger of trying to use structural rules to engage in social
engineering. There\'s a serious mismatch going on here because when the
Hollywood community talks about creative control and wanting to put on
quality programs, they\'re talking about wanting to put on the very
kinds of programs that Mr. Bozell hates. For example, if you look at the
comments filed in this proceeding, they talk about being blocked from
being able to put on shows like \"Murphy Brown\" and \"Roseanne\", shows
that Mr. Bozell in the past has criticized and I\'m sure would again if
they reappeared.

The other difficulty is when you start talking about using official
pressure to change the kinds of programs that appear on television, then
it\'s hard to predict what\'s going to happen. If you go back 10 or 12
years ago when \"The Simpsons\" first appeared on Fox which, by the way,
at the time was a fledgling network and wasn\'t forcing anybody to watch
anything. \"The Simpsons\" appeared and was roundly criticized as being
vulgar and in poor taste. President George Bush criticized it by saying
that we needed a nation closer to the Waltons than to the Simpsons. I
guess he didn\'t have quite the same concern with bland TV.

Drug czar William Bennett engaged in a similar public tirade against
\"The Simpsons\". And Mr. Bozell criticized it in a 1997 column saying
that it is \"a dysfunctional family\" and I believe the same concern you
had today about the Hollywood elites forcing their views. You say always
the approach is the same. Forget the majority sentiment, aim to capture
the avant garde minority.

Well, I think if you come back now and look at a program like \"The
Simpsons\" it\'s clearly stood the test of time. It\'s the longest
running sitcom in TV history. [National Review]{.underline} recently
called it possibly the most intelligent, funny and politically
satisfying TV show ever. [Broadcasting and Cable]{.underline} has
editorialized in favor of giving it an Emmy and not just as an animated
series. And lately, and perhaps surprisingly, religious writers have
begun praising \"The Simpsons\" for the amount of religious content in
the show including a recent book that\'s come out on the subject. There
are even websites devoted to the religious references in \"The
Simpsons.\"

So I think once you start having public officials put their thumb on the
scale and try and create structural rules to affect whether or not shows
like that are going to succeed or to game the process, then I think you
have a very serious problem.

MR. KRATTENMAKER: Commissioner Martin?

COMMISSIONER MARTIN: Mr. Bozell, you said that you\'d never seen an
outpouring like this one on this issue. Just help me understand. I was
just trying to \-- is the issue that you\'re seeing the outpouring on
the decency or indecency of the programming or is it on the ownership
issues?

And I\'m trying to understand what you\'re actually seeing the
outpouring of public comment on and I\'m still a little confused about
the connection between the two. And then I would hope that maybe Mr.
Corn-Revere could respond as well to your comments.

MR. BOZELL: I\'d be happy to respond. First, let me, in fact, and
correct Mr. Corn-Revere and I would ask him not to quote out of context
what I have and haven\'t said. I\'ve also praised \"The Simpsons\" up
and down for a thousand different reasons as well. And we\'re not
debating \-- we could debate it some other time, but please don\'t take
my words out of context.

On the question of what the public talks about, I travel all over the
country. Ladies and gentlemen, you do the same thing. You talk to
people. You talk to your friends, you talk to your associates. And on a
daily basis, there isn\'t somebody who isn\'t going to say to you did
you see what was on television last night? Did you see \-- and I\'m not
going to name any shows because it\'s unfair to pinpoint a show. But did
you see this show? Did you see that program? Did you hear what he said
on that awards program? Did you hear the F word used last night during
the family hour? They\'re horrified that this is happening. They\'re
horrified that it\'s happening with increasing frequency. And then they
say what can I do? What can one do about this?

We are the market. We are the public out there. Look at the national
surveys. Ninety-seven percent of families in this country believe
there\'s too much sex and violence on prime time television coming into
their living rooms, being broadcast to their children. And then they
turn and say what can I do about it?

Well, they go to the networks. The networks tell them go pound sand.
They don\'t care. They\'ve got the longevity to withstand any little
complaint and they keep it up long enough and sooner or later as Mr.
Corn-Revere just said, people start accepting it. And they just resign
themselves that that\'s the way it\'s going to be. And that\'s another
wall that\'s just come down. Another sensibility that\'s been taken care
of.

There\'s got to be a politics of shame, I believe. Not just, by the way
on the end stream. Not just on the Commission, on the advertisers and on
the public as well. This is a very complicated issue, but there\'s got
to be standards. We\'ve got to say to ourselves, we can\'t put certain
messages on license plates. You can\'t do that. You can\'t use the N
word on a license plate and go down the road with it. You will go to
prison or something for that. You can\'t put certain signs on
billboards, but why can you put it on television in front of my children
and why is it that it\'s indecent, uncivilized for me to use certain
language in this hearing, but tonight on television it will go to my
children. And it\'s okay?

There\'s a problem.

COMMISSIONER MARTIN: I was wondering if Mr. Corn-Revere \-- just a
comment about \-- is the problem the connection between, or whether
there is a connection between, indecency and the ownership issues, which
is really what is before the Commission.

MR. CORN-REVERE: Well, I understand the concerns expressed about
indecency, but I just don\'t understand the connection you\'re trying to
draw between that and media concentration.

In fact, again, when you start talking about the different views on this
panel, you see very divergent views. A while ago, Ms. Riskin referred to
the situation that Stephen J. Cannell had in trying to solve \"The
Comish\" and in the same article that Cannell was writing about that
situation, he described another producer being turned down when he took
\"The Sopranos\" to network television and saying that the networks just
didn\'t get it and none of the networks bought it and so in the end the
producer was forced to go to HBO and ultimately reform the shape of
television.

Now there are two points that I think that are important from that
anecdote that comes from the article in last week\'s [Broadcasting and
Cable]{.underline} by Stephen J. Cannell. The first is that it doesn\'t
see like diversity has been harmed when the networks make a mistake on
whether or not to get a show and it turns up someplace else.

And the second is I don\'t think \"the Sopranos\" is what Mr. Bozell had
in mind what he wants to limit concentration so that we have more
quality television.

It has been one of those shows, it\'s been a breakthrough show. It\'s
been praised by many, reviled by others because it is a hard edged show.
It is on cable and it\'s forcing the networks now to compete, but again,
I don\'t see the problem with concentration. The problem, if there is
one, is that the networks are being forced to compete.

CHAIRMAN POWELL: Thank you. One of the things I find interesting is even
if I credit your argument about indecency, and I think there\'s a fair
amount of it that\'s fair commentary about aspects of television, I\'m
finding it a bit strange the connection to the concentration because I
suppose you will be told that the clean era of the 1950s or 1960s is
when TV was of the quality that we preferred when there were three
networks. So tying it to concentration, there was never a time in
history where the media was more concentrated and the period where TV
was probably its cleanest. So I don\'t know that I see the immediate
merits of the suggestions that the concentration levels of today are
somehow responsible for indecency.

I\'d only also like to make probably just a personal comment. I think TV
right now produces some of the worst ever and I also think it produces
some of the best ever. I think what\'s happened is TV has dramatically
increased in abundance. Yes, I do have a lot of neighbors say did you
see that terrible show last night? I also have a lot that come in and
say did you see the Theodore Roosevelt special, it was brilliant. I also
had people come to see me and say did you see Ken Burns\' Civil War
special? It was brilliant.

Every afternoon after Wednesday, my office comes in and says did you see
\"West Wing\" last night? Wasn\'t that amazing? Or Fox\'s \"24\" or I
think one of the challenges we all are going to have with citizens as
the media continues to explode you\'re going to have a wider range of
diversities in the marketplace from the most shameless to the greatest.

But this connection to concentration, I find, to be almost fabricated.

MR. KRATTENMAKER: Mr. Chairman, can I treat that as a comment? I think I
might do that. We\'ve already cut deeply into the public comment time
and I would like to get to that. I\'m going to cut into it a little bit
more by saying that with all the cards I\'ve gotten, there\'s a series
of questions that aren\'t being asked here yet that I\'d at least like
to pose briefly, particularly to Ms. Thompson and to Mr. Liggins. I
don\'t know whether Mr. Ireland would like to comment on it and it is
summarizing two or three of these.

So far we\'ve been talking almost exclusively about television, what
about radio? And perhaps a little bit more specifically what is reminded
of the old joke that there are three kinds of lies, lies, damn lies and
statistics, but are there certain kinds of ways that the Commission may
have of knowing how it is that increased diversity of ownership can lead
to diversity of public service activity and diversity of programming?

It seemed like Mr. Liggins had, you may want to say you\'ve already
addressed that, but I don\'t know whether you want to follow up with
that a little bit or Ms. Thompson?

MR. LIGGINS: I\'d certainly like to comment. At least from our
perspective, we\'ve been the consolidated of African-American oriented
formats and so as we\'ve gone in and bought more radio stations,
competition is what drives the different voices of the different options
in programming. One, you don\'t want to compete with yourself, so why
would you launch a comparable product? You launch something different.
NBC has launched Telemundo. In Atlanta, Georgia, we have a gospel FM
station. That\'s \-- gospel has typically been relegated to the AM band
for the last 50 years and in Atlanta on a very expensive station that we
paid a lot of money for, we took a shot and you know what? It was very
successful. It\'s the third highest rated radio station in that market.

We have a jazz station. We have a hip hop station. And we also have an R
& B oldies station. So ironically enough, when we first went into the
market, our first station was hip hop oriented and we got some barbs for
that because hip hop music can at times be seen as aggressive. But the
same company, Radio One, also has a station, a gospel station that is
being praised. So the nature of competition, I think, forces the
diversity in format options.

I also think the range and the spectrum of some of the best television
programming and some of the worst that you\'ve seen, that\'s what
competition also does. It forces people to take chances, whether a
television broadcaster or a radio broadcaster, because you are fighting
for the attention and the ratings and the votes from the public. So you
have to take more shots in order to be successful.

And consolidation, I was against consolidation prior to the 1996 act. I
lobbied against it, but when I saw that it was going to go the direction
that we and NABOB had wanted, we decided that we needed to get in the
game and to compete. And it cost money in order to deliver \"The
Simpsons\" and it cost money in order to even deliver this gospel radio
station that I told you about.

So there is a necessariness to scale in order to deliver quality
programming that I think needs to be underscored here.

MR. KRATTENMAKER: Thank you. Ms. Thompson, did you wish to comment.

MS. THOMPSON: Well, you can certainly sense the kind of pride when Mr.
Liggins talks about his company and the products that he provides to his
community and you can certainly also see that every product that he is
outlining specifically targets the segment of the community that he is
serving and that\'s exactly my point. I think minority-owned
broadcasters know how to serve their communities. And if we don\'t
provide support to those minority broadcasters, they would not be able
to continue in business, especially with the issues of carriage.
Distribution is the key for us.

MR. KRATTENMAKER: Thank you. I think the Commissioners should vote with
their feet. We have a number of people lined up to make public comments.

CHAIRMAN POWELL: We\'ll continue this until 12:30 and we\'ll take a 30
minute lunch break. We\'ll be back here at 1, but we have at least 20
some odd minutes left to hear from the public. And also some of the
cards that you have, Tom.

Why don\'t we start with that process and we\'ll go left and right, and
Tom, please interject with the questions that you have on the cards as
we go forward.

MR. KRATTENMAKER: Do we have a time limit?

CHAIRMAN POWELL: 12:30 we\'re wrapping up.

MR. KRATTENMAKER: No, for each individual.

CHAIRMAN POWELL: If we can keep it down to three minutes, that would be
great. If you can state your name and where you come from and who you
represent.

MR. KRATTENMAKER: When the red light comes on, please stop simply
because we want to try to get everybody through. Sorry.

Sir?

UNIDENTIFIED SPEAKER: Thank you for taking time for those of the public
outside the beltway that aren\'t being paid here today because I think
those are the representations that you really are looking for because
character of community is so important. And to have given a few
communities the power of a light bulb in a low power FM station to do
truly community programming by the community, for the community, to have
gospel programs that originate in the community, to have working
watermen that are \-- my waterfront community to have shows is most,
most important, to have the storytelling that comes out of your
community. This is community programming.

I\'m offended by the President of NBC to say that he can do community
programming for our community. Shame on the National Public Radio for
trying to keep my community from having a station, the power of a light
bulb that is only meant to have the power to reach half the people half
the time.

How about all the people all the time? And let\'s give other communities
a frequency. How come corporations have all the frequencies and there\'s
no frequencies left for the communities?

I would say the FCC has abdicated their job in that respect.

Thank you.

MR. KRATTENMAKER: Thank you for your comment.

(Applause.)

Every once in a while the moderator gets to step outside and I would say
that it is interesting that, of course, sometimes you can deal with
ownership issues by creating more things for people to own. As I
indicated, so I sort of associate myself not necessarily with the
conclusion, but the point of view spectrum management may be an issue
here as well as competition, localism and diversity. Let me shut up.

Yes ma\'am.?

MS. HALLICK (Phonetic): My name is DeeDee Hallick and I\'m a co-author
of a book which I recommend to the panel called [Public Broadcasting and
the Public Interest]{.underline} which just came out. It\'s M.E. Sharp
are the publishers.

I am also a former professor of communication at the University of
California, San Diego, where I taught for 17 years and also the past
president of the Association of Independent Video and Film Makers which
is in New York City and has membership of over 6,000 independent video
and film makers.

I would just like to right now address the problem of getting
independent documentaries on any kind of public or commercial television
in the United States if your name isn\'t Ken Burns. With due respect to
his work on the Civil War series, 17 percent of the public television
prime time is Ken Burns, but where are the voices for everyone else?

There are many, many independent producers who do work, who want to work
in documentaries and who cannot \-- or are completely locked out of the
commercial and the public television system; even people who are as
popular as for example, Michael Moore, whose recent documentary has just
broken all kinds of box office records. He has struggled to keep a very
tiny toehold occasionally on any kind of television and right now he is
completely locked out from that.

I refer to my colleague Lee Lu Lee who is also on the Board of Directors
of the AIVF, the Association of Independent Video and Film Makers. He\'s
half Chinese and half African-American. A number of years ago he did a
documentary on the history of the Black Panthers in the United States.
It was a work he worked on for seven years, had incredible archival
footage, was a very in-depth look at the Panthers and often quite
critical of the leadership. His program was shown on 37 national systems
around the world in Japan, in Holland, in England, in many, many \--
Brazil even. And his program could not get on one channel in the United
States, not one.

Finally, Black Entertainment Network did put it on two and a half years
after he had finished making it. Where was the place for people to put
on these kinds of programming? If you talk about the History Channel,
you should ask Gore Vidal about his history with working with the
History Channel. Here is an eminent intellectual, very important \-- he
was originally hired by them. He completely was disgusted with the way
they wanted to portray history.

Look at Howard Zen. A number of people had put together a history series
with him. He cannot get on anywhere. The History Channel turned it down.

MR. KRATTENMAKER: Thank you. Sir?

(Applause.)

MR. MOBLEY: Thank you. My name is Arthur Mobley and I am a broadcaster
and entrepreneur and have been for a number of years. I have been
involved also in the advocacy side. I worked for many years with the
National Black Media Coalition and was a Western Regional Director for a
number of years. Years ago, back when people like Mo Udall were
complaining that the combined communications and the Gannett merger were
tantamount to a whale swallowing a whale.

I think \-- and we\'ve come a long way since then. We\'ve had a lot of
whales and sharks and piranhas and all kinds of things developed since
then. But I think that the missing link in what seems to be a problem
with the Commission, with all due respect, is that we\'re not following
the money. There\'s a money trail, very seriously, and what you\'ve done
and what you\'ve reregulated over the last 10 years or so and the change
that you\'ve made have not encompassed following the money. You\'ve
dealt with the regulation and you\'ve \-- how many stations are here and
there, but who benefits and how they benefit, how they make money has
been left to the FTC and the SEC and other regulatory agencies and
perhaps they should be here.

Also, and you should have maybe some joint discussions about this since
they all are effective and have effect on the interest of all of the
people here. But as a broadcaster, I mean it\'s a simple business
situation. You give me an open \-- a carte blanche to own as many of any
kind of businesses as I want. What I\'m going to do is I\'m going to buy
up as much as I can and then I am going to start minimizing my output of
cash. I\'m going to become less effective at serving local needs. I\'m
going to be less effective at getting all of those concerns and
interests and those outlets taken care of and I\'m going to be making as
much money as I can. So I\'m going to put a little sawdust in the
hamburgers, you know? I\'m going to put some junk out there. That\'s the
nature of business in this country and broadcasting is no different.

People are putting out junk because they have too much opportunity to
own too much and you should not be talking about keeping the standards.
You should be talking about cutting them back. These standards need to
be rolled back. Some of these big corporations need to get off some of
these federal licenses because these licenses again are the property
ultimately of the public. They are the people\'s airways and the
Commission seems to have forgotten that or misplaced it somewhere, but
please find it and if you have any doubts about where you\'re going,
follow the money.

Study a little bit more about how people make money in these big
companies and why we have so many attorneys and no one of any content or
substance to come and talk to you other than sending their attorneys
out.

(Applause.)

MR. KRATTENMAKER: Thank you. Yes ma\'am. The woman at the microphone.

MS. CRUMMILLER (Phonetic): My name is Jenny Crummiller. I\'m a member of
a group from New Jersey, the Antiwar Video Fund. We produced a

30-second TV ad and raised money to broadcast it. We contracted with
Comcast Corporation to show the ad in Washington, D.C. Comcast is the
only cable provider for Washington. Comcast put us in the schedule so
our ad would be shown twice during prime time hours for three days in a
row beginning the night of the President\'s State of the Union Address
when he was expected to make his case for invading Iraq.

However, at the last minute, Comcast pulled our ad, supposedly because
it was unsubstantiated. Obviously, the charge was totally arbitrary. Our
ad is a montage of ordinary Americans making statements against war.

Regardless of whether this was intended to prevent our powerful message
from undermining the President\'s speech, that is what Comcast did,
since we had no time to find other ad time.

Whether by government or by corporation, centralized control of the
media is un-American. When this happened, I felt like I was in Iraq. The
ease and nonchalance with which Comcast pulled our ad makes clear this
was not an isolated occurrence. Channel choice did nothing to give us a
choice.

In terms of control over content, in terms of democracy, one corporation
is one choice.

(Applause.)

MR. KRATTENMAKER: Thank you. Yes sir, the gentleman at the microphone.

