U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

82–690 PDF 2014

SATELLITE TELEVISION LAWS IN TITLE 17 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET 

OF THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

SEPTEMBER 10, 2013 

Serial No. 113–48 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 
(II) 

COMMITTEE ON THE JUDICIARY 

BOB GOODLATTE, Virginia, Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

SPENCER BACHUS, Alabama 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM MARINO, Pennsylvania 

TREY GOWDY, South Carolina 

MARK AMODEI, Nevada 

RAU ́ L LABRADOR, Idaho 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

JOHN CONYERS, JR., Michigan 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO R. PIERLUISI, Puerto Rico 

JUDY CHU, California 

TED DEUTCH, Florida 

LUIS V. GUTIERREZ, Illinois 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

JOE GARCIA, Florida 

HAKEEM JEFFRIES, New York 

SHELLEY HUSBAND, Chief of Staff & General Counsel 

PERRY APELBAUM, Minority Staff Director & Chief Counsel 

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, AND THE INTERNET

HOWARD COBLE, North Carolina, Chairman 

TOM MARINO, Pennsylvania, Vice-Chairman 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR SMITH, Texas 

STEVE CHABOT, Ohio 

DARRELL E. ISSA, California 

TED POE, Texas 

JASON CHAFFETZ, Utah 

MARK AMODEI, Nevada 

BLAKE FARENTHOLD, Texas 

GEORGE HOLDING, North Carolina 

DOUG COLLINS, Georgia 

RON DeSANTIS, Florida 

JASON T. SMITH, Missouri 

MELVIN L. WATT, North Carolina 

JOHN CONYERS, JR., Michigan 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

JUDY CHU, California 

TED DEUTCH, Florida 

KAREN BASS, California 

CEDRIC RICHMOND, Louisiana 

SUZAN DelBENE, Washington 

HAKEEM JEFFRIES, New York 

JERROLD NADLER, New York 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

JOE KEELEY, Chief Counsel 

STEPHANIE MOORE, Minority Counsel 
(III) 

C O N T E N T S 

SEPTEMBER 10, 2013 

Page 

OPENING STATEMENTS 

The Honorable Howard Coble, a Representative in Congress from the State 

of North Carolina, and Chairman, Subcommittee on Courts, Intellectual 

Property, and the Internet .................................................................................. 1 

The Honorable Melvin L. Watt, a Representative in Congress from the State 

of North Carolina, and Ranking Member, Subcommittee on Courts, Intellectual Property, and the Internet .......................................................................... 2 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and Chairman, Committee on the Judiciary ................................. 3 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, Ranking Member, Committee on the Judiciary, and 

Member, Subcommittee on Courts, Intellectual Property, and the Internet .. 4 

WITNESSES 

Paul Donato, Executive Vice President and Chief Research Officer, The 

Nielsen Company 

Oral Testimony ..................................................................................................... 6 

Prepared Statement ............................................................................................. 8 

R. Stanton Dodge, Executive Vice President, General Counsel and Secretary, 

DISH Network, L.L.C. 

Oral Testimony ..................................................................................................... 10 

Prepared Statement ............................................................................................. 12 

Gerard J. Waldron, Partner, Covington and Burling LLP, on behalf of the 

National Association of Broadcasters 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Earle A. MacKenzie, Executive Vice President and Chief Operating Officer, 

Shentel Cable, on behalf of the American Cable Association 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

James Campbell, Regional Vice President, Public Policy, CenturyLink, Inc. 

Oral Testimony ..................................................................................................... 56 

Prepared Statement ............................................................................................. 58 

Robert Alan Garrett, Partner, Arnold & Porter LLP, on behalf of Major 

League Baseball 

Oral Testimony ..................................................................................................... 67 

Prepared Statement ............................................................................................. 68 

Preston Padden, former President, ABC Television Network, former Executive 

Vice President, The Walt Disney Company, testifying on his own behalf 

Oral Testimony ..................................................................................................... 70 

Prepared Statement ............................................................................................. 72 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Material submitted by the Honorable Melvin L. Watt, a Representative in 

Congress from the State of North Carolina, and Ranking Member, Subcommittee on Courts, Intellectual Property, and the Internet ......................... 109 

(1) 

SATELLITE TELEVISION LAWS IN TITLE 17 

TUESDAY, SEPTEMBER 10, 2013 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COURTS, INTELLECTUAL PROPERTY, 

AND THE INTERNET

COMMITTEE ON THE JUDICIARY

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:04 a.m., in room 

2141, Rayburn Office Building, the Honorable Howard Coble 

(Chairman of the Subcommittee) presiding. 

Present: Representatives Coble, Goodlatte, Marino, Sensenbrenner, Smith (Texas), Chabot, Farenthold, Holding, Collins, 

DeSantis, Smith (Missouri), Watt, Conyers, Chu, Deutch, Bass, 

Richmond, DelBene, Jeffries, and Jackson Lee. 

Staff present: (Majority) Joe Keeley, Chief Counsel; Olivia Lee, 

Clerk; and (Minority) Stephanie Moore, Minority Counsel. 

Mr. COBLE. Good morning, ladies and gentlemen. I appreciate 

the witnesses’ presence today. We welcome you to the Subcommittee hearing on satellite television laws contained in Title 17 

of the U.S. Code. 

Not unlike other copyright issues before Congress, the circumstances surrounding disputes over our satellite television laws 

are exceedingly complicated and important to every congressional 

district. 

When it comes to video, I believe there are some points on which 

we can all agree. Americans love to watch television and want to 

have as many choices available at the lowest possible price. 

This Committee has created three compulsory licenses to make 

content more available. While in some instances these licenses 

have served consumers and stakeholders efficiently and effectively, 

I believe it is safe to say that compulsory licenses are not without 

their shortcomings. The classic example is when a local sports competition or a popular show is suddenly unavailable. You go home 

looking forward to seeing that particular show involved and you 

are unable to get it. You are likely to turn off the television and 

call someone to complain. I think that is a natural result. 

Regardless of what perspective a Member of Congress has on licensing issues, we can all learn one truth. Our constituents are not 

shy about telling us to do something about problems in the marketplace that deprive them of their favorite shows. 
2 

As we begin this review of the satellite licenses, one of our goals 

will be to find solutions to situations where the laws tend to benefit 

one party over the other. Throughout this discussion, our top priority will be to protect the interests of consumers. When there is 

a dispute and a resultant blackout, consumers are left with no recourse. 

Again, this is an extremely complex area of copyright law, and 

I am pleased by our highly talented and highly qualified panel of 

witnesses who are participating in today’s hearing. 

I am now pleased to recognize the distinguished gentleman from 

North Carolina, the Ranking Member, Congressman Mel Watt, for 

his opening statement. 

Mr. WATT. Thank you, Mr. Chairman. 

Today is the first of what I suspect will be a series of hearings 

to consider the reauthorization of the Satellite Television Extension 

and Localism Act, or what we call STELA, which, among other 

things, extended the 119 license through December 31, 2014. 

Enacted in 1988, the Satellite Home Viewer Act created a copyright compulsory license for the benefit of the satellite industry to 

retransmit distant television signals to its subscribers. The license, 

codified in section 119 of the Copyright Act, was originally intended 

to ensure the availability of broadcast programming to satellite 

providers and to foster competition with the cable industry, which 

has enjoyed a permanent compulsory license to retransmit copyrighted content contained in both local and distant broadcast television signals since passage of the Copyright Act of 1976. 

The intent of providing compulsory copyright licenses was to facilitate investment in new, creative works by the satellite and cable 

industries by eliminating direct negotiation with the copyright 

owners for the use of distant signal programming. 

Although the 119 compulsory license is temporary and therefore 

the focus of the reauthorization we will be considering, it is part 

of a complex statutory and regulatory framework governing cable 

and satellite retransmission of broadcast signals, making it virtually impossible to consider whether to reauthorize the provision 

in a vacuum. 

For that reason, the Committee on Energy and Commerce, which 

has jurisdiction over key regulations and statutory provisions that 

govern the broadcast market, has held multiple hearings in this 

Congress on whether to repeal, revise, or reauthorize STELA. 

Four years ago, under the leadership of Chairman Conyers, the 

Judiciary Committee also grappled with a number of issues that 

had emerged in the marketplace in an effort to simplify and modernize what was largely perceived as an anachronistic regime for 

the provision of broadcast programming. Most immediately we addressed the impending transition from analog to digital television. 

Other issues the Committee considered at that time remain unresolved while new technologies have further disrupted the market 

with innovations that we could not foresee less than a decade ago. 

I believe we have a unique opportunity to tackle some of the big 

issues that will define the future of video. Compulsory licenses I 

think everyone will admit represent a departure from free market 

negotiations and are usually the last resort in the event of market 

failure. When the compulsory licenses were first enacted, the cable 
3 

and satellite industries were in their embryonic stages. Today, 

however, it is estimated that over 90 percent of American households subscribe to a pay TV service. So there are a myriad of issues 

that may be relevant for consideration. 

For example, are these licenses still necessary to foster competition or should they be phased out as the Copyright Office and others have recommended? How many consumers truly benefit from 

these licenses? 

On the other hand, is the current overlapping web of communications and copyright policy functioning in a way that meets the 

goals of national media policy? It cannot be denied or disregarded 

that marketplace incumbents, including broadcasters, cable, and 

satellite providers and content creators, have entrenched interests 

and investments in a complex framework created by law. Would an 

abrupt dismantling of this structure be unfair to those industries 

and harmful to consumers? Can current law keep pace with new 

technologies that seek to exploit ambiguities in the legal framework, for example, what constitutes a public performance for retransmission consent purposes? 

Recently the CBS/Time Warner Cable retransmission consent 

dispute resulted in a temporary blackout for some consumers. Is 

that dispute evidence of a broken system or does it reflect a robust 

free market? 

Also, how should we address or should we address the nascent 

online video distribution models that in the future may very well 

displace the traditional distribution methods altogether? Are these 

Internet-based video distribution models the new kids on the block 

entitled to comparable statutory imposed rights, obligations, and 

prohibitions? Or is the time for Government intervention over? 

These are only a few of the broad policy questions that I think 

are relevant in this space. I believe that we must determine whether the current regime is working to ensure that content providers 

and distributors, old and new, are appropriately compensated and 

incentivized in a way that provides a competitive environment for 

American consumers. 

We have an impressive and diverse group of expert witnesses 

today with very different views on how the marketplace works and 

how it has developed since STELA and most probably what the 

rules of the road should be moving forward. I look forward to the 

testimony today and to continuing this dialogue in the future. 

And, Mr. Chairman, I yield back and thank you for the time. 

Mr. COBLE. I thank the gentleman for his opening statement. 

The Chair now recognizes the distinguished gentleman from Virginia, Mr. Bob Goodlatte, the Chairman of the Committee on the 

Judiciary, for his opening statement. 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. I appreciate 

your holding this hearing. I look forward to the testimony of the 

witnesses. 

For decades, the vast majority of Americans have relied upon 

satellite and cable services for access to a wide variety of video content ranging from nighttime entertainment for their families, educational shows for their children, local and national news with information that informs them, and public access channels that em-
4 

power Americans to see their local, State, and Federal representatives in action. 

As the number of channels and sources of video content continue 

to increase, a growing number of Americans now subscribe to additional services such as Redbox, Amazon, and Hulu, some of which 

create their own content. Americans are embracing these additional services to such a degree that society has coined two new 

terms, ‘‘cord shavers’’ and ‘‘cord cutters,’’ for those who are reducing or eliminating traditional video subscriptions. According to the 

FCC’s latest competition report, in addition to free over-the-air 

broadcast content, 100 percent of Americans have access to two satellite services. 98 percent have access to these two satellite services 

and one local alternative, and 35 percent have access to two satellite services and two local alternatives. 

Marketplace competition has grown significantly since the last 

major Committee activity in this area in 2010 when Congress enacted the Satellite Television Extension and Localism Act. There 

are three compulsory licenses in Title 17 impacting this industry, 

one of which expires at the end of 2014. This Committee will consider, over the next year, whether a reauthorization of this compulsory license is warranted. 

However, as the written testimony submitted for this hearing 

demonstrates, some interested parties are advocating for Congress 

to undertake more than a simple reauthorization and look at other 

matters surrounding the video marketplace and competition policies that appear to have become more prominent recently. 

One core factor that this Committee will weigh, as we consider 

these important issues, is ensuring that copyright owners maintain 

the right to distribute their intellectual property as they choose. 

This Committee has traditionally disfavored compulsory licenses, 

although there are three in effect today in this marketplace. 

Another core factor we will weigh is ensuring competition in the 

marketplace. Consumers and intermediaries benefit where there is 

robust competition. As the Committee of jurisdiction for competition policy, efforts that involve competition issues deserve this 

Committee’s oversight and ongoing attention. 

The written testimony of the witnesses here this morning highlights the importance of both issues to the video marketplace. As 

this Committee continues its oversight and legislative activities in 

this area, I look forward to hearing from all interested parties 

about their perspectives and concerns. 

And I thank the Chairman and yield back. 

Mr. COBLE. I thank you, Chairman Goodlatte. 

The Chair now recognizes the distinguished gentleman from 

Michigan, Mr. John Conyers, the Ranking Member of the Committee on the Judiciary, for his opening statement. 

Mr. CONYERS. Thank you, Chairman. 

The Satellite Television Extension and Localism Act is full of options that we have witnesses to distinguish. 

I want to thank the Chairman for keeping the witness list down 

to seven. I understand we ran out of tables and we were not able 

to put on any more people than are here. 

I want to consider these options, and I look forward to the witnesses’ testimony. 
5 

Two considerations, one about copyright owners and the other 

about consumers. We must protect copyright owners because it is 

their property that forms the basis of the entire scheme. Compulsory licenses are generally not favored because they distort the 

marketplace and result in below-market rates being paid to content 

owners. 

Second, we must enact policies that protect consumers and safeguard competition. Consumers benefit from increased competition 

because more competition usually produces lower prices. And copyright owners do not benefit financially from retransmission consent 

agreements, which is at the heart of these disputes, despite the fact 

that the signal only has worth because of the programming contained on the signal. 

And so I think we must focus on principles of localism. People 

who subscribe to cable or satellite television have so many options. 

There is never a shortage of something to watch. But even with all 

these choices, people still highly value their local news, their local 

sports, and need local channels to deliver community service and 

emergency information. Localism and the traditional network affiliate relationship also benefits copyright owners by allowing their 

programming to be publicly performed in every market across the 

country. 

Now, I conclude by observing that there will be circumstances in 

which these principles will conflict. I look forward to working to ensure that the public interest can best be served through satellite 

carriage of broadcast television signals. 

And I thank the Chairman for allowing me to make these few 

brief remarks. 

Mr. COBLE. Thank you, Mr. Conyers. I appreciate that. 

As indicated before, we have a very distinguished panel before us 

today, and I will begin by swearing in the witnesses. Gentlemen, 

if you would please rise. 

[Witnesses sworn.] 

Mr. COBLE. Let the record show that all witnesses concur with 

that. 

And I will now introduce our panel. We appreciate everyone’s attendance at this very important hearing. 

Our first witness today is Mr. Paul Donato, Executive Vice President and Chief Research Officer of the Nielsen Company. Mr. 

