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MEDIA OWNERSHIP IN THE 21ST CENTURY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND 

TECHNOLOGY 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 11, 2014 

Serial No. 113–152 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 

COMMITTEE ON ENERGY AND COMMERCE 

FRED UPTON, Michigan 

Chairman 

RALPH M. HALL, Texas 

JOE BARTON, Texas 

Chairman Emeritus 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOSEPH R. PITTS, Pennsylvania 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

Vice Chairman 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 

ROBERT E. LATTA, Ohio 

CATHY MCMORRIS RODGERS, Washington 

GREGG HARPER, Mississippi 

LEONARD LANCE, New Jersey 

BILL CASSIDY, Louisiana 

BRETT GUTHRIE, Kentucky 

PETE OLSON, Texas 

DAVID B. MCKINLEY, West Virginia 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

H. MORGAN GRIFFITH, Virginia 

GUS M. BILIRAKIS, Florida 

BILL JOHNSON, Ohio 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

HENRY A. WAXMAN, California 

Ranking Member 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANICE D. SCHAKOWSKY, Illinois 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

JOHN BARROW, Georgia 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

JERRY MCNERNEY, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

PAUL TONKO, New York 

JOHN A. YARMUTH, Kentucky 

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

GREG WALDEN, Oregon 

Chairman 

ROBERT E. LATTA, Ohio 

Vice Chairman 

JOHN SHIMKUS, Illinois 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

MARSHA BLACKBURN, Tennessee 

STEVE SCALISE, Louisiana 

LEONARD LANCE, New Jersey 

BRETT GUTHRIE, Kentucky 

CORY GARDNER, Colorado 

MIKE POMPEO, Kansas 

ADAM KINZINGER, Illinois 

BILLY LONG, Missouri 

RENEE L. ELLMERS, North Carolina 

JOE BARTON, Texas 

FRED UPTON, Michigan (ex officio) 

ANNA G. ESHOO, California 

Ranking Member 

MICHAEL F. DOYLE, Pennsylvania 

DORIS O. MATSUI, California 

BRUCE L. BRALEY, Iowa 

PETER WELCH, Vermont 

BEN RAY LUJAN, New Mexico 

JOHN D. DINGELL, Michigan 

FRANK PALLONE, JR., New Jersey 

BOBBY L. RUSH, Illinois 

DIANA DEGETTE, Colorado 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

HENRY A. WAXMAN, California (ex officio) 

(II) 

(III) 

C O N T E N T S 

Page 

Hon. Greg Walden, a Representative in Congress from the State of Oregon, 

opening statement ................................................................................................ 1 

Prepared statement .......................................................................................... 3 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, opening statement .................................................................................... 4 

Hon. G.K. Butterfield, a Representative in Congress from the State of North 

Carolina, opening statement ............................................................................... 10 

Hon. Henry A. Waxman, a Representative in Congress from the State of 

California, opening statement ............................................................................. 15 

Hon. Robert E. Latta, a Representative in Congress from the State of Ohio, 

opening statement ................................................................................................ 16 

Hon. John Shimkus, a Representative in Congress from the State of Illinois, 

opening statement ................................................................................................ 17 

WITNESSES

William T. Lake, Chief, Media Bureau, Federal Communications Commission 17 

Prepared statement .......................................................................................... 20 

Answers to submitted questions ...................................................................... 101 

Jessica J. Gonzalez, Executive Vice President and General Counsel, National 

Hispanic Media Coalition .................................................................................... 26 

Prepared statement .......................................................................................... 28 

Answers to submitted questions ...................................................................... 107 

Bernard Lunzer, President, The Newspaper Guild-CWA .................................... 49 

Prepared statement .......................................................................................... 51 

Answers to submitted questions ...................................................................... 118 

Paul J. Boyle, Senior Vice President of Public Policy, Newspaper Association 

of America ............................................................................................................. 53 

Prepared statement .......................................................................................... 55 

Answers to submitted questions ...................................................................... 120 

David Bank, Managing Director, Global Media Equity Research, RBC Capital 

Markets ................................................................................................................. 62 

Prepared statement .......................................................................................... 65 

Answers to submitted questions ...................................................................... 124 

Jane Mago, Executive Vice President and General Counsel, Legal and Regulatory Affairs, National Association of Broadcasters ........................................ 73 

Prepared statement .......................................................................................... 75 

Answers to submitted questions ...................................................................... 126 

SUBMITTED MATERIAL

Letter of June 20, 2014, from Michael Copps, Special Advisor, Media and 

Democracy Reform Initiative, Common Cause, to Mr. Walden and Ms. 

Eshoo, submitted by Ms. Eshoo .......................................................................... 6 

Letter of June 10, 2014, from Jason T. Lagria, Senior Staff Attorney, Asian 

Americans Advancing Justice, to Mr. Walden and Ms. Eshoo, submitted 

by Mr. Butterfield ................................................................................................ 11 

Letter of June 10, 2014, from Wade Henderson, President & CEO, and 

Nancy Zirkin, Executive Vice President, The Leadership Conference on 

Civil and Human Rights, to Mr. Walden and Ms. Eshoo, submitted by 

Mr. Butterfield ..................................................................................................... 13 

(1) 

MEDIA OWNERSHIP IN THE 21ST CENTURY 

WEDNESDAY, JUNE 11, 2014 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY, COMMITTEE ON ENERGY AND COMMERCE, Washington, DC. 

The subcommittee met, pursuant to call, at 10:35 a.m., in room 

2123 of the Rayburn House Office Building, Hon. Greg Walden 

(chairman of the subcommittee) presiding. 

Members present: Representatives Walden, Latta, Shimkus, 

Terry, Blackburn, Lance, Guthrie, Kinzinger, Long, Barton, Eshoo, 

Braley, Lujan, Rush, Butterfield, and Waxman (ex officio). 

Staff present: Ray Baum, Senior Policy Advisor/Director of Coalitions; Sean Bonyun, Communications Director; Matt Bravo, Professional Staff Member; Andy Duberstein, Deputy Press Secretary; 

Gene Fullano, Detailee, FCC; Kelsey Guyselman, Counsel, Communications and Technology; Grace Koh, Counsel, Communications 

and Technology; David Redl, Counsel, Communications and Technology; Charlotte Savercool, Legislative Coordinator; Tom Wilbur, 

Digital Media Advisor; Shawn Chang, Democratic Chief Counsel, 

Communications and Technology; Margaret McCarthy, Democratic 

Professional Staff Member; and Ryan Skukowski, Democratic Policy Analyst. 

Mr. WALDEN. I want to call to order the Subcommittee on Communications and Technology, and welcome you all for our Media 

Ownership in the 21st Century hearing, and thank our witnesses 

for taking time to be here. We really appreciate your counsel and 

your testimony. 

I will open with my opening statement, and then we will move 

to Ms. Eshoo for hers. 

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

What do the founding of Microsoft, the first episode of ‘‘Saturday 

Night Live,’’ and the establishment of the broadcast/newspaper 

cross-ownership ban have in common? Well, they are all about 

ready to turn 40, because they all took place in 1975. But where 

Microsoft has innovated and moved past a world where MS–DOS 

was the state of the art, and ‘‘Saturday Night Live’’ continues to 

reinvent itself as an essential piece of Americana, the media ownership rules persist as though the Internet simply did not exist. Our 

laws need to reflect the reality of the world we live in today, not 

the world of the Ford administration. It is my sincere hope that today’s discussion can spur us to rationalize the rules and regulaVerDate Mar 15 2010 11:53 Apr 22, 2015 Jkt 037690 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 F:\113-152 MEDIA OWNERSHIP ASK OK 4-15-15\113-152 MEDIA OWNERSHIP PDF MADE
2 

tions for a media industry that serves consumers in this century 

and not in the last. The Ford administration, as noted there, with 

one chairman of the subcommittee posed with Mr. Ford, just to put 

in context how things have changed, beyond just my hairline. 

In today’s media environment, traditional media like Bend, Oregon’s, KTVZ–TV and the town’s Bulletin newspaper compete with 

Twitter, The Drudge Report, The Huffington Post, Fox News, 

MSNBC, CNN, the Wall Street Journal, and the New York Times. 

You can get it all right there. We live in an era of a 24-hour news 

cycle and on-demand national media, but our laws assume a world 

where local newspapers and broadcast stations are so influential 

that economies of scale are dangerous to the public interest. While 

proponents of the status quo express their love of localism and the 

laws intended to guarantee it, I fear that laws intended to ensconce 

our love of local media are, in fact, loving it to death. 

Promoting localism is a goal that we all share; but localism is not 

cheap. Producing the kind of high-quality content that has been the 

hallmark of American broadcasting is an expensive labor of love for 

local broadcasters and newspapers, and as Americans’ habits have 

changed, so too should the way we look at local media. We live in 

a competitive landscape where increasingly we cherry pick articles; 

we scroll through feeds and aggregators; and we have multiple national news programming options, and we DVR almost everything 

to time-shift the programming that we love. It is a different world, 

so why don’t our media laws reflect these changes? 

The fact is, the FCC has tried to change these rules as early as 

its 2002 review of media ownership rules, when it recognized the 

competitive force of the Internet. The Commission would have done 

away with the ban on cross-ownership of a daily newspaper and a 

broadcast station, and expanded the caps on local ownership of television and radio stations, but the courts overturned the FCC’s proposed rule, not because it believed that repeal was unreasonable. 

In fact, the court determined that, and I quote, ‘‘reasoned analysis 

supports the Commission’s determination that the blanket ban on 

newspaper/broadcast cross-ownership was no longer in the public 

interest.’’ The Third Circuit threw out the proposed new rules because it thought the Commission relied too heavily on the Internet 

as a significant competitive factor. I wonder what the court would 

say today if the same proposal were before it, now that newspapers’ 

annual revenues are down more than half since 2003. Would the 

same bench consider the Internet a significant competitive factor 

now that the average online video ad often outprices national TV 

day-parts? 

Sadly, following two court losses, it seems that for a while the 

FCC simply gave up on trying to save this industry from antiquated regulation. The Commission failed to complete the 2010 

quadrennial review, its statutorily mandated review of media ownership rules, and instead has doubled down by making changes 

that make it more difficult for local media to compete. The Commission’s recent decisions to unwind many joint sales agreements 

and to look askance at shared service arrangements ignore the realities of the broadcast business and are affirmatively harmful to 

the localism they purport to protect. 

3 

I am happy to see that the Commission intends to return to reasoned rulemaking consistent with its statutory mandate. Chairman 

Wheeler has announced his intention to comply with the law and 

complete the 2014 quadrennial review in a timely manner. And 

while the law is very specific in the Commission’s mandate to deregulate media ownership where warranted, given the recent set of 

FCC decisions, I am, to quote the man for whom this room is 

named, ‘‘comforted very little.’’ Without relief, I fear that local 

broadcast and newspaper companies will continue to struggle 

against unregulated competitors whose businesses are not hamstrung by decades-old regulatory assumptions. Newspaper classified advertising peaked in 2000 at $19.6 billion. In 2012, classified 

advertising brings in $4.6 billion. That is a 77 percent drop in revenues just from classified advertising, primarily due to shifts in 

classifieds to such Internet entities as Craigslist. Unsurprisingly, 

hundreds of newspapers have shuttered operations or migrated to 

digital-only since ’07, and the U.S. has lost 62 daily newspapers 

since 2004. 

We are all committed to promoting a local media industry that 

is healthy; to fostering competition, localism, and diversity of 

voices, and to ensuring that local media continues to serve the 

needs of their communities, but pretending that laws designed for 

an era before smartphones and the Internet will get the job done 

is an effective death sentence for many local media outlets. 

I would like to thank our witnesses again for joining us today to 

offer their opinions on these matters. We appreciate your taking 

the time, and we look forward to your testimony. 

