```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

   CAMPAIGN FINANCE REFORM: PROPOSALS IMPACTING BROADCASTERS, CABLE 
                   OPERATORS AND SATELLITE PROVIDERS

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

                                HEARING

                               before the

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 20, 2001

                               __________

                           Serial No. 107-42

                               __________

       Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

                   U.S. GOVERNMENT PRINTING OFFICE
73-727                     WASHINGTON : 2001

_______________________________________________________________________
 For sale by the Superintendent of Documents, U.S. Government Printing 
                                 Office
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                    ------------------------------  
                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma              BART GORDON, Tennessee
RICHARD BURR, North Carolina         PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                    ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia             BART STUPAK, Michigan
BARBARA CUBIN, Wyoming               ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois               TOM SAWYER, Ohio
HEATHER WILSON, New Mexico           ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona             GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING,          KAREN McCARTHY, Missouri
Mississippi                          TED STRICKLAND, Ohio
VITO FOSSELLA, New York              DIANA DeGETTE, Colorado
ROY BLUNT, Missouri                  THOMAS M. BARRETT, Wisconsin
TOM DAVIS, Virginia                  BILL LUTHER, Minnesota
ED BRYANT, Tennessee                 LOIS CAPPS, California
ROBERT L. EHRLICH, Jr., Maryland     MICHAEL F. DOYLE, Pennsylvania
STEVE BUYER, Indiana                 CHRISTOPHER JOHN, Louisiana
GEORGE RADANOVICH, California        JANE HARMAN, California
CHARLES F. BASS, New Hampshire
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

          Subcommittee on Telecommunications and the Internet

                     FRED UPTON, Michigan, Chairman

MICHAEL BILIRAKIS, Florida           EDWARD J. MARKEY, Massachusetts
JOE BARTON, Texas                    BART GORDON, Tennessee
CLIFF STEARNS, Florida               BOBBY L. RUSH, Illinois
  Vice Chairman                      ANNA G. ESHOO, California
PAUL E. GILLMOR, Ohio                ELIOT L. ENGEL, New York
CHRISTOPHER COX, California          GENE GREEN, Texas
NATHAN DEAL, Georgia                 KAREN McCARTHY, Missouri
STEVE LARGENT, Oklahoma              BILL LUTHER, Minnesota
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               DIANA DeGETTE, Colorado
HEATHER WILSON, New Mexico           JANE HARMAN, California
CHARLES ``CHIP'' PICKERING,          RICK BOUCHER, Virginia
Mississippi                          SHERROD BROWN, Ohio
VITO FOSSELLA, New York              TOM SAWYER, Ohio
TOM DAVIS, Virginia                  JOHN D. DINGELL, Michigan,
ROY BLUNT, Missouri                    (Ex Officio)
ROBERT L. EHRLICH, Jr., Maryland
LEE TERRY, Nebraska
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    BeVier, Lillian R., Doherty Charitable Professor and Class of 
      1963, Research Professor, University of Virginia Law School    24
    Morris, Dwight L., President, Campaign Study Group...........    42
    Sander, Jack, Executive Vice President Media Operations, Belo 
      Corporation................................................    13
    Sapan, Joshua, President and Chief Executive Officer, Rainbow 
      Media Holdings.............................................    34
    Taylor, Paul, Executive Director, Alliance for Better 
      Campaigns..................................................    38
    Wright, Andrew S., General Counsel, Vice President, 
      Government Affairs, Satellite Broadcasting and 
      Communications.............................................    21

                                 (iii)

  

 
   CAMPAIGN FINANCE REFORM: PROPOSALS IMPACTING BROADCASTERS, CABLE 
                   OPERATORS AND SATELLITE PROVIDERS

                              ----------                              

                        WEDNESDAY, JUNE 20, 2001

              House of Representatives,    
              Committee on Energy and Commerce,    
                     Subcommittee on Telecommunications    
                                           and the Internet
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10 a.m., in 
room 2322, Rayburn House Office Building, Hon. Fred Upton 
(chairman) presiding.
    Members present: Representatives Upton, Stearns, Largent, 
Shimkus, Wilson, Ehrlich, Terry, Tauzin (ex officio), Markey, 
Engel, Green, McCarthy, Luther, Sawyer, and Dingell (ex 
officio).
    Staff present: Jessica Wallace, majority counsel; Hollyn 
Kidd, legislative clerk; Andy Levin, minority counsel; and 
Brendan Kelsay, minority professional staff.
    Mr. Upton. Good morning, everyone. Before I give my opening 
statement I'd just like to note for the record, make a 
unanimous consent request that all members will be able to 
submit their statements as part of the record and I have a copy 
from Anna Eshoo that will be done.
    I would also note that there is a reason why we switched 
rooms from downstairs to upstairs. There's a major hearing on 
cloning and a number of us are members of the Health 
Subcommittee and so there are a number of subcommittee hearings 
going on all at the same time, so we'll be seeing members 
coming in and out.
    Let me state at the outset that I'm a strong advocate of 
campaign finance reform. I voted for the Shays-Meehan bill in 
the last Congress, not to mention many other reform measures 
throughout my years in the House.
    Having said that, we are here today to learn more about how 
certain political advertising provisions contained in the 
Torricelli Amendment to the McCain-Feingold Bill would impact 
broadcasters, cable operators and satellite providers. Through 
our respective congressional campaigns, many of us on the 
subcommittee are familiar with the rules which govern political 
advertisements to the extent that these rules dictate the cost 
that we must pay to run them. So this issue has great bearing 
on every one of our political lives. But we cannot overlook the 
fact that advertising is the sole source of income upon which 
broadcasters rely to pay their bills so that they can serve 
their communities.
    Under current law, unlike any other advertiser, a 
politician is entitled to the lowest unit to charge within the 
previous 45 or 60 days for the same class and period of time of 
advertisement regardless of the fact that the lowest unit 
charge is based on the broadcaster's charge to its best 
customers. Like the local auto dealer who might have an 
advanced contract to advertise numerous times every day of the 
year and get the best volume discount as a result. In other 
words, politicians are already given a tremendous price break 
over anyone else in town, but we have come to accept this as a 
balanced way for the broadcasters to fulfill their service to 
the public in exchange for being given use of the public 
airwaves.
    Now we come to the Torricelli Amendment which puts the 
heavy thumb of government on the scale and suggests that the 
broadcasters should have to do even more to pay their debt to 
society. If the Torricelli Amendment were to become law, we 
would give politicians an even bigger leg up on the local auto 
dealer because we would no longer permit the broadcaster to 
distinguish between the most expensive non-preemptable time or 
the cheapest preemptable time in determining the politician's 
lowest unit cost.
    Moreover, the broadcaster would no longer have any 
flexibility to preempt at all. In addition, the politician 
would be entitled to the lowest unit charged no matter when 
that might be derived in the preceding 365 days, never mind 
that in the dead of winter in February when advertising rates 
in Southwest Michigan may be at fire sale prices while in the 
summer the height of the tourist season they are at a premium, 
especially when the Cubs are in first place.
    The politician would get the benefit of the February rates, 
not preemptable under the Torricelli Amendment. Moreover, for 
those broadcasters like those in my neck of the woods in 
Southwest Michigan, along the Indiana border, the broadcaster 
would have to give breaks under the Torricelli Amendment to any 
qualified Federal candidate, not to mention political parties.
    This could mean that in a Presidential year with contested 
U.S. Senate races and numerous House races in both Michigan and 
Indiana and Illinois, those broadcasters would serve both 
Southwest Michigan and those States could be flooded with ads 
from candidates for all such offices from all those States 
which only compound the problem for the broadcasters.
    My fear is that rather than reduce the amount on political 
advertising, the Torricelli Amendment will only make it 
eminently more affordable and result in just as much spending 
and certainly more political ads. The bottom line is that 
politicians do not like to pay any more in advertising than the 
local auto dealer, yet politicians are the only ones who could 
amend the law to cut themselves an even better break.
    I want to see campaign finance system cleaned up and 
reformed, but in my mind the Torricelli Amendment not only 
would fail to reduce spending, but also would unfairly burden 
broadcasters, cable operators and satellite providers.
    I look forward to today's hearing and its witnesses and I 
yield to the ranking member and friend and colleague, Mr. 
Markey of Massachusetts.
    Mr. Markey. Thank you, Mr. Chairman, very much. In Boston, 
we do have this incredible fear this year that we are going to 
make it to the World Series, but that we'd play the Cubs in the 
World Series and then lose to the Cubs. That's the nightmare 
scenario that looks like it could unfold this year.
    Without question, this Congress may be the one that has the 
highest likelihood of actually succeeding in passing a campaign 
reform measure and sending it on to the President. With that in 
mind, it's important that we look to the telecommunications 
policy issues before us this morning in the broader context of 
campaign finance reform.
    Now I've long been an advocate of the House version of the 
McCain-Feingold Bill, the Shays-Meehan Bill and have voted for 
it a number of times. In addition, I have long supported public 
financing as a way to help limit the overall cost of campaigns 
and to limit the amount of time and energy that politicians 
must exert in fundraising. Recognizing that comprehensive 
campaign finance reform that is beyond soft money bans may 
still be some time away, I have supported the policy put on the 
books many, many years ago that requires broadcast licensees to 
provide candidates with the lowest unit rate for their 
political advertisements.
    Today gives us both an opportunity to look at new proposals 
such as those embodied in the so-called Torricelli Amendment 
which was successfully added to the McCain-Feingold Bill on the 
Senate side earlier this year, as well as examine the real-
world operation of the lowest unit rate policy as it exists 
today.
    The lowest unit rate provisions as they are currently 
constructed were put on the books as part of the Federal 
Election Campaign Act of 1971. These provisions require 
reasonable access to candidate advertisements and an obligation 
that broadcasters provide candidates with the lowest charge of 
that broadcast station for the same class and amount of time 
for the same time period. Classes refer to whether the ad buy 
is for preemptable or non-preemptable time with the latter 
obviously being the more expensive typically. Time period 
refers to the time of day and time refers to whether it's a 30 
second or 60 second spot. The ability of these provisions are a 
window of 45 days prior to a primary and 60 days prior to a 
general election.
    The proposal contained in the Senate bill extends this 
window out to 365 days, meaning that stations must provide 
candidates with the lowest rate for that slot that they charged 
anyone during the previous year.
    In addition, the scope is expanded to include cable 
operators and satellite broadcasters. The broadcast industry is 
concerned that these new provisions will force them to charge 
candidates rock bottom prices and will hurt their bottom line. 
It is hard to imagine a proposal that would lower the cost of 
campaigns to candidates that wouldn't, by necessity, negatively 
impact the broadcast revenue from such candidates today.
    Industry also asserts that lower advertisement cost doesn't 
necessarily mean candidates will raise less money or advertise 
less. Cheap ads may simply mean more ads. There may be some 
truth to this, depending upon the particular medium markets, 
how many contest races are going on simultaneously and whether 
the larger campaign finance reform bill includes any caps or 
voluntary limits on overall candidate spending.
    I'm not sure at this point whether it is necessary or 
warranted to include cable operators or satellite broadcasters 
in this regime at this time. Advertisements on those media tend 
not to be as expensive as broadcast advertising. They also 
already have a form of free TV time. They call it must carry 
where they carry local broadcast stations on their service for 
free.
    Yet as we look at this issue, we must keep in mind another 
cost as well and that is the cost to our democracy. There's no 
question that broadcasters who are FCC licensees and are 
required by those licenses to serve the public interest make a 
significant amount of money off of the public's interest in 
elections or at least on a candidate's interest in reaching the 
public.
    How we quantify their responsibility to the public during 
election time is always a difficult question. However, it is 
hard to imagine a reform of our campaign system that doesn't 
look to the broadcast media as part of the solution because 
media remains a significant amount of the cost of many 
political campaigns.
    Again, I look forward, Mr. Chairman, to the statements from 
our witnesses today and to ultimately our participation in this 
very important process.
    Mr. Upton. Thank you. We recognize the vice chairman of the 
subcommittee, Mr. Stearns from Florida.
    Mr. Stearns. Good morning and thank you, Mr. Chairman. I 
also want to thank you for holding this hearing. When an 
amendment is offered by Senator Torricelli from New Jersey in 
the Senate and then it comes over here, it's not oftentimes 
that you have this opportunity to have a hearing on such an 
amendment. So I compliment you and I know the people in the 
audience also appreciate the fact that we can have an open 
forum on this amendment and not just vote on a component on it 
in the House or in a committee without fully understanding the 
full ramifications.
    If this provision is enacted it would result in further, I 
think, socializing might not be the right word; price control, 
we already have some price controls, but this would be price 
control No. 2 for political campaign. And I think there's the 
law of unintended consequences that could result from this. And 
that's why, Mr. Chairman, I have an article from The Hill 
Magazine that I would ask unanimous consent to make part of the 
record.
    Mr. Upton. Without objection.
    Mr. Stearns. This article is entitled ``TV Stations Ration 
Campaign Advertising Citing High Demand.'' The article states 
that in 1998, primary campaign in California, the requests for 
political advertising were so overly demanding that complying 
with every request to purchase advertising space for political 
ads would have placed television stations in a huge economic 
bind. The stations in response to such high demands were forced 
to restrict local and State candidates, besides those running 
for Governor for airing political ads. As a result, some TV 
stations even refused to take ads from campaigns other than 
Federal campaigns and a Governor's race infuriating candidates 
who were put to the test in other offices.
    The article cites a real-life consequences of discounted 
air time. During the 1998 election cycle, Ron Gonzales, a 
Democratic candidate for Mayor in San Jose, California could 
not even purchase any time for political ads and was put into a 
competitive disadvantage that forced him into a run-off. But 
instead of making sure that all candidates in all groups have 
an equitable opportunity to acquire time to inform the public 
of their candidacies or the issues important to them, the 
proponents of the Torricelli Amendment will create a system of 
inequities, bestowing Federal candidates preferential status.
    So unfortunately, sometimes we do not fully recognize the 
law of unintended consequences here in Congress. The Torricelli 
Amendment would do that, further regulate our society, our 
broadcast society and in the end, I think hurt local and State 
candidates.
    Furthermore, broadcasters already have a significant 
financial commitment to make in transitioning to digital 
television. Broadcasters will have to spend tens of millions of 
dollars in order to transition to digital television. With 
Federal elections every 2 years, such proposals can easily 
threaten this conversion to high definition television.
    The proposal before the subcommittee will have unintended 
consequences, severely harming broadcasters financially, 
damaging State and local candidates, insulating incumbents and 
the two major parties from challengers and from third parties, 
and in the end, harming our democracy and our notion of 
freedom.
    So Mr. Chairman, I again commend you on having this hearing 
on the Torricelli Amendment. Thank you.
    Mr. Upton. Thank you. Mr. Dingell, ranking member of the 
full committee.
    Mr. Dingell. Mr. Chairman, I thank you for recognizing me 
and I commend you for holding this hearing. The Torricelli 
Amendment about which this proceeding is, appears to be a 
wonderful piece of legislation and it appears to have almost 
every virtue that the American public would solicit of our 
campaign laws. It is supposed to reduce costs. It is supposed 
to be able to make time more readily available. It is supposed 
to equalize the differences between richer and poorer 
candidates. It is supposed to see to it that time is made more 
cheaply available to the candidates for public office and to 
increase the transparency and the democratic, with a small D, 
impact of television and television advertising on the public. 
Wonderful.
    However, let us look a little more deeply at this 
legislation. And let us begin with some very important 
statements. First of all, it doesn't do what it's supposed to 
do. Second of all, it is badly drafted. Third of all, it has a 
number of unfortunate surprises which are contained in it which 
I will address as I go forward. There's no question in my mind 
that our Nation's campaign finance system has been severely 
corrupted, most notably by the enormous sums of unregulated 
soft money that have poured into campaigns over the past few 
years. It's equally clear that the public is fed up and 
disgusted with the amount of money which is spent and they 
believe that the entire system has been corrupted. Again, 
regrettably, the Torricelli Amendment does not resolve those 
problems.
    The most recent elections in 2000 were the most expensive 
in history and seemingly created an endless cycle of fund 
raising and campaigning that quite frankly has raised questions 
in the minds of the public, and most office holders' minds, 
about the entire electoral process. Reform is needed. Again, is 
this the reform needed? Clearly not. And I will discuss further 
as to why. The public deserves a more transparent process and 
no elected official should either be beholden to special 
interests or appear to be beholden to special interests. I 
think that the exorbitant sums spent in modern campaigns not 
only taint the election process and must be curbed, but quite 
honestly, they raise questions as to the faith of the people in 
the campaign process simply because of the enormous sums of 
money spent and the questions that attend it.
    We should, however, be careful to craft solutions and to 
make sure that they have the desired effect. As the doctors 
would say in the Hippocratic Oath, first, do no harm. As we see 
too often, quick fixes rarely work and usually create larger 
problems down the road. Clearly that is the situation before 
us.
    I have no doubt that the Torricelli Amendment to the 
McCain-Feingold Bill is well-intentioned, and it certainly 
looks great at first glance. Its proponents claim that it will 
drive down the cost of political advertising and, by extension, 
the cost of campaigns. If that were true, we should form bands 
of citizens to support it with great enthusiasm.
    Regrettably, it is not so, and while I'm sure that every 
Member of this body, and of the Senate, and any other 
campaigning officer or rather persons seeking public office, 
joins in that view, I am not convinced that the provision meets 
the necessary tests. Is it constitutional? I doubt it. Is it 
fair? Clearly not. And I also doubt that it, in fact, would 
result in less campaigning, less expenditures, or in a better 
situation.
    To the contrary, I believe this amendment is fraught with 
the potential to achieve precisely the opposite result. Instead 
of stemming the growing tendency toward protracted campaigns 
which causes more money to be raised and more money to be 
spent, the amendment would actually encourage perpetual 
campaigns by deepening advertising discounts and expanding them 
to apply on a permanent year-round basis. The money chase would 
accelerate, let me assure you, Mr. Chairman.
    Instead of providing an incentive to improve the quality of 
political discourse, thereby decreasing the quantity of 
advertising needed, the Torricelli Amendment would actually 
stimulate the purchase of more ads by more political campaigns. 
Not only would this reduce the likelihood that campaigns would 
raise and spend money, but the resulting ad clutter would 
saturate the market and render all of the messages less 
effective. It is interesting to note that the amendment was 
drafted so quickly and without proper vetting that the 
legislation containing this amendment actually exempts radio 
ads from the current law requiring the lowest unit charged. 
Many candidates, Federal, State and local, rely exclusively on 
radio. Imagine the consequences of that.
    It would further then seriously threaten the ability of 
State and local candidates, or less financed Federal 
candidates, to get on the air at all, since Federal candidates 
for elected office are afforded reasonable access to airwaves, 
but State and local candidates are not. In many markets, there 
may be little or no advertising inventory available for these 
races. I do not believe that it was the intent of Senator 
Torricelli to allow Federal candidates to corner this part of 
the market. Of course, the Federal Communications Commission is 
likely to step in and better define just how much political 
advertising constitutes reasonable access.
    Imagine, Mr. Chairman, the FCC contemplating a question 
such as this, with the limited competence that that Agency has 
shown during much of its history and an opportunity to 
interfere in the political process. Imagine the damage that 
that Agency could do.
    Having said that, more concrete FCC rules in this area 
could result in less inventory being made available for 
candidates than is the case today. I would say be careful for 
what you ask for, you just might get it, and God help us if we 
do.
    [The prepared statement of Hon. John D. Dingell follows:]

    Prepared Statement of Hon. John D. Dingell, a Representative in 
                  Congress from the State of Michigan

    Thank you, Mr. Chairman, for holding this hearing today. There is 
no question in my mind that our Nation's campaign finance system has 
been severely corrupted, most notably by the enormous sums of 
unregulated soft money that have poured into campaigns over the past 
few years.
    The most recent elections in 2000 were the most expensive in 
history, and the seemingly endless cycle of fundraising and campaigning 
cast a pall on the entire electoral process.
    Clearly reform is in order. The public deserves a more transparent 
process, and no elected official should feel beholden to special 
interests. I believe the exorbitant sums spent on modern campaigns 
taint the election process and they must be curbed.
    But we should be extremely careful to craft solutions that will 
actually have the desired effect. As we see too often, quick fixes 
rarely work, and usually create larger problems down the road.
    I have no doubt that the Torricelli amendment to the McCain-
Feingold bill is well-intentioned. Its proponents claim that it will 
drive down the cost of political advertising and, by extension, the 
cost of campaigns. And while I'm sure every Member would like to pay 
less for campaign ads, I am not convinced that the provision is fair, 
that it is constitutional, or that it would, in fact, result in less 
campaign spending.
    To the contrary, I believe it is fraught with the potential to 
achieve precisely the opposite result. Instead of stemming the growing 
trend toward protracted campaigns--which causes more money to be raised 
and spent--the Torricelli amendment would actually encourage perpetual 
campaigns by deepening the advertising discounts and expanding them to 
apply on a permanent, year-round basis.
    Instead of providing an incentive to improve the quality of 
political discourse, and thereby decrease the quantity of advertising 
needed, the Torricelli amendment would actually stimulate the purchase 
of many more ads by political campaigns. Not only would this reduce the 
likelihood that campaigns would raise and spend less money, but the 
resulting ad clutter would saturate the market and render the message 
less effective.
    Furthermore, the Torricelli provision could seriously threaten the 
ability of state and local candidates to get on the air at all. Since 
federal candidates for elective office are afforded ``reasonable 
access'' to the airwaves, but state and local candidates are not, in 
many markets there may be little or no advertising inventory available 
for these races. I do not believe it was the intent of Senator 
Torricelli to allow federal candidates for office to corner this 
market.
    Of course, the Federal Communications Commission (FCC) would likely 
step in and better define just how much political advertising 
constitutes reasonable access. But, perhaps ironically, more concrete 
FCC rules in this area could result in less inventory being made 
available to candidates than is the case today. So we must be careful 
what we ask for.
    Mr. Chairman, it is clear that the amendment adopted in the Senate 
was intended to address a very serious problem. Unfortunately, I 
believe it falls short of achieving the desired result, and, worse, is 
likely to cause significant unintended consequences. I hope that we 
will deliberate very carefully over these provisions before proceeding 
to legislate in Committee.

    Mr. Upton. Thank you. Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman, for holding this 
important hearing and welcome witnesses.
    I have, as well, concerns with the Torricelli-Corzine 
language included in McCain-Feingold. First, I believe it's 
entirely unfair to require broadcasters to provide candidates 
with rates equivalent to the least expensive spot in the same 
time period over 365 day period, a 1-year period. Should 
candidates be able to buy ads, unpreemptable at the same prices 
4 days before an election at the same rate that the station 
sold an ad 140 days prior to that election? I don't think so. 
To me, that sounds absurd.
    One columnist compared this to giving politicians a Lexus 
at the price of a Saturn. Now remember, the philosophy 
originally or the current status quo laws provide access to 
candidates to prevent the gouging, an ad that may be sold for 
$1,000 to the long-term customer, advertising customer. We come 
in and maybe it's a $10,000 ad for that period. The current law 
prevents that type of gouging and allows us the access. And now 
the philosophy is give us a political financial advantage on 
the backs of these TV stations. That's wrong.
    Second, the backers of the Torricelli-Corzine language 
claim that it helps the process because now we, as candidates, 
can spend more time legislating than we have to be out on the 
phone raising dollars for these expensive ads and expensive 
campaigns. I would say that this type of amendment is what 
happens when the Torricellis and Corzines have too much time to 
think about legislation. But nothing can be further from the 
truth. The reality, other than maybe for a specific campaign in 
New Jersey, most of us have to raise money just to meet, just 
to do the basic things in a campaign.
    So if we put the burden on you to help finance our 
campaigns, you as the broadcasters and TV stations, in reality, 
what we're going to do is take that windfall, I'm either going 
to buy more ads with it because we don't have enough money to 
really fully do everything we want at campaign unless we have 
$60 million to pull out of our pockets which is very rare. So 
I'm going to use that to buy more ads or I'm going to move it 
to actually doing direct mail or radio or other things. It's 
not going to lower the cost of campaigns. It just won't happen.
    So I want to focus a little bit on some of the 
alternatives. I've introduced with my colleagues, Chip 
Pickering and Joe Nolenberg, the Open and Accountable Campaign 
Financing Act of 2001 as an alternative and this focuses on 
disclosure and it does have a component that hits the 
broadcasters because when independent expenditures, when they 
place ads which I think is their constitutional right to do so, 
even if it's an ad to defeat Lee Terry, I'm going to protect 
their constitutional rights to do that, but we do place a 
burden in this Act to force broadcasters, in essence, to give 
us the information of who and what regard they're purchasing, 
the same thing that you have to do with political candidates 
today.
    I think the answer is disclosure as opposed to what Mr. 
Stearns said in price controls.
    So again, thank you, Mr. Chairman, and I am looking forward 
to hearing from our witnesses.
    Mr. Upton. Thank you. Mr. Green from Texas.
    Mr. Green. Thank you, Mr. Chairman, for the hearing and I'd 
also like to begin by welcoming Jack Sander from Belo 
Corporation. Belo owns and operates a number of TV stations all 
over the country and also the Dallas Morning News, but more 
importantly, they own and operate KHOU TV, Channel 11, in 
Houston and their claim to fame and they've gotten more awards 
than anybody can count. They broke the story last year on the 
Firestone issue and I know after yesterday's hearing that it's 
still a hot topic.
    The topic before us today though presents a delicate 
question on how to control our outrageous campaign spending 
driving our election process. During the last campaign cycle, 
Federal, State and local campaigns spend over $1 billion in 
media and that number is expected to rise in the coming 
election. These rising costs discourage a lot of qualified 
individuals from entering public service on the Federal level 
and forces many of us to campaign full-time in preparation for 
the next election. However, as you look for ways to lower the 
costs for Federal campaigns, I believe we must exercise great 
care in not burdening the private sector with our problem.
    In today's hearing, we're looking at an amendment that 
would allow Federal candidates preferential treatment over 
State and local candidates when purchasing media spots for 
campaign advertising. The amendment attached to the Senate 
version of our Campaign Finance Bill gives Federal candidates 
lowest units charge or LUCs rates for their political ads. This 
rate is typically is given only to the broadcaster's best 
customer.
    In addition, Federal candidates would be allowed to this 
rate for 365 days a year which seems it goes against the intent 
of who can be campaigning all year and even raising more money 
to be able to have our ads up 365 days. While I understand the 
intent of the drafter, I believe the provision is going to have 
the opposite effect on campaign spending and if this new 
ability to purchase cheap air time for political ads, I believe 
the trend will be to buy more ads at an earlier time and thus 
flood the voters with a perpetual campaign and frankly voters 
already think they have a perpetual campaign.
    Also, because of this provision, applies only to Federal 
candidates, it's going to freeze out State and local officials 
who need to purchase air time to get their message out to 
voters. I especially feel uncomfortable with this, Mr. 
Chairman, since our Districts are now being drawn by our 
colleagues in the State legislatures around the country and I 
surely would want our good friends in the legislature to think 
they're excluding them from anything, particularly at this 
time, certainly not me or anyone on this committee.
    In conclusion, Mr. Chairman, I think the spirit of the 
legislation is good, but it needs further hearings before it 
should be allowed to move forward and also, Mr. Chairman, I ask 
unanimous consent that a statement by the University of Texas 
Law Professor Lucas Powell, be included in the record. 
Professor Powell is a noted constitutional scholar and he 
shares many of my concerns with the impacts of this legislation 
and I yield back my time.
    Mr. Upton. Without objection, the statement will be 
included as part of the record.
    Mr. Largent.
    Mr. Largent. Mr. Chairman, thank you for holding this 
morning's hearing to explore how the current lowest unit charge 
rules apply to various segments of the communication industry.
    As Members of Congress, we know all too well the expense 
that is involved in running for public office. One of those 
expenses is the ability to get your message out to the greatest 
number of people. Generally, that involves buying air time. 
This last election cycle is estimated that politicians and 
wannabe politicians spend anywhere from $800 to $1 billion on 
TV ads.
    Clearly, by anyone's standards that's a lot of money and it 
gives new meaning to the phrase free speech. But does it 
justify Congress telling network affiliates, cable operators 
and satellite providers that they can no longer charge 
different rates for different classes of advertising time?
    In my opinion, it does not. Why? For one, the Torricelli 
Amendment unfairly singles out TV broadcasters in this attempt 
to create a political welfare system. Radio broadcasters are 
not covered. Newspapers are not covered. Internet providers, 
wireless providers and any other vendors to political campaigns 
for that matter are not covered. I believe the Torricelli 
Amendment creates a very troubling precedent under the guise of 
campaign finance reform.
    I have to wonder what the local business owner in Tulsa, 
Oklahoma who advertises on cable or broadcast television would 
think about me getting preferential air time at reduced rates 
when they have to pay whatever the going preemptable or non-
preemptable rate is. To be honest, I don't think they would be 
real thrilled about it.
    Later we will hear from our witnesses, one of whom is Mr. 
Paul Taylor, Executive Director for the Alliance for Better 
Campaigns. Mr. Taylor's organization also has a website called 
greedytv.org. I'm familiar with this website because the TV 
broadcaster in Oklahoma City, Griffin Communications has the 
dubious distinction of being one of the top ten greediest 
broadcasters in the country, according to greedytv.org. This 
website alleges that Griffin Communications earned over 
$500,000 from political advertisers last year.
    Griffin Communications disputes that figure and believes 
it's closer to $100,000. For the sake of accuracy, Griffin 
Communications has offered Mr. Taylor and his organization to 
check the books, what I would call full disclosure. The 
Alliance for Better Campaigns has declined the offer to look at 
the books and find out the facts. I think that greedytv is 
following the adage ``never let the truth obscure a good sound 
byte.''
    I find that quite disappointing. Later, I'd like to ask Mr. 
Taylor how his organization came up with the $500,000 figure 
and why they haven't bothered to make sure that their 
information is accurate.
    Mr. Chairman, I have always strived to shoot straight with 
my constituents with my campaigns, and I would hope that those 
organizations that advocate for campaign finance reform would 
do the same and I look forward to hearing from our witnesses.
    Mr. Upton. Thank you, Mr. Largent. Mr. Luther.
    Mr. Luther. Thank you, Mr. Chairman, and thanks for holding 
this hearing on this particular issue. I think there is a 
concern that the little programming time that broadcasters do 
spend on elections has shrunk dramatically in the last two 
decades and as a result, paid television ads have become the 
primary source of information for voters. However, the cost of 
television commercials for candidates has shot through the roof 
in recent years and I would note that this is of particular 
concern to challengers, who do not have the natural benefits of 
incumbency.
    The questions before us are whether the Torricelli 
Amendment is a proper and fair way for broadcasters to serve 
our citizens who are, of course, the true owners of the 
airwaves and whether the Amendment, on balance, will advance 
the public interest.
    I, along with other members, look forward to learning more 
about the effect of this particular proposal and I thank you, 
Mr. Chairman, for the time.
    Mr. Upton. Thank you. Mr. Sawyer.
    Mr. Sawyer. Thank you, Mr. Chairman. Thank you for 
recognizing me and for having this hearing. Like many of us, 
I'm a co-sponsor of the Shays-Meehan Campaign Finance Reform 
Bill. This Chamber has struggled for more than a decade to 
remake the funding regime of American politics. It has not been 
unanimous, but it has been a genuinely bipartisan effort, 
increasingly so and it has been frustrating, increasingly so.