Donato is responsible for overseeing the development and evaluation of research while also serving as Nielsen’s liaison to his clients 

and industry associations. He received his B.A. in psychology and 

sociology from the State University of New York at Stony Brook. 

Our second witness is Mr. Stanton Dodge, Executive Vice President, General Counsel, and Secretary for DISH Network. Mr. 

Dodge is responsible for all legal and government affairs for DISHadded subsidiaries. He received his B.S. in accounting from the 

University of Vermont. 

Our third witness is Mr. Gerard Waldron, partner at Covington 

and Burling, testifying today on behalf of the National Association 

of Broadcasters. With more than 25 years experience in law and 

public policy, his practice focuses on communication and technology. Mr. Waldron received his B.A. degree from the University 

of Virginia. 
6 

Chairman Goodlatte has now asked permission to introduce our 

next witness. 

Mr. GOODLATTE. Thank you, Mr. Chairman. It is my pleasure to 

welcome our fourth witness and my constituent, Mr. Earle MacKenzie, the Executive Vice President and Chief Operating Officer 

of Shentel Cable, testifying on behalf of the American Cable Association. With 35 years of telecom experience, Mr. MacKenzie is responsible for Shentel’s daily operations of its many subsidiaries. He 

received his B.A. in accounting from the College of William and 

Mary. Earle, welcome. We are delighted to have your testimony 

today as well. 

Mr. COBLE. I thank the Chairman. 

Our next witness is our fifth witness today, Mr. James Campbell, 

Vice President for Public Policy at CenturyLink. Mr. Campbell is 

responsible for the company’s regulatory and legislative affairs and 

received his bachelor’s degree from Santa Clara University. 

Our sixth witness is Mr. Robert Garrett, partner at Arnold & 

Porter, who is testifying today on behalf of Major League Baseball. 

Mr. Garrett joined Arnold & Porter in 1977 and has served as outside counsel to Major League Baseball on copyright and telecom 

issues for more than 35 years. Mr. Garrett attended the Northwestern University. 

Our seventh and final witness is Mr. Preston Padden, who is testifying on his own behalf today. With an extensive career in the 

media business, he served as former President of the ABC Television Network and former Executive Vice President of the Walt 

Disney Company. He received his B.A. from the University of 

Maryland. 

We welcome you all and we will start, Mr. Donato, with you. You 

will be the lead-off hitter today. 

Gentlemen, as is obvious to all, we have seven witnesses. This 

could take a long time. We try to apply the 5-minute rule. There 

is a timer before you. When that green light turns to amber, that 

is your signal that the time is running. The clock is running out. 

You have a minute to go. So at that point, we would appreciate if 

you would sort of wrap it up. 

We are trying to apply the 5-minute rule to us as well. So if you 

will respond tersely to our questions, that would be helpful as well. 

So, Mr. Donato, why don’t you start us off? 

TESTIMONY OF PAUL DONATO, EXECUTIVE VICE PRESIDENT 

AND CHIEF RESEARCH OFFICER, THE NIELSEN COMPANY 

Mr. DONATO. Good morning, Chairman Coble, Ranking Member 

Watt, and Members of the Subcommittee. My name is Paul Donato 

and I am the Executive Vice President and Chief Research Officer 

for Nielsen. I thank you for the opportunity to join today’s panel 

to discuss Nielsen’s designated market area, commonly known as 

DMAs, and their role in satellite transmission statutes such as 

STELA. 

Nielsen is a global media and marketing research company that 

measures what people watch and buy in 100 countries worldwide. 

In the United States, we are widely known for our television audience measurement service, the Nielsen television ratings, which 
7 

provide estimates of audiences for broadcast, cable, and satellite 

programs. 

Over the years, Nielsen has developed innovative technologies, 

allowing us to expand our measurement services to include computers, tablets, and smart phones. Through these technologies and 

our volunteer opt-in panelists, Nielsen has the capability to measure consumer Internet purchase habits, listening trends on terrestrial, Internet, and satellite radio, and how consumers utilize social 

media. Our audience measurement reports are relied on by a range 

of public and private sector stakeholders to facilitate business 

transactions and gauge consumer trends. Nielsen’s DMAs are also 

used by the Federal Government to define markets in satellite television retransmission statutes. 

Most discussions of STELA and its predecessors begin with a 

conversation about Nielsen’s DMAs, and that will be the focus of 

my testimony today. 

The designated market area is a collection of counties which 

share a predominance of viewing to broadcast stations licensed to 

operate within a given standard metropolitan statistical area as defined by the OMB. Predominance or dominance of viewing is defined here to indicate that ‘‘for a particular county, homes may 

view broadcast stations licensed to operate from different but generally nearby metro areas. The DMA with the predominant viewing 

is that metro area whose broadcast stations have the highest share 

of audience for that county.’’ 

So we start with a metro area, such as New York or Los Angeles, 

and continue on through the 210 DMA markets in the United 

States. 

Each March, using tuning data collected from Nielsen homes 

over the last year, existing DMA regions are tested in order to 

verify that the dominant share of viewing from each DMA county 

continues to be from broadcast stations licensed to operate from 

within that same home metro. All assignments are based on share 

of household tuning between 6 a.m. and 2 a.m. Sunday through 

Saturday. While this is the basic premise behind the DMA, there 

are rules which Nielsen exercises when it appears that the predominance of viewing may be shifting. These rules try to balance 

the need for stability in television markets, but at the same time, 

they need to ensure that counties are assigned to the DMAs from 

where the highest share of broadcast viewing occurs. 

For example, if a larger share of viewing from a county shifts 

from its current DMA assignment to broadcast stations from another DMA, that shift must be statistically significant and occur for 

2 consecutive years. 

Nielsen instituted the DMA system in the mid-1960’s to measure 

the number of viewers in a particular area and, more specifically, 

to connect sellers and buyers of advertising. 

The DMA allowed for the creation of a market where buyers and 

sellers of local television advertising could do business with each 

other based on impartial information provided by a third party. Advertisers need to know that their ads are directed at audiences 

they want to serve. The TV Advertising Bureau estimates that in 

Q1 of this year, ad spending in the U.S. was almost $18 billion, 

with an estimate of $72 billion for the entire year. That is a market 
8 

that fuels the great entertainment and news programs that this 

country produces and watches. 

With the emergence of cable and satellite television in the late 

1980’s and early 1990’s, the landscape of the industry changed. The 

new technology allowed companies that carried television programming to expand their boundaries. Specifically, television stations 

were previously limited to being viewed within a local DMA and 

could not be seen outside of those boundaries. And while new technologies open up new horizons, they also create new problems for 

the television industry. 

The industry needed rules to determine which local stations 

could be carried in which local markets, and it turned to the Federal Government for help. In 1992, Congress and the FCC established rules governing which local television stations could be carried in which local markets. As part of that process, Nielsen’s designated market areas were adopted as the guideline for determining which local stations could be carried. It should be noted 

that Nielsen did not recommend the use of the DMAs for this purpose nor were we asked for technical assistance on the use of the 

DMAs. It was a decision that was made entirely by Congress. 

Finally, as you work to learn more about the future trends in 

video use, we would be happy to assist you in any way we can. 

Thank you again for the opportunity to appear before you, and I 

look forward to your questions. 

[The prepared statement of Mr. Donato follows:] 

Prepared Statement of Paul Donato, Executive Vice President and 

Chief Research Officer, Nielsen 

Good morning Chairman Coble, Ranking Member Watt and members of the Subcommittee. My name is Paul Donato, and I am the Executive Vice President and 

Chief Research Officer for Nielsen. I thank you for the opportunity to join today’s 

panel to discuss Nielsen’s Designated Market Areas, commonly referred to as 

‘‘DMAs,’’ and their role in satellite transmission statues such as the Satellite Television Extension and Localism Act (STELA). 

Nielsen is a global media and marketing research company that measures what 

people watch and buy in 100 countries worldwide. In the United States, we are 

widely known for our Television Audience Measurement Service, the Nielsen Television Ratings, which provide estimates of the audiences for broadcast cable and satellite programs. Over the years Nielsen has developed innovative technologies allowing us to expand our measurement services to include computers, tablets, and 

smartphones. Through these technologies and our volunteer panelists, Nielsen has 

the capability to measure consumers’ Internet purchasing habits, listening trends on 

terrestrial, Internet and satellite radio, and also how consumers utilize social media. 

Our audience measurement reports are relied upon by a range of public and private 

sector stakeholders to facilitate business transactions and gauge consumer trends. 

Nielsen’s DMAs are also used by the federal government to define markets in satellite television retransmission statutes. 

NIELSEN DMAS & SATELLITE RETRANSMISSION STATUTES

Most discussions of STELA and its predecessors begin with a conversation about 

Nielsen’s DMAs, and that will be the focus of my testimony today. 

The Designated Market Area 

The Designated Market Area is a collection of counties each of which shares a predominance of viewing to broadcast stations licensed to operate in a given Standard 

Metropolitan Statistical Area (SMSA) as defined by the Office of Management and 
9 

Budget (OMB). Predominance or dominance of viewing is defined here to indicate 

that: 

for a particular county, homes may view broadcast stations licensed to operate from different but generally nearby Metro areas. The DMA with the predominant viewing is that Metro area whose broadcast stations have the 

highest share of audience for that county. 

So we start with a Metro area such as the New York or Los Angeles SMSA and 

continue throughout the 210 DMA markets in the US. 

Each March, using tuning data collected from Nielsen homes over the last year, 

existing DMA regions are tested in order to verify that the dominant share of viewing from each DMA county continues to be from broadcast stations licensed to operate from within that same home Metro (SMSA). All assignments are based on share 

of household tuning between 6 AM and 2 AM Sunday through Saturday. While this 

is the basic premise behind the DMA, there are rules which Nielsen exercises when 

it appears that the predominance of viewing may be shifting. These rules try to balance the need for stability in television market definitions and the need to ensure 

that counties are assigned to the DMAs from where the highest share of broadcast 

viewing occurs. 

For example, if the larger share of viewing from a county shifts from its current 

DMA assignment to broadcast stations from another DMA, that shift must be ‘‘statistically significant’’ and occur for two consecutive years. 

Nielsen instituted the DMA system in the mid-1960s to measure the number of 

viewers in a particular area and, more specifically, to connect the sellers and buyers 

of advertising. 

The DMA system allowed for the creation of a market where the buyers and sellers of local television advertising could do business with each other based on impartial information provided by a third party. Advertisers need to know that their ads 

are directed at the audience they want to serve. The Television Advertising Bureau 

estimates that Q1 2013 ad spending in the US was almost $18 billion, for an annual 

spending estimate of almost $72 billion for all TV, a market that fuels the great 

entertainment and news programs that this country produces and America watches. 

With the emergence of cable and satellite television in the late 1980s and early 

1990s, the landscape of the industry changed. The new technology allowed companies that carried television programming to expand their boundaries. Specifically, 

television stations that were previously limited to being viewed within a local DMA 

could be seen outside of those boundaries. And, while the new technologies open 

new horizons, they also created new problems for the television industry. 

The DMA and Satellite Statutes 

The industry needed rules to determine which local stations could be carried in 

which local markets and it turned to the federal government for help. In 1992, the 

Congress and the Federal Communications Commission established rules governing 

which local television station could be carried in which local markets. As part of 

that process, Nielsen’s Designated Market Areas were adopted as the guideline for 

determining which local stations could be carried in which local markets. It should 

be noted that Nielsen did not recommend the use of DMAs for this purpose, nor 

were we asked for technical assistance on the use of DMAs. This was a decision that 

was made by the Congress. 

CONCLUSION

As you work to learn more about the future trends in video use, we would be 

happy to assist you in any way we can. Thank you again for the opportunity to appear before you and I look forward to your questions. 

Mr. COBLE. Thank you, Mr. Donato. Congratulations. You beat 

the illumination of the red light. Pressure on you, Mr. Dodge. 
10 

Needless to say, gentlemen, your entire statements will be made 

part of the record. 

Mr. Dodge? 

TESTIMONY OF R. STANTON DODGE, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, DISH NETWORK, L.L.C. 

Mr. DODGE. Thank you. Chairman Goodlatte, Chairman Coble, 

Ranking Member Conyers, Ranking Member Watt, and Members of 

the Subcommittee, I appreciate the opportunity to testify today. My 

name is Stanton Dodge, and I am the General Counsel of DISH 

Network. DISH is the Nation’s third largest pay TV provider with 

more than 14 million subscribers and over 25,000 employees. We 

are the only provider for local television service in all 210 local 

DMAs. 

DISH’s award-winning innovations include the Hopper DVR and 

TV Everywhere features that consumers can use to have greater 

choice and control over their viewing experience. DISH pays billions of dollars a year for the right to distribute programming to 

our subscribers and fully supports fair compensation to copyright 

holders. 

As the Subcommittee examines the video marketplace, we believe 

that outdated laws need to be updated comprehensively to reflect 

changes in the market and changes in how consumers view their 

content. Public policy should support the preservation and expansion of consumer video choices. 

Unfortunately, as distributors like DISH offer advances in technology, some programmers are again crying wolf, saying that this 

time the threat is real and they will not be able to survive the onslaught of innovation. The challenges to our Hopper DVR are a perfect example. 

We believe in consumer choice and to preserve and expand it, I 

want to make three points. 

First, we believe Congress should protect consumers against the 

growing problem of blackouts caused by retransmission consent 

disputes. The proof is in the numbers. In 2010, there were 12 

blackouts. In 2011, there were 51. In 2012, the number soared to 

almost 100, and the pace has yet to level off. So far in 2013, we 

have had 84 blackouts which puts us on track for a record-setting 

year of 120. 

Making matters worse, the length of the blackouts and the number of consumers impacted are increasing. The consumers are the 

real victims of these one-sided negotiations. Their programming 

gets pulled by the broadcasters and their monthly bills go up. Of 

increasing concern, some broadcasters are coordinating their negotiations with each other and colluding rates that they demand from 

video distributors like DISH. 

The American Television Alliance, a coalition whose membership 

encompasses cable, satellite, and telco providers, independent programmers and public interest groups, and of which DISH is a 

member, is unified in calling for changes to the outdated retransmission consent rules as part of the STELA reauthorization. We 

and many others in the industry propose, among other things, that 

when a local network station is pulled from a consumer due to a 
11 

retransmission consent dispute, the video distributor should be 

able to provide another market’s network signal. The broadcaster 

whose signal is imported would be compensated under the established distant signal royalty rate. And this reform will at least 

allow consumers to keep their network programming while negotiations continue. If the broadcaster’s local content is as valuable as 

they assert, then the imported distant network signal is a poor substitute, and both parties will continue to have every incentive to 

reach an agreement. Importing a distant signal during a blackout 

simply fills the void for network programming. 

Second, Americans living in remote, underserved areas have especially benefited from STELA and its predecessors. Among other 

things, STELA allows Americans residing in predominantly rural 

areas to receive distant network signals for any missing Big 4 stations in their market. The distant signal license sunsets at the end 

of 2014, and without reauthorization, 1.5 million American households will be disenfranchised. 

Third, in the 3 years since the last reauthorization, the video industry has not been sitting still. Consumers can and increasingly 

want to watch news, sports, and entertainment on the go using increasingly high resolution screens available on their smart phones 

and tablets. Over the years, DISH has done much to respond to 

changing consumer preferences, and today DISH stands ready to 

make a significant investment in the wireless market to satiate 

consumers’ growing demand for increased mobility and flexibility in 

consuming video. 

