*Pages 1--257 from  Microsoft Word - 26715*
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 1  UNITED  STATES  OF  AMERICA 
 +  +  +  +  + 
 FEDERAL  COMMUNICATIONS  COMMISSION 
 +  +  +  +  + 
 FIELD  HEARING 
 +  +  +  +  + 
 BROADCAST  OWNERSHIP  EN  BANC 
 +  +  +  +  + 
 RICHMOND,  VIRGINIA 
 +  +  +  +  + 
 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. 
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 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 2  I-  N-  D-  E-  X 
 Morning  Session 
 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 
2
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
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 3 
 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 


 1 
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 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
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 4 
 P-  R-  O-  C-  E-  E-  D-  I-  N-  G-  S  1 


 10:  00  a.  m.  2 
 SECRETARY  DORTCH:  Today's  hearing  will  3 
 focus  on  the  FCC's  Broadcast  Ownership  rules  and  will  4 
 give  the  public  an  opportunity  to  voice  its  opinions  5 
 about  the  Commission's  examination  to  determine  6 
 whether  any  of  the  rules  are  no  longer  in  the  public  7 
 interest  as  a  result  of  competition.  This  periodic  8 
 examination  is  required  by  the  Communications  Act.  9 
 Following  are  the  procedures  for  today's  10 
 en  banc  hearing.  We  will  utilize  a  time-  keeping  11 
 machine  located  in  front  of  Chairman  Powell  to  12 
 maintain  time  limits  on  each  presentation.  Panelists  13 
 will  each  have  a  total  of  five  minutes  to  make  their  14 
 individual  presentations.  The  green  light  will  stay  15 
 lit  for  the  first  three  minutes  of  your  remarks.  When  16 
 the  yellow  light  signals,  you  have  one  additional  17 
 minute  to  sum  up  your  presentation  and  close  your  18 
 remarks.  The  red  light  signals  the  end  of  your  19 
 allotted  time.  Please  conclude  your  remarks  at  that  20 
 time.  21 
 Following  the  morning  session,  a  lunch  22 
 break  will  be  held  from  12:  10  p.  m.  to  1:  10  p.  m.  23 
 Information  concerning  nearby  eateries  is  24 
 available  on  the  table  to  the  right  outside  of  the  25 
4
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
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 5 
 ballroom  doors.  1 


 The  Convention  Center  prohibits  the  2 
 bringing  in  of  food  and  drink  from  outside  vendors.  3 
 The  afternoon  session  of  the  hearing  will  4 
 begin  promptly  at  1:  10  p.  m.  Sign  language  5 
 interpreters  are  available  to  assist  people  with  6 
 disabilities.  If  you  need  an  interpreter,  please  7 
 indicate  this  now  to  the  FCC  interpreter  who  is  8 
 standing  with  her  hand  raised.  9 
 The  transcript  of  this  hearing  will  be  10 
 made  a  part  of  the  record  and  will  be  available  on  the  11 
 FCC  website,  www.  fcc.  gov  approximately  14  days  from  12 
 today.  13 
 Mr.  Chairman  and  Commissioners,  the  14 
 hearing  will  now  begin.  15 
 Mr.  K.  Dane  Snowden,  Chief  of  the  16 
 Commission's  Consumer  and  Governmental  Affairs  will  17 
 serve  as  our  MC.  18 
 Thank  you.  19 
 MR.  SNOWDEN:  Good  morning.  On  behalf  of  20 
 the  Commission  I  would  like  to  welcome  everyone  to  the  21 
 FCC's  Broadcast  Ownership  en  banc  hearing.  In  22 
 addition,  I  would  like  to  thank  and  extend  the  23 
 Commission's  thanks  and  appreciation  to  all  of  the  24 
 invited  panelists  and  the  members  of  the  public  for  25 
5
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 6 
 joining  us  from  the  Richmond  area  and  from  across  the  1 


 country.  2 
 As  many  of  you  know,  the  Commission  is  in  3 
 the  midst  of  its  most  comprehensive  review  4 
 of  the  FCC's  broadcast  ownership  rules,  some  of  which  5 
 date  back  to  the  early  1940s.  Every  two  years  the  6 
 Commission  is  required  by  Congress  to  examine  its  7 
 broadcast  ownership  rules  and  determine  whether  the  8 
 rules  are  necessary  in  the  public  interest  as  9 
 the  result  of  competition.  If  a  rule  cannot  be  10 
 justified,  it  must  be  modified  or  eliminated.  11 
 Today's  en  banc  hearing  is  another  example  12 
 of  how  the  Commission  is  interacting  with  the  public  13 
 on  this  very  important  subject.  In  addition  to  14 
 participating  in  the  public  forum  sponsored  by  15 
 Columbia  University,  we  have  received  more  than  18,000  16 
 comments  on  this  subject,  the  vast  majority  of  which  17 
 are  from  individual  citizens.  18 
 Our  goal  today  is  to  hear  from  the  public  19 
 on  the  important  issue  of  Broadcast  Ownership  20 
 currently  before  the  Commission.  It  should  be  noted  21 
 that  the  Commission's  ultimate  task  in  fulfilling  its  22 
 public  interest  responsibility  is  to  promote  23 
 diversity,  localism  and  competition.  In  addition,  we  24 
 must  craft  rules  that  are  sustainable  in  the  eyes  of  25 
6
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 7 
 the  courts.  1 


 We  are  very  interested  in  learning  how  the  2 
 three  prongs  of  diversity,  localism  and  competition  3 
 are  promoted  under  our  current  broadcast  ownership  4 
 regime.  As  the  FCC  designs  rules,  we  strive  to  5 
 establish  a  framework  which  accounts  for  the  modern  6 
 day  marketplace.  All  of  this  stated,  it  is  important  7 
 to  note  that,  by  the  end  of  this  proceeding,  the  FCC  8 
 intends  to  have  broadcast  ownership  rules  that  reflect  9 
 the  current  marketplace  and  are  legally  sustainable.  10 
 Before  we  begin  with  our  moderator  and  the  11 
 panels,  I  would  first  like  to  turn  the  floor  over  to  12 
 the  Chairman  and  Commissioners  for  their  opening  13 
 remarks.  14 
 Chairman  Powell?  15 
 CHAIRMAN  POWELL:  Thank  you,  Dane,  and  16 
 welcome  everyone  to  this  Federal  Communications  17 
 Commission  field  hearing.  I'll  get  right  to  an  18 
 important  question.  It  seems  like  every  time  we  have  19 
 one  of  these  it's  snowing.  I  don't  know  what  that  20 
 means,  but  we'll  fight  through  it.  But  I  want  to  let  21 
 everyone  who  has  traveled  to  know  that  we  are  going  to  22 
 keep  a  close  eye  on  the  weather  and  do  what  we  need  to  23 
 do  in  terms  of  adjusting  schedules,  if  that  becomes  a  24 
 problem,  just  so  that  you  know.  25 
7
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 8 
 Actually  this  snow  only  heightens  my  1 


 gratitude  for  the  sacrifices  our  panelists  have  made  2 
 to  be  here  today.  It  is  commendable  that  they  agreed  3 
 to  take  time  out  of  their  busy  schedules  to  prepare  4 
 for  and  participate  in  today's  hearing.  Given  the  5 
 weather  conditions,  their  efforts  are  deeply  6 
 appreciated.  7 
 I  would  also  like  to  thank  Dane  Snowden  8 
 and  his  tireless  team  for  making  this  broadcast  9 
 ownership  hearing  happen.  Until  you've  actually  tried  10 
 to  set  up  a  field  hearing  like  this,  you  may  not  11 
 appreciate  how  much  work  is  truly  involved.  They  did  12 
 a  fabulous  job  and  I  appreciate  their  efforts.  13 
 I  am  enormously  pleased  so  many  people  14 
 have  expressed  an  interest  in  the  Commission's  review  15 
 of  broadcast  ownership  regulations.  The  number  of  16 
 comments  we  have  received  is  staggering,  multiple  17 
 thousands  from  the  general  public  alone.  It  is  18 
 gratifying  to  witness  first  hand  the  unparalleled  19 
 opportunities  technology  now  provides  the  American  20 
 public  to  participate  in  the  democratic  process.  This  21 
 record  combined  with  the  forum  we  hold  today,  will  22 
 create  one  of  the  most  exhaustive  records  in  recent  23 
 FCC  history,  one  deserving  of  a  proceeding  of  this  24 
 magnitude.  25 
8
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 9 
 I  am  particularly  pleased  to  see  that  the  1 


 staff  arranged  for  the  leadoff  presentation  to  address  2 
 "legal  issues"  which  are  often  perceived  as  pesky  to  3 
 some,  but  essential  to  good  policy  making.  There  are  4 
 issues  in  media  policy  far  sexier  than  the  legal  5 
 framework,  but  none  is  more  critical  if  you  wish  to  6 
 understand  how  we  will  make  ownership  policy  7 
 decisions.  8 
 For  better  or  worse,  the  FCC  has  hundreds  9 
 of  rules  and  regulations  currently  on  its  books.  Each  10 
 day,  when  my  colleagues  and  I  come  to  work  in  the  11 
 morning,  we  have  plenty  to  do.  Thankfully,  one  thing  12 
 we  don't  have  to  do  is  re-  justify  every  rule  in  the  13 
 book.  Each  existing  rule  is  generally  presumed  to  be  14 
 as  valid  today  as  it  was  yesterday.  15 
 Sadly,  the  broadcast  ownership  rules  are  16 
 fundamentally  different  pursuant  to  Congress'  design.  17 
 Every  two  years  without  fail,  the  Commission  is  18 
 required  by  statute  to  review  the  broadcast  ownership  19 
 rules.  And  when  it  does,  it  is  legally  required  to  20 
 presume  each  rule  is  no  longer  needed  unless  we  find  21 
 otherwise  according  to  the  courts.  Unless  we  can  re-  22 
 justify  each  broadcast  ownership  rule,  in  short,  and  23 
 under  current  market  conditions,  the  rule  goes  away.  24 
 Under  this  tough  review  standard  of  25 
9
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 1323  RHODE  ISLAND  AVE.,  N.  W. 
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 10 
 review,  courts  have  become  far  more  skeptical  of  FCC  1 


 rationales  for  imposing  limits  on  broadcast  ownership.  2 
 Five  times  in  the  past  two  years  we  have  defended  our  3 
 ownership  rules  in  court.  And  sadly,  five  times  we  4 
 have  lost.  0-  5  is  not  an  enviable  record.  5 
 The  common  theme  of  the  courts'  criticism  6 
 is  that  we  have  failed  to  justify  our  rules  in  light  7 
 of  todays  media  environment.  What  the  courts  have  8 
 told  us,  in  no  uncertain  terms,  is  that  the  biennial  9 
 standard  is  a  rigorous  test.  Either  we  produce  10 
 evidence  that  the  rule  is  still  necessary,  or  we  must  11 
 eliminate  it  and  if  we  do  not,  they  will  do  it  for  us.  12 
 If  the  Commission  does  the  same  half-  13 
 hearted  effort  it  did  in  the  last  Biennial  Review,  I  14 
 guarantee  you  that  every  one  of  the  broadcast  rules  15 
 will  be  swept  away  in  a  court  of  law.  Let's  see  if  we  16 
 can  put  that  Genie  back  in  the  bottle.  17 
 Yet  we  all  agree  that  some  broadcast  18 
 ownership  limits  are  indeed  critical  if  we  are  to  19 
 maintain  a  robust  marketplace  of  ideas.  The  public  20 
 interest  is  all  about  promoting  diversity,  localism,  21 
 and  competition.  We  can  achieve  these  goals  --  and  22 
 the  courts  will  agree  with  us  --  if  we  do  it  23 
 correctly.  24 
 The  right  way  is  building  rules  that  25 
10
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
 1323  RHODE  ISLAND  AVE.,  N.  W. 
 (202)  234-  4433  WASHINGTON,  D.  C.  20005-  3701  www.  nealrgross.  com 


 11 
 reflect  today's  media  market.  We  do  that  by  gathering  1 


 evidence  on  the  critical  questions:  How  do  Americans  2 
 use  the  media?  Where  do  they  get  their  news  from?  3 
 What  industry  structure  best  promotes  diverse  and  4 
 innovative  media  content?  5 
 The  FCC  staff  kicked  off  that  effort  by  6 
 conducting  a  dozen  studies  on  the  workings  of  the  7 
 media.  Whatever  those  studies  suggest  for  ownership  8 
 policy,  they  make  an  important  procedural  point  --  9 
 that  this  rulemaking  will  be  driven  by  evidence,  not  10 
 just  intuition  or  personal  preference.  This  agency  11 
 tried  personal  preference  in  the  last  biennial  review  12 
 and  got  hammered  for  it.  13 
 That's  why  we  have  proceeded  methodically  14 
 this  time  around.  The  court  cases  gave  us  clear  15 
 guidance  on  how  to  do  the  biennial  review  correctly.  16 
 We  took  that  guidance  to  heart,  we  conducted  a  large  17 
 number  of  studies,  and  then  we  began  the  biennial.  We  18 
 had  a  long  comment  period  so  interested  parties  could  19 
 formulate  their  own  views  and  provide  us  with  them.  20 
 And  several  public  hearings,  including  today's,  are  21 
 being  held  around  the  nation.  22 
 I  hope  today's  hearing  will  build  on  the  23 
 enormous  record  already  before  us.  We  have  24 
 specifically  set  aside  time  for  members  of  the  public  25 
11
 NEAL  R.  GROSS  COURT  REPORTERS  AND  TRANSCRIBERS 
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 12 
 to  air  their  views  and  I  very  much  look  forward  to  1 


 hearing  them.  2 
 Finally,  let  me  once  again  thank  the  3 
 panelists  for  agreeing  to  join  us  today  to  share  their  4 
 views  as  well  as  my  colleagues  for  being  here.  The  5 
 speakers  with  us  today  are  an  enormously  talented  and  6 
 accomplished  group,  and  I  very  much  look  forward  to  7 
 their  statements  and  the  subsequent  dialogue.  8 
 Commissioner  Abernathy?  9 
 COMMISSIONER  ABERNATHY:  Thank  you,  Mr.  10 
 Chairman.  11 
 Good  morning,  everyone.  It's  a  pleasure  12 
 to  be  here.  First,  I  want  to  thank  Dane  Snowden  and  13 
 everyone  involved  in  organizing  today's  event.  I  also  14 
 want  to  thank  everyone  that  is  taking  part  in  today's  15 
 hearing  whether  you  are  on  a  panel  or  you're  coming  16 
 here  as  part  of  the  audience,  you  are  making  an  17 
 invaluable  contribution  to  the  discussion  on  broadcast  18 
 ownership.  You  braved  the  elements  to  get  here,  as  19 
 the  Chairman  said.  So  thank  you  very  much.  20 
 I  don't  have  to  tell  any  of  you  about  the  21 
 important  role  that  the  media  plays  in  our  education,  22 
 our  entertainment,  and  in  our  civic  discourse.  For  23 
 this  very  reason,  the  FCC  has  continually  focused  on  24 
 the  importance  of  promoting  localism,  diversity  and  25 
12
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 13 
 competition  when  we're  crafting  media  ownership  rules.  1 


 I  am  committed  to  furthering  these  long-  standing  2 
 goals  by  re-  examining  our  rules  to  ensure  that  our  3 
 regulations  advance  and  do  not  undermine  our  policy  4 
 goals.  5 
 It  is  also  important  to  note  that  Congress  6 
 instructed  us  to  review  our  broadcast  ownership  rules  7 
 to  determine  if  they  are  still  necessary  in  the  public  8 
 interest  in  light  of  the  changes  in  competition.  In  9 
 addition  to  this  Congressional  mandate,  however,  the  10 
 courts  have  also  weighed  in  and  not  very  kindly,  and  11 
 they've  weighed  in  by  overturning  some  of  our  media  12 
 ownership  rules.  And  as  the  Chairman  mentioned  our  13 
 win/  loss  record  in  the  courts  over  the  past  two  years  14 
 has  been  rather  pathetic.  The  courts  have  also  made  15 
 clear  that  we  must  justify  the  retention  of  any  of  our  16 
 rules,  or  they  will  be  eliminated.  We  have  been  17 
 faulted  for  failing  to  take  into  consideration  the  18 
 plethora  of  voices  that  are  now  available  and  for  19 
 failing  to  take  a  consistent  approach  across  all  of  20 
 the  ownership  rules.  These  court  decisions  21 
 necessarily  provide  the  context  for  any  future  22 
 decisions  that  the  FCC  makes.  23 
 No  one  can  dispute  that  the  marketplace  24 
 has  changed  significantly  since  the  adoption  of  many  25 
13
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 14 
 of  our  ownership  rules.  We  now  have  a  greater  number  1 


 of  choices,  as  well  as  increased  consolidation.  It  2 
 was  not  that  long  ago  that  we  only  had  three  networks  3 
 and  some  independent  stations.  Now,  in  addition  to  4 
 ABC,  CBS  and  NBC,  we  have  UPN,  WB  and  PaxNet  available  5 
 to  us  over-  the-  air.  Eighty-  five  percent  of  homes,  6 
 moreover,  have  access  to  hundreds  of  cable  programming  7 
 networks.  I  know  that  some  have  expressed  concern,  8 
 however,  that  90  percent  of  the  top  50  cable  channels  9 
 are  owned  by  the  television  networks  and  the  cable  10 
 providers.  These  kinds  of  cross-  ownership  issues  are  11 
 very  important  and  we  need  to  look  at  them.  But  I  12 
 also  want  to  look  beyond  the  popularity  of  a  program  13 
 and  ask  whether  we  have  a  diverse  array  of  choices  14 
 that  can  reach  small  niche  audiences  that  may  be  15 
 ignored  by  the  mainstream,  more  popular  programming.  16 
 So,  when  discussing  choices  I  will  look  not  just  at  17 
 the  top  50  cable  networks,  but  also  at  the  other  18 
 national  and  regional  networks.  19 
 I  also  recognize  that  there  has  been  20 
 increased  consolidation  in  the  media  industry;  this  is  21 
 not  surprising  because  companies  seek  the  benefits  of  22 
 scale  and  scope  unless  curtailed  by  regulators  or  the  23 
 courts.  My  job  is  to  look  at  the  effects  of  24 
 consolidation  and  to  ask:  25 
14
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 15 
 How  has  consolidation  affected  the  amount  1 


 of  diverse  programming  people  are  receiving?  2 
 How  has  it  affected  the  availability  of  3 
 local  news  and  public  affairs  programming  in  small  4 
 markets?  5 
 How  has  it  affected  competition  in  the  6 
 marketplace?  7 
 Restrictions  that  may  have  been  needed  in  8 
 the  past  to  ensure  competition  and  diversity  may  9 
 actually  make  it  more  difficult  for  programmers  and  10 
 station  owners  to  provide  compelling  quality  11 
 programming  in  light  of  the  significant  competition  12 
 that  over-  the-  air  broadcasters  are  facing  from  other  13 
 sources.  14 
 In  seeking  answers  to  these  and  other  15 
 questions,  we  need  to  be  wary  of  the  unintended  16 
 consequences  of  changing  our  rules,  as  well  as  of  the  17 
 unintended  consequences  of  maintaining  our  rules.  I  18 
 want  to  ensure  that  if  we  eliminate  or  modify  any  of  19 
 our  current  rules,  we  don't  lose  vibrant  voices  and  20 
 diverse  sources  from  our  civic  discourse.  I  also  21 
 need  to  know  what  effect  our  current  rules  are  having  22 
 on  the  survival  of  the  broadcast  industry  as  they  23 
 position  themselves  to  compete  with  cable,  DBS  and  24 
 other  services.  And  while  we  talk  about  the  85  25 
15
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 16 
 percent  of  people  that  have  access  to  cable  and  1 


 satellite,  we  can't  forget  about  the  approximately  15  2 
 percent  of  the  American  public  that  only  receive  3 
 broadcast  services.  I  think  it's  essential  that  free  4 
 over-  the-  air  services  remain  competitive  and  viable  5 
 and  continue  to  provide  programming  alternatives.  6 
 What  I  don't  want  is  for  the  competitive  environment  7 
 to  drive  the  migration  of  quality  programming  to  cable  8 
 and  away  from  broadcasting.  9 
 No  doubt,  these  are  important  decisions  10 
 and  we  must  carefully  consider  the  regulatory  options  11 
 that  are  available.  But  do  not  worry  that  we  are  12 
 rushing  to  judgment.  First,  government  is  simply  13 
 incapable  of  rushing.  14 
 (Laughter.)  15 
 Second,  we  are  responding  to  the  fact  that  16 
 a  number  of  rules  that  have  been  remanded  or  vacated  17 
 by  the  courts,  leaving  the  American  people,  the  18 
 industry  and  the  FCC  in  limbo.  Inaction  by  the  FCC  19 
 only  prolongs  the  uncertainty  to  the  detriment  of  the  20 
 public  and  the  marketplace.  21 
 And  third,  without  question,  this  is  the  22 
 most  robust,  detailed  evidentiary  record  that  I  have  23 
 seen  in  my  20  years  of  practicing  telecommunications  24 
 law.  25 
16
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 17 
 As  Dane  stated,  we  sought  comment  on  12  1 


 studies  and  we  have  received  over  3000  comments,  over  2 
 2900  of  which  are  from  individual  citizens.  In  3 
 addition,  there  have  been  over  10,000  e-  mails  from  the  4 
 public,  and  a  number  of  public  hearings  have  been  held  5 
 and  are  being  held  again  in  the  future.  I  am  taking  a  6 
 hard  look  at  this  information  as  are  I  know  all  of  my  7 
 colleagues.  But  don't  forget,  the  statute  and  the  8 
 courts  require  the  Commission  to  act  on  a  timely  9 
 basis,  and  it  is  our  obligation  and  duty  to  respect  10 
 and  adhere  to  that  schedule.  We  cannot  let  fear  11 
 paralyze  us.  There  will  be  no  crystal  ball  available  12 
 to  us  six  months  or  a  year  from  now.  And  I  believe  13 
 our  job,  why  we  were  nominated  by  the  President  and  14 
 confirmed  by  the  Senate,  is  to  make  these  tough  15 
 decisions  and  not  simply  hope  that  they'll  go  away.  16 
 And  while  I  know  that  not  everyone  will  agree  with  us  17 
 when  we  make  these  decisions,  we  will  be  carrying  out  18 
 our  responsibilities.  19 
 So  thank  you  for  allowing  me  to  take  a  few  20 
 minutes  to  share  with  you  the  questions  that  I  think  21 
 need  to  be  addressed.  I  look  forward  to  listening  and  22 
 learning  from  all  of  you,  the  insight  and  the  23 
 viewpoint  of  the  public  and  the  industry  are,  as  24 
 always,  an  essential  part  of  the  FCC's  regulatory  25 
17
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 18 
 process.  Thank  you  for  your  time  and  your  commitment  1 


 to  working  with  us  to  make  well  informed  and  well  2 
 reasoned  decisions  that  will  benefit  all  of  us.  3 
 MR.  SNOWDEN:  Thank  you.  Commissioner  4 
 Copps?  5 
 COMMISSIONER  COPPS:  Good  morning  and  6 
 welcome.  Thank  you  all  for  braving  the  weather  to  7 
 take  part  in  this  important  event.  Those  of  you  from  8 
 Washington  have  heard  me  say  that,  for  me,  no  issue  9 
 pending  before  the  Federal  Communications  Commission  10 
 is  so  important  as  the  decision  on  whether  to  11 
 eliminate  or  significantly  change  our  media  12 
 concentration  protections.  I  say  that  because  what  we  13 
 decide  will  have  a  formative  influence  on  how  our  14 
 media  will  look  for  many,  many  years  to  come.  I  15 
 believe  that  fundamental  values  and  democratic  virtues  16 
 are  at  stake  here  --  things  like  localism,  diversity,  17 
 competition  and  maintaining  the  multiplicity  of  voices  18 
 and  choices  that  undergird  our  marketplace  of  ideas  19 
 and  that  nourish  American  democracy.  And  also  at  20 
 stake  is  the  quality  and  type  of  the  entertainment  21 
 that  we  and  our  children  watch  and  hear.  So  this  is  22 
 really  important  work  that  we  are  about  today.  And  I  23 
 think  that  despite  Mother  Nature  and  other  challenges,  24 
 we  have  top  quality  participation  today.  So  I'm  ready  25 
18
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 19 
 for  us  to  roll  up  our  sleeves  and  go  to  work.  1 


 I  think  that  we  should  have  two  goals  2 
 today.  Proceeding  on  an  assumption  that  some  find  3 
 hard  to  believe,  all  expertise  on  these  issues  does  4 
 not  reside  within  the  I-  495  Beltway.  Our  record  needs  5 
 much  more  breadth  than  the  capital  can  provide.  So  6 
 our  first  goal  in  coming  to  Richmond  is  to  talk  with  7 
 members  of  this  community  and  this  state  and  to  tap  8 
 local  expertise  to  help  us  make  the  right  decisions  9 
 and  have  a  record  of  factual  depth  and  granularity  10 
 that  the  courts  will  accept  in  reviewing  what  we  do  11 
 and  that  the  American  people  will  accept.  Secondly,  I  12 
 hope  we  can  raise  the  awareness  in  Richmond  that  13 
 something  important  is  going  on  at  the  FCC,  something  14 
 that  each  person  here  in  the  city  and  in  the  state  has  15 
 a  stake  in,  something  that  every  consumer,  every  16 
 citizen,  should  know  about.  17 
 I  am  frankly  concerned  about  consolidation  18 
 in  the  media,  and  particularly  concerned  that  we  are  19 
 on  the  verge  of  dramatically  altering  our  nation's  20 
 media  landscape  without  the  kind  of  broad,  national  21 
 debate  and  analysis  that  these  issues  so  clearly  22 
 merit.  23 
 Why  am  I  concerned?  I'm  concerned  because  24 
 I  don't  believe  that  we  yet  know  the  potential  25 
19
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 20 
 implications  of  our  actions.  We  do  have  some  1 


 experience  to  learn  from  --  and  that  is  what  happened  2 
 to  radio  after  Congress  and  the  Commission  changed  the  3 
 rules  of  the  game  seven  years  ago.  Many  media  4 
 observers  believe  that  the  loosening  of  ownership  caps  5 
 and  limits  that  took  place  then  created  real  problems  6 
 in  radio.  We'll  hear  more  about  that  on  today's  7 
 panels.  Arguably,  consolidation  also  created  some  8 
 economies  and  some  efficiencies  that  allowed  broadcast  9 
 media  companies  to  operate  more  profitably  and  may  10 
 even  have  kept  some  stations  from  going  dark  and  11 
 depriving  communities  of  service.  We  need  to  take  12 
 that  into  consideration.  But  I  think  most  people  13 
 would  admit  that  the  consolidation  went  far  beyond  14 
 what  anyone  could  have  foreseen  in  1996.  15 
 Conglomerates  now  own  dozens,  even  hundreds  --  and  in  16 
 one  case,  more  than  a  thousand  --  stations  all  across  17 
 the  country.  More  and  more  of  their  programming  seems  18 
 to  originate  hundreds  of  miles  removed  from  listeners  19 
 and  their  communities.  And  we  know  this,  there  are  34  20 
 percent  fewer  radio  station  owners  in  February  2003,  21 
 than  there  were  before  these  protections  were  22 
 eliminated.  The  majority  of  radio  markets  are  now  23 
 oligopolies.  And  all  this  in  only  seven  short  years!  24 
 It  raises  serious  questions.  Media  25 
20
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 21 
 watchers  like  the  Media  Access  Project,  which  is  here  1 


 today,  Consumers  Union,  and  Professor  Robert  McChesney  2 
 argue  that  this  concentration  has  led  to  far  less  3 
 coverage  of  news  and  public  interest  programming.  The  4 
 Future  of  Music  Coalition  in  its  multi-  year  study  5 
 finds  a  homogenization  of  music  that  gets  air  play  and  6 
 concludes  that  radio  seems  to  serve  now  more  to  7 
 advertise  the  products  of  vertically  integrated  8 
 conglomerates  than  to  entertain  Americans  with  the  9 
 best  and  most  original  programming.  10 
 So,  should  we  eliminate,  or  substantially  11 
 change,  the  protections  that  remain  for  television,  12 
 cable,  and  newspapers?  Before  we  can  make  that  13 
 decision,  we  need  to  better  understand  the  current  14 
 media  landscape  and  the  implications  of  eliminating  15 
 concentration  protections.  Today  we  know  far  too  16 
 little  to  make  an  informed  decision.  Not  only  do  we  17 
 not  have  all  the  answers,  we  haven't  yet  teed  up  all  18 
 the  questions.  Let  me  list  just  a  few  questions  the  19 
 studies  don't  answer.  20 
 What  is  the  likely  prospective  effect  on  21 
 localism,  diversity,  and  independence  of  TV,  cable,  22 
 radio,  and  newspapers  if  we  eliminate  our  protections,  23 
 especially  given  our  history  with  radio  consolidation?  24 
 How  much  news  and  public  affairs  25 
21
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 22 
 programming  was  broadcast  in  the  years  immediately  1 


 before  and  after  elimination  of  FCC  radio  2 
 concentration  protections?  3 
 What  effects  have  recent  media  mergers,  4 
 radio  consolidation,  and  TV  duopolies  had  on  the  5 
 personnel  and  resources  devoted  to  news,  public  6 
 affairs,  and  public  service  programming,  and  on  the  7 
 output  of  such  programming?  How  about  the  effect  on  8 
 the  creative  arts?  Will  eliminating  our  rules  result  9 
 in  a  crisis  in  any  of  those  areas?  10 
 Do  newspapers  and  co-  owned  broadcast  11 
 stations  carry  similar  viewpoints  more  frequently  than  12 
 independent  newspapers  and  broadcast  stations?  The  13 
 one  FCC  study  is  criticized  as  insufficient.  14 
 How  do  consolidation  and  co-  ownership  15 
 affect  the  news'  and  arts'  focus  on  issues  important  16 
 to  minorities  and  to  the  objective  of  diversity?  And  17 
 how  about  children?  18 
 Is  there  a  relationship  between  the  rising  19 
 tide  of  media  consolidation  on  the  one  hand  and  the  20 
 low  quality  and  indecent  programming  on  the  other  21 
 hand?  22 
 How  are  advertising  and  small  business  23 
 affected?  24 
 The  list  goes  on  and  on.  Today  hopefully  25 
22
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 23 
 we  can  begin  to  address  some  of  these  questions.  We  1 


 need  answers  to  them  before  I  can  feel  comfortable  2 
 about  making  an  informed  decision.  We  need  a  3 
 diversity  of  input  into  the  Commission  on  these  issues  4 
 that  goes  beyond  anything  we've  ever  had  before.  We  5 
 need  to  hear  from  stakeholders  of  every  stripe  --  and  6 
 as  far  as  I'm  concerned,  anybody  that  lives  in  this  7 
 democracy  of  ours  is  a  stakeholder  in  the  future  of  8 
 the  media.  9 
 So  it's  just  not  business,  although  10 
 business  input  is  essential.  We  want  to  hear  from  11 
 consumers,  labor,  educational,  religious,  and  minority  12 
 organizations,  and  Americans  who  have  never  heard  of  13 
 the  Federal  Communications  Commission.  We  can  pretend  14 
 that  these  folks  read  the  Federal  Register  and  can  15 
 afford  the  lawyers  to  participate  fully  in  our  16 
 inside-  the-  beltway  decision  making.  But  we'd  be  17 
 kidding  ourselves.  This  decision  is  too  important  to  18 
 make  in  a  business-  as-  usual  way.  We  need  America's  19 
 buy-  in,  and  we  need  your  help  in  answering  these  20 
 questions.  That  is  why  I  have  put  so  much  emphasis  on  21 
 outreach  to  those  I  call  nontraditional  stakeholders  22 
 who  have  traditionally  lacked  access  to  the  FCC.  That  23 
 is  why  I've  been  pushing  so  hard  for  hearings  around  24 
 the  country.  25 
23
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 24 
 Something  tells  me  this  hearing  will  not  1 


 disappoint  me  and  we'll  walk  away  from  here  knowing  2 
 some  facts,  granular  facts  that  we  didn't  know  before  3 
 we  got  here  and  that  we'll  hear  some  perspectives  that  4 
 don't  just  automatically  float  into  us  at  the  FCC.  5 
 Lastly,  I  want  to  note  that  all  of  us  here  6 
 today  --  from  the  Chairman  and  the  FCC,  to  media  7 
 advocacy  groups,  academics,  and  industry,  we  are  all  8 
 interested  in  doing  what's  best,  together,  for  the  9 
 American  people  and  the  American  consumer.  I  note  10 
 with  sadness  this  morning  that  Fred  Rogers  of  Mr.  11 
 Rogers'  Neighborhood  died  today.  Here  was  a  man  who  12 
 really  used  the  media  to  serve  the  public  interest,  13 
 and  his  example  would  remind  us  what  we're  all  working  14 
 for,  TV,  radio,  cable,  newspaper  and  internet,  that  15 
 something  that  uplifts  and  informs  and  serves.  We  16 
 have  some  extraordinary  people  who  have  made  a  real  17 
 effort  to  debate  this  issue  today.  That  means  a  lot  18 
 to  me.  I  know  that  we're  all  after  the  same  thing  and  19 
 that  we  can  work  together  to  do  the  best  thing.  20 
 Thank  you,  Mr.  Chairman,  for  calling  this  21 
 hearing.  Thanks  to  Dane  Snowden  and  his  capable  team  22 
 for  putting  it  together.  Thanks  to  our  panelists  for  23 
 taking  the  time  to  come  here.  And  to  the  audience  24 
 also.  25 
24
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 25 
 MR.  SNOWDEN:  Commissioner  Martin?  1 


 COMMISSIONER  MARTIN:  Good  morning  and  2 
 thank  you  for  --  thanks  everyone  as  well  for  braving  3 
 the  weather  to  join  us  at  this  public  hearing.  And  4 
 Dane,  I  particularly  want  to  thank  you  and  your  staff  5 
 for  the  incredible  job,  as  you  always  do,  in  putting  6 
 this  together  for  us.  7 
 I  find  enormous  value  in  the  opportunity  8 
 to  talk  to  you  and  actually  hear  from  members  of  the  9 
 public,  as  well  as  the  media  industry.  Getting  your  10 
 thoughts  and  insights  on  the  subject  our  media  11 
 ownership  rules  is  particularly  important  to  our  12 
 thorough  review.  13 
 When  formulating  media  ownership  rules,  14 
 three  key  principles  have  guided,  and  will  continue  to  15 
 guide,  our  Agency's  decisions:  competition,  diversity  16 
 and  localism.  These  core  values  recognize  the  17 
 tremendous  role  the  media  plays  in  a  functioning  18 
 democracy,  where  the  ability  to  express  diverse  19 
 viewpoints  is  essential.  Indeed,  much  of  the  news,  20 
 information  and  entertainment  that  we  receive  today  21 
 are  from  the  media.  Thus,  any  decisions  the  FCC  makes  22 
 with  respect  to  media  ownership  will  impact  our  day  to  23 
 day  lives,  the  continued  expression  of  diversity  and  24 
 ultimately  our  democratic  system.  Yet,  we  must  25 
25
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 26 
 address  these  issues.  Congress  has  required  us  to  1 


 review  our  broadcast  ownership  rules  every  two  years  2 
 to  ensure  that  they  are  still  necessary.  And  the  3 
 courts  have  made  clear  that  this  cannot  be  a  cursory  4 
 review,  nor  can  we  base  our  conclusions  on  5 
 unsubstantiated  beliefs.  6 
 As  the  Chairman  has  explained,  if  we  don't  7 
 adequately  justify  our  rules,  the  courts  may  eliminate  8 
 our  ownership  rules  altogether.  In  that  vein,  the  9 
 Chairman  should  be  commended  for  conducting  this  10 
 comprehensive  review.  11 
 There's  no  question  that  the  courts  have  12 
 been  evaluating  our  decisions  with  increasing  13 
 scrutiny.  Indeed,  the  D.  C.  Circuit  has  struck  the  14 
 last  five  media  ownership  rules  it  has  reviewed.  The  15 
 court  has  repeatedly  criticized  the  Commission  for  16 
 failing  to  consider  the  competitive  forces  present  in  17 
 the  modern  media  marketplace  and  the  new  voices  that  18 
 have  been  introduced  since  the  rules  were  first  19 
 enacted.  20 
 Indeed,  the  media  landscape  has  changed  21 
 significantly  since  the  adoption  of  our  current  rules.  22 
 The  number  of  broadcast  networks  has  doubled  and  we  23 
 now  have  numerous  nonbroadcast  networks.  There  are  24 
 230  national  cable  programming  networks  and  more  than  25 
26
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 27 
 50  premium  networks  that  regularly  rival  the  broadcast  1 


 networks  in  audience  share.  Their  success  is  2 
 naturally  due  to  the  introduction  of  widespread  3 
 popularity  of  multi-  channel  video  programming  4 
 services.  In  fact,  today,  over  85  percent  of  5 
 households  receive  their  video  programming  via  6 
 satellite  or  cable.  7 
 In  addition,  the  growth  and  popularization  8 
 of  the  internet  has  dramatically  changed  how  people  9 
 receive  and  distribute  information.  The  internet  10 
 represents  a  significant  outlet  for  diverse  use,  as  11 
 well  as  an  important  source  of  news  and  information  to  12 
 consumers.  13 
 It  is  with  all  these  changes  in  mind  that  14 
 we  must  conduct  our  review  of  the  ownership  rules.  15 
 Given  all  of  the  developments  in  the  media  landscape,  16 
 one  rule  in  particular  is  in  need  of  review.  The  rule  17 
 which  prohibits  a  company  from  owning  a  newspaper  and  18 
 a  broadcast  station  in  the  same  market  has  not  been  19 
 reviewed  in  almost  30  years.  Today,  newspapers  are  20 
 the  only  media  entities  that  are  prohibited  from  21 
 owning  a  broadcast  station,  even  in  the  largest  22 
 markets.  Today,  two  broadcast  stations  are  generally  23 
 permitted  to  combine  in  the  largest  markets  and  could  24 
 own  up  to  six  radio  stations  as  well.  Yet,  newspapers  25 
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 28 
 remain  prohibited  from  owning  even  a  single  radio  1 


 station.  2 
 The  Commission  has  stated  several  times  in  3 
 the  past  seven  years  that  this  rule  might  need  4 
 modifying,  but  after  three  notices  it  has  yet  to  act.  5 
 At  a  minimum,  I  think  that  so  long  as  a  significant  6 
 number  of  independent  voices  remain  in  the  7 
 marketplace,  we  should  give  broadcast  stations  and  8 
 newspapers  the  same  opportunity  to  combine  that  two  9 
 television  stations  now  have  in  the  largest  markets.  10 
 Of  course,  the  introduction  of  new  voices  11 
 into  the  marketplace  does  not  necessarily  mean  that  12 
 all  of  our  limits  need  to  be  relaxed  or  eliminated.  13 
 Indeed,  I  believe  that  the  FCC  must  be  mindful  of  14 
 unintended  consequences  from  any  changes  to  our  rules.  15 
 For  example,  many  people  have  expressed  concern  about  16 
 the  increase  in  consolidation  that  has  occurred  in  17 
 local  radio.  But  some  of  this  consolidation  may  18 
 actually  be  due  to  the  Commission's  rules  rather  than  19 
 the  numerical  limits  set  by  Congress.  20 
 The  problem  lies  in  the  FCC's  definition  21 
 of  a  market  and  in  an  obscure  counting  method  for  22 
 determining  how  many  stations  in  a  market  one  entity  23 
 owns.  The  result  of  our  practice  is  that  the  24 
 Commission  sometimes  treats  small  towns  like  big  25 
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 29 
 markets.  We  have  raised  these  issues  as  well  in  the  1 


 current  proceeding  and  we  need  to  take  this  2 
 opportunity  to  address  them  here  as  well.  3 
 Clearly,  with  the  media  marketplace  4 
 becoming  more  and  more  complex,  there  are  no  easy  5 
 answers  to  the  task  we  confront.  The  ownership  rules  6 
 are  in  need  of  review  and  in  some  instances  revision.  7 
 But  our  guiding  principles  will  remain  at  the  heart  of  8 
 all  our  decisions.  9 
 I  remain  committed  to  doing  everything  I  10 
 can  to  ensure  that  the  FCC  adopts  ownership  rules  that  11 
 protect  and  promote  competition,  diversity  and  12 
 localism  in  today's  medium  environment  and  I'm  fully  13 
 aware  of  how  central  the  decisions  will  be  and  will  14 
 make  to  the  lives  of  many  of  you.  15 
 Thus,  I  welcome  all  of  your  insights  and  16 
 commend  the  Chairman  for  instituting  this  proceeding  17 
 and  scheduling  this  hearing.  And  I  look  forward  to  18 
 hearing  from  you,  both  today  and  in  the  months  to  19 
 come.  20 
 Thank  you.  21 
 MR.  SNOWDEN:  Thank  you.  Commissioner  22 
 Adelstein?  23 
 COMMISSIONER  ADELSTEIN:  Thank  you,  Mr.  24 
 Chairman  and  Commissioners.  I'd  like  to  thank  you  for  25 
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 30 
 convening  today's  hearing.  I  really  appreciate  your  1 


 leadership  in  pulling  this  together  and  I  think  it's  2 
 going  to  be  a  very  illuminating  panel  we  have  and  3 
 thank  you  to  Dane  for  pulling  this  together  and  to  all  4 
 the  staff  of  the  Consumer  and  Governmental  Affairs  5 
 Bureau  for  doing  this.  I'd  like  to  thank  Commissioner  6 
 Copps  also  for  his  leadership  in  calling  for  all  of  us  7 
 to  get  out  of  D.  C.  and  to  get  out  of  the  Beltway  and  8 
 to  hear  from  people  that  are  affected  by  this  and  that  9 
 means  everybody  because  everybody  in  this  country  is  10 
 affected  by  this.  11 
 And  we  have  an  amazing  group  of  panelists  12 
 today  I'm  looking  forward  to  hearing  from  very  13 
 shortly.  I  thank  them  and  the  audience  for  braving  14 
 the  elements  to  get  here.  15 
 As  my  colleagues  have  noted,  we  are  about  16 
 to  make  some  enormous  decisions,  some  of  the  most  17 
 important  decisions  ever  made  by  this  Commission.  And  18 
 yesterday,  for  example,  we  had  a  hearing  on  19 
 telecommunications  issues  at  the  House  Commerce  20 
 Committee.  A  lot  of  the  hearing  turned  out  to  focus  21 
 on  media  ownership.  It  turned  out  Members  of  the  22 
 House  Commerce  Committee  are  deeply  concerned  about  23 
 how  this  Commission  takes  its  role  as  people  who  are  24 
 charged  with  protecting  the  public  interest  and  25 
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 31 
 ensuring  that  the  public  interest  is  served  as  we  are  1 


 required  to  do  by  law  in  establishing  the  media  2 
 ownership  rules  of  this  country.  Because  the  media  3 
 market  isn't  like  other  consumer  products.  It's  not  4 
 like  we're  dictating  the  price  of  candy  here.  But  you  5 
 could  compare  it  in  a  sense  to  candy.  Think  about  the  6 
 children  of  this  country.  I  have  a  new  child  at  home  7 
 and  you  don't  want  them  eating  sweets  all  the  time  and  8 
 you  don't  want  them  watching  stuff  on  television  9 
 that's  like  candy.  You  want  them  watching  the  good  10 
 stuff,  things  that  he's  going  to  learn  from,  things  11 
 that  are  going  to  help  his  small  mind  to  grow  and  to  12 
 develop.  And  we  need  to  look  at  how  the  rules  that  we  13 
 establish  affect  our  children.  And  we  need  to  look  at  14 
 how  it  affects  all  Americans  of  all  ages.  The  media  15 
 really  dictates  the  vitality  of  what  the  Supreme  Court  16 
 referred  to  as  the  "uninhibited  marketplace  of  ideas."  17 
 So  we  need  to  hear  from  a  diverse  range  of  18 
 media  voices.  This  is  at  the  very  core  of  our  19 
 democracy.  20 
 I'd  like  to  read  to  you  a  bit  from  a  21 
 Supreme  Court  decision  in  the  Red  Lion  case  that  22 
 touches  on  this  issue  and  really,  I  think,  lays  out  23 
 the  role  that  the  Supreme  Court  sees  in  law  for  the  24 
 Commission.  The  Supreme  Court  held,  and  I  quote,  "it  25 
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 32 
 is  the  right  of  the  public  to  receive  suitable  access  1 


 to  social,  political,  aesthetic,  moral  and  other  ideas  2 
 and  experiences  which  is  crucial  here.  That  right  may  3 
 not  constitutionally  be  abridged  by  Congress  or  by  the  4 
 FCC."  5 
 So  the  Supreme  Court  decision  is  every  bit  6 
 as  pertinent  to  our  discussion  of  the  ownership  rules  7 
 as  the  D.  C.  Circuit  opinions  that  have  asked  the  FCC  8 
 to  justify  our  current  rules.  9 
 We've  got  to  build  a  solid  evidentiary  10 
 record  to  support  our  rules  as  my  colleagues  have  11 
 indicated.  But  we've  also  got  to  bear  in  mind  that  12 
 the  Supreme  Court  mandate  to  promote  the  core  public  13 
 interest  values  is  also  our  job.  We  need  to  promote  14 
 diversity,  localism  and  competition  in  our  media  15 
 markets.  And  our  decisions  can't  possibly  rest  on  16 
 just  empirical  evidence  alone.  We've  got  to  examine  17 
 in  quantitative  data  and  I  commend  the  Chairman's  18 
 leadership  in  conducting  these  FCC  sponsored  ownership  19 
 studies.  These  studies  and  the  critiques  of  them,  I  20 
 think,  offer  us  a  key  part  of  our  current  record.  But  21 
 these  questions  do  not  lend  themselves  to  purely  22 
 quantitative  answers.  We  need  to  hear  about  your  23 
 experiences  as  participants  in  the  media  marketplace.  24 
 You  know,  government  rulemaking  inherently  involves  25 
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 33 
 making  predictive  judgments  about  what's  going  to  1 


 happen  as  a  result  of  actions  that  we  take  now.  And  2 
 how  can  we  possibly  say  that  we  can  come  up  with  any  3 
 scientific  proof  about  what's  going  to  happen  based  on  4 
 some  kind  of  quantitative  data?  We've  got  to  look  at  5 
 what's  happened  in  the  past.  We  need  to  look  at  6 
 history.  We  need  to  look  at  the  radio  market  and  see  7 
 if  we're  satisfied  with  what  happened  as  a  result  of  8 
 taking  the  cap  off  entirely  as  Congress  did  to  the  9 
 amount  of  radio  stations  that  people  in  this  country  10 
 can  own.  11 
 I  don't  think  a  lot  of  people  in  this  12 
 country  are  happy  about  what  they  hear  on  the  radio.  13 
 I  know  a  lot  of  Members  of  Congress  have  expressed  14 
 concerns  directly  to  us  on  the  Commission.  15 
 So  we  need  to  make  predictive  judgments  16 
 that's  done  in  traditional  anti-  trust  analysis  as  17 
 well,  but  those  judgments  have  to  be  rooted  in  a  18 
 solid,  evidentiary  record,  but  let's  not  pretend  that  19 
 this  is  science.  The  questions  before  us  just  don't  20 
 lend  themselves  to  mathematical  proofs.  We've  got  to  21 
 use  our  judgment  and  the  courts  have  time  and  again  22 
 affirmed  the  right  of  this  Commission  to  exercise  its  23 
 judgments  in  trying  to  determine  what  is  the  public  24 
 interest  which  is  our  legal  mandate.  25 
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 34 
 So  how  do  we  determine  what  media  1 


 ownership  rules  best  promote  the  public  interest?  2 
 This  task  is  daunting  and  it's  made  even  more  3 
 challenging  by  the  short  time  frame  that's  been  4 
 proposed  for  this  proceeding.  5 
 One  panelist  in  our  last  hearing  observed  6 
 that  the  FCC  plans  to  revamp  all  of  its  rules  in  a  7 
 shorter  time  frame  than  an  NBA  basketball  season  and  I  8 
 joined  the  Commission  part  way  into  that  season.  I  9 
 view  this  form  as  another  step  in  our  record  building  10 
 efforts  and  another  step  getting  close  to  the  process  11 
 of  getting  ready  to  make  those  decisions.  The  12 
 panelists  that  we  have  before  us  are  a  cross  section  13 
 of  some  of  the  many  stakeholders  in  this  proceeding.  14 
 They're  journalists,  content  producers,  broadcasters,  15 
 educators,  but  even  more  importantly,  they're  16 
 listeners,  viewers  and  participants  in  our  democracy.  17 
 You  all  have  a  stake  in  this  proceeding  and  we  want  to  18 
 hear  your  views  today.  19 
 It's  been  noted  that  we  have  over  15,000  20 
 comments  on  the  record  in  this  proceeding,  a  huge  21 
 number  by  FCC  standards,  but  there's  250  million  22 
 people  in  this  country  and  all  of  them  are  affected  by  23 
 this.  So  today  is  part  of  an  effort  and  we  need  to  24 
 make  a  lot  more  efforts  just  like  this  to  reach  out  25 
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 35 
 and  get  more  input  on  these  massive  decisions  that  1 


 we're  about  to  make.  2 
 Like  I  said,  your  participation  is  crucial  3 
 in  FCC  decision  making.  The  process  depends  on  it  and  4 
 more  importantly  the  outcome  depends  on  it.  There's  5 
 no  way  the  Commission  can  fully  understand  the  impact  6 
 that  our  decisions  are  going  to  have  on  different  7 
 constituencies  unless  we  hear  from  them.  8 
 If  we're  to  craft  media  ownership  rules  9 
 that  best  serve  the  public  interest  as  we're  required  10 
 to  do,  we've  got  to  hear  from  the  public  and  that's  11 
 why  I'm  here.  12 
 I  don't  know  yet  what  media  ownership  13 
 rules  will  best  serve  the  public  interest,  but  I  know  14 
 that  the  FCC  must  proceed  with  caution  as  we  15 
 reconsider  our  existing  rules.  Further  media  16 
 consolidation  can't  easily  be  undone.  Once  the  17 
 toothpaste  is  out  of  the  tube,  it's  going  to  be  18 
 difficult,  if  not  impossible  to  put  it  back  in.  So  19 
 thanks  again  for  joining  us  and  let's  get  to  it.  20 
 MR.  SNOWDEN:  Thank  you,  Mr.  Chairman  and  21 
 Commissioners.  This  morning,  we  will  hear  from  three  22 
 panels  on  the  specific  themes  of  diversity,  23 
 localism  and  competition.  The  panels  will  be  24 
 moderated  by  Tom  Krattenmaker,  who  will  first  25 
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 36 
 summarize  the  key  broadcast  ownership  rules  and  1 


 issues.  2 
 Before  I  introduce  Mr.  Krattenmaker,  let  3 
 me  briefly  describe  the  two  ways  we  have  provided  for  4 
 members  of  the  public  to  participate  directly  in  5 
 today's  program.  First,  while  the  panelists  are  6 
 speaking,  members  of  the  public  are  invited  to  write  7 
 down  any  questions  for  the  panelists  on  the  index  8 
 cards  located  on  the  tables  at  the  back  of  the  room  9 
 when  you  came  in.  Those  cards  will  be  collected  10 
 during  the  panel  presentations.  The  questions  will  be  11 
 forwarded  to  the  moderator,  who  will  pose  them  to  the  12 
 appropriate  panelists  following  their  opening  13 
 statements.  14 
 Second,  we  have  set  aside  30  minutes  at  15 
 the  end  of  each  panel  as  a  public  comment  period.  16 
 Members  of  the  public  are  invited  to  use  the  open  17 
 microphones  that  are  located  in  the  middle  of  the  room  18 
 to  offer  comments  regarding  the  pending  rulemaking  19 
 proceeding.  If  you  are  not  able  to  express  your  20 
 comments  today,  you  are  welcome  to  submit  them  as  a  21 
 part  of  the  record  in  the  pending  broadcast  ownership  22 
 rulemaking  proceeding.  To  file  your  comments  23 
 electronically,  go  to  www.  fcc.  gov  and  follow  the  24 
 instructions  for  ECFS  Express.  25 
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 37 
 Now  it  is  my  pleasure  today  to  introduce  1 


 our  program  moderator,  Mr.  Tom  Krattenmaker.  Tom  is  2 
 Senior  Counsel  in  the  Washington  office  of  Mintz  3 
 Levin,  where  he  focuses  on  telecommunications  4 
 transactions  and  antitrust  representation  and  5 
 counseling.  Prior  to  joining  Mintz  Levin,  Tom  was  6 
 Director  of  Research  in  the  FCC's  Office  of  Plans  and  7 
 Policy  under  former  Chairman  William  Kennard.  In  that  8 
 position,  Tom  oversaw  the  Commission's  staff  review  9 
 and  recommendations  to  the  Commission  regarding  10 
 telephone,  cable  and  satellite  industry  mergers.  11 
 Before  joining  the  Commission,  Tom  served  as  Special  12 
 Counsel  for  Policy  and  Regulatory  Affairs  in  the  13 
 Antitrust  Division  of  the  Department  of  Justice.  14 
 There  he  oversaw  review  of  several  mergers  and  other  15 
 transactions  in  regulated  industries.  Tom  also  16 
 clerked  for  Justice  John  Harlan  of  the  U.  S.  Supreme  17 
 Court,  and  spent  several  years  in  academia.  He  was  18 
 professor  of  law  and  Associate  Dean  at  Georgetown  19 
 University  as  well  as  Dean  of  the  Marshall-  Wythe  20 
 School  of  Law  at  the  College  of  William  and  Mary.  He  21 
 has  also  taught  at  the  University  of  Connecticut  22 
 School  of  Law  and  at  the  University  of  Natal  in  South  23 
 Africa.  24 
 We  are  honored  and  pleased  to  have  Tom  25 
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 38 
 join  us  today  and  moderate  our  panel  discussions.  1 