MR. SPRUILL: My name is Lonell Spruill. I live within the 7th District
of the House of Delegates. That\'s a part of Chesapeake and Suffolk,
Virginia. I\'m worried about the change in the FCC media ownership rules
that would allow the newspaper, television, radio station to combine
even more. As an elected official I can tell you how important this is
to me.

There\'s not enough important about what\'s happening in our state. If
my constituents don\'t know what\'s going on, they won\'t communicate
their views to me. If the press only reports one side of the story, how
can they reach their own judgment and make important decisions?

I\'m so concerned, particularly about the issues pertaining to minority
race. When it comes to minority race, the press does a poor job when it
comes to that.

If we allow the media to combine even more, we will have fewer reporters
and even fewer coverage on TV. It\'s most important that we don\'t let
this happen.

As you know, in my area, home district in Chesapeake and Tidewater area,
in 1996, we had 21 different owners of radio stations. Now it has
dropped down to 15. That\'s 20 percent. We have only three TV stations,
local stations. I\'m also worried about the impact of media
concentration on advertising. That competition means air prices will go
up. Also, it means it would be more difficult for groups to get heard
through paid advertising.

As the lady spoke earlier, last month, Comcast refused to air an ad
opposed to the war in Iraq on a Washington, D.C. cable station after the
State of the Union message. Since cable is a monopoly now, yet it was
not heard. Guess what? I did not get aired.

As a former member of Bell Atlantic, I never lobbied. I am a lawyer
member of the Communication Workers of America and labor disputes, labor
often relies heavily on paid advertisement to get their message across.
So if we allow this thing to be one sided can you imagine how it is now
so far, the way thing are happening on unions? It\'s important that we
let this thing stay open. Please, don\'t narrow it down any further.
Thank you very much.

(Applause.)

MR. KRATTENMAKER: Thank you. The only way we\'re going to have an
opportunity to try to hear everybody is we change it to a two-minute
limit. I\'m sorry, but that\'s what we\'re going to have to do.

Please.

MR. PRESTON: My name is Dan Preston. I\'m a co-founder of the Anti-War
Video Fund and I just want to give you an update on some of our
experiences after Comcast censored our ad. To reach the D.C. audience,
we did have an alternative, not on cable, but over broadcast. We
approached all the network affiliates with our ad. NBC rejected it on
grounds they would not specify. ABC never responded. We did get the ad
accepted by the CBS affiliate and paid a lot more money to get it
broadcast over the air than it would have cost on cable.

Now the insidious thing about censorship is this. You and the audience
don\'t know what you\'re not seeing. You don\'t hear the voices that
have been silenced. If fewer and fewer people own the microphones, the
diversity of voices in our democracy will be strangled.

Now our story did get heard because it did receive substantial national
and international press coverage on PBS, NPR, Canadian, French and
Arabic TV, in print, on alternative and trade press, a few local
newspapers, but for the most part not on the media properties owned by
the major media conglomerates.

Now in particular, this one story, on the day of the State of the Union
before all this stuff hit the fan, a local Comcast news program prepared
a story on our group, a nice peaceful Princeton group and it was going
to air it on the Channel 8, the local Comcast news program. But when
they heard that their parent company had censored our ad down in
Washington, and the controversy then was arising about us, they canceled
the story about us. And as they candidly admitted, not because they
didn\'t think it was a good story, they wanted to run the story, but
guess what? They told us they wanted to have jobs the next morning. So
the censorship is here. It\'s real. It\'s not an unsubstantiated claim.
It\'s happened to us. It will happen and it will happen more and more as
the media gets more and more concentrated. Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. Yes sir.

MR. LONG: Hi, my name is Nathan Long. I teach at Virginia Union
University, a local historically black college here in town and I\'m
very happy to come after the delegate who just spoke because when we
talk about the public airwaves, I really think we\'re talking about the
public, we\'re not just talking about individuals, but we\'re
specifically talking about citizens. And citizens, in order to be active
in a democratic government, really need to have information and as media
critic Robert McChesney says, the role of our newspapers and of our
journalists are not to entertain us, not to give us what we want, but
what we need.

And more and more as corporations own the major ways of providing news,
no matter how many news stations or how many newscasts there are, there
are fewer and fewer political options and opinions in the news. If you
look at the newspapers a hundred years ago, they were mostly owned by
small local owners and had very staid positions. Now the majority of
news is considered objective which of course means that it takes a very
middle of the road politics. I think this is a real problem.

The other issue that I just want to bring up is if we hear corporations
saying they are going to represent diversity and then you hear citizens
saying no, they\'re not, I ask you seriously think which one is the
person to listen to?

(Applause.)

And what are the motivations of corporations? Newspapers used to be
owned because people wanted to say something. Now they\'re owned to make
money. And that\'s going to effect what gets put out and what doesn\'t.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you.

MS. KEKUS (Phonetic): My name is Christina Kekus and I\'m a senior
consumer studies major at Virginia Tech. Today, I\'m delivering a
statement to you on behalf of my advisor, Dr. Irene Leach who is the
president of the Virginia Citizens Consumer Council, a Virginia
statewide consumer education advocacy organization.

The Virginia Citizens Consumer Council is very concerned about the
changes that you have proposed. We believe that removal of the
restrictions on media ownership will have a very negative effect on
society. Given the problems that exist even with the restrictions,
consumers will be badly harmed if they are removed.

It is already difficult to get the media to address consumer concerns,
especially when they are complex and big companies have different
perspectives from consumers.

For example, Virginia has been involved in restructuring its electricity
markets for over five years. During that time there has been very
limited media coverage. In one media market neither a concerned local
legislator, nor myself, were successful getting coverage as the critical
decisions were made. They were told that the issue was too complex for
people to understand.

Recently, in another market, I had an op ed turned down but was told
that a 100 to 200 word letter to the editor might be printed. However,
it was not printed, even though it supported the editorial view of the
newspaper. Several weeks later, a letter from someone else was printed
on the topic. In the meantime, other issues were rehashed repeatedly,
but electric issues never appeared as a matter to citizens, only to the
editors.

If one entity is allowed to own multiple media outlets in the same
market, it will be far too easy for that entity to totally control the
public discourse. Citizens will hear one perspective regardless of
whether they read the paper, listen to the radio or watch television.
Many voices and perspectives will be lost. Many decisions will be made
based on incomplete or incorrect information. Recent consolidation at
radio stations has meant a loss of local news and weather reporting. For
example, Clear Channel station\'s news all comes from Texas and my
experience has been that there is little news.

This week, as I drove across Virginia in a snowstorm and wondered \--

MR. KRATTENMAKER: Thank you very much, ma\'am. You can submit that for
the record.

MR. KRATTENMAKER: I\'d like to thank everybody very much. One thing I
learned when I was dean of a law school is you don\'t keep the faculty
from eating lunch. I\'m not going to keep the Commissioners from eating
lunch.

Those of you who are standing in line, if you\'ll come up to Mr.
Snowden, he\'ll get your name and guarantee you first spot the next open
mike.

I\'m sorry, we\'re just way over the time limit.

I would like to thank the panel very much and the open mike people very
much. You went to a lot of trouble to come here. I must say, I must
apologize to Mr. Ireland, I should have had him on as a responder. I
didn\'t get to you and I\'m sorry for that.

I apologize to everybody who hasn\'t had a chance to speak yet. Please
come back after lunch. I expect that you will.

Thank you.

(Whereupon, at 12:30 p.m., the hearing was recessed, to reconvene at
1:30 p.m.)

A-F-T-E-R-N-O-O-N S-E-S-S-I-O-N

1:30 P.M.

MR. KRATTENMAKER: Welcome back. This is our panel on competition issues.
People have asked that I begin with a half hour summary of some of the
more interesting aspects of my life before I got to high school, but
I\'ve decided to pass that over.

A reminder that the rules under which we\'re operating are a five minute
time limit for each of the panelists, strictly enforced, not because
you\'re not important but simply on the grounds that everybody here is
important and that we want to hear from everybody.

And are the Commissioners here? We\'re ready, Mr. Chairman?

CHAIRMAN POWELL: We\'re ready.

MR. KRATTENMAKER: Okay, Mr. Croteau?

MR. CROTEAU: Good afternoon. My name is David Croteau. I am a professor
in the Department of Sociology and Anthropology right here in Richmond,
Virginia. I think I\'m the token local panelist today, I believe.

Good afternoon. I appreciate the invitation to comment at today\'s
hearings. I believe local hearings such as this serve an important role.
I certainly hope the FCC will sponsor more public hearings throughout
the country in the coming weeks that will include more local voices and
more time for the public to take part.

The media serve a unique role in democracies that value free and
creative expression, independent thought and diverse perspectives. In
recognition of this unique, public interest role, the free press is the
only business explicitly protected in the U.S. Constitution.

We cannot, therefore, treat the media like any other industry. It\'s
products are not widgets or toasters. They are culture, information,
ideas and viewpoints. Consequently, we must be especially vigilant in
protecting and preserving the public interest as it relates to this
vitally important industry.

Unfortunately, relaxation or elimination of existing ownership
regulations would move us in exactly the wrong direction. While
increasing the profits of major media conglomerates such changes would,
in all likelihood, promote further concentration of media ownership,
thereby undermining competition, reduce the already limited diversity in
commercial media content, and reduce the quality and sometimes the
quantity of locally produced media content.

None of these are good for our country or for our democracy.

We don\'t need to speculate about the likely impact of deregulation on
ownership concentration. We need only look at past experience.

The removal of the national cap on radio ownership in 1996 resulted in
the dramatic concentration of ownership in that industry. In six years,
the number of radio stations increased over 5 percent, but the number of
radio owners decreased by more than one third. A single corporation,
Clear Channel Communications, went from owning 40 stations before the
rule changes to owning over 1,200 stations today, five times as many as
its nearest competitor.

Here, in Richmond, this translated into Clear Channel owning six local
stations, resulting in a loss of competition and the loss of local
content in favor of homogenized national programming. For example, WRVA,
a Richmond institution, long known for its emphasis on local news and
talk, was gutted after the Clear Channel takeover. Nearly every on-air
personality was fired or resigned and public outcry filled local
newspaper columns.

As one columnist put it, \"in its embrace of nationally syndicated
personalities to the exclusion of locals, Clear Channel has made it
clear that it has no use for this community\'s talents, viewpoints and
flavor.\"

In short, the deregulation of radio ownership has been a disaster for
Richmond and many other communities across the country. This experience
should be a cautionary tale in considering any future rule changes.

There is other empirical evidence which I will skip in the interest of
time here today, but despite such evidence, the call to ease regulations
continues to come from the corporations who would profit from such
changes. These calls are often justified on the grounds that technology
has changed our media landscape and therefore has made ownership
regulations obsolete. This claim is not new. Every time new media
technology has been introduced, whether it is radio, television, cable
or the internet, enthusiasts have told us that everything has changed.
But in fact, in each case, the fundamental questions about new media
technologies have remained the same, including who will own and control
them, what purpose will they serve, whose views and visions will be
represented in the new medium?

Technological changes in the media industry have not reduced the
importance of regulation and the public interest. While the expansion of
cable and the rise of the internet have produced more outlets, not much
has changed in terms of who owned and controls these outlets, as we\'ve
heard earlier today.

New media outlets often do not mean new media content either. Instead,
broadcast TV programs are recycled for cable channels. Newspaper and
cable news content is repackaged for the internet and so on. Thus,
despite changing technologies, what we still need are multiple,
competing, diverse and independent sources of information and
entertainment.

MR. KRATTENMAKER: Sir, your time is up, are you summarizing now?

MR. CROTEAU: Yes, yes. Some of which by the way need to be
noncommercial, such as in low power radio.

MR. KRATTENMAKER: Thank you. Ms. Foley?

MS. FOLEY: Good afternoon, I\'m Linda Foley, President of the Newspaper
Guild Communications Workers of America. Thank you for allowing me to
testify on behalf of the Newspaper Guild, CWA, the union that represents
print journalists and their parent union, CWA, representing 700,000
workers including broadcast technicians and other media professionals.

Before my tenure with the Newspaper Guild, CWA, I was a reporter with
the [Knight Ridder Newspaper]{.underline} in Kentucky, so I\'m going to
talk about the competition for news.

The Commission\'s broadcast ownership rules are based on the first
amendment principle that the widest possible dissemination of
information from diverse and antagonistic sources is essential to public
welfare.

First, we acknowledge that the media market is changing. No one knows
this better than our members. There are more media outlets today than
ever before, but there are fewer owners. And the fact remains that
broadcast television and newspapers are probably far and away the
dominant sources for local news and information.

The Newspaper Association of America reports that more than half the
adult population reads a daily paper. Indeed, the Nielsen Study
commissioned for this rulemaking shows that 63 percent of those surveyed
identified newspapers as their source for local news and information. At
the same time, Nielsen also showed that 85 percent rely on broadcast
television for local news. Compare that to one third for radio and only
19 percent for the internet and remember, half of America still doesn\'t
have internet access at home.

The dominance of TV news and newspapers and local news and information
sources is all the more striking because, as the FCC\'s Waldfogel Study
clearly indicates, consumers of news and information do not substitute
sources, but rather use other media outlets to complement their primary
source of news and information. Therefore, local ownership combinations
that allow unfettered mergers of news operations of local broadcasters
and daily newspapers, reduce the number of antagonistic news sources
available to local citizens.

Local television and newspaper media markets are already highly
concentrated. Most cities are one newspaper towns. While cable has
increased the number of outlets, in most cities the top four
over-the-air television stations still maintain more than 75 percent of
the market share.

Simply increasing the number of outlets in a market does little to
produce more antagonistic sources.

The networks submitted a study that shows that of all 210 TV markets in
the U.S., 70 percent have four or fewer stations carrying original,
local news programming and 89 percent have five or fewer.

Only 19 markets have local cable news shows and some, such as News
Channel 8 in Washington, D.C. are owned by a local broadcaster.

Focussing on outlets, without considering market share and ownership,
has led proponents of local market combinations to draw some interesting
comparisons. For example, the network\'s brief includes an in-depth
analysis of the Milwaukee market. It gives equal weight to the website
of the local hurling club and the [Milwaukee Journal
Sentinel]{.underline}. Now let\'s face it. It\'s highly doubtful the
[Milwaukee Journal Sentinel]{.underline} will ever be scooped by the
local hurling society.

When it comes to setting the local news agenda and local viewpoint
diversity, diverse ownership, not the number of outlets is what matters.
The brief filed by the CWA in this proceeding contains numerous examples
that illustrate the point. One example, however, provides a striking
demonstration about how concentration of media ownership can destroy
localism, competition and diversity of viewpoints.

In 2001, Canada\'s second largest commercial broadcast chain purchased
Canada\'s largest newspaper chain and now controls 30 percent of the
nation\'s daily newspaper circulation. Within months of that merger,
Canada West Global reversed journalist tradition of local editorial
independence by mandating that its largest newspapers and all its
broadcast news operations adhere to editorial viewpoints dictated by its
headquarters in Winnipeg. It wasn\'t too long before news stories were
being edited and spun to conform to the editorial viewpoints.

The FCC should not allow mergers in markets that are already highly
concentrated and if mergers are permitted, the Commission should ensure
that the combination is in the public interest and that antagonistic
sources of news and information are preserved.

CWA has proposed one way to do that, by requiring commonly owned media
including duopolies to maintain separate newsroom and editorial staffs
in order to preserve and promote diversity viewpoint.

This language is modeled after the Newspaper Preservation Act passed by
Congress in 1970 that allows common ownership and joint operation of
business functions, but requires separate news and editorial staff. Our
journalist members have worked under these arrangements for decades.
They report that maintaining separate news operations does, in fact,
foster competition among reporters for local scoops and varying news
angles on local events.

Working reporters are employees of complex organizations and they work
under what we call the invisible hand of the newsroom social control.
Like athletes, journalists perform their best when they are challenged
by competition and encouraged to do their own personal best. It is
imperative therefore that the Commission adopt rules that protect the
media from consolidation into fewer hands, an outcome that would do
serious harm to the free flow of ideas that is so essential to civic
participation in our democracy.

Thank you very much.

MR. KRATTENMAKER: Thank you. Mr. Miller?

MR. MILLER: I\'m Victor Miller of Broadcast Equity and also for Bear
Stearns. I\'ve covered the industry for 15 years in lending an analytic
capacity. Today, I\'ll discuss seven operating pressures facing
broadcast networks and local stations as a context for my deregulatory
stance.

First pressure is audience fragmentation and declining ad share. The
national TV marketplace consists of 10 broadcast networks, 1400
commercial TV stations, 287 national and 56 regional cable networks. In
2001, the typical local household had 82 channels available versus 10 in
1980. This robust and

option-filled marketplace accelerated by deregulatory changes made by
Congress and the FCC has been good for consumers. However, robust
competition has impacted TV industry economics. ABC, CBS, NBC networks
have seen prime time viewing shares drop to 38 percent this year from 90
percent in 1980. Local TV stations share of media ad dollars has fallen
to 15.5 percent last year, versus 18.3 percent in 1980 despite almost a
doubling of the number of stations.

The second pressure is escalating programming costs. Even in the throes
of declining ratings, the cost of network programming has increased by
30 percent for half hour sitcoms and by 50 percent plus for one hour
dramas despite networks\' increasing ownership stake in these shows
after financial syndication rules were struck down in 1994. Escalation
of some sports rights have priced sports off broadcast TV all together.
Local ABC, CBS and NBC stations in turn on the local level are investing
more heavily in local news spending \$1.5 billion in the top hundred
markets on programming that most differentiate stations from other
media.

The third pressure is high operating leverage. Recent financial results
reported by broadcast TV players suggest that there are few operating
efficiencies left in the business. High operating leverage means that
the broadcast TV business is exposed to significant cash flow swings
with changes in advertising. In 2000, local TV station industry revenues
fell by 15 percent, but cash flow plummeted by 25 to 35 percent. The
broadcast TV business was not well insulated from short term or long
term declines in the business.

The fourth pressure is a consolidating cable business. Consolidation of
the cable industry may be broadcast TV\'s greatest threat. In 2002, the
top five MSOs controlled 72 percent of the nation\'s 74 million cable
households and in 15 of the top 25 media markets, one MSO controls at
least 75 percent of the local markets wireline subscriber base.
Increasing MSO concentration will make it more difficult for local TV
broadcasters to have meaningful retransmission consent discussions. MSO
concentration creates competition for TV stations\' local ad dollars and
programming franchise as well. We estimate one MSO captures \$1 billion
in local cable advertising, surpassing that earned by the ABC owned and
operated TV group. And perversely, 2002\'s appeals court ruling would
allow an MSO to buy a local TV station or local TV and newspaper player
is often restricted from these moves by current ownership rules. This
anomaly alone begs for significant relief.