In summary, we believe the Government should work to ensure 

its laws mirror today’s competitive realities, consumer expectations, 

and advances in technology. 

Thank you, and I look forward to answering any questions you 

may have. 

[The prepared statement of Mr. Dodge follows:] 
12 
13 
14 
15 
16 
17 
18 
19 
20 
21 
22 
23 
24 
25 

Mr. COBLE. Thank you, Mr. Dodge. 

Mr. Waldron? 

I commend you as well for beating the illuminating light, Mr. 

Dodge. Thank you. Pressure on you, Mr. Waldron. 

TESTIMONY OF GERARD J. WALDRON, PARTNER, COVINGTON 

AND BURLING LLP, ON BEHALF OF THE NATIONAL ASSOCIATION OF BROADCASTERS 

Mr. WALDRON. Good morning, Chairman Coble, Ranking Member 

Watt, Chairman Goodlatte, and Ranking Member Conyers, and 

Members of the Subcommittee. My name is Gerry Waldron. I am 

a partner with the law firm of Covington and Burling, and I am 

testifying here today on behalf of the more than 1,000 free, local, 

over-the-air television members of the National Association of 

Broadcasters. 

As the Committee begins its review of STELA, your broadcast 

constituents urge you to keep in mind two principles. First, free, 

locally focused broadcast television should remain available to 

American households. Second, your review of STELA should not be 

used to create new exceptions to copyright law that undermine 

those contractual relationships between broadcasters and satellite 

or cable companies that enable broadcasting’s local focus. 

Why is localism so important? For broadcasters, localism is coverage of local news, severe weather and emergency alerts, school 

closings, high school sports, local elections, and public affairs. Localism is support for charities, civic organizations, and events that 

help create a sense of community. Our broadcast stations are also 

the way that local businesses educate and inform the public about 

the goods and services and, in turn, create jobs and support your 

economies. 

There is no doubt that viewers, your constituents, continue to 

rely on our service. Broadcast television remains unique because it 

is free, it is local, and it is always on even when other forms of 

communications may fail. 

As a threshold matter, the Subcommittee should ask whether the 

expiring section 119 distant signal license continues to promote localism and whether it is in the public interest. It could be argued 

that the distant signal license served its purpose in 1988 when the 

backyard satellite industry was just getting started and that it 

served its purpose again when DISH and DirecTV first launched 

their small receiver services in the mid-1990’s. But in 2013, when 

DISH and DirecTV are two of the largest three pay TV providers 

in the country, the distant signal license is a vestige of a bygone 

era. 

Today over 98 percent of all U.S. television households can view 

their local network affiliates by satellite, and that number is growing all the time. No public policy justifies treating satellite subscribers in local markets as unserved, which would deprive viewers 

of the benefits of locally focused service. As DISH has demonstrated, there are no technical reasons for failing to serve all 

markets. 

Accordingly, the Subcommittee should continue to encourage localism and consider whether the section 119 license should expire. 
26 

In reexamining STELA, you are likely to hear from those seeking 

enactment of new exceptions to the copyright laws that would undermine broadcasters’ retransmission consent rights. Let me be 

clear. Arguments that broadcasters have too much leverage in the 

retransmission consent process or that retransmission fees are directly responsible for rising cable bills are wrong. Local broadcasters and pay TV providers both have an incentive to complete 

retransmission consent negotiations. And for that simple reason, 

they always do before any disruption to viewers occurs. There are 

exceptions but they are rare, and in fact, carriage disruptions from 

retransmission consent impasses represent 1 one-hundredth of 1 

percent of all annual U.S. television viewing hours. Put that another way, consumers are 20 times more likely to lose television 

programming service because of a power outage than because of a 

retransmission consent impasse. 

Furthermore, in the small number of instances where these negotiations have resulted in disruptions to consumers, there is one distinct pattern: the involvement of Time Warner Cable, DirecTV, and 

DISH. Since 2012, these three companies alone have been party to 

89 percent of all the disruptions nationwide. 

In contrast to what some suggest, NAB has demonstrated across 

numerous economic studies that retransmission consent payments 

are not responsible for high and rising pay TV prices. Just 2 cents 

of every cable bill dollar goes to broadcast retransmission fees, and 

that is true in spite of the fact that during the 2011 season, 96 of 

the top 100 most watched prime time programs were on broadcast 

television. 

Lastly, the Committee should understand that retransmission 

consent negotiations are about more than just fees. Increasingly, 

these negotiations include hard discussions about how we can distribute our content across a variety of new platforms such as Hulu 

that promote competition. 

In conclusion, your local broadcast constituents urge you to rebuff calls from the pay TV industry to expand the narrow examination of STELA solely to give them an unfair leverage in marketbased negotiations. 

Thank you for your time. I look forward to your questions. 

[The prepared statement of Mr. Waldron follows:] 
27 
28 
29 
30 
31 
32 
33 
34 
35 
36 
37 
38 
39 
40 
41 
42 
43 

Mr. COBLE. Thank you, Mr. Waldron. 

Mr. MacKenzie? 

TESTIMONY OF EARLE A. MacKENZIE, EXECUTIVE VICE PRESIDENT AND CHIEF OPERATING OFFICER, SHENTEL CABLE, 

ON BEHALF OF THE AMERICAN CABLE ASSOCIATION 

Mr. MACKENZIE. Good morning. 

Shentel offers wireline and wireless services to residential and 

business customers in smaller markets in rural areas in the midAtlantic region. As a smaller, rural provider, our costs per subscriber are greater. However, despite the higher costs, firms like 

Shentel still provide our customers with the same service enjoyed 

by urban customers. 

It is a challenge that is not made any easier by certain laws and 

rules that govern our business. For example, one of the simplest 

issues I would raise for the Committee today is the competitive disparity that stems from the fact that certain laws governing the satellite TV industry are reauthorized every 5 years. The cable industry does not benefit from such a periodic review. In fact, Congress 

has not made a broad legislative change to the cable rules since the 

1990’s. 

If Congress wants to conduct such a review, one set of rules that 

has worked and should not be changed is the cable copyright license. It continues to serve its goal in compensating copyright holders for the retransmission of their work. Many stakeholders agree 

no significant change to the license is necessary. 

If Congress were to repeal the license, it would be very burdensome for the cable firms to anticipate all the copyrighted works 

that would need to be cleared before they are aired on broadcast 

stations. Moreover, the repeal would create uncertainty in the marketplace for us and our customers. 

Should Congress reach a different conclusion, any change to the 

existing license must coincide with reform to the broadcast carriage 

rules such as retransmission consent because they are legally intertwined. 

There are a number of specific problems related to the outdated 

rules and regulations governing the cable industry, particularly retransmission consent, that are covered in my written testimony. 

But with limited time, I will focus on just two that are of direct 

relevance to the Judiciary Committee. 

This Committee should be aware that there are dozens of instances where separately owned Big 4 broadcasters in the same 

market are colluding against the cable operator in their negotiation 

of retransmission consent. Typically this means that two broadcast 

stations with exclusive market rights that are protected by the 

Government use the same negotiator to conduct the negotiations. 

Available evidence shows this anticompetitive conduct by broadcasters raises fees between 22 and 160 percent. In the end, these 

costs are passed on to the consumer. 

The practice of coordinating retransmission consent negotiations 

is widespread, occurring in at least 20 percent of the TV station 

markets, and it is increasing. This year, there has been a number 

of broadcast station mergers and acquisitions that could result in 

even more coordination of retransmission consent negotiations. 
44 

If you share my concerns, please inform the Department of Justice. 

Another area we would like the Committee to consider are skyrocketing sport programming fees. It is amazing in the past few 

years sports leagues have extracted more than $110 billion from 

broadcast and cable TV networks, and there is no end in sight. 

These networks bid extraordinary amounts because they can pass 

those costs on to the pay TV providers and our customers. Not surprisingly, ESPN, regional sports networks, and the Big 4 broadcasters are aggressively hiking their fees. In the end, the consumer 

shoulders these costs. 

One part of the sports programming problem is rooted in a 50- 

year-old Federal law giving an antitrust exemption to professional 

sports leagues when they are negotiating their TV programming 

deals. However, like retransmission consent, the sports programming market has changed significantly since JFK was President, 

but the rules have not. It may have made sense to give professional 

sports leagues a pass from the antitrust rules in 1961. Their dominant market power no longer justifies this exemption. 

Mr. Chairman, it is clear that there is a host of issues that need 

attention. Given the significant changes in the marketplace, I hope 

the issues I have raised here will be taken into consideration as 

part of the Committee’s reauthorization of the satellite TV license. 

Thank you for the opportunity to testify. 

[The prepared statement of Mr. MacKenzie follows:] 
45 
46 
47 
48 
49 
50 
51 
52 
53 
54 
55 
56 

Mr. COBLE. Thank you, Mr. MacKenzie. 

Mr. Campbell? 

TESTIMONY OF JAMES CAMPBELL, REGIONAL 

VICE PRESIDENT, PUBLIC POLICY, CENTURYLINK, INC. 

Mr. CAMPBELL. Thank you, Mr. Chairman, Ranking Member 

Watt, Chairman Goodlatte, and Ranking Member Conyers. I appreciate you giving CenturyLink the opportunity to testify before this 

Subcommittee as a relatively new entrant into the video marketplace. 

And I would echo Mr. Dodge’s testimony that CenturyLink is certainly not seeking to avoid paying reasonable costs for acquisition 

of broadcast content. Rather, we seek a fair set of rules by which 

it cannot be unfairly leveraged against both consumers and new 

entrants like us. 

To give you a little background, CenturyLink is the third largest 

telecommunications company in the United States offering voice, 

video, and data at over 14 million homes in 37 States and businesses in all 50 States and select international markets. We offer 

cybersecurity solutions to the Federal Government and multiple 

State and local governments, and as a result of our recent acquisition of Savvis, we are actually one of the largest cloud computing 

and hosting companies in the world. 

Only recently over the past 5 years have we gotten involved in 

the competitive video market, launching a fully digital IPTV product in multiple markets, including Orlando, Las Vegas, Phoenix, 

and central North Carolina. And I will tell you consumers benefit 

from robust competition in the form of better service quality, in the 

form of more innovation, more investment, and ultimately lower 

rates. But, unfortunately, the cost of obtaining broadcast content 

has threatened consumers’ ability to get any of these benefits. 

The current regulatory regime was created in an environment 

where the Federal lawmakers were concerned about market abuse 

from monopoly incumbent cable operators. As a result, over the 

years lawmakers have kind of skewed the regulatory advantages 

toward broadcasters vis-a-vis their relationship with pay TV providers in multiple ways. 

For example, one, a local broadcaster, because of tie-down arrangements, can force feed unwanted content to providers regardless of consumer demand. 

Two, a provider has no other alternative to obtain this content 

in most of these markets. 

And third, the FCC’s application and interpretation of the good 

faith standard has rendered really meaningless, giving de facto 

power to the broadcasters in retransmission consent negotiations. 

In addition, the regulatory regime, as has been stated, did not 

contemplate the explosion of video competition from a myriad of industries. Incumbent cable operators no longer have a monopoly in 

the market. 

While the current rules create problems for the larger companies, 

they impose additional burdens on new entrants like CenturyLink. 

Every customer we get had a relationship with another provider 

before they come to us. We have to win every single customer we 

sign up. That is capital intensive. It is tough sledding. And for that 
57 

reason, we cannot simply just take whatever the broadcasters’ demands are. In the case of a blackout—and I know that broadcasters 

have used this more frequently—there is little harm to the broadcasters if the signal is lost, but a tremendous amount of harm to 

a company like CenturyLink as we try and provide competitive 

service. 

And unfortunately, the retransmission consent fees are providing 

a windfall not to the local stations but to national networks. The 

original intent of these rules was to provide a safety net for true 

local stations. It is not the case anymore. SNL Kagan projects that 

retransmission fees will increase to $6.1 billion in 2018, up from 

$2.4 billion in 2012. That is a 250 percent increase, and that is all 

at the expense of consumers. 

Congress has an opportunity as part of the STELA reauthorization to reform and rebalance the negotiation process regarding the 

retransmission consent marketplace. The reasons Congress conferred significant regulatory advantage to the broadcasters no 

longer exist. CenturyLink favors a deregulatory approach where 

our consumers could receive national content from adjacent or alternate markets during the pendency of negotiations, should they 

break down. This is good for two reasons. One, it rebalances the 

negotiation process where both parties have a little bit more leverage at the table, and two and most importantly, it does not punish 

consumers for two providers’ failure to reach an agreement. 

At the end of the day, it is not about winners and losers. It is 

about protecting consumers who bear the biggest brunt of this regulatory problem and ensuring the future of a competitive marketplace in the video marketplace. 

Again, I thank you again for the opportunity testify. We look forward to working with the Committee and try and enact and enable 

consumer-oriented legislative reform. Thank you. 

[The prepared statement of Mr. Campbell follows:] 
58 
59 
60 
61 
62 
63 
64 
65 
66 
67 

Mr. COBLE. Thank you, Mr. Campbell. 

Mr. Garrett? 

TESTIMONY OF ROBERT ALAN GARRETT, PARTNER, ARNOLD 

& PORTER LLP, ON BEHALF OF MAJOR LEAGUE BASEBALL 

Mr. GARRETT. Thank you, Chairman Coble, Ranking Member 

Watt. Thanks for the opportunity to testify on behalf of Major 

League Baseball this morning. 

Let me summarize that testimony with three brief points. 

First, baseball has a major stake in any revision of the copyright 

laws that affect television programming, including cable and satellite compulsory licenses. Baseball and its member clubs are copyright owners of a substantial amount of very entertaining, very valuable television programming. They now offer their fans access to 

approximately 5,000 copyrighted telecasts of Major League Baseball games each year. They do not believe that there is any single 

copyright owner that provides the American public with more television programming than Major League Baseball. 

Second, the vast, overwhelming majority of baseball’s telecasts 

are provided to cable and satellite subscribers pursuant to licenses 

negotiated in a free marketplace and not pursuant to compulsory 

licensing. There is simply no reason that satellite carriers or cable 

systems or anyone else require a compulsory license to provide 

Major League Baseball telecasts or any other broadcast television 

programming. Satellite carriers and cable systems negotiate every 

day in the free marketplace to offer hundreds of channels, tens of 

thousands of hours of non-broadcast television programming. We 

believe that they can do the same to offer broadcast programming, 

including telecasts of baseball games. 

Third and finally, if Congress, nevertheless, chooses to reauthorize the section 119 compulsory license, baseball has one simple request, and that is adopt a mechanism to ensure that satellite carriers and cable systems at the very least pay fair market value for 

their compulsory licenses. According to the FCC, cable systems derive more than $67 billion in revenues by selling access to video 

programming. Compulsory licensing royalties amount to less than 

one-half of 1 percent of those revenues, one-half of 1 percent for 

what is undoubtedly the most valuable, the most watched of all the 

programming cable systems offer. Satellite carriers also pay less 

than one-half of 1 percent of their revenues for their compulsory license. Their video revenues amount to approximately $36 billion. 