    This incessant money chase that everybody has referred to, 
to fund ever more costly campaigns diverts members' attention 
from important duties and diminishes public trust. Members of 
the House today operate in a state of perpetual campaigning. 
Too many of our Chamber view the legislative session primarily 
as an opportunity to frame issues and position for the next 
election. Shays-Meehan offers some real, if imperfect, relief 
from the pressure and problems of the money chase.
    However, I'm not certain that the Torricelli Amendment 
helps address the problem. While campaigns are growing more 
costly, it's not at all clear that those costs are born 
disproportionately through advertising. It is clear, however, 
that advertising is a serious cost in campaigns and something 
that deserves our attention. But it's also not clear whether 
the Torricelli Amendment is constitutional, measured by the 
first or fifth amendment. So I ask, will it work? Is it fair? 
Those are the questions I hope we can illuminate today and I 
yield back the balance of my time, Mr. Chairman.
    Mr. Upton. Thank you. That concludes the opening 
statements. Again, all members----
    Mr. Sawyer. Mr. Chairman, if I could add one comment?
    Mr. Upton. Go ahead.
    Mr. Sawyer. I was interested in what Mr. Green had to say 
to Mr. Sander about the Firestone Ford issue that was broke 
earlier last year. Thank you.
    Mr. Upton. Thank you.
    [Additional statement submitted for the record follows:]

 Prepared Statement of Hon. Eliot Engel, a Representative in Congress 
                       from the State of New York

    Thank you Mr. Chairman: I realize that the main focus of this 
hearing is what impact the Torricelli Amendment would have on the 
broadcasters, cable system and satellite system operators. But, when I 
began thinking about this issue, I realized it is in fact a much larger 
question--one which has direct implications for our democracy. What we 
are discussing today is balancing political speech and commercial 
speech. The courts have held, and I support, providing the strongest 
protections for political speech--the right to redress against one's 
government. I haven't had a long time to think about it in terms of the 
Torricelli amendment, so I have many questions--and hope to come to 
some conclusions today.
    First, let me say that I am actually in my 24th year of public 
service--my 13th year of Congress and 12 years in the State Assembly 
before. All of that time I have represented a portion of New York City. 
Though I have thought about it many times, I have never advertised on 
TV because I know it is well beyond my campaign's means to pay for 
television ads in the New York City media market.
    Presently, we have the equal opportunity and reasonable access 
laws. The equal opportunity one is a law that I think we must be 
vigilant in enforcing. Today though, we are really discussing an issue 
about altering the reasonable access law. Presently, the law requires 
the lowest unit cost for the last 45 or 60 days depending on it being a 
primary or general election. However, I wonder if this is by 
coincidence artificially higher than other times in the year. Fall is 
when the shows start airing new episodes, new shows beginning, the 
Subway series--I mean the World Series! So, is it just by chance the 
campaigns have to compete in an more expensive time period?
    The concern is that campaigns are getting more and more costly--and 
that it is because of the need to do TV ads. Inherent in this is that 
if our campaigns are more costly, then we need to spend more time 
raising money--leaving less time to be elected officials or less time 
for our families. Let me be clear to my constituents--my wife will tell 
you that my responsibilities as a Congressman are not suffering!
    I am intrigued by the argument that one reason that campaigns cost 
more is because they are longer--certainly, I think that is true of the 
Presidential campaign. Also, I note that many incumbents raise large 
sums of money--most of which goes to support the campaign--not for 
advertising.
    I found Professor BeVier's written testimony very thought 
provoking! I am one who does believe that the public does own the 
broadcast airwaves. I do believe that the broadcasters have 
responsibilities--as does the government and as do the consumers. We 
may not have placed into law clear and defined substance and form of a 
legal trust. But, I think that this is more than a traditional legal 
trust anyway, I use the word ``trust'' in as much the legal term as the 
emotional one. We are trusting the broadcasters to do the right thing 
in the public's interest. Sometimes, the government must intervene to 
help set ground rules--I don't think anyone would like us to just to 
give up designating certain areas of spectrum for specific uses and 
instead let any and all start using a frequency for whatever they so 
choose.
    However, how far the government goes--and in this case it has 
profound implications for federal candidates--is the question. I wonder 
about the inequity that develops between the national parties and state 
and local candidates. Does this create too high a protection solely for 
individual federal candidates?
    Then, there is the question of editorial control. We are all ardent 
defenders of the First Amendment--but here we have a clash between two 
groups' First Amendment rights. No one would fight harder than me if we 
were trying to tell the newscasters to only cover federal candidates--
that would be wrong. But, we are in the murky world of advertising. 
Paid access for speech. Is an individual federal candidate TV or radio 
ad worthy of greater protections than a local candidate?
    Finally, there is the question of fairness to the broadcasters. TV 
stations are not cheap. They require lots of equipment and highly 
skilled labor. Is it in the public interest to allow a federal 
candidate to pay what it would cost to advertise during Ishtar when in 
reality the Mets are in the playoffs? Is that fair to the broadcaster?
    As you can see, I have many things going on in my mind about this. 
Right now, I have no set conclusions about anything. So, I look forward 
to discussing this more.
    Thank you, Mr. Chairman.

    Mr. Upton. Our witnesses include the following this 
morning: Ms. Lillian Riemer BeVier, Doherty Charitable 
Professor and class of 1963, Research Professor, University of 
Virginia Law School; Mr. Dwight Morris, President of the 
Campaign Study Group of Springfield, Virginia; Mr. Andrew 
Wright, General Counsel, Vice President, Government Affairs for 
Satellite Broadcasting and Communications Association, Mr. Jack 
Sander, Executive V.P. of Media Operations for Belo Corporation 
in Dallas, Texas; Mr. Joshua Sapan, President and CEO of 
Rainbow Media Holdings in New York; and Mr. Paul Taylor, 
Executive Director, Alliance for Better Campaigns here in 
Washington, DC.
    Your statements are made part of the record in their 
entirety. We'd like to limit your remarks to 5 minutes.
    Mr. Sander, we'll start with you.

   STATEMENTS OF JACK SANDER, EXECUTIVE VICE PRESIDENT MEDIA 
    OPERATIONS, BELO CORPORATION; ANDREW S. WRIGHT, GENERAL 
    COUNSEL, VICE PRESIDENT, GOVERNMENT AFFAIRS, SATELLITE 
  BROADCASTING AND COMMUNICATIONS; LILLIAN R. BeVIER, DOHERTY 
  CHARITABLE PROFESSOR AND CLASS OF 1963, RESEARCH PROFESSOR, 
UNIVERSITY OF VIRGINIA LAW SCHOOL; JOSHUA SAPAN, PRESIDENT AND 
 CHIEF EXECUTIVE OFFICER, RAINBOW MEDIA HOLDINGS; PAUL TAYLOR, 
 EXECUTIVE DIRECTOR, ALLIANCE FOR BETTER CAMPAIGNS; AND DWIGHT 
           L. MORRIS, PRESIDENT, CAMPAIGN STUDY GROUP

    Mr. Sander. Good morning, thank you, Mr. Chairman. I'm 
pleased to be here representing the television broadcasting 
industry and Belo which owns 17 television stations, reaching 
13.7 percent of the U.S. television households. These stations 
are spread from east to west. The industry opposes any 
unjustified modifications to the lowest unit charge or LUC 
charges such as the Torricelli Amendment. Broadcasters take 
these laws very seriously and Federal candidates always receive 
the LUC for the class of time they purchase. We believe the 
existing rules continue to serve the original intent of 
Congress and provide a proper balance to the rights of stations 
and candidates.
    In enacting the Federal Elections Campaign Act, Congress 
specifically intended two things: limit the length of campaigns 
by establishing the LUC windows and provide candidates with 
rates equivalent to those enjoyed by the most favored 
commercial advertisers and in doing so, Congress rejected the 
notion that broadcasters must sell non-preemptable time to 
candidates at preemptable rates.
    The Torricelli Amendment reverses this and fundamentally 
changes this law. Under Torricelli, television stations would 
face a 365-day LUC window. The Amendment removes class from the 
LUC definition requiring the candidates to receive non-
preemptable time at the cheapest preemptable rate. This is like 
every candidate getting a first class seat on an airplane for 
the cheapest priced coach ticket from the previous year.
    The true impact on broadcasters and the American public was 
clearly not evaluated during the Senate debate. A real world 
example paints a telling picture. In the fall, a midsized Fox 
affiliate sells a non-preemptable spot during their Sunday NFL 
football game for $3500. Early in the year a preemptable spot 
in that same time period sold for $15. Under Torricelli, a 
legally qualified candidate would be able to buy a non-
preemptable spot during a Sunday Redskins game for $15 because 
it would be the lowest charge for the same time period from the 
previous year. $15 compared to $3500. Outrageous, but true.
    The proponents of the Senate Amendment cite twin goals: 
reducing the cost of campaigns and increasing political 
discourse. Neither of these goals will be achieved if the 
amendment is enacted into law.
    Many are concerned about the increasing cost of campaigns, 
the Amendment will have the opposite effect: drastically 
reduced advertising rates and a 365-day LUC window provide an 
incentive for candidates to purchase more advertising, not 
less, and guarantee year-round campaign spending.
    Political discourse also suffers. Stations have a limited 
number of spots that can be sold. With an increase in the 
amount of Federal candidate advertising who have a right of 
access, State and local candidates will find it difficult to 
advertise on television and if experience is any guide, most of 
the increased advertising will be negative attack ads.
    Commercial advertisers will be impacted as well. 
Artificially low rates will make it nearly impossible for them 
to have access to the airwaves. A major impetus for the 
Torricelli Amendment was a recent Alliance for Better Campaign 
Report, their ``study'' was a select comparison of 10 stations 
out of approximately 1300 commercial stations, limited to 10 
markets with some of the most hotly contested races in 2000.
    We believe this flawed methodology translates into flawed 
results. Many inaccuracies in the Alliance Report can be found 
in my written testimony. Broadcasters provide substantial 
coverage of campaigns through their news, debates and public 
affairs programming. Belo has always been a leader and we are 
not alone.
    In 1996, Belo inaugurated an unprecedented program called 
It's Your Time in all of our television markets. The program 
provides all qualified Federal and gubernatorial candidates 5 
minutes of free, unedited air time. In the 2000 election cycle, 
118 candidates participated in the program, but because we 
chose to use our own format, not his, Mr. Taylor's, Mr. Taylor 
does not credit our efforts.
    Belo and other fellow broadcasters consider it a part of 
our responsibility to our community and good business to 
provide our viewers with coverage of local, State and national 
elections.
    In conclusion, proposals to gut the LUC law, i.e., the 
Torricelli Amendment will have drastic consequences. They will 
extend the length and cost of campaigns, increase ad clutter, 
treat candidates more favorably than any commercial advertiser 
and drive away regular year-long advertisers. I urge members of 
the subcommittee to oppose any provisions that would alter the 
LUC law, the existing law works as intended by Congress.
    Thank you.
    [The prepared statement of Jack Sander follows:]

   Prepared Statement of Jack Sander, Executive Vice President/Media 
                     Operations , Belo Corporation

                            I. INTRODUCTION

    Thank you, Mr. Chairman, for the opportunity to appear before your 
subcommittee today to discuss the lowest unit charge (``LUC'') law 
applied to broadcast stations, and how proposed modifications to that 
law will affect the television industry. My name is Jack Sander. I am 
Executive Vice President/Media Operations for Belo, which is a member 
of the National Association of Broadcasters (NAB) on whose behalf I am 
testifying today. I am a 30-year veteran of the broadcast industry--
having started in 1965 at WLWC-TV in Columbus, Ohio. Throughout my 
tenure, I have served in many capacities, including various sales and 
sales management positions, and general manager/station manager 
positions at different television stations in a variety of markets. 
Belo owns l7 television stations (six in the top l7 markets) reaching 
l3.7 percent of U.S. television households. The stations are clustered 
primarily in Texas, Arizona, the Pacific Northwest, and the mid-
Atlantic, including WWL-TV our nationally recognized CBS affiliate in 
New Orleans. I'm pleased to represent my stations and the television 
broadcast industry at this hearing.
    The television broadcasting industry opposes any modifications to 
the LUC laws. We believe the existing rule serves the original intent 
of Congress and provides a proper balance among the rights of stations 
and candidates. The proposals to alter the law will not achieve the 
intended goal and provide severe consequences for the television 
industry.
    My written testimony will provide background on the existing rules, 
the intent of Congress, and outline the specifics regarding the Senate 
passed Amendment to fundamentally change the LUC law (i.e., the 
Torricelli Amendment). Additionally, I will outline the impact of such 
proposals. Finally, I will address recent criticism of the television 
industry regarding the LUC rules and show the substantial efforts my 
stations contribute to the campaign process.

                             II. BACKGROUND

a. Political Broadcasting Rules
    Since the Federal Election Campaign Act of 1971, broadcasters have 
operated with a variety of different rules for political candidates. 
Legally qualified Federal candidates enjoy many rights with regard to 
broadcast stations: (1) reasonable access; (2) no censorship; (3) equal 
opportunities to respond to opponents; and (4) the lowest unit charge 
(``LUC'') for advertising purchased during the 45 days prior to primary 
elections and the 60 days prior to general elections.
    Under existing law, the LUC is the lowest charge of the station for 
the same class and amount of time for the same time period. There are 
three important variables in this definition: (1) Time period; (2) 
Amount of time; and (3) Class.
    The ``amount of time'' refers to the length of the advertisement--
whether it's a 30 second spot or a 60 second spot. ``Time period'' 
refers to the time of day the advertisement runs. Generally, different 
rates apply to different times of the day depending on how many viewers 
may be watching. For example, prime time rates will be higher than 
rates for daytime or late night programming.
    Finally, stations may choose to sell a variety of different classes 
of time, each with its own benefits or privileges. Fixed or 
``nonpreemptible'' time generally is the highest class of time and 
garners the highest rates. Stations may also choose to offer different 
levels of ``preemptible'' time, each providing a different level of 
protection from preemption. Finally, stations may offer an 
``immediately preemptible'' class of time. This class generally is the 
cheapest to buy, but also is the first class to be preempted when other 
advertisements are purchased at higher classes of time.
    The reality of having several different classes of time translates 
into a station having numerous LUCs--as each class will have its own 
lowest charge attached. For example, if a station chooses to offer five 
different classes of time and divides its day into five different time 
periods, there will be 25 different LUCs for that station. There will 
rarely be one lowest unit charge for the entire station because of the 
three variables contained within the definition.
    Legally qualified candidates are guaranteed the LUC for the class 
of time purchased during the LUC ``windows.'' 1 Thus, the 
LUC is only provided to candidates during the 45 days prior to a 
primary election, and the 60 days prior to a general or special 
election.2 Outside of these windows, a candidate will 
receive comparable rates to other commercial advertisers for the same 
class and time period.
---------------------------------------------------------------------------
    \1\ A candidate must appear in the ad (either voice or likeness) 
and the ad must be paid for by the candidate (or an authorized 
committee) to qualify for the LUC during the windows.
    \2\ Third party issue advertisers always pay full commercial rates 
for advertising regardless of when purchased.
---------------------------------------------------------------------------

B. Intent of Congress in enacting the Federal Election Campaign Act of 
        1971
    The last major overhaul of the federal election campaign law came 
in 1971, when Congress passed the Federal Election Campaign Act of 1971 
(``FEC Act'') (Pub.L. 92-225). Within the FEC Act, Congress imposed the 
reasonable access and lowest unit charge requirements on broadcasters.
    There was considerable discussion and debate on the LUC provision 
of the FEC Act--in both the committees and on the Senate floor. The 
intention of Congress was best demonstrated during debate in the U.S. 
Senate on August 3, 1971. The Senate specifically intended to do two 
things with regard to the LUC provision: (1) limit the length of 
campaigns by establishing the LUC windows; and (2) it rejected the 
notion that broadcasters must sell nonpreemptible time to candidates at 
preemptible rates--as contemplated by the original bill language.
    Senator John Pastore outlined the first intention when he stated:
        ``The committee limited it to 45 days for a primary election 
        and to 60 days for a general election. We were shortening the 
        campaign time, in effect. Not only that, but there is a 
        tendency to wait to come within those 45 days and those 60 days 
        because candidates will get the lower rates.'' 117 Cong. Rec. 
        29, 028 (1971).
Clearly, it was recognized then that length of a campaign is one of the 
major factors contributing to the overall cost of campaigning. 
Congress, in 1971, specifically sought to limit the length of campaigns 
by adopting these short LUC windows to provide incentives to candidates 
to wait to run advertisements only when it is closer to Election Day.
    With regard to the second intent of Congress--that candidates 
should be treated as favorably as a commercial advertiser--but not 
better than a commercial advertiser, Senator Ted Stevens (R-AK) offered 
an Amendment to clarify the intent of the LUC definition.
        ``I call my amendment the comparable rates provision. It 
        requires that no one can discriminate against politicians in 
        terms of their advertising. It says that they cannot charge us 
        any more than they charge anyone else for the same class of 
        time, the same amount of time, or the same frequency of use . . 
        .'' [emphasis added]
         Senator Ted Stevens, during debate on the FEC Act of 1971,
                                      117 Cong. Rec. 29,026 (1971).
The Amendment was agreed to by the Senate, and was acknowledged to be 
consistent with the original intent of the Senate Commerce Committee in 
an exchange between Senator John Pastore (D-RI) and Stevens:
        ``Mr. Pastore: Mr. President, I want the Record to be clear 
        that this in no way rejects the committee report recommendation 
        as to the lowest unit cost.
        Mr. Stevens: That is absolutely correct. It is the lowest unit 
        cost for the same class of time and the same period of the day, 
        during the same 45- or 60-day period.'' 117 Cong. Rec. 29,028 
        (1971).
Based on this record, there is no doubt that Congress intended the LUC 
law to be as the FCC has interpreted it.

C. Senate Passed ``Torricelli Amendment''
    On March 19, 2001, the Senate passed the ``Torricelli Amendment'' 
to the McCain-Feingold-Cochran Campaign Finance Reform legislation. The 
Torricelli Amendment provides that television broadcasters, cable 
companies, and satellite providers must give legally qualified 
candidates the LUC on the station for the same time period and amount 
of time over the previous 365-day period. It also requires that all 
candidate advertising be ``nonpreemptible.'' The Torricelli Amendment 
removes television stations from the LUC windows--opening the 
``window'' to a year-round period. It provides that national political 
parties will receive LUC for advertising that is coordinated with 
candidates, regardless of whether a candidate appears in the 
advertisement.3 Finally, it requires the FCC to conduct 
extensive audits after election cycles.
---------------------------------------------------------------------------
    \3\  Under existing rules, political parties may qualify for LUC as 
long as the party is an authorized committee of the candidate and the 
candidate appears in the advertisement.
---------------------------------------------------------------------------
    Although the Torricelli Amendment passed by a wide margin in the 
Senate, the true impact on broadcasters and the electoral process were 
not adequately evaluated during debate. There are substantial 
unintended consequences to the Amendment, and any similar proposals in 
the House must be rejected.

                              III. IMPACT

A. Torricelli Amendment is a fundamental change in the law.
    One of the arguments heard on the Senate floor during debate on the 
Torricelli Amendment was that it was merely a ``clarification'' of 
existing LUC rules. Others argued that a ``loophole'' was being closed 
in order to effectuate the original intent of Congress.
    As noted above, in 1971, Congress specifically intended that the 
LUC law be limited in time by imposing the windows and it intended that 
stations could continue to sell time based on classes of time. The 
Torricelli Amendment turns this intent on its head and fundamentally 
changes the LUC law.
    Television stations under the Amendment would have to provide the 
LUC to candidates for advertising for the entire length of a campaign. 
Plus, they must calculate the LUC based on the rates charged from the 
previous 365 days regardless of when that rate was actually charged (or 
available) to a commercial advertiser. This translates into a 
substantial windfall for candidates at the detriment of broadcasters--
the impact of which is further outlined below.
    The Amendment removes ``class'' from the LUC definition and 
requires that candidates receive nonpreemptible time even though they 
will be charged the LUC for the cheapest class on the station. While 
many analogies exist, most illustrative is that it is like a candidate 
getting a first class seat on an airplane for the cheapest coach ticket 
price from the previous 365 days. Clearly, this is not what Congress 
intended in 1971, nor is it an accurate representation of the existing 
LUC law.4 The Torricelli Amendment should be recognized for 
what it is--a federal subsidy for candidates.
---------------------------------------------------------------------------
    \4\ Other fundamental changes include the FCC audit requirement and 
the national party qualification for LUC.
---------------------------------------------------------------------------

B. Modifying the LUC law will not achieve intended goals, but will have 
        severe consequences.
    There are twin goals cited by proponents of the Torricelli 
Amendment: (1) reducing the cost of campaigns; and (2) increasing 
political discourse. Neither of these goals will be achieved if the 
Torricelli Amendment is enacted into law. In fact, severe unintended 
consequences will result.
    While many are concerned about the increasing costs of campaigns, 
gutting the existing LUC law and replacing it with the Torricelli 
Amendment will have the direct opposite impact on the cost of 
campaigns. By reducing the cost of advertising so drastically, it 
provides an incentive for candidates to purchase more advertising, not 
less. Further, the Torricelli Amendment guarantees year-round 
campaigning by opening the LUC window to 365 days. Why wouldn't a 
legally qualified opponent want to get a ``jump start'' on campaigning 
when it's cheaper to advertise all year-round? Finally, more 
advertising (and earlier in the campaign) means that there will be more 
advertising clutter which results in less effective message 
penetration. A candidate may feel pressured to advertise more in order 
to ensure his or her message is getting to voters. There is no doubt 
the consequence of the Torricelli Amendment is that costs will remain 
at existing levels--or increase--because there will be a perpetual 
television campaign.
    Likewise, it is possible that political discourse will be reduced 
in a Torricelli Amendment ``environment.'' With an increase in the 
amount of advertisements likely to be purchased by Federal candidates 
(who have a right of access to broadcast stations), another consequence 
is that state and local candidates will be squeezed out because 
stations will have to allocate time for Federal candidates who may have 
never advertised before and also to provide equal opportunities to all 
the opponents. State and local candidates will find it difficult to 
gain access to television stations for their advertising. Additionally, 
organizations that advertise state and local referenda or other issues 
also may be left without availabilities due to tighter inventory 
schedules.
    Finally, there is the potential that political discourse will be 
reduced because local television broadcasters will not be able to 
continue the same level of public service because the Torricelli 
Amendment may severely impact a station's revenues.

C. Modifying the LUC law will drastically impact the TV industry's 
        ability to serve the public.
    Commercial television stations' only source of revenue is through 
the sale of advertising time. Revenue is required to keep the station 
afloat and to provide capital to continue to serve the public with 
community service programming and projects. However, there are a finite 
number of advertising spots that can be sold. Many stations work year-
round to develop on-going relationships with commercial advertisers. 
The Torricelli Amendment threatens those relationships because it will 
squeeze out those commercial advertisers during campaign season to make 
room for candidate advertising.5 Additionally, it will cut 
the station's revenue stream because it provides substantial discounts 
for candidates.
---------------------------------------------------------------------------
    \5\ See TV to Advertisers: Please Get in Line Behind the 
Politicians, Wall Street Journal, Oct. 27, 1998 at A-1.
---------------------------------------------------------------------------
    A few generic examples of how the Torricelli Amendment works in the 
real world paint a telling picture. The Torricelli amendment would 
undermine a positive revenue stream for television stations when 
applied to special programming. The Amendment removes ``class'' from 
the definition of lowest unit rate; thus, any special classes 
established during specific times of year will be treated the same as 
any other time period.
    For example, using an actual rate card from a mid-sized Fox 
affiliate, a basic ``weekend rotator'' for the Sunday, 12 Noon to 7 PM 
time period on a ``tiered'' rate schedule would look like this:

    Sunday 12N-7 PM
    Level I--Nonpreemptible--$75.00
    Level II--Preemptible w/2 days notice--$50.00
    Level III--Preemptible w/7 days notice--$30.00
    Level IV--Immediately preemptible--$15.00
    During the professional football season, this same station runs NFL 
Redskins games on Sunday during this same Noon-7 PM time period. The 
rates for a Sunday ``Redskins'' game would be as follows:

    Level I--Nonpreemptible--$3500.00
    Level II--Preemptible w/2 days notice--$2700.00
    Level III--Preemptible w/7 days notice--$2100.00
    Level IV--Immediately preemptible--$1500.00
    Under Torricelli, a legally qualified candidate would be able to 
buy a nonpreemptible spot at the Level IV price of $15.00 during a 
Sunday ``Redskins'' game because it would be the lowest charge for the 
same time period from the previous year. Compare that $15.00 rate to 
the nonpreemptible rate of $3500.00 the station would normally expect 
to receive for such programming.
    The above example can also be applied to any network special: 
Monday Night Football, Academy Awards, Country Music Awards, NFL 
Football, Super Bowl, The Masters, Daytona 500, local college and high 
school sports, special news events and elections. Further, regular 
programming rates are affected. The Torricelli Amendment also impacts a 
station's regular programming rate structure. For example, on a mid-
sized market NBC affiliate, the rates for Meet the Press on Sunday in 
June may be similar to these below:

    Level I--Fixed--$500
    Level II--Preemptible--$300
    Level III--Immediately preemptible--$150
    Under Torricelli, a political candidate would get a nonpreemptible 
spot for the $150 rate (assuming that is the lowest rate for that time 
period from the previous year), which translates into a 70% discount 
off of the normal nonpreemptible rate of $500.
    Clearly, the Torricelli Amendment provides candidates with 
unprecedented advantages. When the original lowest unit charge rules 
were imposed in 1971, it was Congress' intent to provide candidates 
with the same privileges as a station's most favored advertiser. The 
Torricelli Amendment tips the balance far beyond and puts legally 
qualified candidates above all others. At the same time, it has the 
impact of severely injuring a television station's ability to raise 
revenue and provide substantial community service.6
---------------------------------------------------------------------------
    \6\ Examples of the voluntary efforts of Belo stations are outlined 
in Section V. of this Written Testimony.
---------------------------------------------------------------------------

           IV. CRITICISM UNFOUNDED--ALLIANCE REPORT IS FLAWED

    The impetus for the Torricelli Amendment has its roots from an 
Alliance for Better Campaigns report released on March 6, 2001, titled 
Gouging Democracy: How the Television Industry Profiteered on Campaign 
2000. The Alliance claims that candidates for public office were 
overcharged for their airtime 65% of the time.7 They base 
this assertion on a very limited ``study'' of 10 stations (out of 
approximately 1,300 commercial stations) in 10 markets where there were 
some of the most hotly contested races in 2000.8 The 
broadcasting industry believes this flawed methodology translates into 
flawed results.
---------------------------------------------------------------------------
    \7\ Gouging Democracy, at 5.
    \8\ Id. at 7.
---------------------------------------------------------------------------
    First, the Alliance concludes ``candidates paid prices far above 
the lowest published rates.'' 9 As noted above, a ``lowest 
published rate'' may not be the same lowest unit charge for the class 
of time purchased by a candidate. Additionally, rates can vary during a 
political campaign due to ordinary business practices such as seasonal 
demand and changed ratings. A rate listed on a published rate card at 
the beginning of the campaign season may change as it gets closer to 
Election Day. Finally, even the Alliance report itself provides 
evidence that the conclusion is misrepresentative when it stated that 
Republican Media Buyer Brad Mont said, ``Most of the time, I am able to 
get the best price in a given class of time.'' 10
---------------------------------------------------------------------------
    \9\ Id. at 2.
    \10\ Id. at 11.
---------------------------------------------------------------------------
    Second, the Alliance report concludes, the LUC law has not worked 
as intended to keep down the cost of candidate ads. 11 The 
Alliance misinterprets the workings of the LUC law. Candidates always 
get the LUC for the class and time they purchase on stations. My 
stations, and most other stations, follow the FCC rules and are not in 
the business of gouging candidates. Also, the Alliance report cites a 
Brigham Young study that shows that Senate candidates in 2000 received 
a 27% discount from full commercial rates. 12 This is 
exactly what Congress intended to happen when it decided to impose LUC 
requirements on broadcasters. 13
---------------------------------------------------------------------------
    \11\ Id. at 3.
    \12\ Id. at 10.
    \13\ In debate on the Senate floor on August 3, 1971, Senator John 
Pastore (D-RI) commented with regard to the LUC provision that, ``The 
discount may come to 30 percent or 50 percent--I don't know--for radio 
or TV.'' 117 Cong. Rec. 29,028 (1971).
---------------------------------------------------------------------------
    Third, the Alliance report concludes, ``Stations steered candidates 
toward paying premium rates.'' 14 Again, this misrepresents 
the reality of time buying. Political time buyers frequently choose 
fixed buys when lower-priced preemptible spots would clear. This 
practice is common because it simplifies it for the time buyer and 
guarantees that the spot will run when the candidate wants it to run. 
Also, time buyers have no incentive to hold costs down, even as the 
Alliance report admits, because their ``compensation is pegged to a 
percentage of gross air time purchased.'' 15
---------------------------------------------------------------------------
    \14\ Gouging Democracy, at 2.
    \15\ Id. at 11.
---------------------------------------------------------------------------
    One of the other conclusions of the Alliance report is that 
broadcasters have cut back on the amount of political 
coverage.16 They cite that stations that voluntarily agreed 
to comply with the proposal to provide 5-minutes of coverage per night 
during the 30 days prior to Election Day fell short of the goal. The 
Alliance claims that a study done by the Norman Lear Center shows those 
stations averaged just 45 seconds of candidate-centered discourse per 
night.17
---------------------------------------------------------------------------
    \16\ The Alliance supports a proposal of the ``Gore Commission,'' 
an advisory panel appointed to assess the public interest obligations 
of digital television broadcasters. The Gore Commission recommended 
that digital television broadcasters voluntarily air five minutes a 
night of candidate-centered discourse in the 30 days before elections.
    \17\ Gouging Democracy, p. 13.
---------------------------------------------------------------------------
    However, closer examination of the Norman Lear Center study 
18 reveals its results are skewed based on the unrealistic 
boundaries placed on the ``5 minute/30 day'' proposal. First, the 
proposal only counts political coverage during the hours of 5:00 PM-
11:35 PM. Additionally, the Center did not include Election Day or 
coverage of the two Presidential debates that occurred during the 30-
day period. The researchers acknowledge,
---------------------------------------------------------------------------
    \18\ Martin Kaplan and Matthew Hale, Local TV Coverage of the 2000 
General Election, The Norman Lear Center Campaign Media Monitoring 
Project, USC Annenberg School for Communication, February 2000.
---------------------------------------------------------------------------
        ``To include either of these results would skew the results, in 
        some cases dramatically. For example, if a station aired both 
        Presidential debates and one Congressional or Senate debate, 
        and no other coverage for the entire 30 day time period, under 
        these accounting rules they would easily meet the 5/30 
        standard.'' 19
---------------------------------------------------------------------------
    \19\ Id. at 6.
---------------------------------------------------------------------------
    Basically, the Center admits that accurately counting all of the 
political coverage in that time period means the stations would have 
met the 5-minute goal. It is ludicrous to think that Presidential 
debates do not ``count'' as political discourse.
    Further, the proposal itself is too limited in scope to provide a 
full accounting of the election coverage of broadcasters. With the 
advent of increased competition from all-day cable news channels and 
the Internet, viewers now have a variety of news choices throughout the 
broadcast day. In response, many television stations have morning, 
Noon, and 4:00 PM newscasts, as well as public affairs shows and 
debates that occur outside the proposal's limited 5:00 PM-11:35 PM 
timeframe. It is inappropriate to discount these efforts. A study that 
reviews all of a station's political coverage throughout a broadcast 
day would show entirely different results.