 MR.  KRATTENMAKER:  Thank  you,  Dane.  It's  a  2 
 privilege  and  an  honor  for  me  to  moderate  today's  3 
 hearings  and  I'd  like  to  give  my  sincere  thanks  for  4 
 that  to  each  of  the  Commissioners  and  to  the  FCC's  5 
 Media  Bureau  for  inviting  me  here  today  and  asking  me  6 
 to  moderate  this  session.  7 
 I'd  like  to  join  with  the  Commissioners  in  8 
 thanking  you  for  attending  and  also  thanks  to  the  9 
 people  in  Richmond  for  hosting  us.  For  those  of  you  10 
 who  have  not  already  guessed  it  from  my  accent,  this  11 
 is  a  bit  of  a  homecoming  for  me.  I  am  not  a  Virginian  12 
 by  birth,  although  I  was  born  in  South  Jersey,  but  I  13 
 spent  most  of  my  high  school  years  in  Richmond  14 
 attending  both  Hermitage  and  Douglass  Freedman  High  15 
 Schools.  In  fact,  the  high  point  of  my  career  in  16 
 public  elective  office  occurred  right  here  in  Richmond  17 
 in  1956  when  I  was  elected  President  of  the  8th  Grade  18 
 at  Hermitage.  19 
 (Laughter.)  20 
 As  you  can  tell  from  Dane's  excessively  21 
 kind  introduction,  my  academic  career  has  been  in  22 
 constant  decline  since  then.  23 
 It  is  the  opinion  of  a  couple  of  people  24 
 here  that  there  might  be  some  members  of  the  audience  25 
38
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 39 
 who  are  not  so  interested  in  learning  about  my  1 


 fascinating  life  as  understanding  why  we  are  here  and  2 
 what  the  ground  rules  might  be,  so  why  don't  I  get  to  3 
 that.  4 
 Today's  topics,  what  are  we  here  for?  The  5 
 Commission  is  in  the  midst  of  reviewing,  as  you've  6 
 heard  from  the  Commissioners,  in  one  comprehensive  7 
 proceeding,  all  of  its  rules  that  limit  the  extent  to  8 
 which  owners  of  radio  and  television  broadcast  9 
 facilities  can  control  additional  outlets  or  related  10 
 businesses.  There  are  essentially  six  of  these  rules  11 
 under  review.  Now  remember,  Dane  told  you  I  spent  30  12 
 years  in  legal  education,  so  you  pay  attention  because  13 
 there  is  going  to  be  a  pop  quiz  when  I  finish.  14 
 Four  of  these  six  rules  center  around  15 
 local  markets.  They  are  first,  the  local  TV  station  16 
 ownership  rule.  This  rule  provides  that  no  one  may  17 
 own  more  than  two  TV  stations  in  any  one  market  and  18 
 may  own  two  only  under  certain  conditions  concerning  19 
 the  size  of  the  market  and  the  strength  of  the  co-  20 
 owned  stations.  21 
 There's  also  a  local  radio  ownership  cap.  22 
 This  provides  that  a  firm  may  own  up  to  eight  radio  23 
 stations  in  one  market,  depending  on  the  size  of  the  24 
 market  which  is  to  be  measured  by  the  number  of  radio  25 
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 40 
 stations  in  that  market.  1 


 Next  we  have  the  local  TV-  radio  cross  2 
 ownership  rule  which  provides  that  a  firm  that  owns  3 
 only  one  TV  station  in  a  local  market  may  own  one,  4 
 four  or  seven  radio  stations  in  that  market  as  well,  5 
 depending  on  the  size  of  the  local  market.  In  this  6 
 case  that  market  is  measured  by  taking  account  of  not  7 
 only  the  number  of  radio  and  TV  stations,  but  also  the  8 
 number  of  cable  systems  and  newspapers  in  that  market.  9 
 And  the  final  local  rule  that's  in  this  10 
 proceeding  is  the  broadcast  newspaper  cross  ownership  11 
 ban,  which  provides  that  no  one  may  own  both  a  daily  12 
 newspaper  and  either  a  TV  or  a  radio  station  in  the  13 
 same  market.  14 
 The  other  two  rules  center  around  national  15 
 markets.  First,  there  is  a  limitation  on  TV  network  16 
 mergers.  No  merger  is  permitted  between  firms  that  17 
 are  among  the  top  four  television  ownership  networks,  18 
 but  a  top  four  network  may  merge  with  a  network  19 
 outside  the  top  four.  20 
 In  addition,  there's  a  national  TV  station  21 
 ownership  cap.  No  company  may  own  a  group  of  22 
 television  stations  that  in  the  aggregate  can  reach  23 
 more  than  35  percent  of  U.  S.  households.  There  is  no  24 
 corresponding  limit  on  the  number  of  radio  stations  25 
40
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 41 
 that  any  firm  can  own  nationwide.  1 


 Okay,  got  all  that?  It's  quite  a  2 
 mouthful.  It's  easy  for  me  to  say.  I  practiced  it.  3 
 But  actually,  it's  not  all  that  hard.  As  a  summary  4 
 overview,  just  think  local  and  national.  In  local  5 
 broadcast  markets  such  as  Richmond,  there  are  rules  6 
 limiting  TV  plus  TV,  radio  plus  radio,  radio  plus  TV,  7 
 and  newspapers  owning  either  radio  or  television.  8 
 Then  at  the  national  level  there  are  limits  on  TV  but  9 
 not  radio  network  mergers,  and  total  national  TV,  but  10 
 not  radio  ownership.  And  those  are  the  rules  that  the  11 
 Commission  is  reviewing  in  this  proceeding.  12 
 Now  as  you  probably  have  already  figured  13 
 out,  and  as  some  of  the  Commissioners  have  alluded  to,  14 
 these  ownership  rules  were  not  all  created  at  the  same  15 
 time.  For  example,  the  antecedents  of  the  local  radio  16 
 rule  traced  back  almost  all  the  way  to  1927  when  the  17 
 Federal  Radio  Commission,  the  precursor  to  the  Federal  18 
 Communications  Commission  was  set  up,  while  the  19 
 newspaper  ownership  rule  is  relatively  new,  it's  about  20 
 30  years  old.  21 
 Additionally,  they  are  not  only  different  22 
 ages,  but  these  rules  grew  up  in  silos,  so  to  speak,  23 
 not  always  taking  account  of  one  another  or  not  24 
 overtly  taking  account  of  one  another.  For  example,  25 
41
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 42 
 did  you  note  and  if  you  did  you're  doing  a  good  job  of  1 


 keeping  up,  how  the  local  ownership  rule  usually,  but  2 
 not  always,  takes  account  of  local  market  size  and  3 
 when  the  rule  does  take  account  of  local  market  size,  4 
 they  don't  all  measure  the  size  of  the  market  in  the  5 
 same  way.  6 
 Further,  these  rules  have  never  before  7 
 been  exhaustively  reviewed  as  part  of  a  single  8 
 comprehensive  package.  So  it's  really  quite  a  9 
 daunting  task  that  the  Commissioners  face  and  much  10 
 easier  to  be  a  moderator  than  a  Commissioner  on  this.  11 
 I  think  for  those  of  you  who  are  here  12 
 today,  it's  important  to  know  not  only  what  the  rules  13 
 are,  but  why  they  are  being  reviewed  collectively  and  14 
 so  thoroughly  today  and  why  the  terms,  competition,  15 
 diversity  and  localism,  have  come  to  frame  most  of  the  16 
 discussion  concerning  those  rules.  17 
 Let  me  talk  a  little  bit  about  why  now?  18 
 Why  is  the  Commission  doing  this  now?  You  know  what  19 
 rules  are  on  the  table.  Why  are  they  on  the  table  20 
 today?  Fundamentally,  they're  on  the  table  today  21 
 because  of  what  Congress  did  in  one  section  of  its  22 
 comprehensive  communications  law  reform  legislation,  23 
 the  Telecommunications  Act  of  1996.  24 
 When  Congress  addressed  broadcast  25 
42
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 43 
 ownership  rules  in  the  1996  act,  it  did  three  things.  1 


 First,  it  eliminated  the  Commission's  national  radio  2 
 ownership  limits  and  it  raised  both  the  local  radio  3 
 caps  and  the  national  TV  caps.  Then,  Congress  4 
 directed  the  Commission  to  immediately  tweak  a  couple  5 
 of  its  remaining  rules.  6 
 Finally,  and  most  importantly  here,  7 
 Congress  required  the  FCC  to  review  each  of  its  8 
 remaining  broadcast  rules  every  two  years.  What  9 
 Congress  said  is  that  the  question  the  FCC  must  10 
 address  in  these  biennial  reviews  is  whether  "any  of  11 
 the  rules"  that  is  the  six  we  just  reviewed,  "whether  12 
 any  of  the  rules  are  necessary  in  the  public  interest  13 
 as  a  result  of  competition."  14 
 And  the  Federal  Court  that  reviews  the  15 
 Agency's  ownership  rules  has  construed  that  provision  16 
 as  "carrying  with  it  a  presumption  in  favor  of  17 
 repealing  or  modifying  the  rules."  18 
 So  the  Commission  has  been  directed  to  19 
 carry  out  these  reviews  now,  and  then  to  do  it  again  20 
 two  years  later  and  again  two  years  after  that,  21 
 etcetera,  etcetera.  Talk  about  the  communication  22 
 lawyers  perpetual  guaranteed  income  act.  I  join  with  23 
 all  other  members  of  the  Federal  Communications  Bar  24 
 Association  in  expressing  our  undying  gratitude  to  25 
43
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 44 
 Congress  for  having  dug  this  very  deep  trough  at  which  1 


 we  may  feed  for  years  on  end,  and  apparently,  my  2 
 grandson  as  well.  3 
 In  addition  to  doing  it  every  two  years,  4 
 according  to  the  courts,  the  Commissioners  have  to  5 
 approach  the  task  with  the  presumption  to  at  least  6 
 modify  the  rules.  Now  it's  also  important  to  note  7 
 these  facts  don't  tie  the  Commission's  hands  and  they  8 
 don't  ordain  any  particular  outcome.  Presumption  9 
 doesn't  mean  fixed  determination,  but  they  do  place  10 
 limits  both  on  how  long  the  Commission  can  wait,  11 
 perhaps  not  much  longer  than  the  course  of  an  entire  12 
 NBA  season,  and  on  its  ability  to  preserve  the  rules  13 
 without  identifying  evidence  that  clearly  supports  14 
 them.  15 
 Now  I  wanted  to  say  a  few  words  about  the  16 
 terms  of  the  discussion,  what  you're  going  to  hear  17 
 from  the  veterans  or  the  cognicenti  here.  As  I  18 
 indicated  in  discussing  the  rules,  we've  had  limits  on  19 
 radio  and  TV  ownership  virtually  from  the  inception  of  20 
 radio  and  television  services  in  this  country.  So  21 
 there's  quite  a  lot  of  water  already  over  the  dam,  22 
 including  discussions,  both  learned  discussions  and  23 
 unlearned  discussions,  about  what  is  at  stake  here.  24 
 Most  people,  including  most  Commissioners  25 
44
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 45 
 who  think  about  these  issues,  tend  to  conclude  that  1 


 the  values  at  stake  are  those  of  competition,  2 
 diversity  and  localism.  And  that  these  are  three  3 
 distinct  values,  each  focusing  on  a  different  aspect  4 
 of  the  effects  of  any  media  consolidation.  5 
 Let  me  try  to  illustrate  this  by  taking  a  6 
 very  simple  hypothetical  for  you.  Suppose  someone  7 
 wants  to  buy  two  television  stations  in  Richmond,  8 
 Virginia.  Without  knowing  any  further  details  about  9 
 the  transaction,  we  can  already  imagine  three  10 
 different  potential  opponents  of  that  merger.  One  11 
 might  say  I  worry  about  the  effects  of  the  merger  --  12 
 [END  TAPE  1,  SIDE  A;  BEGIN  TAPE  1,  SIDE  13 
 B.]  14 
 --  is  I  worry  whether  the  merged  firm,  15 
 after  the  merger,  will  be  able  to  behave  16 
 anticompetitively,  for  example,  by  raising  ad  rates  to  17 
 monopoly  levels  or  by  cutting  back  its  program  day  in  18 
 order  to  restrict  output.  That's  our  competition  19 
 issue.  20 
 A  second  opponent  might  say  well,  I  don't  21 
 really  see  a  problem  with  competition  here.  In  fact,  22 
 this  merger  might  be  good  for  competition.  It  might  23 
 create  a  more  efficient  firm,  but  competition  is  not  24 
 the  only  value  we  care  about.  I  worry  about  25 
45
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 46 
 diversity.  What  I  mean  by  that  is  I  worry  that  the  1 


 merger  might  result  in  fewer  distinct  points  of  view  2 
 being  aired  in  Richmond  or  in  fewer  differences  in  the  3 
 types  of  programs  being  offered  over  the  air  to  4 
 Richmond  residents.  5 
 Now  my  hypotheticals  third  opponent  might  6 
 say  I  think  that  after  this  merger  there  will  be  more  7 
 robust  competition  and  just  as  much  diversity  of  8 
 program  and  formats,  but  I  worry  about  the  impact  of  9 
 this  merger  on  localism.  That  is,  I  worry  that  the  10 
 owners  and  operators  of  the  merged  firm,  as  compared  11 
 to  the  previous  firms,  will  not  be  as  deeply  rooted  in  12 
 and  in  touch  with  the  Richmond  communities  when  13 
 programs,  personnel  or  formats  are  chosen.  14 
 Now  of  course,  certain  broadcast  15 
 combinations,  real  ones,  not  hypothetical  ones,  may,  16 
 depending  on  one's  point  of  view,  raise  significant  17 
 questions  with  respect  to  one,  two,  three  or  none  of  18 
 those  values.  Nor  are  these  categories  of  concern  air  19 
 tight.  For  example,  as  many  of  you  have  figured  out  20 
 already,  concerns  about  localism  or  competition  may  21 
 each  translate  into  a  concern  over  diversity.  There  22 
 may  be  other  value  that  needs  to  be  accounted  for  as  23 
 well.  For  one  time  I'll  abuse  my  privilege  as  the  24 
 moderator  to  interject  a  personal  view  here  is  I  25 
46
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 47 
 wonder  why  media  consolidation  rules  should  be  seen  as  1 


 an  aspect  of  the  Commission's  spectrum  management  2 
 duties.  But  since  I  seem  to  stand  alone  on  that,  I'll  3 
 retreat  back  to  my  other  role.  4 
 I  mean  to  say,  however,  that  if  you  think  5 
 something  other  than  competition,  diversity  or  6 
 localism  may  be  at  stake,  you're  not  necessarily  the  7 
 only  one  in  the  room  who  thinks  that.  8 
 But  the  fact  remains  that  most  of  what  9 
 you'll  hear  today  will  be  couched  in  terms  of  10 
 competition,  diversity  and  localism.  And  how,  if  at  11 
 all,  the  FCC's  ownership  rules  should  be  influenced  by  12 
 each  of  those  values.  13 
 And  in  fact,  the  staff  has  arranged  the  14 
 panels,  the  formal  panels  around  each  of  those  15 
 concepts.  16 
 So  as  a  gross,  but  I  hope  useful  over  17 
 generalization,  we're  going  to  spend  about  six  hours,  18 
 snow  willing,  talking  about  radio  and  television  19 
 ownership  patterns,  national  and  local,  actual  and  20 
 potential  and  how  those  patterns  might  positively  or  21 
 negatively  affect  competition,  diversity  and  localism.  22 
 Got  that?  That's  what  we're  all  here  23 
 about.  24 
 Now  how  are  we  going  to  do  that?  We're  25 
47
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 48 
 going  to  do  it,  please,  by  following  two  rules.  As  1 


 your  moderator,  I'm  asking  that  every  participant,  2 
 panelist,  open  miker  and  even  Commissioner  alike,  3 
 please  agree  to  abide  by  two  and  only  two  simple  rules  4 
 today.  I  base  these  rules  on  my  experiences  with  5 
 public  hearings,  on  my  teaching  experience  and  also  6 
 frankly  on  my  desire  to  prove  that  I,  too,  support  the  7 
 concepts  of  limited  government  and  freedom  of  speech  8 
 from  oppressive  regulatory  oversight.  So  we'll  have  9 
 only  two  rules.  10 
 First  rule  is  please  stay  strictly  within  11 
 your  time  limits.  You  are  important.  I  am  important.  12 
 But  she  and  he  are  equally  important  too.  Every  rule  13 
 has  an  exception,  of  course.  Exemptions  from  this  14 
 rule  will  be  granted,  but  only  to  those  who  need  extra  15 
 time  in  order  to  quote  extensively  from  one  of  my  16 
 books.  17 
 (Laughter.)  18 
 Or  who  are  Commissioners.  Double  19 
 exemption,  if  you're  both  of  the  above.  20 
 Secondly,  again  with  the  exception  of  the  21 
 Commissioners,  of  course,  will  you  please  as  a  formal  22 
 matter  speak  through  me.  Think  of  me,  if  you  wish,  as  23 
 a  potted  plant  with  a  microphone.  As  moderator,  I  24 
 want  to  be  able  to  direct  the  flow  of  discussion,  but  25 
48
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 49 
 I  will  not  cut  it  off.  We  don't  want  the  panelists  1 


 arguing  back  and  forth  with  each  other.  I'd  like  you  2 
 to  come  through  me  so  I  can  bring  other  people  in,  if  3 
 need  be.  4 
 Thank  you,  in  advance,  for  following  these  5 
 hopefully  simple  rules.  6 
 Now  let's  hear  what's  on  your  minds?  For  7 
 your  opening  statements,  each  panelist  will  be  given  8 
 five  minutes  and  as  I  mentioned  before,  I  would  like  9 
 you  to  introduce  yourselves  because  you  know  better  10 
 than  I  just  what  brings  you  here.  11 
 MR.  BOZELL:  Thank  you,  Mr.  Krattenmaker.  12 
 My  name  is  Brent  Bozell.  I'm  the  Chairman  and  the  13 
 founder  of  the  Parents  Television  Council.  14 
 Good  morning,  Mr.  Chairman,  Commissioners  15 
 and  fellow  panelists.  16 
 Mr.  Chairman,  I  thank  you  for  inviting  me  17 
 to  address  these  hearings,  but  I  confess  at  the  start  18 
 that  I  do  so  with  a  certain  degree  of  trepidation.  19 
 There  is,  for  starters  the  angst  one  feels  when  his  20 
 libertarian  sensibilities  are  assaulted  by  the  mere  21 
 thought  of  federal  intervention  into  ownership  of  22 
 private  property.  It's  probably  safe  to  say  that  I  23 
 have  never  taken  a  position  that  does  anything  other  24 
 than  advocate  open  markets  unfettered  by  government  25 
49
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 50 
 regulation.  1 


 It  would  follow  then  that  as  technology  2 
 advances  in  the  world  of  communications  and  presents  3 
 new  opportunities  for  expansion,  we  should  all  rejoice  4 
 and  not  interfere  with  the  opportunities  provided  by  5 
 those  who  would  enter  into  the  market.  6 
 Chairman  Powell,  I  believe,  agrees  with  7 
 this.  I  believe  he  believes  this  has  been  the  result.  8 
 And  in  Chairman  Powell's  recent  interview  with  a  9 
 Hollywood  reporter  he  stated,  and  I  quote,  "our  10 
 statistics  are  since  1960,  there's  been  something  like  11 
 a  195  percent  increase  in  outlets  and  139  increase  in  12 
 independent  owners."  13 
 Chairman  Powell  went  on  to  say  "the  truth  14 
 is,  by  almost  any  measure,  there  are  more  networks  15 
 than  there  ever  were  before.  There  are  more  16 
 television  stations  than  there  ever  were  before.  17 
 There  are  more  independent  owners."  18 
 On  the  face  of  it  then,  it  would  seem  that  19 
 deregulation  has  worked  and  media  consolidation  is  but  20 
 a  mythology.  But  then  one  scratches  the  surface,  21 
 digging  a  little  deeper,  in  this  case  looking  at  the  22 
 FCC's  own  statistics  and  a  different  picture  begins  to  23 
 emerge.  In  the  past  25  years,  the  number  of  TV  24 
 station  owners  has  declined  from  500  to  360.  There's  25 
50
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 51 
 been  a  massive  increase  in  the  number  of  cable  1 


 channels,  yet  almost  three  quarters  of  them  are  now  2 
 owned  by  six  corporate  entities,  four  of  which  are  TV  3 
 networks.  Four  entities  dominate  the  most  popular  4 
 cable  programming  as  well  as  prime  time  network  shows.  5 
 Six  entities  control  approximately  two-  thirds  of  all  6 
 viewers.  7 
 The  Commission's  own  research  is  8 
 devastatingly  clear.  And  I  quote:  "Since  there  are  9 
 approximately  106  million  TV  households,  the  average  10 
 number  of  networks  available  is  over  50  per  household.  11 
 This  sounds  like  a  large  number.  However,  when  we  12 
 examine  the  ownership  of  these  networks,  we  discover  13 
 that  almost  three  quarters  of  them  serving  14 
 approximately  4  billion  subscribers  are  owned  by  six  15 
 corporate  entities.  The  four  major  TV  networks,  NBC,  16 
 ABC,  CBS,  Fox  and  the  two  dominant  cable  providers,  17 
 AOL-  Time  Warner  and  ATT  Liberty,  completely  dominate  18 
 the  tuner."  19 
 And  finally  this,  "the  big  three  networks  20 
 went  from  an  ownership  share  of  programming  of  17  21 
 percent  in  1989  to  48  percent  in  2002  through  growth  22 
 and  mergers."  23 
 This,  I  believe,  is  not  what  deregulation  24 
 was  intended  to  accomplish.  Obviously,  the  Commission  25 
51
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 52 
 cares  a  great  deal  about  the  diversity  issue  and  1 


 obviously  the  industry  cares  a  great  deal  about  that  2 
 issue  as  well.  But  what  about  the  public  which  this  3 
 Commission  and  the  industry  profess  to  serve?  The  4 
 Parents  Television  Council  has  over  750,000  members  5 
 nationwide.  I  can  only  venture  a  guess,  but  I  suspect  6 
 that  if  a  survey  were  taken  of  them  asking  them  what  7 
 they  believe  is  the  most  important  issue  concerning  8 
 television  today,  not  one  percent  would  point  to  9 
 diversity  or  competition  or  localism  or  media  10 
 consolidation  as  an  important  issue.  But  I  know  what  11 
 does  top  their  list.  Like  the  average  American  12 
 family,  they  are  disgusted,  revolted,  fed  up,  13 
 horrified,  I  don't  know  how  else  to  underscore  this,  14 
 by  the  raw  sewage  of  the  ultra  violence,  the  graphic  15 
 sex,  the  raunchy  language  that  is  flooding  into  their  16 
 living  rooms  day  and  night  through  the  television  17 
 screen  and  poisoning  the  minds  of  an  entire  generation  18 
 of  youngsters  whose  parents'  concerns  are  dismissed  by  19 
 an  industry  that  admonishes  them  instead  to  stand  20 
 guard  over  the  TV  sets,  perhaps  with  a  baseball  bat  to  21 
 keep  impressionable  children  away.  22 
 Now  I  ask  the  media  behemoths  how  23 
 important  the  issue  of  indecency  is  to  them.  I  wonder  24 
 if  you  will  find  one  single  executive,  I  don't  know  of  25 
52
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 53 
 one,  who  will  even  speak  out  on  this  issue,  much  less  1 


 do  anything  to  stop  it.  And  sadly,  the  FCC's  record  2 
 on  the  decency  issue  is  lacking.  After  all,  indecency  3 
 on  broadcast  TV  between  the  hours  of  6  and  10  p.  m.,  4 
 when  children  are  likely  to  be  watching  is  against  the  5 
 law.  And  the  FCC  is  charged  by  Congress  with  6 
 enforcing  the  law.  7 
 How  many  stations  in  the  continental  U.  S.  8 
 has  it  fined  over  the  years  since  its  Enforcement  9 
 Division  was  formed  for  broadcasting  indecent  10 
 material?  According  to  our  research  of  the  FCC's  11 
 website,  the  answer  is  none.  12 
 So  I  would  ask  the  Commission  to  consider  13 
 this.  If  the  public  good  is  what  is  driving  this  14 
 debate,  then  the  Commission  ought  to  consider  what  it  15 
 is  the  public  wants,  not  what  the  network  elite  wants.  16 
 The  public  is  demanding  that  television  shape  up  and  17 
 stop  poisoning  the  culture.  18 
 Our  hope  is  that  as  the  Commission  debates  19 
 the  diversity  and  media  consolidation  issue,  it  keeps  20 
 at  the  forefront  the  one  question  that  really  matters.  21 
 What  is  the  formula  that  will  safeguard  the  rights  of  22 
 families?  23 
 Thank  you,  Mr.  Chairman.  24 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  25 
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 54 
 Corn-  Revere?  1 


 MR.  CORN-  REVERE:  Thank  you,  and  thank  you  2 
 Mr.  Chairman  and  Commissioners  for  inviting  me  to  3 
 address  this  very  important  issue.  4 
 I  am  a  partner  of  the  Washington  law  firm  5 
 of  Hogan  and  Hartson,  although  I  should  add  as  sort  of  6 
 a  footnote  to  my  affiliation  that  that's  going  to  last  7 
 for  exactly  one  more  day.  On  Monday,  I  become  a  8 
 partner  in  the  Washington,  D.  C.  Office  of  Davis  Wright  9 
 Tremaine.  I  am  not  speaking  on  behalf  of  any  clients  10 
 today.  I'm  presenting  solely  my  own  views.  11 
 It's  interesting  this  proceeding  is  about  12 
 the  broadcast  ownership  rules,  but  it's  remarkable  the  13 
 extent  to  which  it  is  becoming  a  discussion  of  14 
 broadcast  content  more  than  anything  else,  as  Mr.  15 
 Bozell's  comments  just  indicated.  The  common  16 
 denominator  is  a  purported  link  to  concentration  which  17 
 appears  to  create  a  multitude  of  sins  beyond  just  a  18 
 generalized  concern  about  diversity.  19 
 Some  participants  in  this  proceeding  argue  20 
 that  the  media  concentration  has  made  television  21 
 bland.  Others  claim  that  it  leads  to  more  programming  22 
 that  is  decent  or  violent.  Raw  sewage,  I  guess,  is  23 
 the  expression  that  Mr.  Bozell  used,  indicating  he's  24 
 clearly  been  able  to  overcome  his  libertarian  25 
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 55 
 sensibilities.  1 


 Still  others  suggest  that  media  2 
 concentration  affects  program  quality,  including  the  3 
 quality  of  news  reports.  The  latest  claim  was  made  4 
 this  week  by  Senator  Zell  Miller  of  Georgia.  In  an  5 
 impassioned  speech  on  the  Senate  Floor,  he  sharply  6 
 criticized  CBS  for  its  planned  reality  show,  "The  Real  7 
 Beverly  Hillbillies."  Senator  Miller  seemed  to  blame  8 
 the  advent  of  the  show  on  media  concentration,  9 
 contrasting  the  current  CBS  Viacom  Corporation  with  10 
 the  CBS  network  of  1960s  when,  as  he  put  it,  11 
 "courageous  CBS  reporters  risked  their  lives  to  cover  12 
 the  civil  rights  struggles  in  the  South."  Oddly  13 
 enough,  in  1963,  CBS  was  criticized  in  Senate  hearings  14 
 for  following  the  NAACP  line.  15 
 Now  this  example  struck  me  as  particularly  16 
 strange  because  as  a  kid  growing  up  in  rural  Illinois,  17 
 some  of  my  favorite  shows  were  on  CBS  and  they  18 
 included  "The  Beverly  Hillbillies,"  "Petticoat  19 
 Junction,  and  "Green  Acres."  I  still  one  day  aspire  20 
 to  having  a  cement  pond.  21 
 (Laughter.)  22 
 Of  course,  there  weren't  many  alternatives  23 
 at  the  time.  We  received  three  over-  the-  air  stations  24 
 and  cable  was  a  long  way  off.  Satellite  TV,  VCRs  and  25 
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 56 
 DVDs  and  personal  digital  video  recorders  weren't  even  1 


 a  gleam  in  the  eye.  2 
 By  comparison,  it's  difficult  to  3 
 understand  some  of  the  current  claims  about  reduced  4 
 diversity.  It's  sobering,  for  example,  to  realize  5 
 that  when  Chairman  Newton  Minnow  called  television  a  6 
 vast  wasteland  in  May  1961,  fewer  programs  were  aired  7 
 in  New  York,  the  largest  medium  market  in  the  world,  8 
 on  all  of  its  television  stations  each  week  than  there  9 
 are  channels  today.  10 
 It  seems  to  me  that  blaming  concentration  11 
 in  the  media  for  the  programs  we  don't  like  is  12 
 somewhat  like  the  drunk  who  searches  for  his  keys  13 
 under  the  street  light,  not  because  that's  where  he  14 
 lost  them,  but  because  the  lighting  is  so  much  better  15 
 there.  16 
 (Laughter.)  17 
 After  all,  it's  clear  that  the  Commission  18 
 would  bump  up  against  the  first  amendment  pretty  19 
 quickly  if  it  tried  to  force  programming  that  was  less  20 
 bland  or  if  it  tried  to,  God  help  us,  ban  those  stupid  21 
 reality  TV  shows.  22 
 There  appears  to  be  a  belief  by  some  that  23 
 the  government  can  achieve  its  goal  of  content  24 
 regulation  if  only  it  frames  its  rules  as  economic  25 
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 57 
 regulations.  The  thought  is  that  programming  can  be  1 


 achieved  by  indirection,  rather  than  by  direct  2 
 regulation.  3 
 Of  course,  it's  also  true  that  threats  of  4 
 new  structural  regulations  or  promises  of  relaxation  5 
 of  existing  rules  can  become  powerful  inducements  in  6 
 getting  broadcasters  to  reform  their  editorial  7 
 policies.  8 
 The  Commission  should  bear  in  mind  that  9 
 such  economic  regulations  are  not  immune  from  first  10 
 amendment  scrutiny  where  their  purpose  is  to  affect  11 
 the  programming  content  on  broadcast  television.  12 
 There  have  been  a  few  examples  that  we've  seen  in  the  13 
 past,  for  example,  the  U.  S.  Court  of  Appeals  for  the  14 
 District  of  Columbia  Circuit  struck  down  a  provision  15 
 that  prohibited  extending  any  existing  newspaper  16 
 broadcast  cross  ownership  waiver  where  it  was  17 
 motivated  by  hostility  to  the  editorial  policies  of  18 
 Rupert  Murdoch.  19 
 Similarly,  the  D.  C.  Circuit  has  struck  20 
 down  EEO  rules  designed  indirectly  to  promote  minority  21 
 viewpoints.  The  court  said  that  it  was  too  amorphous  22 
 to  simply  promote  diversity  in  the  abstract,  but  on  23 
 the  other  hand  opined  that  if  you  were  to  try  and  24 
 promote  specific  viewpoints,  then  you  would  encounter  25 
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 58 
 significant  first  amendment  problems.  1 


 More  recently,  the  court  held  that  the  2 
 FCC's  general  power  must  be  interpreted  narrowly  when  3 
 it  comes  to  programming  issues,  since  such  matters  4 
 inevitably  raise  first  amendment  questions.  5 
 Trying  to  devise  regulations  with  the  6 
 purpose  to  improve  the  quality  of  broadcast  programs  7 
 is  entirely  too  nebulous  a  goal  and  too  difficult  to  8 
 attain.  The  FCC  adopted  the  prime  time  access  rule  in  9 
 the  1970s  to  promote  news  events  and  public  affairs  10 
 and  instead  brought  us  "The  Gong  Show."  11 
 The  current  demands  to  bring  back  the  12 
 financial  interest  in  syndication  rules  face  the  same  13 
 problem.  We  are  told  that  programs  will  be  more  14 
 creative  and  less  bland  if  FCC  limits  the  amount  of  15 
 network  programming  that  the  networks  can  own  in  prime  16 
 time.  But  this  argument  was  made  to  the  Commission  17 
 before  in  1991  when  the  Commission  was  considering  18 
 Fin-  Syn  rules  at  the  time.  My  boss  at  the  time,  19 
 Commissioner  Quello,  addressed  the  issue  of  20 
 programming  quality  and  creativity  in  his  dissent  from  21 
 the  decision  in  1991  not  to  eliminate  the  rules  at  the  22 
 time.  23 
 And  if  I  can  beg  your  indulgence  just  to  read  what  he  24 
 said  at  the  time  --  25 
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 59 
 MR.  KRATTENMAKER:  The  objection  will  be  1 


 --  cover  the  quotations  from  an  illustrious  2 
 Commissioner.  3 
 MR.  CORN-  REVERE:  Yes,  thank  you  very  4 
 much.  At  the  time  he  wrote  in  his  dissent,  when  5 
 presented  with  the  argument  that  the  creativity  and  6 
 quality  of  network  programs  would  increase  only  if  you  7 
 retain  the  Fin-  Syn  rules  he  said,  "I  asked  one  8 
 executive  from  an  independent  production  company  who  9 
 had  been  urging  me  to  preserve  creativity  and  quality  10 
 in  television  exactly  how  network  involvement  would  11 
 have  changed  the  company's  most  successful  show,  'The  12 
 A-  Team.  '  He  was  stuck  for  an  answer.  Yet,  even  if  he  13 
 had  been  able  to  describe  the  particular  ways  in  which  14 
 barring  a  networks  financial  interest  would  improve  15 
 'The  A-  Team,    I'm  not  at  all  certain  that  I  would  want  16 
 my  public  interest  calculated  in  this  proceeding  to  17 
 turn  on  that  answer."  18 
 MR.  KRATTENMAKER:  Thank  you.  19 
 MR.  CORN-  REVERE:  Thank  you.  20 
 MR.  KRATTENMAKER:  Mr.  Ireland?  21 
 MR.  IRELAND:  Yes,  good  morning,  Chairman,  22 
 Commissioners,  distinguished  guests.  I'm  Jay  Ireland,  23 
 President  of  the  NBC  Television  Stations  and  I'm  24 
 delighted  to  speak  with  you  this  morning  regarding  the  25 
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 60 
 realities  of  today's  media  marketplace  that  we  compete  1 


 in.  2 
 As  you've  heard  from  a  number  of  people,  3 
 today's  world  is  not  the  world  of  forty  years  ago  when  4 
 markets  like  Washington,  D.  C.  had  fewer  than  30  local  5 
 metropolitan  media  outlets  and  Richmond  had  a  mere  6 
 handful.  7 
 Today,  Washington  has  65  broadcast  8 
 stations  alone  and  literally  hundreds  of  other  media  9 
 outlets  including  hundreds  of  cable  or  satellite  10 
 television  networks,  a  hundred  or  more  satellite  radio  11 
 channels,  dozens  more  daily  or  weekly  newspapers,  and  12 
 most  importantly,  the  internet  which  empowers  every  13 
 user  to  be  his  or  her  own  programmer,  editor  or  14 
 content  creator.  15 
 According  to  the  FCC's  own  data,  there's  16 
 been  nearly  a  200  percent  increase  in  the  number  of  17 
 media  outlets  and  139  percent  increase  in  the  number  18 
 of  owners  since  1960.  19 
 Let's  look  at  the  media  landscape  today  20 
 that  we  compete  in.  There  are  over  2200  commercial  21 
 television  stations.  Eighty-  five  percent  of  TV  homes  22 
 receive  their  signal  from  either  cable  or  satellite  23 
 which  we've  heard  previously.  The  average  number  of  24 
 channels  received  is  89  of  which  roughly  14  are  25 
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 61 
 over-  the-  air.  1 


 Here's  another  way  to  look  at  it.  During  2 
 prime  time,  the  NBC  and  Telemundo  stations  attract  3 
 less  than  3  percent  of  the  nation's  total  television  4 
 audience.  Yet,  the  FCC  rules  assume  that  nearly  35  5 
 percent  of  the  nation's  television  audience  is  6 
 continually  watching  NBC  and  Telemundo.  7 
 The  programming  side  is  equally  8 
 competitive.  NBC  used  to  compete  against  two  other  9 
 networks  to  acquire  first  run  prime  time  programming.  10 
 Now  it  has  to  compete  against  as  many  as  six  other  11 
 general  entertainment,  English  language  broadcast  12 
 networks  and  over  100  targeted  cable  networks.  As  a  13 
 result,  on  a  typical  night  only  50  percent  of  the  14 
 television  viewers  are  watching  the  four  major  15 
 networks.  This  unprecedented  and  ever  growing  level  16 
 of  media  and  programming  diversity  is  a  reality  of  17 
 today's  media  marketplace.  18 
 In  this  diverse  marketplace,  it  makes  no  19 
 sense  to  treat  the  broadcasting  industry  with  20 
 ownership  rules  developed  more  than  a  half  century  21 
 ago.  Those  rules  were  based  on  a  view  of  the  world  22 
 where  broadcast  television  was  the  only  source  for  23 
 video  programming.  That  world  no  longer  exists  as  we  24 
 know.  Therefore,  the  rules  must  reflect  today's  25 
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 62 
 marketplace.  1 


 Let  me  now  turn  to  the  issue  of  diversity.  2 
 Some  advocates  for  more  government  intervention  argue  3 
 that  relaxation  of  the  national  cap  risk  a  local  4 
 viewpoint.  The  reality  is  that  in  large  markets  there  5 
 is  virtually  no  solely  local  ownership  of  television  6 
 stations.  The  only  thing  the  cap  does  is  protect  7 
 national  groups,  many  of  which  own  20  or  more  8 
 stations,  from  having  to  compete  with  network  owned  9 
 stations  and  markets.  10 
 Some  who  seek  continued  government  11 
 protection  argue  that  the  national  cap  protects  the  12 
 affiliate's  ability  to  pre-  empt  programming.  That's  13 
 not  true.  On  average,  a  network  affiliate  pre-  empts  14 
 about  as  often  as  the  average  network  O  &  O  and  an  NBC  15 
 affiliate  uses  only  half  of  its  annual  pre-  emption  16 
 basket  which  are  the  number  of  hours  of  network  17 
 programming  an  affiliate  can  pre-  empt  for  any  reason  18 
 at  all.  19 
 Indeed,  the  network-  owned  stations  20 
 broadcast  programming  that  is  more  local  than  the  21 
 programming  of  the  affiliated  stations.  As  an  22 
 example,  NBC  has  owned  Telemundo  for  less  than  a  year  23 
 and  we  have  already  added  many  newscasts  in  several  24 
 key  Spanish  language  markets.  Also,  the  NBC-  owned  25 
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 63 
 stations,  on  average,  air  more  hours  of  local  news  per  1 


 week  than  the  independently  owned  stations.  2 
 The  real  measure  of  local  relevance  is  the  3 
 viewership  in  the  community  and  on  average,  NBC's  4 
 owned  and  operated  stations  perform  at  least  as  well,  5 
 if  not  better,  than  most  independently  owned  stations.  6 
 There's  another  way  the  FCC  rules  inhibit,  7 
 rather  than  promote  program  diversity.  NBC  is  up  8 
 against  the  cap  because  it  wants  to  make  Telemundo  a  9 
 competitive  Spanish  language  network.  The  cap  10 
 prohibits  NBC  from  continuing  its  efforts  to  acquire  11 
 stations  that  might  improve  Telemundo's  ability  to  12 
 provide  real  diversity  of  programming.  That's  the  13 
 reality  of  the  cap.  14 
 Let  me  quickly  address  ownership,  local  15 
 ownership  rules.  Some  argue  that  local  viewpoint  16 
 diversity  would  be  lost  if  any  party  was  allowed  to  17 
 own  more  than  two  television  stations  regardless  of  18 
 the  size  of  the  market  or  the  stations  involved.  But  19 
 the  reality  is  that  every  market  in  the  country  has  20 
 plenty  of  media  outlets  to  ensure  viewpoint  diversity,  21 
 even  if  the  local  ownership  rule  is  relaxed.  22 
 Moreover,  the  FCC's  existing  rules  treat  23 
 different  markets  differently.  The  FCC  believes  that  24 
 I  can  own  two  of  nine  stations  without  risking  25 
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 64 
 diversity  in  a  smaller  market,  but  in  a  larger  market  1 


 with  many  more  stations,  I  am  still  limited  to  two  2 
 stations.  This  result  defies  logic.  3 
 Some  assert  the  common  ownership  results  4 
 in  common  viewpoint.  The  reality  is  viewers  demand  5 
 differentiated  content.  It  would  not  be  in  our  6 
 economic  interest  to  simply  offer  similar  viewpoints  7 
 on  multiple  stations.  As  an  example,  the  NBC  and  8 
 Telemundo  stations  in  the  same  market,  I  can  tell  you,  9 
 clearly  do  not  offer  similar  programming.  10 
 In  conclusion,  relaxation  of  the  11 
 Commission's  ownership  rules  will  not  diminish  12 
 diversity.  What  will  diminish  diversity  is  the  loss  13 
 of  media  outlets  because  they  can  no  longer  compete  in  14 
 today's  fragmented  marketplace.  If  those  who  want  15 
 more  government  intervention  win,  the  reality  will  be  16 
 that  viewers  will  lose.  This  is  because  the  broadcast  17 
 networks  will  no  longer  be  able  to  afford  to  obtain  18 
 the  top  quality  programming  that  viewers  have  grown  19 
 accustomed  to  and  on  the  local  level,  groups  will  not  20 
 be  able  to  gain  efficiencies  needed  to  compete.  21 
 The  best  protection  against  television  22 
 becoming  an  increasingly  marginalized  source  of  23 
 information  and  entertainment  in  today's  marketplace  24 
 is  not  more  regulation,  but  more  competition,  25 
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 65 
 nationally,  locally  and  in  programming.  1 