Their compulsory licensing royalties in 2012 amounted to approximately $87 million or about $10 million less than when Congress 

last renewed the section 119 license. The current satellite royalty 

rate is, in fact, the same as the rate that an independent panel of 

arbitrators determined to be fair market value in 1997, 16 years 

ago. 

There is simply no justification for requiring copyright owners to 

subsidize with below-market royalty rates the major corporate entities that dominate the cable and satellite industries. Baseball believes that Congress should authorize the Copyright Board to set 

rates for the carriage of all broadcast programming under the cable 

and satellite compulsory licenses and that the Copyright Royalty 

Board also should be authorized to adjust those rates periodically 
68 

so that they continue to provide fair market compensation to copyright owners. 

Thank you, Mr. Chairman, and baseball also looks forward to 

working with you and your Subcommittee on this important matter. 

[The prepared statement of Mr. Garrett follows:] 

Prepared Statement of Robert Alan Garrett, Arnold & Porter LLP, 

Washington, DC, on Behalf of Major League Baseball 

Mr. Chairman and members of the Subcommittee, thank you for the opportunity 

to testify, on behalf of Major League Baseball, concerning the Section 119 satellite 

compulsory license that is scheduled to expire at the end of next year. I have been 

Major League Baseball’s outside counsel on copyright and telecommunications matters for more than thirty-five years. During that same period, I also have served 

as lead counsel in satellite and cable compulsory licensing proceedings for the Joint 

Sports Claimants, which consists of Baseball, the National Football League, National Basketball Association, National Hockey League and National Collegiate Athletic Association. While I am presenting this testimony solely on behalf of Baseball, 

all JSC members share a common interest in ensuring strong and effective copyright protection, and fair market compensation, for the telecasts of their games. 

BASEBALL’S COPYRIGHTED TELECASTS

When Congress comprehensively revised the copyright laws in 1976, and adopted 

the Section 111 cable compulsory license, the average sports fan had access to approximately 100 telecasts of Major League Baseball games each season. Much the 

same was true in 1988 when Congress enacted the satellite compulsory license by 

adding a new Section 119 to the Copyright Act. Today, however, the situation is 

very different. 

Baseball and its member clubs now offer their fans the ability to view virtually 

every one of the approximately 5,000 MLB game telecasts each year. Telecasts of 

MLB games are available on the FOX national broadcast television network; three 

national cable networks (ESPN, TBS, MLB Network); over-the-air broadcast stations throughout the country (e.g., WUSA–TV in Washington DC and ‘‘superstation’’ 

WGN–TV in Chicago); and more than two dozen regional sports networks (e.g., 

MASN, FOX Sports Net). In addition, Baseball’s ‘‘out-of-market’’ satellite and cable 

package, MLB Extra Innings, provides each subscriber with virtually all Major 

League Baseball games not otherwise available from other licensed telecasters. Fans 

in Washington DC, for example, can view game telecasts of the Yankees, Red Sox, 

Cardinals, Pirates, Giants and a score of other teams. More than 67 million cable 

and satellite subscribers in the United States currently have access to MLB Extra 

Innings. 

The comparable out-of-market package for Internet-connected devices, MLB.TV, is 

available to subscribers through more than 350 such devices—including personal 

computers, smartphones (Apple, Blackberry and Android), tablets (iPad, Kindle Fire 

and Android) and a variety of consoles (Xbox360, Sony Playstation 3, Apple TV, 

Roku). In addition to receiving access to out-of-market games, MLB.TV subscribers 

can choose whether to listen to the radio or TV broadcast of the home or visiting 

club. MLB.TV also offers access to HD quality broadcasts of the games and provides 

DVR capabilities that allow fans to pause or rewind live telecasts. And those who 

utilize the MLB.com At Bat app to view games can take advantage of several additional features, including real-time statistical updates and analyses, video archive 

and a ‘‘pitch-by-pitch widget’’ that tracks the location, type, and speed of every pitch 

(including whether a pitch is a curve ball, slider, or knuckle-curve). The At Bat app 

has been downloaded more than 22 million times since its debut five years ago. 

All of the MLB game telecasts, whether they are accessible over-the-air or via 

cable, satellite or Internet-connected devices, are copyrighted works. In the 1976 

Copyright Act, Congress—at the urging of Baseball and other sports interests— 

clarified that telecasts of live sports events receive copyright protection, like any 
69 

other audiovisual work, as long as they are recorded (‘‘fixed’’) simultaneously with 

their transmission. When entering into licensing agreements with its various 

rightsholders, Major League Baseball and its member clubs contractually ensure 

that the resulting telecasts are recorded and that either Baseball or one of its clubs 

will own the copyright in those telecasts. With approximately 5,000 MLB game telecasts each year, Major League Baseball is a major copyright owner and source of 

television programming. Baseball relies heavily upon the copyright laws to protect 

its substantial investment in (and incentive to create) that highly entertaining and 

valuable programming. 

COMPULSORY LICENSING

The satellite compulsory license in Section 119 of the Copyright Act permits satellite carriers to retransmit to their paying subscribers, without the consent of copyright owners, out-of-market broadcast television programming. The retransmitted 

programming includes the telecasts of games that Major League Baseball and its 

clubs license to broadcast stations and the FOX broadcast network. A similar compulsory license, which applies to cable systems, exists in Section 111 of the Copyright Act. The effect of these licenses is to divest Baseball (as well as other copyright 

owners) of any ability to negotiate with satellite carriers and cable systems over the 

terms on which those services commercially exploit broadcasts of MLB games. 

These licenses are impediments to the operation of the free marketplace. They unfairly deprive all copyright owners, including Baseball, of the ability to control the 

distribution of their copyrighted works—as well as the right to receive fair market 

compensation and other license terms typically included in marketplace agreements. 

They also impose significant administrative costs upon Baseball and other copyright 

owners and substantially delay the receipt of compensation for the use of their programming. Baseball routinely negotiates in the marketplace with the cable and satellite industry concerning the carriage of Baseball telecasts; the vast majority of programming that cable systems and satellite carriers offer are the product of marketplace negotiations. There is no reason that similar negotiations should not be allowed to occur over the broadcast programming now covered by the compulsory licenses. 

FAIR MARKET COMPENSATION

Some parties have taken the position that elimination of the compulsory licenses 

could be disruptive to the marketplace, because the licenses reflect the settled expectations of the licensees and at least some licensors. Baseball respectfully disagrees with that view. An inequitable and unjustifiable regulatory regime that supplants marketplace negotiations should not be perpetuated simply because some 

parties have become accustomed to it. However, Baseball understands the practical 

difficulties associated with elimination of the cable and satellite compulsory licenses. 

If the compulsory licenses are retained, Baseball urges Congress to ensure that 

both cable operators and satellite carriers pay fair market value for all programming they choose to carry pursuant to the compulsory licenses. Baseball believes the 

relevant evidence demonstrates that neither cable operators nor satellite carriers 

are paying fair market value under their compulsory licenses. Indeed, satellite carriers are currently paying a Section 119 royalty that is less than the royalty that 

three independent arbitrators considered to be fair market value in 1997—sixteen 

years ago. Moreover, the total Section 119 royalties have declined by approximately 

$10 million per year since Congress last reauthorized the Section 119 license. The 

Section 111 royalty paid by cable operators is comparably below fair market value. 

Indeed, when Congress adopted the Section 111 royalty rates nearly forty years ago, 

it explicitly noted that those rates would produce only a ‘‘minimal’’ royalty that had 

no economic basis. Cable operators pay less than one-half of one percent of their $66 

billion in video revenues (according to the FCC) for the Section 111 compulsory license that allows them to offer some of their most valuable television programming. 

There is no justification for requiring copyright owners to subsidize, with belowmarket royalty rates, the major corporate entities that dominate the cable and satellite industries. Baseball believes Congress should, at the very least, authorize the 
70 

Copyright Royalty Board to set market rates for the carriage of all programming 

under the cable and satellite compulsory licenses. The CRB also should be authorized periodically to adjust those rates so that they continue to provide fair market 

compensation to copyright owners. 

While Section 119(c) of the Copyright Act directs the Copyright Royalty Board to 

adopt fair market value rates for the satellite carrier license, that provision sets a 

series of procedural dates that focus upon 2010, when Congress last renewed the 

Section 119 license. Section 119(c) must be amended to permit the adjustment of 

royalty rates for whatever period, if any, Congress decides to continue the Section 

119 compulsory license. Congress also should adopt a similar rate adjustment mechanism for the compulsory license of cable systems, which compete with satellite carriers in the delivery of broadcast television programming. Currently, the law allows 

adjustments in the cable royalty rates to account for inflation only. 

* * * * * 

Thank you, Mr. Chairman and members of the Subcommittee, for the opportunity 

to express Baseball’s views on the satellite compulsory license in Section 119 of the 

Copyright Act and the related cable compulsory license in Section 111 of the Act. 

Baseball looks forward to working with you and your Subcommittee to help ensure 

strong and effective copyright protection, including fair market compensation, for all 

copyrighted works. 

Mr. COBLE. Thank you, Mr. Garrett. 

Mr. Padden? 

TESTIMONY OF PRESTON PADDEN, FORMER PRESIDENT, ABC 

TELEVISION NETWORK, FORMER EXECUTIVE VICE PRESIDENT, THE WALT DISNEY COMPANY, TESTIFYING ON HIS 

OWN BEHALF 

Mr. PADDEN. Chairman Coble, Ranking Member Watt, Chairman 

Goodlatte, and Ranking Member Conyers, my name is Preston 

Padden. I appear today on my own behalf and sadly no one is paying me to be here. [Laughter.] 

I am so old that I am one of the few living souls who has been 

around for the entire history of this issue, and I am here today to 

implore you not to just kick the can down the road again. It is long 

past time to repeal the satellite and cable compulsory licenses and 

the Rube Goldberg-like statutory and regulatory system that surrounds them. 

As the former President of the ABC Television Network, I know 

how TV program rights are negotiated. I promise you that the 

earth will continue to spin, consumers will continue to have access 

to TV, and all TV industry sectors will continue to thrive without 

the compulsory licenses, without the associated FCC rules, and 

without retransmission consent. 

In 1976 when the cable TV industry was in its infancy, Congress 

granted cable an extraordinary exception to normal copyright principles: a compulsory copyright license to distribute the programs on 

broadcast TV channels. The FCC adopted rules, including network 

non-duplication and syndicated exclusivity, to limit the market disruption caused by the new compulsory license. 

In 1988, the compulsory license was extended to satellite. 

Then in 1992, Congress enacted retransmission consent requiring 

a marketplace negotiation between broadcast TV stations and cable 

and satellite distributors, a negotiation that is the functional equiv-
71 

alent of a negotiation that would have been required if the compulsory licenses had never been enacted in the first place. 

When others argue that the compulsory licenses are essential, 

please consider this. Every day hundreds of non-broadcast TV 

channels, channels like Discovery, History Channel, USA Network, 

Bravo, and HBO, get distributed to nearly every man, woman, and 

child in America without any compulsory license and without retransmission consent. They get distributed because the channel 

owner and the cable and satellite systems have an old-fashioned, 

simple copyright negotiation. There is absolutely no reason why the 

broadcast channels cannot be distributed in exactly the same way. 

When the satellite license was adopted in 1988, you provided a 

sunset and expressed the expectation that the license would temporary and would be replaced by market negotiations. Instead, the 

license has been renewed four times. 

When you renewed it in 2004, you directed the Register of Copyrights to study the continued need for compulsory licensing. In 

2008, the Register released that study, calling the cable and satellite compulsory licenses—and I quote—arcane, antiquated, complicated, and dysfunctional. Not exactly a ringing endorsement. 

When you renewed the satellite license again in 2010, you directed the Register of Copyrights to prepare a more specific report 

to Congress, proposing mechanisms and methods for the phase-out 

and eventual repeal of the cable and satellite compulsory licenses. 

And you asked the Register to propose marketplace alternatives. 

The Register issued that report in 2011, concluding that the compulsory licenses are—and I quote again—an artificial construct created in an earlier era. The Register further recommended that Congress set a date-specific trigger to phase out and ultimately repeal 

the licenses. 

I want to close with what I think are three simple truths. First, 

compulsory licensing is just not necessary in these markets. Second, broadcast channels like non-broadcast channels absolutely deserve to be paid by the cable and satellite distributors who want 

to sell their programming to consumers. And lastly, local broadcast 

channels are no more a monopoly than are the non-broadcast channels like AMC, Time Warner Cable SportsNet, Bravo, and Discovery. 

Thank you very much. 

[The prepared statement of Mr. Padden follows:] 
72 
73 
74 
75 
76 
77 
78 
79 
80 
81 

Mr. COBLE. Thank you, Mr. Padden. 

I want to thank the witnesses for your timely testimony, staying 

within the 5-minute rule. We try to apply the 5-minute rule to ourselves as well. So if you can be terse in your answers, we would 

be appreciative of that. 

Mr. Garrett, how is Major League Baseball working to make its 

content available to Americans in new ways with advanced technology? 

Mr. GARRETT. Mr. Chairman, as I indicated in my testimony, 

Major League Baseball currently offers approximately 5,000 telecasts of its games to consumers each season. That is virtually every 

single game that is played during the course of a season is made 

available to Major League Baseball’s fans. 

They do it in a variety of ways. They have done it over national 

broadcast television networks such as Fox. They do it over a myriad of local broadcast stations and regional sports networks 

throughout the country. They do it over several cable networks, including ESPN, TBS, the Major League Baseball network. They 

make some of these programs available via their out-of-market 

packages that are carried by cable systems and satellite carriers to 

almost 67 million households across the United States. And finally, 

they also make it available via their very successful, award-winning MLB.TV app which makes all of these telecasts available to 

anyone with an Internet-connected device, over 350 different devices. 

Mr. COBLE. Thank you, sir. 

Mr. Dodge, for our constituents what issues should they be asking the Congress to place its focus upon? 

Mr. DODGE. If there is one issue that is top of mine for DISH is 

that the retransmission consent system today is broken. It is not 

a free market. In every local market around the country, in the old 

days when cable was in its infancy, you had one broadcaster who 

would negotiate with one cable company and there was somewhat 

a symbiotic relationship or mutual assured destruction, depending 

on how you looked at it, and today that one broadcaster plays three 

or four distributors off against each other and ultimately it is consumers who are caught in the crosshairs and are hurt by losing 

their signals and have their prices go up year after year. 

Mr. COBLE. Thank you, sir. 

Mr. Padden, I think you have touched on this. In your opinion, 

what would be the result if the section 119 license simply expires, 

which I think is December of next year. 

Mr. PADDEN. My recommendation is that Congress provide a 

short transition period to allow the broadcast industry to get its 

rights in order and then repeal all of these licenses. And all that 

would happen is the broadcast programming would get distributed 

exactly the same way the non-broadcast programming is distributed today, through a simple negotiation between the cable and 

satellite companies on the one hand and the local station on the 

other hand, with the station acting as a rights aggregator just as 

the non-broadcast channels do today. 

Mr. COBLE. I still have time. Anybody else want to weigh in on 

that? 
82 

Mr. DODGE. Sure. I think what Mr. Padden suggests is very similar to a bill that has been proposed by Representative Scalise over 

at the Energy and Commerce Committee, and it is certainly one potential option very worthy of debate. We are just thrilled at DISH 

that there does appear to be a recognition that there is a problem 

and that there should be such a debate. 