    The Alliance for Better Campaigns report should be dismissed as a 
false and misleading attempt to smear broadcasters in the hopes of 
achieving the goal of mandatory free airtime requirements. However, a 
closer look at the report reveals its inaccuracies. Members of Congress 
should not base any decisions on such a report.

                  V. VOLUNTARY EFFORTS OF BROADCASTERS

    Many broadcasters provide substantial voluntary coverage of 
campaigns through their news coverage, candidate debates, public 
affairs programming, and other efforts. Belo has always been a leader 
in the industry, and will continue our efforts.In l996, Belo 
inaugurated an unprecedented program called ``It's Your Time'' in all 
of our television markets. The program provides all qualified federal 
and gubernatorial candidates five minutes of ``free air time.'' The 
candidates answer two questions. The first is: ``Why should the 
constituents of your district vote to elect you?'' Candidates are given 
four unedited minutes to answer that question. The second question, 
which is developed by the news staff in each market, provides the 
candidate a one-minute opportunity to answer a market specific 
question. The four minute segments are developed into hour and half 
hour programs, which run in prime time and adjacent to news and public 
affairs programming, two weeks prior to the election. The one-minute 
pieces run several times in the two weeks prior to the election. In the 
2000 election cycle, 118 candidates participated in the 
program.20 In many cases the program also ran on the local 
PBS stations. Most station websites streamed the program and it 
remained on the website until after the election. ``It's Your Time'' 
was only one component to Belo's election coverage in 2000.
---------------------------------------------------------------------------
    \20\ It should be noted that the Alliance for Better Campaigns 
refused to include Belo efforts because we chose to use our format and 
not the ``Gore Commission'' proposal.
---------------------------------------------------------------------------
    Our NBC affiliate in Seattle, KING-TV, sponsored debates in both 
the U.S. Senate primary and general elections. In addition, KING 
sponsored the gubernatorial debate. Stories covering local and national 
races ran almost every evening on KING in the 30-day period preceding 
the election. Its sister station, KONG, re-ran the debates and ``It's 
Your Time'' in different time periods and produced special primary 
night election coverage for Seattle viewers.
    Following Election 2000, KING was particularly proud to receive the 
Walter Cronkite Award for Excellence in Broadcast TV Political 
Journalism for its one-hour program, ``Adwatch,'' an insightful 
analysis of political campaign ads. The award was created to help 
induce network and local television news operations to create 
television formats that place candidates and their issues at the heart 
of political coverage. The award is sponsored by Reliable Resources, a 
project of the Norman Lear Center at the USC Annenberg School of 
Communications. Reliable Resources is funded by the Pew Charitable 
Trusts. I find it ironic that the Alliance for Better Campaigns, also 
partially funded by the Pew Trust, chose to criticize KING throughout 
their report on Election 2000.
    I would also like to point out that it was not only our large 
market stations that provided extensive news coverage. Belo's station 
in Spokane, Washington, KREM-TV (market 78 in the United States), aired 
over l0 hours of statewide and local debates between September l0 and 
November 5, 2000. KTVB, our affiliate in Boise, Idaho, produced special 
programs and a debate to highlight the two Congressional races in 
Idaho.
    The Pacific Northwest experienced one of the busiest election 
seasons in the country. However, even in markets with relatively quiet 
election years, Belo stations provided extensive news coverage geared 
to their local communities. For example, our flagship ABC station in 
Dallas, WFAA-TV, provided 13 Congressional candidates with access to 
the airwaves, through their ``It's Your Time'' program. WFAA also 
worked with our local PBS affiliate, KERA, on a groundbreaking project 
``Texas and the Latino Vote.'' Also, our ABC affiliate in Louisville, 
Kentucky sponsored four town hall meetings on a local imitative to 
merge City and County government functions.
    I would also like to note that even in off year and special 
elections, our stations produce ``It's Your Time.'' At WVEC our station 
in Norfolk, Virginia a special ``It's Your Time'' program aired last 
Sunday. It included the two candidates in the fourth district 
Congressional race.
    I could list many, many more examples of election coverage from all 
of our stations and our competitors' stations. We consider it a part of 
our responsibility to our community and good business to provide our 
viewers with extensive coverage of local, state and national elections.

                             VI. CONCLUSION

    I urge members of the subcommittee to oppose any provision that 
would alter the LUC law. The existing law works as intended by 
Congress. It provides a discount to candidates, treats them as 
favorably as commercial advertisers, and it limits the length of 
campaigns.
    Existing proposals to gut the LUC law (i.e. the Torricelli 
Amendment) will entail drastic consequences. It will (1) extend the 
length and cost of campaigns; (2) increase ad clutter; (3) treat 
candidates more favorably than any commercial advertiser; (4) threaten 
to squeeze out state and local candidates; and (5) severely hurt some 
stations' ability to raise revenue and continue to serve to public.

    Mr. Upton. Thank you.
    Mr. Wright.

                  STATEMENT OF ANDREW S. WRIGHT

    Mr. Wright. Mr. Chairman, members of the subcommittee, I'm 
Andy Wright. I'm General Counsel and Vice President of 
Government Affairs for the Satellite Broadcasting and 
Communications Association.
    We're pleased to have this opportunity to explain why it is 
not efficient to use a national satellite platform to deliver 
local political advertisements.
    SBCA represents the direct to home consumer satellite 
industry. Our industry includes satellite provided two-way 
interactive broad band and radio services as well as the direct 
broadcast satellite television providers who would be 
potentially affected by this legislation.
    Let me say up front that although we are subject to the 
provisions of the law, we have no DBS provider has received a 
request to purchase political advertising on an LUC basis. 
Further, as I will explain, LUC pricing is likely to have only 
a very limited impact on our industry.
    The history of DBS, the area of political advertising is 
brief. The requirement that DBS provide, that DBS be subject to 
LUC and the other provisions of the law was contained in the 
Cable Act of 1992, but the FCC did not promulgate the rules, 
effectuating that law until 1998.
    In that rulemaking, the Commission recognized the unique 
position of satellite services in the video distribution 
marketplace. Broadcasters and cable operators are regional and 
local programming distributors and distribute within a discrete 
geographic area. DBS, on the other hand, has a national 
footprint and therefore supplies the same subscription 
programming to all its subscribers all across the country at 
the same time.
    Because of these national operating characteristics, DBS is 
not an attractive advertising medium for local congressional or 
even State-wide candidates. Therefore, there is no economic 
efficiency or even political common sense in utilizing a 
satellite's national footprint to bring a political campaign 
message to voters in a limited geographic area.
    Neither the cost, which by necessity would be based on the 
national reach of satellite, nor the use of channel capacity 
can be justified by the handful of qualified voters that a 
candidate's message could actually reach. Further, voters in 
say the 6th District of Michigan, or the 7th District of 
Massachusetts, might be confused and perhaps even dissuaded 
from voting by viewing ads specifically aimed at voters from 
the 6th District of Florida or the 7th District of Missouri or 
vice versa.
    Imagine if you will, Mr. Markey's campaign ads being viewed 
by Chairman Tauzin's constituents or the other way around. No 
doubt an interesting and confusing cultural experience for 
everybody involved.
    Mr. Upton. They have Chinese and Spanish as an option, but 
I don't know if they have either one of those.
    Mr. Wright. In the context of local into local network 
signal retransmission, Congress prohibited DBS providers who 
offer local into local service from altering the content of the 
signal being retransmitted in the broadcasters designated 
market area. Thus, a candidate may not purchase time on the 
satellite retransmission of a local television station's 
signal. Nor frankly would it be in a candidate's interest to do 
that because a satellite provider who is offering local into 
local signal would automatically retransmit any political 
advertising that is being carried in the signal of the local 
broadcaster, a valuable two for the price of one bargain for 
all advertisers.
    With local into local service now available in 41 broadcast 
markets covering over 61 percent of the American population, 
many candidates can also reach their constituents in this 
manner. The must carry provisions of the Satellite Home Viewer 
Improvement Act remain the greatest impediment to expanding the 
provision of local in local service to more markets.
    If Congress were to eliminate these forced carriage 
requirements or if we are successful in our constitutional 
challenge to them, DBS industry leaders have predicted that the 
number of markets receiving local into local service would 
quickly increase to over 60 markets serving over 80 percent of 
America.
    Mr. Chairman, to sum up, first of all, there's no demand. 
No national, let alone State, local or congressional or Senate 
candidate has sought to purchase time on our national DBS 
platform.
    Second, it just doesn't make sense. There's no efficiency 
or political common sense to utilizing scarce and valuable 
spectrum to beam local political ads to a national audience who 
would be at best uninterested or annoyed and at worst, perhaps 
even confused by them.
    And finally, local political advertising is already carried 
on the broadcast signals that are retransmitted in the DMAs 
that have local into local service.
    Thank you again for inviting the satellite industry to 
appear at this hearing. I look forward to answering your 
questions.
    [The prepared statement of Andrew S. Wright follows:]

    Prepared Statement of Andrew S. Wright, General Counsel & Vice 
       President, Government Affairs, Satellite Broadcasting and 
                       Communications Association

    Mr. Chairman and Members of the Subcommittee, I am Andy Wright, 
Vice President and General Counsel of the Satellite Broadcasting and 
Communications Association. I am pleased to have this opportunity to 
testify before you today regarding proposed legislation dealing with 
the lowest unit charge for political advertising carried by satellite 
television providers. The SBCA represents the Direct-to-Home consumer 
satellite services industry. Our industry includes satellite provided 
two-way interactive broadband and radio services as well as the Direct 
Broadcast Satellite television providers (DBS) who would be potentially 
affected by this legislation.
    Let me say up front that the DBS providers have no experience with 
Lowest Unit Charge (LUC) political advertising, and for the reasons I 
am about to explain, LUC pricing is likely to have a very limited 
impact on our industry. In fact, to date no DBS provider has received a 
request to purchase political advertising time on an LUC basis even 
though they are subject to the statute and the Federal Communications 
Commission rules that govern this area.
    By way of background, the history of DBS in the area of political 
advertising is very brief. The requirement that DBS providers carry 
political advertising was contained in the Cable Act of 1992, 
incorporated into the section on public service obligations (Section 
335). But because of intervening litigation surrounding certain 
unrelated sections of the Act, it was not until 1998 that the Federal 
Communications Commission finally promulgated rules dealing with the 
rates that DBS carriers are permitted to charge legally qualified 
candidates for federal office for access to a DBS platform. Under the 
broadcast model, those rates comprise the lowest unit charge that may 
not be ``more than the station's most favored commercial advertisers 
would be charged for comparable time.''
    In the rulemaking, however, the Commission recognized the unique 
position of satellite service in the video distribution marketplace. In 
fact, in its Report and Order, the Commission stated, ``We recognize 
the difficulties enumerated by commenters in applying the LUC 
requirements to DBS providers.'' (FCC Docket 98-307, para. 47, November 
1998). Broadcasters and cable operators are regional or local 
programming providers and distribute within a discrete geographic area. 
DBS, on the other hand, has a national footprint and therefore supplies 
the same subscription programming to all its subscribers throughout the 
country at the same time. Because of these national operating 
characteristics, DBS is not an attractive advertising medium for local, 
Congressional or even statewide candidates.
    There is absolutely no economic efficiency--or political common 
sense--in utilizing a satellite's transponder capacity, with a 
footprint that covers the entire nation, to bring a political campaign 
message to the voters in the limited geographic area that a candidate 
is interested in reaching. Neither the costs--which by necessity would 
be based on the national reach of the satellite--nor the use of channel 
capacity can be justified by the handful of qualified voters that a 
candidate's message would reach. Even then, assuming that a candidate 
is willing to pay a national rate to reach a particular Congressional 
district, doing so by utilizing a satellite transponder would be a 
gross waste of valuable frequency spectrum. This would be especially 
inappropriate given the premium that is placed on spectrum usage today, 
and the many other entities that are clamoring for spectrum to deliver 
such valuable services as broadband Internet, business-to-business, and 
international fixed and mobile communications. Further, voters in, say, 
the 6th District of Michigan or the 7th District of Massachusetts might 
be confused and perhaps even dissuaded from voting by viewing ads 
specifically aimed at voters in the 6th District of Florida or the 7th 
District of Missouri--or vice versa.
    In the context of local network signal distribution, Congress 
prohibited DBS providers who offer local-into-local service from 
altering the content of the signal being retransmitted in the 
broadcaster's Designated Market Area (DMA) that they are serving. Thus, 
there is no possibility of a candidate asking for time on the satellite 
retransmission of a local television station signal. Nor would it be in 
a candidate's interest to do so. What is frequently overlooked in this 
instance is the fact that a satellite provider automatically 
retransmits any political advertising that is already carried in the 
signal of a local broadcaster if that signal is being offered in a 
particular market as part of a local-into-local package--a valuable 
two-for-the-price-of-one bargain for all advertisers. With local-into-
local service now available in 41 broadcast markets covering over 61% 
of the American population, many candidates for federal office can 
already reach their constituents who receive their local network 
broadcast signals via DBS service simply by advertising on the local 
broadcast stations in their Congressional districts that are 
subsequently retransmitted via satellite.
    The must carry provision of the Satellite Home Viewer Improvement 
Act is the greatest impediment to expanding the provision of local-
into-local service to more markets. If Congress were to eliminate these 
forced carriage requirements or if we are successful in our 
constitutional challenge of the statutory requirement 1, DBS 
industry leaders have predicted that the number of markets receiving 
local-into-local service would quickly increase to over 60 markets 
serving over 80% of Americans.
---------------------------------------------------------------------------
    \1\ SBCA, DIRECTV and EchoStar have filed suit in United States 
Federal District Court for the Eastern District of Virginia presenting 
a facial challenge to the constitutionally of the satellite must carry 
provision of the Satellite Home Viewer Improvement Act (SHVIA). 
Simultaneously, SBCA and EchoStar, with the support of DIRECTV, using 
the same constitutional arguments, have asked the Fourth Circuit Court 
of Appeals to review the Order of the Federal Communications Commission 
that implements the must carry provisions of SHVIA.
---------------------------------------------------------------------------
    Mr. Chairman, to sum up, I would like to leave you with two 
important factors to think about regarding the applicability of any 
campaign finance rules to the DBS satellite industry. The first is the 
fact that no national, let alone, local, state, Congressional or Senate 
candidate has sought to purchase time on our national DBS platforms. 
The second related point is that there is no efficiency or political 
common sense to utilizing scarce and valuable frequency spectrum to 
beam local political ads to a national audience who would be, at best, 
uninterested and perhaps even confused by them. It doesn't make sense; 
it is a waste of spectrum; and it is hard to visualize any political 
candidate benefiting from national coverage of specific, local election 
issues and having to pay a national rate to do so. Furthermore, 
political advertising is already carried on the broadcast signals that 
are retransmitted in DMAs that have local-into-local service. For these 
reasons, LUC pricing would have little applicability to satellite.
    Thank you again for inviting the satellite industry to appear at 
this hearing. I would be happy to answer your questions.

    Mr. Upton. Boy, right on the nose. You can tell you're in 
broadcasting.
    Ms. BeVier.

                 STATEMENT OF LILLIAN R. BeVIER

    Ms. BeVier. Thank you, Mr. Chairman, and thank you members 
of the committee for holding this important hearing. It's a 
privilege for me to be here today. I have published numerous 
scholarly articles about the first amendment in general and 
campaign finance regulation in particular and in that capacity 
I have come to address the question of whether the Torricelli 
Amendment violates the first amendment.
    In my testimony today I will make three points. First, the 
changes wrought by the Torricelli Amendment in the lowest unit 
charge provisions are changes in kind, not just in degree, of 
regulation.
    Second, even if the Supreme Court were to review the 
Amendment using the less rigorous Red Lion standard, the 
Amendment will almost certainly be held to violate the first 
amendment because it violates a number of fundamental premises 
of free speech that Red Lion did not put at risk.
    Third, the purposes the Torricelli Amendment supposedly 
serves are neither compelling nor substantial, nor what's 
worse, even legitimate and the means it adopts for achieving 
those purposes are far, far indeed from being the least 
restrictive.
    First as to the Amendment representing a change in kind, 
not in degree. The Amendment makes six major changes in the 
current regime. It extends the benefit of the lowest unit 
charge provision to ads sponsored by national committees of 
political parties. Second, it requires broadcasters to sell 
both candidates and national political parties the most 
desirable class of advertising time at the lowest price charged 
for the least desirable time. Third, it bars broadcasters from 
preempting any political ad. Fourth, it requires intrusive 
government monitoring to ensure compliance. Fifth, it extends 
the new requirements to cable and satellite providers. Sixth, 
it extends the period during which the lowest unit charge 
provision would apply.
    These changes radically alter the lowest unit charge 
provision's impact. Consider: the requirement that broadcasters 
sell both to Federal candidates and national political parties 
the most desirable class of advertising time at the lowest 
price charged during the previous year for the least desirable 
time amounts to a requirement that broadcasters sell parties 
and candidates the equivalent of first class seats at stand-by 
prices, or the penthouse suite at the Plaza for Motel-6.
    The Supreme Court is likely to perceive that the Amendment 
poses precisely the inherent risks of government favoritism and 
manipulation of political debate that strict first amendment 
scrutiny is designed to forestall, even in the area of 
broadcast regulation. It is practically certain therefore that 
the Court will subject the amendment to rigorous and skeptical 
evaluation which the amendment cannot survive.
    Supporters of the Torricelli Amendment argue that it is a 
reasonable price for broadcasters to pay for their user of a 
``public resource.'' That argument cannot be sustained. While 
the image of broadcasters as public trustees is rhetorically 
attractive and though it has been used occasionally as a make 
weight to justify particular regulatory initiatives, no attempt 
has ever been made to give it legal substance. In fact, it has 
never had anything other than rhetorical force and it certainly 
has never done any real legal work.
    The Torricelli Amendment poses a clear threat to several 
important canons of first amendment law. It encroaches to a 
much greater extent to current law upon editorial freedom of 
broadcasters. It represents a form of formed speech. It imposes 
a discriminatory burden on one class of speakers for the 
benefit of one class of participants in the political process, 
namely Federal candidates and national political parties.
    My third point, the Amendment supposedly serves three 
interests, namely, the interest in lowering the cost of 
political campaigns, the interest in improving the quality of 
political debate and the interest in increasing candidate 
access. The Supreme Court has squarely held that neither of the 
first two interests is even legitimate for government in a free 
society to pursue, but even if the interests were held to be 
legitimate, the amendment very poorly serves them. There's no 
guarantee that it will lower the cost to the candidates and 
parties of political campaigns for they're likely to merely 
redirect the savings into other avenues of political 
persuasion. But more importantly, lowering the cost to 
candidates does not lower the cost of campaigns, it merely 
shifts a major portion of the cost to broadcasters. TV ad time 
will certainly not become less valuable because of the 
Torricelli Amendment.
    Second, rather than enhancing political debate, the 
Torricelli Amendment is likely to lead to more negative attack 
ads, ads sponsored by parties in which the candidate being 
supported does not have to appear and thus cannot be held 
accountable. Most campaign reformers think that attack ads, 
especially those for which candidates cannot be held to account 
detract from, rather than enhance political debate.
    It is perhaps true that the Torricelli Amendment increases 
candidate access to the electorate. The reality, however, is 
that it accomplishes this by means neither narrowly tailored 
nor the least restrictive. Indeed, it increases candidate 
access at the expense of all other political speakers and at 
considerable sacrifice to broadcasters' first amendment rights.
    On balance, because it neither serves legitimate purposes, 
nor accomplishes its supposed ends effectively . I believe the 
Torricelli Amendment violates the first amendment.
    Thank you.
    [The prepared statement of Lillian R. BeVier follows:]

 Prepared Statement of Lillian R. BeVier, Doherty Charitable Professor 
and Class of 1963 Research Professor, University of Virginia Law School

    This memorandum analyzes the constitutionality of the proposed 
amendment to the ``lowest unit charge'' provisions of 47 U.S.C. 
Sec. 315(b) (hereafter, the amendment). The amendment would 
fundamentally alter the present regime of broadcast rate regulation 
with regard to political candidate ads. It would operate to the 
substantial and disproportionate disadvantage of broadcasters, cable, 
and satellite operators, as well as of participants in political debate 
other than federal candidates and national political parties. 
Candidates and parties, on the other hand, would reap substantial 
benefits. In order to appreciate the extent of the changes that the 
amendment would effect and to understand why they represent changes in 
kind and not just in degree of regulation, and thus render the 
amendment itself constitutionally problematic, it is necessary briefly 
to recount salient aspects of current law and to offer a bit of 
historical context.

               CURRENT LAW AND SOME HISTORICAL BACKGROUND

    Since Red Lion Broadcasting Corp. v. FCC, 395 U.S. 367 (1969), the 
Supreme Court has applied a more lenient standard of First Amendment 
review to regulations of broadcasters than to regulations of either the 
print media, Miami Herald Publishing Co. v. Tornillo, 418 U.S. 241 
(1974), or to cable operators, Turner Broadcasting System v. FCC 
(Turner I), 512 U.S. 622, 639 (1994). Commentators have long questioned 
the soundness of the ``spectrum scarcity'' rationale upon which Red 
Lion relied, and courts have increasingly challenged the argument as a 
justification for government control of the content of broadcast 
programming. See, e.g., Turner I, 512 U.S. 622, 637-38; 
Telecommunications Research & Action Center & Media Access Project v. 
FCC, 801 F.2d 501 (D.C. Cir. 1986). In light of cable and other 
technological advances, a factual foundation no longer exists for the 
argument that spectrum scarcity entitles the government, in the public 
interest, to control the content of broadcast speech.
    Indeed the scarcity argument has been so profoundly discredited--
its conceptual underpinnings so thoroughly undermined, its empirical 
premises so utterly annihilated--that it provides a wholly inadequate 
foundation for the current disparity in First Amendment protection 
enjoyed by broadcasters and the print media. For this reason, those who 
advocate the amendment's passage have sought to find support in other 
theories. The metaphor of public ownership of the airwaves has proved 
fertile ground for them, and from it have sprung several variations of 
argument. The most often invoked is the ``public trust'' variation, 
which embodies the idea that the public is the beneficial owner of the 
airwaves for whom the licensee acts as trustee, and because it is so 
frequently put forth, it is worth examining. It turns out to resemble a 
cloud: from a distance it seems solid and impenetrable, but up close it 
turns out to be no more substantial than dense fog, vaporous yet 
capable of obscuring vision.
    The public trust image admittedly packs rhetorical punch, 
especially in view of the fact that broadcast licenses are valuable and 
in the past broadcasters have received them at a price of zero: one can 
perhaps acknowledge that the claim that they should be burdened with 
``enforceable public obligations'' analogous to those owed by a private 
trustee to the beneficiaries has superficial intuitive appeal. The 
problem with the public trust concept is that its persuasive force as 
an analogy depends on similarities between broadcasters and private 
trustees that do not in fact exist. In the first place, instead of a 
corpus of property to which a trustee's duty might attach, there is 
only the metaphor of spectrum ownership. The spectrum itself is nothing 
more than a phenomenon produced by the transmission of electromagnetic 
energy through space, and to talk of it as ``property'' that the 
government once ``owned'' and that the broadcasters now hold ``in 
trust'' is really only to give a property label to a regulatory power 
that the government claims it possesses. In the second place, the 
fiduciary duties by which the acts of private trustees are governed are 
highly elaborated and quite clearly specified. There is considerable 
consensus about the nature and source of the trustee's duties, their 
enforceability, and who has standing to object to their breach. By 
contrast, all attempts to specify the nature of broadcasters' fiduciary 
obligations have failed. The Supreme Court has been able to come up 
with criteria no more specific than those loosely embodied in the twin 
assertions that broadcasters have ``obligations to present those views 
and voices which are representative of his community and which would 
otherwise, by necessity, be barred from the airwaves,'' Red Lion, 395 
U.S. at 389, and that broadcasters' obligations are the correlatives of 
``the right of the public to receive suitable access to social, 
political, esthetic, moral, and other ideas and experiences,'' id. at 
390--whatever that might mean in concrete application. Though the 
trustee image has been used occasionally to justify particular 
regulatory initiatives, no attempt has ever been made rigorously or 
systematically to give it legal substance or form. In fact it never has 
had anything other than rhetorical force, and it certainly has never 
done any real legal work.
    Still, it is common for advocates of regulation to proceed on the 
apparent assumption that Red Lion, bolstered by the public trustee 
image, gives the government carte blanche to regulate broadcasters. In 
doing so, they vastly overestimate the extent to which the case has 
actually been read to sanction government interference with the 
editorial discretion of broadcasters, or permits government to impinge 
on broadcasters' freedom of speech. Since Red Lion, for example, the 
Court has emphasized that broadcasters are speakers entitled to 
exercise editorial discretion. Arkansas Educ. Television Comm'n. v 
Forbes, 523 U.S. 666, 674 (1998) (``When a . . . broadcaster exercises 
editorial discretion in the selection and presentation of its 
programming, it engages in speech activity.'') It has insisted that 
broadcasters are entitled to ``the widest journalistic freedom 
consistent with [their] public [duties].'' CBS v. DNC, 412 U.S. 94, 110 
(1973). And it has issued reminders that congressional restrictions on 
broadcasters' editorial judgment and control ``have been upheld only 
when [the Court] was satisfied that the restriction is narrowly 
tailored to further a substantial governmental interest.'' FCC v. 
League of Women Voters, 468 U.S. 364, 377 (1984). This First Amendment 
background is an important part of the historical context of broadcast 
regulation in behalf of political candidates.
    As part of the Federal Election Campaign Reform Act of 1971, 
Congress amended the Communications Act of 1934 in two crucial 
respects. First, it added Sec. 312(a)(7) to authorize the FCC to revoke 
any broadcast license ``for willful or repeated failure to allow 
reasonable access to or to permit purchase of reasonable amounts of 
time for the use of a broadcasting station by a legally qualified 
candidate for Federal elective office on behalf of his candidacy.'' In 
CBS v. FCC, 453 U.S. 367 (1981), the Supreme Court sustained the 
section against a First Amendment challenge. The Court concluded that 
the section created an affirmative right of reasonable access to the 
use of broadcast stations for individual candidates during campaigns. 
Because it requires them to give ``reasonable and good-faith attention 
to access requests,'' 453 U.S. at 387, and to consider each request 
``on an individualized basis,'' id., Sec. 312(a)(7) undeniably 
interferes somewhat with the editorial discretion of broadcasters. The 
fact remains, however, that, even as the Court construed the section in 
CBS v. FCC, broadcasters retain considerable decision-making freedom on 
the issue of whether to grant or deny any particular access request: 
the FCC must defer to the broadcasters' decisions so long as they 
``take the appropriate factors into account and act reasonably and in 
good faith.'' Id. And, of course, Sec. 312(a)(7) has been squarely held 
to require reasonable access only ``if the candidate is willing to 
pay.'' Kennedy for President Committee v. FCC, 636 F2d 432 (D.C. Cir. 
1980).
    The second change wrought in the Communications Act of 1934 by the 
Federal Election Campaign Reform Act of 1971 was to section 315(b), 
which at that time provided that charges for the use of a broadcast 
station for political advertising not exceed the charges for comparable 
use of the station for other purposes. The 1971 amendment added the 
additional requirement that broadcasters and cable systems, within the 
45 days preceding a primary or 60 days preceding a general election, 
charge candidates for public office ``the lowest unit charge of the 
station for the same class and amount of time for the same period.''
    The debates on the changes to Sec. 315(b) reflect Congress' concern 
that the rates charged candidates by broadcasters were sometimes higher 
than those charged commercial advertisers, on account of the fact that 
the short-term, cyclical and individually low-volume-per-candidate 
nature of political broadcasting made certain discounts--such as those 
offered to users with whom broadcasters had longer-term associations--
unavailable to political candidates. See Kennedy for President v. FCC, 
636 F.2d 432, 441 n. 68 (D.C. Cir. 1980). Congress legislated against a 
background of variations in the price of advertising to commercial 
advertisers according both to the size of the anticipated audience and 
also according to whether the advertiser wanted to buy fixed time (the 
most expensive), preemptible time (less expensive than fixed time since 
it permits the station to preempt the time when another advertiser is 
willing to pay the higher fixed rate), and immediately preemptible time 
(sold most cheaply since it permits the station to preempt in favor of 
a better-paying second advertiser without giving notice to the first 
advertiser).
    In enforcing Sec. 315(b), the FCC has consistently interpreted the 
section ``to reflect the realities of the advertising marketplace.'' 
FCC Report & Order, FCC 91-403, FCC Rcd 678, 691 (December 23, 1991). 
Accordingly, the Commission has permitted broadcasters to continue the 
practice of varying rates according to the class of time involved and 
to whether the purchaser paid for fixed, preemptible, or immediately 
preemptible time. This policy has reflected the Commission's conviction 
that ``Congress enacted the lowest unit cost requirement to ensure that 
candidates are treated as favorably as [--not more favorably than--] 
the most favored commercial advertisers during the pre-election 
period.'' Public Notice, Licensees and Cable Operators Reminded of 
Lowest Unit Cost Obligations, FCC 88-269 (August 4, 1988)(emphasis 
supplied). Broadcasters must give candidates the benefits of any 
quantity or package discounts that commercial advertisers receive, but 
just as commercial advertisers must pay more for fixed time than for 
preemptible time or immediately preemptible time, so must political 
candidates. Indeed, according to the Commission, Congress in 1971 
``specifically rejected'' requiring broadcasters to afford candidates 
`` `fixed' status at a `preemptible' rate.'' FCC Report & Order at 
691(December 23, 1991)(citing 117 Cong. Rec. 29, 026-29 (1971)). Thus 
Sec. 315(b) currently puts political candidates ``on a par'' with the 
most favored commercial advertisers, as Congress intended it to do. 
Broadcasters have had no compelling reason to challenge the 
constitutionality of Sec. 315(b) because, though the editorial 
discretion of broadcasters is limited by their being foreclosed from 
altering the content of ads by political candidates, it does not 
require them to charge federal candidates for valuable fixed spots 
rates far below those that any commercial advertiser would pay.

                         THE PROPOSED AMENDMENT

    The proposed amendment to Sec. 315(b) would effect six major 
changes in the nature of the electronic media's obligation to charge 
political candidates the lowest unit charge. First, it would extend the 
benefits of the lowest unit charge provision, which presently extend to 
ads sponsored by candidates' authorized committees in which candidates 
themselves appear, to ads sponsored by a national committee of a 
political party, whether or not they include an appearance by the 
candidate. Second, it would require broadcasters to sell both to 
candidates and national political parties the most desirable class of 
advertising time at the lowest price charged during the previous year 
for the least desirable time. Third, it would bar broadcasters from 
preempting any political ad. Fourth, it would require intrusive 
government monitoring to ensure compliance by mandating repeated audits 
of television stations by the FCC during campaigns. Fifth, it would 
extend the new requirements to cable and satellite providers. 
1 Sixth, it would extend the period during which the lowest 
unit charge provision would apply.
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    \1\ FCC regulations currently apply the statutory provisions 
requiring broadcasters to supply access to and to charge lowest-unit-
rates for political candidates to satellite providers through 
regulation. 47 C.F.R. Sec. 100.5. FCC regulations do not require cable 
television providers to grant access to political candidates, 47 C.F.R. 
Sec. 76.205, but if they do grant access they must charge candidates 
the lowest-unit-rate. 47 C.F.R. Sec. 76.206.