 Thank  you.  2 
 MR.  KRATTENMAKER:  Mr.  Liggins?  3 
 MR.  LIGGINS:  Good  morning,  Mr.  Chairman,  4 
 and  to  the  other  Commissioners  as  well.  I  am  Alfred  5 
 Liggins,  Chief  Executive  Officer  and  President  of  6 
 Radio  One,  Incorporated.  Thank  you  for  inviting  me  to  7 
 speak  before  you  today  on  this  important  issue  of  the  8 
 benefit  of  diversity  in  media  ownership.  9 
 I'm  here  today  to  share  with  you  my  10 
 experience  and  views  on  how  diversity  and  media  11 
 ownership  have  positively  affected  the  broadcast  12 
 industry  and  the  American  public.  I  trust  that  at  the  13 
 conclusion  of  this  hearing,  I  will  have  provided  some  14 
 additional  insight  as  to  the  difference  such  diversity  15 
 can  make  to  the  public  debate  and  dissemination  of  16 
 information.  17 
 This  is  the  twenty-  fifth  anniversary  of  18 
 the  1978  minority  ownership  policy  statement  whose  19 
 history  stands  as  an  example  of  what  creative  20 
 rulemaking  can  accomplish.  In  1978,  there  was  only  21 
 one  minority  owned  television  station  and  59  minority  22 
 owned  radio  stations.  By  1995,  when  the  tax  23 
 certificate  policy  was  repealed  in  comparative  24 
 hearings  basically  came  to  an  end,  there  were  35  25 
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 66 
 minority  owned  television  stations  and  about  320  1 


 minority  owned  radio  stations.  2 
 Today,  in  Richmond,  Virginia,  Radio  One  is  3 
 the  only  minority  owned  broadcaster.  Prior  to  4 
 deregulation  there  were  numerous  other  minority  5 
 owners.  The  significant  decrease  in  the  number  of  6 
 minority  owned  television  and  radio  stations  is  an  7 
 illustration  of  how  federal  rules  and  policy  making  8 
 can  dramatically  change  the  landscape  of  equal  9 
 opportunity  and  diversity.  10 
 I  would  like  to  devote  a  minute  or  so  to  11 
 providing  some  background  information  on  Radio  One.  12 
 As  Radio  One  is  the  largest  African-  American  13 
 controlled  radio  broadcasting  company  in  the  United  14 
 States,  this  background  information  will  be  relevant  15 
 to  our  discussion  today.  16 
 My  mother,  Katherine  L.  Hughes,  founded  17 
 Radio  One  in  1980.  Owning  a  radio  station  was  the  18 
 fulfillment  of  her  goal  of  increasing  the  number  of  19 
 African-  American  voices  heard  on  radio.  20 
 Interestingly,  she  was  able  to  realize  this  goal  by  21 
 taking  advantage  of  the  FCC's  distress  sell  policy.  22 
 Radio  One's  entre  into  broadcasting  commenced  with  the  23 
 acquisition  of  station  WOL-  AM  in  Washington,  D.  C.  For  24 
 seven  years,  this  was  the  company's  sole  station  and  25 
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 67 
 yet  operating  at  a  mere  thousand  watts  it  established  1 


 the  cornerstone  of  the  company's  core  mission,  2 
 presenting  news,  entertainment  and  information  from  3 
 the  African-  American  perspective.  It  was  on  WOL-  AM  4 
 that  my  mother  pioneered  a  new  and  innovative  format,  5 
 24  hour  talk  from  a  black  perspective  and  adopted  the  6 
 slogan,  "information  is  power."  7 
 The  meaning  of  that  slogan  was  as  relevant  8 
 and  important  to  her  generation  as  it  is  to  mine.  The  9 
 ability  to  control  the  airways  through  ownership  gives  10 
 one  the  power  to  proactively  inform,  educate  and  11 
 inspire  one's  community.  I  am  certain  that  if  my  12 
 mother  had  not  been  the  owner  of  WOL,  she  would  not  13 
 have  had  the  opportunity  accomplish  this  important  14 
 goal.  15 
 Over  the  past  two  decades,  Radio  One  has  16 
 grown  from  that  single  AM  station  to  65  stations  in  22  17 
 markets  and  also  provides  programming  to  5  channels  on  18 
 FM  satellite  radio,  one  of  which  is  a  simulcast  of  19 
 WOL.  Radio  One's  expansion  to  a  company  of  national  20 
 scope  is  attributable  in  part  to  the  decision  to  go  21 
 public  in  1999  which  made  capital  more  accessible  and  22 
 less  expensive  and  Clear  Channel's  commitment  to  23 
 divest  a  number  of  stations  being  acquired  from  its  24 
 AM-  FM  acquisition  to  minority-  owned  companies,  an  25 
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 68 
 example  of  deregulation  actually  creating  more  1 


 diversity.  2 
 Through  that  divestiture,  Radio  One  3 
 acquired  stations  in  such  major  markets  as  Los  4 
 Angeles,  Dallas  and  Houston.  Although  we  are  a  public  5 
 company,  my  mother  and  I  continue  to  retain  a  majority  6 
 of  the  voting  control  of  Radio  One.  In  spite  of  our  7 
 significant  growth,  we  have  continued  to  maintain  our  8 
 core  focus,  providing  entertaining  and  informative  9 
 content  that  serves  the  needs  of  the  African-  American  10 
 community.  11 
 Of  our  65  stations,  60  have  formats  that  12 
 are  targeted  toward  the  African-  American  listener.  13 
 Our  diverse  programming  formats  include  black  talk,  14 
 hip  hop,  R  &  B,  jazz  and  gospel.  I  believe  that  15 
 unlike  many  of  our  majority  owned  counterparts,  we  16 
 offer  to  our  listeners  a  viewpoint  that  is  more  17 
 specifically  focused  on  their  community's  interests  18 
 and  needs.  19 
 Studies  have  shown  that  there  are  20 
 significant  disparities  in  the  treatment  of  21 
 African-  Americans  in  local  and  national  news.  In  22 
 addition,  African-  Americans  still  face  a  lack  of  23 
 quality  programming  in  the  media  focused  on  their  24 
 needs,  interests  and  perspectives.  25 
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 69 
 I  strongly  believe  that  minority  owned  1 


 radio  stations  provide  more  minority  focused  content  2 
 and  a  greater  focus  on  the  concerns  of  the  minority  3 
 community.  Likewise,  our  listeners  take  great  comfort  4 
 in  knowing  that  the  information  and  opinions  presented  5 
 are  derived  from  a  shared  perspective  that  there  is  a  6 
 collective  stake  in  the  issues  being  discussed.  7 
 Perhaps  the  best  way  to  illustrate  this  is  8 
 to  point  out  a  few  examples  of  how  Radio  One  uniquely  9 
 serves  the  needs  of  its  listeners.  Our  stations  10 
 regularly  provide  important  health  care  information  11 
 that  is  relevant  to  African-  Americans,  including  12 
 information  concerning  the  disparity  and  the  quality  13 
 of  health  care,  the  significantly  higher  mortality  14 
 rate  and  the  increased  risk  of  heart  disease.  We  also  15 
 provide  information  on  college  admissions,  sponsor  16 
 college  scholarship  opportunities  and  help  raise  funds  17 
 in  support  for  historically  black  colleges  and  18 
 universities.  We've  raised  cash  and  other  donations  19 
 for  Princeville,  North  Carolina,  the  oldest  town  in  20 
 America  incorporated  by  freed  slaves  which  was  21 
 devastated  by  flood.  22 
 On  a  regular  basis,  we  sponsor  job  fairs  23 
 and  other  events  in  the  African-  American  community  and  24 
 promote  voting  and  other  civic  participation.  These  25 
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 70 
 are  just  a  few  of  the  ways  in  which  we  attempt  to  1 


 serve  the  needs  of  our  listeners.  2 
 Obviously,  I  cannot  state  with  certainty  3 
 that  these  issues  are  not  of  important  concern  to  our  4 
 nonminority  owned  companies,  however,  I  can  assure  you  5 
 that  as  an  African-  American  owner,  I  am  committed  to  6 
 ensuring  that  Radio  One  continues  to  focus  on  the  7 
 African-  American  community  and  to  present  that  8 
 viewpoint  to  the  American  public.  9 
 We've  also  just  announced  a  new  cable  10 
 venture  with  Comcast  Corporation.  Comcast  11 
 Corporation,  now  the  largest  cable  operator  in  the  12 
 country,  shares  Radio  One's  view  of  the  importance  and  13 
 of  the  need  for  more  diverse  programming  and  as  a  14 
 result  has  committed  to  a  significant  investment  and  15 
 resources  in  this  channel  in  order  to  make  this  a  16 
 reality.  Yet  another  example  of  deregulation  17 
 increasing  diversity.  18 
 Thank  you.  19 
 MR.  KRATTENMAKER:  Thank  you  very  much.  20 
 Ms.  Riskin?  21 
 MS.  RISKIN:  Thank  you.  I  am  Victoria  22 
 Riskin,  President  of  the  Writers  Guild  of  America,  23 
 West,  which  represents  the  great  majority  of  writers  24 
 and  producers  who  create  prime  time  entertainment  25 
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 71 
 programs  and  I  would  like  to  add  the  good  programs.  1 


 Thank  you  for  inviting  me  to  speak  about  2 
 the  importance  to  the  nation  of  diversity  in  media.  3 
 The  media  are  the  modern  day  American  town  square,  the  4 
 place  where  people  from  different  backgrounds  and  5 
 points  of  view  share  their  stories  and  the  public  6 
 learns  about  the  world.  Here  is  where  American  7 
 democracy  comes  alive  and  the  American  identity  is  8 
 forged.  But  today,  barriers  have  been  erected  to  keep  9 
 all  but  a  handful  of  voices  from  being  heard  in  our  10 
 town  square.  11 
 The  Commission  and  the  courts  have  asked  12 
 for  data  about  diversity  in  entertainment  programming.  13 
 As  President  of  the  Writers  Guild,  I  can  tell  you  that  14 
 over  the  past  decade,  diversity  of  production  sources  15 
 in  the  marketplace  has  been  eroded  to  the  point  of  16 
 near  extinction.  17 
 In  1992,  only  15  percent  of  new  series  18 
 were  produced  for  a  network  by  a  company  it  19 
 controlled.  Last  year,  the  percentage  of  shows  20 
 produced  by  controlled  companies  more  than  quintupled  21 
 to  77  percent.  22 
 In  1992,  16  new  series  were  produced  23 
 independently  of  conglomerate  control.  Last  year,  24 
 there  was  one.  25 
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 72 
 The  opportunity  for  access  for  a  broad  1 


 range  of  voices  has  been  cut  dramatically.  The  claim  2 
 has  been  made  that  because  we  now  have  hundreds  of  3 
 channels  on  cable,  choices  abound.  But  more  channels  4 
 does  not  really  mean  more  choices.  In  the  past,  the  5 
 FCC  has  defined  a  major  network  as  one  that  reaches  16  6 
 million  or  more  homes.  By  that  definition,  there  are  7 
 91  major  networks.  But  of  these  91,  73  or  fully  80  8 
 percent  are  owned  or  co-  owned  by  six  corporate  9 
 entities.  Five  of  these  six  are  the  same  corporations  10 
 that  run  the  broadcast  networks;  Viacom,  Disney,  News  11 
 Corporation,  General  Electric  and  AOL-  Time  Warner.  12 
 Any  doubt  about  the  control  exercised  by  13 
 these  five  companies  was  dispelled  in  a  recent  report  14 
 by  respected  Wall  Street  media  analyst  Tom  Wolzien  15 
 which  I've  attached  to  my  comments.  Wolzien  points  16 
 out  that  a  strong  programming  oligopoly  is  beginning  17 
 to  re-  emerge.  For  December  2002,  he  found  that  the  18 
 five  conglomerates  controlled  about  a  75  percent  share  19 
 of  prime  time  viewing.  Wolzien  concludes  that  over  20 
 the  next  few  years  with  the  further  consolidations  he  21 
 expects  to  occur,  these  five  companies  will  control  22 
 roughly  the  same  percentage  of  TV  households  in  prime  23 
 time  as  the  three  networks  did  40  years  ago.  In  other  24 
 words,  the  control  by  a  few  conglomerates  will  be  as  25 
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 73 
 absolute  as  ever  in  history.  1 


 The  data  we  submitted  to  the  Commission  2 
 documenting  the  dominance  of  content  by  a  handful  of  3 
 vertically  integrated  conglomerates  has  been  4 
 corroborated  by  an  independent  analyst.  No  longer  can  5 
 anyone  argue  that  the  facts  of  such  control  or  their  6 
 potential  impact  are  in  doubt.  The  old  programming  7 
 oligopoly  of  media  content  is  being  rebuilt.  8 
 The  creative  community  has  seen  in  recent  9 
 years  how  increasingly  difficult  it  is  to  bring  10 
 innovative  shows  to  the  air.  All  too  often,  indeed  11 
 virtually  invariably,  to  get  their  work  on  television,  12 
 writers  and  producers  must  cede  ownership  and  creative  13 
 control  to  the  network  or  cable  companies.  Most  have  14 
 no  choice,  none  at  all.  They  must  accept  the  network  15 
 or  cable  company  as  a  partner  and  surrender  their  16 
 independence  with  the  result  that  if  their  show  does  17 
 not  make  the  schedule,  they  are  now  prohibited  from  18 
 taking  it  elsewhere.  19 
 Nearly  100  small  and  medium  size  20 
 businesses,  each  with  its  unique  point  of  view  have  21 
 disappeared  in  the  last  10  years.  Why  is  the  22 
 disappearance  of  a  small  independent  producer  and  23 
 writer  an  issue  for  public  concern?  Because  with  them  24 
 have  gone  stories  from  hundreds  of  writers  and  25 
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 74 
 producers  who  care  deeply  about  original  drama,  1 


 comedy,  history,  culture  and  not  just,  for  example,  2 
 just  ratings,  ratings,  all  the  time,  ratings.  3 
 We  ask  you  to  consider  the  rules  governing  4 
 media  ownership,  as  you  do  that  you  look  to  expand  5 
 diversity,  not  limit  it  to  these  gigantic  6 
 corporations.  We  ask  you  to  take  constructive  action  7 
 to  remedy  the  serious  imbalance  that  has  taken  root  in  8 
 the  programming  marketplace.  9 
 We  are  asking  you  to  ensure  that  a  few  10 
 companies  do  not  continue  to  have  a  strangle  hold  on  11 
 free  expression  and  open  debate.  12 
 MR.  KRATTENMAKER:  Ms.  Riskin,  your  time  13 
 is  up.  14 
 MS.  RISKIN:  Thank  you.  15 
 MR.  KRATTENMAKER:  Did  you  wish  to  16 
 conclude?  Okay,  thank  you.  17 
 I  just  wanted  to  remind  members  of  the  18 
 audience  that  if  you  wish  to  --  there  are  cards  in  the  19 
 back  you  can  fill  out  if  you've  got  questions  you  want  20 
 to  ask  of  the  panelists.  If  we  have  time,  I  will  try  21 
 to  ask  some  of  these  questions.  If  not,  we'll  get  to  22 
 them  at  some  other  point.  So  we  welcome  receiving  the  23 
 cards.  24 
 That  did  not  come  out  of  your  time,  Mr.  25 
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 75 
 Schwartzman.  1 


 MR.  SCHWARTZMAN:  Thank  you,  Mr.  2 
 Krattenmaker.  Thank  you.  I  believe  the  Commission  3 
 and  should  retain  its  existing  ownership  rules,  except  4 
 that  it  should  eliminate  the  so-  called  UHF  discount.  5 
 Five  minute,  five  points  and  a  sixth  about  Telemundo,  6 
 if  there's  time.  7 
 First,  while  I  feel  genuinely  honored  to  8 
 have  been  asked  to  speak  today,  at  the  risk  of  seeming  9 
 discourteous,  I  must  observe  that  today's  hearing  is  10 
 not  likely  to  be  very  useful.  To  develop  a  complete  11 
 record,  you  need  to  hold  more  hearings  under  different  12 
 conditions  and  I  don't  just  mean  weather.  The  purpose  13 
 of  field  hearings  is  to  paint  viewpoints  and  14 
 perspectives  which  are  unavailable  at  home.  This  15 
 principle  is  especially  relevant  to  a  panel  on  16 
 diversity.  But  unlike  the  public  forum  held  at  17 
 Columbia  University  last  month,  today's  agenda  has  too  18 
 many  familiar  faces  from  inside  the  beltway  and  too  19 
 few  additional  perspective  from  local  residents.  20 
 Mr.  Corn-  Revere  and  I  have  frequently  21 
 debated  each  other  in  professional  meetings  in  22 
 Washington  where  we  both  work.  23 
 Ms.  Thompson  and  Mr.  Bozell  also  work  24 
 inside  the  beltway.  25 
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 76 
 Mr.  Liggins'  office  is  technically  outside  1 


 the  beltway,  but  it's  actually  within  sight  of  the  2 
 beltway  and  for  all  practical  purposes  is  inside  the  3 
 beltway.  4 
 We  didn't  need  to  brave  a  snowstorm  to  5 
 present  viewpoints  available  to  you  back  home.  6 
 (Applause.)  7 
 Not  only  that,  the  structure  of  today's  8 
 hearing  offers  little  opportunity  for  the  exchange  of  9 
 ideas.  Seven  panelists,  five  minutes  each,  50  minutes  10 
 total,  do  the  math.  This  is  especially  disappointing  11 
 inasmuch  as  the  record  developed  in  this  docket  as  12 
 Commissioners  Copps  and  Adelstein  have  pointed  out,  13 
 raised  many  questions  as  to  which  there  is  yet  not  14 
 enough  answers.  This  event  does  little  to  fill  in  the  15 
 blanks  and  answer  those  questions.  16 
 Second,  I  want  to  say  what  I've  said  to  17 
 the  Commission  on  other  similar  occasions.  We  have  18 
 the  best  system  of  broadcasting  in  the  world  because  19 
 of,  not  in  spite  of,  the  ownership  regulations  20 
 utilized  since  1934.  The  Commission  is  mandated  to  21 
 ensure  that  broadcasters  serve  all  members  of  the  22 
 public.  The  marketplace  works  well  in  many  respects,  23 
 but  it  is  not  perfect.  In  particular,  the  market  does  24 
 not  recognize  and  serve  the  needs  of  those  who  are  too  25 
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 77 
 old,  too  young,  too  poor  to  be  demographically  1 


 attractive.  Large  group  owners  who  increasingly  lack  2 
 roots  in  the  community  they  serve  are  less  likely  to  3 
 meet  the  needs  of  everyone.  4 
 Over  the  last  25  years,  I've  testified  5 
 before  the  Commission  and  Congress  on  many  occasions.  6 
 More  often  than  not,  I  appear  as  I  do  today  with  7 
 broadcasters  who  exemplify  the  best  service  standards  8 
 in  the  industry.  But  I  urge  you  to  focus  on  the  fact  9 
 that  the  Commission  must  regulate  on  the  proclivities  10 
 of  the  worst  and  most  rapacious  among  them.  You  need  11 
 to  pay  attention  to  who  does  not  attend  these  12 
 hearings.  Relaxation  of  national  ownership  caps  and  13 
 creation  of  larger  local  ownership  combinations  has  14 
 permitted  some  broadcasters  to  ignore  news  programming  15 
 and  to  abandon  their  communities  in  favor  of  voice  16 
 tracking  and  central  casting.  17 
 Third,  I  think  the  Commission  has  set  an  18 
 artificially  high  bar  for  those  of  us  who  support  the  19 
 existing  ownership  rules.  We've  been  told  to  avoid  20 
 emotionalism  and  confine  ourselves  to  presenting  21 
 empirical  data  to  support  the  rules.  I  do  not  22 
 apologize  for  being  emotionally  attached  to  localism,  23 
 diversity  and  the  first  amendment.  Moreover,  the  term  24 
 empirical  has  been  wrongly  equated  with  statistical.  25 
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 78 
 My  dictionary  defines  empirical  as  meaning  capable  of  1 


 being  verified  or  disproved  by  observation  or  2 
 experimentation.  Much  empirical  evidence  is  not  3 
 statistical  and  the  Commission  should  not  be  ignoring  4 
 such  observational  evidence.  5 
 Fourth,  I  believe  that  at  least  some  6 
 members  of  the  Commission  and  staff  have  placed  an  7 
 undue  emphasis  on  searching  for  elusive  formulae.  The  8 
 Commission  has  been  created  as  an  expert  agency  9 
 because  Congress  expects  it  to  make  predictive  10 
 judgments.  In  calling  for  you  to  exercise  this  broad  11 
 and  necessarily  subjective  discretion,  I'm  not  12 
 offering  an  excuse  to  justify  a  result  that  I  seek.  13 
 Indeed,  such  predictive  judgments  can  and  have  been  14 
 used  over  the  last  20  years  to  deregulate  more  often  15 
 than  they've  been  used  to  regulate.  16 
 Fifth,  and  not  withstanding  what  I've  just  17 
 said,  the  civic,  consumer,  labor  and  civil  rights  18 
 groups  that  have  filed  in  this  docket  have  submitted  19 
 powerful  and  detailed  statistical  evidence  which  20 
 strongly  supports  retaining  existing  rules.  They've  21 
 also  pointed  to  shortcomings  in  the  study  the  22 
 Commission  has  generated  and  unlike  the  broadcasting  23 
 industry,  they  have  also  responded  to  the  Commission's  24 
 request  for  metrics  which  can  be  employed  to  measure  25 
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 79 
 concentration.  While  such  formulae  should  be  one  of  1 


 many  factors  the  Commission  should  consider,  my  2 
 colleagues  have  presented  a  scheme  based  on  developing  3 
 a  weighted  HHI  index  which  would  be  a  significant  4 
 improvement  over  the  traditional  HHI  employed  in  other  5 
 economic  sectors  and  I  urge  you  to  consider  it.  6 
 Finally,  with  respect  to  what's  been  said  7 
 about  Telemundo  and  NBC's  concern  that  the  ownership  8 
 cap  is  holding  it  down,  I  think  the  answer  here  is  9 
 waivers  and  I'll  be  happy  to  sit  down  with  Mr.  Ireland  10 
 and  Ms.  Thompson.  If  they  want  to  have  a  waiver  of  11 
 the  national  ownership  cap  for  second  language  12 
 programming,  that's  a  perfectly  legitimate  public  13 
 interest  justification  to  present  as  a  waiver,  but  14 
 it's  not  a  reason  to  throw  the  baby  out  with  the  15 
 bathwater.  16 
 Thank  you.  17 
 (Applause.)  18 
 MR.  KRATTENMAKER:  Thank  you.  Ms.  19 
 Thompson?  20 
 MS.  THOMPSON:  Buenos  dias.  It's  a  great  21 
 honor  for  me  to  have  the  opportunity  to  address  such  a  22 
 distinguished  Commission  and  audience.  I  am  here  23 
 representing  ZGS  Broadcast  Holdings  which  is  a  24 
 minority-  owned  broadcasting  company.  25 
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 E  pluribus  unum.  The  strength  of  this  1 


 great  nation  is  founded  upon  the  principle  of  e  2 
 pluribus  unum,  out  of  many,  one.  The  intrinsic  value  3 
 of  this  coin  reflects  the  progress  of  this  nation  4 
 throughout  history,  a  prosperity  that  is  clearly  5 
 rooted  in  the  diversity  of  its  people  and  consequently  6 
 of  its  business  community.  7 
 The  Hispanic  community  has  grown  to  become  8 
 the  largest  minority  group  in  this  country.  However,  9 
 Hispanic  participation  and  representation  in  the  10 
 broadcasting  industry  continues  to  decline,  which  is  11 
 both  a  concern  for  our  community  and  a  concern  from  a  12 
 public  policy  perspective.  13 
 I  am  here  today  to  express  unequivocally  14 
 the  importance  of  protecting  and  promoting  minority  15 
 representation  in  the  broadcasting  industry.  As  the  16 
 Federal  Communications  Commission  considers  changes  in  17 
 the  current  ownership  rules,  it  is  my  sincere  hope  18 
 that  it  will  not  allow  conciliation  and  survival  of  19 
 the  biggest  to  do  away  with  the  small  and  community  20 
 rooted  broadcasters  that  offer  a  unique  service  to  the  21 
 public.  On  the  contrary,  it  will  be  my  hope  that  the  22 
 Commission  looks  to  create  and  ensure  opportunities  23 
 for  small  and  minority  broadcasters  to  thrive  and  24 
 prosper  into  the  future.  25 
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 81 
 Fifteen  years  ago,  Ronald  Gordon,  1 


 President  and  owner  of  our  company,  ZGS  Broadcasting  2 
 Holdings,  had  the  vision  and  commitment  to  see  that  3 
 the  Hispanic  market  will  someday  become  a  strong  and  4 
 prosperous  business  opportunity.  Born  and  raised  in  5 
 Peru,  Mr.  Gordon  embraced  his  Hispanic  roots  and  the  6 
 potential  in  serving  a  community  that  very  few  people  7 
 knew,  valued  or  cared  to  serve.  His  pursuit  of  the  8 
 American  dream  --  in  Spanish  broadcasting  --  was  an  9 
 incredible,  difficult  and  challenging  task.  The  only  10 
 viable  financial  option  was  low  power  television  and  11 
 given  the  limitations  and  secondary  nature  of  the  LPTV  12 
 service,  no  financial  institution  was  willing  to  back  13 
 him.  Ultimately,  not  surprising,  it  was  a  Hispanic  14 
 run  bank  that  provided  him  the  funds  to  acquire  ZGS'  15 
 first  station.  He  risked  and  personally  guaranteed  16 
 his  assets  in  order  to  offer  our  growing  community  a  17 
 television  station  it  could  call  its  own.  Since  then,  18 
 ZGS'  commitment  to  higher  standards  and  service  to  the  19 
 Hispanic  community  have  allowed  the  company  to  grow  20 
 into  the  largest  affiliate  of  the  Telemundo  network  21 
 with  LPTV  Class  A  stations  in  Boston,  Hartford,  22 
 Springfield,  Providence,  Orlando,  Tampa  and  23 
 Washington,  D.  C.,  along  with  radio  properties  in  24 
 Washington,  D.  C.  and  Tampa.  25 
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 82 
 Today,  ZGS  Broadcast  Holdings  has  over  160  1 


 employees  of  which  90  percent  are  of  Hispanic  descent.  2 
 My  station,  WCDC,  has  over  25  employees  and  each  one  3 
 of  us  has  an  unwavering  commitment  to  serve  our  4 
 audience.  Through  our  local  news  and  Washington's  5 
 only  Spanish-  language  public  affairs  program,  Linea  6 
 Directa,  the  Hispanic  community  in  this  area  is  kept  7 
 informed  of  core  issues.  We  are  the  community's  only  8 
 vehicle  to  learn  about  the  services  and  opportunities  9 
 available  in  our  region.  That  is  why  we  devote  so  10 
 much  effort  to  our  educational  projects  such  as  our  11 
 Read  to  Succeed  literacy  campaign,  the  focus  is  on  the  12 
 importance  of  literacy  and  scholastic  achievement  for  13 
 the  success  of  our  community.  14 
 We  are  very  proud  to  be  a  Hispanic-  owned  15 
 broadcaster  and  prouder  still  of  the  difference  we  16 
 make  in  our  communities.  Our  motto  says  it  all,  La  17 
 Voz  de  la  Comunidad,  the  Voice  of  the  Community.  18 
 There  are  several  initiatives  that  the  19 
 Commission  can  consider  to  encourage  and  promote  20 
 diversity  in  broadcasting.  As  community  broadcasters,  21 
 we  can  appreciate  the  opportunity  that  an  enhanced  22 
 LPTV  service  can  offer  smaller  broadcasters  and  I  23 
 would  encourage  the  Commission  to  review  how  the  24 
 coverage  and  the  status  of  this  television  service  can  25 
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 83 
 be  improved  and  solidified.  1 


 Class  A  was  a  critical  addition  for  2 
 community  broadcasters  which  allow  many  small  and  3 
 minority  players  to  stay  in  the  game.  ZGS'  stations  4 
 are  all  Class  A  and  as  you  have  just  heard,  we  do  more  5 
 in  our  communities  than  many  full  power  stations  6 
 across  the  country.  Our  business  is  not  just  about  7 
 dollars  and  cents.  We  would  like  to  think  that  it  8 
 represents  more  public  value  and  better  use  of  the  9 
 public  airways  than  home  shopping.  10 
 But  Class  A  is  simply  not  enough.  Like  11 
 all  broadcasters,  small  community  broadcasters  need  12 
 access  to  distribution,  cable  distribution.  As  Class  13 
 A  stations,  we  have  to  comply  not  only  with  all  the  14 
 regulatory  requirements  of  full  power  stations  that  15 
 provide  local  programming,  which  full  power  stations  16 
 do  not  need  to  do.  Bigger  is  not  necessarily  better  17 
 and  my  hope  is  that  the  Commission  will  consider  18 
 providing  Class  A  community  stations  which  provide  19 
 local  content  and  local  service  with  the  same  20 
 privileges  accorded  to  full  power  stations,  especially  21 
 [in  Spanish.]  22 
 MR.  KRATTENMAKER:  Thank  you.  23 
 (Applause.)  24 
 MR.  KRATTENMAKER:  That  concludes  the  25 
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 84 
 panel's  remarks.  Technically,  we  have  run  out  of  1 


 time,  but  people  have  done  an  excellent  job  of  staying  2 
 within  this  timeframe,  but  it's  obvious  that  I'm  sure  3 
 the  Commissioners  have  many  questions  they  want  to  4 
 ask,  so  why  don't  we  begin  with  the  Commissioners.  5 
 Commissioner  Adelstein?  6 
 COMMISSIONER  ADELSTEIN:  Thank  you,  Mr.  7 
 Krattenmaker.  8 
 Mr.  Ireland  from  NBC,  I  have  a  question  9 
 for  you,  and  Mr.  Schwartzman,  maybe  if  you  could  10 
 respond  as  well.  11 
 You  raised  a  very  interesting  point.  You  12 
 said  the  internet  can  serve,  allow  people  to  become  13 
 their  own  programmer  or  editor.  You'll  be  happy  to  14 
 know  that  my  staff  person  gets  her  weather  from  NBC4  15 
 in  Washington,  D.  C.  When  she  doesn't  have  the  16 
 opportunity  to  get  it  on  television  though,  guess  17 
 where  she  goes?  She  goes  to  your  NBC4  website.  So  18 
 you  win  in  both  cases.  19 
 The  question  is  she  doesn't  go  to  the  20 
 National  Weather  Service  and  do  her  own  forecast.  21 
 Similarly,  today's  hearing  for  example,  I  doubt  many  22 
 people  are  going  to  go  to  the  web  and  look  at  all  the  23 
 testimony,  read  all  the  testimony.  The  vast  bulk  of  24 
 people  that  hear  the  story  at  all,  are  going  to  get  it  25 
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 85 
 on  the  Washington  Post  website  or  on  the  website  of  1 


 their  local  newspaper  or  in  their  newspaper  itself.  2 
 They're  not  going  to  want  to  process  and  be  their  own  3 
 programmer  or  editor,  as  much  as  they  might  like  to.  4 
 So  my  question  is  for  you,  first  of  all,  5 
 isn't  a  lot  of  what  people  get  over  the  internet  on  6 
 major  sources  that  are  already  owned  by  the  major  7 
 corporations  in  America  and  do  people  really  want  to  8 
 be  their  own  editor  or  programmer?  Does  the  internet  9 
 really  function  as  a  substitute  for  programming  that  10 
 they  get  on  their  news  sources?  11 
 MR.  IRELAND:  Well,  I  believe  that  the  12 
 internet  does  provide  a  varied  amount  of  access  to  13 
 people  to  a  lot  of  information.  Yes,  we  do  have  a  14 
 website  that  ties  into  our  television  station,  but  it  15 
 pales  in  comparison  from  the  standpoint  of  what  The  16 
 Washington  Post  gets  and  what  the  Weather  Channel  17 
 might  get  for  someone  to  check  weather.  18 
 There's  also  many  national  news  services  19 
 available,  as  well  as  information  from  just  knowledge  20 
 or  whatever  people  may  want  to  look  at.  21 
 There's  no  way  that  we  can  direct  the  22 
 users  of  the  internet  to  our  sites.  They  have  the  23 
 complete  flexibility  to  cruise.  They  can  google,  they  24 
 can  do  whatever  they  want  to  try  to  figure  out  how  to  25 
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 86 
 get  to  a  site.  We  hope  that  they  come  to  our  sites  1 


 because  we  have  compelling  content.  We  address  their  2 
 local  issues.  We  address  what  their  concerns  might  be  3 
 around  some  areas  that  we  deal  in.  4 
 We  obviously  cannot  be  everything  to  5 
 everybody,  but  at  least  in  that  specific  example,  6 
 again,  the  people  have  the  power  of  choice  and  we  just  7 
 hope  that  as  they  go  through  that  we're  able  to  8 
 provide  them  an  alternative  for  them  to  choose  from.  9 
 MR.  SCHWARTZMAN:  The  short  answer  is  that  10 
 the  internet  has  yet  to  become  and  may  never  become  a  11 
 significant  source  of  original,  local  content  about  12 
 news  and  information.  Virtually  all  of  the  locally  13 
 generated  information  available  on  the  internet  is  14 
 recycled  from  local  newspaper  and  broadcast  properties  15 
 who  have  leveraged  their  incumbent  status.  In  fact,  16 
 the  three  sites  just  mentioned,  Washington  Post,  NBC4  17 
 and  Weather  Channel  which  is  Discovery  Communications,  18 
 excuse  me,  Landmark  Communications,  are  all  major  19 
 media  operators.  20 
 The  Commission's  own  data  about  --  21 
 [END  TAPE  1,  SIDE  B;  BEGIN  TAPE  2,  SIDE  22 
 A.]  23 
 --  reached  the  conclusion  that  internet  24 
 and  other  sources  are  not  effective  substitutes.  25 
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 87 
 Professor  Owens'  study  is  particularly  egregious  in  1 


 failing  to  take  that  into  account.  Even  using  a  .1  2 
 level  of  statistical  significant,  the  Waldfogel  3 
 (Phonetic)  study  shows  almost  no  substitution.  The  4 
 short  way  to  view  it  is  as  follows:  when  somebody  5 
 wants  to  get  elected  to  public  office,  do  they  buy  6 
 internet  banner  ads  or  television  ads?  Thank  you.  7 
 CHAIRMAN  POWELL:  I'd  like  to  ask  a  more  8 
 general  question  that  I  think  underlies  all  of  that  9 
 and  by  the  way  I  would  note  that  a  major  Democratic  10 
 Presidential  candidate  has  announced  that  his  11 
 Presidential  Office  is  on  the  internet.  It  suggests  12 
 that  the  internet  may  not  be  there  yet,  but  is  13 
 certainly  maturing  as  a  source  of  political  discourse  14 
 or  you  wouldn't  have  a  Presidential  candidate  using  it  15 
 so  extensively.  16 
 I  also  would  note  that  where  most  people  17 
 go  to  get  their  weather  is  the  Weather  Channel  which  18 
 isn't  one  of  the  dominant  ones  being  alluded  to  so  19 
 frequently.  20 
 I  think  one  of  the  things  that  is  21 
 difficult  for  us  and  I  think  difficult  for  all  of  you  22 
 is  when  is  popularity  dominant  and  not  just  23 
 popularity?  We  talk  a  great  deal  about  paying  24 
 attention  to  what  consumers  want,  but  half  the  time  25 
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 88 
 what  we're  railing  against  is  what  consumers  chose.  1 


 Mr.  Bozell,  I  have  two  young  children  and  2 
 I  care  a  lot  about  what  they  watch  on  TV.  I  don't  3 
 think  I  stand  there  with  a  baseball  bat,  but  I  4 
 certainly  pay  attention  to  what  they  see.  But  I  don't  5 
 know  how  to  dismiss  as  a  government  official  the  fact  6 
 that  there  may  be  a  class  of  programming  to  which  a  7 
 vast  majority  of  individual  American  citizens  prefer  8 
 to  watch  and  it  may  not  be  the  programming  that  I  9 
 would  choose  for  my  child  to  see  or  may  not  be  the  10 
 programming  that  certain  groups  would  prefer  to  see,  11 
 but  there  is  an  element  of  the  public  interest  that  is  12 
 what  interests  the  public.  And  I've  often  heard  and  I  13 
 respect  the  argument  there  should  be  some  concern  14 
 about  our  culture  and  our  society,  but  it's  very  15 
 difficult  to  quantify  as  a  matter  of  governmental  16 
 action  when  you're  going  to  take  steps  to  go  beyond  17 
 what  it  is  the  public  itself  responds  to.  18 
 So  we  can  be  disparaging  of  that.  We  can  19 
 call  it  sludge,  but  it's  the  sludge  people  are  20 
 watching.  We  could  call  it  dominance,  but  it's  the  21 
 quality  choices  that  people  are  making.  And  where  22 
 I've  always  struggled  with  this  is  how  does  government  23 
 distinguish  between  what  ought  to  be  the  rights  of  24 
 individual  citizens  to  watch  what  they  choose,  not  25 
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 89 
 what  the  government  would  prefer  that  they  see.  1 


 And  so  help  us  with  that  basic  underlying  2 
 tenet.  When  is  it  not  what  interests  the  public,  but  3 
 it's  something  that  either  your  group  or  someone  else  4 
 thinks  they  would  be  better  served  to  see?  5 
 MR.  BOZELL:  That's  a  good  question,  Mr.  6 
 Chairman,  and  I'm  not  sure  that  there  is  an  easy  7 
 answer  to  that  question.  However,  I  would  submit  to  8 
 you  that  when  you've  got  a  handful  of  corporations  9 
 controlling  two  thirds  of  the  access  of  the  programs  10 
 of  the  networks  that  are  out  there,  then  what  they  11 
 determine  is  going  to  go  on  television  is  what  can  by  12 
 itself  determine  what  the  market  wants.  If  the  13 
 market,  as  this  lady,  I  don't  recall  her  name,  she  14 
 makes  the  point  dramatically,  when  the  public  is  15 
 getting  a  certain  message,  a  certain  kind  of  program,  16 
 a  certain  value  system,  and  is  being  hammered  with  it  17 
 and  hammered  with  it  and  hammered  with  it  and  all  the  18 
 other  voices  are  never  presented  to  it,  well,  19 
 ultimately,  there  is  going  to  be  a  significant  part  of  20 
 that  market  that  is  going  to  accept  that  message  and  21 
 want  more  of  it  but  has  no  idea  that  there  are  other  22 
 messages.  23 
 I  talk  to  people  who  are  in  the  industry  24 
 who  are  producers,  writers,  primarily  who  are  25 
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 90 
 attempting  to  come  out  with  product  and  they  feel  like  1 


 they're  bashing  their  head  against  the  wall  because  2 
 there's  nowhere  to  go  because  the  corporate  mentality  3 
 of  these  major  corporations  is  just  simply  not  4 
 interested  in  that  voice  in  that  kind  of  programming.  5 
 And  so  it  never  gets  out  to  the  public.  So  in  the  6 
 final  analysis,  how  do  we  know  what  the  market  wants?  7 
 MR.  KRATTENMAKER:  I  don't  know  which  is  8 
 the  best  way  to  go,  but  maybe  we'll  just  work  down  and  9 
 we'll  talk  to  Mr.  Copps.  10 
 COMMISSIONER  COPPS:  Mr.  Bozell,  you  just  11 
 testified  that  we're  in  the  midst  of  a  tremendous  12 
 consolidation  in  the  media  and  you  almost  never  13 
 advocate  government  intervention  on  something  like  14 
 ownership.  You  see  a  problem  here.  And  you  said  that  15 
 your  750,000  members  believe  that  television  and  radio  16 
 and  other  media  have  taken  a  sharp  turn  for  the  worse  17 
 in  recent  years  as  extreme  violence  and  trashy  18 
 programming  has  become  more  and  more  endemic,  creating  19 
 risks  for  our  children.  20 
 Do  you  believe  that  it's  important  that  21 
 the  FCC  take  the  issue  of  the  declining  quality  of  22 
 media  programming  into  account  in  this  proceeding  on  23 
 media  ownership?  24 
 MR.  BOZELL:  Perhaps  I  would  tell  you  that  25 
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 91 
 of  the  many  different  things  I've  observed  in  my  1 


 lifetime  professionally,  I  have  never  in  my  life  seen  2 
 a  more  passionate  outpouring  of  concern  from  the  3 
 public  than  over  this  one  issue.  4 
 COMMISSIONER  COPPS:  And  do  you  believe  5 
 that  the  FCC  has  taken  this  subject  seriously?  6 
 MR.  BOZELL:  I  do  not.  When  no  one  has  7 
 been  fined  on  television  for  indecent  programming,  8 
 I've  got  to  conclude  that  the  FCC  doesn't  believe  9 
 there's  anything  indecent  on  television.  But  I  don't  10 
 think  you  would  ever  allow  me  to  say  right  here  in  11 
 this  hearing  some  of  the  language  that  was  used  last  12 
 night  on  television  to  your  children.  13 
 COMMISSIONER  COPPS:  Is  there  in  your  mind  14 
 a  correlation  between  the  rising  tide  of  consolidation  15 
 and  the  rising  tide  of  indecent  programming  even  if  we  16 
 don't  know  for  sure  yet  if  there's  a  causal  link?  17 
 MR.  BOZELL:  I  have  to  be  very  careful.  18 
 We  have  to  be  very  careful.  I  think  we  do  not  want  to  19 
 ascribe  a  blame  where  blame  ought  not  to  be  going.  I  20 
 do  not  believe  there's  a  conspiracy  going  on  here.  I  21 
 do  not  believe  there  are  bad  people  in  these  22 
 corporations.  However,  the  reality  is  that  in  the  23 
 last  several  years  and  every  study  we've  done  and  it's  24 
 never  been  questioned  shows  that  it  is  getting  worse  25 
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 92 
 and  worse  and  worse  when  it  comes  to  programming  and  1 


 you're  seeing  more  and  more  and  more  consolidation.  2 
 COMMISSIONER  COPPS:  Do  you  think  it  would  3 
 be  irresponsible  for  the  FCC  to  decide  to  scrap  or  4 
 significantly  modify  our  concentration  rules  that  5 
 might  lead  to  even  more  indecency  without  adequately  6 
 exploring  this  possible  correlation?  7 
 MR.  BOZELL:  For  the  reasons  I've  given,  8 
 yes.  9 
 COMMISSIONER  COPPS:  You  mentioned  you  10 
 have  750,000  members  who  are  extremely  concerned  with  11 
 violence  and  other  forms  of  indecency  in  the  media,  12 
 but  that  they  do  not  even  know  that  the  FCC  is  making  13 
 this  decision,  correct?  14 
 MR.  BOZELL:  Absolutely.  15 
 COMMISSIONER  COPPS:  So  it  sounds  like  16 
 this  issue  is  not  an  inside  the  beltway  issue,  but  17 
 probably  millions  and  millions  of  Americans  are  18 
 concerned,  but  don't  even  know  that  they  should  make  19 
 their  voice  heard,  right?  20 
 MR.  BOZELL:  Absolutely.  21 
 COMMISSIONER  COPPS:  So  I  guess  before  22 
 we're  through,  we're  going  to  have  to  add  a  few  to  our  23 
 18,000  comments  if  Americans  really  find  out  what's  24 
 going  on  here.  Don't  you  agree?  25 
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 93 
 MR.  BOZELL:  I  hope  you  will.  I  hope  that  1 


 indecency  and  the  Commission's  role  in  that  will  2 
 become  more  important  than  I  believe  it  has  been  to  3 
 date.  4 
 COMMISSIONER  COPPS:  Thank  you  very  much.  5 
 MR.  KRATTENMAKER:  Mr.  Chairman,  could  I  6 
 just  ask  before  we  leave,  because  I  think  all  of  us  7 
 have  so  many  questions.  Is  there  a  possibility  that  8 
 we  could  submit  some  written  questions.  We  don't  want  9 
 to  inundate  our  panelists,  but  just  to  flesh  out  the  10 
 record  and  then  to  ensure  that  these  are  part  of  the  11 
 record  in  the  proceedings.  12 
 CHAIRMAN  POWELL:  Sure.  In  fact,  I've  got  13 
 a  whole  stack  of  questions  from  the  audience  too  so  14 
 we'll  figure  out  how  to  do  that.  15 
 If  you  don't  mind,  I'd  like  to  follow  up  a  16 
 little  on  Commissioner  Copps  and  ask  Ms.  Riskin  17 
 whether  she  agrees  with  the  responses  to  his  questions  18 
 that  Mr.  Bozell  provided?  19 
 MS.  RISKIN:  I'd  like  you  to  know  that  I  20 
 have  black  and  blue  marks  on  my  head  from  pounding  on  21 
 the  network  doors.  I  think  many  of  our  members  feel  22 
 frustrated.  They  would  like  to  do  quality  23 
 programming,  but  find  themselves  in  a  situation  where  24 
 in  order  to  do  work  with  the  networks  they  have  to  25 
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 94 
 cede  complete  control  which  means  that  if  they  want  to  1 


 do  a  story  about  a  middle-  aged  person,  take  for  2 
 example,  a  show  called  "The  Comish."  I  don't  know  if  3 
 you  remember,  it  wasn't  about  FCC  Commissioners,  it  4 
 was  another  kind  of  Commissioner.  5 
 CHAIRMAN  POWELL:  That's  probably  why  it  6 
 didn't  work.  7 
 MS.  RISKIN:  Actually,  it  was  quite  a  good  8 
 show  and  the  man  who  created  the  show  insisted  on  a  9 
 middle-  aged  sort  of  pork  bellied  lead  character.  The  10 
 network  demanded  that  it  be  a  young,  handsome  Italian  11 
 and  in  those  days  when  this  show  was  created,  the  12 
 creator  of  the  show  simply  went  to  another  network.  13 
 He  could  shop  his  story  somewhere  else.  That  does  not  14 
 exist  today.  15 
 I  think  that  the  urgency  for  ratings  and  16 
 bottom  line  has  chased  away  a  majority  of  good  17 
 audience  for  quality  programming  in  the  marketplace.  18 
 We  used  to  have  a  very  rich  marketplace  19 
 for  movies  for  television.  If  you  remember  "The  20 
 Autobiography  of  Miss  Jane  Pittman"  or  "Roots."  You  21 
 don't  see  those  programs  today  on  the  networks.  They  22 
 are  being  done  in-  house.  They  are  expensive  for  a  23 
 major  corporation  to  make.  They  are  not  expensive,  24 
 they  are  not  problematic  in  terms  of  making  money  for  25 
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 95 
 a  small  company  that's  backed  by  somebody  with  a  1 


 passion  to  tell  a  story.  2 
 So  we  have  chased  out  of  the  marketplace  3 
 people  who  are  important  story  tellers  with  the  kind  4 
 of  quality  programming  that  Brent  Bozell  would  like  to  5 
 see  returned.  6 
 Just  as  an  added  note,  one  of  the  7 
 executives  at  ABC  was  asked  why  the  new  series  last  8 
 year,  the  majority  of  the  pilots  were  developed  by  9 
 their  own  in-  house  production.  And  the  answer  was  10 
 because  they  wanted  all  their  programs  to  have  the  ABC  11 
 brand  or  stamp  which  means  that  all  those  shows  would  12 
 be  coming  from  one  point  of  view.  This  is  what's  13 
 damaging  the  diversity  in  the  marketplace.  Thank  you.  14 
 CHAIRMAN  POWELL:  Thank  you  and  we  will  15 
 provide  an  opportunity  for  Mr.  Ireland  to  respond,  but  16 
 I  think  we  should  first  see  what  Commissioner  17 
 Abernathy  and  Commissioner  Martin  wanted  to  follow  up  18 
 on.  19 
 Thanks.  20 
 COMMISSIONER  ABERNATHY:  Thank  you.  I  21 
 still  come  back  to  the  dilemma  that  I  think  as  22 
 government  regulators  we  face  which  is  there's  been  a  23 
 lot  of  concern  expressed  that  the  programming  is  24 
 really  rotten,  there's  not  a  lot  of  choice  about  it.  25 
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 96 
 Forget  if  we  change  the  rules  at  all.  It  sounds  like  1 


 this  is  a  general  comment  about  programming  today  as  2 
 we  see  it  today.  3 
 And  yet,  you  also  tell  me  that  five  have  4 
 75  percent  share  of  prime  time  viewing.  So  there  are  5 
 all  these  alternative  channels.  There's  the  Discovery  6 
 Channel.  There's  Children's  Channel.  There's  AMC.  7 
 There's  Biography.  There's  History.  And  people  8 
 aren't  watching  it,  apparently.  Apparently  75  percent  9 
 are  watching  prime  time  viewing  which  then  goes  back  10 
 to  do  I  tell  them  they  can't  watch  this?  Do  I  start  11 
 trying  to  force  them  into  these  other  outlets?  Which  12 
 are  there,  apparently,  but  it  looks  to  me  like  most  13 
 people  are  choosing  to  watch  the  75  percent  prime  time  14 
 viewing.  So  I'd  like  anyone  to  comment  on  that.  15 
 MR.  KRATTENMAKER:  Mr.  Schwartzman?  16 
 MR.  SCHWARTZMAN:  Yes,  Commissioner.  Two  17 
 points  on  this.  First,  this  is  not  just  about  18 
 majority  tastes.  The  market  will  take  care  of  19 
 majority  tastes.  The  Commission's  job  as  Congress  has  20 
 reminded  it  in  the  case  of  children's  television  is  21 
 that  where  the  market  fails,  the  Commission  can  and  22 
 should  and  has  the  power  and  authority  to  direct  23 
 broadcasters  to  carry  certain  kinds  of  content  that's  24 
 a  viewpoint  neutral  content  --  25 
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 97 
 COMMISSIONER  ABERNATHY:  Do  you  believe  1 


 the  market  is  failing  today?  That's  what  I  need  to  2 
 know.  3 
 MR.  SCHWARTZMAN:  Absolutely.  4 
 COMMISSIONER  ABERNATHY:  So  there's  not  5 
 enough  choices  --  6 
 MR.  SCHWARTZMAN:  The  market  --  7 
 COMMISSIONER  ABERNATHY:  People  can't  turn  8 
 to  history  or  to  American  Movie  Classics  or  to  PBS?  9 
 MR.  SCHWARTZMAN:  You  buy  circulation  and  10 
 you  buy  viewers  and  when  you  have  huge  conglomerates  11 
 which  are  also  the  ones  programming  most  channels,  and  12 
 they  are  leveraging  their  incumbent  status  to  drive  13 
 the  other  content,  you  don't  get  the  development  of  14 
 programming  which  serves  these  different  additional  15 
 tastes  and  you  lose  the  creative  juice.  You  deplete  16 
 the  creative  gene  pool  by  reducing  the  number  of  17 
 channels  for  creative  people  to  introduce  their  18 
 programming.  This  is  what  happens  with  concentration  19 
 of  control.  You  get  concentration  of  taste.  20 
 COMMISSIONER  ABERNATHY:  So  are  you  21 
 discounting,  then  you  must  be  discounting  cable.  Are  22 
 you  just  talking  about  free  over-  the-  air?  23 
 MR.  SCHWARTZMAN:  No,  no.  Who  owns  the  24 
 cable  channels?  25 
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 98 
 COMMISSIONER  ABERNATHY:  No,  but  what's  on  1 


 the  cable  channels  that  people  aren't  watching.  2 
 That's  where  I  keep  --  they  can  turn  the  channel.  3 
 MR.  SCHWARTZMAN:  Some  people  are  watching  4 
 it,  but  you've  got  the  large  companies  using  their  5 
 powers  under  the  --  retransmission  consent  and  so  6 
 forth,  to  drive  viewers  to  their  own  content  which  7 
 they're  repurposing  and  the  size  of  these  companies  8 
 and  their  promotional  capabilities  make  --  leave  9 
 viewers  unaware  of  what  else  is  there.  This  is  buying  10 
 circulation  --  11 
 COMMISSIONER  ABERNATHY:  So  that's  what  12 
 you'd  --  okay.  Now  I  get  what  you're  saying.  You're  13 
 saying  it's  the  promotional  capabilities  so  people  14 
 don't  realize  they  have  a  choice.  15 
 MR.  SCHWARTZMAN:  Incumbents  leverage  16 
 their  power.  That's  the  most  important  thing  that  I  17 
 would  say.  18 
 The  second  point  that  I  would  --  well,  I'm  19 
 taking  too  much  time.  Let  me  leave  it  at  that.  20 
 COMMISSIONER  ABERNATHY:  Let  me  hear  what  21 
 Bob's  response  would  be.  22 
 MR.  CORN-  REVERE:  Well,  as  usual,  when  I  23 
 hear  Andy  speak  I  feel  we're  on  different  planets.  24 
 It's  just  hard  to  imagine  that  people  can  talk  about  25 
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 99 
 less  choice  and  less  diversity  today  than  at  any  time  1 