The fifth pressure is new technology. Early adoption of personal video
recorders suggests that users skip ads at a 75 percent clip five times
at the level of the previous technology VCRs. Advertising is free over
the air TV broadcasting's sole revenue stream. If the ad only model
breaks down, monthly subscriber fees would have to increase by \$39 per
month to replace broadcast TV\'s lost ad revenue.

The sixth pressure is the lack of return on investment in digital TV. We
estimate that local broadcasters will spend \$4 to \$6 billion rolling
out digital TV with little obvious return available to that invested
capital.

The seventh pressure is poor broadcast network economics. Broadcast
networks are not very profitable. From 2000 to 2002, we believe the big
four networks generated only \$2 billion in profits on approximately
\$39 billion in revenue, a 5 percent margin. Without the most profitable
network, margins fell to 1 percent.

My conclusion is if these seven operating pressures continue unabated
and no deregulatory relief is afforded the industry, the viability of
free over-the-air TV in the median term could be threatened.

Deregulation for networks \-- I would say that in order to preserve the
long term viability of the broadcast networks, we believe the FCC should
relax the national station ownership rule to 50 percent.

In the past, the networks have relied on launching cable networks and
syndication to prove their overall TV economics. We believe these
options will prove less valuable now, given the oversupply of cable
inventory and static demand for syndicated product.

For the stations, in order to preserve the long term competitive
viability of the local stations, we believe the FCC should substantially
relax or eliminate newspaper broadcast cross ownership rules, given
newspapers declining circulation, declining ad share and 28 year run
without deregulation. A newspaper broadcast combination also has
potential local and public service benefits as well.

Also, we believe the substantial relaxing of duopoly rules by extending
this option to smaller TV markets who are operating in deficiencies is
really needed. We support a rule that focuses on cumulative local
audience shares such as NAB\'s 10-10 proposal, First Argyle\'s 30
percent local audience share proposal and triopolies in large markets.

On radio, we advocate the retention of the FCC\'s current radio market
definition which was in place when Congress modified the local radio
limits in 1996. Any change now would upset the congressional scheme and
potentially introduce new anomalies. Further, a change in market
definition would be disruptive to the acquisition of radio properties,
relative competitive positions of radio broadcasters, disposition of
radio broadcasters and the capital markets.

Thank you.

MR. KRATTENMAKER: Thank you, Mr. Miller. Mr. Munson?

MR. MUNSON: Thank you. Good afternoon and welcome to the other Virginia,
Commissioners. We have the Northern Virginia and this is what we call
the other Virginia here. So it\'s good to have you with us.

My name is Ed Munson, I\'m the Vice President and General Manager of
WAVY and WVBT-TV in Norfolk, Virginia. We\'re two broadcast TV stations
licensed to the Norfolk -- Portsmouth - Newport News, Virginia market.

My testimony today is basically the story of running two television
stations in the market. When I arrived at WAVY in 1991 there were six
commercial television stations operating in the Norfolk market. The two
independent stations were struggling for survival. My recollection is
that neither of them was profitable and certainly neither of them had an
appreciable share of local viewing or local ad revenue. Despite the
difficulties faced by these independents, yet another station went on
the area, WVBT and it was launched in 1992. Needless to say, with those
two struggling independents already on the air, there really wasn\'t
much interest in WVBT from programmers, advertisers or viewers. The
station was able to muster only enough initial capital to build a
minimal technical facility whose signal could reach about 65 percent of
the homes in the market.

Shortly after initiating operations, the station affiliated with the
Home Shopping Network. While this business plan enabled the licensee to
get on the air and with a small positive cash flow, the station really
wasn\'t a serious competitor for viewers or a significant broadcast
voice in our market. The solution was to partner with another local
station, my station, WAVY, the NBC affiliate. In January 1995, we
entered into a local marketing agreement with WVBT through which WAVY
assumed day to day operations of the station under the licensee\'s
supervision.

In May of 1996, we relocated the station\'s antenna to our 1,000 foot
tower and increased its power to 5 million watts, for the first time
reaching every home in the market. Because of those technical upgrades
and the station\'s new promotion and advertising capabilities, WAVY was
also able to land a network affiliation for WVBT with a fledgling WB
Network shortly after we entered into the LMA.

Through WAVY\'s programming resources, we were able to assemble a
competitive slate of syndicated product in local and regional sports
programming the other stations in the market wouldn\'t want to carry.
While we were able to grow our share of local advertising in the market
from zero to nearly 5 percent, we sustained operating losses of about
\$2 million before becoming cash flow positive in 1998.

In 1996, we were approached by the Fox Television Network about
switching WVBT\'s network affiliation to Fox. Fox had undertaken a
campaign to have all of its affiliates carry local news at 10 o\'clock.
The Fox affiliate in Norfolk had declined to do so. It wasn\'t a
surprising decision for a single station with virtually no news
infrastructure. It would have been years, if ever, before the 10
o\'clock news would have been financially viable in the highly
competitive Norfolk market.

WAVY, however, was already producing five hours of local news a day.
Adding a first class local news program at 10 o\'clock could be
undertaken for fairly modest capital investment and increase our
operating costs under \$1 million.

So in August of 1998, WVBT became the Fox affiliate. At that time, we
initiated the first and still the only 10 o\'clock broadcast news in the
Norfolk market. This newscast which was initially a half hour is now 45
minutes, has given viewers in the Norfolk market an additional news
option. Moreover, it unquestionably expanded the local late news viewing
in the market. WVBT\'s newscast has recently generated a Nielsen rating
of 4.9 or about 33,000 households.

Since the 10 p.m. newscast went on the air, the cumulative total news
viewing in late news viewing has grown from 141,000 households to
189,000 households in the most recent rating book, an increase of more
than 33 percent, substantially faster than the market was growing.

Local news is by no means the only contribution WVBT has made to the
Norfolk media marketplace. In addition to first class syndicated
programming, we\'ve carried a wide variety of local sports and produced
a substantial amount of local sports and public affairs programming. And
because of WAVY\'s resources, an investment of over \$4 million, WVBT
has been able to construct its expensive new digital television facility
on time and is now providing Fox widescreen programming to the market.

This station combination is emphatically in the public interest. Many,
many more such beneficial combinations are being precluded by the
actions of outdated local TV ownership rules. This is particularly true
in smaller markets where there is simply inefficient resources to
support more than one or two high quality news operations. But, as my
experience in Norfolk demonstrates, the current rule is preventing
efficient and productive combinations and suppressing potentially vital
new local voices even in the top 50 markets.

I urge you to act promptly to recognize the realities of the new local
media marketplace and relax the local station ownership rule by adopting
the proposal put forth in the comments of the National Association of
Broadcasters and permit common ownership of any two stations provided
that no one has more than a 10 percent share of the viewing market.

Thank you.

MR. KRATTENMAKER: Dr. Owen?

DR. OWEN: Thank you, Mr. Chairman, Commissioners, Mr. Moderator. I\'m an
economist and a competition economist. I was once chief economist of the
Antitrust Division of the Justice Department and I\'m here to talk about
competition because that\'s what the panel is supposed to be about.

I hope after discussing competition briefly to link it to the diversity
issues that you face. I don\'t \-- I think the localism issues are
impervious to logic, so I won\'t address those.

Competition obviously is an important goal and in fact, your statute
that requires these biennial reviews mentions only competition and not
diversity in the context of what\'s necessary to retain the rules for
the future.

Competition brings benefits to consumers. The point of competition is to
benefit consumers, in this case, viewers, readers and listeners. You
don\'t write on a blank slate here. You don\'t need to invent a new
wheel to deal with competition policy analysis when you\'re analyzing
proposed mergers in the mass media. There\'s a perfectly adequate widely
accepted and even admired paradigm for analyzing mergers and that is the
merger guidelines that are used as a method of analysis by both the
Federal Trade Commission and the Department of Justice.

The Commission has, in fact, demonstrated its understanding and ability
to use their analytical tools in its recent decision in the Echo
Star-Direct TV merger. So I\'m not suggesting anything novel. You don\'t
need to invent a new way to think about these things from the point of
view of competition in economic markets. By economic markets I mean
advertising markets and consumer markets for MBPV services.

I think the Commission in approaching media ownership issues, if it\'s
going to pass a rationality test has to employ an approach that is
consistent with the method, not necessarily the standard, but the
methods in the merger guidelines. And there\'s no reason to try and do
it in a different way.

That means that the present rules, if they are put up against that
standard, don\'t make any sense. They don\'t pass a rationality test.
For example, when you apply the method of analysis that\'s used in the
merger guidelines, you\'re not likely to find that markets are always
defined in terms of technologies or means of broadcasting or
frequencies. They\'re defined in terms of the choices that consumers
have. And those choices can, and do, cut across lots of different
technologies and methods of broadcasting. So any rule that applies only
to television, for example, prejudges the market definition appropriate
to a particular merger transaction and that doesn\'t make any sense. You
can\'t do that in advance.

So fixed market boundaries as reflected in rules almost by definition
can\'t pass a rationality test. Moreover, even if they did, in this
business, market boundaries are changing quickly and have been changing
for some years, so a rule that reflects even a correct, analytically
correct analysis of where the market boundaries are, will be out of date
and as we all know, even though they have to be reviewed every two
years, it\'s hard to change rules.

The final thing to keep in mind when thinking about economic markets,
advertising markets and consumer markets, is that most mergers, the vast
majority of mergers are beneficial, that is, they result in efficiencies
or new products or new services. In the economy as a whole, of the
hundreds and hundreds of transactions that take place every year, only a
tiny fraction of them raise antitrust concerns and they are quite
properly reviewed to see if they past muster under the antitrust laws.

But the presumption is that a merger is pro-competitive absent a showing
by the government that it isn\'t. It doesn\'t go the other way around.

Now the Commission can apply the guidelines or its own version of the
guidelines with its own standards, and the antitrust authorities, of
course, have an obligation to do the same thing. That would result in a
certain amount of duplication, even a great deal of duplication, whether
that duplication is wasteful or not is something for the Commission to
consider. I don\'t offer an opinion on that.

If you apply merger guidelines analysis, economic analysis that\'s
designed to tell whether or not consumers are likely to be injured by a
particular merger, based on the facts of that merger, then I think
you\'ll find that your diversity concerns are also addressed
automatically. In principle, you could have a merger that reduced
diversity unduly even though it didn\'t offend the antitrust laws,
didn\'t reduce competition.

MR. KRATTENMAKER: Your time has expired. Are you summarizing?

DR. OWEN: Yes. I\'ll stop there.

MR. KRATTENMAKER: Okay, thank you. Mr. Rintels?

I\'m sorry, this is not part of your time. I should mention here again
that one of the things we\'ve done is to provide opportunities for
people who would like to propose questions that might be asked of the
panel. There are cards in the back of the room, if you want to write a
question. People will circulate, pick the questions up and we\'ll \--
there\'s a woman over there with her hand up. We\'ll bring the questions
up to me and if there\'s an opportunity, I will ask them. I\'ve already
got several for this panel, but I\'d be happy to receive more.

Excuse me, Mr. Rintels.

MR. RINTELS: Thank you, as a Virginian, a native Virginian, I want to
thank the Commission for slogging through the Old Dominion slush to be
here today to hear our thoughts about media concentration.

My name is Jonathan Rintels. I\'m a screen writer and the executive
director for the Center for the Creative Community, a nonprofit that
conducts research, public education and policy development on behalf of
the tens of thousands of writers, directors, producers and performers,
who create America\'s popular and literary entertainment. Numerous
winners of Oscars, Emmys, Tonys, Peabodys and other awards for creative
excellence serve on our Board of Advisors.

Today, the conventional wisdom is that a 500-channel universe assures
viewpoints from a diversity of sources and competition in the
marketplace of ideas. But as respected Wall Street analyst Tom Wolzien
concludes in his research study dated February 7th and entered in the
record this morning, the reality of today\'s modern median environment
is quite different. Five corporations with their broadcast and cable
networks are now on the verge of controlling the same number of
television households as the Big Three broadcast networks did 40 years
ago.

In the past, when three or four broadcast networks controlled this many
households, the Commission protected the public\'s interest in
competition, the marketplace of ideas and diversity of viewpoints by
requiring independent production of programming. But today, the American
public has no protection. Data in this record prove this programming
oligopoly, Wolzien\'s term, not mine, exists both in the distribution
and production of programming. For example, NBC owns outright or holds a
significant financial interest in 100 percent of the new series on its
schedule this season. The other networks are not far behind. Rather than
compete fairly in the marketplace of ideas, the networks leverage their
control of the publicly owned airways to take over television program
production, driving small businesses and creative entrepreneurs, many of
whom were women and minorities, out of business.

President Bush recently said small business owners represent the
enterprise of the whole nation and the diverse talents of our people.
America\'s economy can thrive only when our small businesses thrive.
Television is not different. The near extinction of creative
entrepreneurs and small businesses has resulted in corporate homogenized
bland programming. Even network executives agree. Their quotes are in
this record.

While there are many highly regarded shows such as \"West Wing\" nearly
all are independently produced, such as \"West Wing,*"* hold overs from
when program source diversity was required. The networks themselves have
produced little to take their place as evidenced by NBC\'s decision to
spend \$10 million per episode of one more seasons of \"Friends.\"

Research shows many Americans receive their information regarding
democracy, politics, news, values, history and culture from television
entertainment programming. Thus, in this proceeding, the stakes for our
nation are far higher than whether we will all be doomed to a future of
bland television. When promoting the wide dissemination of information
from a multiplicity of sources is a government interest of the highest
order, Commission action is indisputably necessary in the public
interest as the law requires.

Today\'s internet does not obviate the need for the Commission to act.
The same programming oligopoly controls the most visited sites on the
net. Moreover, in much of Virginia, including my own home, broadband is
a distant rumor. Even among Virginia families fortunate enough to have
broadband, I\'ve yet to hear of any that microwave popcorn and gather
around the computer to watch internet. They watch television.

The reemergence of the programming oligopoly requires that the
Commission create a new program source diversity rule that allows
independent producers access to network schedules. And there\'s no
question the Commission has the power to create this rule in this
proceeding as the Coalition for Program Diversity reply comments
demonstrate. Such a rule will meet all the goals of the Commission in
this proceeding. It will provide citizens with viewpoints from a
diversity of sources. It will enhance the marketplace of ideas. It will
reflect the reality of the modern media environment in which the
re-emerging programming oligopoly is eliminating both economic and
creative competition. It will promote participation in ownership by
minorities, women and small businesses in television.

This rule, this win-win-win rule will also withstand future judicial
scrutiny. This record is full of data and other evidence documenting the
re-emergence of this programming oligopoly and the harm it has caused.
As with the Commission\'s legal authority to create this rule, Judge
Posner wrote in [Schurz Communications]{.underline}, \"The Commission
could always take the position that it should carve out a portion of the
production and distribution markets and protect them against the
competition of the networks in order to foster a diversity of
programming sources and outlets.\"

It is now necessary in the public interest for the Commission to take
that position. Promoting the widespread dissemination of information
from a multiplicity of sources is the government interest of the highest
order in this proceeding. Increasing the profits of a handful of
corporations is not.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. Mr. Winston, welcome back to the
Commission.

MR. WINSTON: Good afternoon, Chairman Powell, Commissioner Martin,
Commissioner Abernathy, Mr. Copps, Mr. Adelstein. Thank you for inviting
me to discuss the Commission\'s pending rulemaking proceeding, examining
its broadcast ownership rules. I also thank you for inviting Alfred
Liggins, a distinguished member of the NABOB Board of Directors earlier
this morning.

NABOB is a trade association representing the interests of
African-American owners of radio stations and television stations and
cable television systems across the United States. NABOB has
participated in this proceeding to encourage the Commission not to relax
further its multiple ownership rules. Since the passage of the
Telecommunications Act of 1996 which significantly relaxed the
Commission\'s ownership rules, the number of minority owners has dropped
by 14 percent.

The first amendment rights of all Americans to receive a free flow of
news and comment from all segments of the population will be damaged if
minority ownership continues to be squeezed out of the business.

The Commission, the Congress and the courts have historically recognized
that the ownership of broadcast stations must be disseminated among a
wide number of voices to assure the first amendment rights of the
American public are protected.

In its comments in this proceeding, NABOB has cited a significant amount
of research, demonstrating that minority ownership promotes these first
amendment rights by providing viewpoint diversity and promoting
competition.

For this reason, NABOB has proposed in its comments that the Commission
make no further relaxation of its rules. Instead, NABOB has proposed
several improvements for the Commission\'s existing rules. The
Commission should make permanent the Commission\'s interim policy for
processing radio assignment of license and transfer of control
applications. The Commission should improve the interim policy by
flagging all transactions in which one entity will control 40 percent of
the local advertising market or two entities will control 60 percent of
the advertising market and the Commission should use arbitron markets to
define radio markets for application of the multiple ownership rule.

The Commission should include an interim policy, a review of the impact
of minority ownership of flagged transactions.

The Commission should eliminate its policy of granting 6, 12 and 18
month waivers of its ownership rules. If a transaction will require one
or more stations to be spun off, the parties should submit an
application to spin those stations off at the time the transaction is
filed.

The Commission should treat all local market agreements as attributable
and should require that all agreements between noncommonly owned same
market stations be filed with the Commission.

NABOB has also requested the Commission support reinstatement of the
minority cash certificate. NABOB commends the Commission for supporting
Senator McCain\'s Small Business Tax Deferral Bill. We hope that
legislation will be amended to specifically promote minority ownership.

I would also like to make an observation concerning one of the studies
commissioned by the Commission in this proceeding. In that study, the
Commission\'s researcher measured news slanting by commonly owned
television stations and daily newspapers. This study is startling not
for its conclusions, but for its premise. The study assumes news
slanting exists and is a measurable phenomenon. It then proceeds to
measure this phenomenon. Regardless of the conclusions reached in the
study, the study\'s principal values demonstrate that news slanting
exists. The existence of news slanting in and of itself requires
retention of the Commission\'s ownership rules. Once we accept that news
slanting exists as a measurable phenomenon, it becomes imperative to
continue the Commission\'s policy of ensuring the dissemination of
ownership control of the nation\'s airwaves among many different and
antagonistic voices.