Mr. WALDRON. If I may add. I think the section 119 license expiring—this Committee could advance the debate by actually getting 

a number as to how many people would be affected. So I would 

suggest that the Committee ask the satellite carriers to submit a 

certified number as to how many people today are getting distant 

signal. In the past, we have heard 1 million. But we do not know 

what the number is. And I think if the Committee would get that 

information, then we could have a serious debate about is this distant signal license worthwhile to extend for this small number of 

people. There may be some hardship cases. There may be special 

circumstances which justify it. But right now we are all in a blind 

alley. 

Mr. COBLE. Time for one more comment. 

Mr. DODGE. Well, in response to that, I would say that it is true 

that there are less and less folks who are actually availing themselves of the distant signal license today, but it is a very important 

group of rural and underserved Americans, for example, in short 

markets like Glendive, Montana that does not have an ABC or Fox 

affiliate, and what the distant signal license allows us to do is import those stations, the network programming, to those folks who 

otherwise would have no access to that. 

Mr. WALDRON. And we would be happy to have a conversation 

about short markets and areas where there is a spot beam problem. But we just do not know what the nature of it is. And that 

would actually be a helpful step in promoting legislation. 

Mr. COBLE. How many people use it, Mr. Dodge? 

Mr. DODGE. The estimates I have heard are 1 million to 1.5 million consumers. 

Mr. COBLE. I see my amber light appears. So I now recognize the 

distinguished gentleman from North Carolina, Mr. Watt, for his 

questioning. 

Mr. WATT. Thank you, Mr. Chairman. As has become my policy, 

I have decided to defer until the end of the process. So I will defer 

to Mr. Conyers and go last in the chain. 

Mr. CONYERS. Thank you very much. 

Could I begin our discussion that I thank you for the variety of 

views presented? But do you believe, Mr. Dodge and Mr. Padden, 

that Congress should do more than simply reauthorize the distant 

signal license? Either one can start off. 

Mr. PADDEN. I am happy to go first. 

As I have said, I think this is one Government program that you 

can retire. These licenses were enacted before there were any nonbroadcast channels. They only apply to the programming on the 

broadcast channels, and you now have hundreds of other channels 

distributed nationwide with no muss, no fuss through normal copyright negotiations, and I think that proves that you do not need 

these licenses anymore for the broadcast programming. 
83 

Mr. DODGE. To address that specific point, I believe there is a 

difference between cable channels and the local broadcasters, the 

chief difference being the local broadcasters received at least initially billions of dollars of spectrum for free under the promise that 

they would be stewards of that spectrum and use it for the public 

good. And they are further propped up by rules such as must-carry, 

syndicated exclusivity, and network non-duplication that the cables 

do not have the benefit of. 

And to your specific question, Ranking Member Conyers, we 

think that the satellite act should be reauthorized so that the current beneficiaries are not disenfranchised. 

And further, we think there are two reasonable zones of expansion that should be considered, one of which is fixing the broken 

retransmission consent system as it stands today, and the other is 

fixing the orphan county that, at least in my case, every time 

around this year, the folks in two southwest counties in Colorado 

start asking the question of why they cannot watch the Broncos. 

And the reason is because they are in the Albuquerque DMA. 

Mr. CONYERS. Well, Mr. Dodge and Mr. Padden, do I sense that 

there is a little space between both your responses? [Laughter.] 

Mr. DODGE. Yes, although we are good friends. 

Mr. CONYERS. We are all friends here. 

Mr. PADDEN. Ranking Member Conyers, this Committee asked 

the expert agency, the Register of Copyrights, to study these licenses, and their report said—and again I will quote—that they are 

arcane, antiquated, complicated, and dysfunctional. I cannot imagine why you would want to continue such a program. 

Mr. CONYERS. Now, I am going to give you another chance, Mr. 

Dodge. What are the targeted fixes that the American Television 

Alliance, ATVA, is calling for to the retransmission consent rules 

as part of the STELA reauthorization? 

Mr. DODGE. Principally there are two, the first of which is one 

that we favor, which is allowing video providers to import a distant 

signal on an interim basis during the pendency of retransmission 

disputes when the broadcaster takes down the programming. The 

other would be some form of standstill where the programming 

stays up and then the parties would enter binding baseball-style 

arbitration to reach a fair rate. But in each of those cases, the consumers would still have access to the programming and theoretically the broadcasters in the first instance would still have an incentive to negotiate, as would the TV provider because the distant 

signal is an imperfect solution. 

Mr. CONYERS. Would you add to that, Mr. Waldron? 

Mr. WALDRON. Absolutely. Thank you, sir. 

In terms of it, I think it is clear that there are thousands of cable 

systems in America. There are thousands of broadcasters in America. And the vast majority of time, the system works. There is a 

marketplace settlement. There are marketplace negotiations. 

The fact is, as I mentioned in my testimony, there has been an 

increase in disruptions, and they all involve three companies, 

DirecTV, DISH, and Time Warner. We see this, frankly, as a manufactured crisis. They are deliberately going and playing the game 

and, frankly, in order to get this Committee to pay attention to 

these issues. 
84 

So we actually think in the vast majority of cases the system is 

working. 

And with respect to the suggestion of a standstill, well, there is 

another way of putting that. They get to take my copyright without 

my permission. That is what a standstill is. I do not want to give 

them my retransmission consent, but yet they get to take it because they were taking it before. And I do not want to give it to 

them anymore. That seems rather contrary to our copyright law 

tradition. So we think that actually would be not something that 

the Congress should endorse. 

Mr. PADDEN. Could I add one thing? 

Mr. CONYERS. Yes. 

Mr. PADDEN. In evaluating the request being made by the cable 

and satellite industry for a standstill provision, I think you should 

consider the fact that the cable industry just went to court and successfully defeated a standstill agreement in program access disputes. So they went to court and got rid of the standstill when they 

did not want to continue to carry something, and now they are 

back here asking you to enact a standstill against the broadcasters. 

Mr. CONYERS. Mr. Campbell, the last comment. 

Mr. CAMPBELL. Thank you, Ranking Member Conyers. 

The companies that Mr. Waldron mentioned are very large. And 

we are a new entrant into the market. I would suggest that often 

these larger companies play the negotiations against smaller companies like CenturyLink trying to compete and win customers over. 

And without any leverage at all, we are the ones that are getting 

kind of swallowed up in this thing, and that is going to stifle competition, investment, and innovation. 

The other thing I would point out is while the broadcasters often 

threaten to black out, it is unlawful for any provider to not carry 

the signals during ‘‘sweeps week,’’ which is the week that broadcasters get their ratings and make their advertising money. That 

is the 1 week we cannot put it off. 

Mr. CONYERS. Mr. Chairman, could I get 30 seconds more? 

Mr. COBLE. 30 seconds will be granted. 

Mr. DODGE. Thank you. I just wanted to address one point made 

by Mr. Waldron, which is that 90 percent of the blackouts are 

caused by three entities, my company included. And I guess that 

is a bit in the eye of the beholder because we would, of course, take 

the view that 100 percent the blackouts are caused by four companies, ABC, NBC, CBS, and Fox and their affiliates. [Laughter.] 

But putting that aside for the moment, if you look at the facts, 

it is not surprising the DISH, DirecTV, and Time Warner Cable 

represent, as they assert, 90 percent of the blackouts because, one, 

we represent 50 percent of the marketplace for pay TV today. The 

other 25 percent is Comcast, which owns NBC, arguably is conflicted. And the remaining 25 percent is folks like Mr. Campbell. 

So in many ways, DISH, DirecTV, and Time Warner are the only 

folks who are actually able to negotiate effectively with the broadcasters, and thank goodness we are out there fighting for consumers to lower prices. 

Mr. CONYERS. Thank you, Chairman Coble. 

Mr. COBLE. You are welcome, Mr. Conyers. 
85 

The distinguished from Virginia, Mr. Goodlatte, is recognized for 

5 minutes. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. Donato, I want to ask you a question on behalf of my constituents. I have a number of them that I hear from who live usually in a rural area, a good distance from the market that they are 

in and a lot closer to another market that they would prefer to receive the broadcast signal from or the retransmission of that. And 

I wonder if you might just elaborate on that. These are lots of people but living in rural areas who are 75 miles from the D.C. market 

but 25 miles from the small Harrisonburg market and would rather 

have the Harrisonburg market. 

Mr. DONATO. Generally each year there are a few markets in 

which that kind of a situation happens. The DMA is what it is. It 

was created to reflect the viewing of people in that county. So the 

particular counties that you are talking about, as I said in my testimony, the predominance of viewing is actually to the home market that it is currently in. 

Again, it was developed as a mechanism to define the geography 

in which television signals are viewed and therefore local advertisers would be able to use local television and support local television. 

Mr. GOODLATTE. Should those lines be adjusted? 

Mr. DONATO. We have an analysis process. Every year we go 

through and we evaluate the viewing for each county within the 

DMA. It is perhaps a little bit conservative in that you have got 

to have a statistically significant change 2 years in a row before we 

move the county over. But the reason for that is the need for stability in the marketplace overall in the advertisers’ behalf. 

There are always better ways of doing things. We generally treat 

these situations on a case-by-case basis. We often meet with Congressmen when in their district there is an issue and we describe 

what the numbers are. So it is a system upon which almost $40 

billion worth of advertising has been very successful for the last 50 

years. 

Mr. GOODLATTE. Let me interrupt you, and I want to ask a couple other questions that are of a broader nature. 

But before I do that, I want to ask Mr. Garrett if he wants to 

respond to Mr. MacKenzie’s suggestion that the sports broadcast 

antitrust exemption should be eliminated. 

Mr. GARRETT. Mr. Chairman, actually I do not have a response. 

There is nobody who comes to me and asks for advice on antitrust 

laws. My focus is on copyright law and what is good copyright policy. 

Mr. GOODLATTE. Well, in light of that, I will cut you short then 

and ask if you work with and represent people who might have an 

opinion on that subject. 

Mr. GARRETT. Absolutely. 

Mr. GOODLATTE. And if they would submit that to the Chairman 

of the Committee in writing, I would be pleased if the Chairman 

would share that answer with me when it arrives. 

Mr. GARRETT. Absolutely. 

Mr. GOODLATTE. Let me ask all of the members of the panel 

what is the proper role for Congress in responding to marketplace 
86 

disputes. In order to resolve disputes, should Congress set general 

guidelines for the marketplace to follow, or should it set detailed 

requirements that all participants must follow? And then as an adjunct to that, are there ways for business disputes to occur and be 

resolved without disrupting the consumers who rely upon satellite 

and cable services for access to video content? 

Mr. Donato I gave you a shot. I will start with Mr. Dodge and 

we will work our way down. If we have time, we will get back to 

you. 

Mr. DODGE. I will take your second question first, and I would 

say the ways to avoid consumers being disrupted are the two ways 

I said earlier, which is, one, allow us to import a distant signal 

during the pendency of these disputes or some mechanism for a 

standstill. I have to say I am not all that familiar with the niceties 

of what standstills have and have not been struck down over the 

time, but the fact of the matter is if the broadcasters are going to 

sit here and wrap themselves in localism as a justification for 

about 99 percent of what they are saying, why do they want to take 

the signal down and disenfranchise consumers at these times? 

Leave the signal up. We are not saying we are not going to pay 

during those periods. We gladly will. But do not disenfranchise the 

consumer. 

Mr. GOODLATTE. We have just got to keep moving because of limited time. 

Mr. WALDRON. Two points. One is that Congress actually, I 

think, wisely decided in 1992 to essentially have the marketplace 

settle these issues. 

And secondly, where there are problems, frankly, consumers 

should have more choice. So it is sometimes difficult to change your 

provider. There were news reports that people wanted to change 

from Time Warner, but nobody was answering the phone. And 

there are cancellation penalties and the like. So that actually 

would enhance the marketplace competition. 

Mr. GOODLATTE. Mr. MacKenzie? 

Mr. MACKENZIE. I think our position is general guidelines would 

be better than specific guidelines. Mr. Dodge has come up with two 

ideas, the distant signal and also kind of preventing the blackouts. 

A distant signal really does not work for the cable industry because 

we do not already have that content. The satellite industry already 

has that content and can quickly move it. For us, it would be building fiber and trying to get it off air, which would be impossible. So 

from our standpoint, preventing the blackout by leaving the signal 

on while we negotiate would be preferable. 

Mr. GOODLATTE. Mr. Campbell? 

Mr. CAMPBELL. Not to repeat what has been said, I agree with 

Mr. Dodge and Mr. MacKenzie. 

But to return the negotiations to actual free market negotiations, 

we hear a lot about the thumb on the scale in favor of one party 

over the other. We do not seek to have the thumb put on the scale 

in our favor. We would just rather have it removed from the other 

side so that the negotiations do become, once again, free market 

negotiations because the world has changed a lot since 1992. 

Mr. GOODLATTE. Thank you. 

Mr. Garrett? 
87 

Mr. GARRETT. From Major League Baseball’s standpoint, they license a great deal of programming that they want their consumers—they want their fans to see. And they are as frustrated as 

anyone either here in Congress or the fans themselves when that 

programming is not made available. 

Having said that, we also recognize that broadcasters have property rights in those signals, and we believe the best way to determine the value of those property rights is through free marketplace 

negotiations. And that is the objective that we in baseball have, is 

to have free marketplace negotiations or, at the very least, fair 

market value compensation for the programming that is being utilized. 

Mr. GOODLATTE. Thank you. 

Mr. Padden? 

Mr. COBLE. The gentleman’s time has expired. 

Mr. Padden, you may respond. 

Mr. PADDEN. If I could, I would like to respond briefly to your 

question to Nielsen about the DMA. This is an example of the dysfunction that is built into the compulsory license and the associated 

FCC rules. In the free market, if you have constituents who want 

to see station A and station A would like constituents to see it and 

there is a distributor between them that would like to make money 

distributing it, they can figure it out. All the non-broadcast channels get distributed anywhere someone wants to see them. 

The problem is the compulsory license and the associated FCC 

rules actually enshrine Nielsen’s rating data from 1972 as the basis 

for what signals can go where. They are still sitting in the FCC 

rules, 1972 ratings data. And if you would just get a big broom and 

sweep all of this stuff away, the free market could better serve 

your constituents. 

Mr. GOODLATTE. Thank you, Mr. Chairman. 

Mr. COBLE. Thank you. The gentlelady from California, Ms. Chu, 

is recognized for 5 minutes. 

Ms. CHU. Thank you, Mr. Chair. 

Mr. Dodge, I understand that—well, in fact, you said earlier that 

1 million to 1.5 million households in the United States currently 

get their access to broadcast stations through the distant signal 

service. But it is clear that the number of households that are dependent on the distant signal decreases every time Congress looks 

into reauthorizing section 119. 

Can you tell us who these remaining 1 million to 1.5 million 

households are and where they are located? Are they mostly located in rural areas, or are they concentrated in certain parts of 

the country? 

Mr. DODGE. Generally located in rural and underserved areas. 