 in  our  history.  You  can  talk  about  the  number  of  2 
 owners  all  you  want,  but  the  fact  is  the  average  3 
 viewer  has  a  myriad  of  choices  that  never  existed  4 
 before.  And  people  don't  have  a  hard  time  finding  PBS  5 
 if  they  want  to  find  it.  And  they  don't  have  a  hard  6 
 time  finding  Discovery  Science  or  Biography  or  any  of  7 
 the  other  channels,  the  History  Channel.  They  can  8 
 find  them  and  the  question  is  whether  they  want  to  9 
 find  them.  10 
 But  I  think  this  whole  colloquy  that's  11 
 been  going  on  underscores  the  danger  of  trying  to  use  12 
 structural  rules  to  engage  in  social  engineering.  13 
 There's  a  serious  mismatch  going  on  here  because  when  14 
 the  Hollywood  community  talks  about  creative  control  15 
 and  wanting  to  put  on  quality  programs,  they're  16 
 talking  about  wanting  to  put  on  the  very  kinds  of  17 
 programs  that  Mr.  Bozell  hates.  For  example,  if  you  18 
 look  at  the  comments  filed  in  this  proceeding,  they  19 
 talk  about  being  blocked  from  being  able  to  put  on  20 
 shows  like  "Murphy  Brown"  and  "Roseanne",  shows  that  21 
 Mr.  Bozell  in  the  past  has  criticized  and  I'm  sure  22 
 would  again  if  they  reappeared.  23 
 The  other  difficulty  is  when  you  start  24 
 talking  about  using  official  pressure  to  change  the  25 
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 100 
 kinds  of  programs  that  appear  on  television,  then  it's  1 


 hard  to  predict  what's  going  to  happen.  If  you  go  2 
 back  10  or  12  years  ago  when  "The  Simpsons"  first  3 
 appeared  on  Fox  which,  by  the  way,  at  the  time  was  a  4 
 fledgling  network  and  wasn't  forcing  anybody  to  watch  5 
 anything.  "The  Simpsons"  appeared  and  was  roundly  6 
 criticized  as  being  vulgar  and  in  poor  taste.  7 
 President  George  Bush  criticized  it  by  saying  that  we  8 
 needed  a  nation  closer  to  the  Waltons  than  to  the  9 
 Simpsons.  I  guess  he  didn't  have  quite  the  same  10 
 concern  with  bland  TV.  11 
 Drug  czar  William  Bennett  engaged  in  a  12 
 similar  public  tirade  against  "The  Simpsons".  And  Mr.  13 
 Bozell  criticized  it  in  a  1997  column  saying  that  it  14 
 is  "a  dysfunctional  family"  and  I  believe  the  same  15 
 concern  you  had  today  about  the  Hollywood  elites  16 
 forcing  their  views.  You  say  always  the  approach  is  17 
 the  same.  Forget  the  majority  sentiment,  aim  to  18 
 capture  the  avant  garde  minority.  19 
 Well,  I  think  if  you  come  back  now  and  20 
 look  at  a  program  like  "The  Simpsons"  it's  clearly  21 
 stood  the  test  of  time.  It's  the  longest  running  22 
 sitcom  in  TV  history.  National  Review  recently  called  23 
 it  possibly  the  most  intelligent,  funny  and  24 
 politically  satisfying  TV  show  ever.  Broadcasting  and  25 
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 101 
 Cable  has  editorialized  in  favor  of  giving  it  an  Emmy  1 


 and  not  just  as  an  animated  series.  And  lately,  and  2 
 perhaps  surprisingly,  religious  writers  have  begun  3 
 praising  "The  Simpsons"  for  the  amount  of  religious  4 
 content  in  the  show  including  a  recent  book  that's  5 
 come  out  on  the  subject.  There  are  even  websites  6 
 devoted  to  the  religious  references  in  "The  Simpsons."  7 
 So  I  think  once  you  start  having  public  8 
 officials  put  their  thumb  on  the  scale  and  try  and  9 
 create  structural  rules  to  affect  whether  or  not  shows  10 
 like  that  are  going  to  succeed  or  to  game  the  process,  11 
 then  I  think  you  have  a  very  serious  problem.  12 
 MR.  KRATTENMAKER:  Commissioner  Martin?  13 
 COMMISSIONER  MARTIN:  Mr.  Bozell,  you  said  14 
 that  you'd  never  seen  an  outpouring  like  this  one  on  15 
 this  issue.  Just  help  me  understand.  I  was  just  16 
 trying  to  --  is  the  issue  that  you're  seeing  the  17 
 outpouring  on  the  decency  or  indecency  of  the  18 
 programming  or  is  it  on  the  ownership  issues?  19 
 And  I'm  trying  to  understand  what  you're  20 
 actually  seeing  the  outpouring  of  public  comment  on  21 
 and  I'm  still  a  little  confused  about  the  connection  22 
 between  the  two.  And  then  I  would  hope  that  maybe  Mr.  23 
 Corn-  Revere  could  respond  as  well  to  your  comments.  24 
 MR.  BOZELL:  I'd  be  happy  to  respond.  25 
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 102 
 First,  let  me,  in  fact,  and  correct  Mr.  Corn-  Revere  1 


 and  I  would  ask  him  not  to  quote  out  of  context  what  I  2 
 have  and  haven't  said.  I've  also  praised  "The  3 
 Simpsons"  up  and  down  for  a  thousand  different  reasons  4 
 as  well.  And  we're  not  debating  --  we  could  debate  it  5 
 some  other  time,  but  please  don't  take  my  words  out  of  6 
 context.  7 
 On  the  question  of  what  the  public  talks  8 
 about,  I  travel  all  over  the  country.  Ladies  and  9 
 gentlemen,  you  do  the  same  thing.  You  talk  to  people.  10 
 You  talk  to  your  friends,  you  talk  to  your  associates.  11 
 And  on  a  daily  basis,  there  isn't  somebody  who  isn't  12 
 going  to  say  to  you  did  you  see  what  was  on  television  13 
 last  night?  Did  you  see  --  and  I'm  not  going  to  name  14 
 any  shows  because  it's  unfair  to  pinpoint  a  show.  But  15 
 did  you  see  this  show?  Did  you  see  that  program?  Did  16 
 you  hear  what  he  said  on  that  awards  program?  Did  you  17 
 hear  the  F  word  used  last  night  during  the  family  18 
 hour?  They're  horrified  that  this  is  happening.  19 
 They're  horrified  that  it's  happening  with  increasing  20 
 frequency.  And  then  they  say  what  can  I  do?  What  can  21 
 one  do  about  this?  22 
 We  are  the  market.  We  are  the  public  out  23 
 there.  Look  at  the  national  surveys.  Ninety-  seven  24 
 percent  of  families  in  this  country  believe  there's  25 
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 103 
 too  much  sex  and  violence  on  prime  time  television  1 


 coming  into  their  living  rooms,  being  broadcast  to  2 
 their  children.  And  then  they  turn  and  say  what  can  I  3 
 do  about  it?  4 
 Well,  they  go  to  the  networks.  The  5 
 networks  tell  them  go  pound  sand.  They  don't  care.  6 
 They've  got  the  longevity  to  withstand  any  little  7 
 complaint  and  they  keep  it  up  long  enough  and  sooner  8 
 or  later  as  Mr.  Corn-  Revere  just  said,  people  start  9 
 accepting  it.  And  they  just  resign  themselves  that  10 
 that's  the  way  it's  going  to  be.  And  that's  another  11 
 wall  that's  just  come  down.  Another  sensibility  12 
 that's  been  taken  care  of.  13 
 There's  got  to  be  a  politics  of  shame,  I  14 
 believe.  Not  just,  by  the  way  on  the  end  stream.  Not  15 
 just  on  the  Commission,  on  the  advertisers  and  on  the  16 
 public  as  well.  This  is  a  very  complicated  issue,  but  17 
 there's  got  to  be  standards.  We've  got  to  say  to  18 
 ourselves,  we  can't  put  certain  messages  on  license  19 
 plates.  You  can't  do  that.  You  can't  use  the  N  word  20 
 on  a  license  plate  and  go  down  the  road  with  it.  You  21 
 will  go  to  prison  or  something  for  that.  You  can't  22 
 put  certain  signs  on  billboards,  but  why  can  you  put  23 
 it  on  television  in  front  of  my  children  and  why  is  it  24 
 that  it's  indecent,  uncivilized  for  me  to  use  certain  25 
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 104 
 language  in  this  hearing,  but  tonight  on  television  it  1 


 will  go  to  my  children.  And  it's  okay?  2 
 There's  a  problem.  3 
 COMMISSIONER  MARTIN:  I  was  wondering  if  4 
 Mr.  Corn-  Revere  --  just  a  comment  about  --  is  the  5 
 problem  the  connection  between,  or  whether  there  is  a  6 
 connection  between,  indecency  and  the  ownership  7 
 issues,  which  is  really  what  is  before  the  Commission.  8 
 MR.  CORN-  REVERE:  Well,  I  understand  the  9 
 concerns  expressed  about  indecency,  but  I  just  don't  10 
 understand  the  connection  you're  trying  to  draw  11 
 between  that  and  media  concentration.  12 
 In  fact,  again,  when  you  start  talking  13 
 about  the  different  views  on  this  panel,  you  see  very  14 
 divergent  views.  A  while  ago,  Ms.  Riskin  referred  to  15 
 the  situation  that  Stephen  J.  Cannell  had  in  trying  to  16 
 solve  "The  Comish"  and  in  the  same  article  that  17 
 Cannell  was  writing  about  that  situation,  he  described  18 
 another  producer  being  turned  down  when  he  took  "The  19 
 Sopranos"  to  network  television  and  saying  that  the  20 
 networks  just  didn't  get  it  and  none  of  the  networks  21 
 bought  it  and  so  in  the  end  the  producer  was  forced  to  22 
 go  to  HBO  and  ultimately  reform  the  shape  of  23 
 television.  24 
 Now  there  are  two  points  that  I  think  that  25 
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 105 
 are  important  from  that  anecdote  that  comes  from  the  1 


 article  in  last  week's  Broadcasting  and  Cable  by  2 
 Stephen  J.  Cannell.  The  first  is  that  it  doesn't  see  3 
 like  diversity  has  been  harmed  when  the  networks  make  4 
 a  mistake  on  whether  or  not  to  get  a  show  and  it  turns  5 
 up  someplace  else.  6 
 And  the  second  is  I  don't  think  "the  7 
 Sopranos"  is  what  Mr.  Bozell  had  in  mind  what  he  wants  8 
 to  limit  concentration  so  that  we  have  more  quality  9 
 television.  10 
 It  has  been  one  of  those  shows,  it's  been  11 
 a  breakthrough  show.  It's  been  praised  by  many,  12 
 reviled  by  others  because  it  is  a  hard  edged  show.  It  13 
 is  on  cable  and  it's  forcing  the  networks  now  to  14 
 compete,  but  again,  I  don't  see  the  problem  with  15 
 concentration.  The  problem,  if  there  is  one,  is  that  16 
 the  networks  are  being  forced  to  compete.  17 
 CHAIRMAN  POWELL:  Thank  you.  One  of  the  18 
 things  I  find  interesting  is  even  if  I  credit  your  19 
 argument  about  indecency,  and  I  think  there's  a  fair  20 
 amount  of  it  that's  fair  commentary  about  aspects  of  21 
 television,  I'm  finding  it  a  bit  strange  the  22 
 connection  to  the  concentration  because  I  suppose  you  23 
 will  be  told  that  the  clean  era  of  the  1950s  or  1960s  24 
 is  when  TV  was  of  the  quality  that  we  preferred  when  25 
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 106 
 there  were  three  networks.  So  tying  it  to  1 


 concentration,  there  was  never  a  time  in  history  where  2 
 the  media  was  more  concentrated  and  the  period  where  3 
 TV  was  probably  its  cleanest.  So  I  don't  know  that  I  4 
 see  the  immediate  merits  of  the  suggestions  that  the  5 
 concentration  levels  of  today  are  somehow  responsible  6 
 for  indecency.  7 
 I'd  only  also  like  to  make  probably  just  a  8 
 personal  comment.  I  think  TV  right  now  produces  some  9 
 of  the  worst  ever  and  I  also  think  it  produces  some  of  10 
 the  best  ever.  I  think  what's  happened  is  TV  has  11 
 dramatically  increased  in  abundance.  Yes,  I  do  have  a  12 
 lot  of  neighbors  say  did  you  see  that  terrible  show  13 
 last  night?  I  also  have  a  lot  that  come  in  and  say  14 
 did  you  see  the  Theodore  Roosevelt  special,  it  was  15 
 brilliant.  I  also  had  people  come  to  see  me  and  say  16 
 did  you  see  Ken  Burns'  Civil  War  special?  It  was  17 
 brilliant.  18 
 Every  afternoon  after  Wednesday,  my  office  19 
 comes  in  and  says  did  you  see  "West  Wing"  last  night?  20 
 Wasn't  that  amazing?  Or  Fox's  "24"  or  I  think  one  of  21 
 the  challenges  we  all  are  going  to  have  with  citizens  22 
 as  the  media  continues  to  explode  you're  going  to  have  23 
 a  wider  range  of  diversities  in  the  marketplace  from  24 
 the  most  shameless  to  the  greatest.  25 
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 107 
 But  this  connection  to  concentration,  I  1 


 find,  to  be  almost  fabricated.  2 
 MR.  KRATTENMAKER:  Mr.  Chairman,  can  I  3 
 treat  that  as  a  comment?  I  think  I  might  do  that.  4 
 We've  already  cut  deeply  into  the  public  comment  time  5 
 and  I  would  like  to  get  to  that.  I'm  going  to  cut  6 
 into  it  a  little  bit  more  by  saying  that  with  all  the  7 
 cards  I've  gotten,  there's  a  series  of  questions  that  8 
 aren't  being  asked  here  yet  that  I'd  at  least  like  to  9 
 pose  briefly,  particularly  to  Ms.  Thompson  and  to  Mr.  10 
 Liggins.  I  don't  know  whether  Mr.  Ireland  would  like  11 
 to  comment  on  it  and  it  is  summarizing  two  or  three  of  12 
 these.  13 
 So  far  we've  been  talking  almost  14 
 exclusively  about  television,  what  about  radio?  And  15 
 perhaps  a  little  bit  more  specifically  what  is  16 
 reminded  of  the  old  joke  that  there  are  three  kinds  of  17 
 lies,  lies,  damn  lies  and  statistics,  but  are  there  18 
 certain  kinds  of  ways  that  the  Commission  may  have  of  19 
 knowing  how  it  is  that  increased  diversity  of  20 
 ownership  can  lead  to  diversity  of  public  service  21 
 activity  and  diversity  of  programming?  22 
 It  seemed  like  Mr.  Liggins  had,  you  may  23 
 want  to  say  you've  already  addressed  that,  but  I  don't  24 
 know  whether  you  want  to  follow  up  with  that  a  little  25 
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 108 
 bit  or  Ms.  Thompson?  1 


 MR.  LIGGINS:  I'd  certainly  like  to  2 
 comment.  At  least  from  our  perspective,  we've  been  3 
 the  consolidated  of  African-  American  oriented  formats  4 
 and  so  as  we've  gone  in  and  bought  more  radio  5 
 stations,  competition  is  what  drives  the  different  6 
 voices  of  the  different  options  in  programming.  One,  7 
 you  don't  want  to  compete  with  yourself,  so  why  would  8 
 you  launch  a  comparable  product?  You  launch  something  9 
 different.  NBC  has  launched  Telemundo.  In  Atlanta,  10 
 Georgia,  we  have  a  gospel  FM  station.  That's  --  11 
 gospel  has  typically  been  relegated  to  the  AM  band  for  12 
 the  last  50  years  and  in  Atlanta  on  a  very  expensive  13 
 station  that  we  paid  a  lot  of  money  for,  we  took  a  14 
 shot  and  you  know  what?  It  was  very  successful.  It's  15 
 the  third  highest  rated  radio  station  in  that  market.  16 
 We  have  a  jazz  station.  We  have  a  hip  hop  17 
 station.  And  we  also  have  an  R  &  B  oldies  station.  18 
 So  ironically  enough,  when  we  first  went  into  the  19 
 market,  our  first  station  was  hip  hop  oriented  and  we  20 
 got  some  barbs  for  that  because  hip  hop  music  can  at  21 
 times  be  seen  as  aggressive.  But  the  same  company,  22 
 Radio  One,  also  has  a  station,  a  gospel  station  that  23 
 is  being  praised.  So  the  nature  of  competition,  I  24 
 think,  forces  the  diversity  in  format  options.  25 
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 109 
 I  also  think  the  range  and  the  spectrum  of  1 


 some  of  the  best  television  programming  and  some  of  2 
 the  worst  that  you've  seen,  that's  what  competition  3 
 also  does.  It  forces  people  to  take  chances,  whether  4 
 a  television  broadcaster  or  a  radio  broadcaster,  5 
 because  you  are  fighting  for  the  attention  and  the  6 
 ratings  and  the  votes  from  the  public.  So  you  have  to  7 
 take  more  shots  in  order  to  be  successful.  8 
 And  consolidation,  I  was  against  9 
 consolidation  prior  to  the  1996  act.  I  lobbied  10 
 against  it,  but  when  I  saw  that  it  was  going  to  go  the  11 
 direction  that  we  and  NABOB  had  wanted,  we  decided  12 
 that  we  needed  to  get  in  the  game  and  to  compete.  And  13 
 it  cost  money  in  order  to  deliver  "The  Simpsons"  and  14 
 it  cost  money  in  order  to  even  deliver  this  gospel  15 
 radio  station  that  I  told  you  about.  16 
 So  there  is  a  necessariness  to  scale  in  17 
 order  to  deliver  quality  programming  that  I  think  18 
 needs  to  be  underscored  here.  19 
 MR.  KRATTENMAKER:  Thank  you.  Ms.  20 
 Thompson,  did  you  wish  to  comment.  21 
 MS.  THOMPSON:  Well,  you  can  certainly  22 
 sense  the  kind  of  pride  when  Mr.  Liggins  talks  about  23 
 his  company  and  the  products  that  he  provides  to  his  24 
 community  and  you  can  certainly  also  see  that  every  25 
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 110 
 product  that  he  is  outlining  specifically  targets  the  1 


 segment  of  the  community  that  he  is  serving  and  that's  2 
 exactly  my  point.  I  think  minority-  owned  broadcasters  3 
 know  how  to  serve  their  communities.  And  if  we  don't  4 
 provide  support  to  those  minority  broadcasters,  they  5 
 would  not  be  able  to  continue  in  business,  especially  6 
 with  the  issues  of  carriage.  Distribution  is  the  key  7 
 for  us.  8 
 MR.  KRATTENMAKER:  Thank  you.  I  think  the  9 
 Commissioners  should  vote  with  their  feet.  We  have  a  10 
 number  of  people  lined  up  to  make  public  comments.  11 
 CHAIRMAN  POWELL:  We'll  continue  this  12 
 until  12:  30  and  we'll  take  a  30  minute  lunch  break.  13 
 We'll  be  back  here  at  1,  but  we  have  at  least  20  some  14 
 odd  minutes  left  to  hear  from  the  public.  And  also  15 
 some  of  the  cards  that  you  have,  Tom.  16 
 Why  don't  we  start  with  that  process  and  17 
 we'll  go  left  and  right,  and  Tom,  please  interject  18 
 with  the  questions  that  you  have  on  the  cards  as  we  go  19 
 forward.  20 
 MR.  KRATTENMAKER:  Do  we  have  a  time  21 
 limit?  22 
 CHAIRMAN  POWELL:  12:  30  we're  wrapping  up.  23 
 MR.  KRATTENMAKER:  No,  for  each  24 
 individual.  25 
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 111 
 CHAIRMAN  POWELL:  If  we  can  keep  it  down  1 


 to  three  minutes,  that  would  be  great.  If  you  can  2 
 state  your  name  and  where  you  come  from  and  who  you  3 
 represent.  4 
 MR.  KRATTENMAKER:  When  the  red  light  5 
 comes  on,  please  stop  simply  because  we  want  to  try  to  6 
 get  everybody  through.  Sorry.  7 
 Sir?  8 
 UNIDENTIFIED  SPEAKER:  Thank  you  for  9 
 taking  time  for  those  of  the  public  outside  the  10 
 beltway  that  aren't  being  paid  here  today  because  I  11 
 think  those  are  the  representations  that  you  really  12 
 are  looking  for  because  character  of  community  is  so  13 
 important.  And  to  have  given  a  few  communities  the  14 
 power  of  a  light  bulb  in  a  low  power  FM  station  to  do  15 
 truly  community  programming  by  the  community,  for  the  16 
 community,  to  have  gospel  programs  that  originate  in  17 
 the  community,  to  have  working  watermen  that  are  --  my  18 
 waterfront  community  to  have  shows  is  most,  most  19 
 important,  to  have  the  storytelling  that  comes  out  of  20 
 your  community.  This  is  community  programming.  21 
 I'm  offended  by  the  President  of  NBC  to  22 
 say  that  he  can  do  community  programming  for  our  23 
 community.  Shame  on  the  National  Public  Radio  for  24 
 trying  to  keep  my  community  from  having  a  station,  the  25 
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 112 
 power  of  a  light  bulb  that  is  only  meant  to  have  the  1 


 power  to  reach  half  the  people  half  the  time.  2 
 How  about  all  the  people  all  the  time?  3 
 And  let's  give  other  communities  a  frequency.  How  4 
 come  corporations  have  all  the  frequencies  and  there's  5 
 no  frequencies  left  for  the  communities?  6 
 I  would  say  the  FCC  has  abdicated  their  7 
 job  in  that  respect.  8 
 Thank  you.  9 
 MR.  KRATTENMAKER:  Thank  you  for  your  10 
 comment.  11 
 (Applause.)  12 
 Every  once  in  a  while  the  moderator  gets  13 
 to  step  outside  and  I  would  say  that  it  is  interesting  14 
 that,  of  course,  sometimes  you  can  deal  with  ownership  15 
 issues  by  creating  more  things  for  people  to  own.  As  16 
 I  indicated,  so  I  sort  of  associate  myself  not  17 
 necessarily  with  the  conclusion,  but  the  point  of  view  18 
 spectrum  management  may  be  an  issue  here  as  well  as  19 
 competition,  localism  and  diversity.  Let  me  shut  up.  20 
 Yes  ma'am.?  21 
 MS.  HALLICK  (Phonetic):  My  name  is  DeeDee  22 
 Hallick  and  I'm  a  co-  author  of  a  book  which  I  23 
 recommend  to  the  panel  called  Public  Broadcasting  and  24 
 the  Public  Interest  which  just  came  out.  It's  M.  E.  25 
112
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 113 
 Sharp  are  the  publishers.  1 


 I  am  also  a  former  professor  of  2 
 communication  at  the  University  of  California,  San  3 
 Diego,  where  I  taught  for  17  years  and  also  the  past  4 
 president  of  the  Association  of  Independent  Video  and  5 
 Film  Makers  which  is  in  New  York  City  and  has  6 
 membership  of  over  6,000  independent  video  and  film  7 
 makers.  8 
 I  would  just  like  to  right  now  address  the  9 
 problem  of  getting  independent  documentaries  on  any  10 
 kind  of  public  or  commercial  television  in  the  United  11 
 States  if  your  name  isn't  Ken  Burns.  With  due  respect  12 
 to  his  work  on  the  Civil  War  series,  17  percent  of  the  13 
 public  television  prime  time  is  Ken  Burns,  but  where  14 
 are  the  voices  for  everyone  else?  15 
 There  are  many,  many  independent  producers  16 
 who  do  work,  who  want  to  work  in  documentaries  and  who  17 
 cannot  --  or  are  completely  locked  out  of  the  18 
 commercial  and  the  public  television  system;  even  19 
 people  who  are  as  popular  as  for  example,  Michael  20 
 Moore,  whose  recent  documentary  has  just  broken  all  21 
 kinds  of  box  office  records.  He  has  struggled  to  keep  22 
 a  very  tiny  toehold  occasionally  on  any  kind  of  23 
 television  and  right  now  he  is  completely  locked  out  24 
 from  that.  25 
113
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 114 
 I  refer  to  my  colleague  Lee  Lu  Lee  who  is  1 


 also  on  the  Board  of  Directors  of  the  AIVF,  the  2 
 Association  of  Independent  Video  and  Film  Makers.  3 
 He's  half  Chinese  and  half  African-  American.  A  number  4 
 of  years  ago  he  did  a  documentary  on  the  history  of  5 
 the  Black  Panthers  in  the  United  States.  It  was  a  6 
 work  he  worked  on  for  seven  years,  had  incredible  7 
 archival  footage,  was  a  very  in-  depth  look  at  the  8 
 Panthers  and  often  quite  critical  of  the  leadership.  9 
 His  program  was  shown  on  37  national  systems  around  10 
 the  world  in  Japan,  in  Holland,  in  England,  in  many,  11 
 many  --  Brazil  even.  And  his  program  could  not  get  on  12 
 one  channel  in  the  United  States,  not  one.  13 
 Finally,  Black  Entertainment  Network  did  14 
 put  it  on  two  and  a  half  years  after  he  had  finished  15 
 making  it.  Where  was  the  place  for  people  to  put  on  16 
 these  kinds  of  programming?  If  you  talk  about  the  17 
 History  Channel,  you  should  ask  Gore  Vidal  about  his  18 
 history  with  working  with  the  History  Channel.  Here  19 
 is  an  eminent  intellectual,  very  important  --  he  was  20 
 originally  hired  by  them.  He  completely  was  disgusted  21 
 with  the  way  they  wanted  to  portray  history.  22 
 Look  at  Howard  Zen.  A  number  of  people  23 
 had  put  together  a  history  series  with  him.  He  cannot  24 
 get  on  anywhere.  The  History  Channel  turned  it  down.  25 
114
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 115 
 MR.  KRATTENMAKER:  Thank  you.  Sir?  1 


 (Applause.)  2 
 MR.  MOBLEY:  Thank  you.  My  name  is  Arthur  3 
 Mobley  and  I  am  a  broadcaster  and  entrepreneur  and  4 
 have  been  for  a  number  of  years.  I  have  been  involved  5 
 also  in  the  advocacy  side.  I  worked  for  many  years  6 
 with  the  National  Black  Media  Coalition  and  was  a  7 
 Western  Regional  Director  for  a  number  of  years.  8 
 Years  ago,  back  when  people  like  Mo  Udall  were  9 
 complaining  that  the  combined  communications  and  the  10 
 Gannett  merger  were  tantamount  to  a  whale  swallowing  a  11 
 whale.  12 
 I  think  --  and  we've  come  a  long  way  since  13 
 then.  We've  had  a  lot  of  whales  and  sharks  and  14 
 piranhas  and  all  kinds  of  things  developed  since  then.  15 
 But  I  think  that  the  missing  link  in  what  seems  to  be  16 
 a  problem  with  the  Commission,  with  all  due  respect,  17 
 is  that  we're  not  following  the  money.  There's  a  18 
 money  trail,  very  seriously,  and  what  you've  done  and  19 
 what  you've  reregulated  over  the  last  10  years  or  so  20 
 and  the  change  that  you've  made  have  not  encompassed  21 
 following  the  money.  You've  dealt  with  the  regulation  22 
 and  you've  --  how  many  stations  are  here  and  there,  23 
 but  who  benefits  and  how  they  benefit,  how  they  make  24 
 money  has  been  left  to  the  FTC  and  the  SEC  and  other  25 
115
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 116 
 regulatory  agencies  and  perhaps  they  should  be  here.  1 


 Also,  and  you  should  have  maybe  some  joint  2 
 discussions  about  this  since  they  all  are  effective  3 
 and  have  effect  on  the  interest  of  all  of  the  people  4 
 here.  But  as  a  broadcaster,  I  mean  it's  a  simple  5 
 business  situation.  You  give  me  an  open  --  a  carte  6 
 blanche  to  own  as  many  of  any  kind  of  businesses  as  I  7 
 want.  What  I'm  going  to  do  is  I'm  going  to  buy  up  as  8 
 much  as  I  can  and  then  I  am  going  to  start  minimizing  9 
 my  output  of  cash.  I'm  going  to  become  less  effective  10 
 at  serving  local  needs.  I'm  going  to  be  less  11 
 effective  at  getting  all  of  those  concerns  and  12 
 interests  and  those  outlets  taken  care  of  and  I'm  13 
 going  to  be  making  as  much  money  as  I  can.  So  I'm  14 
 going  to  put  a  little  sawdust  in  the  hamburgers,  you  15 
 know?  I'm  going  to  put  some  junk  out  there.  That's  16 
 the  nature  of  business  in  this  country  and  17 
 broadcasting  is  no  different.  18 
 People  are  putting  out  junk  because  they  19 
 have  too  much  opportunity  to  own  too  much  and  you  20 
 should  not  be  talking  about  keeping  the  standards.  21 
 You  should  be  talking  about  cutting  them  back.  These  22 
 standards  need  to  be  rolled  back.  Some  of  these  big  23 
 corporations  need  to  get  off  some  of  these  federal  24 
 licenses  because  these  licenses  again  are  the  property  25 
116
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 117 
 ultimately  of  the  public.  They  are  the  people's  1 


 airways  and  the  Commission  seems  to  have  forgotten  2 
 that  or  misplaced  it  somewhere,  but  please  find  it  and  3 
 if  you  have  any  doubts  about  where  you're  going,  4 
 follow  the  money.  5 
 Study  a  little  bit  more  about  how  people  6 
 make  money  in  these  big  companies  and  why  we  have  so  7 
 many  attorneys  and  no  one  of  any  content  or  substance  8 
 to  come  and  talk  to  you  other  than  sending  their  9 
 attorneys  out.  10 
 (Applause.)  11 
 MR.  KRATTENMAKER:  Thank  you.  Yes  ma'am.  12 
 The  woman  at  the  microphone.  13 
 MS.  CRUMMILLER  (Phonetic):  My  name  is  14 
 Jenny  Crummiller.  I'm  a  member  of  a  group  from  New  15 
 Jersey,  the  Antiwar  Video  Fund.  We  produced  a  16 
 30-  second  TV  ad  and  raised  money  to  broadcast  it.  We  17 
 contracted  with  Comcast  Corporation  to  show  the  ad  in  18 
 Washington,  D.  C.  Comcast  is  the  only  cable  provider  19 
 for  Washington.  Comcast  put  us  in  the  schedule  so  our  20 
 ad  would  be  shown  twice  during  prime  time  hours  for  21 
 three  days  in  a  row  beginning  the  night  of  the  22 
 President's  State  of  the  Union  Address  when  he  was  23 
 expected  to  make  his  case  for  invading  Iraq.  24 
 However,  at  the  last  minute,  Comcast  25 
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 118 
 pulled  our  ad,  supposedly  because  it  was  1 


 unsubstantiated.  Obviously,  the  charge  was  totally  2 
 arbitrary.  Our  ad  is  a  montage  of  ordinary  Americans  3 
 making  statements  against  war.  4 
 Regardless  of  whether  this  was  intended  to  5 
 prevent  our  powerful  message  from  undermining  the  6 
 President's  speech,  that  is  what  Comcast  did,  since  we  7 
 had  no  time  to  find  other  ad  time.  8 
 Whether  by  government  or  by  corporation,  9 
 centralized  control  of  the  media  is  un-  American.  When  10 
 this  happened,  I  felt  like  I  was  in  Iraq.  The  ease  11 
 and  nonchalance  with  which  Comcast  pulled  our  ad  makes  12 
 clear  this  was  not  an  isolated  occurrence.  Channel  13 
 choice  did  nothing  to  give  us  a  choice.  14 
 In  terms  of  control  over  content,  in  terms  15 
 of  democracy,  one  corporation  is  one  choice.  16 
 (Applause.)  17 
 MR.  KRATTENMAKER:  Thank  you.  Yes  sir,  18 
 the  gentleman  at  the  microphone.  19 
 MR.  SPRUILL:  My  name  is  Lonell  Spruill.  20 
 I  live  within  the  7th  District  of  the  House  of  21 
 Delegates.  That's  a  part  of  Chesapeake  and  Suffolk,  22 
 Virginia.  I'm  worried  about  the  change  in  the  FCC  23 
 media  ownership  rules  that  would  allow  the  newspaper,  24 
 television,  radio  station  to  combine  even  more.  As  an  25 
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 119 
 elected  official  I  can  tell  you  how  important  this  is  1 


 to  me.  2 
 There's  not  enough  important  about  what's  3 
 happening  in  our  state.  If  my  constituents  don't  know  4 
 what's  going  on,  they  won't  communicate  their  views  to  5 
 me.  If  the  press  only  reports  one  side  of  the  story,  6 
 how  can  they  reach  their  own  judgment  and  make  7 
 important  decisions?  8 
 I'm  so  concerned,  particularly  about  the  9 
 issues  pertaining  to  minority  race.  When  it  comes  to  10 
 minority  race,  the  press  does  a  poor  job  when  it  comes  11 
 to  that.  12 
 If  we  allow  the  media  to  combine  even  13 
 more,  we  will  have  fewer  reporters  and  even  fewer  14 
 coverage  on  TV.  It's  most  important  that  we  don't  let  15 
 this  happen.  16 
 As  you  know,  in  my  area,  home  district  in  17 
 Chesapeake  and  Tidewater  area,  in  1996,  we  had  21  18 
 different  owners  of  radio  stations.  Now  it  has  19 
 dropped  down  to  15.  That's  20  percent.  We  have  only  20 
 three  TV  stations,  local  stations.  I'm  also  worried  21 
 about  the  impact  of  media  concentration  on  22 
 advertising.  That  competition  means  air  prices  will  23 
 go  up.  Also,  it  means  it  would  be  more  difficult  for  24 
 groups  to  get  heard  through  paid  advertising.  25 
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 120 
 As  the  lady  spoke  earlier,  last  month,  1 


 Comcast  refused  to  air  an  ad  opposed  to  the  war  in  2 
 Iraq  on  a  Washington,  D.  C.  cable  station  after  the  3 
 State  of  the  Union  message.  Since  cable  is  a  monopoly  4 
 now,  yet  it  was  not  heard.  Guess  what?  I  did  not  get  5 
 aired.  6 
 As  a  former  member  of  Bell  Atlantic,  I  7 
 never  lobbied.  I  am  a  lawyer  member  of  the  8 
 Communication  Workers  of  America  and  labor  disputes,  9 
 labor  often  relies  heavily  on  paid  advertisement  to  10 
 get  their  message  across.  So  if  we  allow  this  thing  11 
 to  be  one  sided  can  you  imagine  how  it  is  now  so  far,  12 
 the  way  thing  are  happening  on  unions?  It's  important  13 
 that  we  let  this  thing  stay  open.  Please,  don't  14 
 narrow  it  down  any  further.  Thank  you  very  much.  15 
 (Applause.)  16 
 MR.  KRATTENMAKER:  Thank  you.  The  only  17 
 way  we're  going  to  have  an  opportunity  to  try  to  hear  18 
 everybody  is  we  change  it  to  a  two-  minute  limit.  I'm  19 
 sorry,  but  that's  what  we're  going  to  have  to  do.  20 
 Please.  21 
 MR.  PRESTON:  My  name  is  Dan  Preston.  I'm  22 
 a  co-  founder  of  the  Anti-  War  Video  Fund  and  I  just  23 
 want  to  give  you  an  update  on  some  of  our  experiences  24 
 after  Comcast  censored  our  ad.  To  reach  the  D.  C.  25 
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 121 
 audience,  we  did  have  an  alternative,  not  on  cable,  1 


 but  over  broadcast.  We  approached  all  the  network  2 
 affiliates  with  our  ad.  NBC  rejected  it  on  grounds  3 
 they  would  not  specify.  ABC  never  responded.  We  did  4 
 get  the  ad  accepted  by  the  CBS  affiliate  and  paid  a  5 
 lot  more  money  to  get  it  broadcast  over  the  air  than  6 
 it  would  have  cost  on  cable.  7 
 Now  the  insidious  thing  about  censorship  8 
 is  this.  You  and  the  audience  don't  know  what  you're  9 
 not  seeing.  You  don't  hear  the  voices  that  have  been  10 
 silenced.  If  fewer  and  fewer  people  own  the  11 
 microphones,  the  diversity  of  voices  in  our  democracy  12 
 will  be  strangled.  13 
 Now  our  story  did  get  heard  because  it  did  14 
 receive  substantial  national  and  international  press  15 
 coverage  on  PBS,  NPR,  Canadian,  French  and  Arabic  TV,  16 
 in  print,  on  alternative  and  trade  press,  a  few  local  17 
 newspapers,  but  for  the  most  part  not  on  the  media  18 
 properties  owned  by  the  major  media  conglomerates.  19 
 Now  in  particular,  this  one  story,  on  the  20 
 day  of  the  State  of  the  Union  before  all  this  stuff  21 
 hit  the  fan,  a  local  Comcast  news  program  prepared  a  22 
 story  on  our  group,  a  nice  peaceful  Princeton  group  23 
 and  it  was  going  to  air  it  on  the  Channel  8,  the  local  24 
 Comcast  news  program.  But  when  they  heard  that  their  25 
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 122 
 parent  company  had  censored  our  ad  down  in  Washington,  1 


 and  the  controversy  then  was  arising  about  us,  they  2 
 canceled  the  story  about  us.  And  as  they  candidly  3 
 admitted,  not  because  they  didn't  think  it  was  a  good  4 
 story,  they  wanted  to  run  the  story,  but  guess  what?  5 
 They  told  us  they  wanted  to  have  jobs  the  next  6 
 morning.  So  the  censorship  is  here.  It's  real.  It's  7 
 not  an  unsubstantiated  claim.  It's  happened  to  us.  8 
 It  will  happen  and  it  will  happen  more  and  more  as  the  9 
 media  gets  more  and  more  concentrated.  Thank  you.  10 
 (Applause.)  11 
 MR.  KRATTENMAKER:  Thank  you.  Yes  sir.  12 
 MR.  LONG:  Hi,  my  name  is  Nathan  Long.  I  13 
 teach  at  Virginia  Union  University,  a  local  14 
 historically  black  college  here  in  town  and  I'm  very  15 
 happy  to  come  after  the  delegate  who  just  spoke  16 
 because  when  we  talk  about  the  public  airwaves,  I  17 
 really  think  we're  talking  about  the  public,  we're  not  18 
 just  talking  about  individuals,  but  we're  specifically  19 
 talking  about  citizens.  And  citizens,  in  order  to  be  20 
 active  in  a  democratic  government,  really  need  to  have  21 
 information  and  as  media  critic  Robert  McChesney  says,  22 
 the  role  of  our  newspapers  and  of  our  journalists  are  23 
 not  to  entertain  us,  not  to  give  us  what  we  want,  but  24 
 what  we  need.  25 
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 123 
 And  more  and  more  as  corporations  own  the  1 


 major  ways  of  providing  news,  no  matter  how  many  news  2 
 stations  or  how  many  newscasts  there  are,  there  are  3 
 fewer  and  fewer  political  options  and  opinions  in  the  4 
 news.  If  you  look  at  the  newspapers  a  hundred  years  5 
 ago,  they  were  mostly  owned  by  small  local  owners  and  6 
 had  very  staid  positions.  Now  the  majority  of  news  is  7 
 considered  objective  which  of  course  means  that  it  8 
 takes  a  very  middle  of  the  road  politics.  I  think  9 
 this  is  a  real  problem.  10 
 The  other  issue  that  I  just  want  to  bring  11 
 up  is  if  we  hear  corporations  saying  they  are  going  to  12 
 represent  diversity  and  then  you  hear  citizens  saying  13 
 no,  they're  not,  I  ask  you  seriously  think  which  one  14 
 is  the  person  to  listen  to?  15 
 (Applause.)  16 
 And  what  are  the  motivations  of  17 
 corporations?  Newspapers  used  to  be  owned  because  18 
 people  wanted  to  say  something.  Now  they're  owned  to  19 
 make  money.  And  that's  going  to  effect  what  gets  put  20 
 out  and  what  doesn't.  21 
 Thank  you.  22 
 (Applause.)  23 
 MR.  KRATTENMAKER:  Thank  you.  24 
 MS.  KEKUS  (Phonetic):  My  name  is  25 
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 124 
 Christina  Kekus  and  I'm  a  senior  consumer  studies  1 


 major  at  Virginia  Tech.  Today,  I'm  delivering  a  2 
 statement  to  you  on  behalf  of  my  advisor,  Dr.  Irene  3 
 Leach  who  is  the  president  of  the  Virginia  Citizens  4 
 Consumer  Council,  a  Virginia  statewide  consumer  5 
 education  advocacy  organization.  6 
 The  Virginia  Citizens  Consumer  Council  is  7 
 very  concerned  about  the  changes  that  you  have  8 
 proposed.  We  believe  that  removal  of  the  restrictions  9 
 on  media  ownership  will  have  a  very  negative  effect  on  10 
 society.  Given  the  problems  that  exist  even  with  the  11 
 restrictions,  consumers  will  be  badly  harmed  if  they  12 
 are  removed.  13 
 It  is  already  difficult  to  get  the  media  14 
 to  address  consumer  concerns,  especially  when  they  are  15 
 complex  and  big  companies  have  different  perspectives  16 
 from  consumers.  17 
 For  example,  Virginia  has  been  involved  in  18 
 restructuring  its  electricity  markets  for  over  five  19 
 years.  During  that  time  there  has  been  very  limited  20 
 media  coverage.  In  one  media  market  neither  a  21 
 concerned  local  legislator,  nor  myself,  were  22 
 successful  getting  coverage  as  the  critical  decisions  23 
 were  made.  They  were  told  that  the  issue  was  too  24 
 complex  for  people  to  understand.  25 
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 125 
 Recently,  in  another  market,  I  had  an  op  1 


 ed  turned  down  but  was  told  that  a  100  to  200  word  2 
 letter  to  the  editor  might  be  printed.  However,  it  3 
 was  not  printed,  even  though  it  supported  the  4 
 editorial  view  of  the  newspaper.  Several  weeks  later,  5 
 a  letter  from  someone  else  was  printed  on  the  topic.  6 
 In  the  meantime,  other  issues  were  rehashed  7 
 repeatedly,  but  electric  issues  never  appeared  as  a  8 
 matter  to  citizens,  only  to  the  editors.  9 
 If  one  entity  is  allowed  to  own  multiple  10 
 media  outlets  in  the  same  market,  it  will  be  far  too  11 
 easy  for  that  entity  to  totally  control  the  public  12 
 discourse.  Citizens  will  hear  one  perspective  13 
 regardless  of  whether  they  read  the  paper,  listen  to  14 
 the  radio  or  watch  television.  Many  voices  and  15 
 perspectives  will  be  lost.  Many  decisions  will  be  16 
 made  based  on  incomplete  or  incorrect  information.  17 
 Recent  consolidation  at  radio  stations  has  meant  a  18 
 loss  of  local  news  and  weather  reporting.  For  19 
 example,  Clear  Channel  station's  news  all  comes  from  20 
 Texas  and  my  experience  has  been  that  there  is  little  21 
 news.  22 
 This  week,  as  I  drove  across  Virginia  in  a  23 
 snowstorm  and  wondered  --  24 
 MR.  KRATTENMAKER:  Thank  you  very  much,  25 
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 126 
 ma'am.  You  can  submit  that  for  the  record.  1 


 MR.  KRATTENMAKER:  I'd  like  to  thank  2 
 everybody  very  much.  One  thing  I  learned  when  I  was  3 
 dean  of  a  law  school  is  you  don't  keep  the  faculty  4 
 from  eating  lunch.  I'm  not  going  to  keep  the  5 
 Commissioners  from  eating  lunch.  6 
 Those  of  you  who  are  standing  in  line,  if  7 
 you'll  come  up  to  Mr.  Snowden,  he'll  get  your  name  and  8 
 guarantee  you  first  spot  the  next  open  mike.  9 
 I'm  sorry,  we're  just  way  over  the  time  10 
 limit.  11 
 I  would  like  to  thank  the  panel  very  much  12 
 and  the  open  mike  people  very  much.  You  went  to  a  lot  13 
 of  trouble  to  come  here.  I  must  say,  I  must  apologize  14 
 to  Mr.  Ireland,  I  should  have  had  him  on  as  a  15 
 responder.  I  didn't  get  to  you  and  I'm  sorry  for  16 
 that.  17 
 I  apologize  to  everybody  who  hasn't  had  a  18 
 chance  to  speak  yet.  Please  come  back  after  lunch.  I  19 
 expect  that  you  will.  20 
 Thank  you.  21 
 (Whereupon,  at  12:  30  p.  m.,  the  hearing  was  22 
 recessed,  to  reconvene  at  1:  30  p.  m.)  23 
 24 
 A-  F-  T-  E-  R-  N-  O-  O-  N  S-  E-  S-  S-  I-  O-  N  25 
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 127 
 1:  30  P.  M.  1 


 MR.  KRATTENMAKER:  Welcome  back.  This  is  2 
 our  panel  on  competition  issues.  People  have  asked  3 
 that  I  begin  with  a  half  hour  summary  of  some  of  the  4 
 more  interesting  aspects  of  my  life  before  I  got  to  5 
 high  school,  but  I've  decided  to  pass  that  over.  6 
 A  reminder  that  the  rules  under  which  7 
 we're  operating  are  a  five  minute  time  limit  for  each  8 
 of  the  panelists,  strictly  enforced,  not  because  9 
 you're  not  important  but  simply  on  the  grounds  that  10 
 everybody  here  is  important  and  that  we  want  to  hear  11 
 from  everybody.  12 
 And  are  the  Commissioners  here?  We're  13 
 ready,  Mr.  Chairman?  14 
 CHAIRMAN  POWELL:  We're  ready.  15 
 MR.  KRATTENMAKER:  Okay,  Mr.  Croteau?  16 
 MR.  CROTEAU:  Good  afternoon.  My  name  is  17 
 David  Croteau.  I  am  a  professor  in  the  Department  of  18 
 Sociology  and  Anthropology  right  here  in  Richmond,  19 
 Virginia.  I  think  I'm  the  token  local  panelist  today,  20 
 I  believe.  21 
 Good  afternoon.  I  appreciate  the  22 
 invitation  to  comment  at  today's  hearings.  I  believe  23 
 local  hearings  such  as  this  serve  an  important  role.  24 
 I  certainly  hope  the  FCC  will  sponsor  more  public  25 
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 128 
 hearings  throughout  the  country  in  the  coming  weeks  1 


 that  will  include  more  local  voices  and  more  time  for  2 
 the  public  to  take  part.  3 
 The  media  serve  a  unique  role  in  4 
 democracies  that  value  free  and  creative  expression,  5 
 independent  thought  and  diverse  perspectives.  In  6 
 recognition  of  this  unique,  public  interest  role,  the  7 
 free  press  is  the  only  business  explicitly  protected  8 
 in  the  U.  S.  Constitution.  9 
 We  cannot,  therefore,  treat  the  media  like  10 
 any  other  industry.  It's  products  are  not  widgets  or  11 
 toasters.  They  are  culture,  information,  ideas  and  12 
 viewpoints.  Consequently,  we  must  be  especially  13 
 vigilant  in  protecting  and  preserving  the  public  14 
 interest  as  it  relates  to  this  vitally  important  15 
 industry.  16 
 Unfortunately,  relaxation  or  elimination  17 
 of  existing  ownership  regulations  would  move  us  in  18 
 exactly  the  wrong  direction.  While  increasing  the  19 
 profits  of  major  media  conglomerates  such  changes  20 
 would,  in  all  likelihood,  promote  further  21 
 concentration  of  media  ownership,  thereby  undermining  22 
 competition,  reduce  the  already  limited  diversity  in  23 
 commercial  media  content,  and  reduce  the  quality  and  24 
 sometimes  the  quantity  of  locally  produced  media  25 
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 129 
 content.  1 