In its comments, NABOB cited research showing that in most major markets
the market leader has about 45 percent of advertising revenues and the
top two firms control about 74 percent of advertising revenue. The
research concluded that this resulted in highly concentrated markets
with Herfindahl Hirschman indices exceeding 3,000 in many markets. Thus,
NABOB submits that, given examples such as Ann Arbor where Clear Channel
Communications currently has over 86 percent of the local radio
advertising market, the Commission should adjust its flagging procedure
to flag transactions which would result in a single entity controlling
more than 40 percent of market revenues or two entities controlling more
than 60 percent.

In conclusion, I would like to note that the principal issue before the
Commission in this proceeding is what level of industry consolidation
should be permitted when the Commission balances its often conflicting
goals of promoting diversity, competition and localism. NABOB submits
that in reaching a determination of how to balance these competing
interests, the Commission should note that diversity and localism are
the only two first amendment considerations falling into that balance.
The promotion of first amendment rights is the Commission\'s principal
obligation and in the end, the promotion of diversity and localism must
take precedence over the promotional competition.

Thank you.

MR. KRATTENMAKER: Thank you. Mr. Chairman, if I may, I think I\'m going
to usurp the prerogative of being moderator and ask the first question.
And the reason for that is that I have here a stack of cards from the
audience all of which ask essentially the same question in different
phrase and I think we should start with this question. I\'m going to
particularly direct it at Ms. Foley and Professor Croteau, but I welcome
comments from anybody. As somebody who taught antitrust for a while, I
was not surprised by this.

How exactly is competition enhanced by removing the number of
competitors? That\'s the way it was put on one of these cards. And I
think that\'s the question that\'s on the minds of many in the audience.

I\'d like to say we went alphabetically. As a result of that, we had
three different responses to that already from the middle of the panel.

Bruce Owen has told us that if you take a competition focus, that means
you\'re looking at the welfare of consumers or people who buy
advertising and it may oftentimes be the case that a merger just
doesn\'t harm those interests because it doesn\'t give anyone power to
raise prices.

Mr. Munson said that sometimes what a merger can do is it can rescue an
otherwise nonviable firm. It can provide resources that another firm
might not have had. It can bring somebody from a home shopping network
to being a network affiliate.

Mr. Miller says that the way competition can be enhanced by having fewer
firms is that free over-the-air broadcasting is threatened by a number
of economic factors, all of which require some level of consolidation if
it\'s going to survive in the face of these competing new media.

Those, in sum, are the kinds of answers that some of our panelists have
given and I wanted particularly to ask my wing people, whether you
agreed with that or whether instead you do take the position, it would
be a perfectly respectable position that competition is the number of
people in a market and reducing that number just simply reduces
competition.

Professor?

DR. OWEN: I think one of the interesting issues here that is coming up
today is the interrelated nature of diversity, competition and localism,
the fact that you can\'t simply isolate these things. They are
interrelated. And so when we\'re talking about what is competition,
it\'s not just pure numbers, obviously. We can\'t say in all cases that
more necessarily means better content. The recent study from the Project
for Excellence in Journalism, for example, showed that in fact when it
comes to TV news, local news, smaller broadcast groups had better
content in terms of serving the local community than larger ones did.

However, at the same time they also realized that sometimes groups do
better than individual stations because they have more resources and so
forth. And so this issue of competition is not directly tied to the
number of entities competing. You have to look at the nuances in all of
that, but I think that message that once you get to a certain level,
larger and larger companies are not going to help us in terms of
diversity and localism.

MR. KRATTENMAKER: Thank you. Ms. Foley, would you like to comment?

MS. FOLEY: Yes, just briefly. First of all, I come from a journalism
background and I come from a news background and so I do care very much
about localism and much less about pure competition. And I think that
when it comes to news and when it comes to reporting the news and
setting the local news agenda it very much depends upon the number of
players. Because if you don\'t have competing antagonistic sources,
you\'re going to have one entity or few entities setting the news, so
anybody who\'s ever worked in a newsroom notes that competition is what
drives the news agenda. It\'s what drives reporters to go out there and
beat the competition, to scoop their fellow reporters. So I think from
my perspective, it absolutely does matter.

MR. KRATTENMAKER: Thank you. Mr. Rintels, did you want to comment?

MR. RINTELS: With regard to the nationwide rules, I know the Commission
has asked in its notice of rulemaking whether it dare say the dual
network rule if two networks would merge together whether they would
then discretely target programming to one audience on one network and
one audience on another network because that would be in their
competitive interests.

Prior history has shown that that\'s not the reality at all, that when
CBS and UPN were under common Viacom ownership that UPN simply reran CBS
programming rather than get original programming for its own discrete
audience. And the same occurs with Mothership Broadcast ABC network than
being rerun on satellite ABC Family and other networks owned by the same
parent company.

MR. KRATTENMAKER: Thank you. Mr. Winston, did you want to comment?

MR. WINSTON: Yes. I just wanted to say that as was pointed out a minute
ago, the issues addressed by the Commission here, localism, diversity,
competition, are interrelated. They can\'t be separated out. And
depending upon how you define competition, it requires diversity and
localism and it\'s not something that can be separated out as simply as
might be suggested by someone from the panel.

MR. KRATTENMAKER: Dane, can you remind us when are we shooting for
public mike comments?

MR. SNOWDEN: We\'re shooting at 2 o\'clock.

MR. KRATTENMAKER: We\'ll go somewhat beyond that. I\'ve been keeping you
from the Commissioners for a long time. I shouldn\'t do that anymore. I
should turn this over to the Commissioners.

COMMISSIONER ADELSTEIN: I had a question for Mr. Owen and maybe
Professor Croteau, you could follow up on this.

We\'re both Stanford men. It\'s good to have you here. I was in the
History Department. You\'re over at Economics and they\'re not that far
apart in the quad, but it seems like they\'re miles away here because I
have a different reading of the statute than you do as far as what it
means.

You said, if I understood you correctly, that it was about competition,
the new standard, but if you look at the broader context it said whether
it\'s in the public interest in light of competition. So we look at, as
a historian or somebody is looking at the legal history of this, the
Agency traditionally has looked at the public interest as being about
competition and localism and diversity.

So I\'d be curious if you really believe that we don\'t have to look at
those two as issues in the public interest, and then if you could
explain that in light of the example that we heard about the Richmond
experience, since that\'s the one local example that we have, as whether
or not the public interest was served in this case. I don\'t think you
believe it was. I\'d like to hear your response to that.

DR. OWEN: I think this is the way legal points should be debated,
between economists and historians.

(Laughter.)

The public interest means whatever the Commission says it means. And
then the courts, of course...

I think that it\'s a perfectly sensible thing to worry about diversity
from a competition point of view because you can think about the
marketplace of ideas metaphor, using the same tools that you do to think
about economic marketplaces. How many competitors are there, how many
sources are there, what are the barriers to entry, what alternatives are
available to consumers?

I think if you do that, what you discover is that the choices available
to consumers are far wider than the choices available to advertisers and
as a result, markets in the marketplace of ideas are going to be defined
much more broadly. And therefore, if you worry about economic
concentration, economic markets, you\'ll automatically take care of in
most cases, automatically take care of your diversity concerns.

The other thing that I would say about that is that measuring market
shares in the marketplace of ideas requires you to treat each source
equally and not to weight them by their current popularity. The point of
the first amendment is to make sure that unpopular ideas have access to
the public. The public has choices. In antitrust, there are certain
markets where you give every competitor, despite their current market
share equal weight. And I think the same principles should apply when
you\'re measuring concentration in the marketplace of ideas.

After all, the popularity of a given media outlet is a demand side
phenomenon. It\'s what people like to get, like to read, like to watch.
It has nothing to do with the popularity of the source. The unpopular
idea that we\'re trying to protect is by definition got a small
audience. It\'s unpopular.

I probably used up more than my share of time here.

MR. KRATTENMAKER: Commissioner Copps?

COMMISSIONER COPPS: Yes, I\'d like to ask Mr. Winston \--

MR. CROTEAU: I\'m sorry, I was asked to respond.

COMMISSIONER COPPS: My mistake, excuse me.

MR. CROTEAU: As we all know, there\'s often the \--

\[END TAPE 3, SIDE A; BEGIN TAPE 3, SIDE B.\]

\-- my concern here is that there\'s too much discussion about creating
formulas, whether they\'re economic formulas or otherwise that help to
dictate public policy and I think we have to understand economic
formulas, formulas to measure competition in the marketplaces and so
forth, are useful tools. But they are part of a broader tool kit that we
need to use, some of which has to do with experience and some common
sense to be blunt about it.

And when you look at particular cases, how this actually works and
particular markets, what actually happens in localities and I think
that\'s why these sorts of hearings are so important to hear those
stories, you find that a decline in numbers does mean something to those
communities because it does mean a loss of competition very often and
consequently that translates into a loss of local content, a loss of
diversity and so on.

And so we have to supplement, I think, the economic theory with some
other types of information that, in my opinion, are just as valid.

MR. KRATTENMAKER: Thank you, and pardon me. Commissioner Copps.

COMMISSIONER COPPS: Mr. Winston, we heard earlier in the panel earlier
today that a number of radio station owners has dropped by over a third
since 1996. You pointed out in your eloquent testimony the number of
minority owners has decreased by 13 percent. I\'m hearing this from so
many groups that minorities are now under represented in ownership and
are poorly represented by the media and programming. I\'m hearing it
from your organization and the National Association of Black Owned
Broadcasters. I\'m hearing it from the Minority and Media in
Telecommunications Council. Rainbow, PUSH and National Association of
Hispanic Journalists, Church of Christ, Women\'s Institute for Freedom
of the Press. It goes on and on. I\'m also hearing that advertisers say
that stations are ignoring minority communities that are critical target
markets for their products.

I gather what you\'re saying is not only don\'t abolish these rules, but
you\'re saying we have pretty much reached the limit of what we can
tolerate in changing the rules. I know I\'ve talked to a lot of members
in your group, as individuals, and some of them have done pretty well
for themselves in the world of the media, but so many of them tell me
that in the increasingly consolidated environment right now, they could
not replicate the progress that they made. They wouldn\'t be where they
are if they were starting out right now.

Could you comment on that and also on the question do you think we have
really reached the limit on as far as we can go on some of these rules
insofar as the impact on diversity is concerned?

MR. WINSTON: Well, certainly in the radio area. NABOB has focused
primarily its comments in this proceeding on the radio area because we
have significant number of stations that are owned by minorities. We
have 240 stations that are owned by African-Americans in the radio
industry. In television, there are only 20 television stations, some of
them are fairly marginal stations. It\'s probably too late. The industry
continues to consolidate. Even if you hold the line on your TV rules,
minorities just do not have an opportunity to buy into that business.

In radio, as you pointed out, Radio One is our shining star. They\'re
the folks that we all look up to and say we can do that one of these
days. But the reality is that most minority owners are not going to be
able to do what Radio One has done. And many are trying. But what we
have found is that the consolidation rules, the Clear Channels of the
world, the Citadels, the Affinitys have too much of a head start.

I have current owners who call me all the time, \"I bid for a station,
Cumulus outbid me, Citadel outbid me, Clear Channel outbid me.\" So that
with no national cap, it\'s very difficult to see how we\'re going to be
able to continue to grow as owners and further relaxation of the rules
only makes it worse.

COMMISSIONER COPPS: That\'s a really dramatic statement that everybody
in this audience ought to pause to think about. It\'s already too late
for the television and the radio situation in that dire situation too.
Where we are right now, without further relaxing the rules. If that\'s
not a big red stop sign, it\'s still cautionary in light of the first
magnitude.

Does somebody else want to comment?

MR. VICTOR MILLER: I just want to say that let\'s not forget that since
1996 Salem, a Christian broadcaster who is now a public company. They
weren\'t before that. Entrevision, an owner of Spanish language
newspapers, magazines, outdoor and television stations is now a public
company. They weren\'t before, 1996. Radio One was not a public company.
Spanish Broadcasting was not a public company. PAX, a Christian
television broadcaster is also in the marketplace. So you can \-- some
certain broadcasters have taken advantage of the capital markets, like
Alfred said this morning, decided that the rules had changed. They got
in the game. They went into the public markets and they are now very
viable public companies buying stations along with everybody else and
outfitting a lot of other broadcasters for properties.

So there has been some benefit. We do have five, six public companies
that didn\'t exist before the rules.

COMMISSIONER COPPS: I think Mr. Liggins made it pretty clear this
morning that was kind of a question of fortuitous timing and taking
advantage of some of the programs that we had at the Commission and what
I\'m hearing from Mr. Winston\'s members is trying to replicate that is
very difficult.

Let me ask you another question. Mario Gabelli (Phonetic) who is known
for his media expertise is predicting pretty widely that there\'s going
to be a rush of takeovers and combinations in broadcasting and
newspapers if we significantly change these rules. You\'re an expert
analyst, but I\'d like other people to chime in on this too.

What do you think is going on out there right now if we would eliminate
some of these caps? Would we have a rush to consolidation or \-- what do
you foresee and what do some of your analysts see down there?

MR. VICTOR MILLER: The bottom line is I think that the Federal
Communications Commission has actually sold itself short on how
hideously successful some of its changes have been in the marketplace.

If you look at newspaper broadcast cross ownership, which has been
around for 28 years, no relaxation of that, look at the [Atlanta Journal
Constitution]{.underline}, the [Dallas Morning News]{.underline}, the
[Chicago Tribune]{.underline}, some of the preeminent newspapers in the
United States of America. They have owned TV stations in the same
markets. If you actually look at the quality of those newspapers, it is
undeniably good. Now if you look at the television stations where
there\'s co-ownership where they have newspapers and television
stations, on average, that local news beats competitors in that
marketplace by almost 60 percent and the third place operator by 200
percent in the early news, where there\'s no influence from prime time
viewing whatsoever, because of the quality, the increased quality that
they can bring to the paper and the newspaper at the same time.

Now in terms of the radio, 60 percent of the radio stations were
basically not profitable in 1991. Now you have a situation where the
market is completely stabilized. You\'ve done a great job. There\'s been
9,000 stations that have transferred hands to \$120 billion worth of
acquisitions and it\'s been, I think, a very great success.

Duopoly. You want to talk about duopoly. Sixty-five percent of all
duopolies, those stations earn less than 5 percent of the revenue share
and 80 percent of the duopoly are related to the new networks.
Telepature (Phonetic), UPN, WB, Univision, Fox, they gave birth to all
that, to a very viable and robust and large station group.

And lastly, on the retransmission consent rules which you guys changed
in 1993, that\'s added a tremendous number of new cable networks and we
talked about diversity in that last panel. I just want to remind you the
first 20 weeks of this year, one third of all the audience every night
is watching A&E, ESPN, History Channel, Lifetime, American Movie
Classics, Bravo, CNBC, MSNBC, Fox News, TVFoodNet, Home and Garden,
Cartoons, CNN Headline News, Black Entertainment Television,
Nickelodeon. That\'s a third of the viewers and how can you say that a
lot of those networks aren\'t the kind of programming that you\'d like
our children to sit down and watch?

COMMISSIONER COPPS: That was not my question. My question is \--

MR. VICTOR MILLER: No, I understand.

COMMISSIONER COPPS: Sitting here trying to judge what are the results
going to be, what kind of a mad rush to consolidation are we going to
see?

MR. VICTOR MILLER: You\'re going to see increased duopoly. You\'re going
to see increased newspaper broadcast cross ownership because of the
benefits we\'ve run through. The marketplace compels change \--

COMMISSIONER COPPS: We can debate the benefits and the negatives later
on. We need to do that before we make a decision. I\'m just trying to
see what the market says. You\'re a guy from the market. You understand
the market and you\'re telling me that there is going to be significant
additional consolidation if we significantly change the rules?

MR. VICTOR MILLER: When you have 28 years of no rule change, there will
be some changes in newspaper and broadcast. I don\'t think it\'s going
to be a mad rush, no, I don\'t think.

COMMISSIONER COPPS: Mr. Rintels, you wanted to comment?

MR. RINTELS: I did. I\'m not a man of the markets, but Tom Wolzien is
and in his study which I referred to earlier, he pointed out that if the
national ownership TV audience ownership cap is lifted, or relaxed, that
there will be a mad rush to buy up local affiliates and that will occur
particularly where there\'s overlap with Comcast or one of the other big
cable providers because the networks will then use the retransmission
consent for the cable operator to use that local station as a baseball
bat to force them to take their other cable channels or to move their
other cable channels up a tier or into the more basic level of service.

And this is something that really hasn\'t been explored, at least as far
as I can see in the comments, that that cap is important in terms of
programming diversity and staving off the programming oligopoly.

COMMISSIONER COPPS: Thank you.

MR. KRATTENMAKER: I was going to move to Chairman Powell, but if you
wanted to \--

CHAIRMAN POWELL: I just wanted to make a couple of quick points. I
thought what we were here to do is to find out what the benefits and
detriments of possible changes would be. That is the ultimate question.
I think what the panel seems to universally agree with and if they
don\'t, I find it fantastic, is that any given combination could be good
or it could be bad for consumers. The only thing we should care about is
if it\'s good for consumers or bad for consumers. There are a lot of
groups who may not benefit from a combination, but the one that we care
principally about is for consumers. And I think it is relevant, whether
any changes that take place would be changes that are positive for the
consuming public. I think that it\'s completely legitimate to point out
the detriments that could follow, but I think as Mr. Munson pointed out,
other people can also postulate anecdotes where consumers came out
better as a consequent of the market structure change.

What the government\'s job is to do is to have a mechanism to filter the
one from the other and that\'s really what we\'re trying to do, not just
win a debate on whether consolidation is bad or not. Even in and of
itself. Of course, it\'s both. It depends.

The other thing is I think that we have to accept certain realities.

Mr. Winston, the truth is, I think, in radio that the percentage of
minority ownership has actually increased principally because of Mr.
Liggins\' company over all in the last few years and they\'re taking
advantage of the same dynamics that other people are taking advantage of
to be successful. It\'s not enough. I\'m one of the biggest supporters
of minority ownership policy of anyone as you know, but it is a change
in the marketplace and it\'s real. There\'s an enormous increase in
Spanish language programming that has occurred in the last few years.

One of the things that I\'m going to throw open wide as a question
because Professor, I think you alluded to, which is actually one of the
concerns that I have, it\'s near the end you briefly suggested even
noncommercial.