And there is really four categories, if you will, of consumers: folks 

in short markets such as Glendive, Montana that is missing a Fox 

and an ABC where we are allowed those network affiliates into 

those markets; outside the spot beam of our satellites. So if you 

think of Utah, for example, which is a rectangle—our spot beams 

are generally round. The law allows us to provide distant signals 

to the folks that are not covered by our spot beams. Commercial 

trucks and RVs are covered by the distant signal license, and then 

DirecTV. 
88 

We are an alternate in 10 markets so we do not actually make 

use of the, quote, traditional unserved household exception allowing a distant signal, but DirecTV does because I believe there are 

still 15 markets where they do not provide local service. And then 

they have some grandfathered subscribers as well I believe. 

Ms. CHU. And do we have that technology now to close the gap 

to them? 

Mr. DODGE. For example, the short market issue is just purely 

the fact that there are no affiliates of a particular network in those 

markets. And with respect to outside of the spot beam, it depends 

on whether or not the satellite beam is large enough to actually 

cover an entire DMA, which it is not in all cases, but it is very, 

very limited when it is not. 

Ms. CHU. Mr. Waldron, I am aware that today consumers have 

several options for how they will view video content. They can access the content through pay TV carriers or other options now 

through the Internet. There is no doubt that the online model will 

continue to grow in the coming years. To what extent should we 

consider these newer platforms as we are reauthorizing satellite 

TV laws? Should we consider them at all? 

Mr. WALDRON. Well, I think they can inform the debate because 

they show how the TV market is evolving. 

And let me also say that, you know, we have talked earlier about 

the conflict between CBS and Time Warner Cable. A significant 

part of that dispute was about the ability for CBS to offer its programming to a competitor to Time Warner Cable. Now, I understand why Time Warner Cable does not want CBS to make its programming available to a Hulu or a Netflix or an Amazon Instant 

Video. But CBS actually is interested in doing that to give consumers choice. So you should be aware that that is actually increasingly a matter of the negotiations. It is not necessarily the fee 

which news reports said was a deal that was cut relatively early 

in the process, but in fact, enabling broadcasters to actually have— 

giving consumers choice across these different platforms. 

Ms. CHU. Well, in fact, the digital rights of content are playing 

a more important role in these retransmission negotiations. How do 

you think the issue of digital rights will impact future negotiations, 

and does Congress have a role in protecting consumers in this regard? 

Mr. WALDRON. Well, I think Congress should actually say, as it 

has, that the copyright holders should be able to negotiate an 

agreement across all of their content. As I said, I think the CBS 

example is telling in that CBS wants to actually promote competition. So that is why they actually went about those negotiations. 

And we think that actually is a way that consumers can give 

choices. 

I do want to come back to a statement that Mr. Dodge said. We 

do not dispute that there are some hard cases out there such as 

the short market situation or the corners of spot beams. But what 

we do not know is how many there are. And Mr. Dodge is one of 

two. So he said earlier he has heard the 1.5 million. Well, he has 

half of the information that is needed and DirecTV has the other 

half. So it is not like you have to survey a thousand companies in 

order to get this data. And what we would like to do is to get what 
89 

is the number and what is the context. How many are RVs, how 

many are in short markets, how many are spot beams problems. 

And as DISH has proven, there is now technology so that there 

should not be an unserved household. So DISH is in 100 percent 

of all the markets. 

Ms. CHU. And can you address the issue of localism, the principle 

that is embedded in our Nation’s communications laws? Can you 

tell us how the law developed to focus on localism and some of the 

benefits of holding onto that principle? 

Mr. WALDRON. So just quickly. So localism goes back to the original broadcast licenses. It is embedded in the Communications Act 

of 1934, and it is the notion that broadcasters should meet the 

needs of their local community. That makes American broadcasting 

unique around the world. There are national broadcast systems in 

Europe and in Asia. We have a locally focused broadcast system. 

The reason why we have concerns with the distant signal—it undermines that localism. That local broadcaster who is bringing the 

local car dealership, who is talking about the local high school 

sports or the tornado—if you are getting a signal in from New York 

or LA, you are not going to be aware in Moore, Oklahoma about 

the tornado that is coming. So localism is the heart of the broadcast and it also is at the heart of the satellite laws. And we think 

that that actually is a strong argument why the Committee should 

be skeptical that a distant signal license is still needed. 

Ms. CHU. Thank you. I yield back. 

Mr. COBLE. I thank the gentlelady. 

The gentleman from Texas. 

Mr. FARENTHOLD. Thank you very much. 

Having grown up as a broadcaster working in radio since I was 

15 years old, I kind of grew up with the public interest, convenience, and necessity standard. And I certainly have a great deal of 

sympathy for the local broadcasters. 

I want to ask Mr. Dodge and maybe Mr. MacKenzie. If we take 

away or limit the local TV station’s leverage with respect to negotiating a programming license by allowing distant signals, what leverage are they going to have in the negotiations? 

Mr. DODGE. Well, if you believe what they say and localism is as 

important as it is, then the distant signal is an imperfect solution. 

All it will do is ensure that folks continue to be able to watch 

American Idol, but they will not be getting their local news. 

Mr. FARENTHOLD. I do think that that is important. And, Mr. 

Waldron, maybe you can tell me some of the benefits that we are 

getting. I cannot believe Jim Cantore is going to give me better 

hurricane information than the weathercaster we call ‘‘Dead Wrong 

Dale’’ affectionately in Corpus Christi. 

Mr. WALDRON. Actually that is exactly right. And look, we understand the market. We understand that people actually are tuning 

in on a daily basis for their American Idol or for their CBS or NBC 

hit show. But when the tornado comes, suddenly there will be an 

outcry. And I do not think you want to say where is that local station the day after the tornado hits. So that is the point, that localism is about being there and serving the community all the time. 

And yes, much of the viewing is tuning in for—— 

Mr. FARENTHOLD. Okay. I have got limited time. 
90 

So, Mr. MacKenzie, can you tell me—go ahead. Did you want to 

answer this? 

Mr. MACKENZIE. I would. The American Cable Association are 

primarily very small cable providers. Oftentimes we are at the edge 

of a DMA. So I will use my system as an example. We are in Shenandoah County, which is in the Washington, D.C. DMA. You cannot get off air in our area. We have to have that brought in by fiber 

to do so. So I can tell you there are no local sports. There are no 

local—but I can get that from a distant station which is only 30 

miles away. 

Mr. FARENTHOLD. All right. So let us talk about section 119. And 

if we do away with the requirements—or the incentives for local 

stations to get on or the requirements, do we end up with network 

affiliate super stations where it is the station in New York or Chicago or LA that everyone gets? And then how does the local car 

dealer advertise or whatever business there is in the local community or a candidate for Congress? 

Mr. WALDRON. Our view is that is absolutely what would happen, that the easiest thing for the carriers to do would be to make 

an arrangement with New York and Chicago and LA. So then we 

would have a national broadcast system, which is how some other 

countries are doing it. That is not the American system and it is 

not the case that actually would give a platform for the car dealers 

or the movie theaters—— 

Mr. FARENTHOLD. I am sorry. I have got limited time. 

Mr. Dodge—— 

Mr. DODGE. Can I just say—— 

Mr. FARENTHOLD. Sure. 

Mr. DODGE. Why should consumers not be able to choose in that 

case? It sounds like Mr. Waldron is proving the point that perhaps 

localism is not that important. If a consumer is going to be satisfied with New York, shouldn’t they make that—— 

Mr. FARENTHOLD. But isn’t it much cheaper for you and uses less 

bandwidth and less resources for you on your satellite just to have 

one national? You do away with all the spot beams and all of that 

and you just have one station. And it is actually cheaper for you 

to broadcast one affiliate rather than several hundred? 

Mr. DODGE. It certainly would be, but the fact of the matter is 

today we broadcast locals in all 210 markets. We have made the 

decision that we want to be in there, and all we are saying is to 

protect consumers from takedowns, allow us to temporarily import 

a distant signal. That is not the end game. 

Mr. FARENTHOLD. Would another option to the ones you suggested might be, all right, you stay up and you go under whatever 

agreement is eventually reached? 

Mr. DODGE. Of course. 

Mr. FARENTHOLD. All right. 

Mr. Donato, we talk about these million or so—— 

Mr. DONATO. Designated market areas. 

Mr. FARENTHOLD. Yes. Well, we talk about the million or so people who are not served by anybody. Is there a way we set it up 

where—and even with the DMAs, we set it up to the one that is 

most rationally close to them? Isn’t there just a way to start over 

and do away with the 1972 stuff? If I had my choice of local affili-
91 

ates in Washington, D.C. on DirecTV, I would pick the Corpus 

Christi local affiliate. 

Mr. DONATO. So the 1972 stuff is—that is what existed at the 

time the law was written, and that is why it is in the appendix and 

no one has gone back to update it. We would be delighted to supply 

the Committee with updated information on it. 

Just so you understand what the implications are, pay penetration in 1972 was obviously less than 5 percent or the amount of 

viewing that went to pay was less than 5 percent. And right now 

the amount of viewing that goes to cable stations is about 60-65 

percent. So there has been a shift. 

Typically the counties in which it feels like it is irrational because you cannot get the Broncos game are really large rural counties, and most of those people in those counties do, in fact, watch 

to the home market station. We do have split counties. We had 

split counties in the past. 

Mr. FARENTHOLD. My time is up. I have now got to go research 

whether or not watching my Corpus Christi stations on my 

Slingbox is illegal. I am really concerned now. 

I yield back. 

Mr. COBLE. I thank the gentleman. 

The distinguished gentleman from Florida, Mr. Deutch, is recognized for 5 minutes. 

Mr. DEUTCH. Thank you, Mr. Chairman. 

Mr. Padden, you have made an argument, a very compelling argument, that the current retransmission system that is in place is 

incredibly complex, comically complex I am sure you would say. 

But your solution is to walk away—for us to walk away from that 

process altogether, which would bring all of the broadcast stations 

into the free market, if I understand your proposal. And I appreciate your desire to take Congress out of this. And the full Committee’s Chairman I think touched on this before. If you take Congress 

out of these business-to-business dealings, Congress is still going to 

be tipping the scales in favor of one party or the other either by 

keeping compulsory licenses or by striking them. Why is walking 

away altogether a fair solution? 

Mr. PADDEN. I think the best way to explain it is like this. First 

you gave cable—I will say cable and satellite a compulsory license 

for the programs on broadcast stations. Then as part of that deal, 

the FCC adopted rules that restrict cable and satellite’s use of that 

compulsory license. And then in 1992, Congress enacted retransmission consent which requires a marketplace negotiation between 

the station and the cable and satellite people. So you ended up at 

the same place you would be, namely in marketplace negotiation, 

if you had done nothing except you have got a bunch of regulatory 

warts that you developed along the way like the fact that the 1972 

rules are still in the FCC’s rules. 

All I am saying is it is a Rube Goldberg system. It is a complex 

way to do something simple, and it really is a chance for once to 

say here is a Government program that each little step made sense 

when we did it but the end result is nonsensical, so we are going 

to back out of it. 

Mr. DEUTCH. Mr. Dodge, let’s talk about regulatory warts for a 

second. I assume that you would be in some disagreement with 
92 

that proposal. But I am hoping you could walk us through the process that DISH undertakes to negotiate with local broadcasters. 

What makes that more difficult from your company’s perspective 

than negotiating with the non-broadcast stations that Mr. Padden 

holds up as the model as to exactly how this should now work? As 

he points out, those negotiations all take place without any congressional interference at all. Why is there a difference? Is it more 

difficult and, if so, why? 

Mr. DODGE. It is more difficult because you have 210 small monopoly territories, if you will, where this one local broadcaster who, 

as Mr. Waldron asserts, has this valuable local content that is irreplaceable that no one else can recreate, and that one broadcaster 

gets to play three if not four distributors off each other. And oftentimes you get to a point in a negotiation where they are asking for 

300-400 percent increase, and they say, okay, I guess we are not 

going to get there. I am just going to take the signal down. I am 

going to call up your competitors and tell my consumers to go 

switch to them. And the problem is while the broadcaster might 

lose an eyeball for 30 days, DISH has lost a customer for eternity 

after the consumer goes through the headache of switching. 

Mr. DEUTCH. Mr. Dodge, can you just go through that in a little 

more detail, though? When you say they are playing several off of 

one another, can you give me some examples? How does that actually work? What is it that you would see happen? 

Mr. DODGE. So in some cases, the broadcasters literally start 

running advertisements in the paper saying—you know, putting 

into their signal that you are about to lose your signal from DISH 

network. Please call DirecTV or Comcast, whomever. They run advertisements in the local papers. And, you know, as Mr. Waldron 

says, maybe it is a smaller amount of these things that actually go 

to a takedown. What he does not account for is there are numbers 

of these where you do actually get to an 11th hour negotiation, but 

the consumers have been bombarded for weeks if not a month with 

all these advertisements and messages across the bottom of the 

screen saying the sky is falling, you better switch now. So there is 

a huge disenfranchisement of consumers even in cases where it 

does not actually go to a takedown. 

Mr. DEUTCH. Mr. Waldron? 

Mr. WALDRON. Let’s take Mr. Dodge’s statement, read it back, 

and swap out the word HBO for broadcaster. HBO does not want 

to reach a deal with the local cable company. HBO is going to pull 

back its programming. HBO is going to run an advertising to say 

that, ‘‘Oh, you want to watch HBO, you want to watch your favorite show? Go to DirecTV because DISH does not have HBO.’’ What 

is so remarkable about this? These are marketplace negotiations. 

To your point, Congressman, what you started out with, what is 

different about this, as Mr. Padden said, with every other sort of 

broadcaster? And the answer is Congress depends on HBO and 

DISH and DirecTV to have serious negotiations and to deal with 

the marketplace. That is the same exact thing that is going on 

here. 

Mr. DODGE. And if I may. 

Mr. DEUTCH. Can I have 15 seconds just to hear the difference? 

Mr. Dodge? 
93 

Mr. DODGE. So with respect to HBO, are there other movie channels out there? Yes, there are. Is there potential substitute programming? Yes, there is. 

Now let’s substitute in what Mr. Waldron said. I guess localism 

is not that important. We should be able to import New York because it is just not that important what is actually going on in 

Denver. He cannot talk about of both sides of his mouth. 

Mr. COBLE. The gentleman’s time has expired. 

The distinguished gentleman from Florida? 

Mr. DESANTIS. Mr. MacKenzie, if you wanted to chime in, go 

ahead. 

Mr. MACKENZIE. I would. I think the big difference between 

DirecTV and DISH and members of the American Cable Association are relative size. We are very small providers, normally with, 

on average, less than 5,000 subscribers. When we start our retransmission discussions with the broadcasters, it is after they have already negotiated with the big company that is in the DMA. When 

we try to make a negotiation—and on numerous occasions I have 

asked, ‘‘Could we have a most favored nations clause in our contract to make sure that we are being treated fairly compared to the 

others in the marketplace?’’ And I have never been able to get that 

in. So I think there is a huge difference between the negotiations 

between a DirecTV and DISH and the broadcasters and the small 

cable operators and the broadcasters. 

Mr. DESANTIS. Great. I just wanted to give you a chance. 

This is my first time going around with this. I am a freshman, 

but it is really interesting to see. I was listening to the Major 

League Baseball testimony, and I am one of the youngest Members 

of Congress, but yet I remember watching 100 games about. We 

had TBS in Florida, TBS for the Braves, WGN for the Cubs, a little 

bit of White Sox. Then we did get WOR, so there were Mets games. 