 None  of  these  are  good  for  our  country  or  2 
 for  our  democracy.  3 
 We  don't  need  to  speculate  about  the  4 
 likely  impact  of  deregulation  on  ownership  5 
 concentration.  We  need  only  look  at  past  experience.  6 
 The  removal  of  the  national  cap  on  radio  7 
 ownership  in  1996  resulted  in  the  dramatic  8 
 concentration  of  ownership  in  that  industry.  In  six  9 
 years,  the  number  of  radio  stations  increased  over  5  10 
 percent,  but  the  number  of  radio  owners  decreased  by  11 
 more  than  one  third.  A  single  corporation,  Clear  12 
 Channel  Communications,  went  from  owning  40  stations  13 
 before  the  rule  changes  to  owning  over  1,200  stations  14 
 today,  five  times  as  many  as  its  nearest  competitor.  15 
 Here,  in  Richmond,  this  translated  into  16 
 Clear  Channel  owning  six  local  stations,  resulting  in  17 
 a  loss  of  competition  and  the  loss  of  local  content  in  18 
 favor  of  homogenized  national  programming.  For  19 
 example,  WRVA,  a  Richmond  institution,  long  known  for  20 
 its  emphasis  on  local  news  and  talk,  was  gutted  after  21 
 the  Clear  Channel  takeover.  Nearly  every  on-  air  22 
 personality  was  fired  or  resigned  and  public  outcry  23 
 filled  local  newspaper  columns.  24 
 As  one  columnist  put  it,  "in  its  embrace  25 
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 130 
 of  nationally  syndicated  personalities  to  the  1 


 exclusion  of  locals,  Clear  Channel  has  made  it  clear  2 
 that  it  has  no  use  for  this  community's  talents,  3 
 viewpoints  and  flavor."  4 
 In  short,  the  deregulation  of  radio  5 
 ownership  has  been  a  disaster  for  Richmond  and  many  6 
 other  communities  across  the  country.  This  experience  7 
 should  be  a  cautionary  tale  in  considering  any  future  8 
 rule  changes.  9 
 There  is  other  empirical  evidence  which  I  10 
 will  skip  in  the  interest  of  time  here  today,  but  11 
 despite  such  evidence,  the  call  to  ease  regulations  12 
 continues  to  come  from  the  corporations  who  would  13 
 profit  from  such  changes.  These  calls  are  often  14 
 justified  on  the  grounds  that  technology  has  changed  15 
 our  media  landscape  and  therefore  has  made  ownership  16 
 regulations  obsolete.  This  claim  is  not  new.  Every  17 
 time  new  media  technology  has  been  introduced,  whether  18 
 it  is  radio,  television,  cable  or  the  internet,  19 
 enthusiasts  have  told  us  that  everything  has  changed.  20 
 But  in  fact,  in  each  case,  the  fundamental  questions  21 
 about  new  media  technologies  have  remained  the  same,  22 
 including  who  will  own  and  control  them,  what  purpose  23 
 will  they  serve,  whose  views  and  visions  will  be  24 
 represented  in  the  new  medium?  25 
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 131 
 Technological  changes  in  the  media  1 


 industry  have  not  reduced  the  importance  of  regulation  2 
 and  the  public  interest.  While  the  expansion  of  cable  3 
 and  the  rise  of  the  internet  have  produced  more  4 
 outlets,  not  much  has  changed  in  terms  of  who  owned  5 
 and  controls  these  outlets,  as  we've  heard  earlier  6 
 today.  7 
 New  media  outlets  often  do  not  mean  new  8 
 media  content  either.  Instead,  broadcast  TV  programs  9 
 are  recycled  for  cable  channels.  Newspaper  and  cable  10 
 news  content  is  repackaged  for  the  internet  and  so  on.  11 
 Thus,  despite  changing  technologies,  what  we  still  12 
 need  are  multiple,  competing,  diverse  and  independent  13 
 sources  of  information  and  entertainment.  14 
 MR.  KRATTENMAKER:  Sir,  your  time  is  up,  15 
 are  you  summarizing  now?  16 
 MR.  CROTEAU:  Yes,  yes.  Some  of  which  by  17 
 the  way  need  to  be  noncommercial,  such  as  in  low  power  18 
 radio.  19 
 MR.  KRATTENMAKER:  Thank  you.  Ms.  Foley?  20 
 MS.  FOLEY:  Good  afternoon,  I'm  Linda  21 
 Foley,  President  of  the  Newspaper  Guild  Communications  22 
 Workers  of  America.  Thank  you  for  allowing  me  to  23 
 testify  on  behalf  of  the  Newspaper  Guild,  CWA,  the  24 
 union  that  represents  print  journalists  and  their  25 
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 132 
 parent  union,  CWA,  representing  700,000  workers  1 


 including  broadcast  technicians  and  other  media  2 
 professionals.  3 
 Before  my  tenure  with  the  Newspaper  Guild,  4 
 CWA,  I  was  a  reporter  with  the  Knight  Ridder  Newspaper  5 
 in  Kentucky,  so  I'm  going  to  talk  about  the  6 
 competition  for  news.  7 
 The  Commission's  broadcast  ownership  rules  8 
 are  based  on  the  first  amendment  principle  that  the  9 
 widest  possible  dissemination  of  information  from  10 
 diverse  and  antagonistic  sources  is  essential  to  11 
 public  welfare.  12 
 First,  we  acknowledge  that  the  media  13 
 market  is  changing.  No  one  knows  this  better  than  our  14 
 members.  There  are  more  media  outlets  today  than  ever  15 
 before,  but  there  are  fewer  owners.  And  the  fact  16 
 remains  that  broadcast  television  and  newspapers  are  17 
 probably  far  and  away  the  dominant  sources  for  local  18 
 news  and  information.  19 
 The  Newspaper  Association  of  America  20 
 reports  that  more  than  half  the  adult  population  reads  21 
 a  daily  paper.  Indeed,  the  Nielsen  Study  commissioned  22 
 for  this  rulemaking  shows  that  63  percent  of  those  23 
 surveyed  identified  newspapers  as  their  source  for  24 
 local  news  and  information.  At  the  same  time,  Nielsen  25 
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 133 
 also  showed  that  85  percent  rely  on  broadcast  1 


 television  for  local  news.  Compare  that  to  one  third  2 
 for  radio  and  only  19  percent  for  the  internet  and  3 
 remember,  half  of  America  still  doesn't  have  internet  4 
 access  at  home.  5 
 The  dominance  of  TV  news  and  newspapers  6 
 and  local  news  and  information  sources  is  all  the  more  7 
 striking  because,  as  the  FCC's  Waldfogel  Study  clearly  8 
 indicates,  consumers  of  news  and  information  do  not  9 
 substitute  sources,  but  rather  use  other  media  outlets  10 
 to  complement  their  primary  source  of  news  and  11 
 information.  Therefore,  local  ownership  combinations  12 
 that  allow  unfettered  mergers  of  news  operations  of  13 
 local  broadcasters  and  daily  newspapers,  reduce  the  14 
 number  of  antagonistic  news  sources  available  to  local  15 
 citizens.  16 
 Local  television  and  newspaper  media  17 
 markets  are  already  highly  concentrated.  Most  cities  18 
 are  one  newspaper  towns.  While  cable  has  increased  19 
 the  number  of  outlets,  in  most  cities  the  top  four  20 
 over-  the-  air  television  stations  still  maintain  more  21 
 than  75  percent  of  the  market  share.  22 
 Simply  increasing  the  number  of  outlets  in  23 
 a  market  does  little  to  produce  more  antagonistic  24 
 sources.  25 
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 134 
 The  networks  submitted  a  study  that  shows  1 


 that  of  all  210  TV  markets  in  the  U.  S.,  70  percent  2 
 have  four  or  fewer  stations  carrying  original,  local  3 
 news  programming  and  89  percent  have  five  or  fewer.  4 
 Only  19  markets  have  local  cable  news  shows  and  some,  5 
 such  as  News  Channel  8  in  Washington,  D.  C.  are  owned  6 
 by  a  local  broadcaster.  7 
 Focussing  on  outlets,  without  considering  8 
 market  share  and  ownership,  has  led  proponents  of  9 
 local  market  combinations  to  draw  some  interesting  10 
 comparisons.  For  example,  the  network's  brief  11 
 includes  an  in-  depth  analysis  of  the  Milwaukee  market.  12 
 It  gives  equal  weight  to  the  website  of  the  local  13 
 hurling  club  and  the  Milwaukee  Journal  Sentinel.  Now  14 
 let's  face  it.  It's  highly  doubtful  the  Milwaukee  15 
 Journal  Sentinel  will  ever  be  scooped  by  the  local  16 
 hurling  society.  17 
 When  it  comes  to  setting  the  local  news  18 
 agenda  and  local  viewpoint  diversity,  diverse  19 
 ownership,  not  the  number  of  outlets  is  what  matters.  20 
 The  brief  filed  by  the  CWA  in  this  proceeding  contains  21 
 numerous  examples  that  illustrate  the  point.  One  22 
 example,  however,  provides  a  striking  demonstration  23 
 about  how  concentration  of  media  ownership  can  destroy  24 
 localism,  competition  and  diversity  of  viewpoints.  25 
134
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 135 
 In  2001,  Canada's  second  largest  1 


 commercial  broadcast  chain  purchased  Canada's  largest  2 
 newspaper  chain  and  now  controls  30  percent  of  the  3 
 nation's  daily  newspaper  circulation.  Within  months  4 
 of  that  merger,  Canada  West  Global  reversed  journalist  5 
 tradition  of  local  editorial  independence  by  mandating  6 
 that  its  largest  newspapers  and  all  its  broadcast  news  7 
 operations  adhere  to  editorial  viewpoints  dictated  by  8 
 its  headquarters  in  Winnipeg.  It  wasn't  too  long  9 
 before  news  stories  were  being  edited  and  spun  to  10 
 conform  to  the  editorial  viewpoints.  11 
 The  FCC  should  not  allow  mergers  in  12 
 markets  that  are  already  highly  concentrated  and  if  13 
 mergers  are  permitted,  the  Commission  should  ensure  14 
 that  the  combination  is  in  the  public  interest  and  15 
 that  antagonistic  sources  of  news  and  information  are  16 
 preserved.  17 
 CWA  has  proposed  one  way  to  do  that,  by  18 
 requiring  commonly  owned  media  including  duopolies  to  19 
 maintain  separate  newsroom  and  editorial  staffs  in  20 
 order  to  preserve  and  promote  diversity  viewpoint.  21 
 This  language  is  modeled  after  the  22 
 Newspaper  Preservation  Act  passed  by  Congress  in  1970  23 
 that  allows  common  ownership  and  joint  operation  of  24 
 business  functions,  but  requires  separate  news  and  25 
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 136 
 editorial  staff.  Our  journalist  members  have  worked  1 


 under  these  arrangements  for  decades.  They  report  2 
 that  maintaining  separate  news  operations  does,  in  3 
 fact,  foster  competition  among  reporters  for  local  4 
 scoops  and  varying  news  angles  on  local  events.  5 
 Working  reporters  are  employees  of  complex  6 
 organizations  and  they  work  under  what  we  call  the  7 
 invisible  hand  of  the  newsroom  social  control.  Like  8 
 athletes,  journalists  perform  their  best  when  they  are  9 
 challenged  by  competition  and  encouraged  to  do  their  10 
 own  personal  best.  It  is  imperative  therefore  that  11 
 the  Commission  adopt  rules  that  protect  the  media  from  12 
 consolidation  into  fewer  hands,  an  outcome  that  would  13 
 do  serious  harm  to  the  free  flow  of  ideas  that  is  so  14 
 essential  to  civic  participation  in  our  democracy.  15 
 Thank  you  very  much.  16 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  Miller?  17 
 MR.  MILLER:  I'm  Victor  Miller  of  18 
 Broadcast  Equity  and  also  for  Bear  Stearns.  I've  19 
 covered  the  industry  for  15  years  in  lending  an  20 
 analytic  capacity.  Today,  I'll  discuss  seven  21 
 operating  pressures  facing  broadcast  networks  and  22 
 local  stations  as  a  context  for  my  deregulatory  23 
 stance.  24 
 First  pressure  is  audience  fragmentation  25 
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 137 
 and  declining  ad  share.  The  national  TV  marketplace  1 


 consists  of  10  broadcast  networks,  1400  commercial  TV  2 
 stations,  287  national  and  56  regional  cable  networks.  3 
 In  2001,  the  typical  local  household  had  82  channels  4 
 available  versus  10  in  1980.  This  robust  and  5 
 option-  filled  marketplace  accelerated  by  deregulatory  6 
 changes  made  by  Congress  and  the  FCC  has  been  good  for  7 
 consumers.  However,  robust  competition  has  impacted  8 
 TV  industry  economics.  ABC,  CBS,  NBC  networks  have  9 
 seen  prime  time  viewing  shares  drop  to  38  percent  this  10 
 year  from  90  percent  in  1980.  Local  TV  stations  share  11 
 of  media  ad  dollars  has  fallen  to  15.5  percent  last  12 
 year,  versus  18.3  percent  in  1980  despite  almost  a  13 
 doubling  of  the  number  of  stations.  14 
 The  second  pressure  is  escalating  15 
 programming  costs.  Even  in  the  throes  of  declining  16 
 ratings,  the  cost  of  network  programming  has  increased  17 
 by  30  percent  for  half  hour  sitcoms  and  by  50  percent  18 
 plus  for  one  hour  dramas  despite  networks'  increasing  19 
 ownership  stake  in  these  shows  after  financial  20 
 syndication  rules  were  struck  down  in  1994.  21 
 Escalation  of  some  sports  rights  have  priced  sports  22 
 off  broadcast  TV  all  together.  Local  ABC,  CBS  and  NBC  23 
 stations  in  turn  on  the  local  level  are  investing  more  24 
 heavily  in  local  news  spending  $1.5  billion  in  the  top  25 
137
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 138 
 hundred  markets  on  programming  that  most  differentiate  1 


 stations  from  other  media.  2 
 The  third  pressure  is  high  operating  3 
 leverage.  Recent  financial  results  reported  by  4 
 broadcast  TV  players  suggest  that  there  are  few  5 
 operating  efficiencies  left  in  the  business.  High  6 
 operating  leverage  means  that  the  broadcast  TV  7 
 business  is  exposed  to  significant  cash  flow  swings  8 
 with  changes  in  advertising.  In  2000,  local  TV  9 
 station  industry  revenues  fell  by  15  percent,  but  cash  10 
 flow  plummeted  by  25  to  35  percent.  The  broadcast  TV  11 
 business  was  not  well  insulated  from  short  term  or  12 
 long  term  declines  in  the  business.  13 
 The  fourth  pressure  is  a  consolidating  14 
 cable  business.  Consolidation  of  the  cable  industry  15 
 may  be  broadcast  TV's  greatest  threat.  In  2002,  the  16 
 top  five  MSOs  controlled  72  percent  of  the  nation's  74  17 
 million  cable  households  and  in  15  of  the  top  25  media  18 
 markets,  one  MSO  controls  at  least  75  percent  of  the  19 
 local  markets  wireline  subscriber  base.  Increasing  20 
 MSO  concentration  will  make  it  more  difficult  for  21 
 local  TV  broadcasters  to  have  meaningful  22 
 retransmission  consent  discussions.  MSO  concentration  23 
 creates  competition  for  TV  stations'  local  ad  dollars  24 
 and  programming  franchise  as  well.  We  estimate  one  25 
138
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 139 
 MSO  captures  $1  billion  in  local  cable  advertising,  1 


 surpassing  that  earned  by  the  ABC  owned  and  operated  2 
 TV  group.  And  perversely,  2002's  appeals  court  ruling  3 
 would  allow  an  MSO  to  buy  a  local  TV  station  or  local  4 
 TV  and  newspaper  player  is  often  restricted  from  these  5 
 moves  by  current  ownership  rules.  This  anomaly  alone  6 
 begs  for  significant  relief.  7 
 The  fifth  pressure  is  new  technology.  8 
 Early  adoption  of  personal  video  recorders  suggests  9 
 that  users  skip  ads  at  a  75  percent  clip  five  times  at  10 
 the  level  of  the  previous  technology  VCRs.  11 
 Advertising  is  free  over  the  air  TV  broadcastings  12 
 sole  revenue  stream.  If  the  ad  only  model  breaks  13 
 down,  monthly  subscriber  fees  would  have  to  increase  14 
 by  $39  per  month  to  replace  broadcast  TV's  lost  ad  15 
 revenue.  16 
 The  sixth  pressure  is  the  lack  of  return  17 
 on  investment  in  digital  TV.  We  estimate  that  local  18 
 broadcasters  will  spend  $4  to  $6  billion  rolling  out  19 
 digital  TV  with  little  obvious  return  available  to  20 
 that  invested  capital.  21 
 The  seventh  pressure  is  poor  broadcast  22 
 network  economics.  Broadcast  networks  are  not  very  23 
 profitable.  From  2000  to  2002,  we  believe  the  big  24 
 four  networks  generated  only  $2  billion  in  profits  on  25 
139
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 140 
 approximately  $39  billion  in  revenue,  a  5  percent  1 


 margin.  Without  the  most  profitable  network,  margins  2 
 fell  to  1  percent.  3 
 My  conclusion  is  if  these  seven  operating  4 
 pressures  continue  unabated  and  no  deregulatory  relief  5 
 is  afforded  the  industry,  the  viability  of  free  over-  6 
 the-  air  TV  in  the  median  term  could  be  threatened.  7 
 Deregulation  for  networks  --  I  would  say  8 
 that  in  order  to  preserve  the  long  term  viability  of  9 
 the  broadcast  networks,  we  believe  the  FCC  should  10 
 relax  the  national  station  ownership  rule  to  50  11 
 percent.  12 
 In  the  past,  the  networks  have  relied  on  13 
 launching  cable  networks  and  syndication  to  prove  14 
 their  overall  TV  economics.  We  believe  these  options  15 
 will  prove  less  valuable  now,  given  the  oversupply  of  16 
 cable  inventory  and  static  demand  for  syndicated  17 
 product.  18 
 For  the  stations,  in  order  to  preserve  the  19 
 long  term  competitive  viability  of  the  local  stations,  20 
 we  believe  the  FCC  should  substantially  relax  or  21 
 eliminate  newspaper  broadcast  cross  ownership  rules,  22 
 given  newspapers  declining  circulation,  declining  ad  23 
 share  and  28  year  run  without  deregulation.  A  24 
 newspaper  broadcast  combination  also  has  potential  25 
140
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 141 
 local  and  public  service  benefits  as  well.  1 


 Also,  we  believe  the  substantial  relaxing  2 
 of  duopoly  rules  by  extending  this  option  to  smaller  3 
 TV  markets  who  are  operating  in  deficiencies  is  really  4 
 needed.  We  support  a  rule  that  focuses  on  cumulative  5 
 local  audience  shares  such  as  NAB's  10-  10  proposal,  6 
 First  Argyle's  30  percent  local  audience  share  7 
 proposal  and  triopolies  in  large  markets.  8 
 On  radio,  we  advocate  the  retention  of  the  9 
 FCC's  current  radio  market  definition  which  was  in  10 
 place  when  Congress  modified  the  local  radio  limits  in  11 
 1996.  Any  change  now  would  upset  the  congressional  12 
 scheme  and  potentially  introduce  new  anomalies.  13 
 Further,  a  change  in  market  definition  would  be  14 
 disruptive  to  the  acquisition  of  radio  properties,  15 
 relative  competitive  positions  of  radio  broadcasters,  16 
 disposition  of  radio  broadcasters  and  the  capital  17 
 markets.  18 
 Thank  you.  19 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Miller.  20 
 Mr.  Munson?  21 
 MR.  MUNSON:  Thank  you.  Good  afternoon  22 
 and  welcome  to  the  other  Virginia,  Commissioners.  We  23 
 have  the  Northern  Virginia  and  this  is  what  we  call  24 
 the  other  Virginia  here.  So  it's  good  to  have  you  25 
141
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 142 
 with  us.  1 


 My  name  is  Ed  Munson,  I'm  the  Vice  2 
 President  and  General  Manager  of  WAVY  and  WVBT-  TV  in  3 
 Norfolk,  Virginia.  We're  two  broadcast  TV  stations  4 
 licensed  to  the  Norfolk    Portsmouth  -  Newport  News,  5 
 Virginia  market.  6 
 My  testimony  today  is  basically  the  story  7 
 of  running  two  television  stations  in  the  market.  8 
 When  I  arrived  at  WAVY  in  1991  there  were  six  9 
 commercial  television  stations  operating  in  the  10 
 Norfolk  market.  The  two  independent  stations  were  11 
 struggling  for  survival.  My  recollection  is  that  12 
 neither  of  them  was  profitable  and  certainly  neither  13 
 of  them  had  an  appreciable  share  of  local  viewing  or  14 
 local  ad  revenue.  Despite  the  difficulties  faced  by  15 
 these  independents,  yet  another  station  went  on  the  16 
 area,  WVBT  and  it  was  launched  in  1992.  Needless  to  17 
 say,  with  those  two  struggling  independents  already  on  18 
 the  air,  there  really  wasn't  much  interest  in  WVBT  19 
 from  programmers,  advertisers  or  viewers.  The  station  20 
 was  able  to  muster  only  enough  initial  capital  to  21 
 build  a  minimal  technical  facility  whose  signal  could  22 
 reach  about  65  percent  of  the  homes  in  the  market.  23 
 Shortly  after  initiating  operations,  the  24 
 station  affiliated  with  the  Home  Shopping  Network.  25 
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 143 
 While  this  business  plan  enabled  the  licensee  to  get  1 


 on  the  air  and  with  a  small  positive  cash  flow,  the  2 
 station  really  wasn't  a  serious  competitor  for  viewers  3 
 or  a  significant  broadcast  voice  in  our  market.  The  4 
 solution  was  to  partner  with  another  local  station,  my  5 
 station,  WAVY,  the  NBC  affiliate.  In  January  1995,  we  6 
 entered  into  a  local  marketing  agreement  with  WVBT  7 
 through  which  WAVY  assumed  day  to  day  operations  of  8 
 the  station  under  the  licensee's  supervision.  9 
 In  May  of  1996,  we  relocated  the  station's  10 
 antenna  to  our  1,000  foot  tower  and  increased  its  11 
 power  to  5  million  watts,  for  the  first  time  reaching  12 
 every  home  in  the  market.  Because  of  those  technical  13 
 upgrades  and  the  station's  new  promotion  and  14 
 advertising  capabilities,  WAVY  was  also  able  to  land  a  15 
 network  affiliation  for  WVBT  with  a  fledgling  WB  16 
 Network  shortly  after  we  entered  into  the  LMA.  17 
 Through  WAVY's  programming  resources,  we  18 
 were  able  to  assemble  a  competitive  slate  of  19 
 syndicated  product  in  local  and  regional  sports  20 
 programming  the  other  stations  in  the  market  wouldn't  21 
 want  to  carry.  While  we  were  able  to  grow  our  share  22 
 of  local  advertising  in  the  market  from  zero  to  nearly  23 
 5  percent,  we  sustained  operating  losses  of  about  $2  24 
 million  before  becoming  cash  flow  positive  in  1998.  25 
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 In  1996,  we  were  approached  by  the  Fox  1 


 Television  Network  about  switching  WVBT's  network  2 
 affiliation  to  Fox.  Fox  had  undertaken  a  campaign  to  3 
 have  all  of  its  affiliates  carry  local  news  at  10  4 
 o'clock.  The  Fox  affiliate  in  Norfolk  had  declined  to  5 
 do  so.  It  wasn't  a  surprising  decision  for  a  single  6 
 station  with  virtually  no  news  infrastructure.  It  7 
 would  have  been  years,  if  ever,  before  the  10  o'clock  8 
 news  would  have  been  financially  viable  in  the  highly  9 
 competitive  Norfolk  market.  10 
 WAVY,  however,  was  already  producing  five  11 
 hours  of  local  news  a  day.  Adding  a  first  class  local  12 
 news  program  at  10  o'clock  could  be  undertaken  for  13 
 fairly  modest  capital  investment  and  increase  our  14 
 operating  costs  under  $1  million.  15 
 So  in  August  of  1998,  WVBT  became  the  Fox  16 
 affiliate.  At  that  time,  we  initiated  the  first  and  17 
 still  the  only  10  o'clock  broadcast  news  in  the  18 
 Norfolk  market.  This  newscast  which  was  initially  a  19 
 half  hour  is  now  45  minutes,  has  given  viewers  in  the  20 
 Norfolk  market  an  additional  news  option.  Moreover,  21 
 it  unquestionably  expanded  the  local  late  news  viewing  22 
 in  the  market.  WVBT's  newscast  has  recently  generated  23 
 a  Nielsen  rating  of  4.9  or  about  33,000  households.  24 
 Since  the  10  p.  m.  newscast  went  on  the  25 
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 air,  the  cumulative  total  news  viewing  in  late  news  1 


 viewing  has  grown  from  141,000  households  to  189,000  2 
 households  in  the  most  recent  rating  book,  an  increase  3 
 of  more  than  33  percent,  substantially  faster  than  the  4 
 market  was  growing.  5 
 Local  news  is  by  no  means  the  only  6 
 contribution  WVBT  has  made  to  the  Norfolk  media  7 
 marketplace.  In  addition  to  first  class  syndicated  8 
 programming,  we've  carried  a  wide  variety  of  local  9 
 sports  and  produced  a  substantial  amount  of  local  10 
 sports  and  public  affairs  programming.  And  because  of  11 
 WAVY's  resources,  an  investment  of  over  $4  million,  12 
 WVBT  has  been  able  to  construct  its  expensive  new  13 
 digital  television  facility  on  time  and  is  now  14 
 providing  Fox  widescreen  programming  to  the  market.  15 
 This  station  combination  is  emphatically  16 
 in  the  public  interest.  Many,  many  more  such  17 
 beneficial  combinations  are  being  precluded  by  the  18 
 actions  of  outdated  local  TV  ownership  rules.  This  is  19 
 particularly  true  in  smaller  markets  where  there  is  20 
 simply  inefficient  resources  to  support  more  than  one  21 
 or  two  high  quality  news  operations.  But,  as  my  22 
 experience  in  Norfolk  demonstrates,  the  current  rule  23 
 is  preventing  efficient  and  productive  combinations  24 
 and  suppressing  potentially  vital  new  local  voices  25 
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 146 
 even  in  the  top  50  markets.  1 


 I  urge  you  to  act  promptly  to  recognize  2 
 the  realities  of  the  new  local  media  marketplace  and  3 
 relax  the  local  station  ownership  rule  by  adopting  the  4 
 proposal  put  forth  in  the  comments  of  the  National  5 
 Association  of  Broadcasters  and  permit  common  6 
 ownership  of  any  two  stations  provided  that  no  one  has  7 
 more  than  a  10  percent  share  of  the  viewing  market.  8 
 Thank  you.  9 
 MR.  KRATTENMAKER:  Dr.  Owen?  10 
 DR.  OWEN:  Thank  you,  Mr.  Chairman,  11 
 Commissioners,  Mr.  Moderator.  I'm  an  economist  and  a  12 
 competition  economist.  I  was  once  chief  economist  of  13 
 the  Antitrust  Division  of  the  Justice  Department  and  14 
 I'm  here  to  talk  about  competition  because  that's  what  15 
 the  panel  is  supposed  to  be  about.  16 
 I  hope  after  discussing  competition  17 
 briefly  to  link  it  to  the  diversity  issues  that  you  18 
 face.  I  don't  --  I  think  the  localism  issues  are  19 
 impervious  to  logic,  so  I  won't  address  those.  20 
 Competition  obviously  is  an  important  goal  21 
 and  in  fact,  your  statute  that  requires  these  biennial  22 
 reviews  mentions  only  competition  and  not  diversity  in  23 
 the  context  of  what's  necessary  to  retain  the  rules  24 
 for  the  future.  25 
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 Competition  brings  benefits  to  consumers.  1 


 The  point  of  competition  is  to  benefit  consumers,  in  2 
 this  case,  viewers,  readers  and  listeners.  You  don't  3 
 write  on  a  blank  slate  here.  You  don't  need  to  invent  4 
 a  new  wheel  to  deal  with  competition  policy  analysis  5 
 when  you're  analyzing  proposed  mergers  in  the  mass  6 
 media.  There's  a  perfectly  adequate  widely  accepted  7 
 and  even  admired  paradigm  for  analyzing  mergers  and  8 
 that  is  the  merger  guidelines  that  are  used  as  a  9 
 method  of  analysis  by  both  the  Federal  Trade  10 
 Commission  and  the  Department  of  Justice.  11 
 The  Commission  has,  in  fact,  demonstrated  12 
 its  understanding  and  ability  to  use  their  analytical  13 
 tools  in  its  recent  decision  in  the  Echo  Star-  Direct  14 
 TV  merger.  So  I'm  not  suggesting  anything  novel.  You  15 
 don't  need  to  invent  a  new  way  to  think  about  these  16 
 things  from  the  point  of  view  of  competition  in  17 
 economic  markets.  By  economic  markets  I  mean  18 
 advertising  markets  and  consumer  markets  for  MBPV  19 
 services.  20 
 I  think  the  Commission  in  approaching  21 
 media  ownership  issues,  if  it's  going  to  pass  a  22 
 rationality  test  has  to  employ  an  approach  that  is  23 
 consistent  with  the  method,  not  necessarily  the  24 
 standard,  but  the  methods  in  the  merger  guidelines.  25 
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 148 
 And  there's  no  reason  to  try  and  do  it  in  a  different  1 


 way.  2 
 That  means  that  the  present  rules,  if  they  3 
 are  put  up  against  that  standard,  don't  make  any  4 
 sense.  They  don't  pass  a  rationality  test.  For  5 
 example,  when  you  apply  the  method  of  analysis  that's  6 
 used  in  the  merger  guidelines,  you're  not  likely  to  7 
 find  that  markets  are  always  defined  in  terms  of  8 
 technologies  or  means  of  broadcasting  or  frequencies.  9 
 They're  defined  in  terms  of  the  choices  that  consumers  10 
 have.  And  those  choices  can,  and  do,  cut  across  lots  11 
 of  different  technologies  and  methods  of  broadcasting.  12 
 So  any  rule  that  applies  only  to  television,  for  13 
 example,  prejudges  the  market  definition  appropriate  14 
 to  a  particular  merger  transaction  and  that  doesn't  15 
 make  any  sense.  You  can't  do  that  in  advance.  16 
 So  fixed  market  boundaries  as  reflected  in  17 
 rules  almost  by  definition  can't  pass  a  rationality  18 
 test.  Moreover,  even  if  they  did,  in  this  business,  19 
 market  boundaries  are  changing  quickly  and  have  been  20 
 changing  for  some  years,  so  a  rule  that  reflects  even  21 
 a  correct,  analytically  correct  analysis  of  where  the  22 
 market  boundaries  are,  will  be  out  of  date  and  as  we  23 
 all  know,  even  though  they  have  to  be  reviewed  every  24 
 two  years,  it's  hard  to  change  rules.  25 
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 The  final  thing  to  keep  in  mind  when  1 


 thinking  about  economic  markets,  advertising  markets  2 
 and  consumer  markets,  is  that  most  mergers,  the  vast  3 
 majority  of  mergers  are  beneficial,  that  is,  they  4 
 result  in  efficiencies  or  new  products  or  new  5 
 services.  In  the  economy  as  a  whole,  of  the  hundreds  6 
 and  hundreds  of  transactions  that  take  place  every  7 
 year,  only  a  tiny  fraction  of  them  raise  antitrust  8 
 concerns  and  they  are  quite  properly  reviewed  to  see  9 
 if  they  past  muster  under  the  antitrust  laws.  10 
 But  the  presumption  is  that  a  merger  is  11 
 pro-  competitive  absent  a  showing  by  the  government  12 
 that  it  isn't.  It  doesn't  go  the  other  way  around.  13 
 Now  the  Commission  can  apply  the  14 
 guidelines  or  its  own  version  of  the  guidelines  with  15 
 its  own  standards,  and  the  antitrust  authorities,  of  16 
 course,  have  an  obligation  to  do  the  same  thing.  That  17 
 would  result  in  a  certain  amount  of  duplication,  even  18 
 a  great  deal  of  duplication,  whether  that  duplication  19 
 is  wasteful  or  not  is  something  for  the  Commission  to  20 
 consider.  I  don't  offer  an  opinion  on  that.  21 
 If  you  apply  merger  guidelines  analysis,  22 
 economic  analysis  that's  designed  to  tell  whether  or  23 
 not  consumers  are  likely  to  be  injured  by  a  particular  24 
 merger,  based  on  the  facts  of  that  merger,  then  I  25 
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 150 
 think  you'll  find  that  your  diversity  concerns  are  1 


 also  addressed  automatically.  In  principle,  you  could  2 
 have  a  merger  that  reduced  diversity  unduly  even  3 
 though  it  didn't  offend  the  antitrust  laws,  didn't  4 
 reduce  competition.  5 
 MR.  KRATTENMAKER:  Your  time  has  expired.  6 
 Are  you  summarizing?  7 
 DR.  OWEN:  Yes.  I'll  stop  there.  8 
 MR.  KRATTENMAKER:  Okay,  thank  you.  Mr.  9 
 Rintels?  10 
 I'm  sorry,  this  is  not  part  of  your  time.  11 
 I  should  mention  here  again  that  one  of  the  things  12 
 we've  done  is  to  provide  opportunities  for  people  who  13 
 would  like  to  propose  questions  that  might  be  asked  of  14 
 the  panel.  There  are  cards  in  the  back  of  the  room,  15 
 if  you  want  to  write  a  question.  People  will  16 
 circulate,  pick  the  questions  up  and  we'll  --  there's  17 
 a  woman  over  there  with  her  hand  up.  We'll  bring  the  18 
 questions  up  to  me  and  if  there's  an  opportunity,  I  19 
 will  ask  them.  I've  already  got  several  for  this  20 
 panel,  but  I'd  be  happy  to  receive  more.  21 
 Excuse  me,  Mr.  Rintels.  22 
 MR.  RINTELS:  Thank  you,  as  a  Virginian,  a  23 
 native  Virginian,  I  want  to  thank  the  Commission  for  24 
 slogging  through  the  Old  Dominion  slush  to  be  here  25 
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 151 
 today  to  hear  our  thoughts  about  media  concentration.  1 


 My  name  is  Jonathan  Rintels.  I'm  a  screen  2 
 writer  and  the  executive  director  for  the  Center  for  3 
 the  Creative  Community,  a  nonprofit  that  conducts  4 
 research,  public  education  and  policy  development  on  5 
 behalf  of  the  tens  of  thousands  of  writers,  directors,  6 
 producers  and  performers,  who  create  America's  popular  7 
 and  literary  entertainment.  Numerous  winners  of  8 
 Oscars,  Emmys,  Tonys,  Peabodys  and  other  awards  for  9 
 creative  excellence  serve  on  our  Board  of  Advisors.  10 
 Today,  the  conventional  wisdom  is  that  a  11 
 500-  channel  universe  assures  viewpoints  from  a  12 
 diversity  of  sources  and  competition  in  the  13 
 marketplace  of  ideas.  But  as  respected  Wall  Street  14 
 analyst  Tom  Wolzien  concludes  in  his  research  study  15 
 dated  February  7th  and  entered  in  the  record  this  16 
 morning,  the  reality  of  today's  modern  median  17 
 environment  is  quite  different.  Five  corporations  18 
 with  their  broadcast  and  cable  networks  are  now  on  the  19 
 verge  of  controlling  the  same  number  of  television  20 
 households  as  the  Big  Three  broadcast  networks  did  40  21 
 years  ago.  22 
 In  the  past,  when  three  or  four  broadcast  23 
 networks  controlled  this  many  households,  the  24 
 Commission  protected  the  public's  interest  in  25 
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 152 
 competition,  the  marketplace  of  ideas  and  diversity  of  1 


 viewpoints  by  requiring  independent  production  of  2 
 programming.  But  today,  the  American  public  has  no  3 
 protection.  Data  in  this  record  prove  this  4 
 programming  oligopoly,  Wolzien's  term,  not  mine,  5 
 exists  both  in  the  distribution  and  production  of  6 
 programming.  For  example,  NBC  owns  outright  or  holds  7 
 a  significant  financial  interest  in  100  percent  of  the  8 
 new  series  on  its  schedule  this  season.  The  other  9 
 networks  are  not  far  behind.  Rather  than  compete  10 
 fairly  in  the  marketplace  of  ideas,  the  networks  11 
 leverage  their  control  of  the  publicly  owned  airways  12 
 to  take  over  television  program  production,  driving  13 
 small  businesses  and  creative  entrepreneurs,  many  of  14 
 whom  were  women  and  minorities,  out  of  business.  15 
 President  Bush  recently  said  small  16 
 business  owners  represent  the  enterprise  of  the  whole  17 
 nation  and  the  diverse  talents  of  our  people.  18 
 America's  economy  can  thrive  only  when  our  small  19 
 businesses  thrive.  Television  is  not  different.  The  20 
 near  extinction  of  creative  entrepreneurs  and  small  21 
 businesses  has  resulted  in  corporate  homogenized  bland  22 
 programming.  Even  network  executives  agree.  Their  23 
 quotes  are  in  this  record.  24 
 While  there  are  many  highly  regarded  shows  25 
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 153 
 such  as  "West  Wing"  nearly  all  are  independently  1 


 produced,  such  as  "West  Wing,  hold  overs  from  when  2 
 program  source  diversity  was  required.  The  networks  3 
 themselves  have  produced  little  to  take  their  place  as  4 
 evidenced  by  NBC's  decision  to  spend  $10  million  per  5 
 episode  of  one  more  seasons  of  "Friends."  6 
 Research  shows  many  Americans  receive  7 
 their  information  regarding  democracy,  politics,  news,  8 
 values,  history  and  culture  from  television  9 
 entertainment  programming.  Thus,  in  this  proceeding,  10 
 the  stakes  for  our  nation  are  far  higher  than  whether  11 
 we  will  all  be  doomed  to  a  future  of  bland  television.  12 
 When  promoting  the  wide  dissemination  of  information  13 
 from  a  multiplicity  of  sources  is  a  government  14 
 interest  of  the  highest  order,  Commission  action  is  15 
 indisputably  necessary  in  the  public  interest  as  the  16 
 law  requires.  17 
 Today's  internet  does  not  obviate  the  need  18 
 for  the  Commission  to  act.  The  same  programming  19 
 oligopoly  controls  the  most  visited  sites  on  the  net.  20 
 Moreover,  in  much  of  Virginia,  including  my  own  home,  21 
 broadband  is  a  distant  rumor.  Even  among  Virginia  22 
 families  fortunate  enough  to  have  broadband,  I've  yet  23 
 to  hear  of  any  that  microwave  popcorn  and  gather  24 
 around  the  computer  to  watch  internet.  They  watch  25 
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 154 
 television.  1 


 The  reemergence  of  the  programming  2 
 oligopoly  requires  that  the  Commission  create  a  new  3 
 program  source  diversity  rule  that  allows  independent  4 
 producers  access  to  network  schedules.  And  there's  no  5 
 question  the  Commission  has  the  power  to  create  this  6 
 rule  in  this  proceeding  as  the  Coalition  for  Program  7 
 Diversity  reply  comments  demonstrate.  Such  a  rule  8 
 will  meet  all  the  goals  of  the  Commission  in  this  9 
 proceeding.  It  will  provide  citizens  with  viewpoints  10 
 from  a  diversity  of  sources.  It  will  enhance  the  11 
 marketplace  of  ideas.  It  will  reflect  the  reality  of  12 
 the  modern  media  environment  in  which  the  re-  emerging  13 
 programming  oligopoly  is  eliminating  both  economic  and  14 
 creative  competition.  It  will  promote  participation  15 
 in  ownership  by  minorities,  women  and  small  businesses  16 
 in  television.  17 
 This  rule,  this  win-  win-  win  rule  will  also  18 
 withstand  future  judicial  scrutiny.  This  record  is  19 
 full  of  data  and  other  evidence  documenting  the  re-  20 
 emergence  of  this  programming  oligopoly  and  the  harm  21 
 it  has  caused.  As  with  the  Commission's  legal  22 
 authority  to  create  this  rule,  Judge  Posner  wrote  in  23 
 Schurz  Communications,  "The  Commission  could  always  24 
 take  the  position  that  it  should  carve  out  a  portion  25 
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 155 
 of  the  production  and  distribution  markets  and  protect  1 


 them  against  the  competition  of  the  networks  in  order  2 
 to  foster  a  diversity  of  programming  sources  and  3 
 outlets."  4 
 It  is  now  necessary  in  the  public  interest  5 
 for  the  Commission  to  take  that  position.  Promoting  6 
 the  widespread  dissemination  of  information  from  a  7 
 multiplicity  of  sources  is  the  government  interest  of  8 
 the  highest  order  in  this  proceeding.  Increasing  the  9 
 profits  of  a  handful  of  corporations  is  not.  10 
 Thank  you.  11 
 (Applause.)  12 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  13 
 Winston,  welcome  back  to  the  Commission.  14 
 MR.  WINSTON:  Good  afternoon,  Chairman  15 
 Powell,  Commissioner  Martin,  Commissioner  Abernathy,  16 
 Mr.  Copps,  Mr.  Adelstein.  Thank  you  for  inviting  me  17 
 to  discuss  the  Commission's  pending  rulemaking  18 
 proceeding,  examining  its  broadcast  ownership  rules.  19 
 I  also  thank  you  for  inviting  Alfred  Liggins,  a  20 
 distinguished  member  of  the  NABOB  Board  of  Directors  21 
 earlier  this  morning.  22 
 NABOB  is  a  trade  association  representing  23 
 the  interests  of  African-  American  owners  of  radio  24 
 stations  and  television  stations  and  cable  television  25 
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 156 
 systems  across  the  United  States.  NABOB  has  1 


 participated  in  this  proceeding  to  encourage  the  2 
 Commission  not  to  relax  further  its  multiple  ownership  3 
 rules.  Since  the  passage  of  the  Telecommunications  4 
 Act  of  1996  which  significantly  relaxed  the  5 
 Commission's  ownership  rules,  the  number  of  minority  6 
 owners  has  dropped  by  14  percent.  7 
 The  first  amendment  rights  of  all  8 
 Americans  to  receive  a  free  flow  of  news  and  comment  9 
 from  all  segments  of  the  population  will  be  damaged  if  10 
 minority  ownership  continues  to  be  squeezed  out  of  the  11 
 business.  12 
 The  Commission,  the  Congress  and  the  13 
 courts  have  historically  recognized  that  the  ownership  14 
 of  broadcast  stations  must  be  disseminated  among  a  15 
 wide  number  of  voices  to  assure  the  first  amendment  16 
 rights  of  the  American  public  are  protected.  17 
 In  its  comments  in  this  proceeding,  NABOB  18 
 has  cited  a  significant  amount  of  research,  19 
 demonstrating  that  minority  ownership  promotes  these  20 
 first  amendment  rights  by  providing  viewpoint  21 
 diversity  and  promoting  competition.  22 
 For  this  reason,  NABOB  has  proposed  in  its  23 
 comments  that  the  Commission  make  no  further  24 
 relaxation  of  its  rules.  Instead,  NABOB  has  proposed  25 
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 several  improvements  for  the  Commission's  existing  1 


 rules.  The  Commission  should  make  permanent  the  2 
 Commission's  interim  policy  for  processing  radio  3 
 assignment  of  license  and  transfer  of  control  4 
 applications.  The  Commission  should  improve  the  5 
 interim  policy  by  flagging  all  transactions  in  which  6 
 one  entity  will  control  40  percent  of  the  local  7 
 advertising  market  or  two  entities  will  control  60  8 
 percent  of  the  advertising  market  and  the  Commission  9 
 should  use  arbitron  markets  to  define  radio  markets  10 
 for  application  of  the  multiple  ownership  rule.  11 
 The  Commission  should  include  an  interim  12 
 policy,  a  review  of  the  impact  of  minority  ownership  13 
 of  flagged  transactions.  14 
 The  Commission  should  eliminate  its  policy  15 
 of  granting  6,  12  and  18  month  waivers  of  its  16 
 ownership  rules.  If  a  transaction  will  require  one  or  17 
 more  stations  to  be  spun  off,  the  parties  should  18 
 submit  an  application  to  spin  those  stations  off  at  19 
 the  time  the  transaction  is  filed.  20 
 The  Commission  should  treat  all  local  21 
 market  agreements  as  attributable  and  should  require  22 
 that  all  agreements  between  noncommonly  owned  same  23 
 market  stations  be  filed  with  the  Commission.  24 
 NABOB  has  also  requested  the  Commission  25 
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 support  reinstatement  of  the  minority  cash  1 


 certificate.  NABOB  commends  the  Commission  for  2 
 supporting  Senator  McCain's  Small  Business  Tax  3 
 Deferral  Bill.  We  hope  that  legislation  will  be  4 
 amended  to  specifically  promote  minority  ownership.  5 
 I  would  also  like  to  make  an  observation  6 
 concerning  one  of  the  studies  commissioned  by  the  7 
 Commission  in  this  proceeding.  In  that  study,  the  8 
 Commission's  researcher  measured  news  slanting  by  9 
 commonly  owned  television  stations  and  daily  10 
 newspapers.  This  study  is  startling  not  for  its  11 
 conclusions,  but  for  its  premise.  The  study  assumes  12 
 news  slanting  exists  and  is  a  measurable  phenomenon.  13 
 It  then  proceeds  to  measure  this  phenomenon.  14 
 Regardless  of  the  conclusions  reached  in  the  study,  15 
 the  study's  principal  values  demonstrate  that  news  16 
 slanting  exists.  The  existence  of  news  slanting  in  17 
 and  of  itself  requires  retention  of  the  Commission's  18 
 ownership  rules.  Once  we  accept  that  news  slanting  19 
 exists  as  a  measurable  phenomenon,  it  becomes  20 
 imperative  to  continue  the  Commission's  policy  of  21 
 ensuring  the  dissemination  of  ownership  control  of  the  22 
 nation's  airwaves  among  many  different  and  23 
 antagonistic  voices.  24 
 In  its  comments,  NABOB  cited  research  25 
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 showing  that  in  most  major  markets  the  market  leader  1 


 has  about  45  percent  of  advertising  revenues  and  the  2 
 top  two  firms  control  about  74  percent  of  advertising  3 
 revenue.  The  research  concluded  that  this  resulted  in  4 
 highly  concentrated  markets  with  Herfindahl  Hirschman  5 
 indices  exceeding  3,000  in  many  markets.  Thus,  NABOB  6 
 submits  that,  given  examples  such  as  Ann  Arbor  where  7 
 Clear  Channel  Communications  currently  has  over  86  8 
 percent  of  the  local  radio  advertising  market,  the  9 
 Commission  should  adjust  its  flagging  procedure  to  10 
 flag  transactions  which  would  result  in  a  single  11 
 entity  controlling  more  than  40  percent  of  market  12 
 revenues  or  two  entities  controlling  more  than  60  13 
 percent.  14 
 In  conclusion,  I  would  like  to  note  that  15 
 the  principal  issue  before  the  Commission  in  this  16 
 proceeding  is  what  level  of  industry  consolidation  17 
 should  be  permitted  when  the  Commission  balances  its  18 
 often  conflicting  goals  of  promoting  diversity,  19 
 competition  and  localism.  NABOB  submits  that  in  20 
 reaching  a  determination  of  how  to  balance  these  21 
 competing  interests,  the  Commission  should  note  that  22 
 diversity  and  localism  are  the  only  two  first  23 
 amendment  considerations  falling  into  that  balance.  24 
 The  promotion  of  first  amendment  rights  is  the  25 
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 Commission's  principal  obligation  and  in  the  end,  the  1 


 promotion  of  diversity  and  localism  must  take  2 
 precedence  over  the  promotional  competition.  3 
 Thank  you.  4 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  5 
 Chairman,  if  I  may,  I  think  I'm  going  to  usurp  the  6 
 prerogative  of  being  moderator  and  ask  the  first  7 
 question.  And  the  reason  for  that  is  that  I  have  here  8 
 a  stack  of  cards  from  the  audience  all  of  which  ask  9 
 essentially  the  same  question  in  different  phrase  and  10 
 I  think  we  should  start  with  this  question.  I'm  going  11 
 to  particularly  direct  it  at  Ms.  Foley  and  Professor  12 
 Croteau,  but  I  welcome  comments  from  anybody.  As  13 
 somebody  who  taught  antitrust  for  a  while,  I  was  not  14 
 surprised  by  this.  15 
 How  exactly  is  competition  enhanced  by  16 
 removing  the  number  of  competitors?  That's  the  way  it  17 
 was  put  on  one  of  these  cards.  And  I  think  that's  the  18 
 question  that's  on  the  minds  of  many  in  the  audience.  19 
 I'd  like  to  say  we  went  alphabetically.  20 
 As  a  result  of  that,  we  had  three  different  responses  21 
 to  that  already  from  the  middle  of  the  panel.  22 
 Bruce  Owen  has  told  us  that  if  you  take  a  23 
 competition  focus,  that  means  you're  looking  at  the  24 
 welfare  of  consumers  or  people  who  buy  advertising  and  25 
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 161 
 it  may  oftentimes  be  the  case  that  a  merger  just  1 


 doesn't  harm  those  interests  because  it  doesn't  give  2 
 anyone  power  to  raise  prices.  3 
 Mr.  Munson  said  that  sometimes  what  a  4 
 merger  can  do  is  it  can  rescue  an  otherwise  nonviable  5 
 firm.  It  can  provide  resources  that  another  firm  6 
 might  not  have  had.  It  can  bring  somebody  from  a  home  7 
 shopping  network  to  being  a  network  affiliate.  8 
 Mr.  Miller  says  that  the  way  competition  9 
 can  be  enhanced  by  having  fewer  firms  is  that  free  10 
 over-  the-  air  broadcasting  is  threatened  by  a  number  of  11 
 economic  factors,  all  of  which  require  some  level  of  12 
 consolidation  if  it's  going  to  survive  in  the  face  of  13 
 these  competing  new  media.  14 
 Those,  in  sum,  are  the  kinds  of  answers  15 
 that  some  of  our  panelists  have  given  and  I  wanted  16 
 particularly  to  ask  my  wing  people,  whether  you  agreed  17 
 with  that  or  whether  instead  you  do  take  the  position,  18 
 it  would  be  a  perfectly  respectable  position  that  19 
 competition  is  the  number  of  people  in  a  market  and  20 
 reducing  that  number  just  simply  reduces  competition.  21 
 Professor?  22 
 DR.  OWEN:  I  think  one  of  the  interesting  23 
 issues  here  that  is  coming  up  today  is  the  24 
 interrelated  nature  of  diversity,  competition  and  25 
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 162 
 localism,  the  fact  that  you  can't  simply  isolate  these  1 


 things.  They  are  interrelated.  And  so  when  we're  2 
 talking  about  what  is  competition,  it's  not  just  pure  3 
 numbers,  obviously.  We  can't  say  in  all  cases  that  4 
 more  necessarily  means  better  content.  The  recent  5 
 study  from  the  Project  for  Excellence  in  Journalism,  6 
 for  example,  showed  that  in  fact  when  it  comes  to  TV  7 
 news,  local  news,  smaller  broadcast  groups  had  better  8 
 content  in  terms  of  serving  the  local  community  than  9 
 larger  ones  did.  10 
 However,  at  the  same  time  they  also  11 
 realized  that  sometimes  groups  do  better  than  12 
 individual  stations  because  they  have  more  resources  13 
 and  so  forth.  And  so  this  issue  of  competition  is  not  14 
 directly  tied  to  the  number  of  entities  competing.  15 
 You  have  to  look  at  the  nuances  in  all  of  that,  but  I  16 
 think  that  message  that  once  you  get  to  a  certain  17 
 level,  larger  and  larger  companies  are  not  going  to  18 
 help  us  in  terms  of  diversity  and  localism.  19 
 MR.  KRATTENMAKER:  Thank  you.  Ms.  Foley,  20 
 would  you  like  to  comment?  21 
 MS.  FOLEY:  Yes,  just  briefly.  First  of  22 
 all,  I  come  from  a  journalism  background  and  I  come  23 
 from  a  news  background  and  so  I  do  care  very  much  24 
 about  localism  and  much  less  about  pure  competition.  25 
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 163 
 And  I  think  that  when  it  comes  to  news  and  when  it  1 


 comes  to  reporting  the  news  and  setting  the  local  2 
 news  agenda  it  very  much  depends  upon  the  number  of  3 
 players.  Because  if  you  don't  have  competing  4 
 antagonistic  sources,  you're  going  to  have  one  entity  5 
 or  few  entities  setting  the  news,  so  anybody  who's  6 
 ever  worked  in  a  newsroom  notes  that  competition  is  7 
 what  drives  the  news  agenda.  It's  what  drives  8 
 reporters  to  go  out  there  and  beat  the  competition,  to  9 
 scoop  their  fellow  reporters.  So  I  think  from  my  10 
 perspective,  it  absolutely  does  matter.  11 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  12 
 Rintels,  did  you  want  to  comment?  13 
 MR.  RINTELS:  With  regard  to  the  14 
 nationwide  rules,  I  know  the  Commission  has  asked  in  15 
 its  notice  of  rulemaking  whether  it  dare  say  the  dual  16 
 network  rule  if  two  networks  would  merge  together  17 
 whether  they  would  then  discretely  target  programming  18 
 to  one  audience  on  one  network  and  one  audience  on  19 
 another  network  because  that  would  be  in  their  20 
 competitive  interests.  21 
 Prior  history  has  shown  that  that's  not  22 
 the  reality  at  all,  that  when  CBS  and  UPN  were  under  23 
 common  Viacom  ownership  that  UPN  simply  reran  CBS  24 
 programming  rather  than  get  original  programming  for  25 
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 164 
 its  own  discrete  audience.  And  the  same  occurs  with  1 