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    These changes do not merely refine the section's impact. They 
radically alter it. Consider: the requirement that broadcasters sell 
both to federal candidates and national political parties the most 
desirable class of advertising time at the lowest price charged during 
the previous year for the least desirable time amounts to a requirement 
that broadcasters sell parties and candidates the equivalent of first 
class seats at stand-by prices, or the penthouse suite at the Plaza for 
Motel-6 rates. This requirement markedly increases broadcasters' 
financial burden, not only relative to what they have previously borne 
but relative to that borne by others who supply campaign resources to 
candidates--alternative media outlets, transportation and accommodation 
providers, office suppliers, consultants, and the like. In other words, 
the amendment would transform a requirement that broadcasters treat 
federal candidates equally as well as the most favored commercial 
advertisers with regard to rates into a requirement that they--and only 
they--offer federal candidates and political parties highly 
preferential rate treatment. Also, by significantly expanding the class 
of ads over which broadcasters cannot exercise editorial discretion 
(which now includes only the narrow class of federal candidate-
purchased ads in which the federal candidate appears), and 
substantially increasing the intrusiveness of government enforcement, 
the amendment would significantly reduce broadcasters' journalistic 
freedom. These drastic alterations--increased and disproportionate 
financial burdens, decreased journalistic freedom--give rise to a well-
founded prediction that, if it passes, the amendment will be found to 
violate the First Amendment. This prediction gains credence when one 
scrutinizes the ends supposedly served by the amendment and assesses 
the effectiveness of the increased burdens and decreased freedoms as 
means to achieve them, for looking with care at them reveals that they 
are anything but ``narrowly tailored to further a substantial 
governmental interest.'' FCC v. League of Women Voters, 468 U.S. 364, 
377 (1984).

                        FIRST AMENDMENT ANALYSIS

    The amendment to Sec. 315(b) almost certainly violates the First 
Amendment. If the Court subjects the amendment to the strict--almost 
always fatal--scrutiny that it usually applies to regulations of 
individual speakers and the print media, it will require that the 
amendment serve governmental interests that are compelling and that it 
do so by the least restrictive means. See, e.g., Simon & Schuster, Inc. 
v. Members of the New York State Crime Victims Bd., 502 U.S. 105 
(1991). This is because, as it requires that preferential rates be 
offered only to speech in connection with campaigns of federal 
candidates during election campaigns, it is unquestionably a regulation 
of the content of speech to which the strictest standard of review 
applies. Even if the Court subjects the amendment to the somewhat less 
exacting scrutiny that it has applied to regulation of the speech of 
broadcasters, the amendment is not likely to pass muster, for the Court 
will insist that it be narrowly tailored to further a substantial 
government interest and that it be in fact likely to redress or prevent 
harms that ``are real, not merely conjectural,'' Turner I, 512 U.S. at 
664. As the analysis that follows will confirm, the amendment serves 
governmental interests that are neither compelling nor substantial. Its 
means are neither the least restrictive nor narrowly tailored nor 
likely to redress real harms.
    As noted above, Red Lion held that the unique physical limitations 
of the broadcast medium justified applying a less rigorous standard of 
First Amendment scrutiny to broadcast regulation than to regulation of 
print media. The Court has not applied this more relaxed standard of 
First Amendment review to cable regulation ``because cable television 
does not suffer from the inherent limitations that characterize the 
broadcast medium.'' Turner I, 512 U.S. at 622. The amendment to 
Sec. 315 applies to both broadcasting and cable (as well as to 
satellite) providers. Thus it initially presents the question whether 
the Court would subject the amendment as a whole to the less rigorous 
scrutiny traditionally applied to broadcast regulations or treat it as 
a regulation of cable providers and subject it to more rigorous review. 
The latter option makes more sense, since the fact of its extension to 
cable and satellite operators demonstrates that the amendment cannot 
rest on the (discredited) scarcity rationale. Then again, perhaps the 
Court would subject the regulation of broadcasters to intermediate 
scrutiny and that of cable and satellite providers to more demanding 
review. The Court is likely to perceive that the amendment poses 
precisely the inherent risks of government favoritism and manipulation 
of political debate that strict First Amendment scrutiny is designed to 
forestall (even in the area of broadcast regulation). Thus it will 
probably subject the amendment, its supposed justifications, and the 
likelihood that it will achieve its alleged purposes to rigorous and 
skeptical evaluation, however it describes the intensity of its review.
    No matter what level of scrutiny the Court applies, its analysis 
will have to take account of several bedrock First Amendment 
principles. In combination with Sec. 312(a)(7), the amendment would 
operate, to a far greater extent than does current law, to deprive 
broadcasters of the right to exercise discretion over the content of 
advertising that they are required to accept, both by federal 
candidates themselves and by national parties in their behalf. Its 
supporters thus must somehow justify the fact that it defies the 
generally applicable prohibition on ``forced speech,'' a prohibition 
that embodies the nation's long-standing commitment to protecting ``the 
right of individuals to hold a point of view different from the 
majority and to refuse to foster . . . an idea they find morally 
objectionable.'' Wooley v. Maynard, 430 U.S. 705, 714-15 (1977). In 
addition, the amendment would impose its onerous burdens only on 
broadcasters and cable and satellite operators. And it would extend 
benefits only to federal candidates and political parties, denying them 
to other participants in political campaigns such as independent 
advocacy groups. Thus its supporters must overcome the Court's grave 
and understandable distrust of laws that single out certain elements of 
the press for special treatment or that impose differential burdens 
(or, by a parity of reasoning, confer differential benefits) on 
particular speakers. Minneapolis Star and Tribune Co. v. Minnesota 
Commissioner of Revenue, 460 U.S. 575, 591-93 (1983).
    The First Amendment requires the Supreme Court to subject 
regulations of the content of speech in the print media and by 
individual citizens to the most exacting scrutiny. Regulations that 
``suppress, disadvantage, or impose differential burdens on speech 
because of its content'' Turner I, 512 U.S. at 642 [which the amendment 
to Sec. 315(b) clearly does] or ``that compel speakers to utter or 
distribute speech bearing a particular message,'' id., [which the 
amendment to Sec. 315(b) clearly does] carry the heaviest burden of 
justification. The reason for strict scrutiny of such regulations is 
that they ``pose the inherent risk that the Government seeks not to 
advance a legitimate regulatory goal, but to . . . manipulate the 
public debate through coercion rather than persuasion.'' Id. at 641. 
Laws that single out certain elements of the press for special 
treatment ``pose a particular danger of abuse by the State.'' Arkansas 
Writers' Project, Inc. v. Ragland, 481 U.S. 221, 228 (1987). Laws that 
target a small group of speakers and require them to subsidize the 
public debate create a particular danger of abuse by the state, a 
danger that is exacerbated by intrusive government enforcement 
mechanisms.
    In the area of broadcast regulation, since Red Lion the Court has 
never sustained a regulation of broadcasters that is anywhere near so 
intrusive nor one with such significant financial implications as the 
amendment to Sec. 315(b). Although Red Lion sustained the fairness 
doctrine and personal attack rules, and CBS v. FCC, 453 U.S. 367 
(1981), sustained the reasonable access requirements of Sec. 312(a)(7), 
the Court has never given its constitutional blessing to Sec. 315(b) 
because the section has not been challenged. Supporters of the 
amendment to Sec. 315(b) assert that it ``is significantly less 
burdensome and less likely to interfere with the editorial discretion 
of broadcasters than either the fairness doctrine or the reasonable 
access requirement--both of which have been upheld by the Supreme 
Court,'' Memorandum to Members of Congress and Staff from Elizabeth 
Daniel, Brennan Center for Justice (May 11, 2001). The claim is 
entirely specious.
    The personal attack rules and the fairness doctrine that the Court 
sustained in Red Lion left broadcasters with significant discretion 
about what messages to carry in the first place (so as not to call the 
personal attack rules into play) as well as about the content of their 
overall programming (so as to comply with the general commands of the 
fairness doctrine). While the fairness doctrine was in effect, the FCC, 
mindful of the First Amendment risks entailed in a too-intrusive 
enforcement strategy, made commendable efforts to respect the editorial 
freedom of broadcasters. It is perhaps noteworthy, nonetheless, that 
the FCC abandoned the fairness doctrine in 1985, having become 
persuaded that it was ineffective at achieving its objective of 
increasing the diversity of broadcast content, that the hoped-for First 
Amendment benefits were illusory while the anticipated First Amendment 
costs were all too real.2 In 2000, the District of Columbia 
Circuit Court, acknowledging that the personal attack and political 
editorial rules ``interfere with editorial judgment of professional 
journalists and entangle the government in day-to-day operations of the 
media,'' and that they ``chill at least some speech, and impose at 
least some burdens on activities at the heart of the First Amendment,'' 
Radio-Television News Directors Association v. FCC, 229 F.3d 269, 270 
(D.C. Cir. 2000), directed the Commission immediately to repeal them.
---------------------------------------------------------------------------
    \2\  This outcome is worth noting, if only as a cautionary tale; it 
teaches the wisdom of skepticism in assessing potential benefits of new 
broadcast regulation as well as the folly of neglecting to count the 
costs.
---------------------------------------------------------------------------
    The Court held in CBS v. FCC, 453 U.S. 367 (1981), that 47 U.S.C. 
Sec. 312(a)(7) imposed on broadcasters an ``affirmative, promptly 
enforceable right of reasonable access'' in favor of candidates. Id. at 
377. But it simultaneously emphasized that Sec. 312(a)(7) leaves 
broadcasters with considerable editorial discretion. They must be 
permitted in the first instance to exercise their own judgment with 
regard to whether any particular request for access must be granted:
        In responding to access requests . . . broadcasters may . . . 
        give weight to such factors as the amount of time previously 
        sold to the candidate, the disruptive impact on regular 
        programming, and the likelihood of requests for time by rival 
        candidates under the equal opportunities provision of 
        Sec. 315(a) . . . If broadcasters take the appropriate factors 
        into account and act reasonably and in good faith, their 
        decisions will be entitled to deference even if the 
        Commission's analysis would have differed in the first 
        instance. Id. at 387.
    Mindful of its own injunction that the government's licensing 
scheme for broadcasters calls ``on both the regulators and the 
licensees to walk a `tightrope' to preserve First Amendment values,'' 
CBS v. DNC, 412 U.S. 94, 117 (1972), the Court in CBS v. FCC noted that 
candidates' right of access was ``limited,'' and that, as so 
interpreted, the reasonable access provision properly ``balances the 
First Amendment rights of federal candidates, the public, and 
broadcasters.'' 453 U.S. at 397.
    In terms of the impact on broadcasters' editorial discretion and 
the intrusiveness of its contemplated enforcement mechanism--mandatory 
random audits by the FCC during the pre-election period--the regime 
contemplated by the amendment completely topples the delicate balance 
embodied in the current regime. While current law bars advertisers from 
rejecting candidate ads in which federal candidates appear, or from 
exercising any editorial judgment over them, 47 U.S.C. Sec. 312(a), the 
amendment would deprive broadcasters of discretion over the content of 
national political party ads as well, whether or not candidates appear 
in them. Moreover, presently Sec. 315(b) requires broadcasters merely 
to charge federal candidates the same rates they charge commercial 
advertisers for the same class of time. It does not require them to 
offer preferential rates either to candidates or to national political 
parties. And Sec. 315(b)'s requirement of equality of rate treatment 
applies only to federal candidates whereas the amendment's requirement 
of preferential rate treatment applies both to candidates and to 
political parties. This memorandum noted early, and considers worth 
mentioning repeatedly, the burden of the amendment falls solely upon 
broadcasters and cable and satellite providers, leaving the rates 
charged by other media outlets and other suppliers of campaign 
resources unregulated, and that its benefits accrue only to federal 
candidates and national political parties, leaving other participants 
in the political process--such as independent advocacy groups--much 
disadvantaged. The amendment would create the reality, not merely the 
risk, ``of an enlargement of Government control over the content of 
broadcast discussion of public issues'' against which the Court has 
most emphatically warned. CBS v. DNC, 412 U.S. at 126. It also would 
create the reality, not merely the risk, that what the Government seeks 
to do by this amendment is ``to manipulate the public debate through 
coercion rather than persuasion.'' Turner I, 512 U.S. at 641.
    To summarize, the amendment to Sec. 315(b) poses a clear threat to 
several important canons of First Amendment jurisprudence. It 
encroaches to a much greater extent than current law upon the editorial 
freedom of broadcasters. It represents a form of forced speech. It 
imposes a discriminatory burden on one class of speakers (broadcasters, 
cable and satellite providers) for the benefit of one class of 
participants in the political process (federal candidates and national 
political parties speaking in their behalf).
    Turning now to the governmental interest side of the First 
Amendment equation, it should be noted at the outset that, while 
conferring preferential benefits on candidates and imposing 
disproportionate burdens on broadcasters, the amendment serves neither 
a compelling nor even a substantial governmental interest. Indeed, one 
might argue that it fails to serve any legitimate public interest at 
all. For all that appears, in calling upon broadcasters to subsidize 
candidate campaigns, it serves only the interests of federal candidates 
and national political parties. It would seem improbable that such 
favored treatment for federal candidates (including, of course, 
incumbents; but excluding the independent advocacy groups that might 
want to raise questions about challengers' plans or incumbents' records 
3) could be said to serve the public interest; it is not 
obvious, in other words, why it is in the public's interest that 
federal candidates and political parties be subsidized by broadcasters. 
Moreover, because it leaves candidates free to spend the money saved on 
TV ads on other campaign activities, the amendment does not even offer 
a reliable guarantee that its implementation will ultimately reduce the 
cost to candidates of their election campaigns. Thus it seems likely to 
fail to achieve the objective that its supporters most loudly trumpet. 
Finally, because it will allow political parties to take advantage of 
the subsidies even for ads in which the candidate does not appear, and 
because candidates themselves benefit from attacks on their opponents 
but do not care to appear themselves in negative ads, the amendment is 
likely to increase the amount of negative attack ads. This may or may 
not have a negative effect on the quality of political debate, but it 
seems quite likely to redound to the harm of the broadcasters who are 
forced to run the ads without being able to exercise any editorial 
control over their content. The reason it would harm broadcasters is 
not that they would be liable for statements made in ads over which 
they have no right to exercise editorial control. They would not be. 
Farmers Educ. & Coop. Union of America v. WDAY, 360 U.S. 525, 535 
(1959). Rather, broadcasters would be harmed because, whether or not 
attack ads are politically effective, many viewers do not like them and 
broadcasters who run them thus risk alienating their viewers.
---------------------------------------------------------------------------
    \3\ The McCain-Feingold bill disadvantages independent advocacy 
groups in so many ways relative to candidates and parties that it seems 
quite likely, if it were to be enacted and implemented in the form in 
which it passed the Senate, to cause a significant decrease in the 
number of voices heard and the variety of points of view expressed 
during political campaigns.
---------------------------------------------------------------------------
    The fact that the amendment is unsupported by findings that might 
serve to justify it hinders the quest to determine what governmental 
interests the amendment would serve, whether those interests are 
compelling or even substantial, and whether the amendment represents 
either the least restrictive or even a sufficiently narrowly tailored 
means for accomplishing it. This is troublesome in light of the 
requirement that ``[w]hen the Government defends a regulation of speech 
as a means to redress past harms or prevent anticipated harms, it must 
do more than simply `posit the existence of the disease sought to be 
cured'. . . It must demonstrate that the recited harms are real, not 
merely conjectural, and that the regulation will in fact alleviate 
these harms in a direct and material way.'' Turner I, 512 U.S. at 664. 
The debates on the Senate floor suggest that the amendment's principal 
purpose is the straightforward one of securing low prices for federal 
candidates and political parties seeking to run television ads during 
the campaign season. The effect of achieving this purpose is said to be 
the benign one of lowering the overall cost of campaigns. Proponents of 
the amendment claim these purposes serve the public interest. They 
claim that the amendment ``furthers First Amendment values by enhancing 
the political debate and candidate access to voters at a time when 
television news coverage of debates is diminishing and candidates must 
compete with independent issue groups for air time.'' Brennan Center 
Memorandum at 2. As it seems likely that debate will focus on the 
amendment's alleged public purposes, this memorandum will do the same.
    To expand on some points noted above, consider first the purpose of 
lowering the overall cost of political campaigns. There are two 
difficulties with it. First, far from being either a compelling or a 
substantial governmental interest, it is a highly suspect one. The 
Supreme Court has proclaimed in no uncertain terms that ``the mere 
growth in the cost of federal election campaigns in and of itself 
provides no basis for governmental restrictions on the quantity of 
campaign spending. The First Amendment denies government the power to 
determine that spending to promote one's political views is wasteful, 
excessive, or unwise.'' Buckley v. Valeo, 424 U.S. 1, 57 (1976).
    But, second, as previously remarked, there is no guarantee that the 
overall cost of political campaigns will decrease on account of the 
amendment. It is just as likely that candidates and national political 
parties will simply expend the funds they save on more of the short TV 
spot ads that campaign reformers decry, or on different campaign 
activities, while other participants in the political process--
independent groups advocating positions on particular issues, for 
example--are likely to have to spend considerably more in order to buy 
any TV time at all. Thus, even assuming that the Court were to 
reconsider its aversion to the governmental purpose of lowering the 
cost of political campaigns, it would have a difficult time concluding 
that, in lowering the cost of TV ads to federal candidates and national 
political parties, the amendment achieves the purpose in a ``direct and 
immediate way.'' Perhaps even more fundamentally, a realistic 
perspective on the effect of the amendment reveals that the amendment 
does not, in fact, lower the cost of TV time even for federal political 
candidates and parties. Lowering the cost to federal candidates and 
parties does not reduce the value of TV time; it merely transfers the 
cost of paying for that value from federal candidates and national 
political parties to broadcasters and to other advertisers, both 
political speakers and commercial ones. Thus it is false to claim that 
the amendment lowers the cost of political campaigns. The costs will 
continue to be incurred; they will simply be borne by others than 
federal candidates and national political parties.
    Consider next the claim that the amendment ``enhances political 
debate.'' Again, there are two difficulties. The first is that the 
Supreme Court's frequent celebration of the value of maintaining the 
``opportunity for free political discussion,'' New York Times v. 
Sullivan, 376 U.S. 254, 269 (1964)(citations omitted), has reference 
not to supposedly costless political discussion but rather to political 
discussion unfettered by government control or coercion. The Court has 
held, time and time again, that the quality of political debate is none 
of the government's business. So, just as was the case with the 
objective of lowering the cost of political campaigns, far from being 
either a compelling or a substantial governmental interest, enhancing 
the quality of political debate is a highly suspect one.
    This is a point that tends to get lost in the hand-wringing over 
the supposedly sorry state of our democracy. It should, instead, be the 
focal point of debate. When one has regard to the long line of cases 
confirming the principles of free political speech and individual 
political freedom that lie at the very heart of the First Amendment, it 
becomes clear that those who imply that enhancing the quality of 
political debate is a legitimate governmental interest bear a heavy 
burden of justification. The First Amendment guarantees that government 
may not interfere in the efforts of citizens to persuade their 
compatriots of the merits of particular proposals or of particular 
candidates, Pickering v. Board of Education, 391 U.S. 563 (1968); nor 
may it disrupt the free communication of their views, Mt. Heathy City 
School District Board of Education v. Doyle, 429 U.S. 274 (1977); nor 
penalize them for granting or withholding their support from elected 
officials on the basis of the positions the officials espouse, Elrod v. 
Burns, 427 U.S. 347 (1976). Government may neither prescribe an 
official orthodoxy, West Virginia Board of Education v. Barnette, 319 
U.S. 624 (1943); require the affirmation of particular beliefs, Wooley 
v. Maynard, 430 U.S. 705 (1977); nor compel citizens to support causes 
or political activities with which they disagree, Communication Workers 
of America v. Beck, 487 U.S. 735 (1988). Far from giving government a 
legitimate interest in ``enhancing the quality of political debate,'' 
the ``constitutional right of free expression . . . is designed and 
intended to remove governmental restraints from the arena of public 
discussion, putting the decision as to what views shall be voiced 
largely into the hands of each of us.'' Cohen v. California, 403 U.S. 
15, 24 (1971). As the Court affirmed in Buckley v. Valeo, 424 U.S. 1, 
57 (1976)(per curiam): ``In the free society ordained by our 
Constitution it is not the government, but the people--individually as 
citizens and candidates and collectively as associations and political 
committees--who must retain control over the quantity and range of 
debate on public issues in a political campaign.''
    Contrary to what advocates of the amendment appear to maintain, Red 
Lion does not render these principles of free political debate 
irrelevant in the context of broadcast regulation. While Red Lion 
sustained the fairness doctrine and personal attack rules on the theory 
that ``it is the right of the viewers and listeners, not the right of 
the broadcasters, which is paramount,'' 395 U.S. at 390, the Court 
thought its decision would help to secure, not access for a preferred 
group of speakers, but an ``uninhibited marketplace of ideas'' that 
would permit airing of a diversity of ``social, political, esthetic, 
moral and other ideas and experiences.'' Id. (emphasis supplied.)
    But even were enhancing the quality of political debate a 
legitimate, compelling or substantial governmental interest, the 
overall effect of the amendment seems unlikely to achieve the goal. 
Certainly it does not achieve its posited objective in a ``direct and 
immediate way.'' As noted above, the amendment would guarantee its 
preferential rates not only to candidates but to national party 
committees, who could air TV ads that had no appearance by the 
candidate the party supports. A national party, therefore, could air 
attack ads without having to acknowledge or hold its own candidate 
accountable for the connection between the attack and the party's 
preferred candidate. Many observers believe that attack ads--
particularly those for which candidates themselves are able to avoid 
being held accountable--do the opposite of enhancing political debate; 
rather, they believe such ads reinforce ``the very cynicism they 
exploit, and in the process drive citizens away from politics.'' 
Alliance for Better Campaigns, Campaigns & Television, http://
www.bettercampaigns.org/resources.htm.
    Consider, finally, the claim that the amendment would enhance 
federal candidate access to voters. This, at least, appears at first 
glance to be a legitimate, perhaps even compelling or substantial, 
governmental interest, since more political speech is always better 
than less. Representative democracy benefits when ``candidates have the 
. . . opportunity to make their views known so that they electorate may 
intelligently evaluate the candidates' personal qualities before 
choosing among them on election day.'' Buckley v. Valeo, 424 U.S. 1, 
52-53 (1976). The difficulty comes when we try to assess whether the 
amendment would achieve the goal using either the least restrictive 
means or even sufficiently narrowly tailored ones.
    For two reasons, it is difficult to conclude that the amendment 
satisfies either standard. In the first place, the amendment's 
enhancement of federal candidate and political party access to voters 
comes at the expense of all other participants in the political 
process, none of whom are to receive the benefit of the preferential 
rates. Thus it is even possible that the amendment will ultimately 
reduce rather than increase the total amount of debate during political 
campaigns. In the second place, the amendment singles out one group of 
private actors to bear its burdens, one group to subsidize the 
provision of increased candidate access to voters. If increased 
candidate access is an important public interest, one would think that 
it ought to--and could more narrowly, less restrictively--be provided 
by the public itself rather than being imposed solely on broadcasters, 
cable, and satellite providers. If not by the public, then perhaps the 
burden should be shouldered by all those in the private sector who 
provide resources to political candidates for their campaigns: they too 
could be required to sell their products and services to candidates at 
deeply discounted prices. Or if not by all resource providers, then at 
least the burden of candidate media access should be shared by all 
First Amendment actors, or at least by the print media. Admittedly 
these alternatives are unlikely to be politically viable, but that is 
precisely the point, for it suggests that neither the need nor the 
demand for increased federal candidate and national party access that 
the amendment would provide are as widely felt as has been claimed. And 
the discriminatory nature of the burden creates the unseemly impression 
that the amendment reflects political opportunism rather than a genuine 
attempt to serve a legitimate public interest.

                               CONCLUSION

    The proposed amendment to Sec. 315(b) is of exceedingly dubious 
constitutional validity. Whether the Court subjects the amendment to 
strict or intermediate scrutiny, or some combination of the two, it 
will be gravely troubled by the fact that the amendment offends several 
venerable First Amendment principles. It encroaches, to a much greater 
extent than current law, upon broadcasters' editorial freedom. It 
amounts to forced speech. It imposes a disproportionate burden on one 
class of speakers (broadcasters, cable and satellite providers) for the 
benefit of one class of participants in the political process (federal 
candidates and national political parties speaking in their behalf). It 
serves very poorly indeed a number of purposes that the Court has found 
out-of-First-Amendment bounds, such as lowering the cost of political 
campaigns and improving the quality of public debate. This is because 
it does not lower, but merely shifts, the cost of political campaigns 
and it is likely to increase the number of negative attack ads. It 
serves one legitimate public purpose, that of increasing candidate 
access to the electorate, but this it does by neither narrowly tailored 
nor the least restrictive means. Its enhancement of candidate access 
comes both at the expense of other political speakers and at 
considerable sacrifice of broadcasters' and cable and satellite owners' 
First Amendment rights.

    Mr. Upton. Thank you.
    Mr. Sapan.

                    STATEMENT OF JOSHUA SAPAN

    Mr. Sapan. Thank you, Mr. Chairman. I'm Josh Sapan, CEO of 
Rainbow Media Holdings which is a Division of Cablevision 
Systems. Rainbow Media provides national and local programming 
services among them American Movie Classics, Bravo and our 
local news 12 channels. In addition, my responsibilities 
include oversight of advertising from Rainbow Media and 
Cablevision systems. Cablevision is a cable company serving 
more than 3 million subscribers in the New York area.
    We believe the changes in campaign advertising rules 
proposed by the Torricelli Amendment are not warranted. We 
support the approach taken by current law that requires cable 
operators like television and radio broadcasters to charge 
legally, qualified candidates for public office the best rate 
available for advertising time.
    The Torricelli Amendment creates a new substantial subsidy 
for campaign advertising by giving political candidates better 
rates than those available to all other advertisers and 
expanding the time period those rates are available. There is 
simply no factual or policy basis for requiring this subsidy 
from cable systems.
    During debate, proponents of the Torricelli Amendment cited 
two reasons for requiring below market advertising rates to be 
sold to political candidates. They first cited the rising cost 
of television advertising time. However, there is nothing in 
the Senate record to suggest that cable systems have charged 
excessive rates to political candidates. Cable systems, like 
radio broadcasters have long been viewed as the lower cost 
alternative for campaign and other advertisers.
    At Cablevision, advertisements are telecast in a specific 
geographic area, targeting the message to relevant 
constituents. Prices for purchasing time on our cable system 
are generally lower because the services reach a smaller 
geographic area. For instance, if a candidate is purchasing 
time on Cablevision's Brooklyn system, the price would be less 
than purchasing the advertising time from a local station, 
broadcast station which covers the entire Tri-State area. 
Candidates can then customize the message of an advertisement 
to a smaller base of people.
    The second argument cited by proponents of the Torricelli 
Amendment was that broadcasters have public interest 
obligations that result from their use of the public airwaves. 
Cable operators on the other hand do not use the public 
airwaves and have built their entire distribution system with 
private risk capital and without any Federal subsidies. Cable 
systems are franchised at the State and/or local level and an 
aggregate across the country typically pay about $2 billion in 
local franchising fees per year.
    In addition, cable operators are subject to a cable 
specific public interest construct that includes public 
educational, government and leased access channels.
    Finally, the cable industry is committed to providing the 
broadest variety and most complete coverage of politics on 
television. On the national level, the best examples of cable's 
commitment to full coverage of the political process is C-SPAN, 
private, not for profit, paid for entirely by the cable 
industry. Other national networks providing complete political 
coverage, include CNN, MSNBC and the Fox News Channel.
    On the local level and the regional level, a growing number 
of cable channels provide viewers with a unique perspective on 
politics that only a neighborhood operation can do. For 
instance, Cablevision offers in the New York area no fewer than 
five News 12 local channels that serve an aggregate all of our 
subscribers. During the last election, these five news channels 
held more than 100 debates between local candidates as well as 
live election coverage of local races, numerous profiles of 
local candidates and political analysis of New York specific 
issues.
    So to conclude, the cable industry does not believe that 
changes int he campaign advertising rules are necessary. We 
continue to support the approach taken by current law that 
requires cable operators and television and radio broadcasters 
to charge qualified candidates the best rate available for 
advertising time.
    Cable provides a lower cost alternative for political 
advertising and cable offers what I think it's fair to say is 
the best and most complete election news coverage available on 
television. There appears to be no rationale for including 
cable under the Torricelli proposal.
    Thank you very much for your time.
    [The prepared statement of Joshua Sapan follows:]

   Prepared Statement of Joshua Sapan, President and Chief Executive 
   Officer, Rainbow Media Holdings, Inc., a Division of Cablevision 
                          Systems Corporation

    Thank you Mr. Chairman and Members of the Committee for inviting me 
to testify before you today. I am Josh Sapan, President and CEO of 
Rainbow Media Holdings which is a division of Cablevision Systems. 
Cablevision is one of the nation's leading entertainment and 
telecommunications companies, serving more than 3 million video 
customers in the New York metropolitan area and providing high speed 
Internet access and competitive telecommunications services. As 
Cablevision's programming division, Rainbow owns and manages national 
cable channels American Movie Classics, Bravo, The Independent Film 
Channel, WE: WOMEN'S ENTERTAINMENT, and MuchMusic USA.
    Perhaps most relevant for this discussion, Rainbow also has a 20-
year history in regional programming. Our News 12 Networks provide 
truly local news for New Jersey, Long Island, The Bronx, Westchester 
and Connecticut. The MetroChannels showcase the diverse cultural 
landscape of the New York area, with original programming focused on 
comedy, music, food, fashion, theater and sports. Finally, Rainbow's 
Advertising Sales Corporation (RASCO), is the nation's largest regional 
network and spot cable advertising sales firm.
    Advertising on cable is typically done at the network level. A 
business or a political candidate wishing to advertise on a cable 
channel can buy national or regional coverage by buying from a network. 
However, many political candidates and small businesses may wish to 
advertise on only targeted cable systems. Local cable systems, which 
provide service to specific franchise areas, are able to insert local 
advertisements on cable channels. Typically, the licensing agreements 
between programmers and the cable operators set out the time made 
available to the cable operator to sell for advertising. In general, 
approximately 8-14 minutes per hour is used for paid advertising, and 
about 2 minutes of this time is made available to the cable operator to 
sell for advertising, including political advertising. The remaining 
advertising time is sold at the national level by individual cable 
networks.
    Local advertisements can be bought in a number of ways. Businesses 
and political candidates can purchase time on a specific program (e.g. 
``Larry King Live'') or can purchase time on specific networks (e.g. 
CNN, ESPN) with advertising to be run anytime during the day or within 
a specific time period (e.g. primetime versus fringe). Local 
advertising is also sold on a preemptible versus nonpreemptible basis. 
However, we should note that the policies and practices for ad sales 
differ from company to company and network to network.
    I appreciate the opportunity to discuss political advertising in 
the context of campaign finance reform and to provide your committee 
with Cablevision's perspective as a member of the cable industry. I 
will also use this opportunity to highlight examples of the cable 
industry's efforts to provide television viewers the best and most 
comprehensive information about the political process, political 
candidates and their government at work.
    Earlier this year the Senate passed the ``Bipartisan Campaign 
Reform Act,'' with the addition of an amendment offered by Senator 
Robert Torricelli. This amendment requires television broadcast 
stations, and providers of cable or satellite television service, to 
sell qualified political candidates nonpreemptible advertising time at 
rates that do not exceed the lowest charge of the station during the 
preceding year for the same period and amount of time. In short, the 
amendment would require a cable operator to sell a political candidate 
a fixed spot advertisement (generally the most expensive class of 
advertising) at the system's lowest-priced preemptible rate (generally 
the least expensive class of advertising).