[The prepared statement of Mr. Walden follows:] 

PREPARED STATEMENT OF HON. GREG WALDEN

What do the founding of Microsoft, the first episode of ‘‘Saturday Night Live,’’ and 

the establishment of the broadcast/newspaper cross-ownership ban have in common? 

They are all about to turn 40, because they all took place in 1975. But where Microsoft has innovated and moved past a world where MS–DOS was the state of the 

art, and ‘‘Saturday Night Live’’ continues to reinvent itself as an essential piece of 

Americana, the media ownership rules persist as though the Internet simply doesn’t 

exist. Our laws need to reflect the reality of the world we live in today, not the 

world of the Ford administration. It is my sincere hope that today’s discussion can 

spur us to rationalize the rules and regulations for a media industry that serves 

consumers in this century—not the last. 

In today’s media environment, traditional media like Bend, Oregon’s KTVZ–TV 

and the town’s Bulletin newspaper compete with Twitter, The Drudge Report, The 

Huffington Post, Fox News, MSNBC, CNN, the Wall Street Journal, and the New 

York Times. We live in an era of a 24-hour news cycle and on-demand national 

media, but our laws assume a world where local newspapers and broadcast stations 

are so influential that economies of scale are dangerous to the public interest. While 

proponents of the status quo express their love of localism and the laws intended 

to guarantee it, I fear that laws intended to ensconce our love of local media are 

loving them to death. 

Promoting localism is a goal we all share; but localism isn’t cheap. Producing the 

kind of high-quality content that has been the hallmark of American broadcasting 

is an expensive labor of love for local broadcasters and newspapers. And as Americans’ habits have changed, so too should the way we look at local media. We live 

in a competitive landscape where increasingly we cherry pick articles; we scroll 

through feeds and aggregators; we have multiple national news programming options, and we DVR almost everything to time-shift the programming we love. It’s 

a different world, why don’t our media laws reflect these changes? 

The fact is, the FCC tried to change these rules as early as its 2002 review of 

the media ownership rules, when it recognized the competitive force that is the 

4 

Internet. The Commission would have done away with the ban on cross-ownership 

of a daily newspaper and a broadcast station and expanded the caps on local ownership of television and radio stations. But the courts overturned the FCC’s proposed 

rule notbecause it believed that repeal was unreasonable. In fact, the court determined that ‘‘reasoned analysissupports the Commission’s determination that the 

blanket ban on newspaper/broadcast cross-ownershipwas no longer in the public interest.’’ The Third Circuit threw out the proposed new rules because it thought the 

Commission relied too heavily on the Internet as a significant competitive factor. I 

wonderwhat the court would say if the same proposal before it today—now that 

newspapers’ annual revenuesare down more than half since 2003. Would the same 

bench consider the Internet a significantcompetitive factor now that the average online video ad often outprices traditional TV day-parts? 

Sadly, following two court losses it seems that for a while the FCC simply gave 

up on trying to save thisindustry from antiquated regulation. The Commission failed 

to complete the 2010 quadrennial review—its statutorily mandated review of media 

ownership rules—and instead has doubled down by makingchanges that make it 

more difficult to for local media to compete. The Commission’s recent decisions to 

unwind many joint sales agreements and to look askance at shared service arrangements ignore the realities of the broadcast business and are affirmatively harmful 

to the localism they purport to protect. 

I am happy to see that the Commission intends to return to reasoned rulemaking 

consistent with its statutory mandate. Chairman Wheeler has announced his intention to comply with the law and complete the 2014 quadrennial review in a timely 

manner. And while the law is very specific in the Commission’s mandate to deregulate media ownership where warranted, given the recent set of FCC decisions, I am, 

to quote the man for whom this room is named, ‘‘comforted very little.’’ Without relief, I fear that local broadcast and newspaper companies will continue to struggle 

against unregulated competitors whose business models are not hamstrung by decades-old regulatory assumptions. Newspaper classified advertising peaked in 2000 

at $19.6 billion; in 2012, classified advertising brings in $4.6 billion—a drop of 77 

percent in just over a decade, primarily due to shifts in classifieds to such Internet 

entities as Craigslist. Unsurprisingly, hundreds of newspapers have shuttered operations or migrated to digital-only since 2007, and the U.S. has lost 62 daily newspapers since 2004. 

We are all committed to promoting a local media industry that is healthy; to fostering competition, localism, and diversity of voices; and to ensuring that local 

media continues to serve the needs of their communities. But pretending that laws 

designed for an era before smartphones and the Internet will get the job done is 

an effective death sentence for many local media outlets. 

I’d like to thank our witnesses for joining us today to offer their opinions on how 

we might improve our media ownership rules. We appreciate your taking the time 

to join us today, and we’re looking forward to hearing what you have to say. 

Mr. WALDEN. And with that, I would recognize the ranking member of the subcommittee, the gentlelady from California, Ms. Eshoo, 

for her opening statement. 

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Ms. ESHOO. Thank you, Mr. Chairman. And welcome to the witnesses, and thank you for being willing to testify today at this important hearing that the chairman has called. 

I believe that one of the most important manifestations of a vibrant democracy is that there are many voices speaking to the 

many, and so whatever I say in my opening statement really fits 

in with that principle because I think it is such an essential one, 

and I think it is one that should guide us in everything that we 

do relative to these undertakings in the examination of media ownership in this, the 21st century. 

In an era when corporate media outlets have become increasingly 

concentrated in the hands of a few conglomerates, our goal, and the 

chairman mentioned this, should be to promote localism, advance 

5 

competition, and encourage diversity, not to roll back what few protections we have in these key areas. I would like to put forward 

some facts that I find troubling. Despite a national broadcast television ownership cap, 10 station groups now own over 650 stations, 

or nearly 1⁄2 of all commercial full-powered broadcast stations in 

the United States. The source of that is free press. Ten companies 

control 55 percent of all local TV advertising revenues. Twenty-five 

percent of the Nation’s 952 local news stations do not produce their 

newscast themselves. You combine these statistics with the fact 

that 20 out of the top 25 news Web sites rely heavily or even exclusively on news gathered from traditional media sources, such as a 

daily newspaper, broadcast network or a cable news network, and 

you have a picture of what I think is an unhealthy media landscape. 

So as the FCC takes steps to close existing loopholes in its rules, 

I am pleased that the Agency is moving forward with its review of 

our Nation’s broadcast ownership rules. The completion of the long 

overdue 2010 quadrennial review and the 2014 review will ensure 

the FCC can fully assess the impact of further consolidation on 

ownership, diversity and localism in our Nation’s media system. 

And while some have criticized the FCC for cracking down on sidecar deals before concluding its 2010 review, I think that the Agency 

has an obligation to enforce the existing rules on the books, regardless of the outcome of its review. 

Congress has long entrusted the FCC with upholding the core 

values of competition, localism and diversity of media, and while 

the media landscape may change, and we welcome those changes, 

the role that the these values play in advancing public disclosure 

and strengthening our democracy, I think, should remain intact. 

So again, thank you to our witnesses, and I would like to not 

only submit for the record a letter written by Common Cause, Mr. 

Chairman, supporting FCC action on JSAs, and I would like to 

yield the remainder of my time to Mr. Butterfield. 

Mr. WALDEN. Without objection. 

[The information follows:] 

6 

7 

8 

9 

10 

Ms. ESHOO. Thank you. 

OPENING STATEMENT OF HON. G.K. BUTTERFIELD, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NORTH 

CAROLINA 

Mr. BUTTERFIELD. I thank the ranking member for yielding this 

morning, and certainly thank you for your passion on diversity. It 

is very much appreciated. 

Mr. Chairman, I offer the following statement. African-Americans, Hispanic-Americans and Asian-Americans own a combined 3 

percent of all full-powered, commercially owned and operated TV 

stations here in the United States, and the number for radio are 

not much better. Access to capital, consolidation and outdated ownership rules further stifle minority ownership. Increasing diversity 

ownership is important. It ensures the content—that content will 

be delivered in formats that mirror the cultural experiences of our 

citizens, and generates economic opportunities for the Nation, particularly as these companies create and maintain jobs. The future 

of our media will also be dependent upon our ability to factor-in the 

impact of emerging and evolving digital technologies on traditional 

media models. The FCC regularly says that diversity is one of its 

objectives, but the 2014 quadrennial NPRM doesn’t reflect that 

commitment. Some proposals, including legislative ones pending for 

20 years, were reduced to footnotes. Many of those proposals were 

supported by the FCC’s own Diversity Advisory Committee. 

I am hopeful, Mr. Chairman, the FCC’s long-awaited further notice of proposed rulemaking for 2014, if not done correctly, will seek 

to gather data that will help us to address the disparities that exist 

in minority media ownership. We must increase meaningful media 

ownership opportunities for people of color. That is the point I am 

trying to make. 

Thank you very much. I yield back to you—to the ranking member. 

Ms. ESHOO. And I yield back, Mr. Chairman. Thank you. 

Mr. BUTTERFIELD. Mr. Chairman, I failed to do one thing. If I 

momentarily could ask—— 

Mr. WALDEN. Of course. 

Mr. BUTTERFIELD [continuing]. Unanimous consent to include in 

the hearing into the record a letter dated June 10, 2014, addressed 

to you and to the ranking member. 

Mr. WALDEN. I believe so, yes. Without objection. 

[The information follows:] 

11 

12 

13 

14 

15 

Mr. BUTTERFIELD. All right. Thank you. 

Mr. WALDEN. Are there any members on our side seeking an 

opening statement? OK. Mr. Waxman, I would turn to you. 

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. WAXMAN. Thank you very much, Mr. Chairman. 

Americans have more choices today than ever before about where 

to get news, information, entertainment. Broadband and mobile 

platforms are altering how content is produced and consumed, but 

these incredible new innovations do not alter key policy goals, promoting localism, diversity and competition in the media. These core 

values represent a commitment that stretches all the way back to 

the founding of our country. They have animated the FCC’s policies 

for nearly a century. A commitment to localism means timely delivery of news and information relevant to our daily lives, such as 

emergency alerts in a time of crisis. Competition means original, 

in-depth reporting that not only informs and educates the public, 

but helps distinguish the quality of journalism. Striving for diversity helps the delivery of a wealth of perspectives that more closely 

reflect the diverse makeup and experiences of our community. 

The FCC’s longstanding media cross-ownership rules are tools for 

preserving these values. Despite the wonder and power of the 

Internet, broadcasters and newspapers continue to be the dominant 

sources for local news and information across old and new medium. 

That makes these rules relevant even today. 

Under both Democrats and Republicans, the FCC has tried to revise the media ownership rules, but the Agency has little success 

in navigating the legal, political and resources challenges in meeting the congressional directive to review these rules every 4 years. 

Chairman Wheeler has appropriately set a deadline to complete the 

long-overdue 2010 quadrennial review, and the currently pending 

2014 quadrennial review. As the Agency works to complete these 

reviews, I believe it is time for Congress to examine whether this 

statutory mandate is still helpful or necessary. 

One constructive step the FCC has recently taken is closing a 

loophole created by the proliferation of joint sales agreements between broadcasters. The FCC struck the right balance in adopting 

rule changes to end JSAs manufactured solely to evade the media 

ownership rules, while allowing truly beneficial ones to continue 

through waivers. The committee worked on a bipartisan basis in 

the recently reported Satellite Reauthorization Bill to provide incentives for broadcasters to file timely requests for waivers, and 

the FCC to expeditiously act on them. 

A key consideration for the FCC should be helping ensure the 

health of the newspaper sector, which has been challenged by the 

growth of online news. A broadcast company that wants to invest 

in a newspaper could be a boon to a struggling newspaper, but one 

that wants to raid its assets could hasten its demise. 