 Mothership  Broadcast  ABC  network  than  being  rerun  on  2 
 satellite  ABC  Family  and  other  networks  owned  by  the  3 
 same  parent  company.  4 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  5 
 Winston,  did  you  want  to  comment?  6 
 MR.  WINSTON:  Yes.  I  just  wanted  to  say  7 
 that  as  was  pointed  out  a  minute  ago,  the  issues  8 
 addressed  by  the  Commission  here,  localism,  diversity,  9 
 competition,  are  interrelated.  They  can't  be  10 
 separated  out.  And  depending  upon  how  you  define  11 
 competition,  it  requires  diversity  and  localism  and  12 
 it's  not  something  that  can  be  separated  out  as  simply  13 
 as  might  be  suggested  by  someone  from  the  panel.  14 
 MR.  KRATTENMAKER:  Dane,  can  you  remind  us  15 
 when  are  we  shooting  for  public  mike  comments?  16 
 MR.  SNOWDEN:  We're  shooting  at  2  o'clock.  17 
 MR.  KRATTENMAKER:  We'll  go  somewhat  18 
 beyond  that.  I've  been  keeping  you  from  the  19 
 Commissioners  for  a  long  time.  I  shouldn't  do  that  20 
 anymore.  I  should  turn  this  over  to  the  21 
 Commissioners.  22 
 COMMISSIONER  ADELSTEIN:  I  had  a  question  23 
 for  Mr.  Owen  and  maybe  Professor  Croteau,  you  could  24 
 follow  up  on  this.  25 
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 165 
 We're  both  Stanford  men.  It's  good  to  1 


 have  you  here.  I  was  in  the  History  Department.  2 
 You're  over  at  Economics  and  they're  not  that  far  3 
 apart  in  the  quad,  but  it  seems  like  they're  miles  4 
 away  here  because  I  have  a  different  reading  of  the  5 
 statute  than  you  do  as  far  as  what  it  means.  6 
 You  said,  if  I  understood  you  correctly,  7 
 that  it  was  about  competition,  the  new  standard,  but  8 
 if  you  look  at  the  broader  context  it  said  whether  9 
 it's  in  the  public  interest  in  light  of  competition.  10 
 So  we  look  at,  as  a  historian  or  somebody  is  looking  11 
 at  the  legal  history  of  this,  the  Agency  traditionally  12 
 has  looked  at  the  public  interest  as  being  about  13 
 competition  and  localism  and  diversity.  14 
 So  I'd  be  curious  if  you  really  believe  15 
 that  we  don't  have  to  look  at  those  two  as  issues  in  16 
 the  public  interest,  and  then  if  you  could  explain  17 
 that  in  light  of  the  example  that  we  heard  about  the  18 
 Richmond  experience,  since  that's  the  one  local  19 
 example  that  we  have,  as  whether  or  not  the  public  20 
 interest  was  served  in  this  case.  I  don't  think  you  21 
 believe  it  was.  I'd  like  to  hear  your  response  to  22 
 that.  23 
 DR.  OWEN:  I  think  this  is  the  way  legal  24 
 points  should  be  debated,  between  economists  and  25 
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 166 
 historians.  1 


 (Laughter.)  2 
 The  public  interest  means  whatever  the  3 
 Commission  says  it  means.  And  then  the  courts,  of  4 
 course  5 
 I  think  that  it's  a  perfectly  sensible  6 
 thing  to  worry  about  diversity  from  a  competition  7 
 point  of  view  because  you  can  think  about  the  8 
 marketplace  of  ideas  metaphor,  using  the  same  tools  9 
 that  you  do  to  think  about  economic  marketplaces.  How  10 
 many  competitors  are  there,  how  many  sources  are  11 
 there,  what  are  the  barriers  to  entry,  what  12 
 alternatives  are  available  to  consumers?  13 
 I  think  if  you  do  that,  what  you  discover  14 
 is  that  the  choices  available  to  consumers  are  far  15 
 wider  than  the  choices  available  to  advertisers  and  as  16 
 a  result,  markets  in  the  marketplace  of  ideas  are  17 
 going  to  be  defined  much  more  broadly.  And  therefore,  18 
 if  you  worry  about  economic  concentration,  economic  19 
 markets,  you'll  automatically  take  care  of  in  most  20 
 cases,  automatically  take  care  of  your  diversity  21 
 concerns.  22 
 The  other  thing  that  I  would  say  about  23 
 that  is  that  measuring  market  shares  in  the  24 
 marketplace  of  ideas  requires  you  to  treat  each  source  25 
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 167 
 equally  and  not  to  weight  them  by  their  current  1 


 popularity.  The  point  of  the  first  amendment  is  to  2 
 make  sure  that  unpopular  ideas  have  access  to  the  3 
 public.  The  public  has  choices.  In  antitrust,  there  4 
 are  certain  markets  where  you  give  every  competitor,  5 
 despite  their  current  market  share  equal  weight.  And  6 
 I  think  the  same  principles  should  apply  when  you're  7 
 measuring  concentration  in  the  marketplace  of  ideas.  8 
 After  all,  the  popularity  of  a  given  media  9 
 outlet  is  a  demand  side  phenomenon.  It's  what  people  10 
 like  to  get,  like  to  read,  like  to  watch.  It  has  11 
 nothing  to  do  with  the  popularity  of  the  source.  The  12 
 unpopular  idea  that  we're  trying  to  protect  is  by  13 
 definition  got  a  small  audience.  It's  unpopular.  14 
 I  probably  used  up  more  than  my  share  of  15 
 time  here.  16 
 MR.  KRATTENMAKER:  Commissioner  Copps?  17 
 COMMISSIONER  COPPS:  Yes,  I'd  like  to  ask  18 
 Mr.  Winston  --  19 
 MR.  CROTEAU:  I'm  sorry,  I  was  asked  to  20 
 respond.  21 
 COMMISSIONER  COPPS:  My  mistake,  excuse  22 
 me.  23 
 MR.  CROTEAU:  As  we  all  know,  there's  24 
 often  the  --  25 
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 [END  TAPE  3,  SIDE  A;  BEGIN  TAPE  3,  SIDE  1 


 B.]  2 
 --  my  concern  here  is  that  there's  too  3 
 much  discussion  about  creating  formulas,  whether  4 
 they're  economic  formulas  or  otherwise  that  help  to  5 
 dictate  public  policy  and  I  think  we  have  to  6 
 understand  economic  formulas,  formulas  to  measure  7 
 competition  in  the  marketplaces  and  so  forth,  are  8 
 useful  tools.  But  they  are  part  of  a  broader  tool  kit  9 
 that  we  need  to  use,  some  of  which  has  to  do  with  10 
 experience  and  some  common  sense  to  be  blunt  about  it.  11 
 And  when  you  look  at  particular  cases,  how  12 
 this  actually  works  and  particular  markets,  what  13 
 actually  happens  in  localities  and  I  think  that's  why  14 
 these  sorts  of  hearings  are  so  important  to  hear  those  15 
 stories,  you  find  that  a  decline  in  numbers  does  mean  16 
 something  to  those  communities  because  it  does  mean  a  17 
 loss  of  competition  very  often  and  consequently  that  18 
 translates  into  a  loss  of  local  content,  a  loss  of  19 
 diversity  and  so  on.  20 
 And  so  we  have  to  supplement,  I  think,  the  21 
 economic  theory  with  some  other  types  of  information  22 
 that,  in  my  opinion,  are  just  as  valid.  23 
 MR.  KRATTENMAKER:  Thank  you,  and  pardon  24 
 me.  Commissioner  Copps.  25 
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 169 
 COMMISSIONER  COPPS:  Mr.  Winston,  we  heard  1 


 earlier  in  the  panel  earlier  today  that  a  number  of  2 
 radio  station  owners  has  dropped  by  over  a  third  since  3 
 1996.  You  pointed  out  in  your  eloquent  testimony  the  4 
 number  of  minority  owners  has  decreased  by  13  percent.  5 
 I'm  hearing  this  from  so  many  groups  that  minorities  6 
 are  now  under  represented  in  ownership  and  are  poorly  7 
 represented  by  the  media  and  programming.  I'm  hearing  8 
 it  from  your  organization  and  the  National  Association  9 
 of  Black  Owned  Broadcasters.  I'm  hearing  it  from  the  10 
 Minority  and  Media  in  Telecommunications  Council.  11 
 Rainbow,  PUSH  and  National  Association  of  Hispanic  12 
 Journalists,  Church  of  Christ,  Women's  Institute  for  13 
 Freedom  of  the  Press.  It  goes  on  and  on.  I'm  also  14 
 hearing  that  advertisers  say  that  stations  are  15 
 ignoring  minority  communities  that  are  critical  target  16 
 markets  for  their  products.  17 
 I  gather  what  you're  saying  is  not  only  18 
 don't  abolish  these  rules,  but  you're  saying  we  have  19 
 pretty  much  reached  the  limit  of  what  we  can  tolerate  20 
 in  changing  the  rules.  I  know  I've  talked  to  a  lot  of  21 
 members  in  your  group,  as  individuals,  and  some  of  22 
 them  have  done  pretty  well  for  themselves  in  the  world  23 
 of  the  media,  but  so  many  of  them  tell  me  that  in  the  24 
 increasingly  consolidated  environment  right  now,  they  25 
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 170 
 could  not  replicate  the  progress  that  they  made.  They  1 


 wouldn't  be  where  they  are  if  they  were  starting  out  2 
 right  now.  3 
 Could  you  comment  on  that  and  also  on  the  4 
 question  do  you  think  we  have  really  reached  the  limit  5 
 on  as  far  as  we  can  go  on  some  of  these  rules  insofar  6 
 as  the  impact  on  diversity  is  concerned?  7 
 MR.  WINSTON:  Well,  certainly  in  the  radio  8 
 area.  NABOB  has  focused  primarily  its  comments  in  9 
 this  proceeding  on  the  radio  area  because  we  have  10 
 significant  number  of  stations  that  are  owned  by  11 
 minorities.  We  have  240  stations  that  are  owned  by  12 
 African-  Americans  in  the  radio  industry.  In  13 
 television,  there  are  only  20  television  stations,  14 
 some  of  them  are  fairly  marginal  stations.  It's  15 
 probably  too  late.  The  industry  continues  to  16 
 consolidate.  Even  if  you  hold  the  line  on  your  TV  17 
 rules,  minorities  just  do  not  have  an  opportunity  to  18 
 buy  into  that  business.  19 
 In  radio,  as  you  pointed  out,  Radio  One  is  20 
 our  shining  star.  They're  the  folks  that  we  all  look  21 
 up  to  and  say  we  can  do  that  one  of  these  days.  But  22 
 the  reality  is  that  most  minority  owners  are  not  going  23 
 to  be  able  to  do  what  Radio  One  has  done.  And  many  24 
 are  trying.  But  what  we  have  found  is  that  the  25 
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 171 
 consolidation  rules,  the  Clear  Channels  of  the  world,  1 


 the  Citadels,  the  Affinitys  have  too  much  of  a  head  2 
 start.  3 
 I  have  current  owners  who  call  me  all  the  4 
 time,  "I  bid  for  a  station,  Cumulus  outbid  me,  Citadel  5 
 outbid  me,  Clear  Channel  outbid  me."  So  that  with  no  6 
 national  cap,  it's  very  difficult  to  see  how  we're  7 
 going  to  be  able  to  continue  to  grow  as  owners  and  8 
 further  relaxation  of  the  rules  only  makes  it  worse.  9 
 COMMISSIONER  COPPS:  That's  a  really  10 
 dramatic  statement  that  everybody  in  this  audience  11 
 ought  to  pause  to  think  about.  It's  already  too  late  12 
 for  the  television  and  the  radio  situation  in  that  13 
 dire  situation  too.  Where  we  are  right  now,  without  14 
 further  relaxing  the  rules.  If  that's  not  a  big  red  15 
 stop  sign,  it's  still  cautionary  in  light  of  the  first  16 
 magnitude.  17 
 Does  somebody  else  want  to  comment?  18 
 MR.  VICTOR  MILLER:  I  just  want  to  say  19 
 that  let's  not  forget  that  since  1996  Salem,  a  20 
 Christian  broadcaster  who  is  now  a  public  company.  21 
 They  weren't  before  that.  Entrevision,  an  owner  of  22 
 Spanish  language  newspapers,  magazines,  outdoor  and  23 
 television  stations  is  now  a  public  company.  They  24 
 weren't  before,  1996.  Radio  One  was  not  a  public  25 
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 172 
 company.  Spanish  Broadcasting  was  not  a  public  1 


 company.  PAX,  a  Christian  television  broadcaster  is  2 
 also  in  the  marketplace.  So  you  can  --  some  certain  3 
 broadcasters  have  taken  advantage  of  the  capital  4 
 markets,  like  Alfred  said  this  morning,  decided  that  5 
 the  rules  had  changed.  They  got  in  the  game.  They  6 
 went  into  the  public  markets  and  they  are  now  very  7 
 viable  public  companies  buying  stations  along  with  8 
 everybody  else  and  outfitting  a  lot  of  other  9 
 broadcasters  for  properties.  10 
 So  there  has  been  some  benefit.  We  do  11 
 have  five,  six  public  companies  that  didn't  exist  12 
 before  the  rules.  13 
 COMMISSIONER  COPPS:  I  think  Mr.  Liggins  14 
 made  it  pretty  clear  this  morning  that  was  kind  of  a  15 
 question  of  fortuitous  timing  and  taking  advantage  of  16 
 some  of  the  programs  that  we  had  at  the  Commission  and  17 
 what  I'm  hearing  from  Mr.  Winston's  members  is  trying  18 
 to  replicate  that  is  very  difficult.  19 
 Let  me  ask  you  another  question.  Mario  20 
 Gabelli  (Phonetic)  who  is  known  for  his  media  21 
 expertise  is  predicting  pretty  widely  that  there's  22 
 going  to  be  a  rush  of  takeovers  and  combinations  in  23 
 broadcasting  and  newspapers  if  we  significantly  change  24 
 these  rules.  You're  an  expert  analyst,  but  I'd  like  25 
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 173 
 other  people  to  chime  in  on  this  too.  1 


 What  do  you  think  is  going  on  out  there  2 
 right  now  if  we  would  eliminate  some  of  these  caps?  3 
 Would  we  have  a  rush  to  consolidation  or  --  what  do  4 
 you  foresee  and  what  do  some  of  your  analysts  see  down  5 
 there?  6 
 MR.  VICTOR  MILLER:  The  bottom  line  is  I  7 
 think  that  the  Federal  Communications  Commission  has  8 
 actually  sold  itself  short  on  how  hideously  successful  9 
 some  of  its  changes  have  been  in  the  marketplace.  10 
 If  you  look  at  newspaper  broadcast  cross  11 
 ownership,  which  has  been  around  for  28  years,  no  12 
 relaxation  of  that,  look  at  the  Atlanta  Journal  13 
 Constitution,  the  Dallas  Morning  News,  the  Chicago  14 
 Tribune,  some  of  the  preeminent  newspapers  in  the  15 
 United  States  of  America.  They  have  owned  TV  stations  16 
 in  the  same  markets.  If  you  actually  look  at  the  17 
 quality  of  those  newspapers,  it  is  undeniably  good.  18 
 Now  if  you  look  at  the  television  stations  where  19 
 there's  co-  ownership  where  they  have  newspapers  and  20 
 television  stations,  on  average,  that  local  news  beats  21 
 competitors  in  that  marketplace  by  almost  60  percent  22 
 and  the  third  place  operator  by  200  percent  in  the  23 
 early  news,  where  there's  no  influence  from  prime  time  24 
 viewing  whatsoever,  because  of  the  quality,  the  25 
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 174 
 increased  quality  that  they  can  bring  to  the  paper  and  1 


 the  newspaper  at  the  same  time.  2 
 Now  in  terms  of  the  radio,  60  percent  of  3 
 the  radio  stations  were  basically  not  profitable  in  4 
 1991.  Now  you  have  a  situation  where  the  market  is  5 
 completely  stabilized.  You've  done  a  great  job.  6 
 There's  been  9,000  stations  that  have  transferred  7 
 hands  to  $120  billion  worth  of  acquisitions  and  it's  8 
 been,  I  think,  a  very  great  success.  9 
 Duopoly.  You  want  to  talk  about  duopoly.  10 
 Sixty-  five  percent  of  all  duopolies,  those  stations  11 
 earn  less  than  5  percent  of  the  revenue  share  and  80  12 
 percent  of  the  duopoly  are  related  to  the  new  13 
 networks.  Telepature  (Phonetic),  UPN,  WB,  Univision,  14 
 Fox,  they  gave  birth  to  all  that,  to  a  very  viable  and  15 
 robust  and  large  station  group.  16 
 And  lastly,  on  the  retransmission  consent  17 
 rules  which  you  guys  changed  in  1993,  that's  added  a  18 
 tremendous  number  of  new  cable  networks  and  we  talked  19 
 about  diversity  in  that  last  panel.  I  just  want  to  20 
 remind  you  the  first  20  weeks  of  this  year,  one  third  21 
 of  all  the  audience  every  night  is  watching  A&  E,  ESPN,  22 
 History  Channel,  Lifetime,  American  Movie  Classics,  23 
 Bravo,  CNBC,  MSNBC,  Fox  News,  TVFoodNet,  Home  and  24 
 Garden,  Cartoons,  CNN  Headline  News,  Black  25 
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 175 
 Entertainment  Television,  Nickelodeon.  That's  a  third  1 


 of  the  viewers  and  how  can  you  say  that  a  lot  of  those  2 
 networks  aren't  the  kind  of  programming  that  you'd  3 
 like  our  children  to  sit  down  and  watch?  4 
 COMMISSIONER  COPPS:  That  was  not  my  5 
 question.  My  question  is  --  6 
 MR.  VICTOR  MILLER:  No,  I  understand.  7 
 COMMISSIONER  COPPS:  Sitting  here  trying  8 
 to  judge  what  are  the  results  going  to  be,  what  kind  9 
 of  a  mad  rush  to  consolidation  are  we  going  to  see?  10 
 MR.  VICTOR  MILLER:  You're  going  to  see  11 
 increased  duopoly.  You're  going  to  see  increased  12 
 newspaper  broadcast  cross  ownership  because  of  the  13 
 benefits  we've  run  through.  The  marketplace  compels  14 
 change  --  15 
 COMMISSIONER  COPPS:  We  can  debate  the  16 
 benefits  and  the  negatives  later  on.  We  need  to  do  17 
 that  before  we  make  a  decision.  I'm  just  trying  to  18 
 see  what  the  market  says.  You're  a  guy  from  the  19 
 market.  You  understand  the  market  and  you're  telling  20 
 me  that  there  is  going  to  be  significant  additional  21 
 consolidation  if  we  significantly  change  the  rules?  22 
 MR.  VICTOR  MILLER:  When  you  have  28  years  23 
 of  no  rule  change,  there  will  be  some  changes  in  24 
 newspaper  and  broadcast.  I  don't  think  it's  going  to  25 
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 176 
 be  a  mad  rush,  no,  I  don't  think.  1 


 COMMISSIONER  COPPS:  Mr.  Rintels,  you  2 
 wanted  to  comment?  3 
 MR.  RINTELS:  I  did.  I'm  not  a  man  of  the  4 
 markets,  but  Tom  Wolzien  is  and  in  his  study  which  I  5 
 referred  to  earlier,  he  pointed  out  that  if  the  6 
 national  ownership  TV  audience  ownership  cap  is  7 
 lifted,  or  relaxed,  that  there  will  be  a  mad  rush  to  8 
 buy  up  local  affiliates  and  that  will  occur  9 
 particularly  where  there's  overlap  with  Comcast  or  one  10 
 of  the  other  big  cable  providers  because  the  networks  11 
 will  then  use  the  retransmission  consent  for  the  cable  12 
 operator  to  use  that  local  station  as  a  baseball  bat  13 
 to  force  them  to  take  their  other  cable  channels  or  to  14 
 move  their  other  cable  channels  up  a  tier  or  into  the  15 
 more  basic  level  of  service.  16 
 And  this  is  something  that  really  hasn't  17 
 been  explored,  at  least  as  far  as  I  can  see  in  the  18 
 comments,  that  that  cap  is  important  in  terms  of  19 
 programming  diversity  and  staving  off  the  programming  20 
 oligopoly.  21 
 COMMISSIONER  COPPS:  Thank  you.  22 
 MR.  KRATTENMAKER:  I  was  going  to  move  to  23 
 Chairman  Powell,  but  if  you  wanted  to  --  24 
 CHAIRMAN  POWELL:  I  just  wanted  to  make  a  25 
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 177 
 couple  of  quick  points.  I  thought  what  we  were  here  1 


 to  do  is  to  find  out  what  the  benefits  and  detriments  2 
 of  possible  changes  would  be.  That  is  the  ultimate  3 
 question.  I  think  what  the  panel  seems  to  universally  4 
 agree  with  and  if  they  don't,  I  find  it  fantastic,  is  5 
 that  any  given  combination  could  be  good  or  it  could  6 
 be  bad  for  consumers.  The  only  thing  we  should  care  7 
 about  is  if  it's  good  for  consumers  or  bad  for  8 
 consumers.  There  are  a  lot  of  groups  who  may  not  9 
 benefit  from  a  combination,  but  the  one  that  we  care  10 
 principally  about  is  for  consumers.  And  I  think  it  is  11 
 relevant,  whether  any  changes  that  take  place  would  be  12 
 changes  that  are  positive  for  the  consuming  public.  I  13 
 think  that  it's  completely  legitimate  to  point  out  the  14 
 detriments  that  could  follow,  but  I  think  as  Mr.  15 
 Munson  pointed  out,  other  people  can  also  postulate  16 
 anecdotes  where  consumers  came  out  better  as  a  17 
 consequent  of  the  market  structure  change.  18 
 What  the  government's  job  is  to  do  is  to  19 
 have  a  mechanism  to  filter  the  one  from  the  other  and  20 
 that's  really  what  we're  trying  to  do,  not  just  win  a  21 
 debate  on  whether  consolidation  is  bad  or  not.  Even  22 
 in  and  of  itself.  Of  course,  it's  both.  It  depends.  23 
 The  other  thing  is  I  think  that  we  have  to  24 
 accept  certain  realities.  25 
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 178 
 Mr.  Winston,  the  truth  is,  I  think,  in  1 


 radio  that  the  percentage  of  minority  ownership  has  2 
 actually  increased  principally  because  of  Mr.  Liggins'  3 
 company  over  all  in  the  last  few  years  and  they're  4 
 taking  advantage  of  the  same  dynamics  that  other  5 
 people  are  taking  advantage  of  to  be  successful.  It's  6 
 not  enough.  I'm  one  of  the  biggest  supporters  of  7 
 minority  ownership  policy  of  anyone  as  you  know,  but  8 
 it  is  a  change  in  the  marketplace  and  it's  real.  9 
 There's  an  enormous  increase  in  Spanish  language  10 
 programming  that  has  occurred  in  the  last  few  years.  11 
 One  of  the  things  that  I'm  going  to  throw  12 
 open  wide  as  a  question  because  Professor,  I  think  you  13 
 alluded  to,  which  is  actually  one  of  the  concerns  that  14 
 I  have,  it's  near  the  end  you  briefly  suggested  even  15 
 noncommercial.  16 
 Now  a  lot  of  what  I  hear  today  which  is  17 
 very  informative  to  me  suggests  that  one  of  the  18 
 problems  isn't  so  much  big,  isn't  so  much  corporate,  19 
 but  that  it's  commercial,  but  anything  by  definition  20 
 that's  commercial  is  profit  seeking.  I  don't  know  how  21 
 to  differentiate  between  more  meritorious  groups,  but  22 
 some  of  the  independent  producers  we're  talking  about  23 
 are  Sony  Pictures  or  Carsey-  Warner.  These  are  not  24 
 small,  independent  little  guys  seeking  and  they're  not  25 
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 179 
 doing  it  for  free.  I  commend  them  just  as  I  commend  1 


 any  writer  or  producer,  but  we  should  put  on  the  2 
 record  there  are  very  few  people  who  are  doing  this  3 
 business  not  for  business.  4 
 But  it  seems  to  me  one  of  the  things  5 
 that's  very  unique  in  the  American  system  is  that  our  6 
 television  system  is  almost  totally  commercial.  Most  7 
 democracies  deal  with  this  threat  to  democracy  by  8 
 having  government-  sponsored  programming,  whether  it  be  9 
 the  BBC  or  those  kinds  of  programming  in  which  10 
 individuals  are  taxed  and  in  the  case  of  the  U.  K.  $150  11 
 roughly  a  year  to  support  a  medium  that  doesn't  have  12 
 to  be  bound  by  these  commercials.  13 
 So  I'm  curious  that  if  people  think  the  14 
 biggest  problem  in  the  United  States  is  that  as  long  15 
 as  we  have  strong  commercial  incentives  for  the  16 
 production  of  what  we  do  and  see,  exclusively,  we'll  17 
 always  have  this  problem  and  that  maybe  a  greater  18 
 commitment  to  public  broadcasting  or  forms  of  public  19 
 broadcasting  is  one  of  these  things  this  country,  the  20 
 government  ought  to  put  more  stock  in.  21 
 I  heard  you  mention  that  in  passing,  could  22 
 you  --  23 
 MR.  KRATTENMAKER:  I  just  have  to  24 
 interject.  I  have  the  sense  that  most  people  on  the  25 
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 180 
 panel  would  like  to  speak  to  that  so  I  would  ask  could  1 


 you  each  try  to  keep  your  remarks  brief,  because  we're  2 
 trying  to  get  to  audience  comments.  3 
 Professor?  4 
 DR.  OWEN:  Yes.  I  think  that's  a  very  5 
 important  point  and  it  speaks  precisely  to  the  point  6 
 that  you  made  earlier  which  I  have  to  respectfully  7 
 object  with.  That  is,  I  don't  think  the  primary  8 
 responsibility  of  this  Commission  is  to  protect  the  9 
 interests  of  consumers.  That  is  certainly  a  piece  of  10 
 it.  But  it  is  to  protect  the  interests  of  citizens  11 
 and  that  includes  a  consumer  side.  12 
 (Applause.)  13 
 But  also  includes  other  features  of  the  14 
 media  landscape  that  do  not  lend  themselves  to  this  15 
 sort  of  consumer  analysis  and  your  point  about  public  16 
 broadcasting  is  an  excellent  one.  We  are  not  talking  17 
 about  public  broadcasting  and  I  think  that's  a  real  18 
 shame  because  in  fact,  a  lot  of  the  dynamics  that  19 
 we're  talking  about  today  that  we're  concerned  about  20 
 have  to  do  with  how  marketplaces  operate  in  general  21 
 and  the  kinds  of  economic  forces  that  influence  in  the  22 
 end  the  content  more  generally  and  it  is  absolutely  23 
 important  to  have  a  noncommercial  alternative  to  that  24 
 if  we're  really  going  to  talk  about  diversity,  if  25 
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 181 
 we're  really  going  to  talk  about  meeting  the  needs  of  1 


 minority  communities  and  so  forth  and  that  is  public  2 
 broadcasting.  It's  public  radio.  It's  low  power  3 
 radio  which  is  a  piece  of  this  as  well.  4 
 (Applause.)  5 
 MR.  KRATTENMAKER:  Thank  you.  Did  any  of  6 
 the  other  panelists  want  to  comment  on  the  Chairman's  7 
 question.  8 
 I'm  sorry  to  be  the  bad  guy  in  this.  If  9 
 each  of  you  talk  for  two  minutes,  we're  going  to  go  10 
 all  through  the  public  comment  period.  So  please  try  11 
 to  keep  your  remarks  brief.  12 
 Ms.  Foley?  13 
 MS.  FOLEY:  Yes.  I  was  just  going  to  say  14 
 that  there  is  a  point  to  what  the  Chairman  said  in  15 
 that  in  other  countries  like  the  United  Kingdom  and  16 
 Canada  there  is  a  strong,  public  service  broadcasting  17 
 component  there.  We  don't  have  that  in  this  country  18 
 and  part  of  the  reason  we  don't  have  that  is  that  we  19 
 give  our  airways  away  to  these  commercial  broadcasters  20 
 and  so  that's  why  this  Commission  does  have  to  look  at  21 
 the  public  interest  aspect  of  this.  It  isn't  a  pure  22 
 economic  analysis.  We've  made  a  decision  as  a  country  23 
 to  operate  our  media  system  this  way.  It  may  be  a  24 
 good  way  to  operate.  I'm  not  saying,  I'm  not  arguing  25 
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 182 
 against  it.  I'm  just  saying  that  that  then  argues  for  1 


 us  not  to  do  an  economic  analysis  and  to  really  focus  2 
 on  in  a  proceeding  like  this  the  public  interest.  3 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  Miller?  4 
 MR.  MILLER:  Again,  all  we're  talking  5 
 about  when  we  talk  about  broadcast  free  over-  the-  air  6 
 broadcast  television  as  its  own  ecosystem,  it  has  two  7 
 pieces:  a  network  that  produces,  that  takes  $37  8 
 billion  worth  of  risk  over  the  last  three  years  to  9 
 produce  programs  and  local  stations  which  try  to  serve  10 
 the  local  marketplace.  There  are  seven  pressures  that  11 
 have  been  bearing  down  on  both  of  these  models  and  if  12 
 not  addressed  in  the  medium  or  short  term  that  free  13 
 over-  the-  air  broadcast  system  that  we  don't  pay  for  14 
 that  only  has  one  single  revenue  stream  will  change  15 
 markedly  and  we  don't  know  how  it's  going  to  change,  16 
 whether  consumers  are  going  to  have  to  pay  for  that  17 
 model  or  whether  it's  going  to  degrade  the  model  so  18 
 much  that  it's  not  a  viable,  robust  market  and  as  19 
 someone  mentioned  this  morning,  15  percent  of  America  20 
 still  relies  solely  on  over-  the-  air  broadcasts  as  21 
 their  only  way  of  seeing  television  in  their  homes  22 
 because  they  don't  have  cable  or  satellite.  23 
 MR.  KRATTENMAKER:  Mr.  Munson?  24 
 MR.  MUNSON:  I  can  only  say  this.  I  can  25 
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 183 
 never  be  embarrassed  by  the  fact  that  my  television  1 


 stations  make  a  profit.  Part  of  that  profit  goes  to  2 
 our  shareholders.  Part  of  that  profit  goes  back  into  3 
 the  product.  We've  increased  the  number  of  hours  of  4 
 news  and  public  affairs  programming  and  sponsorships  5 
 of  events  and  been  able  to  employ  200  families  to  6 
 provide  a  paycheck  for  them.  7 
 So  any  good  broadcaster  is  going  to  pour  8 
 part  of  the  money  into  the  product  and  part  of  the  9 
 money  into  profits.  10 
 MR.  CROTEAU:  I  agree  with  the  Chairman  11 
 that  the  complaints  about  programming  that  we've  heard  12 
 have  been  chiefly  about  programming  that's  responsive  13 
 to  what  consumers  want  to  see.  And  that  does  leave  14 
 out  of  the  count  programs  that  consumers  don't  want  to  15 
 see,  at  least  in  large  numbers.  If  it's  in  the  public  16 
 interest  to  subsidize  such  programming,  that's  fine,  17 
 but  public  broadcasting  is  not  the  way  to  do  it.  If  18 
 you  want  to  subsidize  programming,  the  programming  19 
 should  be  subsidized  as  programming  and  be  available  20 
 for  any  kind  of  outlet.  There's  no  reason  to  waste  21 
 scarce  spectrum  resources  on  public  broadcasting  22 
 stations  that  viewers  don't  know  how  to  tune  in.  23 
 MR.  KRATTENMAKER:  Mr.  Rintels.  24 
 MR.  RINTELS:  I  take  the  Chairman's  point  25 
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 184 
 about  Sony,  not  a  small  business.  But  Carsey-  Warner  1 


 certainly  was.  It  was  two  people  with  one  telephone  .  2 
 And  it  was  by  virtue  of  their  innovation  and  3 
 creativity  and  efforts  that  they  became  a  large  4 
 business.  5 
 So  we're  not  pretending  that  the  creative  6 
 community  or  independent  producers  are  not  in  this  to  7 
 make  a  profit,  but  my  organization  doesn't  only  8 
 represent  those  producers.  We're  talking  about  the  9 
 people  who  simply  work  on  shows  and  we're  not  able  to  10 
 do  our  best  work  when  it's  the  networks  who  are  11 
 calling  all  the  creative  shots  and  so  I  think  that  12 
 independent  production  was  a  wonderful  way  for  small  13 
 businesses,  minorities  and  women  to  get  into  the  14 
 television  business.  It  took  very  little  capital.  15 
 All  you  needed  was  a  great  idea,  but  that's  gone  now.  16 
 So  really,  the  question  for  us  is  by  virtue  of  the  17 
 networks'  control  of  the  airways,  should  they  be  able  18 
 to  exclude  all  the  other  voices  that  are  out  there?  19 
 We  don't  think  that's  right.  20 
 Should  they  be  able  to  monopolize  the  21 
 production  of  programming  and  not  compete  in  the  22 
 marketplace  of  ideas.  We  just  don't  think  that's  23 
 right.  24 
 (Applause.)  25 
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 185 
 MR.  KRATTENMAKER:  Mr.  Winston?  1 


 MR.  WINSTON:  I  just  wanted  to  respond  to  2 
 the  Chairman's  comment  about  Radio  One.  Certainly,  3 
 we've  very  happy  that  Radio  One  has  had  all  that  4 
 growth  over  the  last  several  years,  but  --  and  you're  5 
 right,  the  total  number  of  African-  American  owned  6 
 stations  has  grown  primarily  because  of  the  growth  of  7 
 Radio  One.  8 
 The  concern  I  have,  of  course,  however,  is  9 
 looking  at  BET.  The  African-  American  community  pinned  10 
 all  of  its  hopes  in  television  on  one  company.  That  11 
 company  sold  out.  Radio  One  is  a  publicly  traded  12 
 company  like  every  other  publicly  traded  company,  it's  13 
 under  pressure  from  Wall  Street  financial  sources  to  14 
 keep  showing  revenue  growth  or  find  itself  under  15 
 pressure  to  sell  out  too.  16 
 I  think  that  the  African-  American  17 
 community  shouldn't  say  that  we're  going  to  pin  all  18 
 our  hopes  on  one  company  no  matter  which  company  it  19 
 is,  no  matter  how  great  they  are.  And  I  don't  think  20 
 the  Commission  should  ask  us  to  do  that  either.  21 
 Thank  you.  22 
 MR.  KRATTENMAKER:  Commissioner  Abernathy?  23 
 COMMISSIONER  ABERNATHY:  Thank  you.  24 
 You've  brought  up  a  lot  of  points.  I  have  many  25 
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 186 
 questions,  but  I  know  where  to  find  you  guys.  I  will  1 


 submit  my  questions.  I'd  rather  hear  from  all  of  you  2 
 and  if  the  audience  has  any  questions,  I'm  happy  to  3 
 jump  in,  but  I'm  just  going  to  pass  for  now.  4 
 MR.  KRATTENMAKER:  Thank  you.  5 
 Commissioner  Martin?  6 
 COMMISSIONER  MARTIN:  I  just  have  one  7 
 question.  8 
 Mr.  Miller,  you  talked  about  the  9 
 importance  of  changing  some  of  our  rules  for  the  10 
 maintenance  of  free  over-  the-  air  broadcasting  and  11 
 talked  about  the  limited  revenue  stream  that  they  have  12 
 and  yet  the  increased  costs  that  they've  incurred,  13 
 particularly  going  through  the  digital  transition.  14 
 Isn't  there  an  opportunity  though  for  them  15 
 also  to  have  additional  revenue  streams  from  that  if  16 
 they  chose  to  multi-  cast  in  a  digital  context?  If  17 
 that  was  the  case,  are  there  other  things  that  18 
 inhibit,  maybe  digital  carriage  issues,  or  whatever,  19 
 but  are  there  --  is  that  not  a  potential  other  20 
 additional  revenue  stream  for  them  that  would  have  21 
 some  positive  benefits  on  the  other  side?  22 
 MR.  MILLER:  When  you  spent  $4  to  $6  23 
 billion  are  you  likely  to  get  a  real  return  on  that  24 
 investment  and  that's  the  unanswered  question  right  25 
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 187 
 now.  1 


 As  you  know,  we  have  problems  with  the  2 
 rights,  the  rights  when  you  digitally  send  something  3 
 over  the  year  that  it  could  be  stolen  by  someone.  4 
 That  has  not  been  fixed  yet.  5 
 We  don't  have  the  transmission  standard  is  6 
 still  not  --  we  don't  know  whether  it's  a  robust  7 
 standard  yet  and  you've  certainly  helped  with  tuner  8 
 issues  and  cable  operability  issues  which  were  not  9 
 solved,  even  six  months  ago.  And  then  you  have  the  10 
 consumer  that  now  has  to  spend  a  lot  of  money  to  11 
 change  a  TV  set  and  as  you  know,  the  average  TV  set  12 
 lasts  anywhere  between  15  and  20  years.  13 
 So  there's  a  lot  of  pieces  that  have  to  be  14 
 solved  for  it  to  be  a  robust  system,  but  yes,  15 
 philosophically  will  we  be  able  to  multicast?  16 
 Absolutely.  But  right  now,  we  don't  have  all  the  17 
 pieces  in  place  to  even  approach  that  yet.  18 
 MR.  KRATTENMAKER:  My  thanks  to  the  19 
 panelists.  You  all  were  terrific.  Thank  you  for  20 
 braving  the  weather  and  coming  down  here.  21 
 We're  now  going  to  turn  to  a  public  22 
 comment  portion  of  the  meeting.  I  notice  that  it's  23 
 supposed  to  end  in  10  minutes.  We'll  go  on  for  at  24 
 least  20.  25 
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 188 
 Dane,  I  think  you  have,  are  there  some  1 


 people  who  are  waiting  from  last  time  to  speak?  2 
 MR.  SNOWDEN:  Sure.  I  would  ask  that  3 
 Allison  Bresnick,  Dan  Pottle,  Christopher  Maxwell,  4 
 Raine  Burrows,  Silver  Persinger  and  Bob  Wolfner  be  the  5 
 first  to  go  to  the  microphones.  6 
 While  they're  doing  that,  I  want  to  have  a  7 
 scheduling  update.  What  we're  going  to  do  is  we're  8 
 going  to  take  this  all  the  way  to  about  2:  40  and  then  9 
 we're  going  to  start  the  next  panel  immediately  after  10 
 that  so  the  next  panelists  please  get  ready  at  2:  40.  11 
 We're  going  to  begin  at  that  point.  So  we'll  start  12 
 with  Allison.  And  again,  you  all  have  two  minutes.  13 
 MR.  KRATTENMAKER:  We're  going  to  give  you  14 
 two  minutes.  The  red  light  will  come  on  and  will  you  15 
 please  stop  at  the  end  of  your  time  so  others  can  16 
 speak.  17 
 MS.  BREZENCHEK  (Phonetic):  My  name  is  18 
 Allison  Brezenchek  and  I  am  the  Vice  President  of  19 
 Media  Reform  for  the  Action  Coalition  for  Media  20 
 Education.  I  want  to  first  just  specifically  thank  21 
 Commissioner  Copps  for  all  of  his  advocacy  efforts  22 
 regarding  the  public  interest  of  the  mass  media.  We  23 
 really  appreciate  your  commitment  to  that.  24 
 First  of  all,  I  want  to  say  that  being  25 
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 189 
 able  to  communicate  to  the  public  is  power.  Mass  1 


 communication.  And  one  of  the  things  we  need  to  pay  2 
 attention  to  is  what's  not  there  and  I  want  to  3 
 specifically  talk  about  what  hasn't  been  paid  4 
 attention  to  related  to  these  FCC  hearings  and  media  5 
 deregulation.  Why  haven't  these  issues  been  in  the  6 
 mass  media?  The  mass  media  is  there  to  inform  us  and  7 
 to  let  us  know  about  things  that  are  related  to  the  8 
 public  interest?  Why  haven't  they  been  covering  these  9 
 issues?  10 
 The  only  reason  that  I  can  think  of  is  11 
 because  of  the  financial  interests  that  they  have  in  12 
 getting  further  deregulation  to  occur.  And  that  is  a  13 
 big  conflict  between  financial  interests  and  public  14 
 interests  that  are  not  being  addressed  here.  15 
 (Applause.)  16 
 I  also  wanted  to  comment  on  programming  17 
 content.  We've  had  some  controversy  in  the  panel  18 
 about  is  programming  content  appropriate  to  be  19 
 discussing  here  and  why  is  that  being  commented  on?  I  20 
 think  that  again  goes  back  to  the  public  not  being  21 
 informed.  The  reason  why  the  public  doesnt  comment  22 
 on  programming  content  is  because  most  of  them  23 
 probably  don't  know  the  FCC  exists,  don't  know  what  24 
 deregulation  is  and  don't  know  the  steps  to  take  to  25 
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 190 
 voice  their  concerns.  The  only  thing  that  they  do  1 


 know  is  that  they  don't  like  what  they  see  on  2 
 television.  What  other  means  do  they  have  to  comment  3 
 about  it  other  than  program  content?  And  therefore,  I  4 
 think  that's  why  they  comment  on  that  specifically.  5 
 If  the  mass  media  was  educating  them  about  6 
 deregulation  and  things  of  that  nature,  then  they  7 
 would  have  more  to  talk  about.  8 
 Related  to  consolidation,  I  think  that  9 
 consolidation  leads  to  the  recycling  of  programming.  10 
 A  specific  example  is  --  11 
 MR.  KRATTENMAKER:  Thank  you.  12 
 (Applause.)  13 
 MR.  PODWELL:  Hi.  I'm  sure  some  of  you  14 
 are  wondering  why  we  dressed  like  mad  scientists  15 
 today?  And  it  is  in  response  to  a  comment  made  by  the  16 
 Chairman  that  he  only  wants  to  hear  from  media  17 
 scientists  and  that  our  commentary  has  been  too  18 
 emotional  and  too  political.  19 
 Well,  I'm  not  a  scientist,  I  am  a  tech,  a  20 
 very  small  radio  station,  WPEB,  in  West  Philadelphia  21 
 and  we  don't  run  plugs.  We  don't  do  public  22 
 fundraising  campaigns.  We  just  have  benefits,  mostly  23 
 in  the  forms  of  parties.  Occasionally,  we  get  24 
 donations  from  our  friends.  We're  a  very  small  25 
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 191 
 station  and  we've  had  a  few  grants.  1 


 I  think  our  existence,  it's  a  leftover  2 
 from  the  1970s.  It's  an  old  Class  D  license  and  our  3 
 existence  is  proof  that  the  public  interest  is  not  the  4 
 same  thing  as  business  interest  because  we're  the  only  5 
 kind  of  voice  for  the  kind  of  community  in  which  we  6 
 exist.  7 
 I  know  that  we're  talking  about  8 
 deregulation.  I  have  to  say  I  think  that  Spectrum  9 
 Management  plays  into  the  equation  here.  LPFM  as  was  10 
 these  reforms  that  happened  during  Chairman  Kennard's  11 
 administration  was  a  big  step  forward  and  it  was  12 
 special  interests,  it  was  business  interests  such  as  13 
 NPR,  National  Association  of  Broadcasters  that  pushed  14 
 Congress  to  eviscerate  it.  There  was  a  rider  attached  15 
 to  a  budget  appropriations  bill  sponsored  by  Senator  16 
 Rod  Grahams  who  not  surprisingly  soon  after  lost  the  17 
 election  which  is  what  happens  --  which  is  what  18 
 ideally  happens.  19 
 MR.  KRATTENMAKER:  Mr.  Podwell,  thank  you  20 
 very  much.  21 
 (Applause.)  22 
 Mr.  Maxwell.  23 
 MR.  MAXWELL:  Thank  you.  My  name  is  24 
 Christopher  Maxwell.  I'm  the  Vice  President  of  the  25 
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 192 
 Virginia  Center  for  Public  Press.  We  are  a  low  power  1 