    The changes in campaign advertising rules proposed by the 
Torricelli amendment are not warranted. We support the approach taken 
by current law that requires cable operators, like television and radio 
broadcasters, to charge legally qualified candidates for public office 
the best rate available for advertising time. This guarantees that 
political candidates get the same rate as the most favored commercial 
advertisers during the pre-election period. Unlike existing law, the 
Torricelli amendment creates a new substantial subsidy for campaign 
advertising by giving political candidates better rates than are 
available to all other advertisers. There is simply no factual or 
policy basis for requiring this subsidy from cable systems.
    Originally, the Torricelli amendment did not include cable 
operators. However, prior to consideration of the amendment on the 
Senate floor, the language was changed to include cable. Neither the 
author of the amendment nor its supporters proffered any rationale for 
this last minute change. We are appreciative that this committee is 
taking a fresh look at this issue. We believe the evidence suggests 
that the expansion of the amendment to include cable is unnecessary and 
unmerited to achieve the goals stated by the authors.
    The proponents of the Torricelli amendment cited the rising cost of 
buying advertising time from broadcasters and broadcasters' use of the 
public airwaves as the basis for requiring broadcasters to provide 
below-market advertising rates to political candidates. However, by 
expanding the Torricelli amendment to cover cable, the authors failed 
to account for the significant differences in the actual cost of 
advertising on a broadcast station versus cable, the fact that cable 
does not use the public airwaves, and the abundance of electoral and 
public affairs political programming services provided by the cable 
industry.
    During debate on the Senate Floor, supporters of the Torricelli 
amendment argued that campaign finance reform legislation must do more 
than just limit the supply of political money, it must also decrease 
the demand for money. While many Senators argued that some broadcasters 
increase advertising rates during periods when airtime for political 
candidates is critical, the cost for advertising on cable was not cited 
as a rationale for amending current law. In fact, there is nothing in 
the Senate record to suggest that cable systems have charged excessive 
rates to political candidates. Cable systems, like radio broadcasters, 
have long been viewed as a lower cost alternative for campaign and 
other advertisers.
    Cable advertising is generally a more efficient and effective use 
of political ad dollars. At Cablevision, advertisements are telecast in 
a specific geographic area, targeting the message directly to the 
relevant constituents. Further, prices for purchasing time on our cable 
system are generally lower because the services reach a smaller 
geographic area. For instance, if a candidate is purchasing time on 
Cablevision's Brooklyn system, the price would be less than purchasing 
the advertising from a local broadcast station, which covers the entire 
tri-state area. Candidates also benefit by being able to customize the 
message of an advertisement to a smaller base of people. Using New York 
as an example, a candidate can develop one spot for the Bronx and then 
customize another spot for Brooklyn.
    The second key argument advanced by proponents of the Torricelli 
amendment is that broadcasters were given the public airwaves for free. 
Proponents cite this free grant of spectrum as a rationale for 
requiring broadcasters to offer below-market advertising rates to 
political candidates. However, cable operators do not use the public 
airwaves and have built their entire distribution systems with private 
risk capital and without any federal subsidies. Cable systems are 
franchised at the state and/or local level and typically pay 5% of 
gross revenues totaling approximately $2 billion in local franchising 
fees annually for use of public rights of way. In addition, cable 
operators are subject to a cable-specific public interest regime, 
including the provision of public, educational, government and leased 
access channels. In fact, the proceedings of local governmental bodies, 
such as city and county council meetings, are often made available to 
cable customers on government access channels, and cable operators, 
through local programming, often do regular series of public issues 
shows with elected officials.
    The cable industry is committed to providing the broadest variety 
and most complete coverage of politics on television. During Election 
2000, cable was the leading source of primary, convention and general 
election political news on the national, regional and local level. 
Public opinion surveys showed that between 1996 and 2000, cable 
replaced broadcast television as the prime source of political news for 
Americans.1 Viewers turned in force to national 24-hour 
cable news and public affairs networks as well as local and regional 
networks for their election coverage.
---------------------------------------------------------------------------
    \1\ Peter Johnson, We Vote With Our Eyes, and the Cable Guys Win, 
USA Today, Dec. 12, 2000.
---------------------------------------------------------------------------
    On the local level and regional level, a growing number of cable 
channels provide viewers with a unique perspective on politics that 
only a neighborhood operation can do. There are about 30 regional cable 
news networks around the country. There are also several state public 
affairs networks, similar to C-SPAN, that provide gavel-to-gavel 
coverage of state legislatures. These channels bring government into 
millions of homes and give Americans direct access to the decision-
making process.
    At Cablevision, we have a variety of programs aimed at increasing 
the visibility and accessibility of candidates. For instance, 
Cablevision offers News 12 Networks to all of our subscribers. There 
are five News 12 networks that provide local programming for the Bronx, 
Connecticut, Long Island, New Jersey and Westchester. During the last 
election News 12 coverage included more than 100 debates between 
candidates for local offices, live election coverage of local races, 
numerous profiles of local candidates as well as political analysis of 
New York specific issues. In addition, in our Westchester service area, 
Cablevision offers candidates the opportunity to tape a three minute 
spot which is then aired four times a week during the three week period 
prior to the election.
    News 12's award-winning Website also provides viewers access to the 
issues and candidate profiles at their convenience. News 12 not only 
covers the election season, the networks also cover local politics and 
policy issues on a regular basis. With public affairs shows like Long 
Island's ``At Issue'' and the Bronx's ``Two Reporters and the Person of 
the Week, `` News 12 presents a local perspective on politics. News 12 
Networks also produce town meetings where topics specific to its 
regions such as Lyme disease, affordable daycare, and racism are 
discussed in depth with local experts. Viewers participate by phone or 
by email.
    On the national level, perhaps the best example of cable's 
commitment to full coverage of the political process is C-SPAN. The C-
SPAN networks offer not only gavel-to-gavel House and Senate action, 
but also cover events at the White House, the cabinet and the judicial 
branch. C-SPAN is a private, non-profit company, created over 20 years 
ago by the cable industry to provide public access to the political 
process. C-SPAN receives no government funding and operations are paid 
for by the cable industry.
    During the 2000 election, C-SPAN carried live gavel-to-gavel 
coverage of the major party conventions, served as a pool for all news 
media at the Republican and Democratic conventions, provided live 
coverage of the Presidential debates and comprehensive coverage of the 
House and Senate campaigns.
    Other national cable networks providing complete political coverage 
include CNN, MSNBC, and Fox News Channel. These cable networks offered 
the most complete, varied and thorough coverage of the primary season, 
national conventions, Presidential debates and continuing election 
reports. In fact, during the 2000 election campaign cable TV provided 
375 hours of coverage of the national conventions as compared with 
broadcast coverage of 25 hours.2
---------------------------------------------------------------------------
    \2\ Source: CNN, C-SPAN, MSNBC, Fox News Channel and Martin P. 
Wattenberg, University of California, Irvine.
---------------------------------------------------------------------------
    To conclude, the cable industry does not believe that changes in 
the campaign advertising rules are necessary. We continue to support 
the approach taken by current law that requires cable operators and 
television and radio broadcasters to charge legally qualified 
candidates for public office the best rate available for advertising 
time. Cable provides a lower cost alternative for political advertising 
and cable offers the best and most complete election news coverage 
available on television. There is clearly no rationale for including 
cable under the Torricelli scheme.

    Mr. Upton. Thank you.
    Mr. Taylor.

                    STATEMENT OF PAUL TAYLOR

    Mr. Taylor. Thank you, Mr. Chairman. I'm Paul Taylor, 
Founder and Director of the Alliance for Better Campaigns and 
I'm here today to testify in support of lowest unit charge 
amendment that was added to the McCain-Feingold Bill by a vote 
of 69 to 31 and is expected to be part of the bill that 
Representatives Shays and Meehan will introduce on the floor of 
the House next month.
    The amendment will advance the cause of campaign finance 
reform by closing loopholes that have gutted a 30-year old law 
designed to ensure that during the height of the campaign 
season political candidates receive the same low advertising 
rates that broadcasters make available to their best high 
volume product advertisers.
    The main thrust of the bipartisan campaign finance bill 
that's before Congress is to reduce the supply of political 
money. This amendment would work hand in glove by reducing the 
demand for political money. It would do so by cutting the cost 
of the most essential part of any campaign, the act of 
communicating to voters. In order for democracy to thrive, 
candidates need to deliver and citizens need to receive 
information that enables voters to make informed choices on 
election day. But in the modern era, communication has become 
enormously expensive and in the year 2000, political 
advertisers spent an estimated $1 billion on broadcast 
television ads, five times more in inflation adjusted dollars 
than political advertisers had spent just 20 years earlier. One 
reason is that there are more political communicators than 
there used to be. In recent years, parties and issue groups 
have joined candidates as major campaign advertisers.
    But a second reason is that television stations have 
exploited this election-related spike in ad time demand by 
jacking up their ad rates and they've done so because the 
lowest unit charge law has been rendered ineffective by two 
loopholes this Amendment is designed to close.
    First, the Amendment would guarantee that when candidates 
receive low rates their ads would not be preempted if other 
advertisers are willing to pay more. That's not the case under 
current law. Now unlike most product advertisers, candidates 
need such assurances for they're engaged in the fast-paced 
thrust and parry of a political campaign. As matters now stand, 
they're forced to pay high premiums for such non-preemptable ad 
time.
    The second loophole is to require that stations pay the 
candidate rate to the lowest rate the station has sold a 
comparable spot in a comparable time during the previous 365 
days, rather than just during the previous 60 days as is now 
the case. Now there's been some misunderstanding on this point 
and to clear this up. This would not guarantee lowest unit rate 
over 365-day period. It would just create a 365-day look back 
period to establish the lowest unit rate and as in current law, 
those lowest unit rates would only apply to the 60 days prior 
to the election or the 45 days prior to a primary.
    Let me illustrate how the loopholes in the current law, 
affect the current law by walking you through the rates the 
candidates paid last fall to advertise on KYW-TV, a 
Philadelphia station owned and operated by CBS. There were a 
total of 1,922 candidate spots on KYW from September 4th 
through November 6th of last year. Of these, 1,913 or 99.5 
percent were purchased at the non-preemptable rate, and the 
cost was on average 55 percent above the preemptable rate for 
the same spots.
    Now I would suggest to you that a lowest unit charge law 
that delivers its cost reduction to just one half of 1 percent 
of its intended beneficiaries isn't working very well and KYW 
is by no means unique. Our group took an audit of 10 stations 
geographically dispersed around the country and we found that 
on average candidates spent 65 percent more for their 16,000 
political ads, candidate ads that ran on those 10 stations than 
the lowest candidate rate published on those stations' own rate 
cards.
    But the preemptability loophole is not the only reason that 
candidates paid so much. The other reason is that during the 
election season everybody's rates are going up, product and 
nonproduct advertiser, candidate and noncandidate preemptable 
and non-preemptable and my testimony lays out how that happens.
    What we have now really is a vicious cycle. We have more 
money than ever coming into the political system. That creates 
the opportunity for more gouging by stations and the gouging 
generates the need for more money from political candidates and 
the broadcast industry, it seems to me is at the heart of this 
problem and they are also the ones, of course, who have been 
given the airwaves free of charge in return for a commitment to 
serve the public interest.
    In my testimony I lay out several myths that have been 
propagated against this Amendment by the National Association 
of Broadcasters. The argument, for example, that it's an 
infringement in first and fifth amendment rights was addressed 
by a Congressional Research Memorandum that I hope has been 
distributed and I would ask that it be included in the record. 
It makes it clear that there is a 60-year history here of 
legislation, regulation and jurisprudence which supports this 
kind of public interest standard being imposed upon the 
broadcast industry.
    Another myth is that this won't reduce the cost of 
advertising. It may actually increase the number of ads. Look, 
to make this point very explicit, under current law, stations 
are obligated to provide reasonable access to Federal 
candidates, but they are not obligated to provide unlimited 
access. The FCC takes into account a variety of factors such as 
the number of political races in a given media market, the 
number of candidates seeking to advertise the needs and demands 
of a station's regular product advertisers to determine what 
reasonable access means on a case by case basis. That would 
continue to be the case under the new law.
    In summary, in order to make our democracy more robust, our 
politics less money driven and our campaign system more 
sensible, I urge you to support this Amendment. And thank you 
very much for the time.
    [The prepared statement of Paul Taylor follows:]

  Prepared Statement of Paul Taylor, Executive Director, Alliance for 
                            Better Campaigns

    My name is Paul Taylor. I am the founder and director of the 
Alliance for Better Campaigns, a public interest group that promotes 
political campaigns in which the best information gets to the most 
number of citizens in the most engaging ways.
    I am testifying here today in support of the so-called ``lowest 
unit charge'' amendment that was added to the McCain-Feingold campaign 
finance bill in the Senate on March 21, 2001, by a vote of 69-31. 
Representatives Shays and Meehan have indicated they plan to include 
this amendment in the bill they bring to the House floor next month.
    This amendment will advance the cause of campaign finance reform by 
closing loopholes that have gutted a 30-year-old law designed to ensure 
that during the height of the campaign season, political candidates 
receive the same low advertising rates that broadcasters make available 
to their best, high-volume product advertisers. The main thrust of the 
bipartisan campaign finance bills before Congress is to reduce the 
supply of political money; this amendment would work hand-in-glove by 
reducing the demand for political money.
    It would do so by cutting the cost of the most essential part of 
any campaign--the act of communicating to voters. In order for 
democracies to thrive, candidates need to deliver--and citizens to 
receive--information that enables voters to make informed choices on 
election day.
    But in the modern era, communication has become enormously 
expensive. In 2000, political advertisers spent an estimated $1 billion 
on broadcast television ads, five times more in inflation-adjusted 
dollars than political advertisers had spent just 20 years earlier.
    One reason is that there are more political communicators than 
there used to be--in recent years, parties and issue groups have joined 
candidates as major campaign advertisers. A second reason is that 
television stations have exploited this election-related spike in ad 
time demand by jacking up their ad rates. They have been able to do so 
because the 30-year-old lowest unit charge law has been rendered 
ineffective by two loopholes that this amendment is designed to close.
    First, the amendment would guarantee that when candidates receive 
low rates, their ads will not be preempted if other advertisers are 
willing to pay more. That is not the case under current law. Unlike 
most product advertisers, candidates need such assurances, for they are 
engaged in the fast-changing thrust and parry of a political campaign. 
As matters now stand, they are forced to pay high premiums for such 
``non-preemptible'' ad time.
    The second loophole the amendment would close is to require that 
stations peg the candidate rate to the lowest rate the station has sold 
a comparable spot in a comparable time slot during the previous 365 
days--rather than to the lowest rate in the 60 day period immediately 
preceding an election, as is now the case. This new 365 day ``look 
back'' provision will help insulate candidates from the profiteering 
that drives up everyone's ad rates during the pre-election period--
political and non-political advertisers alike.
    Let me illustrate the loopholes in the current law by walking you 
through the rates that candidates paid last fall to advertise on KYW-
TV, a Philadelphia station owned and operated by CBS. It was one of 10 
local stations across the country where Alliance researchers conduced a 
detailed examination of the political advertising sales records and 
compared them to the lowest unit charge prices quoted on the stations' 
own rate cards. (I request that our full report, ``Gouging Democracy: 
How the Television Industry Profiteered on Campaign 2000,'' be made a 
part of the subcommittee's record.)
    Candidates purchased a total of 1,922 spots on KYW-TV from 
September 4, 2000 through November 6, 2000. Of these, 1,913--or 99.5 
percent--were purchased at the non-preemptible rate, at a cost that on 
average was 55 percent above the preemptible rate for the same spots. 
Now, I would suggest to you that a ``lowest unit charge'' law that 
delivers its cost reductions to just one half of one percent of its 
intended beneficiaries isn't working very well. And KYW-TV was by no 
means unique; it actually treated candidates slightly better than the 
average of the 10 stations we studied. Within that universe, candidates 
on average spent 65 percent more for their 16,000 ads than the lowest 
candidate rate published on the stations' own rate cards.
    But the preemptibility loophole was not the only reason candidates 
paid so much. The other factor was that during the election season, all 
rates on the stations' rate cards were rising--preemptible and non-
preemptible rates alike. So for example, on September 6, a preemptible 
30-second spot on KYW-TV's 11 o'clock news program cost $1,100 and a 
non-preemptible spot cost $1,800. By November 6, the preemptible spot 
cost $1,701, and the non-preemptible spot cost $2,393. The biggest 
reason for these increases was the campaign itself--the spike in demand 
for political air time allowed advertisers to raise their rates for 
both political and non-political advertisers. And nothing in current 
law held them back.
    This kind of demand pressure was never anticipated by lawmakers 
when they passed the LUC in 1971. In the 1972 campaign, just $25 
million was spent on political ads on television. In today's dollars, 
that's the equivalent of $100 million, or about one-tenth of what 
political advertisers spent in 2000. So what we have now is a vicious 
cycle--more political money creates the chance for more gouging, and 
more gouging generates the need for more political money. At the heart 
of this cycle is broadcast television--where candidates spend more than 
80 cents of each advertising dollar.
    Not only are broadcasters profiteering on political campaigns, they 
are doing so with airwaves they have been granted free of charge, in 
return for a commitment to serve the public interest. For thirty years, 
Congress has decreed that one way that broadcasters and cable system 
operators (and, since 1992, direct satellite providers) must serve the 
public interest is by reducing the cost of political communication.
    Any system of price control tends over time to produce evasions and 
loopholes. If this amendment becomes law, it is safe to assume that the 
broadcast industry will look for new ways around it. For that reason, 
the Alliance believes that a better and more permanent solution to the 
problem of the high cost of modern political communication is a system 
of free air time vouchers, distributed to qualifying candidates and 
parties from a national political broadcast time bank funded by a small 
spectrum usage fee. That is a fight for another day. For now, the least 
Congress should do to address this problem is to fill the loopholes in 
the law it passed 30 years ago.
    Finally, let me briefly address three myths about this amendment 
that National Association of Broadcasters and its state affiliates have 
been spreading.
    Myth 1: The amendment is unconstitutional, both as an infringement 
of broadcasters' First Amendment rights and as a ``taking'' of property 
without just compensation, in violation of the Fifth Amendment.
    Reality: As a memorandum from the Congressional Research Service 
dated May 24, 2001 makes clear, there is a long line of Supreme Court 
decisions, stretching back more than half a century, that (a) uphold 
the government's interest in assuring that the electromagnetic spectrum 
is used in ways that promote the public interest; (b) give precedence 
to the First Amendment principles served when public forums are 
provided that enhance the ability of candidates to present, and the 
public to receive, information necessary for the effective operation of 
the democratic process; and (c) assert that broadcasters do not have a 
property right when they are granted a license to operate the public 
airwaves. (I request that the CRS memorandum be made a part of the 
subcommittee's hearing record).
    Myth 2: Lowering the cost of candidate ads will simply mean that 
candidates will advertise more; it will not drive down the cost of 
campaigns.
    Reality: Under law, stations are obligated to provide ``reasonable 
access'' to federal candidates for their campaign ads, but they are not 
obligated to provide unlimited access. The Federal Communications 
Commission takes into account a variety of factors--such as number of 
political races in a given media market, the number of candidates 
seeking to advertise, and the needs and demands of a station's regular 
product advertisers--to determine what ``reasonable access'' means on a 
case-by-case basis. The courts have approved of this approach. If this 
amendment passes, the FCC would continue to apply these criteria, and 
in doing so would not allow for a dramatic increase in the volume of 
candidate advertising if the rule of reason does not support such an 
increase.
    Myth 3: Broadcasters already give ample amounts of ``free time'' to 
candidates in the form of coverage of debates, conventions and the 
campaign itself.
    Reality: In the past several decades, both the national broadcast 
networks and local television stations have sharply cut back their 
commitment to substantive campaign coverage, ``forfeiting the field,'' 
as veteran ABC reporter Sam Donaldson said early last year, to cable. 
Of 22 televised presidential debates held during the primaries last 
year, just two were aired on a national broadcast network, neither in 
prime time. Network coverage of the two national party conventions was 
down nearly 80 percent in 2000 from what it had been in 1980. Last 
fall, two of the major national networks for the first time chose not 
to carry the general election presidential debates; they aired sports 
and entertainment programs instead. And the industry ignored a modest 
proposal put forward by a blue ribbon White House advisory panel, co-
chaired by CBS President Leslie Moonves, that all stations voluntarily 
air a minimum of five minutes a night of candidate discourse in the 
month preceding the election. A nationwide survey by the Annenberg 
School for Communication at the University of Southern California found 
that the typical local station aired just 45 seconds a night of 
candidate discourse in the month before the November 7 election. (I 
would request that the USC study be made a part of the subcommittee's 
hearing record).
    In order to make our democracy more robust, our politics less money 
driven and our campaign finance system more sensible, I urge Congress 
to support this amendment to close the loopholes in the lowest unit 
charge law. Thank you.

    Mr. Upton. Thank you.
    Mr. Morris, if you wouldn't mind moving that mike over.

                  STATEMENT OF DWIGHT L. MORRIS

    Mr. Morris. Thank you, Mr. Chairman. I would like to begin 
by saying to you and other members of the committee that it's 
an honor to be here this morning. I am here not as an advocate 
for either side of this debate. I'm here as someone who has 
studied how money is actually spent in campaigns for the better 
part of 12 years, first as an investigative reporter and editor 
for the Los Angeles Times and now as a businessman who services 
the news industry and studies these issues for them.
    We have built a data base that contains roughly 5 million 
records, going back to 1990 of every dollar spent by every 
candidate to the House and Senate contests, who ultimately 
contested the general election. We have not had a chance to put 
into that data base all of the people that lost in primary. We 
simply haven't had the resources to do it. But from the time 
they declare to the time the election season is over, we track 
every dollar spent by every candidate for Federal office.
    What we have discovered over the last 12 years is that 
there is a huge myth and much of the discussion here this 
morning is predicated on the fallacious assumption that every 
single candidate must raise money in order to buy massive 
amounts of television time. That is simply not the case and I 
go through in some detail in my formal testimony why that's 
true, but to summarize, many members represent urban districts 
where buying a 30-second spot reaches not only your 
constituents, but maybe 15 or 16 other congressional districts. 
It makes no economic nor political sense to advertise in those 
areas and they don't. It's been zero dollars and zero cents on 
advertising and they communicate with voters in persuasion 
mail.
    Geographic and other types of gerrymandering. This is not 
something that you're unfamiliar with as someone pointed out a 
few minutes ago. Those lines are currently being drawn now. As 
those lines are drawn the fight in those State legislatures is 
over how to create as many safe districts for the Republicans 
and Democrats as possible and so that in each and every 
election you have roughly half of the Members of the House of 
Representatives who face opponents who spend no money and they 
spend no money because the parties give them no money. They 
have no prayer of victory and they can't raise the money, so 
that in the last election or this past election cycle, half of 
the incumbents seeking re-election to the House of 
Representatives faced people who spent zero or less than 
$25,000. That did not mean that the people in those districts 
spent very little money as some of the charts in my testimony 
reveal.
    And finally, campaign funds is a misnomer. These are really 
political funds. And as some of the members of this committee 
are well aware, money is spent on all kinds of things, some of 
which includes television advertising, but not nearly all of 
it. And that's true of Senate contests as well.
    It will shock a lot of people to know to that while 11 
Senate seats, I'm sorry, 12 Senate seats were decided by 10 
percentage points or less, there were 11 Senate seats that were 
decided by 30 percentage points or more. And in those Senate 
seats, there was not that great deal of advertising and I list 
some examples in the testimony, one of which is Senator Ted 
Kennedy from Massachusetts who faced an opponent who spent 
$193,000 and Senator Kennedy spent nearly $6 million. Out of 
that $6 million, $211,000 went to developing television 
advertising. There were none aired as far as we can tell. So 
that $6 million and zero spent to air ads.
    Senator Lott, $4.3 million, but he gave $730,000 of his 
money away and many Members of the House and some of the 
members on this panel do the same thing and there's nothing 
wrong with it and it's perfectly legal, not suggesting anything 
untoward, but the money goes to those candidates who need it 
and so the money comes into your committees and flows out to 
other Members of the House and Senate.
    And again, I want to stress that none of this is meant in 
any way derogatory as to how the money is spent. It's simply 
meant to point out that the notion that all of this money is 
raised because you must buy more TV time just doesn't hold 
water.
    I've listed in the testimony the dollars spent on 
broadcasts by the candidates and the percentage of that total 
and you'll notice that in Senator Kennedy's case it's 3.6 
percent and in Senator Lott's case it's about 15 percent. In 
Senator Akaka's case it's a little less than 3 percent. And in 
the House, while I have listed a number of examples, 6 or 7 of 
which are members of this committee, that show that vast sums 
of money were spent and zero dollars was put into television, 
that only scratches the surface. I have a book here full of 
examples from the 1998 and we're just beginning the 2,000 cycle 
now, but it strikes me that it's improbable that it has changed 
any in the 2000 cycle. Thank you.
    [The prepared statement of Dwight L. Morris follows:]
Prepared Statement of Dwight L. Morris, President, Campaign Study Group
    I would like to begin by saying that it is an honor to be here this 
morning. As someone who toiled in the world of daily journalism for 
more than 18 years--much of it spent as an investigative reporter and 
editor--this is a moment I could never have imagined. I hope that what 
I have to say will prove useful to this committee as it tackles a 
difficult and often misunderstood subject.
    I would also like to say that I appear as a journalist, political 
scientist and businessman, not as an advocate for either side in the 
campaign finance debate. When my partner and I left daily journalism 
more than five years ago to form the Campaign Study Group, we did not 
cease to be journalists. Neither our company nor we as individuals take 
a position on campaign finance reform. We continue to believe that our 
role is to collect and analyze information that will help inform the 
public debate.
    That approach has helped add most of the nation's largest news 
organizations to our client list, either as subscribers to our Web site 
or as consumers of our custom research. That approach has also 
attracted national party committees from both sides of the aisle, as 
well as clients from both sides of the campaign finance reform debate.
    While a full explanation of how we track campaign spending is 
contained in Appendix 1, you should know that we do not pick and choose 
the races we track in order to make a point. Since 1990, when we both 
worked at the Washington bureau of the Los Angeles Times, my partner 
and I have tracked every expenditure made by House and Senate 
candidates who ultimately contested the general election (we have not 
had the resources to track all those who lost in the primaries). That 
process has involved collecting more than 7,000 documents filed with 
the Federal Election Commission each election cycle, reading each of 
the roughly 500,000 discrete expenditures reported by the candidates 
from the day they began their quests for office, and coding each of 
those expenditures into 1 of 126 categories. That information now 
resides in a database that contains nearly 5 million records.
    What emerges from that database is a picture of campaign spending 
that runs contrary to conventional wisdom for a host of reasons. Put 
simply, while the cost associated with television and radio advertising 
is part of the equation, it is only one among many reasons that 
campaigns cost what they do.

 Many members represent highly urban districts in which an 
        investment in television and radio advertising makes neither 
        economic nor political sense. For that reason, large numbers of 
        candidates spend nothing on television and radio advertising, 
        preferring to invest in what we refer to as persuasion mail.
 As a result of both the geographic gerrymandering that 
        inevitably accompanies the decennial redistricting process and 
        the power of incumbency, most House contests and a surprising 
        number of Senate races are noncompetitive. That creates a 
        disincentive to large investments in advertising and an 
        incentive to spend money on broader political goals.
 The phrase ``campaign funds'' is largely a misnomer that is 
        better described by the phrase ``political funds,'' since a 
        majority of members use their treasuries to pay for a host of 
        activities that go far beyond their own immediate reelection.

                        SPENDING IN SENATE RACES

    If one asked any 10 strangers on the street--or any ten 
journalists, for that matter--why Senate campaigns cost so much the 
answer would almost invariably be ``television advertising.'' Certainly 
those who recently watched Sen. Jon Corzine (D-N.J.) spend $40.1 
million on commercials (63% of his campaign's total spending) that 
helped bring him victory in an open-seat contest could not be blamed 
for thinking that the cost of television is the main culprit in driving 
the cost of campaigns higher. Nor could observers of the open seat 
contest between Sen. Hillary Rodham Clinton (D-N.Y.) and former Rep. 
Rick Lazio (R-N.Y.)--who together spent roughly $37.5 million to 
produce and air their commercials--be faulted for drawing the same 
conclusion.
    However, while the media focuses on these races for obvious reasons 
and tends to write about them as though they represent the political 
norm, that could not be farther from the truth. The fact is that while 
many Senate campaigns are competitive, just as many are not. While 
twelve Senate contests were decided by 10 percentage points or less, in 
seventeen contests the margin of victory exceeded 20 percentage points, 
including eleven in which the margin of victory exceeded 30 percentage 
points.
    Although thirteen incumbent Senators seeking reelection in 2000 
spent 50 percent or more of their treasuries on television and radio 
advertising during the 2000 campaign, nine devoted one-third or less of 
their total outlays to such advertising. While these nine Senators 
spent a combined $5.4 million on advertising, their total campaign 
spending topped $32 million.
    For example, during the recent Senate debate on campaign finance 
reform, no one mentioned that while Sen. Ted Kennedy (D-Mass.) spent 
$5.9 million on his successful reelection bid, just $211,928 of that 
sizeable total (3.5%) was devoted to the creation and airing of 
television and radio commercials. Overhead costs for the permanent 
campaign Sen. Kennedy runs 365 days a year, every year, totaled $2.2 
million. His campaign spent more than three times as much on payroll as 
it spent on advertising. The campaign's telephone bills totaled 
$165,884. The campaign spent $90,468 to lease and maintain an 
automobile--nearly half as much as his opponent spent on his entire 
campaign.
    Sen. Trent Lott (R-Miss.), who I think it is safe to say is no 
friend of campaign finance reform, spent $4.3 million on his 2000 
reelection bid, but just 14 percent of that total was invested in 
television and radio advertising. Sen. Lott was challenged by Democrat 
Troy Brown, who spent only $53,931 on the campaign. That left Sen. Lott 
free to donate $730,600 of his campaign treasury to Republican Party 
committees and candidates. Sen. Lott spent more on constituent gifts 
and entertainment--$68,340--than Mr. Brown spent on his entire 
campaign. Sen. Lott's reimbursements to corporations for the use of 
their private jets to ferry him to and from fund-raising and other 
political events totaled $166,398, or more than twice his opponent's 
total campaign outlays.
    Other Senators appear to spend money on television and radio 
advertising simply because they can, not because they need to. For 
example, with then-Governor George W. Bush seeking the Presidency, 
Texas Democrats did not bother to field a competitive challenge to 
Republican Sen. Kay Bailey Hutchison. Nevertheless, while Gene Kelly 
spent just $4,602 trying to unseat her, Sen. Hutchison countered with a 
$4.1 million effort, including a $2.5 million advertising campaign (60% 
of her total budget).
    None of this is meant to single out Sen. Kennedy, Sen. Lott, or 
Sen. Hutchison. Nor am I suggesting that they did anything wrong in 
opting to spend money as they did. It is simply important to note that 
huge sums of campaign dollars are spent on a host of things, including, 
but not limited to, advertising. It is also important to note that none 
of this is new, but rather that it has followed roughly the same 
pattern for the past decade.