Now a lot of what I hear today which is very informative to me suggests
that one of the problems isn\'t so much big, isn\'t so much corporate,
but that it\'s commercial, but anything by definition that\'s commercial
is profit seeking. I don\'t know how to differentiate between more
meritorious groups, but some of the independent producers we\'re talking
about are Sony Pictures or Carsey-Warner. These are not small,
independent little guys seeking and they\'re not doing it for free. I
commend them just as I commend any writer or producer, but we should put
on the record there are very few people who are doing this business not
for business.

But it seems to me one of the things that\'s very unique in the American
system is that our television system is almost totally commercial. Most
democracies deal with this threat to democracy by having
government-sponsored programming, whether it be the BBC or those kinds
of programming in which individuals are taxed and in the case of the
U.K. \$150 roughly a year to support a medium that doesn\'t have to be
bound by these commercials.

So I\'m curious that if people think the biggest problem in the United
States is that as long as we have strong commercial incentives for the
production of what we do and see, exclusively, we\'ll always have this
problem and that maybe a greater commitment to public broadcasting or
forms of public broadcasting is one of these things this country, the
government ought to put more stock in.

I heard you mention that in passing, could you \--

MR. KRATTENMAKER: I just have to interject. I have the sense that most
people on the panel would like to speak to that so I would ask could you
each try to keep your remarks brief, because we\'re trying to get to
audience comments.

Professor?

DR. OWEN: Yes. I think that\'s a very important point and it speaks
precisely to the point that you made earlier which I have to
respectfully object with. That is, I don\'t think the primary
responsibility of this Commission is to protect the interests of
consumers. That is certainly a piece of it. But it is to protect the
interests of citizens and that includes a consumer side.

(Applause.)

But also includes other features of the media landscape that do not lend
themselves to this sort of consumer analysis and your point about public
broadcasting is an excellent one. We are not talking about public
broadcasting and I think that\'s a real shame because in fact, a lot of
the dynamics that we\'re talking about today that we\'re concerned about
have to do with how marketplaces operate in general and the kinds of
economic forces that influence in the end the content more generally and
it is absolutely important to have a noncommercial alternative to that
if we\'re really going to talk about diversity, if we\'re really going
to talk about meeting the needs of minority communities and so forth and
that is public broadcasting. It\'s public radio. It\'s low power radio
which is a piece of this as well.

(Applause.)

MR. KRATTENMAKER: Thank you. Did any of the other panelists want to
comment on the Chairman\'s question.

I\'m sorry to be the bad guy in this. If each of you talk for two
minutes, we\'re going to go all through the public comment period. So
please try to keep your remarks brief.

Ms. Foley?

MS. FOLEY: Yes. I was just going to say that there is a point to what
the Chairman said in that in other countries like the United Kingdom and
Canada there is a strong, public service broadcasting component there.
We don\'t have that in this country and part of the reason we don\'t
have that is that we give our airways away to these commercial
broadcasters and so that\'s why this Commission does have to look at the
public interest aspect of this. It isn\'t a pure economic analysis.
We\'ve made a decision as a country to operate our media system this
way. It may be a good way to operate. I\'m not saying, I\'m not arguing
against it. I\'m just saying that that then argues for us not to do an
economic analysis and to really focus on in a proceeding like this the
public interest.

MR. KRATTENMAKER: Thank you. Mr. Miller?

MR. MILLER: Again, all we\'re talking about when we talk about broadcast
free over-the-air broadcast television as its own ecosystem, it has two
pieces: a network that produces, that takes \$37 billion worth of risk
over the last three years to produce programs and local stations which
try to serve the local marketplace. There are seven pressures that have
been bearing down on both of these models and if not addressed in the
medium or short term that free over-the-air broadcast system that we
don\'t pay for that only has one single revenue stream will change
markedly and we don\'t know how it\'s going to change, whether consumers
are going to have to pay for that model or whether it\'s going to
degrade the model so much that it\'s not a viable, robust market and as
someone mentioned this morning, 15 percent of America still relies
solely on over-the-air broadcasts as their only way of seeing television
in their homes because they don\'t have cable or satellite.

MR. KRATTENMAKER: Mr. Munson?

MR. MUNSON: I can only say this. I can never be embarrassed by the fact
that my television stations make a profit. Part of that profit goes to
our shareholders. Part of that profit goes back into the product. We\'ve
increased the number of hours of news and public affairs programming and
sponsorships of events and been able to employ 200 families to provide a
paycheck for them.

So any good broadcaster is going to pour part of the money into the
product and part of the money into profits.

MR. CROTEAU: I agree with the Chairman that the complaints about
programming that we\'ve heard have been chiefly about programming
that\'s responsive to what consumers want to see. And that does leave
out of the count programs that consumers don\'t want to see, at least in
large numbers. If it\'s in the public interest to subsidize such
programming, that\'s fine, but public broadcasting is not the way to do
it. If you want to subsidize programming, the programming should be
subsidized as programming and be available for any kind of outlet.
There\'s no reason to waste scarce spectrum resources on public
broadcasting stations that viewers don\'t know how to tune in.

MR. KRATTENMAKER: Mr. Rintels.

MR. RINTELS: I take the Chairman\'s point about Sony, not a small
business. But Carsey-Warner certainly was. It was two people with one
telephone . And it was by virtue of their innovation and creativity and
efforts that they became a large business.

So we\'re not pretending that the creative community or independent
producers are not in this to make a profit, but my organization doesn\'t
only represent those producers. We\'re talking about the people who
simply work on shows and we\'re not able to do our best work when it\'s
the networks who are calling all the creative shots and so I think that
independent production was a wonderful way for small businesses,
minorities and women to get into the television business. It took very
little capital. All you needed was a great idea, but that\'s gone now.
So really, the question for us is by virtue of the networks\' control of
the airways, should they be able to exclude all the other voices that
are out there? We don\'t think that\'s right.

Should they be able to monopolize the production of programming and not
compete in the marketplace of ideas. We just don\'t think that\'s right.

(Applause.)

MR. KRATTENMAKER: Mr. Winston?

MR. WINSTON: I just wanted to respond to the Chairman\'s comment about
Radio One. Certainly, we\'ve very happy that Radio One has had all that
growth over the last several years, but \-- and you\'re right, the total
number of African-American owned stations has grown primarily because of
the growth of Radio One.

The concern I have, of course, however, is looking at BET. The
African-American community pinned all of its hopes in television on one
company. That company sold out. Radio One is a publicly traded company
like every other publicly traded company, it\'s under pressure from Wall
Street financial sources to keep showing revenue growth or find itself
under pressure to sell out too.

I think that the African-American community shouldn\'t say that we\'re
going to pin all our hopes on one company no matter which company it is,
no matter how great they are. And I don\'t think the Commission should
ask us to do that either.

Thank you.

MR. KRATTENMAKER: Commissioner Abernathy?

COMMISSIONER ABERNATHY: Thank you. You\'ve brought up a lot of points. I
have many questions, but I know where to find you guys. I will submit my
questions. I\'d rather hear from all of you and if the audience has any
questions, I\'m happy to jump in, but I\'m just going to pass for now.

MR. KRATTENMAKER: Thank you. Commissioner Martin?

COMMISSIONER MARTIN: I just have one question.

Mr. Miller, you talked about the importance of changing some of our
rules for the maintenance of free over-the-air broadcasting and talked
about the limited revenue stream that they have and yet the increased
costs that they\'ve incurred, particularly going through the digital
transition.

Isn\'t there an opportunity though for them also to have additional
revenue streams from that if they chose to multi-cast in a digital
context? If that was the case, are there other things that inhibit,
maybe digital carriage issues, or whatever, but are there \-- is that
not a potential other additional revenue stream for them that would have
some positive benefits on the other side?

MR. MILLER: When you spent \$4 to \$6 billion are you likely to get a
real return on that investment and that\'s the unanswered question right
now.

As you know, we have problems with the rights, the rights when you
digitally send something over the year that it could be stolen by
someone. That has not been fixed yet.

We don\'t have the transmission standard is still not \-- we don\'t know
whether it\'s a robust standard yet and you\'ve certainly helped with
tuner issues and cable operability issues which were not solved, even
six months ago. And then you have the consumer that now has to spend a
lot of money to change a TV set and as you know, the average TV set
lasts anywhere between 15 and 20 years.

So there\'s a lot of pieces that have to be solved for it to be a robust
system, but yes, philosophically will we be able to multicast?
Absolutely. But right now, we don\'t have all the pieces in place to
even approach that yet.

MR. KRATTENMAKER: My thanks to the panelists. You all were terrific.
Thank you for braving the weather and coming down here.

We\'re now going to turn to a public comment portion of the meeting. I
notice that it\'s supposed to end in 10 minutes. We\'ll go on for at
least 20.

Dane, I think you have, are there some people who are waiting from last
time to speak?

MR. SNOWDEN: Sure. I would ask that Allison Bresnick, Dan Pottle,
Christopher Maxwell, Raine Burrows, Silver Persinger and Bob Wolfner be
the first to go to the microphones.

While they\'re doing that, I want to have a scheduling update. What
we\'re going to do is we\'re going to take this all the way to about
2:40 and then we\'re going to start the next panel immediately after
that so the next panelists please get ready at 2:40. We\'re going to
begin at that point. So we\'ll start with Allison. And again, you all
have two minutes.

MR. KRATTENMAKER: We\'re going to give you two minutes. The red light
will come on and will you please stop at the end of your time so others
can speak.

MS. BREZENCHEK (Phonetic): My name is Allison Brezenchek and I am the
Vice President of Media Reform for the Action Coalition for Media
Education. I want to first just specifically thank Commissioner Copps
for all of his advocacy efforts regarding the public interest of the
mass media. We really appreciate your commitment to that.

First of all, I want to say that being able to communicate to the public
is power. Mass communication. And one of the things we need to pay
attention to is what\'s not there and I want to specifically talk about
what hasn\'t been paid attention to related to these FCC hearings and
media deregulation. Why haven\'t these issues been in the mass media?
The mass media is there to inform us and to let us know about things
that are related to the public interest? Why haven\'t they been covering
these issues?

The only reason that I can think of is because of the financial
interests that they have in getting further deregulation to occur. And
that is a big conflict between financial interests and public interests
that are not being addressed here.

(Applause.)

I also wanted to comment on programming content. We\'ve had some
controversy in the panel about is programming content appropriate to be
discussing here and why is that being commented on? I think that again
goes back to the public not being informed. The reason why the public
doesn't comment on programming content is because most of them probably
don\'t know the FCC exists, don\'t know what deregulation is and don\'t
know the steps to take to voice their concerns. The only thing that they
do know is that they don\'t like what they see on television. What other
means do they have to comment about it other than program content? And
therefore, I think that\'s why they comment on that specifically. If the
mass media was educating them about deregulation and things of that
nature, then they would have more to talk about.

Related to consolidation, I think that consolidation leads to the
recycling of programming. A specific example is \--

MR. KRATTENMAKER: Thank you.

(Applause.)

MR. PODWELL: Hi. I\'m sure some of you are wondering why we dressed like
mad scientists today? And it is in response to a comment made by the
Chairman that he only wants to hear from media scientists and that our
commentary has been too emotional and too political.

Well, I\'m not a scientist, I am a tech, a very small radio station,
WPEB, in West Philadelphia and we don\'t run plugs. We don\'t do public
fundraising campaigns. We just have benefits, mostly in the forms of
parties. Occasionally, we get donations from our friends. We\'re a very
small station and we\'ve had a few grants.

I think our existence, it\'s a leftover from the 1970s. It\'s an old
Class D license and our existence is proof that the public interest is
not the same thing as business interest because we\'re the only kind of
voice for the kind of community in which we exist.

I know that we\'re talking about deregulation. I have to say I think
that Spectrum Management plays into the equation here. LPFM as was these
reforms that happened during Chairman Kennard\'s administration was a
big step forward and it was special interests, it was business interests
such as NPR, National Association of Broadcasters that pushed Congress
to eviscerate it. There was a rider attached to a budget appropriations
bill sponsored by Senator Rod Grahams who not surprisingly soon after
lost the election which is what happens \-- which is what ideally
happens.

MR. KRATTENMAKER: Mr. Podwell, thank you very much.

(Applause.)

Mr. Maxwell.

MR. MAXWELL: Thank you. My name is Christopher Maxwell. I\'m the Vice
President of the Virginia Center for Public Press. We are a low power FM
applicant. We train people to create their own television shows and thus
tell their stories their way without the filter of too many other
influences, editors, owners, advertisers, underwriters, etcetera. So
you\'ll hear a lot of things on our programs that may not be perfectly
polished, but we get a lot of viewers because we have authenticity to
offer. So we use say, for example, an ancient titler, an omega from
1984, but it gets the titles up and it doesn\'t seem to matter to our
audience.

A lot of the money problems come from concerns about creating a product
for a thin, rich slice at the top or the great masses and not
necessarily kind of all the leftover \-- people in between.

I\'m concerned that the studies, however, unfortunately, are irrelevant.
They\'re invalid. Here\'s the problem.

Mr. Powell, you voted against low power FM, in part, you said because
you were concerned that LPFM would take some listeners away from
commercial minority broadcasters that were on the edge of bankruptcy and
that might push them over or cause other problems. Well, okay, but in
band on channel digital audio broadcasting has been proven by tests and
by Clear Channel\'s own testimonies and tests to jam the signals of
stations adjacent to an ibox station. That doubling of the stations on
the dial then removes those stations from people\'s selections and
choices. That then means we go from say 33 stations on a car radio in
Richmond down to say 22 or 23. And what if that one station that
disappeared was the one station that spoke to your soul, the one station
that carried your news, your religion, your viewpoint, your ethnic news,
your whatever? Then it\'s a 100 percent loss.

So that means that we have already accepted \--

MR. KRATTENMAKER: Thank you, Mr. Maxwell. Your time is up. You can
submit your information for the record, as you continue.

Ms. Burrows, please.

MS. BURROWS: Hi. I\'m the mother of a

2-year-old living here in Richmond and I\'m very concerned about the
deteriorating quality of television in this country. When I was a child,
my parents made educational films and I sometimes appeared in them. They
were often shown on television, not only on PBS, but also the networks.

I wish I could find programs like that today for my little girl to
watch. The point is there were more ways back then for people to produce
interesting programs and get them distributed on television. Now the
media outlets are pretty much controlled by huge multinational
corporations.

The best programs don\'t get aired because of the obsession to maximize
profits.

Today, we are bombarded with sensational violent mindless shows. The
people of this country have no way to use airways that supposedly belong
to us except for local cable access TV. The FCC should be deeply
concerned about what is happening. They should protect the interests of
the people and look for ways to use their regulating power to encourage
the independence of the smaller stations throughout the country. We
don\'t want Fox and Viacom owning every station we turn to on the dial.
We do not want one corporation quietly buying up 1200 channels so they
can maximize profits by making pure programs. This is already happening
in radio.

Please do not make the same mistake in television. If we do still live
in a democracy which is at work in this room today, then we need to keep
television open for as many voices as possible.

I know I speak for so many parents in this country who grew up loving TV
and now worry about letting our kids watch it at all.

(Applause.)

MR. KRATTENMAKER: Thank you, Ms. Burrows.

Mr. Persinger (Phonetic)?

MR. PERSINGER: Hello, Chairman Powell and Commissioners. Thank you for
the privilege to speak to you today.

My name is Silver Persinger. I live in Richmond, Virginia. I come today
to tell you to oppose removing restrictions on ownership of media
outlets.

I come to you today, before you today as an advocate of the golden
American ideals of democracy, free speech, freedom of press, liberty and
freedom.

What we all know, but what hasn\'t been said is that television is the
most powerful source of propaganda in this country, a major source of
information, education and social values. Information is power, but
information is also wealth.

This marketplace of ideas and the funny thing about ideas is it\'s hard
to sell them. Ideas inherently are free and your whole \-- all this
stuff is centered around the economy and I identify myself as a
socialist and I feel real threatened by this dependency on economy to
justify every action and I don\'t know, I just don\'t see a real place
for socialism being discussed in commercial media which looks like the
way we\'re heading.

This is an essential tool of political speech and it\'s largely denied
to ordinary people. If you truly want diversity, you need to increase
public access to the media.

Just look \-- just take a look at the rules already enacted by the
Commission. One of the Commissioners or panelists mentioned that the
first rules banning ownership of multiple radio stations occurred in
1927. I think you would be forgetting the wisdom of previous FCC
Commissions. These rules were instituted at a time when there were fewer
stations and only about five years after the initial radio boom of 1922
and 1923. The Commission recognized the importance of the distribution
of information.

MR. KRATTENMAKER: Thank you, Mr. Persinger.

Is Mr. Vuckmer there?

MR. VUCKMER: Thank you. My name is Bob Vuckmer. I am a citizen or as
referred to by a panelist, I\'m a consumer. I object to that
classification. I\'m here as a citizen and a resident of Virginia. I
want to state very clearly that perception in my opinion is reality.
Everyone creates their own reality, so I\'m speaking in terms of my own,
really for my wife and I.

I\'m going to speak about a reality that is my perception and the
perception is that what I\'ve heard today, we\'re really talking about
corporate policy as opposed to public policy and when I say public
policy I mean citizen policy. I get enough phone calls and attempts to
take my money as a consumer. I don\'t want to be thought of as a
consumer by a public agency, the FCC.

Secondly, we have lost our ability in America through the media. Free
press, in my opinion, is all the media. To agree or disagree, we have
come, I think, in a fashion and form now where it\'s only fashionable to
agree. Whatever the opinion is that is being pushed, by the media, by
whatever media outlet, is the one which we\'re expected to agree, with
which we\'re expected to agree. And I disagree with that.

I think a free press, a free media means that there\'s this antagonism
that everyone talked about in this room that allows free exchange of
ideas whether you agree or disagree, but you come to some resolution as
a result of that disagreement.

That isn\'t happening any more. I think what we\'re finding \-- my real
concern is news. I find we\'re getting a lot more entertainment than we
are news. The content is awful. For those people who run stations, media
outlets, you need to understand we\'re tired of the garbage, in my
opinion, what we\'re getting served up as news is not news. It is
entertainment.

Finally, I want to say that the experiment in Richmond was we used to
have more than two newspapers. We eventually had two newspapers and
those two newspapers were merged. One I found was a little bit more
moderate than the surviving entity \--

MR. KRATTENMAKER: Thank you, Mr. Vuckmer.