 FM  applicant.  We  train  people  to  create  their  own  2 
 television  shows  and  thus  tell  their  stories  their  way  3 
 without  the  filter  of  too  many  other  influences,  4 
 editors,  owners,  advertisers,  underwriters,  etcetera.  5 
 So  you'll  hear  a  lot  of  things  on  our  programs  that  6 
 may  not  be  perfectly  polished,  but  we  get  a  lot  of  7 
 viewers  because  we  have  authenticity  to  offer.  So  we  8 
 use  say,  for  example,  an  ancient  titler,  an  omega  from  9 
 1984,  but  it  gets  the  titles  up  and  it  doesn't  seem  to  10 
 matter  to  our  audience.  11 
 A  lot  of  the  money  problems  come  from  12 
 concerns  about  creating  a  product  for  a  thin,  rich  13 
 slice  at  the  top  or  the  great  masses  and  not  14 
 necessarily  kind  of  all  the  leftover  --  people  in  15 
 between.  16 
 I'm  concerned  that  the  studies,  however,  17 
 unfortunately,  are  irrelevant.  They're  invalid.  18 
 Here's  the  problem.  19 
 Mr.  Powell,  you  voted  against  low  power  20 
 FM,  in  part,  you  said  because  you  were  concerned  that  21 
 LPFM  would  take  some  listeners  away  from  commercial  22 
 minority  broadcasters  that  were  on  the  edge  of  23 
 bankruptcy  and  that  might  push  them  over  or  cause  24 
 other  problems.  Well,  okay,  but  in  band  on  channel  25 
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 193 
 digital  audio  broadcasting  has  been  proven  by  tests  1 


 and  by  Clear  Channel's  own  testimonies  and  tests  to  2 
 jam  the  signals  of  stations  adjacent  to  an  ibox  3 
 station.  That  doubling  of  the  stations  on  the  dial  4 
 then  removes  those  stations  from  people's  selections  5 
 and  choices.  That  then  means  we  go  from  say  33  6 
 stations  on  a  car  radio  in  Richmond  down  to  say  22  or  7 
 23.  And  what  if  that  one  station  that  disappeared  was  8 
 the  one  station  that  spoke  to  your  soul,  the  one  9 
 station  that  carried  your  news,  your  religion,  your  10 
 viewpoint,  your  ethnic  news,  your  whatever?  Then  it's  11 
 a  100  percent  loss.  12 
 So  that  means  that  we  have  already  13 
 accepted  --  14 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Maxwell.  15 
 Your  time  is  up.  You  can  submit  your  information  for  16 
 the  record,  as  you  continue.  17 
 Ms.  Burrows,  please.  18 
 MS.  BURROWS:  Hi.  I'm  the  mother  of  a  19 
 2-  year-  old  living  here  in  Richmond  and  I'm  very  20 
 concerned  about  the  deteriorating  quality  of  21 
 television  in  this  country.  When  I  was  a  child,  my  22 
 parents  made  educational  films  and  I  sometimes  23 
 appeared  in  them.  They  were  often  shown  on  24 
 television,  not  only  on  PBS,  but  also  the  networks.  25 
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 194 
 I  wish  I  could  find  programs  like  that  1 


 today  for  my  little  girl  to  watch.  The  point  is  there  2 
 were  more  ways  back  then  for  people  to  produce  3 
 interesting  programs  and  get  them  distributed  on  4 
 television.  Now  the  media  outlets  are  pretty  much  5 
 controlled  by  huge  multinational  corporations.  6 
 The  best  programs  don't  get  aired  because  7 
 of  the  obsession  to  maximize  profits.  8 
 Today,  we  are  bombarded  with  sensational  9 
 violent  mindless  shows.  The  people  of  this  country  10 
 have  no  way  to  use  airways  that  supposedly  belong  to  11 
 us  except  for  local  cable  access  TV.  The  FCC  should  12 
 be  deeply  concerned  about  what  is  happening.  They  13 
 should  protect  the  interests  of  the  people  and  look  14 
 for  ways  to  use  their  regulating  power  to  encourage  15 
 the  independence  of  the  smaller  stations  throughout  16 
 the  country.  We  don't  want  Fox  and  Viacom  owning  17 
 every  station  we  turn  to  on  the  dial.  We  do  not  want  18 
 one  corporation  quietly  buying  up  1200  channels  so  19 
 they  can  maximize  profits  by  making  pure  programs.  20 
 This  is  already  happening  in  radio.  21 
 Please  do  not  make  the  same  mistake  in  22 
 television.  If  we  do  still  live  in  a  democracy  which  23 
 is  at  work  in  this  room  today,  then  we  need  to  keep  24 
 television  open  for  as  many  voices  as  possible.  25 
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 I  know  I  speak  for  so  many  parents  in  this  1 


 country  who  grew  up  loving  TV  and  now  worry  about  2 
 letting  our  kids  watch  it  at  all.  3 
 (Applause.)  4 
 MR.  KRATTENMAKER:  Thank  you,  Ms.  Burrows.  5 
 Mr.  Persinger  (Phonetic)?  6 
 MR.  PERSINGER:  Hello,  Chairman  Powell  and  7 
 Commissioners.  Thank  you  for  the  privilege  to  speak  8 
 to  you  today.  9 
 My  name  is  Silver  Persinger.  I  live  in  10 
 Richmond,  Virginia.  I  come  today  to  tell  you  to  11 
 oppose  removing  restrictions  on  ownership  of  media  12 
 outlets.  13 
 I  come  to  you  today,  before  you  today  as  14 
 an  advocate  of  the  golden  American  ideals  of  15 
 democracy,  free  speech,  freedom  of  press,  liberty  and  16 
 freedom.  17 
 What  we  all  know,  but  what  hasn't  been  18 
 said  is  that  television  is  the  most  powerful  source  of  19 
 propaganda  in  this  country,  a  major  source  of  20 
 information,  education  and  social  values.  Information  21 
 is  power,  but  information  is  also  wealth.  22 
 This  marketplace  of  ideas  and  the  funny  23 
 thing  about  ideas  is  it's  hard  to  sell  them.  Ideas  24 
 inherently  are  free  and  your  whole  --  all  this  stuff  25 
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 is  centered  around  the  economy  and  I  identify  myself  1 


 as  a  socialist  and  I  feel  real  threatened  by  this  2 
 dependency  on  economy  to  justify  every  action  and  I  3 
 don't  know,  I  just  don't  see  a  real  place  for  4 
 socialism  being  discussed  in  commercial  media  which  5 
 looks  like  the  way  we're  heading.  6 
 This  is  an  essential  tool  of  political  7 
 speech  and  it's  largely  denied  to  ordinary  people.  If  8 
 you  truly  want  diversity,  you  need  to  increase  public  9 
 access  to  the  media.  10 
 Just  look  --  just  take  a  look  at  the  rules  11 
 already  enacted  by  the  Commission.  One  of  the  12 
 Commissioners  or  panelists  mentioned  that  the  first  13 
 rules  banning  ownership  of  multiple  radio  stations  14 
 occurred  in  1927.  I  think  you  would  be  forgetting  the  15 
 wisdom  of  previous  FCC  Commissions.  These  rules  were  16 
 instituted  at  a  time  when  there  were  fewer  stations  17 
 and  only  about  five  years  after  the  initial  radio  boom  18 
 of  1922  and  1923.  The  Commission  recognized  the  19 
 importance  of  the  distribution  of  information.  20 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  21 
 Persinger.  22 
 Is  Mr.  Vuckmer  there?  23 
 MR.  VUCKMER:  Thank  you.  My  name  is  Bob  24 
 Vuckmer.  I  am  a  citizen  or  as  referred  to  by  a  25 
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 panelist,  I'm  a  consumer.  I  object  to  that  1 


 classification.  I'm  here  as  a  citizen  and  a  resident  2 
 of  Virginia.  I  want  to  state  very  clearly  that  3 
 perception  in  my  opinion  is  reality.  Everyone  creates  4 
 their  own  reality,  so  I'm  speaking  in  terms  of  my  own,  5 
 really  for  my  wife  and  I.  6 
 I'm  going  to  speak  about  a  reality  that  is  7 
 my  perception  and  the  perception  is  that  what  I've  8 
 heard  today,  we're  really  talking  about  corporate  9 
 policy  as  opposed  to  public  policy  and  when  I  say  10 
 public  policy  I  mean  citizen  policy.  I  get  enough  11 
 phone  calls  and  attempts  to  take  my  money  as  a  12 
 consumer.  I  don't  want  to  be  thought  of  as  a  consumer  13 
 by  a  public  agency,  the  FCC.  14 
 Secondly,  we  have  lost  our  ability  in  15 
 America  through  the  media.  Free  press,  in  my  opinion,  16 
 is  all  the  media.  To  agree  or  disagree,  we  have  come,  17 
 I  think,  in  a  fashion  and  form  now  where  it's  only  18 
 fashionable  to  agree.  Whatever  the  opinion  is  that  is  19 
 being  pushed,  by  the  media,  by  whatever  media  outlet,  20 
 is  the  one  which  we're  expected  to  agree,  with  which  21 
 we're  expected  to  agree.  And  I  disagree  with  that.  22 
 I  think  a  free  press,  a  free  media  means  23 
 that  there's  this  antagonism  that  everyone  talked  24 
 about  in  this  room  that  allows  free  exchange  of  ideas  25 
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 whether  you  agree  or  disagree,  but  you  come  to  some  1 


 resolution  as  a  result  of  that  disagreement.  2 
 That  isn't  happening  any  more.  I  think  3 
 what  we're  finding  --  my  real  concern  is  news.  I  find  4 
 we're  getting  a  lot  more  entertainment  than  we  are  5 
 news.  The  content  is  awful.  For  those  people  who  run  6 
 stations,  media  outlets,  you  need  to  understand  we're  7 
 tired  of  the  garbage,  in  my  opinion,  what  we're  8 
 getting  served  up  as  news  is  not  news.  It  is  9 
 entertainment.  10 
 Finally,  I  want  to  say  that  the  experiment  11 
 in  Richmond  was  we  used  to  have  more  than  two  12 
 newspapers.  We  eventually  had  two  newspapers  and  13 
 those  two  newspapers  were  merged.  One  I  found  was  a  14 
 little  bit  more  moderate  than  the  surviving  entity  --  15 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Vuckmer.  16 
 You  can  submit  your  information  for  the  record  as  17 
 well.  18 
 We're  now  going  to  begin  to  alternate.  19 
 We'll  start  with  the  right  and  go  to  the  left.  Again,  20 
 two  minutes.  Yes  sir.  21 
 MR.  LABLAU:  Yes,  Mr.  Commissioner,  22 
 Members  of  the  Commission,  my  name  is  Danny  Lablau  23 
 (Phonetic).  I'm  President  of  the  Virginia  State  AFL-  24 
 CIO  that  represents  over  200,000  working  families  here  25 
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 in  the  State  of  Virginia.  These  working  families  1 


 depend  upon  a  diverse  and  free  media  to  participate  in  2 
 our  democracy.  I'm  worried  about  the  concentration  of  3 
 media  ownership  into  fewer  and  fewer  hands.  Here,  in  4 
 Richmond,  a  city  of  over  200,000  people,  the  state  5 
 capital,  we  have  one  daily  newspaper,  The  Richmond  6 
 Times-  Dispatch.  It's  owned  by  Media  General  with  a  7 
 circulation  of  about  200,000  with  about  230,000  on  8 
 Sunday.  We  have  three  TV  stations,  the  ABC,  CBS  and  9 
 NBC  affiliates  which  produce  local  news  shows  four  10 
 times  a  day.  The  Fox  affiliate  produces  a  10  p.  m.  11 
 newscast.  There  are  no  locally  produced  cable  news  12 
 shows.  So  we  have  four  or  five,  if  you  include  Fox,  13 
 as  major  news  sources  in  Richmond.  If  you  allow  any  14 
 of  them  to  merge,  we'd  only  have  three  or  four.  15 
 Just  look  at  what  happened  to  radio  in  16 
 Richmond  since  the  1996  Telecommunications  Act  dropped  17 
 its  national  radioship  ownership  rule.  The  four  18 
 largest  radio  stations  now  control  90  percent  of  the  19 
 market,  according  to  your  study.  The  number  of  20 
 independent  radio  station  owners  in  Richmond  has  21 
 dropped  31  percent  since  1996.  22 
 Now  I  hear  that  Media  General,  the  owner  23 
 of  the  major  newspaper  is  into  something  called  24 
 convergence.  They  want  to  own  a  TV  station  where  they  25 
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 200 
 own  a  newspaper  and  then  share  the  news  operation.  I  1 


 fear  they  have  Richmond  on  their  radar  screen.  2 
 I  shudder  to  think  what  this  would  mean.  3 
 They  would  dominate  the  news  market  and  drive  up  ad  4 
 prices.  Working  people  have  a  hard  enough  time  5 
 getting  fair  reporting  in  this  state.  If  we  even  have  6 
 fewer  media  owners,  it  would  be  even  harder  to  get  7 
 fair  coverage  from  workers'  point  of  view.  8 
 Politicians  would  have  to  pay  even  more  9 
 for  their  ads,  print  and  media  or  electronic  media.  10 
 MR.  KRATTENMAKER:  Thank  you,  sir.  I  11 
 remind  you  to  please  state  your  name  for  the  record  as  12 
 well.  13 
 Ma'am?  14 
 MS.  SMITH:  My  name  is  Laura  Smith  and  I'm  15 
 from  Austin,  Texas  where  I'm  a  doctoral  student  at  the  16 
 University  of  Texas  at  Austin.  I  also  worked  in  17 
 television  news  for  about  13  years  before  I  went  back  18 
 to  school  to  teach  the  next  generation  of  19 
 broadcasters.  20 
 I  would  like  to  actually  reference  21 
 directly  the  issue  of  duopolies  and  much  deference  to  22 
 Mr.  Munson  in  what  he's  doing  at  WAVY.  This  is  not  23 
 the  case  in  many  duopoly  conditions  around  the  24 
 country.  25 
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 In  Jacksonville,  Florida  when  Gannett  1 


 purchased  the  Albritton  station  in  1999  under  one  of  2 
 the  first  television  stations  allowed  to  do  this,  they  3 
 immediately  dismantled  the  news  operation  and  fired  4 
 the  majority  of  the  news  staff,  although  they  kept  the  5 
 entirety  of  the  sales  staff.  6 
 I  would  like  to  say  they  are  now  7 
 simulcasting  one  news  product  on  two  television  8 
 stations,  one  an  ABC  affiliate,  the  other  an  NBC  9 
 affiliate.  They  are  maintaining  the  entertainment  10 
 programming,  but  they  have  disassembled  entirely  the  11 
 news  gathering  operation  and  until  those  sorts  of  12 
 issues  are  addressed  in  what  can  happen  both  pro  and  13 
 con,  I  think  that's  something  that  the  FCC  really  14 
 needs  to  take  into  consideration  when  it's  looking  at  15 
 relaxing  its  duopoly  rules.  16 
 I  also  want  to  mention  that  in  the  issue  17 
 of  the  national  cap,  there  are  many  companies  such  as  18 
 Sinclair  and  others  who  are  looking  at  going  to  19 
 regional  casting  as  a  result  of  being  able  to  purchase  20 
 more  television  stations  around  the  country.  This  21 
 means  they'll  inevitably  knock  off  local  producers  and  22 
 reporters  in  order  to  go  to  a  regional  casting  issue.  23 
 This  is  something  that  local  citizens  need  to  be  24 
 aware  of  and  that  the  FCC,  I  think,  should  be  25 
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 responsible  for  protecting  their  interests  when  they  1 


 get  out  there.  2 
 Finally,  I'd  like  to  just  make  a  quick  3 
 statement  about  the  quality  of  the  12  empirical  4 
 studies  that  the  FCC  is  going  to  base  its  decision  on.  5 
 I've  read  all  12  of  them  and  in  due  deference  to  the  6 
 FCC  Members  who  are  here  who  worked  on  those  studies,  7 
 there  is  a  great  deal  of  missing  data  in  those  8 
 studies,  the  theoretical  foundations,  the  social  9 
 science  research  there.  As  a  social  scientist  now  and  10 
 a  former  journalist,  I  have  great  issue  with  some  of  11 
 the  quality  controls  that  were  put  in  place  in  how  12 
 this  issue  is  being  measured  by  the  FCC.  I  think  we  13 
 need  a  great  deal  more  research  before  you  take  any  14 
 further  steps  and  I  applaud  Commissioner  Copps  for  his  15 
 willingness  to  do  more  public  hearings  because  12  16 
 people  talking  at  a  hearing  like  this  is  not  nearly  17 
 enough.  18 
 Thank  you.  19 
 (Applause.)  20 
 MR.  KRATTENMAKER:  Thank  you.  This  will  21 
 be  the  last  public  comment  before  we  go  to  the  next  22 
 panel,  but  I'll  ask  a  member  of  my  staff  to  come  over  23 
 and  get  the  names  so  we  can  start  the  list  again.  24 
 Yes  ma'am.  25 
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 203 
 MS.  BALATTA-  DALY  (Phonetic):  My  name  is  1 


 Darva  Balatta-  Daly  and  I'm  a  volunteer  with  the  2 
 Prometheus  Radio  Project  in  Philadelphia,  although  I  3 
 drove  down  from  Upstate  New  York  where  I  live  to  be  4 
 part  of  this.  Thank  you,  Commissioner  Copps,  for  5 
 giving  me  the  opportunity  to  drive  800  miles.  I  6 
 appreciate  it.  I  do.  7 
 How  did  the  FCC  get  away  for  70  years  8 
 without  having  any  empirical  basis  to  these  rules?  9 
 (Laughter.)  10 
 Ownership  is  power  that's  well  understood.  11 
 I  don't  think  that  we  need  an  economist  to  tell  us  12 
 that.  13 
 The  public  interest,  diversity  and  14 
 localism,  those  issues  get  thrown  around  and  they  15 
 expand  and  contract  through  this  room  with  each  person  16 
 that  talks  about  them.  I  have  my  own  version  of  that  17 
 and  I'd  like  to  share  an  anecdote  with  you.  I  was  at  18 
 a  low  power  FM  station  a  couple  of  years  ago.  It  was  19 
 unlicensed  because  the  community  wasn't  served  and  20 
 there  wasn't  the  possibility  of  getting  a  license.  So  21 
 they  pitched  in  and  got  some  equipment,  put  it  up  in  a  22 
 house  and  everybody  in  that  neighborhood  listened  to  23 
 it.  If  the  police  were  out,  or  if  somebody  would  call  24 
 out,  hey  the  police  are  out,  everybody  would  be  out  on  25 
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 204 
 the  street  to  see  what  the  police  were  about.  I  had  1 


 the  opportunity  to  see  this  with  my  own  eyes.  2 
 A  viewer  called  into  the  station  and  said  3 
 I  don't  know  where  my  daughter  is,  has  anybody  seen  4 
 her?  The  DJ  announced  that.  A  minute  later,  the  5 
 phone  rang  and  she's  on  her  way  home.  That  is  the  6 
 kind  of  diversity  and  localism  that  we're  talking  7 
 about.  8 
 Two  hundred  forty-  seven  different  9 
 ethnicities  that  Americans  identify,  that's  what  the  10 
 Census  says.  You've  got  the  census  data  available.  11 
 You  can  use  that.  Forty-  one  different  language  12 
 families.  Creole  is  spoken  in  the  United  States,  not  13 
 just  Spanish  and  English.  14 
 We've  got  a  real  different  idea  of  what  15 
 character  of  community  can  be  and  what  localism  can  16 
 be.  I  hope  that  the  FCC  will  seriously  consider  the  17 
 social  science  aspect  of  this  and  look  very  closely  at  18 
 what  the  relationship  is  between  a  market  area  which  19 
 is  created  by  industry  data  and  is  used  by  the  20 
 industry  and  what  actually  communities  are.  Okay?  21 
 Because  I  don't  think  that  there's  a  correlation,  but  22 
 it's  the  FCC's  job  to  prove  to  the  public  that  there  23 
 is  a  correlation.  24 
 The  same  thing  goes  for  consumers  versus  25 
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 205 
 citizens.  The  FCC,  if  you  believe  that  consumers  and  1 


 citizens  are  the  same  thing,  then  prove  it  to  us.  2 
 Show  it.  Make  it  transparent.  3 
 MR.  KRATTENMAKER:  Thank  you  very  much.  4 
 (Applause.)  5 
 MR.  KRATTENMAKER:  We're  going  to  begin  6 
 the  next  panel.  Please  get  ready.  7 
 (Pause.)  8 
 As  the  Chairman  explained,  we're  9 
 regretfully  trimming  you  down  to  four  and  a  half  10 
 minutes.  When  the  red  light  comes  on,  will  you  please  11 
 stop  and  so  I  shall  shut  up  and  give  you  the  time  you  12 
 have  remaining.  13 
 I'm  sorry,  I'm  going  to  mispronounce,  Mr.  14 
 Blethen.  15 
 MR.  BLETHEN:  I'm  Frank  Blethen.  I'm  the  16 
 publisher  of  The  Seattle  Times.  The  Times  is  a  106-  17 
 year-  old  family  business.  For  five  generations,  my  18 
 family  has  passionately  pursued  a  singular  obligation,  19 
 to  fulfill  our  public  trust  responsibility  to  serve  20 
 our  communities  with  independent  journalism  that's  21 
 relevant  to  them.  22 
 I'm  here  today  because  American  democracy  23 
 is  in  crisis.  It  is  at  risk.  A  democracy  needs  a  24 
 free  and  independent  press  to  survive.  In  the  words  25 
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 206 
 of  a  great  journalist,  Walter  Lipman  speaking  about  50  1 


 years  ago,  "there  is,  I  believe,  a  fundamental  reason  2 
 why  the  American  press  is  strong  enough  to  remain  3 
 free.  That  reason  is  the  American  newspaper,  large  4 
 and  small,  and  without  exception  belongs  to  a  town,  a  5 
 city,  at  the  most  a  region."  6 
 We  are  long  past  our  free  press  because  7 
 few  newspapers  and  few  media  outlets  any  longer  belong  8 
 to  a  town  or  a  region.  The  loss  is  being  driven  by  9 
 two  troubling  trends,  one  is  the  egregious  ownership  10 
 concentration  and  loss  of  local  connection  for  11 
 newspapers,  television,  radio  and  cable.  The  other  is  12 
 the  insidious  transformation  of  our  large  media  13 
 companies  into  ownership  by  Wall  Street  financial  14 
 investors.  Wall  Street  has  a  singular  --  15 
 [END  TAPE  3,  SIDE  B;  BEGIN  TAPE  4,  SIDE  16 
 A.]  17 
 --  term  earnings  and  stock  price.  Not  18 
 news,  not  public  service  and  not  democracy.  19 
 The  specter  of  media  dominance  by  a  small  20 
 handful  of  conglomerates  controlled  by  faceless,  21 
 financial  institutions  and  driven  by  CEO  stock  options  22 
 is  enough  to  scare  George  Orwell.  23 
 When  I  started  with  my  career,  there  were  24 
 about  1500  daily  newspapers  in  the  United  States,  most  25 
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 207 
 locally  or  regionally  owned.  Today,  only  35  years  1 


 later,  there  are  only  about  280  independent  daily  2 
 newspapers  left  and  very,  very  few  serving  3 
 metropolitan  areas.  4 
 In  the  old  days,  long  tenured  publishers  5 
 and  editors  had  deep  connections  with  the  cities  and  6 
 regions  they  served.  Today,  few  publishers,  editors  7 
 or  station  managers  even  come  from  the  communities  8 
 they  work  in.  Few  of  them  stay  very  long.  Few  9 
 publishers  have  news  backgrounds  or  even  news  10 
 sensibilities.  11 
 America's  news  rooms  have  quietly  been  12 
 transformed  from  democracy's  watchdog  into  corporate  13 
 lapdogs.  One  only  needs  to  ask  why  FCC  pleadings  to  14 
 relax  radio  and  TV  concentration  rules  and  to  repeal  15 
 the  cross  ownership  trend  have  been  outside  the  bright  16 
 light  of  press  scrutiny.  When  huge  corporations  17 
 lobbying  for  their  own  financial  self-  interest  also  18 
 control  most  of  our  news  rooms,  does  anybody  wonder  19 
 why  there  is  such  a  chill?  20 
 I've  heard  the  arguments  of  proponents  of  21 
 cross  ownership  repealed.  I've  noted  that  they  are  22 
 made  only  by  large  companies  driven  by  the  quest  to  23 
 grow  ever  larger.  The  most  frequent  argument  is  that  24 
 the  internet  and  cable  have  created  information  and  25 
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 access  proliferation.  That  is  not  accurate.  There  1 


 are  still  limited  sources  of  professional,  credible  2 
 news  and  opinion.  Indeed,  the  public  company  quest  3 
 for  ever  higher  profits  have  put  incredible  pressure  4 
 on  our  remaining  few  news  rooms.  Most  journalists  5 
 believe  there  has  been  a  serious  disinvestment  in  news  6 
 and  a  dumbing  down  of  media,  in  general.  7 
 The  correct  issue  is  whether  we  still  have  8 
 and  can  maintain  well-  staffed,  professional  news  rooms  9 
 that  can  keep  Americans  informed  about  their  community  10 
 and  about  their  country.  Getting  the  same  often  11 
 shallow  information  delivered  a  thousand  different  12 
 ways  does  not  provide  a  substitute  for  robust,  13 
 independent,  news  generation.  14 
 This  argument  also  ignores  that  single  15 
 corporate  entities  are  now  using  their  various  16 
 platforms  and  extensive  control  to  simply  recycle  17 
 information  and  programming  and  to  promote  their  own  18 
 products  often  in  the  guise  of  news.  19 
 I  urge  the  Commission  to  return  to  your  20 
 most  basic  obligation,  to  ensure  we  preserve  and  21 
 nurture  our  democracy.  Your  obligation  is  bigger  than  22 
 cross  ownership  or  the  other  concentration  rules,  but  23 
 that's  what's  in  front  of  us.  Repeal  of  cross  24 
 ownership  and  relaxing  of  the  other  rules  would  be  a  25 
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 209 
 giant  crack  in  the  foundation  of  our  democracy.  We  1 


 have  seen  the  unintended  consequences  of  the  1996  2 
 Telecommunications  Act.  We're  beginning  to  see  the  3 
 negative  consequences  of  the  Commission's  relaxing  of  4 
 other  radio  and  TV  concentrations  --  5 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Blethen.  6 
 Your  time  is  up.  7 
 Mr.  Herwitz?  8 
 MR.  HERWITZ:  Good  afternoon.  My  name  is  9 
 Tom  Herwitz.  I'm  President  of  Station  Operations  for  10 
 Fox  Television  Stations.  Given  our  record  in  local  11 
 news  and  service,  we  at  Fox  are  frankly  confounded  by  12 
 the  argument  that  allowing  us  to  own  stations  that  13 
 reach  more  than  35  percent  of  the  country  will  14 
 threaten  competition,  diversity  and  localism.  I  hope  15 
 I'll  show  today  that  the  opposite  is  true.  16 
 Today,  at  our  stations,  35  stations  across  17 
 the  country,  we  produce  and  air  more  than  800  hours  of  18 
 original,  regularly  scheduled  local  news  per  week,  19 
 more  than  anybody  else  in  the  country.  20 
 I  joined  Fox  from  the  FCC  actually  in  1986  21 
 when  our  first  six  stations  were  bought.  Those  22 
 stations  did  23.5  hours  of  news  and  three  of  them  in  23 
 Dallas  and  Chicago  and  Houston  aired  no  news  at  all.  24 
 Today,  those  same  stations  produce  every  week  195  25 
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 210 
 hours  of  local  news,  an  eight-  fold  increase.  And  on  1 


 the  station  in  Dallas,  for  example,  we  broadcast  43  2 
 hours  per  week.  3 
 In  many  markets,  we've  produced  and  aired  4 
 more  local  news  by  9  a.  m.  than  our  competitors  will  5 
 air  all  day  long.  What  empirical  justification  is  6 
 there  to  keep  Fox  from  bringing  this  kind  of  7 
 commitment  to  additional  communities?  8 
 We  also  provide  local  news  service  that  is  9 
 unique  to  many  communities,  often  in  dayparts  where  10 
 there  is  no  other  local  news  and  prime  time  and  in  the  11 
 morning.  We're  baffled  that  some  broadcasts  say  12 
 they're  more  local,  more  dedicated  to  serving  their  13 
 local  communities  than  Fox  because  their  group  doesn't  14 
 reach  35  percent.  The  facts  completely  belie  this.  15 
 Deb  McDermott  who  is  down  to  my  left  is  a  wonderful  16 
 broadcaster,  but  her  Richmond  station  here  is  not  more  17 
 local  than  ours.  When  I  call  her,  I  call  her  in  18 
 Nashville  and  I  call  Vince  Young  in  New  York  City.  19 
 Our  local  managers,  as  theirs,  have  editorial  autonomy  20 
 which  we  believe  benefits  the  stations  as  well  as  the  21 
 viewers.  22 
 Secondly,  we  emphatically  dispute  that  our  23 
 stations  have  less  than  the  highest  commitment  to  24 
 serving  their  local  communities.  Take  our  station  in  25 
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 211 
 Detroit,  WJBK,  which  I  use  because  one  of  our  1 


 principal  competitors  there,  WDIV,  is  owned  by  Post  2 
 Newsweek  station,  an  outspoken  advocate  of  keeping  the  3 
 35  percent  cap,  arguing  that  companies  whose  stations  4 
 don't  reach  the  cap  are  better  local  operators.  But  5 
 we  have  50  percent  more  news  than  WDIV.  Our  station  6 
 has  been  chosen  Broadcasters  Association  station  of  7 
 the  year  four  years  in  a  row.  Our  problem  solving  8 
 news  takes  on  local  Detroit  issues  every  day.  We  shut  9 
 down  prostitution  rings  near  schools.  We  got  the  10 
 school  district  to  recognize  that  they  were  operating  11 
 abandoned  buildings  that  were  drug  and  prostitution  12 
 and  rat-  infested  by  schools.  We  brought  to  the  13 
 attention  of  the  Detroit  Water  and  Sewage  Department  14 
 that  had  to  clean  up  their  operations  after  we  showed  15 
 workers  spending  their  days  drinking,  smoking  16 
 marijuana  and  dangerously  driving  large  city-  owned  17 
 trucks  while  intoxicated.  18 
 WDIV  is  a  strong  competitor  and  whether  19 
 they're  better  or  worse  than  us  really  isn't  the  20 
 point.  It  seems  that  if  the  Commission's  task  as  the  21 
 Court  seems  to  order  is  to  find  empirical  evidence  to  22 
 justify  preventing  Fox  from  owning  additional  stations  23 
 in  light  of  the  facts,  the  hard  evidence  of  our  24 
 stations'  service  in  communities  like  Detroit,  it's  25 
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 212 
 hard  to  understand  what  Post  Newsweek  or  any  of  the  1 


 other  evidence  is  or  possibly  could  be.  2 
 Given  this  commitment  to  our  local  3 
 communities,  what  is  the  evidence  that  our  ownership  4 
 harms  competition,  diversity  and  localism?  Given  our  5 
 track  record,  how  can  the  government  justify  a  rule  6 
 that  requires  us  to  shut  down  stations  or  sell  7 
 stations  in  Austin  where  we  do  30  hours;  Greensboro,  8 
 35  hours;  Birmingham,  41;  we're  the  news  leader  there;  9 
 Kansas  City,  48  hours,  in  order  to  get  below  a  35  10 
 percent  cap.  11 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Herwitz.  12 
 We'll  take  those  last  three  questions,  not  as  13 
 questions,  but  as  statements.  14 
 Mr.  Mays?  15 
 MR.  MAYS:  Good  afternoon.  16 
 MR.  HERWITZ:  I'm  sorry,  can  I  just  17 
 finish.  I  just  want  to  say  that  we  believe  and  I  18 
 think  it's  shown  that  what  we  brought,  what  Fox  has  19 
 brought  through  Rupert  Murdoch's  version  through  the  20 
 [Inaudible]  deregulation  and  other  things  that  we  have  21 
 brought  to  --  22 
 MR.  KRATTENMAKER:  Mr.  Herwitz,  I'm  sorry,  23 
 I  believe  that  we  have  heard  and  I  believe  that  in  all  24 
 fairness  to  the  other  members  of  this  panel,  I  should  25 
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 213 
 move  along.  1 


 Mr.  Mays?  2 
 MR.  MAYS:  Good  afternoon,  Chairman  Powell  3 
 and  Members  of  the  Commission.  My  name  is  Mark  Mays  4 
 and  I'm  the  president  and  chief  operating  officer  of  5 
 Clear  Channel  Communications.  Thank  you  for  inviting  6 
 me  to  testify  about  the  importance  of  localism  in  7 
 radio  broadcasting.  8 
 Some  have  spoken  of  the  radio  experience  9 
 as  the  canary  in  the  coal  mine,  providing  evidence  of  10 
 the  dangers  of  deregulation,  dangers,  they  say,  that  11 
 await  other  media  that  would  follow  in  radio's  12 
 footsteps.  But  this  analogy,  although  it  may  be  13 
 colorful,  just  doesn't  apply  for  one  simple  reason.  14 
 The  canary  isn't  dead.  To  the  contrary,  it  is  alive  15 
 and  well,  healthier  and  more  robust  than  ever  before,  16 
 far  from  being  dead,  radio  is  experiencing  a  new  17 
 vitality  and  is  providing  excellent  service  to  local  18 
 communities  all  over  the  country.  19 
 In  order  to  fully  appreciate  the  new  20 
 vitality  of  the  radio  industry,  you  must  remember  back  21 
 to  the  early  1990s  when  many  stations  were  simply  22 
 struggling  to  survive.  It  was  a  different  world  then,  23 
 just  10  years  ago.  Half  of  all  radio  stations  24 
 operated  in  the  red  and  many  others  close  to  it.  25 
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 214 
 Of  course,  the  first  thing  many  of  these  1 


 stations  did  in  those  rough  financial  times  was  cut  2 
 their  local  news  budget  and  even  shut  down  a  news  3 
 department  entirely.  Local  audiences  suffered.  4 
 Though  with  deregulation  and  the  ability  to  own  more  5 
 stations,  companies  like  Clear  Channel  could  create  6 
 economies  of  scale  and  benefit  from  cost  savings.  And  7 
 we,  like  many  other  broadcasters  have  reinvested  those  8 
 savings  in  our  stations  improving  technical  9 
 facilities,  hiring  better  on-  air  talent  and  increasing  10 
 the  quality  of  local  programming.  11 
 Study  after  study  demonstrates  that  12 
 consolidation  has  led  to  increases  in  the  diversity  of  13 
 formats  available  to  listeners  and  local  markets,  14 
 large  and  small.  Here  in  Richmond,  there  were  only  16  15 
 different  formats  in  1995.  In  2002,  that  number  has  16 
 grown  to  25.  That's  more  than  a  50  percent  increase  17 
 since  deregulation.  18 
 Now  it's  true  that  while  there  are  more  19 
 formats,  there  are  fewer  owners.  It's  also  true  that  20 
 Clear  Channel  owns  1200  radio  stations.  However,  it's  21 
 important  to  put  those  numbers  in  context.  While  22 
 Clear  Channel  owns  1200  stations,  that  represents  just  23 
 9  percent  of  all  the  radio  stations  in  the  U.  S.  Put  24 
 another  way,  more  than  90  percent  of  U.  S.  radio  25 
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 215 
 stations  are  owned  by  nearly  4,000  other  companies.  1 


 I'm  not  here  to  dispute  the  fact  that  2 
 we're  a  large  company  or  that  consolidation  has  3 
 occurred,  but  I  will  strongly  dispute  the  notion  that  4 
 consolidation  has  led  to  a  reduction  in  localism.  We  5 
 succeed  by  intimately  knowing  the  local  community  we  6 
 serve  and  tailoring  our  programming  to  meet  their  7 
 unique  needs  and  tastes.  This  is  true  every  minute  of  8 
 every  hour  of  every  day.  9 
 If  listeners  don't  like  what  they  hear,  10 
 they  will  turn  the  dial.  It's  that  simple.  One  tired  11 
 song,  one  commercial  break  that  lasts  too  long  or  a  12 
 failure  to  provide  timely  news  or  traffic  and  the  13 
 listener  is  gone.  That's  why  we  run  Clear  Channel  in  14 
 a  completely  decentralized  manner.  We  operate  like  an  15 
 association  of  small,  local  businesses.  Our  local  16 
 station  managers  and  program  directors  make  every  17 
 decision  about  what  music  gets  played  on  our  stations  18 
 and  how  often.  They  develop  the  play  list  based  on  19 
 extensive  local  audience  research,  listener  requests  20 
 and  first  hand  knowledge  of  their  own  communities.  21 
 At  Clear  Channel,  there  is  no  such  thing  as  a  22 
 standardized  play  list.  23 
 To  those  who  would  say  that  radio  has  24 
 become  more  homogenized  since  deregulation,  let  me  25 
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 216 
 dispel  that  myth  as  well.  Since  1999,  the  number  of  1 


 unique  songs  and  artists  we  play  has  increased  by  30  2 
 percent,  reflecting  the  fact  that  Clear  Channel  radio  3 
 stations  are  actually  playing  a  greater  variety  of  4 
 music  every  year.  I'm  pleased  to  say  that  our  5 
 dedication  to  localism  has  been  recognized  time  and  6 
 time  again.  Last  year,  our  Richmond  stations  won  7 
 awards  ranging  from  best  locally  produced  radio  show,  8 
 to  best  traffic  reports,  to  best  local  broadcaster  of  9 
 the  year.  And  our  local  managers  take  great  pains  to  10 
 introduce  listeners  to  new  artists.  Here  in  Richmond,  11 
 for  example,  WRXL,  there's  a  one  hour  program  each  12 
 Sunday  night  featuring  local  and  regional  bands.  Up  13 
 the  road  in  Washington,  D.  C.,  DC-  101  New  Music  Mart  14 
 every  Sunday  night.  15 
 In  fact  Carbonleaf,  an  unsigned  band  from  16 
 right  here  in  Richmond,  has  seen  its  music  move  from  17 
 the  Sunday  night  show  to  DC-  101  power  rotation.  But  18 
 we  don't  just  serve  our  communities  by  playing  the  19 
 music  our  listeners  want  to  hear.  Clear  Channel  20 
 stations  around  the  country  are  deeply  involved  in  a  21 
 wide  variety  of  local,  civic  and  charitable  events.  22 
 The  bottom  line  is  that  good  radio  is  23 
 local  radio.  24 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Mays.  25 
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 217 
 Ms.  McDermott?  1 


 MS.  McDERMOTT:  Thank  you  for  conducting  2 
 today's  hearing  in  Richmond  and  for  allowing  me  to  3 
 appear.  I'm  executive  vice  president  of  Young  4 
 Broadcasting,  Inc.  which  owns  and  operates  11  5 
 television  stations  in  various  markets,  including  6 
 WRIC-  TV,  an  ABC  affiliate  in  Richmond.  7 
 I  respectfully  urge  the  Commission  not  to  8 
 modify  or  repeal  the  35  percent  national  television  9 
 ownership  cap.  The  35  percent  cap  is  essential  to  10 
 localism,  the  bedrock  principle  on  which  the  11 
 congressionally  mandated  broadcast  system  is  based.  12 
 The  principle  of  localism  is  uniquely  American.  It  13 
 has  its  roots  in  our  federalist  system  of  government.  14 
 As  Virginia's  favorite  son,  Thomas  Jefferson  warned  15 
 his  friend,  Gideon  Granger  in  1800,  our  country  is  too  16 
 large  to  have  all  of  its  affairs  directed  by  a  single  17 
 government.  Public  servants  at  such  a  distance  and  18 
 from  under  the  eye  of  their  constituents  must,  from  19 
 the  circumstance  of  distance,  be  unable  to  administer  20 
 and  overlook  all  the  details  necessary  for  the  good  21 
 government  of  the  citizens.  22 
 For  the  very  same  reason,  Congress  23 
 rejected  the  notion  of  a  highly  centralized  system  of  24 
 terrestrial  broadcasting.  Unlike  the  governments  of  25 
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 218 
 Europe,  Congress  opted  for  a  system  that  would  assure  1 


 to  the  fullest  extent  possible  that  America's  2 
 television  stations  would  be  responsive  to  the  special  3 
 needs  and  interests  of  the  local  communities  they  are  4 
 licensed  to  serve.  As  it  is  self-  evident  today,  as  5 
 when  Congress  created  the  current  system  of  6 
 broadcasting,  that  it  is  not  in  the  national  interest  7 
 to  have  all  the  nation's  television  broadcast  8 
 programming  dictated  each  day,  every  day,  seven  days  a  9 
 week,  52  weeks  a  year  and  year  after  year  by  a  handful  10 
 of  station  owners.  11 
 Some  of  you  have  asked,  how  would  viewers  12 
 know  the  difference  if  the  cap  were  raised?  Viewers  13 
 will  know  because  network  owned  stations  must  serve  14 
 their  parent  network  national  and  international  15 
 program  distribution  interests  and  the  interests  of  16 
 their  station's  local  viewers.  Those  interests  are  17 
 often  in  conflict.  A  non-  network  owned  station  in  18 
 contrast  has  but  a  single  responsibility  to  only  serve  19 
 the  interests  of  its  local  viewers.  The  interests  of  20 
 local  viewers  is  the  essence  of  localism.  21 
 Localism  has  meant  that  the  citizens  of  22 
 Springfield,  Missouri  were  spared  an  episode  of  NBC's  23 
 Fear  Factor  when  the  local  station  determined  the  24 
 program  would  be  offensive  to  local  viewers.  No  NBC  25 
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 219 
 station  rejected,  to  my  knowledge,  a  single  episode  of  1 


 that  show.  2 
 Localism  has  meant  that  viewers  in  North  3 
 Dakota,  Virginia,  South  Dakota,  South  Carolina  and  4 
 other  states  have  been  able  to  watch  Billy  Graham  on  5 
 their  local  stations.  That,  of  course,  would  not  have  6 
 occurred  if  these  stations  had  been  owned  by  a  7 
 network.  Localism  has  meant  a  Fox  affiliate  in  8 
 Raleigh,  North  Carolina  was  able  to  reject  Fox's  9 
 "Temptation  Island"  because  it  refused  in  its  words  to  10 
 support  a  program  that  could  potentially  break  up  the  11 
 parents  of  a  young  child.  To  my  knowledge,  none  of  12 
 the  Fox  owned  stations  rejected  "Temptation  Island."  13 
 Localism  has  also  meant  that  NBC  14 
 affiliates  collectively  were  able  to  persuade  NBC  to  15 
 allow  them  to  carry  a  presidential  debate  rather  than  16 
 a  major  league  baseball  playoff  game  scheduled  by  the  17 
 NBC  network.  None  of  that,  of  course,  would  have  18 
 occurred  had  NBC  owned  their  affiliate.  19 
 For  20  years,  our  company's  Louisiana  20 
 station  has  aired  a  live  broadcast  of  the  rosary  in  a  21 
 very  Catholic  area,  early  each  morning.  When  we  22 
 wanted  to  expand  our  local  news  and  move  the  start  23 
 time  of  the  rosary  program,  our  network  vehemently  24 
 objected  because  the  rosary  program  would  encroach  on  25 
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 220 
 the  network's  early  national  news.  If  our  station  1 


 were  owned  by  the  network,  the  rosary  would  not  be  on  2 
 the  air.  3 
 An  increase  in  the  national  cap  will  4 
 reduce  the  number  of  television  stations  to  which  5 
 independent  program  producers  can  sell  programming  and  6 
 in  turn  will  eventually  reduce  the  already  small  7 
 number  of  independent  program  companies.  This  is,  of  8 
 course,  of  great  concern  to  our  company.  Right  now,  9 
 70  to  80  percent  of  our  programming  comes  from  the  10 
 network  and  with  some  companies,  100  percent  of  our  11 
 syndicated  programming  is  coming  from  one  syndicated  12 
 company.  13 
 The  balance  of  power  in  the  program  market  14 
 has  already  shifted  to  the  networks.  If  you  raise  the  15 
 cap,  you  will  nationalize  the  nation's  local  broadcast  16 
 system.  The  network  argument  for  increasing  or  17 
 repealing  the  cap  is  purely  financial.  They  claim  18 
 they  can  no  longer  compete  unless  they  acquire  19 
 ownership  of  their  affiliates.  It  is  a  tired  and  20 
 hollow  argument.  The  networks  have  made  it  for  years.  21 
 If  the  networks  owned  television  stations  in  America  22 
 they  would  have  the  same  argument.  23 
 I  don't  know  what  Thomas  Jefferson  would  24 
 think  about  the  "Fear  Factor"  if  he  were  alive  today,  25 
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 nor  do  I  know  if  he  would  enjoy  a  Billy  Graham  1 


 Crusade,  a  presidential  debate  or  a  rosary  program,  2 
 but  I  think  he  would  concur  that  the  local  television  3 
 station  in  Charlottesville  should  reflect  the  core  4 
 values  of  the  people  of  Charlottesville  and  not  merely  5 
 the  national  and  international  program  interests  of  a  6 
 major  national  television  network.  7 
 Thank  you.  8 
 (Applause.)  9 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  Powell?  10 
 MR.  POWELL:  Thank  you.  My  name  is  Chris  11 
 Powell.  I'm  the  managing  editor  of  the  Journal  12 
 Inquirer  in  Manchester,  Connecticut,  the  daily  13 
 newspaper  serving  17  towns  east  and  north  of  Hartford.  14 
 I'm  here  to  protest  Tribune  Company's  monopolization  15 
 of  the  news  media  in  Connecticut  and  to  urge  the  16 
 Commission  to  enforce  the  cross  ownership  rule  against  17 
 Tribune  instead  of  repealing  the  rule.  18 
 The  Tribune  already  owned  two  of  the  six  19 
 privately  held  television  broadcast  licenses  in  20 
 Connecticut  three  years  ago  when  it  bought  the  Times  21 
 Mirror  newspaper  chain.  Acquiring  Times  Mirror,  22 
 Tribune  became  owner  of  Connecticut's  largest  daily  23 
 newspaper,  the  Hartford  Courant,  two  other  Connecticut  24 
 dailies,  the  Stamford  Advocate  and  Greenwich  Time;  the  25 
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 four  weekly  newspapers  of  the  Advocate  chain  in  1 


 Hartford,  Fairfield  County  and  New  Haven,  Connecticut  2 
 and  Springfield,  Massachusetts  and  the  Valu-  Mail  3 
 direct  mail  advertising  company  in  Hartford.  When  4 
 Tribune  acquired  Times  Mirror,  news  reporting  said  5 
 that  a  big  part  of  the  corporate  plan  was  to  obtain  6 
 control  of  TV  stations  and  newspapers  and  overlapping  7 
 markets  and  to  coordinate  their  operations  in  8 
 deliberate  violation  of  the  cross  ownership  rule,  but  9 
 in  anticipation  of  the  rule's  repeal.  That  is  what  10 
 has  come  to  pass  in  Connecticut,  where  the  Courant's  11 
 and  Tribune's  two  TV  stations  now  promote  each  other  12 
 constantly  and  exchange  features.  13 
 As  Tribune  now  uses  its  grant  of  14 
 government  monopoly  on  two  channels  on  the  public  15 
 airwaves  to  give  the  Courant  a  big  advantage  over  all  16 
 the  other  newspapers  in  Connecticut,  the  Courant  has  17 
 made  exclusionary  contracts  with  newspaper  feature  18 
 syndicates.  That  is,  the  Courant  has  made  its  19 
 purchase  of  certain  newspaper  features  conditional  on  20 
 promises  by  the  feature  syndicates  not  to  sell  those  21 
 newspaper  features  to  my  paper.  22 
 The  worsening  concentration  of  ownership  23 
 in  the  news  media  in  Connecticut  does  not  end  with  24 
 Tribune  Company.  In  the  last  few  years,  the  Journal  25 
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 223 
 Register  newspaper  chain  has  obtained  not  only  the  1 


 daily  newspaper  in  New  Haven,  but  also  the  weekly  2 
 newspapers  in  New  Haven  suburbs  and  the  Media  News  3 
 Group  newspaper  chain  has  obtained  not  only  the  daily  4 
 newspaper  in  Bridgeport,  but  also  the  weekly  5 
 newspapers  in  Bridgeport  suburbs,  that  is,  in  6 
 Connecticut  the  so-  called  alternative  press  is  now  7 
 owned  by  the  same  big  company  downtown.  8 
 Announcing  today's  hearing  the  FCC  press  9 
 release  of  February  7th  said  "the  FCC's  goal  is  to  10 
 promote  competition,  diversity  and  localism  in  the  11 
 media."  I'd  like  to  know  how  competition,  diversity  12 
 and  localism  in  the  media  are  promoted  by  the  FCC's  13 
 giving  two  of  Connecticut's  six  privately  held  TV  14 
 broadcast  licenses  to  an  out  of  state  conglomerate  15 
 that  already  owns  three  major  newspapers,  three  weekly  16 
 newspapers  and  a  direct  mail  company  in  the  state  when  17 
 as  a  practical  matter  no  other  newspaper  company  in  18 
 Connecticut  can  have  even  one  broadcast  license.  19 
 Some  people  say  the  cross  ownership  rule  20 
 should  be  repealed  because  the  internet  and  cable  21 
 television  are  providing  plenty  of  competition  in  the  22 
 news  media.  I  don't  know  where  these  people  live  but  23 
 they  can't  be  living  in  Connecticut.  The  state  and  24 
 local  news  and  advertising  provided  by  the  internet  25 
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 224 
 and  cable  TV  in  Connecticut  are  negligible.  News  and  1 


 advertising  in  Connecticut  are  99  percent  matters  of  2 
 TV  and  radio  broadcasters  and  newspapers.  3 
 Indeed,  if  the  internet  and  cable  TV  were  4 
 really  providing  so  much  competition  in  the  media,  the  5 
 conglomerates  would  be  happy  to  expand  by  enterprise  6 
 that  way  instead  of  by  acquisition  of  the  existing  7 
 traditional  media  properties,  existing  broadcasters  8 
 and  newspapers.  But  no,  Tribune  and  other  big  media  9 
 companies  are  expanding  through  cross  ownership  of  10 
 existing  properties  because  the  big  media  companies  11 
 consider  cross  ownership  to  be  their  best  opportunity  12 
 for  growth  and  gaining  control  of  a  market.  13 
 The  awarding  of  broadcast  licenses  --  14 
 government  grants  of  monopoly  on  the  public  airwaves  -  15 
 -can  be  conducted  in  only  two  ways,  to  diversify  16 
 ownership  of  the  media  or  to  concentrate  ownership.  17 
 The  cross  ownership  rule  has  been  a  small,  but  clear  18 
 affirmation  that  diversification  is  better  than  19 
 concentration.  On  a  national  basis,  it  has  been  a  20 
 guarantee  of  a  little  diversification,  though  only  a  21 
 tiny  fraction  of  the  diversification  we  could  have.  22 
 I  have  never  understood  why  we  let  anybody  23 
 have  more  than  one  broadcast  license  in  this  country.  24 
 Repeal  the  cross  ownership  rule  and  we  are  25 
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 225 
 sure  to  get  a  lot  of  the  concentration  that  it  was  1 


 meant  to  prevent.  That  is  precisely  why  the  FCC  is  2 
 being  asked  to  repeal  the  rule.  Repeal  the  cross  3 
 ownership  rule  and  by  government  decree  and  patronage,  4 
 Connecticut  will  be  awarded  the  Tribune  Company.  5 
 We're  a  small  state,  but  we  deserve  better  public  6 
 policy  than  that.  7 
 Thank  you.  8 
 (Applause.)  9 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  Sturm?  10 
 MR.  STURM:  Good  afternoon.  I'm  John  11 
 Sturm,  president  and  CEO  of  the  Newspaper  Association  12 
 of  America.  I'm  grateful  for  the  opportunity  to  13 
 appear  before  you  this  morning,  this  afternoon,  14 
 because  in  the  28  years  since  the  newspaper  broadcast  15 
 cross  ownership  rule  went  into  effect,  my  association  16 
 has  never  had  an  opportunity  before  to  bring  our  view  17 
 of  this  issue  in  front  of  the  Commission.  18 
 I  will  take  the  next  few  minutes  to  19 
 demonstrate  the  important  role  that  newspaper  20 
 broadcast  cross  ownership  can  play  in  enhancing  the  21 
 quality  and  the  quantity  of  news  and  other  local  22 
 content  available  to  the  public.  Once  upon  a  time,  23 
 long  ago,  the  FCC  affirmatively  encouraged  the  24 
 participation  of  newspaper  publishers  in  the  broadcast  25 
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 226 
 industry.  Even  in  its  1975  order  adopting  the  ban,  1 


 the  FCC  expressly  recognized  the  traditions  of  service  2 
 that  newspaper  publishers  brought  to  the  broadcasting  3 
 industry.  These  facts  have  not  changed.  4 
 The  Commission  also  found  in  1975  that  5 
 there  was  no  evidence  that  commonly  owned  newspaper  6 
 and  broadcast  stations  posed  any  threat  of  any  7 
 competitive  behavior  and  that,  on  average,  stations  8 
 co-  owned  with  local,  daily  newspapers,  provided  more  9 
 news  and  nonentertainment  programming  than  other  TV  10 
 stations.  Happily,  these  facts  too  have  not  changed.  11 
 It  makes  perfect  sense  that  newspaper  12 
 owned  broadcast  stations  would  excel  in  news  coverage  13 
 and  informational  programming  given  their  extensive  14 
 news  gathering  resources  and  their  strong  ties  with  15 
 the  community.  Indeed,  daily  newspapers  are  by  their  16 
 very  nature  more  deeply  involved  in  and  aware  of  the  17 
 activities,  concerns,  and  issues  affecting  their  local  18 
 communities.  19 
 The  best  evidence  of  the  impact  of  cross  20 
 ownership  can  be  found  in  another  set  of  facts,  the  21 
 records  of  the  40  grandfathered  newspaper  broadcast  22 
 accommodations  that  exist  today,  representing  the  full  23 
 gamut  of  market  sizes  from  Mile  City,  Montana  to  24 
 Chicago,  Illinois.  These  co-  owned  facilities  25 
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 227 
 consistently  have  provided  their  home  communities  with  1 


 unmatched  levels  of  service.  By  way  of  example,  in  2 
 the  Cedar  Rapids,  Iowa  market,  KCRG-  TV,  KCRG-  AM,  which  3 
 are  jointly  owned  by  the  Cedar  Rapids  Gazette,  offer  4 
 more  news  than  any  other  stations  in  their  markets.  5 
 The  stations  make  use  of  a  wide  array  of  newspaper  6 
 resources,  including  an  ombudsman  employed  by  the  7 
 Gazette  to  review  the  fairness  and  accuracy  of  the  8 
 news  reports  offered  by  both  the  TV  station  and  the  9 
 newspaper.  10 
 Similarly,  WEOL-  AM,  co-  owned  with  the  11 
 Chronicle  Telegram  in  Lorraine,  Ohio,  provides  an  12 
 impressive  24  hour  news  service  with  the  local  news  13 
 every  hour  on  the  hour  as  well  as  news  summaries  every  14 
 half  hour  during  the  morning  and  afternoon  drive.  15 
 And  finally,  in  the  much  smaller  Sioux  16 
 City,  Nebraska  market,  WJAG,  Inc.,  owns  both  the  17 
 Norfolk  Daily  News  and  WJAG-  AM.  As  a  result  of  this  18 
 cross  ownership,  WJAG  has  built  a  solid  reputation  for  19 
 its  news  reporting,  operations,  earning  it  more  than  20 
 35  awards  in  the  past  several  years.  21 
 These  and  the  numerous  other  firsthand  22 
 experiences  in  other  markets  have  been  filed  in  the  23 
 Commission's  record  by  NAA  and  many  other  parties  such  24 
 as  Gannett  in  Phoenix,  Media  General  in  Tampa,  Belo  25 
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 228 
 (Phonetic)  in  Dallas  and  Tribune  in  Chicago,  Los  1 