    In 1998 twenty-nine Senate incumbents poured $73 million into 
television and radio advertising. Senate challengers pumped nearly $51 
million into their own broadcast advertising campaigns, and with open 
seat candidates tossing in another $15 million, total broadcast 
advertising outlays by Senate candidates topped $138 million--a $46 
million increase over 1992.
    Yet, as staggering as those numbers are, the typical Senate 
candidate's budget broke down very much like it did in 1992. The median 
percentage invested in television and radio commercials was 41 
percent--just as it was in 1992. Put another way, while the amount 
spent by Senate candidates on television and radio advertising has 
skyrocketed since 1990, the percentage of total spending represented by 
those ads has remained remarkably constant.
    Below are all 2000 Senate candidates with their total spending and 
their television and radio advertising outlays.

----------------------------------------------------------------------------------------------------------------
                                                                            Total         Broadcast    Broadcast
                      Candidate                            Status         Spending       Advertising    Percent
----------------------------------------------------------------------------------------------------------------
Jon Kyl (R-Ariz.)....................................       Incumbent      $2,720,966      $1,227,176      45.10
Dianne Feinstein (D-Calif.)..........................       Incumbent     $11,604,749      $5,126,440      44.18
Joseph Lieberman (D-Conn.)...........................       Incumbent      $4,398,341        $419,635       9.54
William Roth (R-Del.)................................       Incumbent      $4,422,348      $2,177,819      49.25
Zell Miller (D-Ga.)..................................       Incumbent      $2,517,702      $1,910,144      75.87
Daniel K. Akaka (D-Hawaii)...........................       Incumbent        $628,976         $15,521       2.47
Richard G. Lugar (R-Ind.)............................       Incumbent      $4,889,576      $2,697,589      55.17
Spencer Abraham (R-Mich.)............................       Incumbent     $14,415,920      $7,961,319      55.23
Edward M. Kennedy (D-Mass.)..........................       Incumbent      $5,881,765        $211,928       3.60
Paul S. Sarbanes (D-Md.).............................       Incumbent      $1,891,258      $1,002,696      53.02
Olympia J. Snowe (R-Maine)...........................       Incumbent      $2,318,741        $810,149      34.94
Rod Grams (R-Minn.)..................................       Incumbent      $7,523,708      $1,998,051      26.56
John Ashcroft (R-Mo.)................................       Incumbent      $9,742,579      $5,568,434      57.16
Trent Lott (R-Miss.).................................       Incumbent      $4,260,678        $631,080      14.81
Conrad Burns (R-Mont.)...............................       Incumbent      $4,989,872      $2,438,074      48.86
Kent Conrad (D-N.D.).................................       Incumbent      $2,563,713      $1,399,739      54.60
Jeff Bingaman (D-N.M.)...............................       Incumbent      $2,929,932        $979,008      33.41
Mike DeWine (R-Ohio).................................       Incumbent      $6,527,687      $3,247,604      49.75
Richard J. Santorum (R-Pa.)..........................       Incumbent     $12,826,761      $6,290,145      49.04
Lincoln Chafee (R-R.I.)..............................       Incumbent      $2,226,935      $1,277,364      57.36
Bill Frist (R-Tenn.).................................       Incumbent      $6,930,932      $2,607,737      37.62
Kay Bailey Hutchison (R-Texas).......................       Incumbent      $4,091,429      $2,455,278      60.01
Orrin hatch (R-Utah).................................       Incumbent      $3,462,034        $517,210      14.94
Charles S. Robb (D-Va.)..............................       Incumbent      $6,778,099      $4,539,343      66.97
James M. Jeffords (R-Vt.)............................       Incumbent      $2,040,290        $498,653      24.44
Slade Gorton (R-Wash.)...............................       Incumbent      $6,945,101      $3,549,466      51.11
Herb Kohl (D-Wis.)...................................       Incumbent      $5,535,630      $3,385,991      61.17
Robert C. Byrd (D-W.Va.).............................       Incumbent      $1,239,838        $629,004      50.73
Craig Thomas (R-Wyo.)................................       Incumbent        $973,058        $191,676      19.70
William Toel (I-Ariz.)...............................      Challenger         $21,493          $6,054      28.17
Tom Campbell (R-Calif.)..............................      Challenger      $4,527,167      $1,809,135      39.96
Philip Giordano (R-Conn.)............................      Challenger        $816,624        $272,005      33.31
Thomas R. Carper (D-Del.)............................      Challenger      $2,565,838      $1,539,226      59.99
Mack Mattingly (R-Ga.)...............................      Challenger      $1,019,524        $662,653      65.00
John S. Carroll (R-Hawaii)...........................      Challenger         $22,407          $4,000      17.85
David L. Johnson (D-Ind.)............................      Challenger      $1,173,299        $736,649      62.78
Debbie Stabenow (D-Mich.)............................      Challenger      $8,013,758      $4,478,402      55.88
Jack E. Robinson (R-Mass.)...........................      Challenger        $193,199             $--       0.00
Paul Rappaport (R-Md.)...............................      Challenger        $148,594         $49,175      33.09
Mark Lawrence (D-Maine)..............................      Challenger        $743,174        $309,598      41.66
Mark Dayton (D-Minn.)................................      Challenger     $11,957,115      $7,722,091      64.58
Mel and Jean Carnahan (D-Mo.)........................      Challenger      $7,702,160      $3,527,276      45.80
Troy Brown (D-Miss.).................................      Challenger         $54,022          $6,243      11.56
Brian Schweitzer (D-Mont.)...........................      Challenger      $2,012,419      $1,201,360      59.70
Duane Sand (R-N.D.)..................................      Challenger        $369,654        $124,068      33.56
Bill Redmond (R-N.M.)................................      Challenger        $655,594         $29,513       4.50
Ted Celeste (D-Ohio).................................      Challenger        $515,286         $31,714       6.15
Ron Klink (D-Pa.)....................................      Challenger      $3,641,097      $2,150,091      59.05
Bob Weygand (D-R.I.).................................      Challenger      $2,291,469      $1,210,271      52.82
Jeff Clark (D-Tenn.).................................      Challenger        $173,217         $12,082       6.98
Gene Kelly (D-Texas).................................      Challenger          $4,654             $--       0.00
Scott N. Howell (D-Utah).............................      Challenger        $296,842        $166,745      56.17
George Allen (R-Va.).................................      Challenger      $9,894,904      $5,650,709      57.11
Ed Flanagan (D-Vt.)..................................      Challenger      $1,094,078        $426,996      39.03
Maria Cantwell (D-Wash.).............................      Challenger     $11,538,133      $7,007,000      60.73
John Gillespie (R-Wis.)..............................      Challenger        $603,858         $83,205      13.78
David T. Gallaher (R-W.Va.)..........................      Challenger             $--             $--       0.00
Mel Logan (D-Wyo.)...................................      Challenger          $4,188          $3,060      73.07
Bill Nelson (D-Fla.).................................       Open-Seat      $6,674,656      $5,043,704      75.57
Bill McCollum (R-Fla.)...............................       Open-Seat      $8,798,354      $4,687,966      53.28
Hillary Rodham Clinton (D-N.Y.)......................       Open-Seat     $29,595,761     $16,530,095      55.85
Rick Lazio (R-N.Y.)..................................       Open-Seat     $43,038,453     $20,935,067      48.64
Ben Nelson (D-Neb.)..................................       Open-Seat      $2,988,285      $1,607,266      53.79
Don Stenberg (R-Neb.)................................       Open-Seat      $1,828,965      $1,024,468      56.01
Jon Corzine (D-N.J.).................................       Open-Seat     $63,202,492     $39,999,560      63.29
Bob Franks (R-N.J.)..................................       Open-Seat      $6,595,862      $2,913,225      44.17
John Ensign (R-Nev.).................................       Open-Seat      $4,988,054      $2,665,726      53.44
Ed Bernstein (D-Nev.)................................       Open-Seat      $2,446,048      $1,570,727      64.21
----------------------------------------------------------------------------------------------------------------

                       SPENDING IN HOUSE CONTESTS

    In the House, 197 incumbents--roughly half of those seeking 
reelection--either ran unopposed or faced challengers who spent less 
than $25,000 in 2000. Eighty-three incumbents won reelection with 80 
percent of the vote or more--one out of every five incumbents seeking 
reelection--and those 83 incumbents raised more than $49 million and 
spent nearly $38 million of that total. In these races, television 
advertising was certainly not the issue.
    With the availability of large sums of campaign money, most 
incumbents spend at least some money to entertain or thank 
constituents. Whether it is providing a meal at the House restaurant 
for visitors to Washington, purchasing wedding gifts when invitations 
arrive, mailing thousands of holiday cards, sending flowers to 
commemorate the death of a constituent, or some other action, the money 
almost always comes from the campaign treasury.
    Others use their campaign funds to lay the groundwork for future 
bids for other offices. For example, former Rep. Joseph P. Kennedy II 
(D-Mass.) routinely spent between $750,000 and $1 million on his 
reelection bids even though 80 percent of the voters in his district 
were registered Democrats and he never received less than 79 percent of 
the vote in any reelection contest. With the exception of his last 
House race in 1996, when he was about to declare his candidacy for 
Governor, Rep. Kennedy never spent a cent on television or radio 
advertising.
    When members find themselves under ethical or legal scrutiny, it is 
common to pay for the associated legal bills with their campaign 
treasury. Former Rep. Daniel Rostenkowski (D-Ill.) spent $1.3 million 
of campaign money to pay for legal expenses that he and his staff 
incurred during the investigation that contributed to his defeat and 
ultimate criminal conviction.
    Most members of Congress give away at least some of their campaign 
funds, and many donate huge proportions of their treasuries. During the 
2000 election cycle, more than $34 million given by individual donors 
and Political Action Committees (PACs) to support federal candidates 
across the country ended up benefiting party committees and other 
federal candidates for whom the money was never intended. Democratic 
candidates donated $16.5 million to other candidates and party 
committees. Republican candidates gave away $17.8 million.

 Republican Jose A. Suero spent just $410 on his way to 
        collecting 9 percent of the vote against Rep. Charles B. Rangel 
        (D-N.Y.). Rep. Rangel spent slightly more than $2 million 
        during his campaign to secure a 15th term. He simply gave away 
        $620,000, or 31% of that total, to federal committees and 
        candidates, including $350,000 to the Democratic Congressional 
        Campaign Committee (DCCC), $51,500 to the New York state 
        Democratic Party, and $30,000 to the Congressional Black 
        Caucus. Ninety-six Democratic House and Senate candidates 
        received donations ranging from $500 to $4,000 from Rep. 
        Rangel's campaign committee.
 First elected to represent Connecticut's 3rd District in 1990 
        and never reelected with less than 66 percent of the vote, 
        Democrat Rosa DeLauro spent $646,322 to defeat Republican June 
        Gold, who managed to spend $73,864. However $364,250 of 
        DeLauro's outlays, representing 56 percent of her total 
        spending, was donated to federal committees and candidates. In 
        addition to giving $151,000 to the DCCC and $26,000 to the 
        Connecticut Democratic Party, her campaign committee wrote 
        checks to 112 candidates and 7 other party committees.
 Rep. Robert T. Matsui (D-Calif.) has not faced a serious 
        challenge since he was first elected in 1978. Nevertheless he 
        spent $748,737 on his latest reelection bid. Little was needed 
        for direct appeals to voters, so he donated nearly half of it--
        $347,190--to fellow Democratic candidates, party committees and 
        political action committees, including $304,000 to the DCCC.
 Turning to the Republican side of the aisle, Rep. Chris Cox 
        spent $1,164,850 during the 2000 campaign, $782,700 of which 
        was donated to Republican candidates and party committees. In 
        addition to donating $701,000 to the National Republican 
        Congressional Committee (NRCC), he tapped his campaign treasury 
        to support 52 Republican candidates.
 House Majority Leader Richard K. Armey (R-Texas) had little to 
        worry about. Consistently reelected by huge margins and facing 
        a Democratic opponent who failed to raise or spend as much as 
        $5,000, he donated slightly more than half of the $1,125,103 
        his campaign spent. All but $3,500 of the $603,500 Rep. Armey 
        donated through his campaign committee went to the NRCC.
 Rep. Jerry Lewis (R-Calif.) gave away $329,849, which 
        accounted for 42% of the $787,333 his reelection committee 
        spent. In addition to the $240,000 it donated to the NRCC, his 
        campaign committee cut checks ranging from $1,000 to $3,000 to 
        61 Republican House and Senate candidates.
    Again, these examples are illustrative of a broad pattern of 
spending followed by many House members who routinely face little or no 
opposition.
    Harkening back to our first study in 1990, the average House 
incumbent spent just 20 percent of his or her campaign treasury on 
television and radio advertising. The typical challenger devoted 27 
cents out of every dollar to television and radio commercials, while 
the average open-seat candidate spent 36 cents out of every dollar on 
such ads. These figures include not only the cost of airtime but all 
consulting and production costs associated with the commercials. Both 
incumbents and challengers spent significantly more on office 
overhead--rent, staff costs, telephones, leased automobiles, travel, 
etc.--than they spent on their commercials.
    Driven largely by redistricting and a wave of anti-incumbent 
sentiment generated in part by news reports about members' use of their 
accounts at the House bank, the typical House incumbent spent 25 cents 
out of every dollar on television and radio advertising in 1992. The 
comparable figures for challengers and open-seat contestants were 33 
percent and 30 percent, respectively. Incumbent spending on overhead 
continued to outpace spending on radio and television advertising. 
Among challengers, advertising outlays outpaced overhead expenses by a 
total of only about $6 million.
    Although the total dollars invested in campaigns has exploded since 
1992, the percentage of that total spending accounted for by television 
and radio advertising has remained essentially constant. While the 
media focuses almost exclusively on the 40 to 50 hot races across the 
country each cycle, the examples below are just a few of the examples 
of the incumbents who spent large sums of money during the 1998 
election cycle but invested relatively little or nothing in television 
and radio advertising.

----------------------------------------------------------------------------------------------------------------
                                                                            Total         Broadcast    Broadcast
                      Candidate                            Status         Spending       Advertising    Percent
----------------------------------------------------------------------------------------------------------------
Charles W. ``Chip'' Pickering (R-Miss.)..............       Incumbent     $509,629.00      $76,421.00      15.00
George Radanovich (R-Calif.).........................       Incumbent     $441,457.00             $--       0.00
Cliff Stearns (R-Fla.)...............................       Incumbent     $189,424.00             $--       0.00
Nathan Deal (R-Ga.)..................................       Incumbent     $223,972.00             $--       0.00
Christopher Cox (R-Calif.)...........................       Incumbent   $1,416,514.00             $--       0.00
J. Greg Ganske (R-Iowa)..............................       Incumbent     $529,820.00       $2,000.00       0.37
Henry A. Waxman (D-Calif.)...........................       Incumbent     $275,209.00             $--       0.00
Diana Louise Degette (D-Colo.).......................       Incumbent     $700,504.00     $190,252.00      27.16
John D. Dingell (D-Mich.)............................       Incumbent     $845,465.00             $--       0.00
Chris John (D-La.)...................................       Incumbent     $197,804.00         $100.00       0.05
W. J. ``Billy'' Tauzin (R-La.).......................       Incumbent     $765,905.00       $2,887.00       0.37
James E. Rogan (R-Calif.)............................       Incumbent   $1,247,527.00             $--       0.00
Howard L. Berman (D-Calif.)..........................       Incumbent     $707,302.00     $100,832.00      14.26
Nancy Pelosi (D-Calif.)..............................       Incumbent     $514,991.00             $--       0.00
David J. Weldon (R-Fla.).............................       Incumbent     $505,886.00      $60,407.00      11.94
Henry J. Hyde (R-Ill.)...............................       Incumbent     $513,992.00       $17,418.0      03.39
John E. Porter (R-Ill.)..............................       Incumbent     $488,779.00             $--       0.00
Nita M. Lowey (D-N.Y.)...............................       Incumbent     $930,323.00             $--       0.00
Rod R. Blagojevich (D-Ill.)..........................       Incumbent     $323,990.00       $30,343.0      09.37
Pete Stark (D-Calif.)................................       Incumbent     $313,214.00             $--       0.00
----------------------------------------------------------------------------------------------------------------

                               APPENDIX I

       CAMPAIGN STUDY GROUP CAMPAIGN SPENDING ANALYSIS GUIDELINES

    Copies of each campaign's financial reports were obtained from the 
FEC and entered into a database under 1 of 126 categories.
    In calculating expenditure totals, transfers between authorized 
committees, payments of debts from prior election cycles, contribution 
refunds, and loan repayments have been excluded in order to avoid 
double counting expenditures. All debts to vendors reported at the end 
of each election cycle have been included in that cycle's totals.
    The expenditures were subsequently assigned to one of eight major 
spending categories. Five categories were broken further into specific 
areas of spending. The following is a description of the categories and 
the types of items included in each.

Overhead
    Office furniture/supplies: Furniture and basic office supplies, 
telephone answering services, messenger and overnight delivery 
services, monthly cable television payments, newspaper and magazine 
subscriptions, clipping services, payments for file storage, small 
postage and photocopying charges, office moving expenses, and 
improvements or upkeep of the office (including office cleaning, 
garbage pickup, repairs, plumbers, and locksmiths).
    Rent/utilities: Rent and utility payments for campaign offices. 
Purchases and leases used as mobile offices, as well as their 
maintenance costs, are also included.
    Salaries and payroll taxes: Salary payments, payroll taxes and 
employee benefits including health insurance. In addition to payments 
specifically described as salary and payroll taxes, this category 
includes regular payments to those people who performed routine office 
tasks, which were frequently misrepresented in campaign finance reports 
as ``consulting.'' Whenever a housing allowance was part of a campaign 
employee's compensation package, it was considered to be salary.
    Taxes: Income taxes paid on the campaign's investments.
    Bank/investment fees: Interest payments on outstanding loans, 
annual credit card fees, check charges, investment fees, and investment 
losses.
    Lawyers/accountants: Fees paid for their services as well as any 
other expenses incurred by the campaign's lawyers and accountants. Five 
Senate and thirty-one House campaigns paid fines related to violations 
of federal or state election laws, and those fines have been included 
as part of legal fees.
    Telephone: Purchases of telephone equipment (including cellular 
telephones and beepers), monthly payments for local and long-distance 
service, installation fees, repairs, and reimbursements to staff for 
telephone expenses.
    Campaign automobile: All payments for the purchase or lease of a 
campaign vehicle (except mobile offices), maintenance, insurance, 
registration, licensing, and gasoline.
    Computers/office equipment: All payments related to the purchase, 
lease, and repair of office equipment, such as computer equipment and 
software, typewriters, photocopiers, FAX machines, telephone answering 
machines, televisions, radios, and VCRs.
    Travel: All general travel expenses, such as air fare and hotels, 
rental cars, taxies, daily parking, and entries such as ``food for 
travel.'' Expenses for the national party conventions, including the 
costs of receptions and other entertainment, are also included.
    Food/meetings: Meeting expenses (for example, steering committees, 
finance committees, state delegations) and other food costs not 
specifically related to fund raising, constituent entertainment, or 
travel.

Fund Raising
    Events: All costs related to fund-raising events, including 
invitations, postage, planning meetings, travel costs, room rental, 
food and catering costs, liquor, flowers, bartenders, follow-up thank-
you cards, in-kind fund-raising expenses, general reimbursements to 
individuals for fund-raising, tickets to sporting or theater events 
that served a fund-raising purpose, and fees paid to consultants who 
planned the events.
    Direct mail: All costs related to fund-raising solicitations via 
the mail, including the purchase of mailing lists, computer charges, 
postage, printing, caging services, and consultant fees and expenses. 
Mailings that served a dual purpose, both to raise funds and inform 
voters, were included in this category.
    Telemarketing: All expenses related to a telephone operation 
designed to raise money, including consultant fees, list purchases, and 
computer costs.

Polling
    All polling costs, including payments to consultants as well as in-
kind contributions of polling results to the campaign.
Advertising
    Electronic media: All payments to consultants, separate purchases 
of broadcast time, and production costs associated with the development 
of radio and television advertising.
    Other media: Campaign videos; payments for billboards; advertising 
in newspapers, journals, magazines, and publications targeted to 
religious groups, senior citizens, and other special constituencies; as 
well as program ads purchased from local charitable and booster 
organizations.

Other Campaign Activity
    Persuasion mail/brochures: All costs associated with strictly 
promotional mailings and other campaign literature, including artwork, 
printing of brochures or other literature, postage, the purchase of 
mailing lists, as well as consultant fees and consultant expenses.
    Actual campaigning: Filing fees and costs of petition drives, 
announcement parties, state party conventions, campaign rallies and 
parades, campaign training schools, opposition research, posters, 
signs, buttons, bumper stickers, speech writers and coaches, get-out-
the-vote efforts, election day poll watchers, and all campaign 
promotional material (T-shirts, jackets, hats, embossed pencils, pens, 
nail files, pot holders, etc.). Fees and expenses billed by campaign 
management firms and general consultants for services unrelated to 
advertising, fund-raising, and persuasion mail are also included.
    Staff/volunteers: All food expenses for staff and volunteers, 
including phonebank and get-out-the-vote volunteers. These expenses 
included bottled water, soda machines, monthly coffee service, and food 
purchases that are specifically for the campaign office. Also included 
were expenditures for recruitment of volunteers, gifts for staff and 
volunteers, and staff retreats.

Constituent Gifts/Entertainment
    Meals purchased for constituents, the cost of events that were 
designed purely for constituent entertainment (for example, a local 
dominos tournament), constituent gifts of all kinds, flowers, holiday 
greeting cards, awards and plaques, inaugural parties, and costs 
associated with the annual congressional art contest.

Donations
    To candidates (both in-state and out-of-state): Direct 
contributions to other candidates as well as the purchase price of 
fund-raiser tickets.
    To civic organizations: Contributions to charitable organizations, 
such as the American Cancer Society, as well as local booster groups, 
such as the Chamber of Commerce and local high school athletic 
associations. Includes the cost of tickets to events sponsored by such 
groups.
    To ideological groups: Contributions to ideological organizations, 
such as the NAACP, the National Organization for Women, and the Sierra 
Club.
    To political parties: Contributions to national, state, and local 
party organizations, including tickets to party-sponsored fund-raising 
events.

Unitemized Expenses
    Candidates are not required to report expenditures of less than 
$200, and many do not list them on their FEC reports. This category 
also includes expenditures described in FEC reports merely as ``petty 
cash,'' unitemized credit card purchases, and all reimbursements that 
were vaguely worded, such as ``reimbursement,'' ``political expenses,'' 
or ``campaign expenses.''

                              APPENDIX II

    Campaign Study Group (CSG) is a for-profit consulting firm 
specializing in campaign finance research and public opinion analysis. 
Formed in January, 1996 by Dwight L. Morris, former Editor For Special 
Investigations at the Los Angeles Times, and Murielle E. Gamache, 
former Senior Editorial Researcher at the Los Angeles Times Washington 
Bureau, CSG is dedicated to providing its media clients with pristine 
data and cutting-edge political analysis.
    Since its inception, CSG has helped inform political coverage 
provided by The New York Times, the Los Angeles Times, The Washington 
Post, the Chicago Tribune, The Boston Globe, USA Today, the New York 
Daily News, the Saint Louis Post-Dispatch, the Minneapolis Star 
Tribune, the Raleigh News & Observer, the Fresno Bee, the Sacramento 
Bee, the Modesto Bee, the Philadelphia Inquirer, The Columbus Dispatch, 
the San Jose Mercury News, the Albuquerque Journal, The Hartford 
Courant, the Associated Press, Reuters America, CBS News, Cable News 
Network, ABC News, NBC News, KPNX-TV in Phoenix, WCCO-TV in 
Minneapolis, KOAA-TV in Colorado Springs, WFLA-TV in Tampa, and the 
Medill News Service.
    CSG has also become a major supplier of campaign finance 
information to political party committees, labor unions, trade 
organizations, and interest groups. Our campaign finance data is used 
as a teaching tool in journalism and political science classes at major 
universities throughout the country, including Northwestern University, 
Indiana University, the University of North Carolina and Arizona State 
University.
    The firm's major survey research projects include:

 b nationwide study of community involvement and volunteerism 
        conducted for the Pew Partnership for Civic Change
 Two groundbreaking studies examining the political and social 
        attitudes of non-voting Americans. The first of these was 
        conducted in 1996 for the Medill School of Journalism and WTTW-
        TV in Chicago with funding provided by the John D. and 
        Catherine T. MacArthur Foundation. The second, undertaken for 
        the Medill School of Journalism with funding provided by the 
        Pew Foundation, was conducted following the 2000 presidential 
        election.
 Two surveys dissecting the political attitudes and behavior of 
        18-to-24 year-old Americans. Funded by the Pew Foundation, 
        these surveys were part of a year-long effort by the Medill 
        School of Journalism to cover the 2000 presidential election in 
        ways that would engage young voters.
 A nationwide survey of Americans 55 years and older for 
        Northwestern University's Newspaper Management Center.
 A survey of senior newspaper editors conducted for the 
        Associated Press Managing Editors Association, the Pew Center 
        for Civic Journalism, and the National Conference of Editorial 
        Writers.
    Mr. Morris, CSG's president, began his news career at The New York 
Times, where he served for six years as special projects coordinator 
and field director of the New York Times/CBS News Poll. In January 
1984, he joined Louis Harris & Associates, where he became a vice 
president responsible for research commissioned by the firm's 
telecommunications clients.
    Mr. Morris also served for two years as vice president of Opinion 
Research Corporation before returning to the news business as Assistant 
Managing Editor for Special Projects at the Atlanta Journal-
Constitution. While in Atlanta, he established the paper's in-house 
polling operation and coordinated the computer analysis for a ground-
breaking study of redlining by Atlanta banks. The series, dubbed ``The 
Color Of Money,'' won the 1989 Pulitzer Prize for investigative 
reporting.
    Named Editor For Special Investigations at the Times Washington 
bureau in December, 1989, Mr. Morris designed the first-ever study of 
how money is spent in House and Senate campaigns, which the paper 
nominated for a Pulitzer Prize in 1991. That project gave rise to the 
Handbook of Campaign Spending, a race-by-race analysis of House and 
Senate campaigns, which was published by Congressional Quarterly Books 
following the 1990 and 1992 elections.
    Ms. Gamache, CSG's research director, joined the Los Angeles Times 
Washington Bureau's special investigations unit in 1990, where she 
managed the research team responsible for campaign finance projects. 
Among other projects she helped design and execute were studies 
examining the impact of Defense Department downsizing, the Resolution 
Trust Corporation's efforts to dispose of assets acquired following the 
collapse of the Savings & Loan industry, Medicare funding issues, and 
travel abuses by Clinton cabinet officers. The latter project was 
nominated for a Pulitzer Prize in 1996.

    Mr. Upton. Thank you.
    Thank you, Panel. To begin questions, we're going to rotate 
between the two sides of the aisle, but to start we'll 
recognize the chairman of the full committee, Mr. Tauzin.
    Chairman Tauzin. Thank you, Mr. Chairman. Let me first, Mr. 
Morris, concur with you on the points you make that an awful 
lot of the funds that are raised in campaigns is not spent on 
broadcast media messages of any type. By the way, I'm looking 
at your charts and it occurs to me that unfortunately because 
everyone sees the total amount spent, they lose track of 
several important parts of the campaign, the first part is the 
cost of raising that money which is an expenditure listed in 
the campaign as an expenditure, when it really is money that 
doesn't come to the campaign. It's actually money that is spent 
to put on the functions or the events or the travel costs, 
whatever else may go into a fundraising event. I had one in New 
Orleans this weekend. It gets pretty expensive when you've got 
to put on a nice show in New Orleans. I promise you that.
    Mr. Upton. But it is a nice show.
    Chairman Tauzin. It is a nice show. It was that. We had a 
good time.
    Second, a lot of the money that is raised in our campaigns 
is money donated to the parties and it shows up in expenditures 
when it really is donated to the parties for other candidates 
and some of it is directly to candidate's campaigns, so there's 
a lot of confusion about how much is really spent in an 
election.
    As you point out using Mr. Kennedy as an example, an awful 
lot of campaigning is really 365 day a year operation. I 
maintain an office in my District, a political office with paid 
personnel year round to constantly do campaign functions and 
campaign work and political function and fundraising, etcetera. 
Many Members, particularly incumbents, obviously, do this.
    The other point I want to make is that your chart doesn't 
take into account that in some cases there are no opponents. 
Why would you spend a lot of money on campaigning? In the year, 
I think, 1998 you show in the chart, that was a year, for 
example, where I faced no opponents, so the money spent in 
advertising was to say thank you. It didn't require a lot. And 
a lot of, a great many differences in the way money is spent in 
a campaign and unfortunately when you just look at a raw 
report, you think wow, just a small percent went into 
advertising. The truth is it's a year-round operation. When you 
look at the money spent in the campaign, in the weeks before a 
campaign, I think maybe that's a better judge of what percent 
goes into political advertising as opposed to ground operations 
and whatever else may occur, mailings, what have you, in a 
particular campaign.
    The other point I want to make quickly was one more of 
philosophy and I'd like any of your comments. There's a neat 
think about the American political system that may separate us 
from a lot of countries to our south and countries to the east 
of us. And that is in our political structure, we generally 
count on the people in a 2 and 4 and 6-year cycle to recreate 
their government.
    There are many systems that literally provide all kind of 
government funding for campaigns and free time on media. I was 
in Brazil and they've got some elaborate system where every 
candidate has free time on television and media and everyone 
takes advantage of it and nobody watches it. It's just lost 
space on the spectrum. And as I looked at it, it was an 
absolute mess, but it was an attempt by government to provide 
the means by which government would be recreated in a 
democratic process. I'd like your thoughts on that. The one 
thing that separates us from a lot of those countries is that 
we still depend upon people to decide who they like as 
candidates and who they're going to give their time to and 
their dollars to support in terms of the next recreation of our 
government, whether it's a 2-year cycle in the House or a 4-
year cycle in many of the State offices or a 6-year cycle for 
the Senate, a 4-year cycle for President.
    People generally are in the process of picking and choosing 
with the time they give and the money they give in a campaign 
and the votes they cast, the people they'd like to see running 
the government because they like what they stand for or not.
    Isn't that something worth preserving and shouldn't we be 
very careful about amending laws to put the government in the 
process of deciding who can speak and when they can speak and 
how much they can speak and who's got to provide them a forum 
and who can't?
    Does anyone want to comment on that? Mr. Taylor?
    Mr. Taylor. Mr. Chairman, I couldn't agree with you more. 
In order for the people to recreate their government every 2, 4 
or 6 years, they need information upon which to cast an 
informed vote.
    This issue came before the Courts when the reasonable 
access provision which goes right to what you're talking about 
was challenged and there was a ruling in 1981, CBS versus FCC, 
where the Court said that reasonable access promotes first 
amendment principles by enhancing the ability of candidates to 
present and citizens to receive the information necessary for 
the effective operation of the democratic process.
    For better or worse, the most important medium of 
communication in our society is television, has been since its 
infancy, remains the most important medium today despite the 
amazing proliferation of other medium. This is the way most 
citizens get their information. And if you raise the bar for 
getting on so high that candidates can't get on, you're 
creating one kind of problem and this Amendment would go toward 
lowering that bar a little bit, ultimately to getting more 
information to citizens which is exactly what you're talking 
about.
    Chairman Tauzin. Except that it does put the government in 
a position of making some preliminary decisions about how 
people access a political campaign, how they get a message to 
voters and in a sense because the government is providing the 
spectrum to the broadcasters, in a sort of a civil contract, 
that they're going to broadcast over the air, free television 
to people, that we're into content.