So those were the people that I followed. When ESPN started covering cable, you started to get more, and then with the Internet— 

I remember when MLB.TV came out. You could actually watch 

games at work. And now you can do it on your devices. I mean, it 

is just unbelievable. And I think the technology is great. I wonder 

about the lost productivity in the American workforce, but I guess 

that is just a discussion for another time. 

So as someone who is new to this, I would just like you all to 

say—you know, we are here. A lot of people say, you know, Congress—they got to solve the problems of the American public, all 

that. And that is nice to say but it obscures the fact that we actually create a lot of problems here through the years. And I have 

seen it in other areas. 

And so as somebody who is new looking at this, what would you 

say as kind of something that Congress has created a problem with 

this that we should look to rectify? I probably know where Mr. 

Padden is going but can you start and then just give me a 

quick—— 

Mr. PADDEN. Sure. One perfect example is the compulsory license 

that you enacted gives cable systems the right to carry stations 

that are deemed significantly viewed in their county based on a list 

of ratings from 1972 that is enshrined in the FCC rules. And if a 

station wants to get carried somewhere else and the constituents 
94 

there want to see it, the station has to petition the FCC to amend 

the list of significantly viewed stations so they can be carried there. 

It is crazy. I mean, if you simply rely on the free market and there 

are people who want to see the station and the station wants to 

be seen, they will figure out how to get it done. 

Mr. DESANTIS. Mr. Garrett? 

Mr. GARRETT. Well, Congressman DeSantis, there are probably 

several answers I could give. The one I would focus on for Major 

League Baseball here is the fact that entities like Major League 

Baseball and other content owners are forced to subsidize essentially a $100 billion industry by providing them with below-market 

programming pursuant to the compulsory license. 

You mentioned the great variety, the wealth of programming, 

baseball programming that you can see now. The vast bulk of that 

programming is made available through negotiated licenses, 

through marketplace negotiations. And we think that the same can 

be true of the program that is now available during compulsory licensing, but if compulsory licenses continue, at the very least, we 

should have fair market value paid for that programming. 

Mr. DESANTIS. You mentioned the industry. But what is the dollar loss to Major League Baseball? Have you looked—— 

Mr. GARRETT. I do not know the answer to that. It is not a question of harm here. It is a question of talking about what is fair and 

reasonable and that marketplace compensations, marketplace value 

is what we all live with in this industry. 

Mr. DESANTIS. Thank you. 

Mr. Campbell? 

Mr. CAMPBELL. Congressman DeSantis, thank you. 

Conceptually I think that the biggest problem is that the rules 

that are currently in place do not recognize what the marketplace 

looks like today and it is ever-changing and ever-evolving. I think 

the biggest thing that Congress could do would make sure that 

rules are in place that encourage innovation and investment and 

competition because we are dealing with companies that have been 

there forever, and I think consumers benefit the most by having 

companies like CenturyLink go into a major market, invest the 

capital, and compete. And I think the rules in place would tend to 

stifle that. So I think conceptually that is what Congress should 

take a look at. 

Mr. DESANTIS. Good. 

Mr. MacKenzie? 

Mr. MACKENZIE. Small rural carriers are the ones who are bringing broadband to America which is, I know, a priority for everyone. 

But oftentimes the rules and regulations are one size fits all. And 

so I think one of the things we should look at is some changes in 

the rules or when the rules are being looked at, how it impacts the 

small providers. 

Mr. DESANTIS. I am out of time, but if the rest of you gentlemen 

would like to submit something, I would certainly love to hear your 

views as well. 

So thank you for coming. 

Mr. COBLE. I thank the gentleman from Florida. 

The distinguished lady from California. 

Ms. BASS. Thank you very much, Mr. Chairman. 
95 

And our witnesses today—I appreciate your time. It has been 

helpful to me coming from Los Angeles and having just experienced 

the blackout which, again, I thought was specific to our area and 

did not really realize how widespread this was or why this happens. 

So I just had a couple of questions for you, one of which is do 

you worry that pulling consumers into these escalating negotiations 

between cable or satellite and broadcasters means that more people 

are going to opt out of pay TV and whether or not you think this 

would have a harmful effect on content creators whose shows are 

distributed on cable and satellite? And that is for anybody. 

Mr. WALDRON. Can I make one point? 

Ms. BASS. Sure. 

Mr. WALDRON. I want to emphasize that a broadcaster is a free 

over-the-air service. So during the so-called blackout, the service 

was available 100 percent of the time. I realize that some people 

might not have antennas or some people might have reception 

problems. But I do want to emphasize—— 

Ms. BASS. I could have seen CBS? 

Mr. WALDRON. I am sorry? 

Ms. BASS. I could have seen CBS if I had rabbit ears? 

Mr. WALDRON. Yes, absolutely. It was available over the air during the entire time, and indeed, there were reports at least in the 

New York market that there was a run on antennas at Radio 

Shack. So I do want to emphasize that the signal is always on and 

always up. It may not be available on the cable system, and we realize that, but it was available during this whole time. 

Mr. DODGE. Well, I would take a bit of an issue with that as I 

do not think the broadcasters actually build out terrestrial signal 

to their entire DMA, certainly not in every DMA. So I think it depends where you lived in Los Angeles as to whether you could get 

an off-air signal. 

Ms. BASS. I see. I do not think people knew that, and I doubt 

whether there was a run on rabbit ears in LA. 

Mr. DODGE. Shame on broadcasters for not building out their entire DMAs. 

Ms. BASS. Okay. 

Mr. CAMPBELL. And from a pay provider perspective, it is not 

free. 

Ms. BASS. Okay. 

The second question is many local broadcast stations play an important role in providing local news, weather and emergency information particular to the communities they serve. And I know that 

we all agree that viewers should not be deprived of local information, especially during emergencies. So specifically I wanted to ask 

what steps can Congress take to ensure that our constituents do 

not get caught in the middle of these commercial disputes, particularly when weather or other emergency information is at stake. 

Mr. WALDRON. Well, one approach that we would have is that if 

there is a dispute, the consumers should be able to change providers. So there should not be a cancellation fee, and frankly there 

should be a rebate if they are denied service. 

Ms. BASS. That is not that easy to do. 

Mr. WALDRON. I am sorry. Excuse me? 
96 

Ms. BASS. That is not that easy to do. I mean, if you just want 

to cancel right in the middle of the dispute? 

Mr. WALDRON. I understand it is not easy to do, but that is a 

choice that consumers can have in addition to getting the signal 

over the air. And by the way, it is free to anyone who has antennas. You can also pay for pay TV, but it is free to anyone who has 

an antenna. 

Ms. BASS. Okay, representing the antenna companies. 

Mr. DODGE. Could I address just the point about refunds and 

cancellation fees? I think, as is clear, our view of the world is today 

it is an unfair fight as it stands. You have got one broadcaster who 

plays all the distributors off against each other. With all due respect, Mr. Waldron is trying to actually make it even worse by saying now let’s give another hammer to the broadcaster by saying 

you have to do refunds and waive termination fees in all these 

cases when, quite frankly, the fact that there are blackouts are the 

exact reason why our disclosures to our consumers in our contracts 

are crystal clear that programming is subject to change because we 

cannot ever guarantee that we are going to be able to provide any 

local broadcaster’s signal because there is this constant threat of 

takedowns. 

Ms. BASS. Thank you. 

Would anybody else like to respond? 

Mr. MACKENZIE. Yes. I think the proposal that we put forward 

that during these disputes the signal remains up while the negotiations are going on, therefore the consumer is not going to be 

harmed, and once the negotiations are completed, then the fees are 

paid retroactive. So no one really is disturbed or harmed by that, 

and it allows the consumer to continue to have service during that 

period of time. 

Ms. BASS. Anyone else? All right. Thank you. Oh, I am sorry. 

Mr. PADDEN. I would just repeat that Mr. MacKenzie’s industry 

just went to court to defeat a standstill agreement in the context 

of the program access rules, and for them to now come in and say 

they would like it in this instance I think is unusually duplicitous 

even by Washington standards. 

Ms. BASS. Would you like to respond to that, Mr. MacKenzie? 

Mr. MACKENZIE. My company and the companies of the ACA 

were not involved in that suit. The large cable operators maybe, 

but not the small cable operators. 

Ms. BASS. Okay, thank you. 

Mr. COBLE. I thank the gentlelady. 

The distinguished gentleman from Louisiana. 

Mr. RICHMOND. Thank you, Mr. Chairman. I want to thank you 

for having the Committee meeting today. 

Let me just start with—I guess I will show a little favoritism and 

start with Mr. Campbell from CenturyLink. I guess my question to 

you would be looking at most of your new subscribers and the fact 

that they are probably new to the Internet and looking at the area 

where you all are located which, if you go right down the street toward Monroe Lake Providence, you are talking about one of the 

poorest places in the country. That has consistently been that way. 

The fact that your new customers and coming in and taking video 
97 

along with Internet access, what kind of effect is that having in the 

area? 

Mr. CAMPBELL. Congressman, thank you for the question. It has 

had a great effect not only for our subscribers that take the video 

product but for those who choose not to. As we upgrade the networks in these markets that we enter, we are offering broadband 

speeds that range from 25 to 40 megabits. So even those folks we 

cannot sign up to the video product that may not want it, everyone 

else is getting enhanced broadband speed. So really the benefit 

from the video perspective is great because it allows us to compete 

with the incumbent cable operator and offer a video product. But 

even from a broadband perspective, the effect is even greater. 

Mr. RICHMOND. From a price point, how are you all with the traditional video providers and cable providers? 

Mr. CAMPBELL. Traditionally in the markets where we have entered, we obviously enter lower than they do. What we have seen 

is some slowdown in price increases from the incumbent cable operator although that has not—they slow down the increases. They 

still increase their prices and the content acquisition is still a problem, but generally our price point is lower. 

Mr. RICHMOND. Let me just say that many local broadcast stations play an important role in providing local news, weather, and 

emergency information to the communities they serve. However, 

nearly 90 percent of households today watch their local broadcaster 

through a pay TV subscription and therefore are dependent on 

cable, satellite, or other video provider to offer this program. And 

as we mark the anniversary of 9/11, I believe that we all agree that 

the U.S. should not be deprived of local information during emergencies regardless of how retransmission consent negotiation is 

proceeding. And I mentioned 9/11 but, of course, in Louisiana and 

in our area, we have to worry about hurricanes and tornados and 

other things. 

So I would be interested whether the panelists would comment 

on their views as to whether it is a fair negotiating tactic to threaten blackouts given viewers are then at the risk of missing emergency information. What steps can we take to ensure that our constituents do not get caught in the middle of that fight, particularly 

when weather and other disasters may play a part? And anyone 

can start. 

Mr. DODGE. Of course, we do not think it is fair for consumers 

to be put in that position, especially given that the broadcasters received at least initially billions of dollars of spectrum for free under 

the premise that they would be stewards of that spectrum for the 

public good. 

And with all due respect to Mr. Waldron, I do not think saying 

to folks, ‘‘Hey, just go use an off-air antenna’’ is a 100 percent satisfactory solution because the broadcasters do not cover their entire 

DMAs with the free broadcast signal. 

Mr. WALDRON. The vast majority—I do want to emphasize the 

vast majority of the thousands of broadcasters and the thousands 

of cable companies reach deals. So for your constituents and the 

vast majority of constituents, as I said in my opening statement, 

1 one-hundredth of 1 percent of all viewing hours were lost to disruptions last year. You are 20 times more likely to lose your service 
98 

because of a power outage than you are because of retransmission 

consent impasse. So broadcasters have every commitment to reach 

the deals in the marketplace, and in the vast majority of times, 

those deals are reached and constituents continue to get their service. 

Mr. CAMPBELL. Congressman, as you know, our company is 

steeped in a rich history of being a local rural communications provider, and we absolutely embrace localism. The issue from a video 

perspective is—I think Mr. Dodge mentioned this—negotiations are 

not quite as local as they used to be. If we were dealing with a 

local station in the Colorado Springs market, then it might be a 

better negotiation process. We are dealing with syndicates that own 

30, 40, 50 markets who play them against each other, who push 

these negotiations up to the national level and tie in all of this nonlocal content into the agreement and say take it or else. And so 

that is kind of the issue from the video perspective. 

In utopia, if they were local and it worked the way that Mr. 

Waldron said, I do not disagree, but it does not work that way. 

Mr. RICHMOND. I see that my time has expired, and Mr. Chairman, I yield back. 

Mr. COBLE. The gentleman’s time has expired. I thank the gentleman. 

The distinguished gentleman from Georgia. 

Mr. COLLINS. Thank you, Mr. Chairman. I appreciate the opportunity to be here. 

This is one of those issues that my staff and others have said 

this is just a terribly complicated issue. And I began reading about 

this last week, and I felt like I was back in law school and, as I 

call, seminary ‘‘cemetery’’ and reading a paragraph and having to 

reread it four or five times and saying what exactly is being said 

here. Mr. Padden, you made a great point about that. This is just 

chaotic. 

And then I have been listening today, and what I come back to 

is—having the great joy of serving Georgia’s 9th congressional district, which is northeast Georgia, the mountains, the start of the 

Appalachian Trail, very rural but also very urban in certain areas. 

Is what I hear lost here? The people who are not in this room paid 

to be here and that is my constituents back home who could really 

frankly care less about the complexity of it. They are wanting to 

be able to get their news, to watch new ideas and to watch new 

TV and to watch new programming. And sometimes the complacency of what I have seen here today is more fighting for our battles and our market share than ending up—the bottom line is the 

person that we actually serve. And this is some of the questions 

that I want to take up first. 

Mr. Donato, you answered a few minutes ago, and I am going to 

assume that it was sort of off the cuff. But you said, well, the DMA 

is what it is, almost implying like Nielsen—where we are because 

we are in a statute doing what we do. But you do not always have 

to be there. We can change that. I mean, there can be other ways 

to look at DMAs and going very conservatively and this kind of 

thing. 
99 

So I would like for you to explain the process in which Nielsen 

decides current DMA boundaries and tell me whether or not northeast Georgia is under current consideration. 

Mr. DONATO. Currently the process is annually. We go in and we 

evaluate the share of tuning to stations from the home market, and 

the market for a particular county which has the majority of the 

viewing or the larger share—it is to that home market that a county is assigned. In some cases very large or rural or counties which 

are on the sort of outskirts of the DMA, we will actually split counties and put one part of the county in one market and one part of 

the county in the other market. 

Mr. COLLINS. Does safety ever become an issue? I mean, you 

seem to talk about viewership, but I mean, we are talking about 

safety here. We talked about hurricanes, tornados. Does safety ever 

enter into what you are thinking about? Because by splitting a 

county—Elbert County is one of mine that is split. I was watching 

just a few months ago when we had an issue with ice. I did not 

even see four of my counties on the Atlanta area—which I am in 

Gainesville—even listed there. I mean, is there safety that ever 

comes into account of what you are talking about? 

Mr. DONATO. The DMA is entirely based on viewing. 

Mr. COLLINS. Okay, and I appreciate that because we have something I want to cover here. 

So these gentlemen have talked about safety and localism and 

these kind of things, but yet, when we do the DMA, safety is not 

a consideration being taken into account. So the argument is really 

interesting here. We get them talking about localism and safety. 

We get you saying, well, we do not even take it into account for 

DMAs. 