These are not just theoretical questions. Late last year, the Tribune Corporation, the owner of the Los Angeles Times, other newspapers and broadcast stations across the country, announced that 

they would be spinning off its newspaper holdings, including the 

16 

LA Times. The original terms would have forced the LA Times to 

rent its own building from the Tribune Company, and to borrow 

over $300 million to pay a cash dividend to the Tribune Corporation. I raised questions and consulted with independent media experts who advised that the terms could cripple the LA Times. To 

its credit, the Tribune Corporation has recently reduced the size of 

the cash payment it will demand from the newspaper, LA and 

other newspapers. I hope it will take further steps to ensure the 

viability of the Times before the deal is complete. 

Finally, our discussion today would be incomplete without an examination of the abysmal state of media ownership diversity. 

Women and minorities represent a tiny fraction of the owners and 

decision-makers in the media companies that shape our national 

discourse. The FCC has had great difficulty crafting policies that 

could improve ownership diversity and survive legal challenge. I 

hope today’s witnesses can bring some fresh thinking and new 

ideas to help advance this issue, which is so critical for a healthy 

democracy. 

I thank all the witnesses for being here today. I must apologize 

in advance that I have to be present at another subcommittee, and 

won’t be here for all of your testimony. I will try to get back for 

questions, but I appreciate your participation and I look forward to 

reviewing what you have to say, both orally and your written submissions. 

Thank you, Mr. Chairman. Yield back my time. 

Mr. WALDEN. Thank you, Mr. Waxman. And I will turn now to 

the vice chair of the subcommittee, Mr. Latta, for opening comments. 

OPENING STATEMENT OF HON. ROBERT E. LATTA, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF OHIO 

Mr. LATTA. Well, thank you, Mr. Chairman, and thank you very 

much for holding today’s hearing, and I appreciate all the witnesses being with us today. 

The media landscape, much like many other sectors in the communications and technology industry, has evolved considerably 

over the last 20 years. With the introduction of the Internet and 

digital technology, we have seen convergence, increased competition, innovative content delivery services, and rapidly shifting preferences in consumer demand come to define the media market. 

However, many of the laws that govern this space are outdated. As 

a result, long-time industry participants that are subject to these 

rules and regulations are placed at a competitive disadvantage to 

newer market entrants. This has thwarted their ability to flexibly 

and quickly respond and compete in this dynamic marketplace. Of 

particular concern is the FCC has been negligent in completing its 

mandatory review of the media market that could help address today’s competitive realities. 

As we continue our efforts to examine the Communications Act 

and consider updates to the law that would better reflect the 21st 

century communications landscape, I look forward to hearing from 

our witnesses today about the current regulatory framework governing media ownership and the impact that it is having on businesses, consumers, and the economy. 

17 

And, Mr. Chairman, if I could, I would yield to the gentleman 

from Illinois. 

OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Mr. SHIMKUS. I want to thank my colleague. I want to welcome 

you all here. 

There is no reason why the 2010 and 2014 quadrennial review 

has not been filed. It is just not complying with the law, and it is 

a failure of the bureaucracy and the Federal Government to do its 

job. Having said that, one reason why, because this sector is moving so fast, I mean how do you get a handle on it? Late-breaking 

story last night. How did I find out about it? Someone did a Twitter 

feed that one of my staff members picked up and emailed to me. 

I didn’t get it over broadcast, I didn’t get it over cable, I didn’t get 

it over radio, I definitely didn’t get it out of print media, I got out 

of this new world age of information flow. 

There is more access to information now than ever before. These 

media ownership rules stifle the ability for localism in rural America. 

I look forward to this hearing, and I thank you all for coming. 

Mr. WALDEN. Gentleman yields back the balance of his time. All 

the opening statements are concluded, and we will now go to testimony from our witnesses. 

And again, we thank you all very much for the work you have 

put into your testimony. 

We will start off with Mr. William T. Lake, who is the Chief of 

the Media Bureau of the Federal Communications Commission. Mr. 

Lake, we are delighted to have you here before the subcommittee. 

Pull that microphone pretty close to your mouth or we won’t be 

able to hear your fine words, sir. So thank you, and we look forward to your testimony. 

STATEMENTS OF WILLIAM T. LAKE, CHIEF, MEDIA BUREAU, 

FEDERAL COMMUNICATIONS COMMISSION; JESSICA J. GONZALEZ, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, NATIONAL HISPANIC MEDIA COALITION; BERNARD 

LUNZER, PRESIDENT, THE NEWSPAPER GUILD–CWA; PAUL J. 

BOYLE, SENIOR VICE PRESIDENT OF PUBLIC POLICY, NEWSPAPER ASSOCIATION OF AMERICA; DAVID BANK, MANAGING 

DIRECTOR, GLOBAL MEDIA EQUITY RESEARCH, RBC CAPITAL MARKETS; AND JANE MAGO, EXECUTIVE VICE PRESIDENT AND GENERAL COUNSEL, LEGAL AND REGULATORY 

AFFAIRS, NATIONAL ASSOCIATION OF BROADCASTERS 

STATEMENT OF WILLIAM T. LAKE 

Mr. LAKE. Good morning, Chairman Walden, Ranking Member 

Eshoo, and members of the subcommittee. My name is Bill Lake. 

I am the Chief of the Media Bureau at the FCC, and I am very 

happy to be with you today. 

I would like to highlight a few points from my written statement 

about the actions that the Commission and the Media Bureau took 

in March relating to media ownership. 

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First, the Quadrennial Review. The FCC is very aware of its responsibility to review its media ownership rules every 4 years. As 

you know, in March the Commission began its most recent review, 

adopting a Further Notice that builds on the record of the ongoing 

2010 proceeding. The Further Notice analyzes the evidence to date 

on each of the rules, and discusses the diversity issues remanded 

to the Commission by the Third Circuit. 

I recognize that some observers, including members of the subcommittee, are concerned that the Commission has yet to complete 

its 2010 Quadrennial Review. As Chairman Wheeler noted in 

March, the Commission’s inability to complete that review was not 

for lack of effort. We began the proceeding early in November 2009, 

compiled an extensive record, and circulated a proposed Order in 

2012, which remained before the Commission for over a year but 

failed to receive a majority. The Further Notice will enable all interested parties to supplement the record with information about 

the 2014 marketplace. The Chairman has committed to present 

recommendations to the Commissioners by June 30, 2016. 

Second, shared services agreements, or SSAs. As part of the Further Notice, the Commission sought to improve its understanding 

of the sharing of services between separately owned TV stations. 

The Commission does not now require SSAs to be disclosed, and 

that makes it hard for us or the public to know what impact these 

agreements may have on our policies. The Further Notice invites 

comment on whether and how best to disclose SSAs. 

Third, TV joint sales agreements or JSAs. The Commission also 

adopted a report and order on TV JSAs. JSAs are agreements between stations in which one station sells advertising time on behalf 

of the other—typically, all of it. Unlike SSAs, they are well known 

to the Commission. We have long recognized our duty to identify 

any interests that give holders a realistic potential to influence a 

station’s programming or operations. We treat such interests as attributable—that is, we count the stations as being commonly owned 

for purposes of our ownership rules. The Commission tentatively 

concluded in 2004 that it should attribute TV JSAs just as it had 

done for radio JSAs in 2003. The rationale is that someone who 

controls a station’s main source of revenue has a significant potential to influence the station’s operations. 

Based on the record, and in light of the growing prevalence of TV 

JSAs, the Commission decided that it should attribute these agreements with a 2-year transition period for existing JSAs, as we had 

done for radio. 

Finally, I can provide a bit of context for the Media Bureau’s 

Public Notice in March, which gave guidance to the industry on 

how the Bureau will process pending and future TV license transfer applications. In releasing the Public Notice, the Bureau sought 

to provide greater transparency to the industry about concerns that 

had come to light in our review of proposed license transfers. 

Transactions we have seen in recent years have involved increasingly complex relationships between stations that our rules do not 

allow to be jointly owned. In particular, more and more transactions involve combinations of sharing arrangements and financial 

ties, such as options and loan guarantees. We have found that determining the economic effects of a transaction requires much more 

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extensive analysis when stations have such complex entanglements, and, though we must decide each case on its particular 

facts, case-by-case decisions by themselves may not give broadcasters the predictability they want as they structure deals. 

The Public Notice is intended to increase transparency by making sure that broadcasters appreciate that deals involving complex 

interrelationships require more extensive review, and by highlighting the combinations of relationships that we have found most 

troubling as we evaluate whether one station may have undue influence over another. By arming the parties with this knowledge, 

we sought to guide them as they structure future deals or consider 

amendments to pending transactions. 

From what we have seen so far, this increased transparency has 

been helpful. Far from coming to a halt, deal-making in the industry continues. Since mid-March, we have approved the sale of 36 

full power stations, representing 12 different deals. 

Again, thank you for the opportunity to be here today, and I am 

happy to take any questions. 

[The prepared statement of Mr. Lake follows:] 

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Mr. WALDEN. Mr. Lake, thank you for your service and for your 

testimony. We look forward to continuing the discussion. 

We will now go to Jessica J. Gonzalez, Executive Vice President 

and General Counsel, the National Hispanic Media Coalition. Ms. 

Gonzalez, thank you for being here. Please go ahead. 

STATEMENT OF JESSICA J. GONZALEZ 

Ms. GONZALEZ. Thank you, Chairman Walden, Ranking Member 

Eshoo, and members of the subcommittee. 

I represent the National Hispanic Media Coalition, a media advocacy and civil rights organization working towards a media that is 

fair, inclusive and accessible to all people. 

What happens in an overly consolidated media system that fails 

to reflect American multiculturalism? Here is an example from the 

radio industry, which is already plagued by major consolidation. On 

Clear Channel radio stations across the country, listeners are fed 

a steady diet of racism and stereotyping. According to some Clear 

Channel pundits, Latinos and African-Americans are dangerous, 

Asians are cheaters, women are sluts, immigrants are animals. At 

a time when this country should be developing its proud, multicultural identity, instead, this dehumanization of women and people 

of color is normalized over the public airwaves. 

We as parents of young children of color and young girls have to 

figure out how to explain these slurs to our children, who don’t see 

color, but yet are told at a young age that they are different or they 

are feared, or they are less than. The harms of this rhetoric are 

deep and well documented. Clear Channel has 850-plus stations in 

over 150 cities across the country. It exploits the lack of strong 

radio ownership limits to insulate its stations from free market accountability mechanisms, such as losing audience share or revenue. 

It is totally out of touch with the communities it serves. 

Media ownership limits are vital to the health of our democracy. 

These content and race-neutral rules promote ownership diversity, 

viewpoint diversity, localism and completion. Broadcasters and 

newspapers play a critically important role in informing Americans, and influencing attitudes towards people of color and women. 

Broadcast TV and radio reach over 98 percent of us, and reliance 

on over-the-air TV is prevalent in poor, rural and non-Englishspeaking communities. 

Internet sources are far from achieving parody with broadcasters 

when it comes to disseminating information, particularly local 

news. First of all, 1 in 3 Americans does not have home broadband 

access. Rural communities, Latinos, African-Americans, seniors, 

the poor, people with disabilities, and non-English speakers are far 

less likely to be connected to the Internet. And traditional media 

sources like broadcasting and newspapers are still responsible for 

the vast majority of online local news and information. The courts, 

Congress and the FCC have long recognized a nexus between minority ownership and broadcasting diversity, yet people of color, 

who make up more than 36 percent of the U.S. population, own 

less than 3 percent of TV stations. Women own less than 7 percent. 

Media consolidation and joint sales agreements that allow big 

media companies to circumvent the ownership rules are bad for diversity. 