    Mr. Taylor. We're into forum. We're saying that this thing 
that we as a people own, this spectrum, whether it's a physical 
thing or not, is among the most precious resources we have and 
70 days of legislation and regulation and jurisprudence has 
said we need to operate that in a way that----
    Chairman Tauzin. My only concern is that it is akin to 
using government assets, public airwaves, public people. It's 
like taxes or government assets and buildings and public 
broadcasting is partially a public asset. It's akin to saying 
when you use public assets to help recreate the next government 
and I just raise that as a real, I hope, point of concern 
that--we can tiptoe our way into a situation I see other 
countries in where the government is more and more involved in 
the recreation of the next round of the government and the 
people end up having less and less to do with it as they go 
down the line.
    We made a pretty good break from all that when we declared, 
our Founding Fathers did, and they went through some rather 
arduous times to present us with this country, they basically 
said no, this is going to be a government of, by and for the 
people, not of, by and for the government. And the government 
should have less and less, not more and more to do with the 
next round of elections. I just worry about that consistently. 
I know my time is up, but if anyone wants to respond to that?
    Ms. BeVier. Could I just say one thing, please? I think 
your point is absolutely on the money, excuse the pun. But I do 
think that one of the aspects of the Torricelli Amendment is 
that is the most troublesome is that it, in fact, represents in 
effect a closing off of avenues to change for other groups for 
independent advocacy groups, or anything other than Federal 
candidates and so not only is the government getting in and 
going to monitor very carefully what you do as a broadcaster, 
but also it's going to keep other people out and I think that's 
extremely troublesome in a free country.
    Chairman Tauzin. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman. Mr. Taylor, the 
Torricelli proposal goes back in time 365 days in order to 
determine what the lowest rate would be. The sense is that, as 
I take it, that the industry ramps up the prices immediately 
before the election, so you have to get back to some point of 
time that makes the price more accessible to candidates who 
clearly don't have the wealth that corporate America would have 
in those time periods.
    Is there some way we can play with the 365-day period? Is 
there some other way in which you're contemplating that the 
problem could be solved without using a 1-year timeframe?
    Mr. Taylor. Well, the Senate, in its wisdom, 69 Members of 
the Senate voted for an amendment that includes those 365 day 
look back provision. I would point out an unusually bipartisan 
group, 22 of the Senate's Republicans voted for this Amendment, 
so it was their belief that this was the most effective way to 
assure that the original intent of the lowest unit charge is 
served.
    I have heard people suggest that that rate, that that look 
back period be reduced somewhat to, for example, 180 days. I 
don't pretend to be an expert in all the nuances of how 
advertising is bought and sold. Clearly, there is a seasonal 
pattern to it and if it was felt that this was a more 
manageable number, it seems to me as an informed layman, let me 
call myself, that 180-day look back would also substantially 
achieve the objectives of this amendment.
    Mr. Markey. Mr. Sander, you're opposed to the Torricelli 
Amendment. What do you support? What do you believe the 
broadcasters have a responsibility to contribute to the 
political process?
    Mr. Sander. Well, I think that--I am opposed to the 
Torricelli Amendment because of all the reasons we heard, both 
at this table and from the committee. I would submit a couple 
of things. One, I think we can always work toward improving 
this situation. I think that disclosure element that was talked 
about earlier today is one that is very relevant and can be 
looked at and to be sure that it is clear who is spending this 
money. I think the other thing I would say in this regard also 
is the fact that we've lumped in use candidates who get LUC 
with third parties, with interest groups.
    Mr. Markey. LUC?
    Mr. Sander. LUC, lowest unit charge. We've kind of lumped 
in all these interest groups which do not get lowest unit 
charge. We've lumped in ballot issues to some degree which do 
not get that. Only the candidate which has a use spot which is 
clearly defined. So I think we've kind of homogenized all of 
this to a point where----
    Mr. Markey. What would you support? What I'm saying is that 
you oppose free time.
    Mr. Sander. Right.
    Mr. Markey. You oppose lowest unit time.
    Mr. Sander. No sir, I do not.
    Mr. Markey. You do not.
    Mr. Sander. I do not oppose the current regulations.
    Mr. Markey. But you oppose extending it in a way which 
would lower the rates further prior to 60 days or 30 days prior 
to an election?
    Mr. Sander. I certainly oppose the 365 and the other point 
I would make is the way the television business is handled and 
sold is very much like airplanes or hotel rooms. It's a comity 
business. There's highs and lows. There's demands and the 
audience levels vary a great deal as you know. When the Red Sox 
are fighting for the pennant those ratings are significantly 
different than when they are not and throughout the times of 
the year. These rates fluctuate in many cases on a week to week 
basis.
    Mr. Markey. Let's look at it another way.
    Mr. Sander. Okay.
    Mr. Markey. We gave you, retrospectively, ill-advisedly, 
digital spectrum with a date of 2006 for you to return your 
analog spectrum. The broadcasters are saying that they are not 
going to return it by 2006. They can't meet the deadlines. They 
won't meet the deadlines, whatever, but nonetheless, you have 
this incredible asset that would make a tremendous difference 
in the 3-G revolution in wireless technology, tremendous. So 
now you've got basically, you've got the beach front property 
and you've got the home back in the nice community. You've got 
two homes now which is a nice deal, but no date for you to 
return the original home, as you promise.
    My question to you is this, since you're not going to be 
returning the digital spectrum for a decade anyway, unless we 
do something on this committee, well, hopefully we will. We've 
been waiting a long time for something to happen here, what 
could you do more for the political process with your digital 
spectrum?
    Mr. Sander. Interesting question. I'm not sure I can give 
you a great answer. I'd be very happy to think through that and 
try to respond back to that. I would----
    Mr. Markey. Would you commit to the lowest unit rate for 
365 days or how many days for the digital spectrum?
    Mr. Sander. I'm not sure I understand what the difference 
would be.
    Mr. Markey. Right now, you're putting out a digital signal 
and an analog signal, but you have intention on returning the 
analog signal, could you say that you would give the lowest 
rate for the last 365 days for the digital signal since you're 
saying you can't make money on it, but at least it gives the 
candidates some place that they can go. Would you do that? As a 
gift. Since you're basically keeping from the Federal 
Government, $30, $40, $50 billion that we could make in the 
auctioning off of the spectrum, would you give us that back 
that you could make concessions to the Torricelli Amendment 
just for the digital spectrum?
    Mr. Sander. Could I check my thoughts with you because I 
think it's a very complicated issue and I'm not sure I have all 
the nuances in that. No. 1, my company has spent over $12 
million on digital and we are prepared to go and we are----
    Mr. Markey. You're speaking for the whole industry right 
now. Can I say this, Mr. Sander? You're a good player in a bad 
industry, okay?
    Mr. Sander. Oh wow, gee whiz.
    Mr. Markey. You're the best in a----
    Mr. Sander. Bad industry.
    Mr. Markey. I love the broadcasting industry, but they 
usually pick the best broadcaster who's doing the most to 
shield all the bad broadcasters who don't want to do anything, 
okay? And that's why the NAB has paid so much money to be a 
good lobbying effort here in town.
    But what I'm saying to you is you're speaking for the whole 
industry right now, so I don't want to hear what you're doing 
because that would be not representative of the broadcasting 
industry. What I need is a standard for the whole industry. Do 
you think it makes some sense, given the primitive state of 
digital television that we could experiment over there. Would 
that be something that you would be open to doing, Mr. Sander, 
having an experiment with digital TV in terms of providing a 
365-day a year price or 180-day a year price?
    Mr. Sander. I guess, again, I'm having trouble because 
we're going to try to reach your voter. I have no problem with 
thinking about how to experiment with digital television and if 
that includes some type of political reform, I think it's 
certainly an open dialog and worth discussion. I candidly don't 
see the solution as you see it, so I just----
    Mr. Markey. I'm looking for a give----
    Mr. Sander. I understand that.
    Mr. Markey. Concession here, based upon--are you going to 
give back the digital spectrum in 2006?
    Mr. Sander. We are working toward that.
    Mr. Markey. Will you commit to the committee you will do 
it? Maybe you'll be a good example there and----
    Mr. Sander. If we have the viewership, if we have met all 
the requirements.
    Mr. Markey. The standard is 85 percent.
    Mr. Sander. Right.
    Mr. Markey. Obviously, you're not going to have that. Will 
you give it back even though there isn't 85 percent?
    Mr. Sander. Give back so I should go off the air for 20 to 
30 percent of the air? Eliminate free television?
    Mr. Markey. You're not going to do that Mr. Sander. That's 
correct.
    Mr. Markey. What I'm saying to you since you will keep the 
digital spectrum and you're arguing that it would make no sense 
for you to go off the air with your analog signal, could you 
give us something over here on what will still be for you an 
experimental signal, your digital signal? We need something 
from the industry, Mr. Sander. We're giving you tens of 
billions of dollars. You represent that giveaway. Can you give 
us back something?
    Mr. Sander. I just don't understand what that giveaway back 
is.
    Mr. Markey. Yes, you do. You made it very clear what it is.
    Mr. Upton. The gentleman's time has expired. Maybe, Mr. 
Sander, if you can respond in writing to the question.
    Mr. Sander. Sure.
    Mr. Markey. He doesn't understand the question, he says.
    Mr. Upton. We'll let you have another opportunity.
    Mr. Markey. I think he's the only one in the room that 
doesn't understand the question.
    Mr. Upton. A number of Members, I have supported campaign 
reform all my days in a bipartisan effort and in all the 
efforts that I have supported thus far on the floor, whether 
it's working with Mr. Livingston or Mr. Seiner who is a former 
member of this committee, Mr. Shays, Mr. Meehan, this issue has 
not been part, free, over-the-air broadcasting or the 
Torricelli Amendment has not been included as part of that. I 
have to agree with the number of those who said here during 
their opening statements that they see the Torricelli Amendment 
as, in fact, unintended consequences and particularly Ms. 
BeVier who indicated that costs to candidates does not 
necessarily lower the cost of campaigns.
    As I have watched a number of campaigns, there is a lot of 
ads out there, both radio as well as TV, and if somehow the 
Torricelli provision became law, I see many more ads, not less, 
and as a viewer, I turn on the TV to watch programs sports, 
news, movies, not ads and not even at the Super Bowl. And as a 
consequence though, if you, in fact, saw more ads on the air, I 
have a sense that, in fact, there would be nothing else but ads 
and it would, in fact, close in on the programming element that 
most viewers turn the TV on and maybe Mr. Wright, Mr. Sanders 
and Mr. Sapan, you could answer the question as to whether or 
not you actually have to turn away advertisers, other 
advertisers in the political season because that time is 
bought.
    Mr. Sander?
    Mr. Sander. Sure, without question. One of the dilemmas----
    Mr. Upton. And folks that are wanting to sell cars or 
hammers or whatever it might be, do not have the opportunity 
because the politicians have bought up all of that time during 
that spectrum.
    Mr. Sander. We have a fixed amount of time we cannot 
expend. That is an example of prime time. The local television 
station has approximately 4 minutes of commercial time to sell, 
nothing more. We can't expand that. We can't make that larger, 
so we have a fixed amount of time. So we can't just accordion 
that the way we might like some times.
    Second, I've had dozens and dozens of regular 365-day 
advertisers tell me I'm pulling out of advertising on your 
station now because of the political overload. It's not an 
environment I want to advertise in. I can't afford to advertise 
in there and you've not provided me enough time to buy even if 
I wanted to. And I'm going to take that and take my advertising 
because I have to stay in business. I still have Saturday 
sales. I still have upcoming Thanksgiving Day promotions and so 
on and so forth. I'm going to move that money out of television 
on your television station and then maybe come back and talk to 
you later, but you're going to have to recruit me back into 
that environment, so without question, we are displacing 
regular commercial local business advertisers.
    Mr. Upton. Mr. Wright, do you want to comment? I know 
you're more of the national perspective.
    Mr. Wright. Yes, as I said in my testimony----
    Mr. Upton. Do you not have candidates, Presidential 
candidates?
    Mr. Wright. We have not yet, Mr. Chairman, as I said, we 
have not yet had a request for advertising time, but clearly if 
we were to, if the demand were to increase we only get a couple 
of minutes an hour on those channels where we have advertising, 
where we can sell advertising that's available for sale. So 
obviously, if the demand were to increase, then we would have 
to turn away other people who would be seeking that time.
    Mr. Upton. Mr. Sapan?
    Mr. Sapan. That phenomenon occurs to a rather limited 
degree. It does occasionally, but the amount of inventory 
that's available on cable television, on a system because many 
systems are selling upwards of 25 cable channels and avails on 
them is rather robust, so it tends not to result in that 
escalation and any of that displacement. As well, on our local 
news channels which we consider a very important part of our 
participation in a political dialog in the election process, 
there is relatively abundant inventory. So that tends not to 
challenge us.
    Mr. Upton. Now Mr. Taylor, you raise the question and cited 
some examples of I think it was 99.8 percent in your testimony. 
Isn't it true that if Candidate Markey is looking for time on 
the 6 o'clock news, who was your opponent, did you have an 
opponent last year?
    Mr. Markey. I'm in the plus perfect form of democracy in my 
district.
    Mr. Upton. The parole candidate, having lots of cash to 
compete with Mr. Markey, if Mr. Markey chooses the 6 o'clock 
evening news time, doesn't under equal opportunity or equal 
time provisions already there, isn't that candidate also 
allowed to buy, in essence, the same slot, either that day or 
the next day at a comparable rate, comparable time?
    Mr. Taylor. Yes. That's my understanding. But the 99.5 
figure had to do with the fact that in almost every instance, 
Mr. Markey and his opponent and all the other classes of 
candidates, in order to guarantee they get on on the 6 o'clock 
news which is obviously a very attractive advertising forum for 
a candidate, that candidate is going to pay a premium. Now that 
candidate is choosing to pay that premium, but I think this is 
a flaw that this Amendment is designed to correct. Candidates 
are a different kind of advertiser from product advertisers. 
Nike and McDonald's primary motive is to sort of build brand 
loyalty over the long haul. They buy in an upfront basis. 
They're interested in hitting a certain amount of demographics 
over a certain period of time, a month or a quarter and whether 
it runs on the 6 o'clock news or tonight or tomorrow night or a 
little bit later, as long as it's good at the end of a season, 
they're fine.
    Candidate Markey is looking at overnight polls and he's 
discovering that his opponent is running a very effective 
attack ads against him on the 6 o'clock news and he wants to be 
on the 6 o'clock news and that's the way the real world works. 
So when his media buyer calls up the local station, it's ``I 
got to have it tonight on the 6 o'clock news'' and that takes 
that media buyer to this very high rate. And that's, I think, 
the conceptual flaw that was not fully addressed 30 years ago 
and that this Amendment is designed to deal with.
    Mr. Upton. But that opponent is still able to get the same 
price that comparable time.
    Mr. Taylor. Absolutely. And if that opponent has the money, 
he or she is paying that price and everybody's prices are going 
up.
    Mr. Upton. Okay, Mr. Sawyer.
    Mr. Sawyer. Thank you, Mr. Chairman. I sit in continual awe 
of Mr. Markey's ability to stretch 5 minutes. It's very 
impressive.
    Mr. Taylor, in his testimony, mentioned the CRS memo citing 
at least three cases. Ms. Bevier, can you comment on those 
three cases and your sense of their applicability in the 
decision before us?
    Ms. BeVier. Certainly. I think the three cases, I would say 
very briefly are outdated. In other words, it has been quite a 
long time since the Supreme Court decided CBS versus FCC. The 
Red Lion case has been discredited. The scarcity rationale 
simply does not hold water, even the Court has suggested the 
scarcity rationale should not continue to govern broadcast 
regulation. They've just never had occasion to encounter a 
direct challenge to Red Lion.
    In the last 10 years, the Supreme Court has been quite 
rigorous in its scrutiny of any sort of broadcast regulation, 
increasingly willing to rehabilitate, if you will, the 
editorial discretion of broadcasters. That simply is a fact, so 
that I think the most important thing to note about the CRS 
study is that it relies on precedents that really are too old 
and have been called into severe question, both by the 
commentators and by the Court, most particularly.
    Mr. Sawyer. Mr. Taylor, do you want to comment?
    Mr. Taylor. Well, I wasn't aware that there was a statute 
of limitations on Supreme Court decisions. None of these 
rulings have been overruled. They are the settled law of the 
land.
    Mr. Sawyer. Let me make an observation. It seems to me that 
what we are seeing here is as a product of cost a reduced 
access to voice. I don't know that this is the solution to it, 
but in thinking about what Chairman Tauzin had to say I was 
recalled to the idea that when this democracy was founded it 
was a democracy of ideas, first and foremost, and those were 
ideas that were spread as a product of the written word. And 
with that in mind, it is no accident that the founders put into 
the Constitution the creation of Postal Service, not for the 
convenience or the commercial use necessarily of this 
democracy, although it was certainly that, but for the purpose 
of spreading ideas. I think that's an important notion.
    The sharing of spectrum, as Mr. Markey suggests, is an 
important notion. I'm not sure this is the best way to go about 
it. Do you have any thoughts on the best way to make sure that 
there is adequate voice, not constrained by unreasonable costs 
that will make it possible to continue this 200-year-old 
tradition of sharing ideas at the heart of what makes this 
democracy possible.
    Anybody?
    Mr. Wright. Well, Mr. Sawyer, one of the things that we are 
working on in the satellite industry is that we've developed 
programs that give candidates the opportunity to have free 
time. For example, Echo Star, one of our member companies, 
provided free time.
    Mr. Sawyer. Anybody else?
    Mr. Sander. Broadcasters provide a lot of free time, 
without question, so I think we all believe in that concept is 
that there is a responsibility to your very point about making 
sure that these voices are heard and different viewpoints are 
heard.
    Mr. Sawyer. One broadcast station in my media market 
provided one 5 minute slot that I think was broadcast three 
times in the course of an 8-week campaign. It was fine for me. 
It was totally inadequate for my opponent who had little 
financial access to that time. That's the dilemma.
    Mr. Sapan. I'll sound like a booster for the cable 
industry, but I believe it. If we take a look at the 
combination of C-SPAN and the three now national news channels, 
CNN, MSNBC and Fox and the proliferation of local news channels 
of which today I think there are 30, and if you don't live 
where one is, you don't see them, but I guess in New England, 
there's New England News. We operate five in New York and 
there's New York One and Time-Warner. They are, I think, 
abundant in their true dedication to providing an editorial 
voice that is open to a democratic dialog and I think 
candidates really do become notwithstanding their current 
position, incumbent or not, exposed. It strikes me that it is a 
pretty good forum of democratic dialog and information hearing.
    Mr. Sawyer. Mr. Taylor?
    Mr. Taylor. Our organization has long supported free air 
time. I think there are ways of doing it that are not 
burdensome. The television industry took in $40 billion in 
advertising revenues last year. We're talking about a very 
small fraction of that.
    As to the notion that the industry gives free time, there 
was a recommendation from a White House Advisory Panel co-
chaired by Leslie Moon that every station in the country 
voluntarily provide 5 minutes a night of candidate discourse in 
the month preceding every election. We, working with 
universities in Pennsylvania and Southern California, monitored 
stations and we found on average they gave about 45 seconds a 
night of candidate discourse. So it seems to me they are not 
stepping up to the plate.
    Mr. Sawyer. Thank you, Mr. Chairman.
    Mr. Upton. Mr. Largent.
    Mr. Largent. Mr. Sanders, I think that in listening to your 
conversation with Mr. Markey I would be tempted to roll the 
dice if I were you and say okay, we'll just keep our digital 
spectrum and we'll cutoff all analog viewers by 2006 and just 
see what happens when the phones light up in all of our offices 
and you can just explain to them that we did this because 
Congress made us and you need to call your Congressman.
    Mr. Sander. That would be painful for all of us.
    Mr. Largent. It sure would. Mr. Morris, I wanted to ask 
you, you've done a lot of research on the various campaigns of 
435 Members of Congress, the House, and 33 Senators every 
election cycle. In the election of 2000, how many of those 435 
House races were really contested races?
    Mr. Morris. If you look at the margins of victory and you 
say all right, if anything is less than 20 percentage points 
we're going to call that contested, so it's a 60-40 split, 
you're talking about 60, 65 races. In every election cycle it's 
about the same number. The parties are not ignorant of the 
facts and every year they sit down and they figure out what 
Districts are going to be vulnerable and which ones are 
competitive because there's a retirement and they target 50 or 
60 Districts across the country and that's where the game is 
played.
    Mr. Largent. So if you say 60, 65 races out of 435, you're 
talking about 15 percent of the races in the House.
    Mr. Morris. Roughly.
    Mr. Largent. In that 15 percent then, what percent of the 
total number of dollars do you believe are spent? If we're just 
talking about spending on actual campaign events, in other 
words, not me giving money to Heather for her race, but 
actually me spending money on advertising, on mail, whatever?
    Mr. Morris. It depends. Do you include the cost of the 
staff and telephones and travel?
    Mr. Largent. I noticed in some of the research that you 
have that that's pretty expensive, particularly in 
Massachusetts.
    Mr. Morris. It's very expensive because I'm sure most of 
the people in this committee maintain offices, political 
offices in the District which are open every day from the first 
day they win until the day they walk out the door. There's 
actually more money spent by Members of the House, every 
election cycle, on just the office overhead, the rent, the 
staff, the telephones, the travel, things like that than is 
spent--and considerable more--than is spent on television or 
radio advertising and that includes the cost of the production 
and anywhere from 5 to 15 percent that they pay to the 
consultants for placing the ads.
    But if you reduce it to the 65 races and you throw away all 
of the money that members give away and you include the fund 
raising costs, you're probably talking about 60 percent to 65 
percent of the money going to TV in those 65 races.
    Mr. Largent. So I guess the question I'm asking and it's 
probably hard to quantify and my guess is and see if you would 
confirm this is that the overwhelming majority of money that's 
spent on campaigns, if you say let's exclude the job creation 
that we do through campaigns and exclude the money that is 
transferred from one campaign to another and just say money 
that's really going to what you and I think of as campaign 
expenses----
    Mr. Morris. You're just throwing about 40 percent.
    Mr. Largent. TV, radio, the overwhelming majority of it has 
to be spent in those 65 races.
    Mr. Morris. Oh yes, absolutely. There's no question if you 
take out the basic office overhead and you take out the money 
that's transferred from committee to committee and you look at 
where the money is being focused, you give money to your 
colleagues who are in tight races or you give money to 
colleagues who aren't because you hope they'll vote for you for 
some leadership office, but whatever the reason is, if you take 
all that money out, and you look at the money that's spent 
trying to best the opposition and gain control of the House or 
the Senate, it's in a very small handful of races and the 
majority of the money, 60 percent at least goes to television 
and radio advertising, including the production costs.
    Mr. Largent. Mr. Taylor, why didn't you want to look at Mr. 
Griffin's books when he gave you an opportunity to do so?
    Mr. Taylor. This is the first I'm hearing about that. The 
website you referred to we put up last September 15th. It had 
detailed information on political ad sales in more than 300 
stations. We got that information from the Campaign Media 
Analysis Group which is the leading ad monitoring firm used by 
candidates for Republicans and Democrats alike. If there is 
anything wrong with that information, I would love to correct 
it and would leap at the chance to correct it, but this is the 
first I'm hearing about it.
    Mr. Largent. Great, I hope that you'll take them up on 
their offer and I would think that it would be an enlightening 
experience.
    Mr. Taylor. The truth of the matter is we'd love to take a 
look at stations' books.
    Mr. Largent. I would think so too. Why should we not look 
at radio and newspaper and other venues besides just TV, 
satellite and cable in the Torricelli Amendment?
    Mr. Taylor. Personally, I feel like leaving radio out, it 
doesn't make any sense conceptually or from a policy point of 
view. Candidates use radio. Radio is subject to the same 
licensing procedures, but to bring print in would be an 
enormous leap, out of line again with 70 years of law and 
jurisprudence and regulation that says broadcast is different. 
It is the public airwaves. There is nothing equivalent on the 
print side.
    Mr. Largent. Can I just ask one more question, Mr. 
Chairman?
    Ms. BeVier. Could I just say one thing about the print 
media being different from the broadcasting media? Remember 
that Red Lion, of course, there's no statute of limitations on 
it, but it was based on the notion of physical scarcity and 
that notion of scarcity of access, that notion given 
technological advance, simply no longer is factually true.
    So that the factual predicate for regulation, namely 
scarcity does no longer exist and I think there are very few 
people who have looked carefully at the first amendment aspect 
of difference in treatment between broadcasting and print media 
and have been persuaded that that makes any sense at all. In 
fact, my question would be why don't you simply require, if you 
candidates think it's costing you too much to run for office, 
why don't you require everybody to sell you everything at 
wholesale? Make everyone contribute to your campaign and 
subsidize your political career.
    Mr. Largent. It does seem like a huge conflict of interest 
for us to be voting on legislation that cuts, reduces the 
costs----
    Ms. BeVier. Part of my point.
    Mr. Largent. Well, my last question, Mr. Chairman, thank 
you for your indulgence here is to address to Mr. Taylor and I 
just wonder, what is your motive? You want to drive the cost of 
campaigns down which I mean, believe me, raising money is the 
dark side of this business that we're in, but it's also a 
necessary side and I'm for that, but I think taking it out of 
the hide of broadcasters, I question that, as you heard in my 
opening testimony, but what is your motive other than just 
driving the cost of the campaign down?
    Mr. Taylor. Well, our one-sentence mission statement, if 
you will, which I have in my testimony is we're a public 
interest group that promotes political campaigns in which the 
best information gets to the most number of citizens in the 
most engaging ways. So our motive is to increase the flow of 
political communication and to do so it seems to me you have to 
go to television. That's where the most important political 
communication happens, on television. To reduce the cost of 
that communication and ideally, frankly, to increase the 
breadth of it. And to those who say you're just going to have 
more political ads and don't we all hate political ads, I would 
add my voice to that very large chorus.
    I'm not sure there would be a dramatic increase in 
political ads as a result of this. We have a difference of 
opinion in how it works, but I do think that it would reduce 
the cost of communicating and that's a good thing for all the 
reasons that supporters of campaign finance have talked about, 
how much pressure there is to raise money, how it brings 
special interest into play. Beyond doing this, I mean I didn't 
read this part of my testimony, I believe we should look to a 
system that the government also requires stations t provide a 
variety of forums of free time, not too dissimilar from the 3-
hour rule that we now have requiring stations to do 3 hours of 
children's educational programming a week. Congress made a 
determination that's in the public's interest. I think robust 
discussion around election time is very much in the public's 
interest. I don't think it's a heavy hand of government doing 
anything but assuring that the airwaves are open. Our airwaves 
are open so we can govern ourselves and make informed choices 
on election day. That's the motive.
    Mr. Largent. Thank you, Mr. Chairman.
    Mr. Upton. Ms. McCarthy?
    Ms. McCarthy. Thank you very much, Mr. Chairman and I thank 
the Panel for their help with this issue today. I'm sorry I 
missed your testimony, but I wanted to pursue something Mr. 
Sawyer raised which was back along the lines of a solution. 
Interestingly enough, Mr. Largent's testimony, it got me 
thinking about the print media and what's happening in that 
industry and how difficult it is even for small businesses to 
now advertise and I find that media markets such as my own, 
which is in the Greater Kansas City area where there's just one 
paper owned by a conglomerate, the rates have gone up.
    The advertising is like this thick on Sunday and the news 
and factual material is like this thick and everybody seems to 
be able to advertise, but the rates are so high that unless you 
are a big guy or gal, you get stuck in an odd part of the paper 
and you don't really get the positioning that you need and I'm 
thinking, Mr. Chairman, this question may be larger than just 
campaigns and prices, but what's going on out there in the 
communications world, TV, radio and print with regard to this 
question of scarcity and whether or not, and rates and charges 
and reasonable access, because I really think we could find a 
solution to this dilemma, if we all put our minds to it and I'd 
appreciate you raising that question. I think there could be a 
compromise reached which does not violate the first amendment, 
that the statute reads that you're not obligated to provide 
unlimited access.
    So isn't that sort of the gate keeper anyway for these 
election issues and I would just welcome some reflection on 
that from any member of the Panel who would like to respond?
    Mr. Sander. I certainly don't pretend to be a newspaper 
expert, but I would submit that I think as these newspapers 
grow in density, they're also offering more zoned product, 
specifically for geographical areas, much like our colleagues 
in the cable industry do, newspapers now are finding ways to 
provide unique sections, geographically driven, so that I think 
they're trying to address that issue.
    Mr. Wright. Ms. McCarthy, to finish the thought that I was 
about to say to Mr. Sawyer's question, talking about other ways 
to approach this, we are, as I said in my testimony, a national 
service, so therefore we tend to be, people who are interested 
in us tend to be Presidential candidates because we're reaching 
everyone.
    But one of our companies, Echo Star Communications offered 
500 hours of free time to the four main Presidential candidates 
last time and frankly only three of them were willing to even 
take advantage of it which strikes me as pretty indicative that 
the problem here isn't just what's out there.
    I mean candidates obviously want to control the way the 
message is presented, who it's directed to. It's not just a 
question of availability of forums. With cable and with 
satellite and broadcasting, certainly there's a lot of forums 
out there and part of the problem is the desire by the 
candidate to control what is said to whom, at what time and in 
what way.
    Ms. McCarthy. How is that different from a department store 
commercial?
    Mr. Wright. It isn't.
    Ms. McCarthy. Okay, so it's all the same standard.
    Mr. Wright. I didn't mean it as a criticism. I'm just 
saying that we are trying, we in the satellite industry are 
certainly trying to come up with some creative things that we 
can do. Obviously, the testimony from cable is equally 
applicable here. We're looking for ways to get information out, 
what Mr. Taylor is looking for, we're looking for ways to get 
more, better information out to more people in as useful a way 
as possible.
    Ms. McCarthy. Well, I see a lot of what's happening out 
there in the communications world has become corporate America 
looking at quarterly figures and bottom lines and in my 
community they're letting go with buyout packages of all the 
most senior, talented members, whether it's in the print media 
or in the electronic media and actually forcing them out with 
these buyouts because they just want to save money.
    So I have larger questions and concerns than what we have 
right before us today, but what I would like to see is some 
attempt by the industry to sit down and try to reach a 
compromise so that all people are well-served.
    Thank you, Mr. Chairman.
    Mr. Upton. Mrs. Wilson?
    Ms. Wilson. Thank you, Mr. Chairman. I regret having not 
having seen the testimony, although I did read much of it in 
the book and I appreciate that. I had a couple of questions. 
One was for Mr. Taylor on the study that you did. How did you 
choose the 10 stations that are highlighted here?
    Mr. Taylor. We wanted to go to, we wanted a geographic 
spread. We intended to go to medium or large markets and 
frankly, we went to markets where we knew there was a lot of 
political activity. That describes at least 8 of the 10 
markets. A couple of the others, there wasn't a great deal of 
political activity.
    Frankly, we needed two sets of information. One was fairly 
easy for us to get which is--we had volunteers go to each 
station. They're required by law to keep a political file and 
we had volunteers go look through those files, but the other 
set of information we needed to be able to get was the 
station's published rate cards and that's proprietary and we're 
able to rely on a network of media buyers and other folks to 
give them to us, so to a certain extent that dictated a little 
bit where we wound up, so those were the factors that went in.
    Ms. Wilson. So you don't have a random sample?
    Mr. Taylor. And we don't claim it's a random sample. It is 
a spread of medium to large size markets where more often than 
not there was a lot of political activity.