 Angeles  and  other  markets.  2 
 These  results  are  confirmed  by  the  FCC's  3 
 sponsored  studies  that  have  been  conducted  on  4 
 newspaper  broadcast  cross  ownership.  Indeed,  while  5 
 there  have  been  some  criticisms  of  some  of  these  6 
 studies,  the  evidence  that  broadcast  stations  jointly  7 
 owned  with  daily  newspapers  provide  your  communities  8 
 with  both  more  and  higher  quality  news  and  9 
 informational  programming  has  not  been  seriously  10 
 questioned.  11 
 Specifically,  the  Spavins  Study  found  that  12 
 affiliates  co-  owned  with  newspapers  experience  13 
 noticeably  greater  success  under  our  measures  of  14 
 quality  and  quantity  of  local  news  programming  than  15 
 other  network  affiliates.  16 
 Ladies  and  gentlemen,  the  Commission's  17 
 record  establishes  this  set  of  facts  that  must  guide  18 
 your  decision  on  this  matter.  The  media  world  is  19 
 totally  different  now  as  compared  to  when  this  ban  20 
 went  into  effect  in  1975;  no  one  can  seriously  suggest  21 
 otherwise.  Second,  the  experiences  in  the  40  22 
 grandfathered  markets  over  28  years  have  demonstrated  23 
 a  complete  absence  of  harm.  And  third,  the  24 
 Commission's  record  and  your  own  studies,  reveal  an  25 
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 229 
 abundance  of  superior  service  by  newspaper-  owned  local  1 


 stations.  The  ban  is  long  outdated,  has  no  current  2 
 basis  and  should  be  immediately  repealed  in  full.  The  3 
 only  thing  proven  that  this  ban  has  done  is  deny  4 
 public  interest  benefits  to  the  great  number  of  5 
 markets  in  this  country.  6 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Sturm.  7 
 Ms.  Toomey?  8 
 MS.  TOOMEY:  Good  morning.  On  behalf  of  9 
 the  Future  of  Music  Coalition,  I  want  to  thank  you  for  10 
 the  honor  of  testifying  today  and  I  also  want  to  thank  11 
 the  inspiring  audience  for  coming  out  and  letting  12 
 their  voices  be  heard.  13 
 My  name  is  Jenny  Toomey.  I'm  a  rocker  and  14 
 a  businesswoman  and  an  activist  and  I  speak  to  you  15 
 today  as  a  working  musician  and  the  executive  director  16 
 of  the  Future  of  Music  Coalition.  Most  working  17 
 musicians  aren't  super  stars.  Rather,  they're  18 
 independent  and  local.  For  the  past  three  years,  the  19 
 Future  of  Music  has  worked  on  issues  from  webcasting  20 
 to  health  care,  but  one  issue  unites  our  entire  21 
 constituency  and  that's  lack  of  access  to  the  radio.  22 
 Given  these  concerns,  last  February  we  23 
 began  an  8-  month  research  project  to  examine  the  24 
 problem.  In  the  study  we  asked  the  basic  questions,  25 
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 how  has  ownership  of  commercial  radio  changed  and  does  1 


 the  radio  serve  the  essential  regulatory  priorities  of  2 
 localism,  competition  and  diversity?  3 
 Our  study  finds  the  following:  there  is  4 
 scant  evidence  that  these  priorities  are  improved  in  5 
 any  way  by  the  radical  restructuring  of  the  industry  6 
 that  has  taken  place  over  the  past  six  years.  Rather,  7 
 this  restructuring  has  damaged  a  precious  public  8 
 resource.  Localism  has  withered.  The  industry  has  9 
 lost  one  third  of  its  owners  and  every  local  market  is  10 
 controlled  by  four  companies  or  fewer.  11 
 Those  few  independent  operators  who  are  12 
 less  concerned  with  reaching  the  most  attractive  13 
 demographics  cannot  compete  in  an  environment  where  a  14 
 handful  of  media  corporations  control  every  local  15 
 market.  And  there  is  scant  evidence  that  radio  16 
 listeners,  radio  talent,  government,  social  service  17 
 agencies  and  the  music  community  does  not  benefit  from  18 
 these  changes.  19 
 The  fundamental  regulatory  structures  that  20 
 have  governed  radio  for  decades  are  overturned  and  the  21 
 public  deserves  an  accounting  of  the  impact  of  these  22 
 changes  and  a  true  seat  at  the  table  as  further  23 
 changes  are  debated.  24 
 The  radio  industry  defends  its  25 
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 231 
 consolidated  state  by  pointing  at  the  other  industries  1 


 and  saying  we're  not  as  bad  as  those  guys,  but  they  2 
 aren't  those  guys.  Radio  is  not  private  property.  3 
 Radio  is  a  public  resource,  regulated  by  the  4 
 government  on  behalf  of  citizens.  The  question  is  not  5 
 the  gross  number  of  owners.  The  question  is  how  many  6 
 owners  exert  control  in  a  local  market.  7 
 When  measured  according  to  market  8 
 concentrations  of  both  listenership  and  advertising  9 
 dollars,  radio  demonstrates  the  same  principles  of  10 
 oligopolistic  control  now.  11 
 In  virtually  every  local  market  of  the  12 
 country,  four  companies  or  fewer  control  over  70  13 
 percent  of  the  market  and  in  most  cases  those  owners  14 
 are  not  local.  15 
 The  broadcast  industry  claims  this  16 
 reduction  in  local  ownership  is  not  a  problem.  In  17 
 fact,  they  say  fewer  owners  in  a  market  leads  to  more  18 
 diversity.  They  say  radio  companies  will  avoid  19 
 competing  with  themselves  in  single  format  in  a  single  20 
 market.  Yet,  our  study  found  regular  and  substantial  21 
 overlap  between  supposedly  distinct  formats.  In  the  22 
 most  extreme  case,  in  the  week  of  August  2,  2002,  the  23 
 national  charts  for  two  supposedly  distinct  formats  24 
 overlapped  at  a  76  percent  level.  In  other  words,  38  25 
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 232 
 of  the  50  songs  on  the  to  play  list  were  the  exact  1 


 same  songs.  2 
 Furthermore,  this  argument  misses  the  3 
 fundamental  logic  of  the  value  of  the  station  group.  4 
 The  primary  goal  of  the  station  group  is  to  (1)  5 
 attract  the  largest  possible  number  of  listeners  and  6 
 the  most  attractive  demographics  and  (2)  to  ensure  7 
 that  if  a  listener  changes  a  station,  they  change  it  8 
 to  another  station  owned  by  the  parent  company.  In  9 
 other  words,  the  incentive  is  not  to  provide  a  10 
 diversity  of  programming  to  serve  local  communities  11 
 with  a  range  of  news,  entertainment  and  information.  12 
 The  economic  incentive  is  to  assemble  a  homogenous  13 
 landscape  of  overlapping  and  economically  lucrative  14 
 audiences  that  generate  the  most  revenue.  15 
 In  the  February  18th  issue  of  Fortune  16 
 Magazine,  Clear  Channel  CEO  Lowery  Mays  articulated  17 
 the  importance  of  revenue  generation  at  his  company.  18 
 He  said  "we're  not  in  the  business  of  providing  news  19 
 and  information.  We're  not  in  the  business  of  20 
 providing  well  researched  music.  We're  simply  in  the  21 
 business  of  selling  our  customers  products."  This,  I  22 
 would  argue  is  the  fundamental  problem  at  the  heart  of  23 
 the  media  deregulation.  The  stated  effort  to  promote  24 
 competition,  localism  and  diversity  through  less  25 
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 233 
 oversight  has  merely  led  to  an  increased  emphasis  on  1 


 the  bottom  line.  On  the  expense  side,  the  incentive  2 
 for  radio  companies  is  to  centralize  operations,  3 
 increasing  the  use  of  syndicated  programming,  applying  4 
 new  technologies  like  voice  tracking  and  cutting  5 
 costs.  In  many  cases,  this  syndicated  programming  is  6 
 also  owned  by  the  radio  parent  company.  7 
 These  strategies  increase  profit  of  the  8 
 parent  company,  while  diminishing  the  local  connection  9 
 between  the  citizen  and  locally  licensed  station.  10 
 Our  radio  study  makes  a  strong  case  that  11 
 concentration  has  distorted  the  health  and  functioning  12 
 of  the  radio  market,  but  there  are  signs  of  this  13 
 negative  change  that  go  beyond  the  numbers  in  our  14 
 study.  At  the  most  recent  Future  of  Music  policy  15 
 summit,  Congressman  Mark  Foley  explained  that  as  a  16 
 result  of  radio  deregulation,  the  number  of  local  17 
 stations  that  would  provide  him  access  to  his  18 
 constituents  has  diminished  from  five  to  one.  I  19 
 suspect  the  station  owners  like  Mr.  Mays  who  decided  20 
 that  the  kind  of  local  news  programming  that  would  21 
 have  previously  welcomed  the  Congressman  on  to  the  22 
 airways  is  now  not  cost  effective.  23 
 If  this  is  happening  in  Florida,  we  can  24 
 bet  it's  happening  all  over  the  country  and  if  this  25 
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 doesn't  raise  questions  about  the  damage  that  1 


 increased  consolidation  could  inflict  upon  our  2 
 participatory  democracy,  I  don't  know  what  does.  3 
 (Applause.)  4 
 MR.  KRATTENMAKER:  Thank  you.  I  would  5 
 like  to  thank  the  entire  panel  and  two  particulars.  6 
 One,  I've  noticed  that  all  the  Commissioners  have  said  7 
 will  you  please  bring  us  facts  and  data  with  which  we  8 
 can  assess  our  rules  and  I  think  every  single  one  of  9 
 ou  really  listened  to  that.  I  think  you  really  need  10 
 to  be  commended  for  it.  11 
 Secondly,  I'm  not  going  to  apologize  for  12 
 the  weather  because  I  didn't  create  it,  but  I  do  want  13 
 to  say  that  I'm  sorry,  I  appreciate  the  way  you  all  14 
 condensed  your  remarks  to  90  percent  of  the  already  15 
 condensed  that  you  intended  to  bring  here  and  I  think  16 
 you  showed  great  good  spirit  and  good  charm  about  it.  17 
 Thank  you  very  much.  18 
 We  turn  to  questions  from  the  19 
 Commissioners  now.  I  realized  I'd  been  going  in  the  20 
 same  direction  every  time.  That's  not  fair  to  21 
 Commissioner  Martin,  so  I  thought  I'd  start  with  you,  22 
 sir.  23 
 COMMISSIONER  MARTIN:  In  the  interest  of  24 
 letting  the  public  go  ahead  and  comment  as  much  as  25 
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 235 
 possible,  I'll  pass.  1 


 MR.  KRATTENMAKER:  Commissioner  Abernathy?  2 
 COMMISSIONER  ABERNATHY:  I'm  going  to  do  3 
 the  same  thing.  4 
 MR.  KRATTENMAKER:  Chairman  Powell?  5 
 CHAIRMAN  POWELL:  I'll  pass  too.  I  had  6 
 one  status  report  though  that  I  wanted  to  share  with  7 
 Mr.  Mays  because  it  was  Commissioner  Adelstein  that  8 
 sent  that  canary  down  into  the  mine  to  test  the  air  9 
 down  there  and  we  just  heard  back  from  him  this  10 
 morning  and  you're  right,  he's  not  dead.  Actually,  11 
 what  happened  when  he  flew  into  the  mine,  he  12 
 immediately  got  acquired  and  he's  now  programming  12  13 
 radio  stations  from  the  coal  mine.  14 
 (Laughter  and  applause.)  15 
 MR.  KRATTENMAKER:  Commissioner  Adelstein?  16 
 COMMISSIONER  ADELSTEIN:  I  guess  Mr.  Mays  17 
 didn't  think  that  the  canary  image  flew.  It  just  18 
 didn't  fly.  I'm  going  to  pass  in  the  interest  of  time  19 
 so  we  can  hear  from  the  public.  20 
 MR.  KRATTENMAKER:  As  much  as  I  would  like  21 
 to  turn  some  questions  to  the  Panel  too,  I  think  22 
 we'll,  if  we  have  time  later  we'll  come  back  to  them.  23 
 Let's  go  to  the  public.  24 
 People  who  want  to  make  comments,  please  25 
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 236 
 move  up  to  the  microphone.  Watch  the  signal  here.  At  1 


 the  end  of  one  minute  you're  going  to  be  given  a  red  2 
 light  and  we  are  going  to  cut  you  off,  not  because  we  3 
 don't  like  you,  but  because  we  want  everybody  to  have  4 
 a  chance  to  speak.  5 
 Sir,  please  state  your  time.  6 
 MR.  MAZURSKY  (Phonetic):  Michael  7 
 Mazursky,  second  generation  of  broadcasters.  I  thank  8 
 all  of  the  Commissioners  for  coming  to  our  city  today.  9 
 Welcome.  My  partner  and  I  put  a  radio  station  that  10 
 was  on  silent  status  back  on  the  air.  We  own  four  AM  11 
 radio  stations  here  with  the  construction  permit  to  12 
 build  a  fifth  radio  station  right  now.  Of  Mr.  Mays'  13 
 comments,  of  the  diversity  of  formats  in  Richmond,  14 
 we're  proud  to  have  three  of  those  formats  that  we  15 
 serve  and  we're  the  only  ones  that  do  that  in  the  16 
 market.  17 
 My  comment  also  is  on  what  Mr.  Mays  was  18 
 saying  about  how  they  helped  the  local  market.  They  19 
 immediately,  when  they  consolidated  a  few  more  of  20 
 their  stations,  took  off  an  oldies  format  so  we  have  21 
 no  oldies  station  in  Richmond.  They  put  on  an  urban  22 
 format  to  compete  against  Radio  One  because  they  23 
 needed  to  do  that  for  their  national  dollars  --  to  try  24 
 to  gain  some  of  the  national  dollars,  just  is  my  25 
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 237 
 opinion.  1 


 My  father  was  one  of  the  founders  of  Lotus  2 
 Communications,  a  broadcaster  since  1962  in  Los  3 
 Angeles.  I  had  the  opportunity  with  my  partners  to  4 
 buy  a  broken  radio  station  here,  990  AM  and  I  just  5 
 want  to  tell  you  since  1997  we  put  the  station  back  on  6 
 the  air.  We  have  35  employees.  We  have  grouped  7 
 together  our  stations  so  we  do  gain  some  efficiencies,  8 
 but  we  have  been  trying  since  1997  to  add  a  night  time  9 
 signal  on  this  station  and  we  did  get  a  construction  10 
 permit.  11 
 MR.  KRATTENMAKER:  Thank  you,  sir.  Your  12 
 time  is  up.  13 
 What  we're  going  to  do,  as  I  promised  14 
 earlier  --  15 
 MR.  MAZURSKY:  Can  I  say  just  one  more  16 
 thing?  17 
 MR.  KRATTENMAKER:  I'm  sorry,  sir  --  18 
 MR.  MAZURSKY:  That  it  took  from  January  19 
 of  2000,  a  5-  day  window  to  accept  200  applications  20 
 from  AM  guys  like  me  to  fix  theirs  so  I  can  do  more  21 
 local  high  school  sports  at  night,  to  May  of  2001  22 
 until  I  got  the  construction  permit  and  I'm  still  just  23 
 trying  to  get  it  on  because  of  all  the  zoning  and  land  24 
 issues,  but  I  just  want  to  tell  you  that  we're  working  25 
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 238 
 hard  as  local  guys  to  serve  the  community.  1 


 MR.  KRATTENMAKER:  Please  submit  your  15  2 
 second  statement  for  the  record.  Thank  you.  3 
 MR.  SNOWDEN:  We're  going  to  now  go  to  4 
 Arthur  Mobley  who  was  in  line  first  at  the  last  public  5 
 comment,  if  he's  in  line.  Mr.  Mobley?  6 
 You  have  two  minutes,  sir.  7 
 MR.  MOBLEY:  Yes,  I'm  going  to  yield  most  8 
 of  my  time,  but  I  did  want  to  again  reiterate  that  if  9 
 the  Commission  can  look  at  how  economically  stations  10 
 make  money,  they'll  find  a  better  answer  to  some  of  11 
 the  dilemma  that  they're  sharing.  And  I'd  love  to  12 
 come  back  and  testify  with  a  bunch  of  facts  that  I've  13 
 compiled  also,  but  I'll  yield  the  rest  of  my  time  14 
 because  I  got  to  comment  this  morning.  15 
 MR.  KRATTENMAKER:  Thank  you.  Mr.  16 
 Barrett?  17 
 MR.  BARRETT:  I'm  Alan  Barrett,  President  18 
 of  the  Richmond  Branch  of  the  NAACP  and  the  NAACP  19 
 wants  to  issue  a  brief  to  statement  in  strong  20 
 opposition  to  mergers  and  consolidations  that  would  21 
 undermine  minority  opportunities  and  we  also  want  to  22 
 appeal  to  the  FCC  to  not  threaten  the  diversity  and  23 
 democratic  ideals  that  are  the  philosophic  foundations  24 
 of  this  country.  25 
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 239 
 FCC's  support  for  these  kind  of  mergers  1 


 have  done  damages  earlier  presenters  have  stated.  The  2 
 ethnic,  social  and  cultural  pluralism  will  suffer  from  3 
 [Inaudible]  broadcasts  and  print  journalism  supported  4 
 by  the  FCC.  More  restrictive  control  of  popular  5 
 culture  will  not  benefit  diversity  and  in  fact,  they  6 
 will  undermine  [Inaudible]  culturalism.  News  events  7 
 will  become  commodities  that  are  subject  to  the  whims  8 
 of  corporate  ownership.  Controversial  issues  will  be  9 
 diluted  or  filtered  out  all  together.  This  means  that  10 
 minority  views  would  have  less  of  a  chance  of  being  11 
 presented.  What  happened  to  Bill  Maher  and  12 
 "Politically  Incorrect"  is  but  one  example.  We  risk  a  13 
 situation  when  indoctrination  can  become  the  14 
 intentional  or  unintentional  product  of  oligopolistic  15 
 media  markets.  16 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  Barrett.  17 
 (Applause.)  18 
 MR.  KRATTENMAKER:  Mr.  Richmond?  19 
 MR.  RICHMOND:  Yes,  good  afternoon.  My  20 
 name  is  John  Richmond  and  the  only  reason  I'm  here  21 
 today  is  normally  I'd  be  teaching  school  but  we  got  22 
 snowed  out  so  I  find  myself  here  and  I'll  just  try  to  23 
 get  through  as  many  as  five  observations  as  I  can.  24 
 Observation  1.  If  you  all  are  interested  25 
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 240 
 in  finding  a  larger  slice  of  the  public,  including  a  1 


 larger  slice  of  people  that  listen  to  the  various  2 
 types  of  media  that  are  out  there,  hold  hearings  in  3 
 the  evenings  and  on  weekends.  That's  when  most  of  us  4 
 can  come  out.  5 
 (Applause.)  6 
 Number  two,  I  find  myself  less  able  to  7 
 find  out  what's  going  on  locally  than  nationally  8 
 because  I  see  the  media  already  as  nationalized.  9 
 There  seems  to  be  a  formulaic  approach  to  local  news  10 
 coverage.  In  the  morning  and  again  during  the  11 
 evening,  I  flip  back  and  forth  between  the  three  major  12 
 stations  here.  They  have  virtually  the  same  stories  13 
 on  at  virtually  the  same  time  and  I  don't  need  to  know  14 
 about  a  rescue  in  North  Dakota  or  a  unique  pie  15 
 throwing  contest  in  Texas  and  this  type  of  story  16 
 inevitably  takes  up  at  least  two  minutes  of  the  17 
 newscast.  And  also  an  extra  hour  of  news  doesn't  18 
 necessarily  mean  an  extra  hour  of  news.  Here's  why.  19 
 A  lot  of  times  stories  get  introduced  or  summarized  20 
 that  are  going  to  be  covered  in  more  depth  later  on.  21 
 Three.  I  use  radio  for  most  of  my  media  22 
 entertainment  and  in  this  market  it  seems  like  the  23 
 same  songs  are  playing  on  every  station,  several  of  24 
 which  are  owned  by  Clear  Channel  and  so  a  format  does  25 
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 241 
 not  necessarily  mean  diversity  because  as  Ms.  Toomey  1 


 said,  formats  overlap.  2 
 Observation  four.  As  a  principal,  I  3 
 believe  that  you  must  resist  corporate,  NPR  and  any  4 
 other  pressure  to  restrict  in  any  way  the  right  of  low  5 
 power  broadcasters  to  set  up  as  long  as  they  don't  6 
 interfere  with  other  low  power  broadcasters.  7 
 I  look  for  views  and  news  from  all  over  my  8 
 locality,  from  left,  right,  up,  down,  center  and  the  9 
 restrictions  that  need  to  be  loosened  are  those  on  the  10 
 establishment  of  low  power  stations  such  as  Prometheus  11 
 Radio  in  Philadelphia  --  12 
 (Applause.)  13 
 MR.  KRATTENMAKER:  Thank  you,  Mr.  14 
 Richmond.  15 
 Mr.  Boone?  16 
 MR.  BOONE:  I  am  Raymond  H.  Boone,  editor  17 
 and  publisher  of  the  Richmond  Free  Press,  the  loyal  18 
 opposition  to  monopoly  journalism,  represented  by  the  19 
 Richmond  Times  Dispatch.  I'm  also  a  former  journalism  20 
 professor  at  Howard  University  and  I'm  also  a  former  21 
 Pulitzer  Prize  juror  on  two  separate  occasions.  22 
 I  stand  here  to  reinforce  a  lead  editorial  23 
 this  morning  that  was  titled  "Stop  Monopoly  in  24 
 Journalism".  I  also  stand  to  reinforce  my  letter  to  25 
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 242 
 the  Commissioners  calling  for  the  end  of  the  abuse  of  1 


 the  first  amendment  which  is  the  cornerstone  which  is  2 
 the  source  or  the  protector  of  our  democracy.  If  we  3 
 do  not  do  that,  we  are  fueling  an  internal  enemy.  4 
 I  think  it  is  appropriate  that  you  meet  in  5 
 Richmond,  a  city  that  has  suffered  much  because  of  the  6 
 abuse  and  a  newspaper  not  respecting  the  first  7 
 amendment.  8 
 To  give  you  an  idea  of  the  conditions  that  9 
 an  independent  newspaper  like  the  Free  Press  faces  it  10 
 is  not  only  the  monopoly,  but  the  kind  of  influence  11 
 that  it  has  entrenched  in  the  environment.  An  12 
 example,  the  main  library  tossed  out  our  three  13 
 volumes,  original  volumes,  simply  because  we  expressed  14 
 the  view  that  was  not  consistent  with  that  of  the  15 
 monopoly  publication.  Just  two  or  three  weeks  ago,  our  16 
 photographer  was  restricted  --  17 
 MR.  KRATTENMAKER:  Thank  you.  18 
 MR.  BOONE:  One  last  sentence,  please.  19 
 Restricted  from  photographically  covering  a  historical  20 
 swearing  in  ceremony  of  the  Chief  Justice  while  the  21 
 monopoly  press  was  allowed  to  do  that.  22 
 MR.  KRATTENMAKER:  Thank  you,  sir.  23 
 MR.  SNOWDEN:  We're  going  to  go  for  24 
 another  15  minutes.  25 
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 243 
 Sir.  1 


 MR.  BENNETT:  My  name  is  Hans  Bennett.  2 
 I'm  an  independent  photojournalist  and  editor  of  3 
 Insubordination  Magazine  from  Philadelphia.  I'd  like  4 
 to  talk  about  the  issue  of  diversity  and  in  5 
 particular,  the  availability  of  news  that  challenges  6 
 President  Bush's  current  war  campaign.  In  my  opinion,  7 
 the  corporate  media's  reporting  on  the  U.  S.  wars  has  8 
 never  been  good,  but  this  current  consolidation  9 
 threatens  to  make  it  even  worse.  10 
 Despite  the  millions  around  the  world  that  11 
 marched  on  February  15th  against  the  war,  Bush  has  12 
 said  he  will  attack  without  U.  N.  support,  despite  the  13 
 fact  that  this  violates  international  law,  the  14 
 mainstream  media  is  essentially  supporting  Bush  in  his  15 
 war  drive.  This  very  scandaled,  illegal  war  has  not  16 
 been  addressed.  17 
 One  of  the  clearest  empirical  examples  of  18 
 U.  S.  military  ties  to  the  media  machine  is  the  fact  19 
 that  FCC  Chair,  Michael  Powell,  is  the  son  of  a  war  20 
 criminal,  Colin  Powell.  When  Colin  Powell  presented  21 
 supposed  rock  solid  proof  of  Iraq's  deception  at  the  22 
 U.  N.  earlier  this  month,  we  did  not  have  a  critical  23 
 media  to  challenge  his  statements.  How  many  people  24 
 supporting  the  U.  S.  massacre  of  Iraq  know  that  --  25 
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 244 
 MR.  KRATTENMAKER:  Thank  you,  sir,  that  is  1 


 two  minutes.  2 
 Yes  ma'am.  3 
 MS.  EWELL:  Hello,  my  name  is  Katie  Ewell  4 
 and  I  work  and  live  in  Richmond  and  I  was  lucky  enough  5 
 to  catch  an  article  about  the  hearings.  I  had  no  idea  6 
 that  media  ownership  deregulation  might  happen.  And  7 
 so  I  took  it  upon  myself  to  do  a  lot  of  research  after  8 
 I  read  the  article  and  in  a  lot  of  my  research  I  found  9 
 a  lot  of  the  opposing  views.  I  guess  I'm  a  consumer  10 
 activist  or  a  citizen  activist  now.  I  don't  know  what  11 
 you  would  call  it,  but  I  am  not  for  the  deregulation.  12 
 I  see  a  lot  of  --  I  don't  like  to  have  13 
 everything  coming  from  one  or  two  corporations.  And  14 
 I'd  just  like  to  say  I  wish  that  more  people  were  15 
 here.  16 
 I  wrote  a  letter  to  the  editor  of  the  17 
 Times  Dispatch  and  unfortunately  it  wasn't  printed  and  18 
 it's  unfair  to  assume  that  that's  because  Media  19 
 General  might  have  opposing  views,  but  it's  easy  to  20 
 assume  that  that's  why  it  was  not  printed.  21 
 And  the  biggest  thing  is,  Chairman  Powell,  22 
 I  know  that  you  wanted  us  to  bring  evidence  and  I'm  23 
 just  an  individual  and  I  want  to  ask  what  can  we  do  as  24 
 individuals  or  concerned  citizens  to  help  you  guys  25 
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 245 
 fight  the  courts,  to  gather  the  evidence  that  you  need  1 


 to  support  our  views?  2 
 I  could  do  a  telephone  survey  or  you  know,  3 
 would  you  like  me  to  document  all  my  media  intake  for  4 
 a  month.  What  can  the  public  do  to  help  you  guys  5 
 because  apparently  you  don't  have  enough  time  to  get  6 
 all  the  studies  done  together.  I'm  just  trying  to  ask  7 
 for  help  so  that  we  can  help  you  guys.  8 
 Thank  you  very  much.  9 
 MR.  KRATTENMAKER:  Thank  you.  Yes  sir.  10 
 MR.  PARISH:  My  name  is  James  Parish  and  11 
 I'm  co-  founder  of  the  Richmond  Image  Moving  Co-  op  12 
 which  is  a  nonprofit  here  in  Richmond  that  promotes  13 
 and  supports  independent  media  makers.  14 
 I  took  the  day  off  work  so  I  could  be  15 
 here.  I  had  planned  to  be  here  a  couple  of  hours,  but  16 
 was  so  encouraged  by  the  public  support  that  I  had  to  17 
 call  in  and  say  I  needed  to  be  somewhere  else  today.  18 
 And  I'm  glad  that  I  have  the  flexibility  to  do  that  in  19 
 my  job  and  not  everybody  does.  20 
 And  I  would  encourage  you  to  hold  some  of  21 
 these  hearings  in  the  evenings  and  on  the  weekends.  22 
 I'm  guessing  if  you're  listening  to  my  voice,  you  may  23 
 have  some  idea  where  I  am  from  at  least  that  I  grew  up  24 
 in  the  South.  I  grew  up  in  a  little  town,  Benson,  25 
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 246 
 North  Carolina.  And  when  I'm  in  the  South  and  when  1 


 I'm  in  North  Carolina,  I  like  to  turn  on  the  radio  and  2 
 the  TV  and  hear  people  that  sound  like  me  and  when  I'm  3 
 in  New  York,  I  want  to  hear  people  who  sound  like  they  4 
 are  from  New  York.  5 
 So  I  am  for  the  local  and  last  night  I  was  6 
 in  a  club  showing  a  bunch  of  films  through  my  7 
 nonprofit  to  focus,  showcase  independent  film  makers,  8 
 media  makers  here  in  Richmond.  And  to  highlight  this  9 
 event  so  media  makers  would  know  to  be  here  and  we're  10 
 doing  that  because  it's  hard  to  have  a  voice  and  to  11 
 show  our  work  elsewhere,  so  we  gather  in  clubs  with  12 
 100  to  200  people  at  a  time.  But  we  can  do  that  and  I  13 
 encourage  you  to  think  about  the  local  in  this  issue.  14 
 It's  important.  Thank  you.  15 
 MR.  KRATTENMAKER:  Thank  you.  Yes  sir.  16 
 (Applause.)  17 
 MR.  MAZZA  (Phonetic):  Hi,  my  name  is  18 
 Anthony  Mazza.  I  come  from  Philadelphia  and  my  19 
 comment  pertains  to  --  well,  we've  been  here  since  20 
 about  10  o'clock  this  morning  for  approximately  six  21 
 hours  of  testimony  and  we've  briefly  heard  from  the  22 
 public  20  minutes  before  lunch,  about  20  minutes  a  23 
 little  while  ago  and  now,  where  we've  heard  four  or  24 
 five  hours  of  testimony  from  experts  and  the  panelists  25 
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 247 
 and  I'm  just  wondering  if  this  is  all  we  have  to  offer  1 


 as  far  as  inviting  the  public  into  this  process,  then  2 
 I  just  think  that  it's  really  deficient.  3 
 The  other  comment  that  I  wanted  to  make  4 
 was  that  I  thought  it  was  curious  that  we  heard  some  5 
 testimony  from  people  from  NBC  and  from  Fox  and  from  6 
 Clear  Channel  about  how  consolidation  promotes  7 
 diversity  and  protects  localism  and  we've  heard  some  8 
 very  heartfelt  stories  from  Detroit  and  some  other  9 
 areas.  But  I'm  just  curious  where  the  representatives  10 
 of  these  communities  are  that  are  the  cheerleaders  of  11 
 this  corporate  protection  that  there  are  communities  12 
 and  representation  that  they're  getting  in  these  13 
 corporate  forums  because  even  groups  like  the  tobacco  14 
 industry  can  trot  out  their  corporate-  funded  grass  15 
 roots  groups  to  talk  about  the  evils  of  smoking  laws  16 
 and  anti-  smoking  laws,  but  we  haven't  heard  from  one  17 
 citizen  who  wasn't  on  the  payroll  of  these  companies  18 
 come  in  and  testify  that  media  consolidation  has  done  19 
 great  things  for  my  local  area.  20 
 (Applause.)  21 
 And  I'm  just  wondering,  I  just  hope  that,  22 
 I  really  hope  that  we  have  another  opportunity,  23 
 another  public  forum  to  hear  the  full  range  of  24 
 opinions  because  I'm  sure  that  they  exist,  but  I  just  25 
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 248 
 don't  feel  that  we've  been  given  the  opportunity  to  1 


 hear  them  here  today.  2 
 (Applause.)  3 
 MR.  KRATTENMAKER:  Yes  sir.  4 
 MR.  COLLIER:  My  name  is  Chris  Collier,  I  5 
 live  in  Plymouth,  New  Hampshire  and  I  have  20  years'  6 
 experience  in  broadcasting.  I  then  became  a  parent  7 
 company  and  I  have  a  subsidiary  now.  I  have  a  child,  8 
 he's  22  years  old,  but  he  has  autism  and  he's  very  9 
 literal.  And  when  he  heard  about  the  angel  of  public  10 
 interest  I  couldn't  explain  what  that  was  because  he  11 
 wanted  to  know  is  that  like  Gabriel  the  archangel  or  12 
 what  is  that?  So  I  began  to  look  into  what  was  going  13 
 on  and  I  noticed  there  is  a  particular  fondness  for  14 
 faith-  based  metaphors.  So  I'd  like  --  15 
 [END  OF  TAPE  4,  SIDE  A;  BEGIN  TAPE  4,  SIDE  16 
 B.]  17 
 --  if  we're  to  believe  that  market  can  be  18 
 a  religion,  then  we  can  take  that  to  be  the  church  19 
 started  by  David  Zarnoff.  David  and  his  well-  financed  20 
 legion  of  corporate  lawyers  who  are  responsible  for  21 
 keeping  FM  radio  out  of  our  hands  for  decades.  David  22 
 told  his  followers  the  following  parable:  what's  good  23 
 for  RCA  is  good  for  the  USA.  That  breaks  most  of  the  24 
 Commandments.  25 
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 The  1996  Telecommunications  Act  allowed  1 


 the  money  changers  back  in  the  temple  and  today  2 
 they're  here  with  a  vengeance.  The  angel  of  public  3 
 interest  hasn't  got  a  prayer  of  being  heard,  much  less  4 
 seen.  The  only  place  we  can  eavesdrop  is  a  50  watt  FM  5 
 station  just  outside  Modesto.  6 
 Further  deregulation  is  an  indulgence  7 
 followed  by  a  transgression.  If  there's  to  be  anyone  8 
 with  a  flaming  sword  guarding  the  American  public,  let  9 
 it  be  the  institution,  the  FCC,  that  has  the  power  to  10 
 shape  what  we  see,  what  we  hear  and  how  we  think.  11 
 That's  the  cannon  and  creed  that  will  define  us,  our  12 
 values  and  our  society.  13 
 Thank  you  very  much  and  I  appreciate  the  14 
 chance  to  be  here  today  and  to  talk  to  you.  15 
 Thank  you  very  much.  16 
 (Applause.)  17 
 MR.  KRATTENMAKER:  Thank  you,  sir.  Yes  18 
 ma'am.  19 
 MS.  RANNELL  (Phonetic):  Good  afternoon.  20 
 My  name  is  Deborah  Rannell  and  being  a  former  teacher  21 
 I  do  know  that  people  can  only  focus  for  about  20  22 
 minutes  so  I  do  appreciate  you  staying  with  us  for  the  23 
 whole  day.  24 
 If  I  heard  correctly,  Commissioner  Copps,  25 
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 250 
 you  said  that  you  were  interested  in  the  person  who  1 


 didn't  know  the  FCC  existed.  Well,  I  am  that  clueless  2 
 person  that  you  were  looking  for  because  up  until  3 
 about  two  weeks  ago  I  didn't  know  this  issue  even  4 
 existed.  So  I  did  come  here  today  to  learn.  And  this  5 
 is  what  I've  learned.  6 
 Whatever  side  you  all  decide  to  vote  on,  7 
 you  have  your  empirical  evidence.  I  have  heard  some  8 
 great  speakers  today.  I  think,  as  I  said,  whatever  9 
 you  decide  to  do  you  will  have  the  empirical  evidence  10 
 to  back  you  up.  11 
 So  then  what  I'm  thinking  is  that  you're  12 
 going  to  have  to  go  to  your  relationships,  the  people  13 
 you  trust  to  make  your  decision.  I  want  to  be  one  of  14 
 those  people  that  you  trust,  one  of  those  people  that  15 
 you  listen  to  because  I  think  of  you  as  the  steward  of  16 
 my  voice.  17 
 So  let  me  share  a  fear  I  have.  I  am  very  18 
 mainstream  and  conservative,  at  least  I've  been  told  19 
 so,  so  sometimes  that  one  voice  that  we  hear  is  real  20 
 warm  and  fuzzy  for  me.  I  like  that.  I  can  go  with  21 
 that.  But  it  scares  me  to  death  to  think  that  I  won't  22 
 have  all  these  other  voices  coming  at  me  because  those  23 
 other  voices  give  me  the  luxury  of  deciding  if  I'm  24 
 wrong  and  making  a  change.  25 
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 251 
 They  also  give  me  the  pleasure  of  deciding  1 


 I'm  right  and  I  should  stick  with  what  I  believe.  And  2 
 I  do  believe  that  what  you  have  heard  today  is  that  we  3 
 want  you  to  trust  us.  We  want  you  to  listen  to  us.  4 
 You  are  the  steward  of  our  voice.  And  if  we  haven't  5 
 given  you  a  good  enough  picture  of  the  American  6 
 citizen  --  7 
 MR.  KRATTENMAKER:  Thank  you,  ma'am.  8 
 MS.  RANNELL:  Then  go  get  it.  9 
 (Applause.)  10 
 MR.  KRATTENMAKER:  Thank  you.  Yes  sir.  11 
 MR.  BRIDGES:  My  name  is  Alex  Bridges.  12 
 I'm  a  reporter  for  a  small  newspaper  just  south  of  13 
 Richmond  and  I've  been  there  about  four  years,  got  14 
 there  straight  out  of  college,  actually.  Went  here  to  15 
 VCU  and  I  noticed  that  while  I  was  at  VCU  there  16 
 weren't  any  places  really  to  work  straight  out  of  17 
 college  that  were  of  the  calibre  of  say  the  Times  18 
 Dispatch  or  any  of  these  other  newspapers,  so  you  had  19 
 to  think  small  and  that's  how  most  journalists  get  20 
 their  start.  21 
 But  I've  noticed  that  the  diversity  in  the  22 
 area,  across  the  state,  I  guess,  has  dwindled.  And  23 
 I'm  not  here  to  argue  against  corporations  owning  24 
 several  newspapers  across  the  country  because  they  can  25 
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 252 
 still  do  a  fine  job  covering  local  events,  but  I  think  1 


 that  if  you  lift  this  cap,  if  you  allow  newspapers  and  2 
 television  stations  and  radio  stations  to  get  gobbled  3 
 up  by  the  large  corporations,  eventually  it's  not  4 
 going  to  work  well  and  there's  been  a  lot  of  evidence  5 
 to  show  that  diversity  is  dwindling.  When  you  cut  6 
 away  from  the  diversity,  you  also  start  to  cut  away  7 
 from  the  dissemination  of  information  which  is  8 
 generally  the  main  goal  of  a  journalist.  And  if  you  9 
 cut  away  from  the  dissemination  of  information,  you  10 
 have  a  less  educated  public,  a  less  informed  public.  11 
 A  less  informed  public  means  you  have  less  of  a  12 
 democracy  than  you  had  before.  13 
 In  my  history  lessons,  I  vaguely  recall  14 
 that  the  Soviet  Union  had,  I  believe,  two  media  15 
 outlets  for  its  entire  country  and  that  also  included  16 
 the  Eastern  Bloc  and  if  you  want  to  talk  about  17 
 diversity,  obviously  that  wasn't  very  diverse,  18 
 especially  since  it  was  controlled  by  the  government.  19 
 Well,  eventually  you'll  have  that  same  diversity  here  20 
 in  America.  You'll  have  Clear  Channel  and  you'll  have  21 
 maybe  even  Media  General  owning  everything  in  the  22 
 country  and  then  you  will  not  have  any  diversity.  23 
 Thank  you.  24 
 (Applause.)  25 
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 253 
 MR.  KRATTENMAKER:  And  for  our  final  1 


 public  comment,  yes  sir.  2 
 MR.  MILKUS  (Phonetic):  My  name  is  Chuck  3 
 Milkus.  I'm  a  former  FCC  attorney  turned  broadcaster.  4 
 You  heard  from  my  partner,  Mike  Mazursky.  We're  5 
 independent  AM  broadcasters  here  in  Richmond  and  I  6 
 want  to  make  sure  that  the  contribution  of  independent  7 
 broadcasters  to  diversity  and  localism  is  not  8 
 overlooked.  We're  doing  a  lot  of  good  things  here  9 
 bringing  new  formats  to  the  market.  10 
 I  urge  you  that  in  this  rulemaking,  if  you  11 
 decide  to  toughen  up  and  take  some  action  against  12 
 deregulation  in  response  to  some  of  the  things  you're  13 
 hearing,  please  don't  do  it  in  the  way  that  will  harm  14 
 small  independent  broadcasters  who  are  doing  the  best  15 
 we  can  to  try  and  compete  against  the  large  group  16 
 operators.  17 
 One  additional  comment  to  Mr.  Mays,  who  18 
 made  a  comment  about  the  contribution  of  Clear  Channel  19 
 to  localism.  An  anecdote  that  came  to  mind  for  me  is  20 
 I  have  two  children,  ages  13  and  10.  They  prefer  to  21 
 listen  to  FM  music  stations,  not  my  radio  station,  22 
 unfortunately,  but  there's  a  pop  station  in  the  market  23 
 here,  Q94.  Whenever  we  go  to  another  city,  the  first  24 
 thing  they  do  is  we  get  in  the  car  and  they're  like  25 
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 254 
 Dad,  where's  the  Q94  in  this  city?  And  it  usually  1 


 takes  me  about  anywhere  from  10  to  30  seconds  to  scan  2 
 the  dial  and  find  it  and  stations  just  sound  the  same  3 
 when  they're  owned  by  the  group  owners,  regardless  of  4 
 what  city  you're  in  and  I  don't  think  that  speaks  very  5 
 well  for  localism.  6 
 Thank  you.  7 
 (Applause.)  8 
 MR.  KRATTENMAKER:  Sir,  may  I  ask  you  to  9 
 submit  your  information  for  the  public  record.  10 
 Thank  you  very  much  and  you  have  the  11 
 floor.  12 
 MR.  BEST:  My  name  is  Glen  Best  and  I'm  13 
 representing  the  Sierra  Club  and  the  reason  I'm  late  14 
 is  because  I  actually  got  tied  up  in  Memphis.  15 
 MR.  KRATTENMAKER:  Will  you  please  give  us  16 
 your  remarks,  sir?  17 
 MR.  BEST:  Yes  sir,  I  will.  Before  the  18 
 FCC  considers  any  change  that  would  further  19 
 consolidate  media  ownership,  it  needs  to  investigate  20 
 instances  of  censorship  by  owners  such  as  those  21 
 recently  experienced  by  the  Sierra  Club.  In  the  past  22 
 eight  months,  the  Sierra  Club  has  had  two  radio  23 
 campaign  ads  rejected  by  stations,  a  radio  ad  produced  24 
 by  the  club  last  June  urging  Bill  Ford,  CEO  of  Ford  25 
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 255 
 Motor  Company  to  produce  more  fuel  efficient  vehicles  1 


 was  rejected  by  Detroit  stations,  but  later  aired  by  a  2 
 station  in  neighboring  Canada.  We  shouldn't  have  to  3 
 go  to  Windsor  to  have  our  ads  run.  4 
 In  September,  another  ad,  critical  of  5 
 pollution  from  large  dairy  operations  in  Twin  Falls  6 
 and  Jerome,  Idaho  was  pulled  by  station  owners,  Clear  7 
 Channel  Communications  one  week  after  the  station  8 
 started  getting  --  was  pulled  by  the  station  one  week  9 
 after  they  got  a  lot  of  calls  in  an  orchestrated  10 
 effort  by  advertisers  complaining  about  the  Sierra  11 
 Club  ad.  12 
 Now  this  isn't  directly  related  to  the  13 
 FCC,  but  it  involves  Clear  Channel.  In  October  of  14 
 last  year,  Clear  Channel  Communications  and  Viacom  15 
 which  own  billboards  in  New  Mexico  rejected  billboard  16 
 ads  by  the  Sierra  Club  in  support  of  the  Zuni  Native  17 
 American  Tribe  and  critical  of  plans  for  an  18,000  18 
 acre  strip  coal  mine  that  would  harm  the  Zuni  salt  19 
 lake  in  western  New  Mexico.  20 
 I  ask  you  this  question  in  my  closing  21 
 remarks  here,  how  can  the  marketplace  of  ideas  which  22 
 you're  so  concerned  about  legitimately  operate  in  an  23 
 environment  where  access  to  public  airways  is  owned  by  24 
 fewer  and  fewer  corporations  that  view  public  25 
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 256 
 discourse  as  a  threat  to  their  bottom  line?  1 


 Thank  you.  2 
 MR.  KRATTENMAKER:  As  the  moderator  of  3 
 this  session  I  would  like  to  thank  all  of  the  4 
 panelists  and  all  the  contributors  from  the  public.  I  5 
 thought  the  woman,  the  schoolteacher  said  it  best,  6 
 we've  heard  a  lot  of  very  good  talks  here  today,  not  7 
 only  from  the  panelists,  but  also  from  the  members  of  8 
 the  public.  9 
 I  don't  know  how  many  public  hearings  at  10 
 the  FCC  I've  participated  in,  watched  or  even  set  up  a  11 
 couple.  I  don't  think  any  of  them  were  as  robust  or  12 
 as  informative  as  this  and  I  think  that's  all  due  to  13 
 the  efforts  of  the  Commissioners  and  of  Dane  Snowden  14 
 and  his  staff.  And  I  wanted  to  thank  you,  Dane,  very  15 
 much  and  give  this  to  you  to  wrap  up.  16 
 MR.  SNOWDEN:  Thank  you,  Tom,  and  thank  17 
 you  very  much  for  all  of  your  good  work  in  moderating  18 
 our  panel  and  thank  you  all  for  coming  today.  If  you  19 
 did  not  have  an  opportunity  to  make  a  public  comment  20 
 and  you  would  like  to  submit  a  comment,  you  can  go  to  21 
 the  FCC  website  at  fcc.  gov  and  click  on  the  icon  that  22 
 says  ECFS  Express  where  you  can  file  your  comment  for  23 
 the  record.  24 
 Madam  Secretary?  25 
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 257 
 SECRETARY  DORTCH:  This  concludes  the  1 


 Commission's  Broadcast  Ownership  En  Banc  hearing.  The  2 
 Commission  thanks  the  panelists  and  the  public  for  its  3 
 attendance.  We  are  now  adjourned.  4 
 (Whereupon,  the  public  hearing  was  5 
 concluded.)  6 
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257