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Immediately after the 1996 Act, relaxed ownership limits and the 

minority tax certificate was abandoned, women and people of color 

were pushed from the market as conglomerates grew. According to 

a 1997 NTIA report, relaxed ownership limits created a significant 

competitive advantage for group owners who are more likely to be 

nondiverse and have greater financial resources. That media concentration drove up station prices. 

The FCC’s recent JSA ruling, on the other hand, creates opportunities for diverse owners and small businesses to enter the market. 

An agency envisions a country in which broadcasters reflect 

American multiculturalism and serve the information needs of all 

communities. Promoting diversity and localism with strong media 

ownership rules within the FCC’s existing regulatory framework, 

and using your law-making power to reinstate the minority tax certificate, are important steps towards achieving that vision. 

Thank you and I look forward to questions. 

[The prepared statement of Ms. Gonzalez follows:] 

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Mr. WALDEN. Ms. Gonzalez, thank you for your powerful testimony. We appreciate your comments. 

We will now turn to Mr. Bernard Lunzer, President of The Newspaper Guild-CWA. Mr. Lunzer, thank you for being here. We look 

forward to your testimony as well, sir. 

STATEMENT OF BERNARD LUNZER 

Mr. LUNZER. Thank you, Mr. Chairman, ranking member and 

the committee for allowing me to testify. 

News Guild-CWA represents workers in broadcast, print and digital. Our sister sector, NABET–CWA, represents workers throughout broadcast. Along with our employer rep, some of them that are 

here, we seek solutions to the current challenges in media. 

The Internet will continue its disruption of media, while also offering room for innovation and new revenue. Right now, there are 

no simple solutions or clear ways forward. 

We support Chairman Wheeler’s stated intent to rein in JSAs, 

study shared service agreements, and maintain the status quo on 

cross-ownership between print and broadcast. Further consolidation will not help. It is not about saving call letters, NASTADs or 

Web sites, if they only duplicate information from elsewhere. JSAs, 

SSAs, and more cross-ownership will result in fewer employees, 

less news coverage, and less diversity in both areas. It also will not 

stimulate diversity in ownership. 

Already, JSAs and SSAs have substantially reduced coverage in 

towns like Youngstown, Ohio, and Honolulu, Hawaii. In Youngstown, for example, four TV stations are operated by Lynn Media, 

with duplicated material being presented on those stations. Lynn 

Media is in competition with two other stations that are owned and 

operated in conjunction with the Youngstown Vindicator newspaper. When Lynn consolidated stations, it eliminated most newsroom jobs in the accreted newsrooms. The Vindicator and its broadcast stations have small staffs in their newsrooms and share material. Overall, employment has shrunk and diversity of coverage as 

well. Cable, by the way, adds almost nothing locally. 

We are often told that combinations allow for more coverage. 

That is just not the case, as the efficiencies are used purely to increase profitability through less staff. 

Honolulu is a similar case to Youngstown, and well documented. 

Three of five stations operate as if they were a single news operation, with almost identical news, significantly diminishing local 

coverage. 

In Syracuse, New York, and Peoria, Illinois, Granite and Barrington Broadcasting swapped and combined news operations in 

each city. Our union commissioned a national study done by the 

University of Delaware. The study reported that 70 workers were 

laid off and 16 were reassigned. Barrington Broadcasting now runs 

3 stations in Syracuse with the same news staff. The Syracuse and 

Peoria markets both lost competing and different points of view in 

news coverage through duplication. 

We get to a situation where some broadcast stations are essentially zombies. Broadcasting continues but there are few, if any, 

employees involved. The JSAs allow for consolidation on the advertising side. 

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We believe the goal of restricting JSAs where more than 15 percent of sales are attributed to another station is a good one. We 

also agree with the FCC about studying SSAs to see if similar restrictions would be in order. There needs to be a procedure and a 

test to revive such stations, allowing for more hiring, diversity of 

coverage, and the potential for diversity of ownership. The FCC is 

on the right track, if that really is the goal. 

Again, further concentration will make this worse. The status 

quo continues the current dilemma. Only new guidelines will provide for a better competition, and a robust landscape that may 

allow for diversity of ownership, which is at scandalous levels, as 

has already been discussed here. 

Let me also strike at the heart of the myth of diverse content, 

because the Internet is adding so many voices. This is a very important point. Much of what the Internet has added is opinion, not 

well-sourced and not particularly helpful. A Pew Study of Baltimore Tribune Paper in 2012 demonstrated that although there 

were 53 news outlets for local content, 83 percent of stories were 

repetitive, with no new information. Legacy print content providers 

accounted for 48 percent of content, with local broadcast providing 

about 1⁄3. Almost no breaking information came from the nonlegacy 

platforms. Since the study, the Baltimore Sun, the principle provider of news, has shrunk substantially. 

As a labor union that cares deeply about democracy, we believe 

further concentration will mean less credible news and information 

to citizens as major debates take place over the future of America. 

Citizens should expect their rights to be paramount over broadcasters, as has been established in law. We need real innovation 

and investment as we continue forward in the 21st century. Consolidating existing organizations with fewer employees does not get 

us there. 

I would also note that the breaking news last night on the Virginia election, I got that through a print source that actually came 

in through a tweet. The original news actually came from a print 

organization. 

I look forward to any questions. Thank you. 

[The prepared statement of Mr. Lunzer follows:] 

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Mr. WALDEN. Mr. Boyle, you are now recognized for your 5 minutes. 

STATEMENT OF PAUL J. BOYLE 

Mr. BOYLE. Congressman Terry, Ranking Member Eshoo, and 

members of the subcommittee, on behalf of our 2,000-plus member 

newspapers, thank you for providing this opportunity to testify. 

The subcommittee’s focus on Media Ownership in the 21st Century is appropriate. Many of our ownership regulations are creatures of the 20th century, and are no longer suitable for today’s 

multimedia world. My testimony will focus on one such outdated 

regulation; the newspaper/broadcast cross-ownership ban. The FCC 

adopted this ban in 1975. The rule prohibits investors from owning 

both a daily newspaper and a television or radio station in the 

same market. At the time, the Commission feared that one owner 

could control all of the news and editorial viewpoints in a community. 

Many ideas that sounded perfectly reasonable in 1975 now appear behind the times. Those were the days of a single nationwide 

telephone company, gasoline rationing and bellbottoms. Today’s 

media ownership regulations must reflect today’s media. You recognized this need when, in 1996, you required the FCC to conduct a 

comprehensive review of its media ownership regulations every 4 

years, and to repeal or modify any regulation that it determines to 

be no longer in the public interest. Well, NAA is getting ready to 

file comments in the Commission’s eighth proceeding in nearly 20 

years, examining the validity of the 1975 cross-ownership ban. Remarkably, none of these proceedings has resulted in any changes 

in the rule, creating an endless cycle of regulatory uncertainty for 

newspapers and broadcasters. We all know that American consumers have access to more information and viewpoints today than 

ever before. According to a recent report on the personal news 

cycle, the average American recalled getting her news from between 4 and 5 different sources in a week, and new digital news 

players have exploded on the scene. This same report found that 

nearly 1⁄2 of those surveyed received their news from online-only reporting sources. Quite simply, there are no longer any barriers to 

entry in the distribution of news and information. However, indepth investigative original reporting that is professionally edited 

takes a substantial commitment of resources. Newspapers have always made this commitment. 

Some have argued that the repeal of the cross-ownership ban will 

lead to a massive wave of mergers. Nothing could be further from 

the truth, but in light of rapid changes in media consumption, 

some newspapers likely will come on the market. The ban reduces 

the number of potential buyers who might want to invest in a 

newspaper, including an owner of a broadcast station with deep resources and a commitment to journalism. And when local television 

or radio stations become available for sale, the only media companies that are barred from bidding on them are newspaper companies; companies that have had a long history of producing local 

news in that community. 

Some of the Nation’s top journalism has occurred in communities 

that have cross-owned newspapers and broadcast stations. For exVerDate Mar 15 2010 11:53 Apr 22, 2015 Jkt 037690 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 F:\113-152 MEDIA OWNERSHIP ASK OK 4-15-15\113-152 MEDIA OWNERSHIP PDF MADE
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ample, two of the primary news sources that broke and dug deep 

into the story about mismanagement at the Department of Veterans Affairs were newspaper-television combinations in Arizona 

and Ohio. This was not a surprise. Public service journalism is a 

part of their DNA. 

According to FCC Commission research, a cross-owned television 

station produces 50 percent more local news, devotes 40 percent 

more time to candidate speeches, and airs 30 percent more coverage of State and local political candidates. Removing the crossownership restriction would serve, not harm communities. It is 

time to eliminate this barrier that has stifled much-needed investment in local journalism. 

Thank you and I look forward to your questions. 

[The prepared statement of Mr. Boyle follows:] 

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Mr. WALDEN. Mr. Boyle, thank you for your testimony. We will 

now go to Mr. David Bank who is the Managing Director of RBC 

Capital Markets. 

Mr. Bank, we especially appreciate your testimony today, and 

look forward to hearing it. So thanks for being here. 

STATEMENT OF DAVID BANK 

Mr. BANK. Thank you. OK, good morning. 

Mr. WALDEN. You have to push that little button right there in 

front. There we go. 

Mr. BANK. Shows my lack of Governmental experience. Thank 

you. 

Good morning, Chairman Walden, Ranking Member Eshoo, and 

members of the subcommittee. My name is David Bank and I am 

a managing director and the equity research analyst responsible for 

covering the media sector at RBC Capital Markets. 

RBC Capital Markets is the corporate and investment banking 

arm of the Royal Bank of Canada; Canada’s largest bank and the 

twelfth largest bank in the world, based upon market capitalization. 

I primarily advise institutional clients such as pension funds and 

mutual fund managers with respect to broader themes and specific 

company fundamentals in the media industry. I help advise investors with respect to how they should be positioned in the media 

space, given current and future industry dynamics. I have covered 

the media space for approximately the last 15 years, during which 

a tremendous amount of change has occurred in the broad media 

landscape, especially with respect to three things: the first, how 

consumers apportion their time consuming different media; the second, the new media outlets that have become available to those 

consumers; and third, the business models available to those operators, and the competitive forces within the media space. 

Much has already been made of the fact that the current regulatory framework for media ownership dates back to 1975 for newspaper cross-ownership, and basically, to the late 20th century for 

much of the framework for TV and radio broadcast with respect to 

both cross-ownership and single media ownership concentration 

across single markets, as well as in the U.S. in totality. 

The financial markets, the capital markets, are keenly aware 

that this regulatory framework was created before the dynamically 

changing nature of the media ecosystem, that has overtaken us at 

light speed over the past few years, had been developed. The financial and capital markets are even more keenly aware that consumer behavior itself has changed massively as a result of the 

evolving ecosystem. Specifically, the current regulatory framework 

was constructed in a media ecosystem that basically didn’t include 

the Internet. While it may have contemplated a broad PC-based 

Internet consumption environment, it certainly didn’t contemplate 

a mobile application-based ecosystem. For an illustration of this 

point, I would ask you to look at Exhibit 1. As you can see, hopefully, from this exhibit, about 45 percent of consumers’ media time 

is now spent on either the Internet, on PC or some sort of mobile 

application. That is 45 percent. We think this is a reasonable startVerDate Mar 15 2010 11:53 Apr 22, 2015 Jkt 037690 PO 00000 Frm 00066 Fmt 6633 Sfmt 6633 F:\113-152 MEDIA OWNERSHIP ASK OK 4-15-15\113-152 MEDIA OWNERSHIP PDF MADE
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ing point to view the framework through which we might want to 

evaluate the relevance of current rules to the existing ecosystem. 

In terms of traditional media, there is probably no surprise that 

consumers still spend more of their time with television than any 

other medium, as they have for decades, including the time period 

in which the current regulatory framework was constructed. However, the consumption within the TV paradigm has shifted greatly 

in a way not necessarily reflected in a regulatory paradigm shift. 