    Ms. Wilson. How do you know just taking 10 stations with a 
nonrandom sample that you have something useful as far as 
conclusions?
    Mr. Taylor. Well, to pick up on Dwight Morris' testimony, 
if you look at the world of political campaigns, it's a very 
uneven world. If you look at the universe of 435 races, if you 
were to try to get an average of those races, you're not 
finding the essence of it. The essence of modern political 
campaigns is it happens very intensively in certain areas and 
not very intensively in others and then 2 years later, the 
pattern is going to be different. So what we tried to take a 
look at was races where there was a lot of activity where we 
think the problems of price pressure are obviously at their 
greatest and where the needs for protection are at their 
greatest.
    Ms. Wilson. Thank you. Mr. Sander, you talk about impact of 
the Torricelli Amendment, particularly with respect to cutting 
in revenue during the campaign season. Is that impact 
disproportionate at smaller regional stations than it is at the 
big guys or is it just a percentage across the board?
    Mr. Sander. I think it is market by market, but certainly 
the smaller markets can be impacted. As an example, we have a 
television station in Spokane, Washington which had heavy, 
heavy political interest. In addition to probably 
disenfranchising some regular advertisers during that last 3 to 
4 weeks of that campaign, we provided 10 hours of debates which 
I would also note were not attributed to coverage by Mr. 
Taylor's report, so that we're actually preempting commercial 
time, prime time to put these debates on which also is another 
loss of revenue.
    Ms. Wilson. Does that loss of revenue impact the capital 
available at all for the transition to digital or impact 
programming that can be purchased and played during election 
time?
    Mr. Taylor. Sure. I think that it can because, as I stated 
earlier, once that inventory is gone, you can't double up the 
next day or the next week or the next month. It's a fixed 
amount of inventory and as an example in Seattle which was one 
of the markets that Mr. Taylor targeted our NBC news leading 
television station there was selling political candidate time 
for the 5 o'clock news, roughly about $1500 at the peak of the 
campaign. Non-use candidates would be $7,000 for that same 
time, so there's no way we can make up that money and therefore 
you would slow down your capital purchase. You would have to be 
careful about the programming you bought and your overall cost 
base.
    Ms. Wilson. Thank you. Mr. Chairman, looking down the list 
of folks on this committee, I don't think--I found your idea of 
what is competitive to be an interesting list. In my wildest 
dreams I would have a District where there was a 20 percent 
spread and I am on one of those that it's not in this list of 
60, but probably down there on the list of 10, depending upon 
which Democrat you talk to and in one of the top 50 television 
markets in the country. I don't think there's anybody else in 
this House who has endured more issue advertising that, of 
course, is not designed to impact our elections at all than me. 
But I think I agree with Mr. Largent when he says that there's 
probably a fundamental conflict of interest in candidates and 
Members of Congress telling businesses that you have to give us 
something for a particular price or for free and when it comes 
right down to it, I'll probably stand on the side of principle 
and not on the side of self-interest.
    Thank you, Mr. Chairman.
    Mr. Upton. Thank you. Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman. I had another committee 
meeting and vote, so I apologize for coming late. Obviously, 
what we're discussing today is balancing a political speech and 
commercial speech and the way I see it, we presently have the 
equal opportunity and reasonable access laws and the equal 
opportunity law is one that I think we need to be very vigilant 
in enforcing, but we're really discussing today an issue about 
altering the reasonable access law and while it would seem to 
me we don't want to bully anybody, it would also seem to me 
that we have an obligation to try to strike a balance. I 
represent a District, my entire District is in the New York 
City metropolitan area and I have never in all my campaigns and 
I've been running for office now 7 terms in Congress and 6 
terms before that in the State Assembly, I've never been able 
to afford television because it's just too expensive and not 
cost effective. Now people are talking about cable and perhaps 
that would be easier, but to a very large degree it's an 
impossibility for someone in New York unless they're running 
State-wide to be able to afford it.
    I'd like to ask Professor BeVier, your written testimony is 
clear that you don't think there's a substantive framework in 
place governing this issue and what I wanted to ask you is if 
you were to create such a framework, what would it look like?
    Ms. BeVier. You mean if I were to--a framework to regulate 
the rates that broadcasters provide?
    Mr. Engel. Yes.
    Ms. BeVier. Well, I think the framework of freedom of 
speech and freedom of the press is a pretty good framework to 
begin with and I would say even that the present favorable 
treatment that Federal candidates get for advertising time is 
about as much as I could ever possibly defend in terms of 
compliance with the first amendment. To be candid with you, 
frankly, Mr. Engel, I have doubts about the present systems 
being constitutional. It has never been challenged. 
Broadcasters have gone along with it and I think that's fine, 
but my own view is that freedom is the best way to assure 
political competition and I think that's what the first 
amendment is about and that's what self-government is about. So 
that's where I stand.
    Mr. Engel. I'd like to ask Mr. Taylor, you mentioned a 
station in Philadelphia as an example of rising TV cost. The 
Philadelphia market serves a number of, not just a number of 
State jurisdictions, but also part of Delaware and obviously, 
New Jersey as well. Do you have any examples of what might be a 
claim to media market, one that would not have two Governors, 
two U.S. Senators competing for time? Is Jersey kind of--is 
Philadelphia kind of muddled because New Jersey relies on the 
Philadelphia market and the New York market?
    Mr. Taylor. Well, there are a lot of major media markets 
that span over a couple of States, but again, we did the in-
depth look at 10 stations around the country and Philadelphia 
came about in the middle of those 10 in terms of its rates 
being over the lowest published rates. The other cities, we 
looked at Minneapolis, Columbus, Ohio, San Francisco, Detroit, 
New York, Salt Lake City, Las Vegas, Los Angeles and Seattle. 
So that was the spread. As I said to a question earlier, those 
tended to have a lot of political activity, so the price 
pressures that drove our candidates were probably greater there 
than they were at other markets, but this is what happens every 
2 years and the price pressures, just talking to media buyers 
and candidates and issue groups and parties, everybody was 
saying last fall, my God, we've never seen anything like this. 
So I don't make a claim that Philadelphia is representative of 
a country. It is certainly representative of those 10 cities 
that I just listed and I don't think the two State thing is 
that unusual a situation.
    Mr. Sander. Could I add a note to that? The only point I 
would make is that Mr. Taylor said that it was hard for them to 
find rate cards. As I talked about earlier, during these times, 
these rates are changing dramatically for everyone. If you 
begin in September which is where we could get a rate card and 
then by the time we're talking about October the 25th, there's 
been a significant market change there for everyone. In nearly 
all cases that I've researched, at least at the Belo stations, 
we have stayed steadfastly with the rate available to 
politicians much, much tougher and clearer than the rest of the 
marketplace. So the marketplace has changed during this. There 
have been 6, 8, 10, 12 rate cards revised during that period of 
time, so Mr. Taylor obviously has to pick a moment in time 
which he does, but this is a changing dynamic as I said, in a 
commitized business.
    Mr. Engel. Thank you very much. I just want to make a final 
comment. I think most of us are trying to legitimately balance 
what we think is right. We don't want to impose burdens on 
anybody, but on the other hand it's certainly in the public 
interest that people who are running for office get their views 
out and do it in a way that can help in the political process. 
I just wanted to comment on what Ms. Wilson said. I don't think 
that it's at all a conflict of interest for Members of Congress 
to try to regulate it. There are many, many things, many, many 
issues that we deal with on this committee and in general in 
Congress. If you carry it to the nth degree you could say 
there's a conflict of interest when we vote to raise taxes or 
cut taxes, technically we're all affected by it. So I think 
that most Members on both sides of the aisle are really trying 
to create that balance and I think that was--that is obviously 
the purpose for these hearings today.
    I thank you, Mr. Chairman.
    Mr. Upton. Mr. Ehrlich.
    Mr. Ehrlich. Thank you, Mr. Chairman. I apologize. I came 
here about 10 minutes ago. We had a very important hearing with 
the Maryland delegation with regard to the Port of Baltimore. 
And I really regret not listening to your testimony. I will 
read it. I guarantee you, because I'm sitting here listening to 
my last two colleagues talk and make points and I'm compelled 
to agree with both.
    Mr. Morris, with respect to your comments, what I would 
like to do is just make a couple of observations and anybody 
can comment, if you feel that you need to and I would solicit 
comments.
    The fact is most races here are not competitive, as you 
know, Congressman Largent talked about. The other fact is with 
regard to competitive Districts, the amount of TV money you 
have is very relevant, is the most relevant factor I would 
submit to you all.
    You could--with regard to Ms. Wilson's comments and my 
friend, both Ms. Wilson and Congressman Largent, you could make 
the case that the present system is inherently pro-incumbent 
because to the extent that incumbents can raise money that 
money generally goes for TV. It's the major cost component of 
any serious race these days and to the extent that challengers 
cannot secure TV money, they're not going to be competitive 
because we all know we communicate through TV. The fact is lawn 
signs aren't that important and equally the fact is with 
respect to the fact we keep offices open all year round and all 
that, we don't have to do that, many of us, if we just wanted 
to be reelected. Many of us are looking to future races, State-
wide races. That's why we do it. The cost component is TV. 
Fact. So that being, I guess, a central observation I have and 
I suspect most of my colleagues will agree. My position letter, 
I try to make my position letters thoughtful and my position 
letter with regard to this issue basically is campaign finance 
reform is a very subjective issue. My favorite thing to do when 
I talk to a community association at home is to enter the room 
and say who here supports campaign finance reform and everybody 
raises their hand and then my next question is okay, define it. 
And of course, it's like being for Mother and apple pie, small 
business and peace and prosperity. It means nothing unless you 
fill in context, unless you define terms. With regard to this 
campaign finance reform, the McCain bill, it clearly chooses 
winners and losers. In relative terms it makes big city 
newspapers more relevant. That's not real good for my party, 
quite frankly, and it makes parties less relevant and that's 
probably a loser for all of us, quite frankly. So I get very 
frustrated with regard to some of the demonization and the 
demagoguery I see associated with this issue from everybody 
because the fact is TV runs it. If we're talking about campaign 
finance reform, we're talking about TV.
    Professor, your comments were equally well-taken. As 
somebody who generally comes from the right on many of these 
issues and freedom means something to me and to all of us, of 
course. So I guess my observations are everyone's comments are 
very well taken, political speech as we know is highly 
protected speech under the Supreme Court rulings. These are 
public licenses. There is an obligation. Where we draw that 
line is what this hearing is all about. But it's a very 
difficult issue for those of us who really do this for a living 
and understand that the most important cost element that drives 
this issue is TV time period.
    What to do about it, of course, is why we're making all 
these hopefully fairly articulate observations. So I'll just 
make those observations and throw it out to the Panel.
    Mr. Morris. If I could respond, just briefly. I 
respectfully have to disagree that TV time is the relevant 
issue in every race. I think what you need to decide----
    Mr. Ehrlich. I meant competitive races.
    Mr. Morris. I think the question you need to decide is do 
you want to pass a law that really is targeted at 10 to 15 
percent of the Districts in this country? I mean North 
Carolina, when the people run in that District they really need 
some help because they've changed parties in terms of 
representation in this body about six times in the last two 
decades. And that is an incredibly competitive District and 
they have taken every dime that every candidate can get and 
stuck it----
    Mr. Upton. Excuse me, whose seat is that in North Carolina?
    Mr. Morris. Representative Price. Unbelievable District. I 
wouldn't want to run in that District.
    Okay, having said that, in those Districts, the challengers 
and the incumbents both have all the money they need. You folks 
from the noncompetitive Districts make sure that that happens. 
Money just pours into those Districts, both from the parties 
and from the candidates, both the challenger and the incumbent 
in every one of those Districts has all the money they need. 
And so then the question is is it an important issue to pass 
not only to the benefit of 10 percent of the Districts, but is 
it important to subsidize them? I can't answer that question. I 
just raise the issue and I present the facts that I've been 
able to determine over 12 years of looking at this. You guys 
are going to be the ones who make that decision and I don't 
presume to tell you what you need to do. But I mean I think 
that is the choice.
    Mr. Ehrlich. And of course, that is a recent phenomenon of 
which we're all to blame because as the House remains fairly 
close, our respective party committees are continually hitting 
us up and that's very recent, as you know. Congressman Markey, 
I'm sure can remember the days when that didn't happen, 
actually, so that's not a very good answer to filling in that 
gap as to why there's more money in the process and why there's 
challengers in relative terms and now have relatively more 
dollars.
    Anybody else? Thank you.
    Mr. Upton. I have just one additional question or comment, 
I think other members may have that and then we'll wrap things 
up.
    You know, as I look at my District, if you're from 
Michigan, you use your hand, I'm right here on the southwest 
corner. And I venture to say that every broadcaster that covers 
my District, whether they be from Grand Rapids, Kalamazoo or 
Battle Creek or Elkhart, Indiana, South Bend, Indiana, Chicago, 
they all offer free time. I'm talking about public broadcasting 
in terms of free time like debates where they invite all of the 
candidates for a multitude of offices to come in. And the 
debates sometime is an hour, often they will give, the stations 
will give free time to get your message off and it will run 
periodically and the public broadcasters, both TV and radio, do 
it as well.
    For people, individuals, constituents, voters, that want to 
hear about issues, and that's really how we want them to decide 
why they vote the way that they do, they have that opportunity, 
both as a call-in, as well as the people that are usually 
journalists that are asking questions. So in my view the system 
works and again, if you look at providing, and I know Mr. 
Taylor, your view, at least in some of your writings is to go 
beyond the Torricelli Amendment and look at free advertising 
because of the spectrum of allocation, and I look at my 
District and I look at particularly the Chicago area which 
covers over the air broadcasters, probably 30 or 40 
congressional candidates every 2 years, Wisconsin, Indiana, 
Illinois, Michigan. Usually have 4 or 5 folks that run for my 
seat, the various parties that are out there and I just don't 
know when people actually turn on their set to watch a program, 
if you allow that, it would preempt the World Series. You have 
to play after November 7th and you know, be snowed out if it's 
at Wrigley Field because that's when we get snow and in my 
view, the system works today. The broadcasters like Mr. Sander, 
by offering free time for your candidates, what did you say 
118, I think, this last cycle. The system works and there are 
serious constitutional questions that would have to be met. Who 
knows whether this amendment for those who want campaign 
finance reform will have an opportunity to vote on an amendment 
whether one provision in the entire bill is ruled 
unconstitutional. Do you get anything out of the whole bill, 
that's a separate debate on a different issue, but I just offer 
that as a comment. If any of you would like to respond, 
briefly, we'll move on to Mr. Markey.
    Ms. BeVier. Mr. Upton, may I just say one thing? It has 
always seemed to me that in order to make any of these 
proposals work, whether it be free TV or lower rates, what you 
would have to do, your final move is going to have to be to 
require people to watch these things and if you can do that, 
then you can get to your audience, but otherwise, it's so 
saturated that I think people will probably not.
    Mr. Upton. Mr. Taylor, do you want to comment?
    Mr. Taylor. Just very briefly. There are a number of 
broadcasters around the country and Belo is certainly one of 
them that does do a good job of offering the kind of debates 
and other forums, but they are unfortunately the exception and 
not the rule.
    Going back to the Presidential campaign last year, two very 
quick statistics, there were 22 televised Presidential debates 
during the primaries in January and February and March of last 
year. Of those, only two were carried on a national broadcast 
network, neither in prime time. Then fast forwarding to the 
fall general elections, two of the four major national networks 
for the first time chose not to cover the general election 
debates. I think this is part of a pattern of retreat from the 
kind of providing forums that citizens do need, so I think that 
while, yes, there are some stations do it, the overall numbers 
are not very attractive.
    Mr. Upton. But remember, too, that particularly in one of 
the California debates, the candidates were offered an hour of 
free time and they chose not to do it. I think it was Mr. 
McCain chose not to show.
    Mr. Taylor. This happens and the dynamic there is 
oftentimes front runners don't want these forums because they 
don't want their challengers to be on equal footing. This is a 
problem that seems to me a robust system needs to overcome.
    The most difficult problem, I think is the one that 
Professor described as how do you get people to watch and 
there, I think if you place yourself in the hands of the 
broadcast industry, you are at least placing yourself in the 
best hands in the country, the broadcasters understand how to 
get people to watch television.
    Mr. Upton. Another comment here is McCain chose not to 
participate. I think almost in every race that I've had, I had 
my opponents fail to show up too, including my Democratic 
opponent this last time, chose not to appear on a free 
televised debate. It's fine with me. But I've always indicated 
that I would debate my opponents in every election and I have 
at one point or another.
    The other, I guess, just quick comment, because of the 
advent of C-SPAN, they often cover other races in parts of the 
country for the whole country to watch, so I can watch Mr. 
Markey's empty chair if they chose to show it in Boston, as he 
has no opponent, but seriously, you can watch the Senate races 
and the Congressional races, particularly those, the real close 
races that Mr. Morris cited, a lot of those, the local 
broadcasters, in fact, send their feed, taped or sometimes live 
to C-SPAN, where the whole country can watch.
    Mr. Taylor. But they have to pay a subscription fee to 
watch it, so it's not free over-the-air broadcast.
    Mr. Upton. Well, C-SPAN doesn't----
    Mr. Taylor. You have to have cable to get C-SPAN.
    Mr. Upton. Or satellite. Mr. Markey.
    Mr. Markey. Thank you, Mr. Chairman. I have testimony here 
from Louise Slaughter and I would like to make unanimous 
consent request that it be included.
    Mr. Upton. Without objection.
    [The prepared statement of Hon. Louise Mcintosh Slaughter 
follows:]

  Prepared Statement of Hon. Louise M. Slaughter, a Representative in 
                  Congress from the State of New York

    Mr. Chairman, as a long-time supporter of increasing the 
communication between candidates and the voters, I urge you to support 
the ``lowest unit charge'' amendment to the McCain-Feingold campaign 
finance reform bill. Special interests now contribute hundreds of 
millions of dollars to political campaigns, but who gets the money? 
Television broadcasters, who make the cost of campaigning today truly 
prohibitive. Make the advertising rates fair, and our elections will be 
fairer. That's a ratings system all Americans would be proud of.
    My involvement in the debate over the cost of political advertising 
stretches back to the 104th Congress, when I first introduced the 
Fairness in Political Advertising Act of 1995. This legislation would 
have required broadcasters to provide free air time for candidates who 
are seeking office in the period before an election. The air waves are 
owned by the public; therefore, broadcasters should be willing to 
provide a few minutes of free advertising for candidates who wish to 
serve the public good. This bill was never even reported out of 
committee because the broadcasting lobby spent millions of dollars 
trying to defeat the bill.
    I became interested in the lowest unit charge amendment after it 
was passed by a bipartisian majority in the Senate on March 21, 2001. 
This amendment would close the loophole in an existing federal law 
which directs broadcasters to offer candidates the lowest amount that 
the station charged for advertising during the 45 days preceding a 
primary election and the 60 days preceding a general election. Congress 
enacted the lowest unit charge to assure that candidates are treated 
the same as the most favored commercial advertisers during the pre-
election period.
    Although the lowest unit charge is still available to political 
candidates who wish to run television ads, the broadcast networks have 
made it an unattractive choice because advertisements that are 
purchased at the lowest unit charge can be preempted. The only way for 
a candidate to ensure that his or her political ad will be shown at a 
specific time and date is to buy nonpreemptible air time. According to 
a report by the Alliance for Better Campaigns, on average, this can 
increase the cost of political advertising by up to 65%.
    It is my firm belief that the lowest unit charge amendment to the 
McCain-Feingold bill is an important step toward increasing the 
communication between candidates and the voters in the period before an 
election. This amendment would not require broadcasters to offer free 
air time; rather, as a compromise, it would reduce the costs that 
federal candidates must pay to get their message out. The lowest unit 
charge language reinforces an existing federal law that was designed to 
prevent political candidates from competing with commercial 
advertisers, and it promotes fairness in the electoral process.
    Mr. Chairman, I thank you for the opportunity to express my views, 
and I urge you to support this provision when the House considers 
campaign finance reform in July.

    Mr. Markey. Thank you. So the government actually does set 
the rate that broadcasters have to pay the satellite industry 
and the cable industry for carriage of the local broadcast 
station and we set that rate at free, no charge, to the 
broadcasters. They get on without paying a nickel. So it's the 
government getting in, saying we're going to protect the 
broadcast industry, you don't have to pay a nickel. And the 
government sets the compulsory license rates for certain 
programming as well. We do that. But candidates, the government 
similarly sets the rates. And so as much as one industry or 
another, depending upon the circumstances either benefits from 
or laments the fact that the government is intruding, the 
industry is depending upon the issue are asking the government 
to move in to help out. So that's the reality, especially the 
broadcasters when it comes to must carry.
    Now as we move to the digital era, there will be a capacity 
for the broadcast industry to multiplex, to use this more 
versatile technology in ways that are touted to increase the 
capacity for the broadcast industry to serve the community. So 
the context in which I'm raising the issue of the role that the 
free over-the-air broadcast industry should play is that there 
is going to be a must carry issue when it comes to the digital 
signal and it's going to be a very thorny issue and one of the 
great contentions, of course, that the broadcast industry is 
going to make is that they are free and they are over-the-air, 
but they want now this enhanced benefit from the Federal 
Government in imposing a mandate upon the cable industry or 
upon the satellite industry. So my question again is what 
additional things, Mr. Sander, do you think the broadcast 
industry can do in conjunction with their request to us that we 
mandate must carry for the digital signal, the multiplexing, 
with all of its complexities for the cable industry, set that 
fee at zero, again, for you. What could you do, in your 
opinion, as Belo, the best of the broadcasters, what would you 
recommend that the commitment be that the broadcasters make to 
ensure that there is more which is done on a mandatory basis, 
by the way, not you, you're the best, but we hear from Mr. 
Taylor that on average it came out to 45 seconds. So a lot of 
people are riding upon your good work and other good stations 
in the country, but we need something that's more uniform.
    So what would you recommend?
    Mr. Sander. Mr. Markey, I think that's a very fair and 
thoughtful idea. I think as we go forward in the digital world 
and there are multi-channels and a lot of that is still trying 
to be hashed out as to what that really access is going to be, 
I think to have some information/political/governmental 
responsibilities for one of those channels or one of those 
multiplex signals is not an unreasonable idea and one that 
should be pursued.
    Mr. Markey. So would it be within the realm of 
reasonableness to have the kind of proposal which Mr. Taylor 
supports be applicable, at least for some period of time to 
some part of the digital signal which is being sent out so that 
the candidates would at least be able to avail themselves in 
the early years of the digital age since obviously we're 
putting policies on the books now that will last for a 
generation?
    Mr. Sander. You may be more knowledgeable in the technical 
area than I am, but there seems to be so much confusion as to 
how much spectrum you're going to be able to allot in a multi-
channel world, but having said that, to see that as part of the 
discussion, absolutely.
    Mr. Markey. You see my experience now in 25 years on this 
committee is that the one request that we always get from the 
broadcasters is that it be free, that if we must carry, or it 
be the digital spectrum itself, free is the key word. So 
obviously that raises in our minds this question of how we 
revisit the issue of the public interest responsibility that 
has to be reciprocated and if no concrete proposal ever comes 
back, then that's obviously going to affect the way many of us 
view this relationship that exists between yourself and cable. 
The cable industry, to its credit, now has C-SPAN 1, C-SPAN 2, 
C-SPAN 3, admittedly, that's national and it doesn't have 
political advertising on it, but at the same time that's a 
pretty substantial commitment. And what I'm saying is that you 
are going to have an increasing burden and at this point it's 
clear to me that at least in your testimony today, there is no 
concrete proposal which has been developed by the NAB.
    Mr. Sander. On the digital side.
    Mr. Markey. On the digital side. And I find that troubling 
because I know that there was a long discussion that Belo was 
part of at the national level.
    Mr. Sander. Right.
    Mr. Markey. And I'm not asking you to speak again for the 
whole of the NAB, but just for your own company in terms of 
what you think it would be reasonable for you to offer as the 
best player in the industry.
    Mr. Sander. I'd be happy to do that. A couple of points I 
would add. One, we have been the proponent of the most robust, 
quality signal possible, so we have been on the aggressive side 
of the 10 ADI which will take the most amount of that 
bandwidth. Having said that knowing technology is going to 
evolve and change in the multi-channel world, Belo would be 
most happy to come to the table and talk about that.
    One of the things I would submit and ask it very much goes 
to what Chairman Upton talked about, that is, one of the things 
we talk so much about, I think, in the broadcasting world, 
because we hear from your constituents, your voters, day in and 
day out is we don't want all these political ads, so I think 
what our responsibility would be is to continue to urge for 
more debates, more open forum, more open access and we do have 
a dilemma, it's frustrating that we offer this time and that 
we're not taken up on it. But I would hope that that would 
encompass all of your goal here for more a voice.
    Mr. Markey. You believe the NAB should have a national 
policy which can then be codified, put in regulation or do you 
think we should just leave it to every company to make up their 
own mind?
    Mr. Sander. It's a great question. I'm not sure I've got a 
terrific answer for you. I think that----
    Mr. Markey. I don't want you to speak disparaging of other 
members of the NAB, but you're aware of certain participants 
that have no public interest, obligation whatsoever.
    Mr. Sander. Absolutely.
    Mr. Markey. And that their shareholders are the only people 
to whom they have any responsibility at all and you know who 
those broadcasters are.
    Mr. Sander. I would concur with that, but I would say I 
think it's the minority and not the majority and I think----
    Mr. Markey. We don't pass laws for the good players. We 
don't have a death penalty because anyone is really concerned 
that my mother is going to murder anybody. That's not why we 
have it on the books. We have it for that percentage of people 
that we think are in a category that might tend toward anti-
social behavior. So that's why you need to have laws. It's for 
those people. So within every industry, those people exist and 
so you need a certain minimal standard of conduct that they all 
understand that has to be met. And so while I appreciate the 
fact that there might be an adversity, you might be adverse to 
having any kind of a regulation, you do understand the need 
because of the lack of jaw boning capacity within an industry 
group to get the worst players to behave well.
    Mr. Sander. I certainly understand your position. I'd be 
happy to give you my list as well.
    Mr. Markey. It's the same list. You know who they are. 
They're standouts in their field of inactivity.
    One final question, Mr. Taylor, the cable and satellite TV 
industry, should they be included at this time?
    Mr. Taylor. Well, my understanding is that under current 
law they are already included, the 1971 law included cable and 
I understand the 1992 Cable Act extended these political 
broadcast requirements to satellite. Now as we've heard 
testimony, there's not a great deal of advertising, certainly 
on satellite. There's just a little bit on cable. I don't see 
any reason at the moment to revisit this. The presumption is 
that over time this will become a more attractive medium of 
advertising. I understand the constitutional questions are a 
little bit different. It seems to me the strongest case is with 
broadcast because of the 70-year history of public interest 
obligation, but cable and satellite do have licenses, there is 
an interference issue with cable and there is at least a peg on 
which to impose some of these requirements. I don't pretend to 
be an expert, but I would simply notice that current law is 
that they are included.
    Mr. Markey. And I would ask you, Mr. Morris, regardless of 
the percentage of money that ultimately is dedicated to buying 
TV everyone of us knows that if you're on television, you 
exist. If you're not on television, you do not exist. Descartes 
would have to change his formula.
    Mr. Morris. I'm not here to suggest in a lot of highly 
competitive races this is not an important issue. I'm simply 
here to say that in the majority of congressional districts 
across the country, it's not an issue and you need to decide, 
as I mentioned earlier, whether or not and from your 
perspective it sounds like you made that decision that it is 
important to pass the law to benefit the few rather than the 
many and I don't have a problem. That's not my position. I 
don't have a position.
    Mr. Markey. I apologize, your indulgence, Mr. Chairman. You 
may be right that in any given cycle television only plays a 
role in 15 or 20 percent of the seats, but when that seat is in 
doubt, that is, when there's an open seat and the new 
Congressman is going to be selected, albeit with the likelihood 
that they will stay there for some considerable period of time, 
television, more likely than not, will be the determining 
factor as to who wins that open seat.
    Mr. Morris. I cannot disagree with that.
    Mr. Markey. And that then becomes the determining factor 
for how that vote is cast in Congress, for the rest of the 
duration of the career of that Congressman. So there is no 
seat, in other words, in the U.S. Congress that wasn't 
determined by television.
    Mr. Morris. Well, actually, there are quite a few at this 
point because there have been members here long enough when TV 
wasn't----
    Mr. Markey. Since I'm not the 18th senior Member of the 
U.S. House of Representatives, and I ran in 1976 with a 
television commercial, we're now numbering no more than 17 
people, but even amongst them their careers, I think----
    Mr. Morris. I would agree with you that in many, many 
Districts, particularly North Carolina, Florida and others that 
are not highly urbanized, but I would argue that in New York 
City, the next time any of those seats comes up, you will not 
see anyone advertising on television. You simply will not. In 
Chicago, you won't. It just doesn't happen.
    Mr. Markey. How about in Boston?
    Mr. Morris. In Boston, you do. There has been, if you look 
at the Congressional Delegation from Massachusetts in the last 
couple of election cycles, there has been 1 or 2 of the 10 in 
Massachusetts in which there has been significant advertising 
in any given election cycle, but for central city of Boston, 
and I use the example of Joe Kennedy, there is not a tremendous 
incentive to advertise in order to win the 8th Congressional 
District in Boston. I would venture to guess that whoever the 
Democratic nominee will never run ads in the 8th Congressional 
District in Boston. I think that's a pretty safe bet.
    Mr. Markey. That is absolutely untrue. When Joe Kennedy ran 
the first time in 1986, there was a deification process that 
was reinforced by the television advertisements that were the 
central part of his campaign and when his seat was open, 
believe it or not, in 1998, $12 million was spent in the 
primary.
    Mr. Morris. In the primary, yes.
    Mr. Markey. Almost all of it on television. So that's what, 
the fifth largest market in the country?
    Mr. Morris. Something like that.
    Mr. Markey. Fifth or sixth. So you might be able to exclude 
New York. Okay, but there aren't many any longer.
    Mr. Morris. You can also, to get to a point you were making 
a moment ago about the question of cable, a lot of Members are 
moving to cable. One, it's much more cost effective and I don't 
know, it's certainly not the majority at this point, but if you 
look at Northern Virginia, and you look at my congressional 
district, the 8th Congressional District, it's now the 11th 
Congressional District, was the 8th Congressional District, 
there was a considerable amount of television advertising by an 
unopposed incumbent last time. It was all on cable. Every shred 
of it.
    Mr. Markey. I'll just make this final point. When I ran in 
1976 I was the first person to run a television commercial and 
I spent $27,000 on the Boston TV stations and my slogan was 
because the Speaker of the House had thrown my desk out in the 
hall because I had passed this bill banning judges from having 
law practices on the side, and my final slogan was the bosses 
can tell me where to sit, nobody tells me where to stand. 
That's my little slogan, 1976. That's $27,000, 1976.
    For the same buy today, it will be like $300,000 to 
$400,000 with the rate increase, huh? So I could go on and have 
$25 fundraisers, $50 fundraisers in 1976 and as an insurgent 
candidate actually figure out in a 12-way race how to come out 
of that field in spending only $50,000 or $60,000 totally for 
$27,000 on television and create a candidacy.
    Today, people can't have $50 fundraisers or $100----
    Mr. Morris. But if you take the percentage of every Member 
of Congress and what they spent on television, the median 
expenditure for television advertising by Members of the House 
of Representatives has not changed one iota since 1992.
    Mr. Upton. I think on that note, we'll adjourn the hearing.
    [Whereupon, at 12:41 p.m., the hearing was adjourned.]
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