You can submit your information for the record as well.

We\'re now going to begin to alternate. We\'ll start with the right and
go to the left. Again, two minutes. Yes sir.

MR. LABLAU: Yes, Mr. Commissioner, Members of the Commission, my name is
Danny Lablau (Phonetic). I\'m President of the Virginia State AFL-CIO
that represents over 200,000 working families here in the State of
Virginia. These working families depend upon a diverse and free media to
participate in our democracy. I\'m worried about the concentration of
media ownership into fewer and fewer hands. Here, in Richmond, a city of
over 200,000 people, the state capital, we have one daily newspaper,
[The Richmond Times-Dispatch]{.underline}. It\'s owned by Media General
with a circulation of about 200,000 with about 230,000 on Sunday. We
have three TV stations, the ABC, CBS and NBC affiliates which produce
local news shows four times a day. The Fox affiliate produces a 10 p.m.
newscast. There are no locally produced cable news shows. So we have
four or five, if you include Fox, as major news sources in Richmond. If
you allow any of them to merge, we\'d only have three or four.

Just look at what happened to radio in Richmond since the 1996
Telecommunications Act dropped its national radioship ownership rule.
The four largest radio stations now control 90 percent of the market,
according to your study. The number of independent radio station owners
in Richmond has dropped 31 percent since 1996.

Now I hear that Media General, the owner of the major newspaper is into
something called convergence. They want to own a TV station where they
own a newspaper and then share the news operation. I fear they have
Richmond on their radar screen.

I shudder to think what this would mean. They would dominate the news
market and drive up ad prices. Working people have a hard enough time
getting fair reporting in this state. If we even have fewer media
owners, it would be even harder to get fair coverage from workers\'
point of view.

Politicians would have to pay even more for their ads, print and media
or electronic media.

MR. KRATTENMAKER: Thank you, sir. I remind you to please state your name
for the record as well.

Ma\'am?

MS. SMITH: My name is Laura Smith and I\'m from Austin, Texas where I\'m
a doctoral student at the University of Texas at Austin. I also worked
in television news for about 13 years before I went back to school to
teach the next generation of broadcasters.

I would like to actually reference directly the issue of duopolies and
much deference to Mr. Munson in what he\'s doing at WAVY. This is not
the case in many duopoly conditions around the country.

In Jacksonville, Florida when Gannett purchased the Albritton station in
1999 under one of the first television stations allowed to do this, they
immediately dismantled the news operation and fired the majority of the
news staff, although they kept the entirety of the sales staff.

I would like to say they are now simulcasting one news product on two
television stations, one an ABC affiliate, the other an NBC affiliate.
They are maintaining the entertainment programming, but they have
disassembled entirely the news gathering operation and until those sorts
of issues are addressed in what can happen both pro and con, I think
that\'s something that the FCC really needs to take into consideration
when it\'s looking at relaxing its duopoly rules.

I also want to mention that in the issue of the national cap, there are
many companies such as Sinclair and others who are looking at going to
regional casting as a result of being able to purchase more television
stations around the country. This means they\'ll inevitably knock off
local producers and reporters in order to go to a regional casting
issue. This is something that local citizens need to be aware of and
that the FCC, I think, should be responsible for protecting their
interests when they get out there.

Finally, I\'d like to just make a quick statement about the quality of
the 12 empirical studies that the FCC is going to base its decision on.
I\'ve read all 12 of them and in due deference to the FCC Members who
are here who worked on those studies, there is a great deal of missing
data in those studies, the theoretical foundations, the social science
research there. As a social scientist now and a former journalist, I
have great issue with some of the quality controls that were put in
place in how this issue is being measured by the FCC. I think we need a
great deal more research before you take any further steps and I applaud
Commissioner Copps for his willingness to do more public hearings
because 12 people talking at a hearing like this is not nearly enough.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. This will be the last public comment before
we go to the next panel, but I\'ll ask a member of my staff to come over
and get the names so we can start the list again.

Yes ma\'am.

MS. BALATTA-DALY (Phonetic): My name is Darva Balatta-Daly and I\'m a
volunteer with the Prometheus Radio Project in Philadelphia, although I
drove down from Upstate New York where I live to be part of this. Thank
you, Commissioner Copps, for giving me the opportunity to drive 800
miles. I appreciate it. I do.

How did the FCC get away for 70 years without having any empirical basis
to these rules?

(Laughter.)

Ownership is power that\'s well understood. I don\'t think that we need
an economist to tell us that.

The public interest, diversity and localism, those issues get thrown
around and they expand and contract through this room with each person
that talks about them. I have my own version of that and I\'d like to
share an anecdote with you. I was at a low power FM station a couple of
years ago. It was unlicensed because the community wasn\'t served and
there wasn\'t the possibility of getting a license. So they pitched in
and got some equipment, put it up in a house and everybody in that
neighborhood listened to it. If the police were out, or if somebody
would call out, hey the police are out, everybody would be out on the
street to see what the police were about. I had the opportunity to see
this with my own eyes.

A viewer called into the station and said I don\'t know where my
daughter is, has anybody seen her? The DJ announced that. A minute
later, the phone rang and she\'s on her way home. That is the kind of
diversity and localism that we\'re talking about.

Two hundred forty-seven different ethnicities that Americans identify,
that\'s what the Census says. You\'ve got the census data available. You
can use that. Forty-one different language families. Creole is spoken in
the United States, not just Spanish and English.

We\'ve got a real different idea of what character of community can be
and what localism can be. I hope that the FCC will seriously consider
the social science aspect of this and look very closely at what the
relationship is between a market area which is created by industry data
and is used by the industry and what actually communities are. Okay?
Because I don\'t think that there\'s a correlation, but it\'s the FCC\'s
job to prove to the public that there is a correlation.

The same thing goes for consumers versus citizens. The FCC, if you
believe that consumers and citizens are the same thing, then prove it to
us. Show it. Make it transparent.

MR. KRATTENMAKER: Thank you very much.

(Applause.)

MR. KRATTENMAKER: We\'re going to begin the next panel. Please get
ready.

(Pause.)

As the Chairman explained, we\'re regretfully trimming you down to four
and a half minutes. When the red light comes on, will you please stop
and so I shall shut up and give you the time you have remaining.

I\'m sorry, I\'m going to mispronounce, Mr. Blethen.

MR. BLETHEN: I\'m Frank Blethen. I\'m the publisher of [The Seattle
Times]{.underline}. [The Times]{.underline} is a 106-year-old family
business. For five generations, my family has passionately pursued a
singular obligation, to fulfill our public trust responsibility to serve
our communities with independent journalism that\'s relevant to them.

I\'m here today because American democracy is in crisis. It is at risk.
A democracy needs a free and independent press to survive. In the words
of a great journalist, Walter Lipman speaking about 50 years ago,
\"there is, I believe, a fundamental reason why the American press is
strong enough to remain free. That reason is the American newspaper,
large and small, and without exception belongs to a town, a city, at the
most a region.\"

We are long past our free press because few newspapers and few media
outlets any longer belong to a town or a region. The loss is being
driven by two troubling trends, one is the egregious ownership
concentration and loss of local connection for newspapers, television,
radio and cable. The other is the insidious transformation of our large
media companies into ownership by Wall Street financial investors. Wall
Street has a singular \--

\[END TAPE 3, SIDE B; BEGIN TAPE 4, SIDE A.\]

\-- term earnings and stock price. Not news, not public service and not
democracy.

The specter of media dominance by a small handful of conglomerates
controlled by faceless, financial institutions and driven by CEO stock
options is enough to scare George Orwell.

When I started with my career, there were about 1500 daily newspapers in
the United States, most locally or regionally owned. Today, only 35
years later, there are only about 280 independent daily newspapers left
and very, very few serving metropolitan areas.

In the old days, long tenured publishers and editors had deep
connections with the cities and regions they served. Today, few
publishers, editors or station managers even come from the communities
they work in. Few of them stay very long. Few publishers have news
backgrounds or even news sensibilities.

America\'s news rooms have quietly been transformed from democracy\'s
watchdog into corporate lapdogs. One only needs to ask why FCC pleadings
to relax radio and TV concentration rules and to repeal the cross
ownership trend have been outside the bright light of press scrutiny.
When huge corporations lobbying for their own financial self-interest
also control most of our news rooms, does anybody wonder why there is
such a chill?

I\'ve heard the arguments of proponents of cross ownership repealed.
I\'ve noted that they are made only by large companies driven by the
quest to grow ever larger. The most frequent argument is that the
internet and cable have created information and access proliferation.
That is not accurate. There are still limited sources of professional,
credible news and opinion. Indeed, the public company quest for ever
higher profits have put incredible pressure on our remaining few news
rooms. Most journalists believe there has been a serious disinvestment
in news and a dumbing down of media, in general.

The correct issue is whether we still have and can maintain
well-staffed, professional news rooms that can keep Americans informed
about their community and about their country. Getting the same often
shallow information delivered a thousand different ways does not provide
a substitute for robust, independent, news generation.

This argument also ignores that single corporate entities are now using
their various platforms and extensive control to simply recycle
information and programming and to promote their own products often in
the guise of news.

I urge the Commission to return to your most basic obligation, to ensure
we preserve and nurture our democracy. Your obligation is bigger than
cross ownership or the other concentration rules, but that\'s what\'s in
front of us. Repeal of cross ownership and relaxing of the other rules
would be a giant crack in the foundation of our democracy. We have seen
the unintended consequences of the 1996 Telecommunications Act. We\'re
beginning to see the negative consequences of the Commission\'s relaxing
of other radio and TV concentrations \--

MR. KRATTENMAKER: Thank you, Mr. Blethen. Your time is up.

Mr. Herwitz?

MR. HERWITZ: Good afternoon. My name is Tom Herwitz. I\'m President of
Station Operations for Fox Television Stations. Given our record in
local news and service, we at Fox are frankly confounded by the argument
that allowing us to own stations that reach more than 35 percent of the
country will threaten competition, diversity and localism. I hope I\'ll
show today that the opposite is true.

Today, at our stations, 35 stations across the country, we produce and
air more than 800 hours of original, regularly scheduled local news per
week, more than anybody else in the country.

I joined Fox from the FCC actually in 1986 when our first six stations
were bought. Those stations did 23.5 hours of news and three of them in
Dallas and Chicago and Houston aired no news at all. Today, those same
stations produce every week 195 hours of local news, an eight-fold
increase. And on the station in Dallas, for example, we broadcast 43
hours per week.

In many markets, we\'ve produced and aired more local news by 9 a.m.
than our competitors will air all day long. What empirical justification
is there to keep Fox from bringing this kind of commitment to additional
communities?

We also provide local news service that is unique to many communities,
often in dayparts where there is no other local news and prime time and
in the morning. We\'re baffled that some broadcasts say they\'re more
local, more dedicated to serving their local communities than Fox
because their group doesn\'t reach 35 percent. The facts completely
belie this. Deb McDermott who is down to my left is a wonderful
broadcaster, but her Richmond station here is not more local than ours.
When I call her, I call her in Nashville and I call Vince Young in New
York City. Our local managers, as theirs, have editorial autonomy which
we believe benefits the stations as well as the viewers.

Secondly, we emphatically dispute that our stations have less than the
highest commitment to serving their local communities. Take our station
in Detroit, WJBK, which I use because one of our principal competitors
there, WDIV, is owned by Post Newsweek station, an outspoken advocate of
keeping the 35 percent cap, arguing that companies whose stations don\'t
reach the cap are better local operators. But we have 50 percent more
news than WDIV. Our station has been chosen Broadcasters Association
station of the year four years in a row. Our problem solving news takes
on local Detroit issues every day. We shut down prostitution rings near
schools. We got the school district to recognize that they were
operating abandoned buildings that were drug and prostitution and
rat-infested by schools. We brought to the attention of the Detroit
Water and Sewage Department that had to clean up their operations after
we showed workers spending their days drinking, smoking marijuana and
dangerously driving large city-owned trucks while intoxicated.

WDIV is a strong competitor and whether they\'re better or worse than us
really isn\'t the point. It seems that if the Commission\'s task as the
Court seems to order is to find empirical evidence to justify preventing
Fox from owning additional stations in light of the facts, the hard
evidence of our stations\' service in communities like Detroit, it\'s
hard to understand what Post Newsweek or any of the other evidence is or
possibly could be.

Given this commitment to our local communities, what is the evidence
that our ownership harms competition, diversity and localism? Given our
track record, how can the government justify a rule that requires us to
shut down stations or sell stations in Austin where we do 30 hours;
Greensboro, 35 hours; Birmingham, 41; we\'re the news leader there;
Kansas City, 48 hours, in order to get below a 35 percent cap.

MR. KRATTENMAKER: Thank you, Mr. Herwitz. We\'ll take those last three
questions, not as questions, but as statements.

Mr. Mays?

MR. MAYS: Good afternoon.

MR. HERWITZ: I\'m sorry, can I just finish. I just want to say that we
believe and I think it\'s shown that what we brought, what Fox has
brought through Rupert Murdoch\'s version through the \[Inaudible\]
deregulation and other things that we have brought to \--

MR. KRATTENMAKER: Mr. Herwitz, I\'m sorry, I believe that we have heard
and I believe that in all fairness to the other members of this panel, I
should move along.

Mr. Mays?

MR. MAYS: Good afternoon, Chairman Powell and Members of the Commission.
My name is Mark Mays and I\'m the president and chief operating officer
of Clear Channel Communications. Thank you for inviting me to testify
about the importance of localism in radio broadcasting.

Some have spoken of the radio experience as the canary in the coal mine,
providing evidence of the dangers of deregulation, dangers, they say,
that await other media that would follow in radio\'s footsteps. But this
analogy, although it may be colorful, just doesn\'t apply for one simple
reason. The canary isn\'t dead. To the contrary, it is alive and well,
healthier and more robust than ever before, far from being dead, radio
is experiencing a new vitality and is providing excellent service to
local communities all over the country.

In order to fully appreciate the new vitality of the radio industry, you
must remember back to the early 1990s when many stations were simply
struggling to survive. It was a different world then, just 10 years ago.
Half of all radio stations operated in the red and many others close to
it.

Of course, the first thing many of these stations did in those rough
financial times was cut their local news budget and even shut down a
news department entirely. Local audiences suffered. Though with
deregulation and the ability to own more stations, companies like Clear
Channel could create economies of scale and benefit from cost savings.
And we, like many other broadcasters have reinvested those savings in
our stations improving technical facilities, hiring better on-air talent
and increasing the quality of local programming.

Study after study demonstrates that consolidation has led to increases
in the diversity of formats available to listeners and local markets,
large and small. Here in Richmond, there were only 16 different formats
in 1995. In 2002, that number has grown to 25. That\'s more than a 50
percent increase since deregulation.

Now it\'s true that while there are more formats, there are fewer
owners. It\'s also true that Clear Channel owns 1200 radio stations.
However, it\'s important to put those numbers in context. While Clear
Channel owns 1200 stations, that represents just 9 percent of all the
radio stations in the U.S. Put another way, more than 90 percent of U.S.
radio stations are owned by nearly 4,000 other companies.

I\'m not here to dispute the fact that we\'re a large company or that
consolidation has occurred, but I will strongly dispute the notion that
consolidation has led to a reduction in localism. We succeed by
intimately knowing the local community we serve and tailoring our
programming to meet their unique needs and tastes. This is true every
minute of every hour of every day.

If listeners don\'t like what they hear, they will turn the dial. It\'s
that simple. One tired song, one commercial break that lasts too long or
a failure to provide timely news or traffic and the listener is gone.
That\'s why we run Clear Channel in a completely decentralized manner.
We operate like an association of small, local businesses. Our local
station managers and program directors make every decision about what
music gets played on our stations and how often. They develop the play
list based on extensive local audience research, listener requests and
first hand knowledge of their own communities.

At Clear Channel, there is no such thing as a standardized play list.

To those who would say that radio has become more homogenized since
deregulation, let me dispel that myth as well. Since 1999, the number of
unique songs and artists we play has increased by 30 percent, reflecting
the fact that Clear Channel radio stations are actually playing a
greater variety of music every year. I\'m pleased to say that our
dedication to localism has been recognized time and time again. Last
year, our Richmond stations won awards ranging from best locally
produced radio show, to best traffic reports, to best local broadcaster
of the year. And our local managers take great pains to introduce
listeners to new artists. Here in Richmond, for example, WRXL, there\'s
a one hour program each Sunday night featuring local and regional bands.
Up the road in Washington, D.C., DC-101 New Music Mart every Sunday
night.

In fact Carbonleaf, an unsigned band from right here in Richmond, has
seen its music move from the Sunday night show to DC-101 power rotation.
But we don\'t just serve our communities by playing the music our
listeners want to hear. Clear Channel stations around the country are
deeply involved in a wide variety of local, civic and charitable events.

The bottom line is that good radio is local radio.

MR. KRATTENMAKER: Thank you, Mr. Mays.

Ms. McDermott?

MS. McDERMOTT: Thank you for conducting today\'s hearing in Richmond and
for allowing me to appear. I\'m executive vice president of Young
Broadcasting, Inc. which owns and operates 11 television stations in
various markets, including WRIC-TV, an ABC affiliate in Richmond.

I respectfully urge the Commission not to modify or repeal the 35
percent national television ownership cap. The 35 percent cap is
essential to localism, the bedrock principle on which the
congressionally mandated broadcast system is based. The principle of
localism is uniquely American. It has its roots in our federalist system
of government. As Virginia\'s favorite son, Thomas Jefferson warned his
friend, Gideon Granger in 1800, our country is too large to have all of
its affairs directed by a single government. Public servants at such a
distance and from under the eye of their constituents must, from the
circumstance of distance, be unable to administer and overlook all the
details necessary for the good government of the citizens.

For the very same reason, Congress rejected the notion of a highly
centralized system of terrestrial broadcasting. Unlike the governments
of Europe, Congress opted for a system that would assure to the fullest
extent possible that America\'s television stations would be responsive
to the special needs and interests of the local communities they are
licensed to serve. As it is self-evident today, as when Congress created
the current system of broadcasting, that it is not in the national
interest to have all the nation\'s television broadcast programming
dictated each day, every day, seven days a week, 52 weeks a year and
year after year by a handful of station owners.