The primary shift has been the consumption of TV moving meaningfully from a world dominated by broadcast content, to an increasingly fragmented one where the American viewer now consumes the majority of TV content from dual-stream advertiser and 

subscription fee-supported cable channels. 

Exhibit 2 illustrates, even 10 years ago, the majority of adult 18 

to 49 primetime audiences was not on the big 4 networks, but rather skewed slightly more toward nonbroadcast. Today, that shift is 

even more pronounced with broadcast controlling only about 1⁄3 of 

the primetime audience. As a result, it is clear to us that broadcast 

TV regulation should probably consider a framework in which paid 

TV in total, as an ecosystem, is a competitor. This is the case in 

small and big markets alike. 

Further, TV isn’t the only medium that has seen an increased 

fragmentation audience over the past 15 years. The radio ecosystem has clearly undergone an evolution beyond simply a broadcast transmitter since the time when the regulatory framework was 

constructed. Broadcast radio has probably been less impacted by 

the advent of traditional subscription services, such as Sirius satellite radio, than the television ecosystem, despite the fact that Sirius has 26 million paying subs today with millions more of trials 

and inactive radios currently on the road just waiting to be activated. This has eaten into traditional radio’s share of the audience 

on some level, but radio has been more directly impacted by the advent of the Internet, with services such as Pandora, Spotify or 

download and podcast services on iTunes, especially on a nonsubscription basis. Simply considering, digital radio services offers 

a framework for which the world has dramatically changed. 

Digital’s audience skews younger, but the trend of total population penetration is irrefutable, as illustrated in Exhibit 3. Digital 

radio listeners are now at mass market proportions, representing 

just more than 1⁄2 the population and 2⁄3 of Internet users. Clearly, 

the game has changed in radio with respect to consumer behavior. 

This has also put some pressure on the typical radio business 

model. 

The newspaper business model is not a major focus in our coverage universe, but it is quite clear that the industry has undergone a great deal of tumult, in no small part due to changes in consumer behavior and alternatives as well. Most specifically, consumers simply have more choices with respect to how to consume 

news. 

In 1975 when the newspaper/TV cross-ownership rules were essentially constructed, consumers had no digital or cable news 

choices. By 2003, over 10 years ago, consumers were getting 20 percent of their news from online sources. Today, that figure is around 

40 percent, as illustrated in Exhibit 4. That is an astounding 

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change in consumer behavior, having a material impact on the ecosystem. 

The bottom line regarding these shifts in the ecosystem is that 

they seem to call into relief what some of the existing regulatory 

framework might not. Digital media has now created, at least on 

the macro level, a powerful competitor to the media ecosystem that 

existed in isolation in the prior century. The markets are keenly 

aware of it. It plays a significant role in the way they fund growth 

and choices that consumers have. 

That said, there have been some movements more recently on 

the part of the FCC to re-regulate some elements of media ownership, and ownership concentration issues in the TV landscape in 

particular. The merits of these rule changes specifically aren’t what 

we would focus on in this venue, but rather, we put the focus on 

the isolated nature of the rule changes, without consideration to 

adjacent issues. For instance, the UHF discount itself is probably 

something increasingly obsolete in an evolved ecosystem where 

most people under the age of 40 couldn’t tell you the difference between a UHF or a VHF station; there is no separate dial on the 

cable box, but rather the choice to address such changes on a piecemeal basis adds limited visibility to the financial marketplace. The 

financial markets would probably have found it more constructive 

to view the UHF discount rule considered in a broader framework 

related to overall ownership cap regulation. The financial markets 

sometimes struggle with how to interpret broader ramifications. 

That concludes my prepared remarks. I would like to thank 

Chairman Walden, Ranking Member Eshoo, and the subcommittee 

members for giving me the opportunity to speak today. 

[The prepared statement of Mr. Bank follows:] 

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Mr. WALDEN. Thank you, Mr. Bank. We appreciate your testimony. Thanks for coming down. 

We will now turn to Jane Mago, who is the Executive Vice President and General Counsel, Legal and Regulatory Affairs, The National Association of Broadcasters, for our final testimony from our 

witnesses today. Ms. Mago, thanks for being back before the subcommittee. We look forward to your comments. 

STATEMENT OF JANE MAGO 

Ms. MAGO. Thank you. Thank you, Chairman Walden, Ranking 

Member Eshoo, members of the subcommittee. I appreciate the invitation to speak to you this morning. 

Let me put my spin on 1975, that year that we have been talking 

about all morning here. In 1975, I was starting law school, watching a black-and-white television with no remote control, and like 

everyone else, I had only three broadcast networks to choose from. 

Cable wasn’t available to me, and satellite television was only delivered to huge earth stations that were owned by cable companies. 

That was the world when some of these broadcast ownership regulations were created. 

Since then, we have cable and satellite and telecommunications 

companies that are all offering video services. The Internet and the 

massive proliferation of news outlets that you have heard about 

this morning have absolutely revolutionized the way we consume 

media, yet time has seemingly stood still at the FCC. 

The current broadcast ownership rules are simply out of touch 

with the reality of today’s media marketplace. They distort competition. Cable, satellite and Internet-based media outlets who operate without these cumbersome regulations continue to proliferate 

and take both audience share and advertising revenues. 

The local television rule, for example, which generally prohibits 

the ownership of 2 television stations in the same market, assumes 

the television broadcasters operate in a bubble, only competing 

against other television broadcasters. That is almost laughable in 

today’s marketplace. One need only look at the growing cable practice of selling local advertising across hundreds of cable programs 

to understand that there is a direct and real competition between 

broadcast and cable. 

The FCC has recently decided to effectively prohibit 2 broadcast 

stations from engaging in the joint sale of advertising, but the 

large cable operators, along with satellite companies and AT&T 

and Verizon, have been unimpeded as they join forces to create a 

single source that jointly sells to local television advertising. It is 

increasingly difficult for broadcasters to compete in a marketplace 

that is so skewed by disparate regulation. The 1975 newspaper 

cross-ownership rule that we have heard about this morning also 

relies on assumptions of a media landscape from a bygone era. The 

FCC itself has said that the prohibition against newspaper/broadcast cross-ownership is not necessary to advance its goals of localism and competition, and it has recognized that the rule is overly 

broad as related to the alleged goal of promoting viewpoint diversity, particularly with regard to radio; yet, this outdated rule is 

still on the books. 

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To maintain the ability to provide quality local service, and compete with newer technologies, broadcasters need a more level playing field with our competitors. 

That leads to my second point. Broadcast ownership rules must 

keep pace with market changes. Congress wisely required the FCC 

to take a fresh look at the ownership rules on a regular basis, in 

light of competition, and repeal or modify those that no longer 

serve the public interest, but the FCC has failed to follow your direction. The last review was done in 2007, and rather than complete the most recent Quadrennial Review, as required by statute, 

the Commission rolled its 2010 review into 2014, and then announced that it would not likely complete that review until at least 

mid-2016. 

NAB is challenging this most recent FCC decision in court, not 

just because the FCC failed to live up to its statutory obligation, 

but also because the Commission is imposing new restrictions on 

joint sales agreements amongst television stations, despite the fact 

that these agreements have produced tangible public interest benefits. NAB has shown that these agreements produce more news, 

more foreign language television, and other community-focused 

programming. Amazingly, the new rules will force broadcasters to 

unwind agreements that the Commission had previously approved. 

Finally, consideration of the broadcast ownership rules must be 

based on real evidence, not speculation. To address this, NAB asks 

Congress to undertake an examination of how the FCC’s administration of the broadcast ownership rules has stifled investment and 

opportunity in broadcasting. In this time of intense consolidation in 

other parts of the communications industry, these ownership rules 

are increasingly outdated and have significant harmful consequences on local media. Regulatory practices that starve media 

of capital investment are a proven failure. They serve no one. Not 

current broadcasters, not interested new entrants, and most importantly, not the American people. 

In sum, NAB is asking for you to ensure timely and fair revision 

of the broadcast ownership rules. Maintaining the status quo, creating new restrictions, or even just kicking the can down the road 

is a disservice to the American people. 

Thank you and I am happy to answer any questions. 

[The prepared statement of Ms. Mago follows:] 

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Mr. WALDEN. Ms. Mago, thank you for your testimony. We appreciate it. And we thank all of you for sharing your thoughts with 

us today. 

We will go now into the Q and A portion of our hearing. 

So, Mr. Lake, in the Sirius-XM merger in 2008, the Justice Department acknowledged that satellite radio services do not just 

compete with each other, but with a broad array of possible consumer substitutes, including AM and FM radio, CDs, iPods and 

other MP3 players. And as you know, many new cars now have 

docking stations or Bluetooth capability to connect all that up with 

other audio services, including Internet radio Web casting over WiFi, cell phones and other handheld wireless devices, and the new 

digital HD radio receivers, which allow old-fashioned broadcasters 

to send up to three digital channels of programming over AM and 

FM bands, bundled together with the XM analog channel. Terrestrial broadcasters now contend with Spotify and Pandora and other 

services, so it is a much-changed audio market in terms of competition for ears. 

What is the delay? How do you justify not changing the radio 

rules on ownership? 

Mr. LAKE. We have looked very carefully at that in our 2010 review—— 

Mr. WALDEN. Yes. 

Mr. LAKE. We have compiled a great record, and we are looking 

at those trends in the use of radio and other audio sources. They 

haven’t indicated to us yet that we should change the local radio 

rules. 

Mr. WALDEN. Really? 

Mr. LAKE. Again, we have just called for further input. We are 

very interested in knowing how—— 

Mr. WALDEN. Have you changed anything relative—— 

Mr. LAKE [continuing]. The market will change in 2014. 

Mr. WALDEN [continuing]. To the radio rules since 1996? 

Mr. LAKE. No, those rules have not been changed—— 

Mr. WALDEN. Right. 

Mr. LAKE [continuing]. Since Congress put the current—— 

Mr. WALDEN. Do you think the market has changed since 1996 

in terms of audio offerings and competition in the audio marketplace? 

Mr. LAKE. The entire marketplace has changed, both audio 

and—— 

Mr. WALDEN. But the rules have not. 

Mr. LAKE. Our task is to try to determine in this—at the current 

state of evolution, what are the appropriate rules. And, again, we 

are very open to all input on that subject. 

Mr. WALDEN. Because I sense from your testimony you are not. 

I mean it kind of indicates you are going to go with the existing 

rules. Right? 

Mr. LAKE. What we have done, I think, is to analyze the record 

as it now stands. We have a very extensive record, but we are very 

open to further input, and—— 

Mr. WALDEN. Yes. 

Mr. LAKE [continuing]. I think if you read—— 

Mr. WALDEN. So—— 

87 

Mr. LAKE [continuing]. The Further Notice carefully, it says what 

it says, which is that we are open to all further input. Those—all 

of the issues are open. 

Mr. WALDEN. OK. I am glad to hear that because, as you know, 

I was a radio broadcaster, we had to do the Olympic ring theory 

to justify having two AMs and three FMs in a market that was, 

I don’t know, several hundred square miles probably. And ours had 

competition with XM and Sirius. That was really before Pandora 

took off. I have got five audio platforms out there, and you all 

allow, and justice allowed XM and Sirius to merge, and said here 

is the marketplace as we see it. And then for broadcasters, you say, 

no, no, no, you can’t have another platform in a market. We, frankly, rescued some stations that were in pretty bad shape, and restored local programming, split them apart. I just think you guys 

don’t get it, that the marketplace has changed dramatically. And 

the statute requires you to get it. And here we have been a Quadrennial Review, and for a whole set of reasons, not yours, you don’t 

have a vote at the Commission so I am picking on you, but not 

really, OK, but the message will get through because I imagine the 

Commissioners listen in occasionally. And I just wonder, television 

has changed, newspapers are going broke, Craigslist has done 

amazing things to classified advertising. Mr. Lunzer, you probably 

don’t have a lot of people working in the classified ad bureau anymore, do you? And a lot of it was propped up by legal notice requirements through the housing crash with foreclosures. That 

made up a lot of revenue, but that is going away, and I worry 

about the future of newspapers. I don’t even like what they write 

about me sometimes and I still worry about them. Some of the 

time. Yes, well, but the point is it is a vibrant marketplace, and 

I think our rules are outdated. And so, again, I worry about what 

you are doing with the JSAs, because I sense from your testimony, 

Mr. Lake, it is almost like you think that the sales department controls the news department. 

