**Remarks of FCC Chairman Kevin J. Martin**

**Association of National Advertisers Advertising Law and Business
Affairs Conference**

**January 18, 2007**

***As Prepared for Delivery***

Thank you very much, Judy, for that kind introduction. I want to thank
Bob Liodice, Dan Jaffe and Doug Wood for inviting me to be here with you
today.

As you know well, the media is undergoing unprecedented change.
Television programs are sold on the Internet and streamed wirelessly to
mobile devices. DVRs mean people watch TV when, where and how they
want - - sometimes skipping commercials altogether. Mobile phones now
show movies, play songs, take pictures, and even send emergency
messages. And you cannot read a business section of a newspaper today
without coming across an article about the decline of traditional news
and entertainment outlets at the hands of YouTube or My Space. One
newspaper editor recently quoted in the Washington Post put it well
saying, "you can't really avoid the fact that page views are
increasingly the coin of the realm." While technology is changing the
advertising market, new opportunities abound. The Wall Street Journal
reported yesterday that just one company last year distributed nearly a
billion ads to mobile phones.

Although the technology by which it is delivered is changing, people's
appetite for news and entertainment has not diminished. And its impact,
especially on children, can't be overstated. According to Nielsen Media
Research (for the 2004-2005 season), an average American Household has
the television turned on more than 8 hours a day with children watching
between 2 and 4 hours daily. And recent studies have found that even the
youngest children are highly exposed to television. Almost one-half (43
percent) of children under two watch TV every day. One quarter (26
percent) of them even have a television in their bedroom. Almost
three-fourths (72 percent) of children age 2 to 6 watch TV every day.
The Kaiser Foundation also found that by the time they enter the first
grade, kids will have spent the equivalent of three school years in
front of the TV.

I have said that with hundreds of channels to choose from, consumers
today have access to some of the best programming ever produced. But
television today also contains some of the coarsest and most violent
programming ever aired. For instance a Time Magazine survey in 2005
found fifty-eight percent of people believe there is too much cursing
and sexual language on TV; fifty percent believe there is too much
explicit sexual content. And sixty-six percent of people believe there
is too much violence on television.

This data is consistent with the FCC's own findings. We have seen a
dramatic increase in the number of indecency complaints. And several
years ago, Congress requested the FCC study Violent Television and Its
Impact on Children. Our report finds that there is a deep concern among
parents and health professionals regarding harm from viewing violence in
the media.

In addition, there has been a lot of attention recently paid to the
alarming rise in childhood obesity rates. According to the CDC, since
1980, the number of overweight children between the ages of 6 and 11 has
doubled. The number of overweight adolescents has tripled during that
same period. The Christian Science Monitor reported American companies
are spending \$15 billion per year advertising to children under the age
of 12 and children influence about \$500 billion in annual spending on
products like cereal, candy and fast food.

According to the Kaiser Family Foundation, children under 6 cannot
distinguish between programming content and advertising. Congress
anticipated that children would be particularly susceptible to
advertising and thus put certain protections in place. Indeed, in the
Children's Television Act, Congress enacted specific limits on the
amount of advertising that could be shown during children's programming.
The Children's Television Act requires that commercial TV broadcasters
and cable operators limit the amount of commercials in children's
programs to no more than 10 ½ minutes per hour on weekends and 12
minutes per hour on weekdays. These limits apply to all digital video
programming, including both broadcasting and subscription channels,
directed to children 12 and under. Our rules also require the separation
of programming content from commercial material with a "bumper."
Finally, our rules prohibit program characters and show hosts from being
featured in commercials run during the program in which they appear.

While government has a responsibility to address concerns about content
and excessive marketing to kids, it is always preferable for industry to
work on these issues on their own. For example, ANA members have tried
to develop significant initiatives to address the trend in childhood
obesity rates. Disney's "Healthy Kids Initiative" is employing favorite
Disney characters to encourage healthy eating. General Mills is
promoting portion control by offering small 100-calorie packages of
their snack foods. I am particularly pleased by the ANA's willingness to
participate in the Task Force on the Media and Childhood Obesity that
the Commission and Senator Sam Brownback recently announced. The goal of
this bipartisan task force is to provide a forum in which health
experts, advocacy groups, media companies, the food and beverage
industry, advertisers and the government can work together to examine
the impact of the media on childhood obesity. The Task Force will hold
meetings throughout the year and ultimately identify voluntary steps
that the public and private sectors can take to combat this very
important social and medical problem.

The ANA has also urged "parents, not the government, must act as the
first line of defense for their children," adding "it is up to them to
determine what programming content to allow into their homes." But that
means that industry must ensure that parents have the tools necessary to
make those decisions. The best way to avoid government mandates is
responsible private sector action. Since I first came to the Commission,
I have urged media companies, both broadcasters and cable operators, to
provide parents with more tools to help them navigate the entertainment
waters, particularly when it comes to television.