Some of you have asked, how would viewers know the difference if the cap
were raised? Viewers will know because network owned stations must serve
their parent network national and international program distribution
interests and the interests of their station\'s local viewers. Those
interests are often in conflict. A non-network owned station in contrast
has but a single responsibility to only serve the interests of its local
viewers. The interests of local viewers is the essence of localism.

Localism has meant that the citizens of Springfield, Missouri were
spared an episode of NBC\'s Fear Factor when the local station
determined the program would be offensive to local viewers. No NBC
station rejected, to my knowledge, a single episode of that show.

Localism has meant that viewers in North Dakota, Virginia, South Dakota,
South Carolina and other states have been able to watch Billy Graham on
their local stations. That, of course, would not have occurred if these
stations had been owned by a network. Localism has meant a Fox affiliate
in Raleigh, North Carolina was able to reject Fox\'s \"Temptation
Island\" because it refused in its words to support a program that could
potentially break up the parents of a young child. To my knowledge, none
of the Fox owned stations rejected \"Temptation Island.\"

Localism has also meant that NBC affiliates collectively were able to
persuade NBC to allow them to carry a presidential debate rather than a
major league baseball playoff game scheduled by the NBC network. None of
that, of course, would have occurred had NBC owned their affiliate.

For 20 years, our company\'s Louisiana station has aired a live
broadcast of the rosary in a very Catholic area, early each morning.
When we wanted to expand our local news and move the start time of the
rosary program, our network vehemently objected because the rosary
program would encroach on the network\'s early national news. If our
station were owned by the network, the rosary would not be on the air.

An increase in the national cap will reduce the number of television
stations to which independent program producers can sell programming and
in turn will eventually reduce the already small number of independent
program companies. This is, of course, of great concern to our company.
Right now, 70 to 80 percent of our programming comes from the network
and with some companies, 100 percent of our syndicated programming is
coming from one syndicated company.

The balance of power in the program market has already shifted to the
networks. If you raise the cap, you will nationalize the nation\'s local
broadcast system. The network argument for increasing or repealing the
cap is purely financial. They claim they can no longer compete unless
they acquire ownership of their affiliates. It is a tired and hollow
argument. The networks have made it for years. If the networks owned
television stations in America they would have the same argument.

I don\'t know what Thomas Jefferson would think about the \"Fear
Factor\" if he were alive today, nor do I know if he would enjoy a Billy
Graham Crusade, a presidential debate or a rosary program, but I think
he would concur that the local television station in Charlottesville
should reflect the core values of the people of Charlottesville and not
merely the national and international program interests of a major
national television network.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. Mr. Powell?

MR. POWELL: Thank you. My name is Chris Powell. I\'m the managing editor
of the [Journal Inquirer]{.underline} in Manchester, Connecticut, the
daily newspaper serving 17 towns east and north of Hartford. I\'m here
to protest Tribune Company\'s monopolization of the news media in
Connecticut and to urge the Commission to enforce the cross ownership
rule against Tribune instead of repealing the rule.

The Tribune already owned two of the six privately held television
broadcast licenses in Connecticut three years ago when it bought the
[Times Mirror]{.underline} newspaper chain. Acquiring [Times
Mirror]{.underline}, [Tribune]{.underline} became owner of
Connecticut\'s largest daily newspaper, the [Hartford
Courant]{.underline}, two other Connecticut dailies, the [Stamford
Advocate]{.underline} and [Greenwich Time]{.underline}; the four weekly
newspapers of the [Advocate]{.underline} chain in Hartford, Fairfield
County and New Haven, Connecticut and Springfield, Massachusetts and the
Valu-Mail direct mail advertising company in Hartford. When Tribune
acquired [Times Mirror]{.underline}, news reporting said that a big part
of the corporate plan was to obtain control of TV stations and
newspapers and overlapping markets and to coordinate their operations in
deliberate violation of the cross ownership rule, but in anticipation of
the rule\'s repeal. That is what has come to pass in Connecticut, where
the [Courant]{.underline}\'s and [Tribune]{.underline}\'s two TV
stations now promote each other constantly and exchange features.

As [Tribune]{.underline} now uses its grant of government monopoly on
two channels on the public airwaves to give the [Courant]{.underline} a
big advantage over all the other newspapers in Connecticut, the
[Courant]{.underline} has made exclusionary contracts with newspaper
feature syndicates. That is, the [Courant]{.underline} has made its
purchase of certain newspaper features conditional on promises by the
feature syndicates not to sell those newspaper features to my paper.

The worsening concentration of ownership in the news media in
Connecticut does not end with Tribune Company. In the last few years,
the [Journal Register]{.underline} newspaper chain has obtained not only
the daily newspaper in New Haven, but also the weekly newspapers in New
Haven suburbs and the Media News Group newspaper chain has obtained not
only the daily newspaper in Bridgeport, but also the weekly newspapers
in Bridgeport suburbs, that is, in Connecticut the so-called alternative
press is now owned by the same big company downtown.

Announcing today\'s hearing the FCC press release of February 7th said
\"the FCC\'s goal is to promote competition, diversity and localism in
the media.\" I\'d like to know how competition, diversity and localism
in the media are promoted by the FCC\'s giving two of Connecticut\'s six
privately held TV broadcast licenses to an out of state conglomerate
that already owns three major newspapers, three weekly newspapers and a
direct mail company in the state when as a practical matter no other
newspaper company in Connecticut can have even one broadcast license.

Some people say the cross ownership rule should be repealed because the
internet and cable television are providing plenty of competition in the
news media. I don\'t know where these people live but they can\'t be
living in Connecticut. The state and local news and advertising provided
by the internet and cable TV in Connecticut are negligible. News and
advertising in Connecticut are 99 percent matters of TV and radio
broadcasters and newspapers.

Indeed, if the internet and cable TV were really providing so much
competition in the media, the conglomerates would be happy to expand by
enterprise that way instead of by acquisition of the existing
traditional media properties, existing broadcasters and newspapers. But
no, Tribune and other big media companies are expanding through cross
ownership of existing properties because the big media companies
consider cross ownership to be their best opportunity for growth and
gaining control of a market.

The awarding of broadcast licenses \-- government grants of monopoly on
the public airwaves \--can be conducted in only two ways, to diversify
ownership of the media or to concentrate ownership. The cross ownership
rule has been a small, but clear affirmation that diversification is
better than concentration. On a national basis, it has been a guarantee
of a little diversification, though only a tiny fraction of the
diversification we could have.

I have never understood why we let anybody have more than one broadcast
license in this country.

Repeal the cross ownership rule and we are sure to get a lot of the
concentration that it was meant to prevent. That is precisely why the
FCC is being asked to repeal the rule. Repeal the cross ownership rule
and by government decree and patronage, Connecticut will be awarded the
Tribune Company. We\'re a small state, but we deserve better public
policy than that.

Thank you.

(Applause.)

MR. KRATTENMAKER: Thank you. Mr. Sturm?

MR. STURM: Good afternoon. I\'m John Sturm, president and CEO of the
Newspaper Association of America. I\'m grateful for the opportunity to
appear before you this morning, this afternoon, because in the 28 years
since the newspaper broadcast cross ownership rule went into effect, my
association has never had an opportunity before to bring our view of
this issue in front of the Commission.

I will take the next few minutes to demonstrate the important role that
newspaper broadcast cross ownership can play in enhancing the quality
and the quantity of news and other local content available to the
public. Once upon a time, long ago, the FCC affirmatively encouraged the
participation of newspaper publishers in the broadcast industry. Even in
its 1975 order adopting the ban, the FCC expressly recognized the
traditions of service that newspaper publishers brought to the
broadcasting industry. These facts have not changed.

The Commission also found in 1975 that there was no evidence that
commonly owned newspaper and broadcast stations posed any threat of any
competitive behavior and that, on average, stations co-owned with local,
daily newspapers, provided more news and nonentertainment programming
than other TV stations. Happily, these facts too have not changed.

It makes perfect sense that newspaper owned broadcast stations would
excel in news coverage and informational programming given their
extensive news gathering resources and their strong ties with the
community. Indeed, daily newspapers are by their very nature more deeply
involved in and aware of the activities, concerns, and issues affecting
their local communities.

The best evidence of the impact of cross ownership can be found in
another set of facts, the records of the 40 grandfathered newspaper
broadcast accommodations that exist today, representing the full gamut
of market sizes from Mile City, Montana to Chicago, Illinois. These
co-owned facilities consistently have provided their home communities
with unmatched levels of service. By way of example, in the Cedar
Rapids, Iowa market, KCRG-TV, KCRG-AM, which are jointly owned by the
[Cedar Rapids Gazette]{.underline}, offer more news than any other
stations in their markets. The stations make use of a wide array of
newspaper resources, including an ombudsman employed by the
[Gazette]{.underline} to review the fairness and accuracy of the news
reports offered by both the TV station and the newspaper.

Similarly, WEOL-AM, co-owned with the [Chronicle Telegram]{.underline}
in Lorraine, Ohio, provides an impressive 24 hour news service with the
local news every hour on the hour as well as news summaries every half
hour during the morning and afternoon drive.

And finally, in the much smaller Sioux City, Nebraska market, WJAG,
Inc., owns both the [Norfolk Daily News]{.underline} and WJAG-AM. As a
result of this cross ownership, WJAG has built a solid reputation for
its news reporting, operations, earning it more than 35 awards in the
past several years.

These and the numerous other firsthand experiences in other markets have
been filed in the Commission\'s record by NAA and many other parties
such as Gannett in Phoenix, Media General in Tampa, Belo (Phonetic) in
Dallas and Tribune in Chicago, Los Angeles and other markets.

These results are confirmed by the FCC\'s sponsored studies that have
been conducted on newspaper broadcast cross ownership. Indeed, while
there have been some criticisms of some of these studies, the evidence
that broadcast stations jointly owned with daily newspapers provide your
communities with both more and higher quality news and informational
programming has not been seriously questioned.

Specifically, the Spavins Study found that affiliates co-owned with
newspapers experience noticeably greater success under our measures of
quality and quantity of local news programming than other network
affiliates.

Ladies and gentlemen, the Commission\'s record establishes this set of
facts that must guide your decision on this matter. The media world is
totally different now as compared to when this ban went into effect in
1975; no one can seriously suggest otherwise. Second, the experiences in
the 40 grandfathered markets over 28 years have demonstrated a complete
absence of harm. And third, the Commission\'s record and your own
studies, reveal an abundance of superior service by newspaper-owned
local stations. The ban is long outdated, has no current basis and
should be immediately repealed in full. The only thing proven that this
ban has done is deny public interest benefits to the great number of
markets in this country.

MR. KRATTENMAKER: Thank you, Mr. Sturm.

Ms. Toomey?

MS. TOOMEY: Good morning. On behalf of the Future of Music Coalition, I
want to thank you for the honor of testifying today and I also want to
thank the inspiring audience for coming out and letting their voices be
heard.

My name is Jenny Toomey. I\'m a rocker and a businesswoman and an
activist and I speak to you today as a working musician and the
executive director of the Future of Music Coalition. Most working
musicians aren\'t super stars. Rather, they\'re independent and local.
For the past three years, the Future of Music has worked on issues from
webcasting to health care, but one issue unites our entire constituency
and that\'s lack of access to the radio.

Given these concerns, last February we began an 8-month research project
to examine the problem. In the study we asked the basic questions, how
has ownership of commercial radio changed and does the radio serve the
essential regulatory priorities of localism, competition and diversity?

Our study finds the following: there is scant evidence that these
priorities are improved in any way by the radical restructuring of the
industry that has taken place over the past six years. Rather, this
restructuring has damaged a precious public resource. Localism has
withered. The industry has lost one third of its owners and every local
market is controlled by four companies or fewer.

Those few independent operators who are less concerned with reaching the
most attractive demographics cannot compete in an environment where a
handful of media corporations control every local market. And there is
scant evidence that radio listeners, radio talent, government, social
service agencies and the music community does not benefit from these
changes.

The fundamental regulatory structures that have governed radio for
decades are overturned and the public deserves an accounting of the
impact of these changes and a true seat at the table as further changes
are debated.

The radio industry defends its consolidated state by pointing at the
other industries and saying we\'re not as bad as those guys, but they
aren\'t those guys. Radio is not private property. Radio is a public
resource, regulated by the government on behalf of citizens. The
question is not the gross number of owners. The question is how many
owners exert control in a local market.

When measured according to market concentrations of both listenership
and advertising dollars, radio demonstrates the same principles of
oligopolistic control now.

In virtually every local market of the country, four companies or fewer
control over 70 percent of the market and in most cases those owners are
not local.

The broadcast industry claims this reduction in local ownership is not a
problem. In fact, they say fewer owners in a market leads to more
diversity. They say radio companies will avoid competing with themselves
in single format in a single market. Yet, our study found regular and
substantial overlap between supposedly distinct formats. In the most
extreme case, in the week of August 2, 2002, the national charts for two
supposedly distinct formats overlapped at a 76 percent level. In other
words, 38 of the 50 songs on the to play list were the exact same songs.

Furthermore, this argument misses the fundamental logic of the value of
the station group. The primary goal of the station group is to (1)
attract the largest possible number of listeners and the most attractive
demographics and (2) to ensure that if a listener changes a station,
they change it to another station owned by the parent company. In other
words, the incentive is not to provide a diversity of programming to
serve local communities with a range of news, entertainment and
information. The economic incentive is to assemble a homogenous
landscape of overlapping and economically lucrative audiences that
generate the most revenue.

In the February 18th issue of [Fortune Magazine]{.underline}, Clear
Channel CEO Lowery Mays articulated the importance of revenue generation
at his company. He said \"we\'re not in the business of providing news
and information. We\'re not in the business of providing well researched
music. We\'re simply in the business of selling our customers
products.\" This, I would argue is the fundamental problem at the heart
of the media deregulation. The stated effort to promote competition,
localism and diversity through less oversight has merely led to an
increased emphasis on the bottom line. On the expense side, the
incentive for radio companies is to centralize operations, increasing
the use of syndicated programming, applying new technologies like voice
tracking and cutting costs. In many cases, this syndicated programming
is also owned by the radio parent company.

These strategies increase profit of the parent company, while
diminishing the local connection between the citizen and locally
licensed station.

Our radio study makes a strong case that concentration has distorted the
health and functioning of the radio market, but there are signs of this
negative change that go beyond the numbers in our study. At the most
recent Future of Music policy summit, Congressman Mark Foley explained
that as a result of radio deregulation, the number of local stations
that would provide him access to his constituents has diminished from
five to one. I suspect the station owners like Mr. Mays who decided that
the kind of local news programming that would have previously welcomed
the Congressman on to the airways is now not cost effective.

If this is happening in Florida, we can bet it\'s happening all over the
country and if this doesn\'t raise questions about the damage that
increased consolidation could inflict upon our participatory democracy,
I don\'t know what does.

(Applause.)

MR. KRATTENMAKER: Thank you. I would like to thank the entire panel and
two particulars. One, I\'ve noticed that all the Commissioners have said
will you please bring us facts and data with which we can assess our
rules and I think every single one of ou really listened to that. I
think you really need to be commended for it.

Secondly, I\'m not going to apologize for the weather because I didn\'t
create it, but I do want to say that I\'m sorry, I appreciate the way
you all condensed your remarks to 90 percent of the already condensed
that you intended to bring here and I think you showed great good spirit
and good charm about it.

Thank you very much.

We turn to questions from the Commissioners now. I realized I\'d been
going in the same direction every time. That\'s not fair to Commissioner
Martin, so I thought I\'d start with you, sir.

COMMISSIONER MARTIN: In the interest of letting the public go ahead and
comment as much as possible, I\'ll pass.

MR. KRATTENMAKER: Commissioner Abernathy?

COMMISSIONER ABERNATHY: I\'m going to do the same thing.

MR. KRATTENMAKER: Chairman Powell?

CHAIRMAN POWELL: I\'ll pass too. I had one status report though that I
wanted to share with Mr. Mays because it was Commissioner Adelstein that
sent that canary down into the mine to test the air down there and we
just heard back from him this morning and you\'re right, he\'s not dead.
Actually, what happened when he flew into the mine, he immediately got
acquired and he\'s now programming 12 radio stations from the coal mine.

(Laughter and applause.)

MR. KRATTENMAKER: Commissioner Adelstein?

COMMISSIONER ADELSTEIN: I guess Mr. Mays didn\'t think that the canary
image flew. It just didn\'t fly. I\'m going to pass in the interest of
time so we can hear from the public.

MR. KRATTENMAKER: As much as I would like to turn some questions to the
Panel too, I think we\'ll, if we have time later we\'ll come back to
them. Let\'s go to the public.

People who want to make comments, please move up to the microphone.
Watch the signal here. At the end of one minute you\'re going to be
given a red light and we are going to cut you off, not because we don\'t
like you, but because we want everybody to have a chance to speak.

Sir, please state your time.

MR. MAZURSKY (Phonetic): Michael Mazursky, second generation of
broadcasters. I thank all of the Commissioners for coming to our city
today. Welcome. My partner and I put a radio station that was on silent
status back on the air. We own four AM radio stations here with the
construction permit to build a fifth radio station right now. Of Mr.
Mays\' comments, of the diversity of formats in Richmond, we\'re proud
to have three of those formats that we serve and we\'re the only ones
that do that in the market.

My comment also is on what Mr. Mays was saying about how they helped the
local market. They immediately, when they consolidated a few more of
their stations, took off an oldies format so we have no oldies station
in Richmond. They put on an urban format to compete against Radio One
because they needed to do that for their national dollars \-- to try to
gain some of the national dollars, just is my opinion.

My father was one of the founders of Lotus Communications, a broadcaster
since 1962 in Los Angeles. I had the opportunity with my partners to buy
a broken radio station here, 990 AM and I just want to tell you since
1997 we put the station back on the air. We have 35 employees. We have
grouped together our stations so we do gain some efficiencies, but we
have been trying since 1997 to add a night time signal on this station
and we did get a construction permit.

MR. KRATTENMAKER: Thank you, sir. Your time is up.

What we\'re going to do, as I promised earlier \--

MR. MAZURSKY: Can I say just one more thing?

MR. KRATTENMAKER: I\'m sorry, sir \--

MR. MAZURSKY: That it took from January of 2000, a 5-day window to
accept 200 applications from AM guys like me to fix theirs so I can do
more local high school sports at night, to May of 2001 until I got the
construction permit and I\'m still just trying to get it on because of
all the zoning and land issues, but I just want to tell you that we\'re
working hard as local guys to serve the community.