Mr. LAKE. The conclusion we reached with respect to both radio 

and TV JSAs is that, if one station controls the principal source of 

revenue for another, it is likely to have an influence, or the ability 

to influence, the conduct of the second station. And that is the test 

under our attribution rules. 

Mr. WALDEN. OK. I would like to go to Ms. Mago. You said that 

because of some consolidation, the market is actually better served. 

What is your evidence for that? 

Ms. MAGO. We showed a number of different markets where 

there was the specific advantages that came from the shared services arrangements. For example, in Wichita, Kansas, they were— 

stations were able to do a JSA combination to provide the first 

Spanish language news in the entire State of Kansas. Similarly, in 

a situation in Eureka, California, you had two stations that didn’t 

have any local news at all. By combining their resources to be able 

to get the efficiencies that came through those shared operations, 

both were able to start news operations in the Eureka market 

where there had only been one before that, and that is something 

that was a great advantage to the communities. 

Mr. WALDEN. All right, my time has expired. Thank you all for 

your testimony and the work you do in this area. 

88 

Ms. Eshoo for 5 minutes. 

Ms. ESHOO. Thank you, Mr. Chairman, and thank you to each 

one of our guests today. 

Varying views and I have listened hard to what each one of you 

said, and I can’t help but think that some of my thinking relative 

to what—some of the testimony is the opposite of what you said. 

And so I want to go the other way and test out some of the things 

that have been put out about how great media consolidation is and 

how well it serves our country. 

I started out today by stating I think one of the most important 

principles relative to a democracy. Now, our democracy is old, India’s I think is large and vibrant as well, but would anyone suggest 

that because that is an old idea, it is a bad one, that we should 

take up something that would change the whole idea of democracy? 

I don’t think so. So I—while I celebrate the new platforms, the new 

services, so many of them, I will—I would be willing to wager the 

majority of them, being established in my congressional district, 

that we need to examine this in terms of what consolidation is actually going to do for the American people. 

I understand business models, capital markets, how they want to 

invest, what is going to serve them well. That—in many ways, 

many of those business approaches were blown apart in 2008 when 

we had a near total economic collapse in our country. That was one 

hell of a business model that was brought to the American people. 

So I think that, you know, it has been said that, you know, nothing 

has changed since 1975, we are out of touch with ourselves and 

markets, and what we need to do, I would suggest that some of the 

business models are out of touch with what the American people 

should be receiving. I don’t know who is going to stand next to the 

model that Ms. Gonzalez described. I mean that is really, as the 

chairman said, powerful testimony. 

So if we consolidate more, are minorities in our country going to 

progress? No one addressed that. I never heard anyone address 

that. So if you have some points to make on that, I think it would 

be terrific, but honestly, I just don’t—I think that people care. They 

care enormously if, in their market, there is one outfit that owns 

the newspaper, runs the TV stations and the radio stations, what 

kind of line of information, what is the value and the texture and 

the fabric and the content of just that one line being fed to people? 

I think that there are some countries in the world where we shun 

and make fun of that model because this one line to people. I want 

to hear diversity of thinking, and I would suggest that there is a 

lot of junk out there too, even though we have many more things 

at our fingertips, and for, you know, for the broadcasters, God bless 

you, you do a lot of things for—in terms of localism, we have had 

testimony on that, but you also have the airwaves that belong to 

the American people, and you don’t pay for that. So that is a pretty 

darn good deal. So why would I want to consolidate something even 

more? For what? What is the reason? I mean what is the prime 

reason? Anyone have an answer to that? What is the prime reason? 

Is it for a better business model for someone, or is this in the name 

of democracy, localism, diversity, competition? 

Ms. MAGO. If I can—— 

Ms. ESHOO. I mean, I think that is the central question here. 

89 

Ms. MAGO. If I can, Ranking Member Eshoo. I think I would like 

to put the right perspective on this of what we want, and what I— 

what broadcasters are calling for is a healthy, vibrant broadcast industry, and I think it can achieve all of those goals that you were 

just talking about. 

Ms. ESHOO. Yes, well, I don’t know how though. I—that is—— 

Ms. MAGO. By being able to compete in the current ecosystem. 

You cannot simply look at the broadcast industry as if it is only 

in its own little bubble. You have to recognize all of the changes 

that we talked about here this morning, and recognize that for 

broadcasters to create—be able to provide the kind of local information, the kind of truly competitive services that we have to have 

the kind of—— 

Ms. ESHOO. Well, I—— 

Ms. MAGO [continuing]. Autonomy to do that. 

Ms. ESHOO [continuing]. Appreciate you jumping in, and I am— 

I think it is very interesting today that there is not a camera here. 

We have print media that is here, but I don’t know—— 

Mr. WALDEN. The camera is right there. 

Ms. ESHOO [continuing]. Are we Webcast or—— 

Mr. WALDEN. Sure. Of course. 

Ms. ESHOO. Is C–SPAN carrying this? 

Mr. WALDEN. It is up to them to carry it or not. We don’t—— 

Ms. ESHOO. I see. 

Mr. WALDEN [continuing]. Dictate it. 

Ms. ESHOO. Well, I am—— 

Mr. WALDEN. Yes. 

Ms. ESHOO. I am proud that the print media is here, so—— 

Mr. WALDEN. We have print over here. We have print. Raise your 

hand if you are with the newspeople. 

Ms. ESHOO. I will submit my questions to you, but I really think, 

Mr. Chairman, that, when you look across America, we really have 

to understand what more consolidation is going to do, and myself, 

I don’t think it really feeds democracy simply to consolidate because that is someone’s business plan. I just don’t buy that. I have 

seen a lot of peoples’ lives wrecked and bad information being put 

out in the region as a result of it. I don’t want more than that. 

So thank you very much, and I will submit my questions to the 

witnesses for their response. Thank you. 

Mr. WALDEN. Thank the gentlelady. 

And now we will go to Mr. Latta, the vice chair of the subcommittee, for questions. 

Mr. LATTA. Thank you, Mr. Chairman. And, again, thanks for 

our panel for being with us today. Appreciate your testimony. 

Ms. Mago, if I could start with you at this time. What would be 

the effect of the FCC’s proposal to attribute stations under a JSA 

in calculating a broadcaster’s media ownership cap? 

Ms. MAGO. For many of the stations that have been operating 

under the JSAs that were, in fact, proved by the Commission, it is 

going to mean that they are going to have to unwind those operations within the 2 years, as Mr. Lake described, and that means 

that they are going to have to either go out of business, they are 

going to have to find other sources of revenues, because those efficiencies that they have been operated under have been what have 

90 

allowed them to provide greater service to their communities. So 

there is going to be a reduction of the amount of the service that 

is available in the communities. 

Mr. LATTA. OK, and the next part of the question then, what effect would that have when you are talking—looking at a reduction 

for services in that community, or communities? What would you 

see that as? 

Ms. MAGO. I seem that as harmful to the American public, and 

that reduction could be that, for example, where you have the station that I referred to before in Wichita, Kansas, where the Spanish news operation is being facilitated by the fact that there is a 

joint sales agreement that is in that market. That might well have 

to go away or find some other way of being financed that would not 

give it the kind of resources that they need. Other markets have 

similar stories that go with it, where the Tuvalu College that is 

also operating under a JSA, and they have presented evidence to 

the Commission that they would not be able to provide the services 

that they could to their community. 

Mr. LATTA. All right, thank you. 

Mr. Lake, you note in your testimony, ‘‘The Further Notice tentatively affirms that media ownership limits remain necessary in 

the current marketplace, despite the prevalence of new electronic 

media.’’ So how is the FCC making that determination without first 

having conducted a thorough review of the marketplace to justify 

those limits? 

Mr. LAKE. We looked at the record as it now exists, and while 

my friend Jane is right that the market has evolved quite a bit 

since she began law school, it continues to evolve. I am sure it will 

be very different 5 years or 10 years from now. And our task is to 

try to determine what rules are appropriate for the current state 

of evolution. And one of the things that we find in the current 

record is that, while distribution of news—local news and information, in particular—has become much more diverse, people find it 

on the Internet and elsewhere, the sources of that news and information remain principally the traditional media: newspapers and 

broadcast television. We also note that, while broadband is changing everything in the country, there remains about 20—30 percent 

of the population that doesn’t have broadband at home. 

In 5 years or 10 years, if that figure is much closer to 100 percent, and if the electronic media are generating more original news 

than they do today, that might have tremendous implications for 

our media ownership rules. What we are trying to do is to look at 

the state of the market today and decide what rules are appropriate to the market today. And, as I say, we are basing our tentative conclusions on the 2010 quadrennial record. We have invited 

comments on our Further Notice and will look very carefully at the 

updated information that people submit. 

Mr. LATTA. OK. Well, thank you. 

Mr. Bank, if no changes are made in the current regulatory system, and the ownership caps remain where they are today, what 

is your prediction for the world of traditional media in the next 5 

years? 

Mr. BANK. Well, what I would say is that the perspective of the 

capital markets on a daily basis, on an hourly basis, is the intense 

91 

increasing competition that is being ratcheted up by a competing 

ecosystem from the online media world. 

I think that over that period of time, over a 5-year period of time, 

we would expect to see continued wallet-in-mind share loss by the 

traditional medial players to online media. I don’t think they are 

going out of business in the traditional media world, but I think 

it risks being a less healthy environment. And because of that, you 

know, the capital markets will have to evaluate how they are willing to fund growth in that area. 

Mr. LATTA. Let me follow up with—your testimony is very helpful in showing us the trends in today’s media consumption. What 

does that mean to the investment community overall when you 

look at that? 

Mr. BANK. I am sorry, what—— 

Mr. LATTA. When you look at the trends that you are talking 

about, what does it mean to the investment community when you 

are looking at today’s—— 

Mr. BANK. Well, I—— 

Mr. LATTA [continuing]. Today’s world out there, and into the 

next few, you know, 4 to 5 years? 

Mr. BANK. I think, again, the focus of the capital markets is to 

invest for the greatest potential return, and that is often connected 

with the long-term growth perspective. And I think if you look at 

a lot of those exhibits, what you see is, on some level, a decline of 

share potentially, going from traditional media to online, and typically dollars will follow that share, whether it is advertising revenue, viewership, whatever it is you can measure, I think those are 

the kinds of things that capital tends to chase. 

Mr. LATTA. Thank you very much. 

And, Mr. Chairman, my time has expired and I yield back. 

Mr. WALDEN. Thank the gentleman and for his questions, and 

you for your answers. 

We will now go to Mr. Lujan from New Mexico. Thank you 

for—— 

Mr. LUJAN. Mr. Chairman—— 

Mr. WALDEN [continuing]. Your questions. 

Mr. LUJAN. Mr. Chairman, thank you very much. 

Mr. Boyle, with your recommendation to eliminate the ban, are 

there any restrictions that you would replace the ban with? 

Mr. BOYLE. No, we think that the ban should be fully eliminated 

for radio-newspaper combinations, but also TV-newspaper combinations. It makes no sense that a top-rated television station in a 

market that has resources and a deep commitment to journalism 

can’t invest in a local newspaper in that market if that newspaper 

becomes available. Investigative, original reporting that is professionally edited is very expensive to do. And we don’t think there 

is going to be a massive wave of mergers. There may be some markets that a newspaper comes on the scene, and we think, for too 

long, investors have been on the sidelines. 