For instance, I have long called for broadcasters to bring back the
"family hour." I know you share the commitment to make family friendly
programming available between the hours of 8 p.m. and 10 p.m. You have
supported and promoted the development and scheduling of family friendly
programming through the Family Friendly Programming Forum. And, I
applaud these efforts.

While changes in technology certainly challenge regulators and
advertisers to keep apace, they provide important opportunities as well.
In the digital world, it is technologically feasible, with a few simple
steps, for cable and satellite operators to offer consumers more choice
over the programming they buy and bring into their homes. For instance,
they could purchase smaller bundles such as a family or sports tier. Or
they could simply elect not to receive channels they are not interested
in. Indeed 78 percent of respondents in an AP poll said they would
prefer to choose and pay for their own tailored selection of cable
channels. Moving to a more a la carte system of television programming
would offer consumers significant benefits, and be consistent with
ANA\'s position that it is parents who should control "what programming
content to allow into their homes."

I was surprised to learn that some advertisers were concerned about
giving parents such tools and offering cable channels in more a la carte
manner. Generally, the ANA has said: "Marketing accountability is one of
the top priorities for ANA members. This push to gain granular
visibility and understanding of commercial vs. program ratings is
critical for the accuracy of media measurement in the U.S." I agree, and
it should be similarly helpful to have an understanding of who is
willing to pay for what programming. The willingness of viewers to pay
for a service is extraordinarily helpful information to advertisers much
as it is for print media. Advertisers want to know the paid
subscriptions and direct sales for a magazine, not just how many copies
are printed at the printing press. A magazine read by nobody can have
millions of copies and be of little or no value to advertisers. But a
magazine with a hundred thousand paying subscriptions can be enormously
valuable to those subscribers and to the advertisers trying to reach
them.

Suppose the publishing industry were arranged such that consumers who
paid \$100 per month would each receive a copy of 200 different
magazines. In this scenario consumers could not purchase magazines
individually or on the street. You either pay \$100 per month for all
magazines, or you get no magazines.

How would advertisers know which magazines to advertise in? Of course
there would be consumer surveys and polls, but ultimately advertisers
would not know whether most households read 195 magazines throwing out
five, or read five magazines and tossed 195 of them into the recycling
bin without ever opening them.

That would be a confusing situation for the advertising industry and for
the American consumer. So instead, in the magazine world, consumers can,
and do, purchase individual subscriptions and purchase individual copies
from stores. Indeed, I haven't met anyone who subscribes to 200
magazines.

In most American homes, consumers can watch hundreds of channels of
video programming. But the reality is that most viewers watch fewer than
two dozen channels. The hundreds of channels included in the most highly
subscribed video programming packages each have some form of advertising
on them. But how many consumers are actually watching advertisements on
a particular channel? My guess is not many. But the sad truth, as both
you and your commercial clients know, is that no one actually knows how
many people are watching each channel, much less how many are watching
each commercial.

Currently the most accurate measures are those Nielsen provides for
stations affiliated with the four major networks during prime time. One
can easily sell ads during prime time, and advertisers have some sense
of the audience being reached. At other times of the day, however, there
are fewer viewers and less precise measures of shares of viewer-ship
even for network affiliates.

As one goes to the top several cable channels, market shares drops into
the low single digits. And as market share declines confidence in the
ability to accurately measure actual audience share declines as well.
For second and third-tier cable channels, there really are no good
approximations of actual audience. For some channels, it is uncertain
whether viewership is in the hundreds of thousands, tens of thousands,
thousands, or really whether anyone ever watches the channel at all.
Advertising is sold on the basis of homes passed and on potential
viewership rather than on the basis of actual viewership.

Providing cable channels on a more a la carte basis would decrease the
uncertainty for advertisers and their clients about the viewership of
smaller cable networks not covered or not accurately covered by Nielson.
A la carte sales provide a much more accurate proxy for viewership than
sales of the large tier of which the small network is currently one
component.

Secondly, if television programming is purchased a la carte, advertisers
on a particular channel will know more about the characteristics of
their potential audience. Knowing more about the types of consumers that
are watching a particular channel means advertisers could target ads to
the demographic composition of the audience more effectively.

Finally, I do not believe overall television viewing would decline \--
and therefore advertisers would not be harmed \-- if consumers had more
choice. It goes against common sense to believe that if consumers were
able to purchase only the channels they want, they will watch less TV.
Are they going to read a book or mow the lawn instead, because there is
less clutter to sift through on their TV? I don't think so.

The current tying of channels of video programming is much the same as
requiring consumers to buy 200 magazines or none at all. No consumer
wants to be required to buy everything. And no advertiser wants to
advertise on channels that no one watches. So I have to ask, why is your
industry unenthusiastic about a la carte programming? Allowing consumers
to purchase programming on a more a la carte basis would give them
greater choice and control over the programming that comes into their
homes and would give advertisers more information about exactly who is
watching your commercials; information you desperately want and need.

Thank you very much again for the opportunity to be with you today. I
look forward to working with you on these and other relevant issues
before us at the Commission. I would be happy to answer any questions
you may have.

\- FCC -