MR. KRATTENMAKER: Please submit your 15 second statement for the record.
Thank you.

MR. SNOWDEN: We\'re going to now go to Arthur Mobley who was in line
first at the last public comment, if he\'s in line. Mr. Mobley?

You have two minutes, sir.

MR. MOBLEY: Yes, I\'m going to yield most of my time, but I did want to
again reiterate that if the Commission can look at how economically
stations make money, they\'ll find a better answer to some of the
dilemma that they\'re sharing. And I\'d love to come back and testify
with a bunch of facts that I\'ve compiled also, but I\'ll yield the rest
of my time because I got to comment this morning.

MR. KRATTENMAKER: Thank you. Mr. Barrett?

MR. BARRETT: I\'m Alan Barrett, President of the Richmond Branch of the
NAACP and the NAACP wants to issue a brief to statement in strong
opposition to mergers and consolidations that would undermine minority
opportunities and we also want to appeal to the FCC to not threaten the
diversity and democratic ideals that are the philosophic foundations of
this country.

FCC\'s support for these kind of mergers have done damages earlier
presenters have stated. The ethnic, social and cultural pluralism will
suffer from \[Inaudible\] broadcasts and print journalism supported by
the FCC. More restrictive control of popular culture will not benefit
diversity and in fact, they will undermine \[Inaudible\] culturalism.
News events will become commodities that are subject to the whims of
corporate ownership. Controversial issues will be diluted or filtered
out all together. This means that minority views would have less of a
chance of being presented. What happened to Bill Maher and \"Politically
Incorrect\" is but one example. We risk a situation when indoctrination
can become the intentional or unintentional product of oligopolistic
media markets.

MR. KRATTENMAKER: Thank you, Mr. Barrett.

(Applause.)

MR. KRATTENMAKER: Mr. Richmond?

MR. RICHMOND: Yes, good afternoon. My name is John Richmond and the only
reason I\'m here today is normally I\'d be teaching school but we got
snowed out so I find myself here and I\'ll just try to get through as
many as five observations as I can.

Observation 1. If you all are interested in finding a larger slice of
the public, including a larger slice of people that listen to the
various types of media that are out there, hold hearings in the evenings
and on weekends. That\'s when most of us can come out.

(Applause.)

Number two, I find myself less able to find out what\'s going on locally
than nationally because I see the media already as nationalized. There
seems to be a formulaic approach to local news coverage. In the morning
and again during the evening, I flip back and forth between the three
major stations here. They have virtually the same stories on at
virtually the same time and I don\'t need to know about a rescue in
North Dakota or a unique pie throwing contest in Texas and this type of
story inevitably takes up at least two minutes of the newscast. And also
an extra hour of news doesn\'t necessarily mean an extra hour of news.
Here\'s why. A lot of times stories get introduced or summarized that
are going to be covered in more depth later on.

Three. I use radio for most of my media entertainment and in this market
it seems like the same songs are playing on every station, several of
which are owned by Clear Channel and so a format does not necessarily
mean diversity because as Ms. Toomey said, formats overlap.

Observation four. As a principal, I believe that you must resist
corporate, NPR and any other pressure to restrict in any way the right
of low power broadcasters to set up as long as they don\'t interfere
with other low power broadcasters.

I look for views and news from all over my locality, from left, right,
up, down, center and the restrictions that need to be loosened are those
on the establishment of low power stations such as Prometheus Radio in
Philadelphia \--

(Applause.)

MR. KRATTENMAKER: Thank you, Mr. Richmond.

Mr. Boone?

MR. BOONE: I am Raymond H. Boone, editor and publisher of the [Richmond
Free Press]{.underline}, the loyal opposition to monopoly journalism,
represented by the [Richmond Times Dispatch]{.underline}. I\'m also a
former journalism professor at Howard University and I\'m also a former
Pulitzer Prize juror on two separate occasions.

I stand here to reinforce a lead editorial this morning that was titled
\"Stop Monopoly in Journalism\". I also stand to reinforce my letter to
the Commissioners calling for the end of the abuse of the first
amendment which is the cornerstone which is the source or the protector
of our democracy. If we do not do that, we are fueling an internal
enemy.

I think it is appropriate that you meet in Richmond, a city that has
suffered much because of the abuse and a newspaper not respecting the
first amendment.

To give you an idea of the conditions that an independent newspaper like
the [Free Press]{.underline} faces it is not only the monopoly, but the
kind of influence that it has entrenched in the environment. An example,
the main library tossed out our three volumes, original volumes, simply
because we expressed the view that was not consistent with that of the
monopoly publication. Just two or three weeks ago, our photographer was
restricted \--

MR. KRATTENMAKER: Thank you.

MR. BOONE: One last sentence, please. Restricted from photographically
covering a historical swearing in ceremony of the Chief Justice while
the monopoly press was allowed to do that.

MR. KRATTENMAKER: Thank you, sir.

MR. SNOWDEN: We\'re going to go for another 15 minutes.

Sir.

MR. BENNETT: My name is Hans Bennett. I\'m an independent
photojournalist and editor of [Insubordination Magazine]{.underline}
from Philadelphia. I\'d like to talk about the issue of diversity and in
particular, the availability of news that challenges President Bush\'s
current war campaign. In my opinion, the corporate media\'s reporting on
the U.S. wars has never been good, but this current consolidation
threatens to make it even worse.

Despite the millions around the world that marched on February 15th
against the war, Bush has said he will attack without U.N. support,
despite the fact that this violates international law, the mainstream
media is essentially supporting Bush in his war drive. This very
scandaled, illegal war has not been addressed.

One of the clearest empirical examples of U.S. military ties to the
media machine is the fact that FCC Chair, Michael Powell, is the son of
a war criminal, Colin Powell. When Colin Powell presented supposed rock
solid proof of Iraq\'s deception at the U.N. earlier this month, we did
not have a critical media to challenge his statements. How many people
supporting the U.S. massacre of Iraq know that \--

MR. KRATTENMAKER: Thank you, sir, that is two minutes.

Yes ma\'am.

MS. EWELL: Hello, my name is Katie Ewell and I work and live in Richmond
and I was lucky enough to catch an article about the hearings. I had no
idea that media ownership deregulation might happen. And so I took it
upon myself to do a lot of research after I read the article and in a
lot of my research I found a lot of the opposing views. I guess I\'m a
consumer activist or a citizen activist now. I don\'t know what you
would call it, but I am not for the deregulation.

I see a lot of \-- I don\'t like to have everything coming from one or
two corporations. And I\'d just like to say I wish that more people were
here.

I wrote a letter to the editor of the [Times Dispatch]{.underline} and
unfortunately it wasn\'t printed and it\'s unfair to assume that that\'s
because Media General might have opposing views, but it\'s easy to
assume that that\'s why it was not printed.

And the biggest thing is, Chairman Powell, I know that you wanted us to
bring evidence and I\'m just an individual and I want to ask what can we
do as individuals or concerned citizens to help you guys fight the
courts, to gather the evidence that you need to support our views?

I could do a telephone survey or you know, would you like me to document
all my media intake for a month. What can the public do to help you guys
because apparently you don\'t have enough time to get all the studies
done together. I\'m just trying to ask for help so that we can help you
guys.

Thank you very much.

MR. KRATTENMAKER: Thank you. Yes sir.

MR. PARISH: My name is James Parish and I\'m co-founder of the Richmond
Image Moving Co-op which is a nonprofit here in Richmond that promotes
and supports independent media makers.

I took the day off work so I could be here. I had planned to be here a
couple of hours, but was so encouraged by the public support that I had
to call in and say I needed to be somewhere else today. And I\'m glad
that I have the flexibility to do that in my job and not everybody does.

And I would encourage you to hold some of these hearings in the evenings
and on the weekends. I\'m guessing if you\'re listening to my voice, you
may have some idea where I am from at least that I grew up in the South.
I grew up in a little town, Benson, North Carolina. And when I\'m in the
South and when I\'m in North Carolina, I like to turn on the radio and
the TV and hear people that sound like me and when I\'m in New York, I
want to hear people who sound like they are from New York.

So I am for the local and last night I was in a club showing a bunch of
films through my nonprofit to focus, showcase independent film makers,
media makers here in Richmond. And to highlight this event so media
makers would know to be here and we\'re doing that because it\'s hard to
have a voice and to show our work elsewhere, so we gather in clubs with
100 to 200 people at a time. But we can do that and I encourage you to
think about the local in this issue. It\'s important. Thank you.

MR. KRATTENMAKER: Thank you. Yes sir.

(Applause.)

MR. MAZZA (Phonetic): Hi, my name is Anthony Mazza. I come from
Philadelphia and my comment pertains to \-- well, we\'ve been here since
about 10 o\'clock this morning for approximately six hours of testimony
and we\'ve briefly heard from the public 20 minutes before lunch, about
20 minutes a little while ago and now, where we\'ve heard four or five
hours of testimony from experts and the panelists and I\'m just
wondering if this is all we have to offer as far as inviting the public
into this process, then I just think that it\'s really deficient.

The other comment that I wanted to make was that I thought it was
curious that we heard some testimony from people from NBC and from Fox
and from Clear Channel about how consolidation promotes diversity and
protects localism and we\'ve heard some very heartfelt stories from
Detroit and some other areas. But I\'m just curious where the
representatives of these communities are that are the cheerleaders of
this corporate protection that there are communities and representation
that they\'re getting in these corporate forums because even groups like
the tobacco industry can trot out their corporate-funded grass roots
groups to talk about the evils of smoking laws and anti-smoking laws,
but we haven\'t heard from one citizen who wasn\'t on the payroll of
these companies come in and testify that media consolidation has done
great things for my local area.

(Applause.)

And I\'m just wondering, I just hope that, I really hope that we have
another opportunity, another public forum to hear the full range of
opinions because I\'m sure that they exist, but I just don\'t feel that
we\'ve been given the opportunity to hear them here today.

(Applause.)

MR. KRATTENMAKER: Yes sir.

MR. COLLIER: My name is Chris Collier, I live in Plymouth, New Hampshire
and I have 20 years\' experience in broadcasting. I then became a parent
company and I have a subsidiary now. I have a child, he\'s 22 years old,
but he has autism and he\'s very literal. And when he heard about the
angel of public interest I couldn\'t explain what that was because he
wanted to know is that like Gabriel the archangel or what is that? So I
began to look into what was going on and I noticed there is a particular
fondness for faith-based metaphors. So I\'d like \--

\[END OF TAPE 4, SIDE A; BEGIN TAPE 4, SIDE B.\]

\-- if we\'re to believe that market can be a religion, then we can take
that to be the church started by David Zarnoff. David and his
well-financed legion of corporate lawyers who are responsible for
keeping FM radio out of our hands for decades. David told his followers
the following parable: what\'s good for RCA is good for the USA. That
breaks most of the Commandments.

The 1996 Telecommunications Act allowed the money changers back in the
temple and today they\'re here with a vengeance. The angel of public
interest hasn\'t got a prayer of being heard, much less seen. The only
place we can eavesdrop is a 50 watt FM station just outside Modesto.

Further deregulation is an indulgence followed by a transgression. If
there\'s to be anyone with a flaming sword guarding the American public,
let it be the institution, the FCC, that has the power to shape what we
see, what we hear and how we think. That\'s the cannon and creed that
will define us, our values and our society.

Thank you very much and I appreciate the chance to be here today and to
talk to you.

Thank you very much.

(Applause.)

MR. KRATTENMAKER: Thank you, sir. Yes ma\'am.

MS. RANNELL (Phonetic): Good afternoon. My name is Deborah Rannell and
being a former teacher I do know that people can only focus for about 20
minutes so I do appreciate you staying with us for the whole day.

If I heard correctly, Commissioner Copps, you said that you were
interested in the person who didn\'t know the FCC existed. Well, I am
that clueless person that you were looking for because up until about
two weeks ago I didn\'t know this issue even existed. So I did come here
today to learn. And this is what I\'ve learned.

Whatever side you all decide to vote on, you have your empirical
evidence. I have heard some great speakers today. I think, as I said,
whatever you decide to do you will have the empirical evidence to back
you up.

So then what I\'m thinking is that you\'re going to have to go to your
relationships, the people you trust to make your decision. I want to be
one of those people that you trust, one of those people that you listen
to because I think of you as the steward of my voice.

So let me share a fear I have. I am very mainstream and conservative, at
least I\'ve been told so, so sometimes that one voice that we hear is
real warm and fuzzy for me. I like that. I can go with that. But it
scares me to death to think that I won\'t have all these other voices
coming at me because those other voices give me the luxury of deciding
if I\'m wrong and making a change.

They also give me the pleasure of deciding I\'m right and I should stick
with what I believe. And I do believe that what you have heard today is
that we want you to trust us. We want you to listen to us. You are the
steward of our voice. And if we haven\'t given you a good enough picture
of the American citizen \--

MR. KRATTENMAKER: Thank you, ma\'am.

MS. RANNELL: Then go get it.

(Applause.)

MR. KRATTENMAKER: Thank you. Yes sir.

MR. BRIDGES: My name is Alex Bridges. I\'m a reporter for a small
newspaper just south of Richmond and I\'ve been there about four years,
got there straight out of college, actually. Went here to VCU and I
noticed that while I was at VCU there weren\'t any places really to work
straight out of college that were of the calibre of say the [Times
Dispatch]{.underline} or any of these other newspapers, so you had to
think small and that\'s how most journalists get their start.

But I\'ve noticed that the diversity in the area, across the state, I
guess, has dwindled. And I\'m not here to argue against corporations
owning several newspapers across the country because they can still do a
fine job covering local events, but I think that if you lift this cap,
if you allow newspapers and television stations and radio stations to
get gobbled up by the large corporations, eventually it\'s not going to
work well and there\'s been a lot of evidence to show that diversity is
dwindling. When you cut away from the diversity, you also start to cut
away from the dissemination of information which is generally the main
goal of a journalist. And if you cut away from the dissemination of
information, you have a less educated public, a less informed public. A
less informed public means you have less of a democracy than you had
before.

In my history lessons, I vaguely recall that the Soviet Union had, I
believe, two media outlets for its entire country and that also included
the Eastern Bloc and if you want to talk about diversity, obviously that
wasn\'t very diverse, especially since it was controlled by the
government. Well, eventually you\'ll have that same diversity here in
America. You\'ll have Clear Channel and you\'ll have maybe even Media
General owning everything in the country and then you will not have any
diversity.

Thank you.

(Applause.)

MR. KRATTENMAKER: And for our final public comment, yes sir.

MR. MILKUS (Phonetic): My name is Chuck Milkus. I\'m a former FCC
attorney turned broadcaster. You heard from my partner, Mike Mazursky.
We\'re independent AM broadcasters here in Richmond and I want to make
sure that the contribution of independent broadcasters to diversity and
localism is not overlooked. We\'re doing a lot of good things here
bringing new formats to the market.

I urge you that in this rulemaking, if you decide to toughen up and take
some action against deregulation in response to some of the things
you\'re hearing, please don\'t do it in the way that will harm small
independent broadcasters who are doing the best we can to try and
compete against the large group operators.

One additional comment to Mr. Mays, who made a comment about the
contribution of Clear Channel to localism. An anecdote that came to mind
for me is I have two children, ages 13 and 10. They prefer to listen to
FM music stations, not my radio station, unfortunately, but there\'s a
pop station in the market here, Q94. Whenever we go to another city, the
first thing they do is we get in the car and they\'re like Dad, where\'s
the Q94 in this city? And it usually takes me about anywhere from 10 to
30 seconds to scan the dial and find it and stations just sound the same
when they\'re owned by the group owners, regardless of what city you\'re
in and I don\'t think that speaks very well for localism.

Thank you.

(Applause.)

MR. KRATTENMAKER: Sir, may I ask you to submit your information for the
public record.

Thank you very much and you have the floor.

MR. BEST: My name is Glen Best and I\'m representing the Sierra Club and
the reason I\'m late is because I actually got tied up in Memphis.

MR. KRATTENMAKER: Will you please give us your remarks, sir?

MR. BEST: Yes sir, I will. Before the FCC considers any change that
would further consolidate media ownership, it needs to investigate
instances of censorship by owners such as those recently experienced by
the Sierra Club. In the past eight months, the Sierra Club has had two
radio campaign ads rejected by stations, a radio ad produced by the club
last June urging Bill Ford, CEO of Ford Motor Company to produce more
fuel efficient vehicles was rejected by Detroit stations, but later
aired by a station in neighboring Canada. We shouldn\'t have to go to
Windsor to have our ads run.

In September, another ad, critical of pollution from large dairy
operations in Twin Falls and Jerome, Idaho was pulled by station owners,
Clear Channel Communications one week after the station started getting
\-- was pulled by the station one week after they got a lot of calls in
an orchestrated effort by advertisers complaining about the Sierra Club
ad.

Now this isn\'t directly related to the FCC, but it involves Clear
Channel. In October of last year, Clear Channel Communications and
Viacom which own billboards in New Mexico rejected billboard ads by the
Sierra Club in support of the Zuni Native American Tribe and critical of
plans for an 18,000 acre strip coal mine that would harm the Zuni salt
lake in western New Mexico.

I ask you this question in my closing remarks here, how can the
marketplace of ideas which you\'re so concerned about legitimately
operate in an environment where access to public airways is owned by
fewer and fewer corporations that view public discourse as a threat to
their bottom line?

Thank you.

MR. KRATTENMAKER: As the moderator of this session I would like to thank
all of the panelists and all the contributors from the public. I thought
the woman, the schoolteacher said it best, we\'ve heard a lot of very
good talks here today, not only from the panelists, but also from the
members of the public.

I don\'t know how many public hearings at the FCC I\'ve participated in,
watched or even set up a couple. I don\'t think any of them were as
robust or as informative as this and I think that\'s all due to the
efforts of the Commissioners and of Dane Snowden and his staff. And I
wanted to thank you, Dane, very much and give this to you to wrap up.

MR. SNOWDEN: Thank you, Tom, and thank you very much for all of your
good work in moderating our panel and thank you all for coming today. If
you did not have an opportunity to make a public comment and you would
like to submit a comment, you can go to the FCC website at
[fcc.gov]{.underline} and click on the icon that says ECFS Express where
you can file your comment for the record.

Madam Secretary?

SECRETARY DORTCH: This concludes the Commission\'s Broadcast Ownership
En Banc hearing. The Commission thanks the panelists and the public for
its attendance. We are now adjourned.

(Whereupon, the public hearing was concluded.)