Mr. LUJAN. Mr. Boyle, while I have concerns with the response, 

with this reason. If there are no restrictions, I don’t see anything 

that keeps one entity from controlling everything, and we only get 

news from one source. And that is where my concern is, and that 

is why I was hoping that I would hear some restrictions, but maybe 

92 

we could have a conversation about that later. I only have a few 

minutes, I am going to move on. 

Ms. Mago, I appreciate very much the remarks bringing attention to an outdated rule, a bygone era, a marketplace that has 

changed dramatically with rules that were put in place in the ’70s. 

Should we get rid of DMAs? 

Ms. MAGO. I am sorry? 

Mr. LUJAN. Should we get rid of DMAs? 

Ms. MAGO. DMAs are actually fairly current. They reflect the 

market patterns in—— 

Mr. LUJAN. DMAs were put in place in the ’40s and ’50s. 

Ms. MAGO. The designated market areas are something that has 

been created for the Nielsen services, and, in fact, they get—— 

Mr. LUJAN. So—— 

Ms. MAGO [continuing]. They are adapted as you go along—— 

Mr. LUJAN. So—— 

Ms. MAGO [continuing]. That indicate—— 

Mr. LUJAN. If I may. So we should get rid of an antiquated rule 

that was written in the ’70s, but not antiquated rules that were 

written before then? 

Ms. MAGO. No, sir. I am contesting the notion that it is simply 

that the DMAs have not changed. In fact, they do change, and they 

are reflective of the market patterns and the commerce that is 

within any given area. 

Mr. LUJAN. So DMAs create a bubble. 

Ms. MAGO. I am sorry? 

Mr. LUJAN. DMAs create a bubble for broadcasters to upgrade 

them, correct? 

Ms. MAGO. No, they reflect the markets where the broadcasters 

are, in fact, operating. They are the commerce area around where 

the broadcasters and the others in that market are. They reflect 

the businesses that advertise on whatever broadcasting service is 

there, and they, in fact, are updated. 

Mr. LUJAN. Very good. That is another conversation I hope that 

we can have—— 

Ms. MAGO. I would be happy to talk with you more about that. 

Mr. LUJAN [continuing]. In the future as well. Yes, I—although 

we have learned about that where there are local communities all 

around the United States and orphan counties that don’t get local 

broadcast news. 

Ms. MAGO. It—— 

Mr. LUJAN. So, clearly, something is broken when local, rural 

Americans are left out in the dark and don’t know what is happening in their backyard, and when local newspapers are providing 

coverage up there because it is too far to commute to take a local 

newspaper. I come from a State where my legislative district takes 

8 1⁄2 hours to drive across. Out here, I drive through six or seven 

States. 

Ms. MAGO. Um-hum. 

Mr. LUJAN. But people seem to forget about rural America, and 

that is where my concern is in that particular area, but we will 

talk—— 

Ms. MAGO. I would be happy to talk with you more about that, 

and really address your concerns. 

93 

Mr. LUJAN. I appreciate that. 

Ms. Gonzalez, you noted in your testimony that since 2006, there 

has been nearly an 80 percent decrease in full-powered TV station 

ownership by African-Americans. Some have used that number to 

argue that existing media cross-ownership rules have done little to 

preserve diversity in broadcast ownership. I find it interesting, 

however, that over roughly the same period, the use of GSAs by 

broadcasters has grown substantially. For example, data indicates 

that while JSAs were only found in 4 percent of the ownership 

transfer applications pending before the FCC between 2001 and 

2004, by earlier this year had ballooned to 25 percent. 

Based on these figures, do you think there is a correlation between the tremendous uptake in the use of JSAs that, in many instances, help broadcasters go around the media cross-ownership restrictions, and the decline in minority ownership of broadcast TV 

stations? 

Ms. GONZALEZ. Yes. There seems to be a correlation. I will note, 

in Ms. Mago’s testimony, she mentioned one example in Kansas 

where there is a JSA that is providing Spanish language news that 

didn’t otherwise exist in that DMA. I think that example is a prime 

candidate for the waiver process that the FCC articulated in its 

JSA order several months ago, and—but for the most part, these 

JSAs seem, and the consolidation generally, seem to have been diminishing owners of color, making it more difficult for us to enter 

the market, and all around just not a good situation for diversity. 

In fact, there are also examples of JSAs where there is an owner 

of color involved, but that person doesn’t have control of the programming and a path toward sole ownership of the station. 

We want genuine involvement and ownership by people of color. 

That doesn’t seem to be happening in this current marketplace. 

Mr. LUJAN. I appreciate that. 

Now, Mr. Chairman, I know that I have not heard any of my colleagues say anything to the contrary that we don’t want to see 

more ownership with minorities as well. And I think this an important question that I hope that we can flush out and just get more 

information on as we have the conversation pertaining to JSAs as 

well, and I really appreciate the panel that you have put together 

and the responses today. I still have many questions as well that 

I will submit into the record, but again, thank you for bringing this 

panel together, Mr. Chairman, and, Ranking Member Eshoo. 

Thank you. 

Mr. WALDEN. Yes, thank you, and thanks for your participation. 

We will now go to Mr. Kinzinger from Illinois. 

Mr. KINZINGER. Well, thank you, Mr. Chairman, and thank you 

all for being here on these very important issues. 

I am going to start with you, Mr. Lake. I have just a couple of 

kind of quick questions. 

The last time that the media ownership rules were substantively 

updated was 1999. That was quite literally the last century, and 

in the ensuing 15 years, the media landscape and specifically the 

options people have to obtain and consume information have expanded exponentially. It is largely thanks to the Internet and the 

availability of online mediums. 

94 

It has become apparent that the FCC is either unable or unwilling to complete the congressionally mandated media ownership review. Is Congress going to have to rewrite and deregulate the current media ownership rules to finally match the intent of the 1996 

Telecommunications Act, and to finally provide regulations that 

match the realities of the current media landscape? 

Mr. LAKE. I can say the Commission takes very seriously its responsibility to review the ownership rules, and the current Chairman has committed to take a very serious look and to have recommendations for the Commissioners by mid-2016. 

Mr. KINZINGER. Good. And I hope you can take back the concerns 

of the committee on that, very loudly. And, Mr. Lake, the Commission adopted an expedited process to review requests for waivers of 

the recently adopted JSA rules. As you noted, the Bureau is tasked 

with acting on any waiver request within 90 days of the close of 

the record, provided there are no circumstances requiring additional time for review. 

Could you describe what those circumstances are, and how will 

applicants know that such circumstances exist? 

Mr. LAKE. We haven’t confronted circumstances such as that, 

and I don’t know what they might be. There might be a need for 

further information that hasn’t been available, but we don’t anticipate that that circumstance will happen very often. We are very 

much aware of the commitment we have to act, if at all possible, 

within 90 days after the record closes, and that is what we will try 

to do. 

Mr. KINZINGER. And so if there is a circumstance, will you guys 

be communicating this well to the applicants? 

Mr. LAKE. Absolutely. If we identify such a circumstance, we will 

make clear what that is. 

Mr. KINZINGER. And will they know immediately? 

Mr. LAKE. We might not know, except during that 90-day period, 

but again, I think this is very hypothetical because we don’t anticipate that that will occur very frequently. 

Mr. KINZINGER. And how will this new speed of disposal metric 

be incorporated into the management of the Bureau? What happens if it is not met, and will you commit to seeing this deadline 

met? 

Mr. LAKE. Excuse me, will we commit to? 

Mr. KINZINGER. To seeing this deadline—to seeing any deadlines 

met? 

Mr. LAKE. Yes, we are committed to meeting that deadline if at 

all possible. And, again, I don’t anticipate there will be many circumstances in which it is not. 

Mr. KINZINGER. OK. Ms. Mago, the FCC has an open proceeding 

to do away with the UHF discount in terms of how UHF stations 

are countered against the national broadcast ownership cap. This 

discount was put into law at a time when UHF signals were seen 

as inferior to VHF signals, which, after the digital television transition, is no longer the case. 

Does NAB have a position on that proceeding? 

Ms. MAGO. Yes. NABs position is that you really shouldn’t be 

looking at just the UHF discount aspect of this without looking at 

the larger rule regarding the national ownership cap. It makes no 

95 

sense in a world where you have grown up with the various discounts, with the ownership sizes, to look at that without considering the larger rule. It is not a standalone rule. 

Mr. KINZINGER. OK. 

Mr. Chairman, I still have a minute and 30, but I will yield back. 

Mr. WALDEN. Gentleman yields back. 

Chair now recognizes the gentleman from Illinois, Mr. Rush. 

Turn on your mic, please. 

Mr. RUSH. Mr. Chairman—— 

Mr. WALDEN. We are glad to have you back, Mr. Rush. 

Mr. RUSH. Well, and I am very glad to be back, Mr. Chairman, 

and thank you for all your concern, both for me and my wife. I really appreciate it. 

I want to welcome all the witnesses, and I want to let you know 

I appreciate your testimony, and I appreciate you spending this 

time with us to discuss the FCC media ownership rules. And this 

is an issue, an area of concern that I have had over the last 21 

years that I have been in Congress, and certainly in terms of my 

years on this committee and on this subcommittee, it has been one 

of my primary concerns. And I have taken the position over these 

past couple of decades that one of the reasons why I sit on this 

committee is to increase the number of minority owners of media 

across the country. And I must say, I am dismally disappointed. I 

have been disappointed over a number of years because I don’t see 

the vigorous commitment from the FCC. I am disappointed in the 

excuse-making and the continual excuse-making, and it is worse 

now than it has ever been in the last 20 years that I have been 

in this Congress—21 years that I have been in Congress. This is 

the worst time for media ownership by minorities. As a matter of 

fact, if I am not mistaken, in the last 3 or 4 years, the percentage 

of media ownership by minorities has dropped almost 60 percent. 

That is not a good report. That is a horrible report. And as we sit, 

there are only four African-Americans who own television stations 

in the Nation, in this great Nation of ours. And we have an agency 

that is responsible for ensuring that the airwaves of the American 

people—that there is some equality, equal access not only to content and viewership, but also from a point of view of ownership. 

And so my question to you, Mr. Lake, is, Does the FCC know 

how many minorities and women are employed by minorities, and 

women broadcasters, compared to how many are hired by nonminority and nonwomen broadcasters? Do you all keep that kind 

of information? 

Mr. LAKE. We do not have that employment breakdown. We have 

EEO rules that require all stations, regardless of their ownership, 

to do outreach in their employment. 

Mr. RUSH. Well, how do you justify in the FCC, how do you justify a decrease of 60 percent of minority owners? 

Mr. LAKE. The Commission does have a longstanding goal, as you 

know, of promoting minority and women ownership of broadcast 

stations—— 

Mr. RUSH. No, I don’t—— 

Mr. LAKE. We hear your dissatisfaction. 

Mr. RUSH. I don’t know it because I hear about it, but I have 

never witnessed it. I have never seen that posture and that attiVerDate Mar 15 2010 11:53 Apr 22, 2015 Jkt 037690 PO 00000 Frm 00099 Fmt 6633 Sfmt 6633 F:\113-152 MEDIA OWNERSHIP ASK OK 4-15-15\113-152 MEDIA OWNERSHIP PDF MADE
96 

tude. I have never seen that program and that commitment by, I 

would say, most of the Commissioners over there. I hear of good 

intentions, I hear a lot of platitudes, I hear a lot of tear-jerking, 

but it is all saying, and it is all—I don’t see the work being done. 

I don’t see them rolling up their sleeves and solving this problem 

that should be solved. It should have been solved a long time ago, 

but I still just hear a lot of—from the FCC, I hear a lot of, ‘‘Yes, 

you are right, yes, we are—it is longstanding,’’ but how long is 

longstanding? 

Mr. LAKE. We share your dissatisfaction with the results so far, 

but we are taking concrete action. One of the results of our recent 

action on JSAs, we think, will be to open more opportunities for 

truly independent owners of TV stations, including minority and 

women owners. As you probably know, there was a list of about 30 

civil rights and other public interest groups that supported our taking that action, and we hope that they are right and that we are 

right; that it will open opportunities for minority owners. 

We also recently relaxed our approach to foreign investment in 

broadcast stations. Again, civil rights groups urged us to do that 

as a way of trying to solve some of the access-to-capital problems 

that minority owners face. So we are taking concrete action. We are 

constantly looking for additional things we can do. We are always 

subject to the very strict Supreme Court rules that have been put 

down as to taking any action that is actually race- or gender-based, 

but, again, one of the things that we did in our Further Notice that 

was recently announced was to review that constitutional law very 

carefully, and the state of the evidence that we have, and to call 

for further evidence that might someday allow us to actually be 

able to justify to the Supreme Court taking race- or gender-based 

action. 

Mr. RUSH. Mr. Chairman, I have one more question, if you don’t 

mind. 

Mr. WALDEN. Go ahead, Mr. Rush. 

Mr. RUSH. If I could. Have you ever heard of the critical information need study? 

Mr. LAKE. Yes, I certainly have. 

Mr. RUSH. Why was it terminated? 

Mr. LAKE. The study was intended to gather data anonymously 

to help determine what the information needs of communities are 

and whether they are being met. When the current Chairman took 

a fresh look at that study, he decided that some of the questions 

appeared inappropriate, and he terminated the study. 

Mr. RUSH. OK. Again, here we go again, all right. So the study 

wasn’t done according to maybe the standards of the new Chairman, but instead of revising it, you end it. All right? Instead of 

adapting or coming up with some new questions that might have 

fit the standards of the Chairman, you ended it. And it was a study 

that should take place, and FCC was headed in the right direction, 

but again, you have ended that study, which would have given us 

information, all right, that would be able to—Mr. Chairman, I 

thank you for your indulgence. I am so upset and angry about this, 

I think I should end this right now, my line of questioning. Thank 

you so very much, and I thank the witnesses, but please I want to 

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go on the record that I am absolutely, totally disappointed in the 

FCC and their position on minority ownership of marketplace. 

Mr. LAKE. And I would be happy to respond on that if you want 

to take the time. 

Mr. WALDEN. We need to actually move on, but, Mr. Rush, thank 

you. I know you are passionate about this, and we all know that, 

and I appreciate your participation in the hearing. 

We will turn now to, I believe, the gentleman from Illinois, Mr. 

Shimkus, for 5 minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. And I do have great respect for my friend from the Chicago area, and it was important 

for him to get his time that he needed to finish up. 

I too am disappointed with the FCC, but not for the totally 

same—and I said in the opening statement, when Federal agencies, 

regardless of who they are, don’t comply with the law and delay, 

it makes it difficult for those of us and conservatives that are in 

the country to say there is a legitimate reason to have that agency. 

If our Government and our agencies would comply with law and be 

expeditious in the processing, it would make it easier, and I would 

just hope you would take that back to the FCC and the Commissioners. That is the importance of getting these Quadrennial Reviews. I mean it has to be embarrassing to come up here and say, 

really, we haven’t done 2010 and 2014, and we are going to get 

around to it. So I am just beating a dead horse, but again, you 

don’t make it easier for us. 

Let me go to Mr. Bank, please. Unless you addressed this in a 

question and answer while I was gone, because I am up at the 

Health Subcommittee meeting too, I am not sure you addressed the 

impact of the FCC’s changes to the attribution of joint sales agreement in your statement. You may have gotten it in a question, and 

if you did, I apologize. Can you tell us about the investment community’s reaction to the FCC’s recent announcement that they will 

force broadcasters to unwind joint sales agreements if the broadcaster finds itself over the local ownership cap? 

Mr. BANK. Well, the sun setting of the JSA provisions for some 

of those stations without a grandfathering provision has been certainly concerning to the capital markets. You know, I think the 

capital markets were initially just kind of confused, but the reality 

is those are events that took value away from those companies. I 

think it was reflected in the reaction of the capital markets. 

Mr. SHIMKUS. Yes, and people know who follow this committee 

and follow my service here, you know, I represent 1⁄3 of the State 

of Illinois, I only have 6 media markets, most of them are small 

or medium-to-small markets. Without this ability, they are not 

broadcasting, or they are broadcasting inadequately. So the argument—so I am very concerned, as other communities are concerned 

about, as Bobby is concerned about minorities, as the Hispanic 

community is concerned, I am concerned about everyday news to 

rural America, and that is the opportunity that we are losing by 

what the FCC is proposing. And I think Mr. Bank identified one 

of them. 

Ms. Mago, it is expensive, and this kind of ties into the whole 

debate, it is expensive to run a TV station or a newspaper in this 

day and age. I think it would be difficult to make it work, that is 

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why I am here and not out there trying. Mr. Walden tried in a different era, pretty much, but there are successful companies out 

there—— 

Ms. MAGO. Um-hum. 

Mr. SHIMKUS [continuing]. With proven track records, and have 

continued to do so, and do it well. Doesn’t it make sense to a lot 

of good companies with good resources to put their expertise to 

work in failing stations or newspapers? 

Ms. MAGO. Absolutely. We believe that good stations can invest 

in their communities, create greater localism, also create more opportunities. They can invest in quality journalism, provide better 

service to the communities, and that is all good for the American 

people. 

Mr. SHIMKUS. And just the stories that I know from local, small 

to medium-sized markets, you have helicopter access where you 

didn’t have it before, you have real news broadcasting versus satellite in news, you might have a new state-of-the-art weather station that may be more predictive than the old one on the old station. So that point needs to be made as we do, as members of Congress, bring our differing voices here to try to collectively raise 

those concerns. Rural America cannot be left out in the ability to 

receive real-time, accurate information, and these agreements help 

them maintain that in a very competitive world. So I appreciate 

you all being here, and again, I apologize for not spending more 

time with you, Mr. Chairman. A great hearing. And I yield back 

my time. 

Mr. WALDEN. Thank you, Mr. Shimkus. We appreciate your participation, as always. 

We will now turn to Mr. Long as our final Member with questions. Mr. Long. 

Mr. LONG. Thank you, Mr. Chairman. 

Ms. Mago, you may not be able to answer this question, as executive vice president and general counsel, legal and regulatory affairs, the National Association of Broadcasters, but I hope you can. 

Are you familiar with a program that the NAB has to encourage 

minority ownership of stations? 

Ms. MAGO. Absolutely. In fact, my other capacity at the NAB is 

that I am the general counsel advisor to the National Association 

of Broadcast Education Foundation, which runs the program that 

you are talking about. 

Mr. LONG. OK, good. And this was not a setup because I had not 

talked to you before, and I didn’t know that you were that familiar 

with it, but I am familiar with that and I am given to understand 

that it is a very intense program, very successful. I have talked to 

people that have gone through and become owners of stations. So 

for my friend from Illinois, I hope you realize that the NAB is 

reaching out and doing a lot in that direction. 

My next question is for Mr. Lake. If you have a successful broadcaster, what advantages have that successful broadcaster to fold 

into a JSA with another company, what would be his advantage? 

If I have a successful, rock ’em, sock ’em station, on the air, making 

a lot of money, what is my advantage to fold that in with a JSA 

with another station? 

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Mr. LAKE. What a number of stations seem to have concluded is 

that they would very much like to have a duopoly in a market in 

which our rules don’t allow a duopoly, and that going into a JSA, 

which is often combined with a number of other entanglements between the stations, is a way, essentially, to go around our local TV 

rule and establish a de facto duopoly where a true duopoly or a 

legal duopoly wouldn’t be allowed. 

Mr. LONG. So it would be good to give up a large percentage of 

my profits and things so I could fold into this arrangement if I am 

a successful station? 

Mr. LAKE. Typically, these arrangements are not between two established, successful stations. 

Mr. LONG. Exactly. In my area, we have a station that came on 

the air as a UHF, and, yes, I am old enough to remember that, and 

it was, for all these years forward, it was kind of like ‘‘Ted Mack’s 

Amateur Hour,’’ and there are a few of you in here old enough to 

remember Ted Mack, but it was going to fold, it was going to be 

out of business. I don’t care if you would have brought in a minority owner, a nonminority owner, whoever it is, at the end of the 

day, these stations have to make money, they have to be successful. 

And I think that the message I would like for you to take back to 

the FCC, other than trying to do a Quadrennial Review in less 

than 10 years or something like that, would be that they need to 

be cognizant of these operations, the stations I am talking about 

in my market, in my hometown that I am talking about in particular, that news station that used to look like ‘‘Ted Mack’s Amateur Hour’’ now is winning national awards. Yes, they folded and 

they closed the building they were in, and tried to lease it or tried 

to sell it. They moved across town into a successful station, but 

that—I don’t understand, I mean, I came from a 30-year business 

background, I don’t come from politics. I, you know, I wasn’t a politician before I ran for this, so at the end of the day, I did talk radio 

for 6 years and I know, when you do talk radio, you want to put 

people in those stores. You have to be motivated to do a good show, 

get in there, and sell product and have people support your sponsors. So it is all about capitalism, making a profit, and I just think 

that if you all blow up this thing, that station that is getting all 

these news awards now that used to do terrible, is going to be 

gone. Whether you bring in a minority owner, or whatever kind of 

owner you bring in, if it is not a successful station, it is not going 

to work very well. 

So I guess another question for you would be, would you rather 

that these failing broadcasters, such as the one I described, go out 

of business, than to be influenced, as you said earlier, by having 

a JSA with a successful broadcaster? Are you really that worried 

about the influence they may have if—would you rather they be 

out of business? 

Mr. LAKE. A few things in response to that. The facts of 

these—— 

Mr. LONG. Answer that question first, if you will. 

Mr. LAKE. Yes. 

Mr. LONG. Yes or no, would you rather they be out of business? 

Mr. LAKE. We have expressly in our rules an opportunity for a 

station that is failing to obtain a waiver of our local TV rule, and 

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we have granted failing station waivers. So if a station is failing, 

it doesn’t have to take a backdoor of trying to become dependent 

on another station through a JSA, it can come in and seek a waiver. We also have indicated that we are wide open to consider waivers of the JSA attribution rule itself in appropriate circumstances. 

There are very different circumstances. There are circumstances in 

which these de facto duopolies have been established between two 

major network stations. Clearly not a failing station situation. 

Mr. LONG. But if this failing station did a JSA with a successful 

station like I have described, and you blow this up or unwind it, 

then that station would either have to cease to exist, or they would 

have to go find another space across town and go back to being a 

failing station. I mean it is going to be too late to come in for this 

waiver you are talking, correct, or not? 

Mr. LAKE. It may not be too late. Again, we have entertained and 

granted a number of failing station waivers. 

Mr. LONG. OK. Thank you all for being here today. 

And I have gone over my time, so if I had any time, I would sure 

yield her back. 

Mr. WALDEN. I appreciate that. Thank the gentleman for his participation, and all of our witnesses for your testimony and answer 

to your questions. I am sure we may have a few more for the record 

that, if we do, we will send to you and look forward to getting your 

response to it. Obviously, this is an issue that spans the spectrum 

of philosophy and the committee in a marketplace that is changing 

pretty dramatically and rapidly, and it is an issue we will continue 

to pursue one way or another. So thank you all for your participation. 

We stand adjourned. 

[Whereupon, at 12:16 p.m., the subcommittee was adjourned.] 

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