Mr. DONATO. I guess I would respond in this way. So the DMA 

is basically set up as a commercial entity so that buyers and sellers 

of advertising understand the geography associated with viewing 

audiences. It is the basis for literally hundreds of billions of dollars 

of commercial activity, and it really is the thing that has supported 

local television all along. It is objective. It is based on viewer preferences. It is not based on any rules. We frequently talk to Congressmen and women when there are issues that arise in terms of 

someone not seeing a signal and they go to their Congressman or 

woman. 

Mr. COLLINS. We are going to talk about that in just a second. 

Mr. DONATO. Yes. We basically handle them one at a time and 

try to demonstrate why they are where they are. And we listen to 

them and sometimes this is the reason why we begin to split a 

county if it does appear as if a county really goes—part of a county 

goes to one market, part of a county goes to another market in 

terms of the viewer preferences. 

Mr. COLLINS. In one of my counties in particular, I think that is 

just a false distinction. 

But really I think what is happening here is we are talking on 

two different levels when we deal with this DMA issue. In one part, 

we are dealing with localism and the safety aspects and why we 

need local broadcasting and why the satellite and cable providers 

get in this market. And on your angle, you are not even discussing 

really what some of the arguments that are being made here. So 
100 

that is a concern. I may submit more questions for the record for 

you at a later time. 

Mr. Waldron, how specifically are broadcasters willing to facilitate the availability? As I said before, I have four counties that are 

orphan counties. I would like a commitment from you to work with 

my office, and I know that they have already been working there 

to make sure that we get this question addressed because it came 

up in my town hall meetings. They understand this. They get it because we are really in a different dynamic in those four counties 

and really split between two smaller markets in the predominant 

Atlanta market in which most of them are participating. Can I get 

a commitment out of you continuing to work with me on those orphan counties that I have? 

Mr. WALDRON. Absolutely. 

Mr. COLLINS. The other question here and this is sort of an overall question. I will leave this one open. It is not one that I had prepared but it came to me as I was listening to you. I am out of time, 

I believe, Mr. Chairman? So I guess I will have to submit it for the 

record. Can I have 30 seconds, Mr. Chairman? 

Mr. COBLE. 30 seconds will be granted. 

Mr. COLLINS. Thank you, Mr. Chairman. 

I read the New York Times. I read the Washington Post. I read 

the Wall Street Journal. I read the Atlanta Journal. I read the 

Gainesville Times. I even read the Fannin News Observer. I get information from all over. Why couldn’t I have my local broadcasting 

and the Los Angeles affiliate if I wanted to? And I am not setting 

myself up. So anybody in the audience says, ‘‘Oh, he is for one side 

or the other.’’ No. I am just asking an honest question with the way 

things are developed. Shouldn’t the question be ‘‘either/or’’—not be 

‘‘either/or’’ and be ‘‘and?’’ 

Mr. WALDRON. If I may answer. 

Mr. COBLE. Your time has expired. 

You may answer. 

Mr. WALDRON. I mean, I think the argument is that exclusive 

territories are very common in business, let’s say a beer distributorship or a car dealership. Well, that is what a local broadcaster 

is. They are the CBS outlet, if you will, for a CBS affiliate in 

Gainesville or Atlanta. They are that outlet. If you are bringing in 

another CBS station, then you actually have defeated the exclusivity that the broadcaster negotiated for. 

Mr. COLLINS. We will talk about it. 

Mr. COBLE. The gentleman’s time has expired. I thank the gentleman. 

The gentlelady from Washington. 

Ms. DELBENE. Thank you, Mr. Chair, and I just want to thank 

all of you for being here today and continuing as we have more 

questions. 

I wanted to start with Mr. Padden. You have not talked about 

localism at all and with your proposal how that would impact access to local information. 

Mr. PADDEN. Again, I am just suggesting to you that marketplace 

forces would be a better servant of consumers’ interests. If there is 

programming they are interested in, whether it is local programming or something from somewhere else, and you leave it to the 
101 

market and there is money to be made providing that program to 

them, they will get it. The overwhelming majority of the viewing 

is to local broadcast stations because of the overwhelming interest 

in the local news and weather and sports, and in a free market system, that would continue. There would be absolutely no diminution 

in that at all. 

Why you would want to continue a system that is based on the 

Nielsen ratings from 1972 to decide who gets to watch what I do 

not understand. 

Ms. DELBENE. You know, with the new technology today, the 

Internet, people are getting a lot of local information even when 

they are not at home. Many of us when we are here are still staying connected at home and getting local information in other ways 

because we have people traveling around a lot and they are not always in their local area but they still want news that is happening 

from home. 

So given the development of new technologies and the different 

consumer behavior in terms of access to content and making sure 

that we—given that we have legislation from 1988 and Nielsen ratings from earlier, how do we make sure that we put together a policy that does not inhibit innovation or change going forward as we 

look at what we should do here in the next step? And so that is 

kind of a broad question for everyone, but we want to make sure 

that whatever we do addresses issues that consumers have today 

but also does not block innovative new entrants that may also want 

to compete in this space. 

Mr. Donato? 

Mr. DONATO. Yes, I would like to answer that actually. 

So we measure viewing of television online. We have made an 

announcement. It is a very complicated technical problem of measuring it through tablets. We have made an announcement that we 

have solved the technology, and starting the end of next year, 

viewership on tablets will also be included in the ratings. 

I suppose my point is we have got measurement solutions. The 

business relationships are very, very complicated, and I would not 

comment on them. I would leave it to my fellow panelists to comment on them. But we do have the measurement solutions worked 

out. 

Mr. DODGE. If I could comment on the 1972 Nielsen data point, 

I think one thing that is missing from the record is that although 

theoretically DMAs can change based on viewership and viewership 

is what is measured, if there is only one signal that is available in 

a DMA, when you check the viewership, you are going to get the 

same local affiliate over and over and over again. And in southwest 

Colorado, for example, which I mentioned is in the Albuquerque 

DMA, we have proposed to provide both Albuquerque and Denver 

to the folks in those two counties and let the consumers decide. So 

when Mr. Donato’s firm calls them up, they can say I am watching 

Albuquerque and, lo and behold, maybe the broadcasters are right. 

People down there prefer to buy their Chevrolets from Albuquerque, but some people might say I am watching Denver. And 

ultimately it is a vote of the people to decide where those two counties should be. 
102 

Mr. DONATO. I said it before, but I do not understand the 1972 

comment. Every year we evaluate viewership and that is the basis 

on which DMAs are constructed. 

Ms. DELBENE. So I was not just focused on 1972. I am kind of 

focused on the speed of legislation and the way people are viewing, 

the way the industry work changes more quickly sometimes than 

legislation does. So how do we make sure we put together legislation that does not inhibit that innovation? 

Mr. WALDRON. If I could come back to your original question 

about technology, technology is very exciting for broadcasters because, as you are probably well aware, with Slingbox and other 

technologies, watchabc.com, you can actually use the Internet technologies to keep up with your local broadcaster even when you are 

in Washington, D.C. And with the CBS issue with Time Warner, 

an important part of that was the online digital rights so that CBS 

can make that programming available to Hulu or Netflix or Amazon Instant Video. So the technology is actually expanding opportunities to access your local broadcaster. 

Ms. DELBENE. Yes, Mr. Padden. 

Mr. PADDEN. If I could respond just briefly. You are right. New 

technology is creating all kinds of wonderful opportunities. Unfortunately, the compulsory license that you have given to the cable 

industry and the satellite industry you have not given to the online 

industry. So, for example, you give the rights to broadcast programming, to Comcast and to DirecTV, but you do not give it to Netflix. 

I do not understand why. I am not advocating that you give it to 

Netflix. What I am advocating is you undo the license you have 

given to cable and satellite that currently puts online distributors 

at a disadvantage. The United States is a party to a number of 

international treaties that prohibit compulsory licensing of television programming to online providers. So the only way you can 

level the playing field is by repealing the license for cable and satellite. 

Ms. DELBENE. My time has expired. So thank you, Mr. Chair. I 

yield back. 

Mr. COBLE. I thank the gentlelady. 

The distinguished gentleman from Texas, Mr. Lamar Smith. 

Mr. SMITH OF TEXAS. Thank you, Mr. Chairman. 

First of all, let me apologize for being tardy as well as for having 

to leave early. This is one of those days where all of the three Committees on which I serve are meeting concurrently. So I am having 

to shift around. 

Also, I may be covering some subjects that have already been 

covered, and I apologize for that. But I would like to address a couple of questions to our panelists today. 

My first question I think would go to Mr. Dodge, Mr. Waldron, 

and Mr. MacKenzie, and it is this. The compulsory license has been 

extended innumerable times by Congress, and my question is how 

well is it working for television viewers? And do you feel that it 

ought to be reauthorized for another 5 years? Mr. Dodge? 

Mr. DODGE. I would say it is working wonderfully. As a result 

of the last reauthorization, DISH is now providing local channels 

in all 210 DMAs. 

Mr. SMITH OF TEXAS. Okay. Thank you. 
103 

Mr. Waldron? 

Mr. WALDRON. With respect to the local channels, I might surprise you. I agree completely with Mr. Dodge. We think the local 

compulsory licenses actually do work. I disagree with my friend, 

Preston Padden, on that one. Broadcasters think the system is 

working. 

Mr. SMITH OF TEXAS. And Mr. MacKenzie? 

Mr. MACKENZIE. We are going to go three in a row. I would 

agree. 

Mr. SMITH OF TEXAS. Okay. Thank you. 

The next question is for Mr. Garrett and Mr. Padden and Mr. 

Dodge, and it is this. What alternatives exist to the compulsory license? And would those alternatives adequately protect the rights 

of copyright holders? Mr. Garrett? 

Mr. GARRETT. The Copyright Office addressed that very question 

in a report that they prepared for Congress here, and they talked 

about the different types of licensing, direct licensing, sub-licensing, and collective licensing. And the report lays it out in excellent 

detail here. 

The one thing I would mention is just the actual history here of 

what has happened with WTBS, for example. I have had the privilege of being present, I think, at every one of the hearings this Subcommittee has held on this issue since the late 1970’s. And when 

I go back, I think about the years when people would debate about 

making WTBS available and it could only be done via compulsory 

licensing. And in fact, what happened in 1990 is WTBS converted 

to a cable network, and today it is available to virtually every cable 

subscriber, not pursuant to compulsory licensing, but pursuant to 

free marketplace negotiated agreements, including agreements that 

Major League Baseball has and has kept a package of programming on TBS for several years and will through the year 2021. 

Mr. SMITH OF TEXAS. Mr. Padden? 

Mr. PADDEN. There are plenty of marketplace alternatives that 

would be far more appropriate and fair to copyright owners than 

a Government system where Government boards set the rates. 

Mr. SMITH OF TEXAS. Thank you. 

And finally, Mr. Dodge. 

Mr. DODGE. We believe that the compulsory licenses do still continue to have utility, and part of the reason is what Mr. Padden 

noted in his written testimony, which is to this day the broadcasters still have not cleared copyrights through to the viewer in 

all instances. And that is the magic of a compulsory license actually. 

Mr. SMITH OF TEXAS. Thank you all for your testimony. 

Thank you, Mr. Chairman. I yield back. 

Mr. COBLE. I thank the gentleman from Texas. 

The distinguished gentleman from New York. 

Mr. JEFFRIES. Thank you, Mr. Chairman, and I thank the distinguished Ranking Member as well. 

It seems to me that many of the disputes over the last several 

years that have, in some instances unfortunately, resulted in a 

temporary blackout and ability for consumers, some of whom I represent back home in Brooklyn and parts of Queens, to get content 

all seem to occur in and around significant sporting events. So 
104 

most recently in the run-up to the start of the football season, there 

was a conflict that was resolved on the eve of the football season 

starting, thankfully. In the past back at home, there was a conflict 

that prevented some consumers from seeing part of the early Yankees run through a particular playoff season that wound up resolving itself. And there was a conflict at home that centered around 

the ability for some people to see MSG which broadcast cast the 

Knicks. The Knicks were off to a terrible start, so nobody cared. 

[Laughter.] 

And then Jeremy Lin came on the scene and it became a big 

problem. And it ultimately resolved itself. 

But there is a lot of conflicts, not all exclusively, but a lot that 

just seem to have interesting timing as it relates to major sporting 

events. 

And so I was very interested in Mr. MacKenzie’s observations as 

it relates to sports licensing fees. I believe you testified that sort 

of these transmission fees have been skyrocketing in recent times. 

Is that correct? 

Mr. MACKENZIE. True. 

Mr. JEFFRIES. And I think you also indicated that as a result, 

consumers are hurt as a result of the increase in the sports transmission fees. Is that right? 

Mr. MACKENZIE. That is our opinion, yes. 

Mr. JEFFRIES. Now, could you elaborate on that opinion in terms 

of how exactly you think the consumers are hurt by an increase in 

licensing fees connected to ESPN or some of the other sports content? 

Mr. MACKENZIE. Well, for instance, ESPN, as reported by SNL Kagan—the cost of that channel alone is $5.50, and that is a channel that is required to be carried at the basic tier. So whether you 

are a sports fan or not, you are having to pay for ESPN. So when 

you look at the sports programming that is on the cable channels 

and on the broadcast channels, the amount of the programming 

costs that can be attributed to sports—and I do not have an exact 

number, but the estimate is a third of the expense—— 

Mr. JEFFRIES. Now, who requires ESPN to be carried at the basic 

tier? 

Mr. MACKENZIE. That is part of the negotiations that you have 

with Disney. When you are negotiating with them, they will only 

allow you to carry ESPN if you put it on the lowest tier. 

Mr. JEFFRIES. Okay. 

You also mentioned in your testimony that you thought that the 

antitrust exemption that exists perhaps should be revisited because 

of the dominant market share that exists with the major sports 

leagues. Is that correct? 

Mr. MACKENZIE. Yes. 

Mr. JEFFRIES. Now, in 1922, I believe there was an antitrust exemption granted blanket to Major League Baseball, and then you 

referenced legislation that this Congress passed in 1961. But if we 

were to revisit the antitrust exemption and adjustments were to be 

made, recognizing that there is a difference between baseball and 

the other major sports leagues, how do you think that that could 

impact the landscape in a manner that was favorable to our consumers? 
105 

Mr. MACKENZIE. Well, I think that what you have, rather than 

one entity negotiating on behalf of the entire league, you would 

have individual teams negotiating in their local market. I think 

that that would allow for more competition and probably lower 

costs. 

Mr. JEFFRIES. Could you comment on that, Mr. Garrett? 

Mr. GARRETT. Congressman, as I indicated earlier, very few people want to hear what I have to say about antitrust policies and 

antitrust laws. My focus is on the copyright side. 

But what I will say is that with the Sports Broadcasting Act, it 

is, among other things, responsible for why you and the American 

public will be able to see the World Series on Fox this year. It is 

that law which gives the Commissioner of Baseball, gives the NFL 

and other leagues the ability to pull together rights and make 

available to the American public the kind of programming that is 

now made available. I think the law has worked well. It has not 

been abused, and it is one of the reasons why today I can come 

here and say to you that every one of the approximately 5,000 

games played in Major League Baseball—I am sorry—5,000 telecasts of games in Major League Baseball is available in one fashion 

or another to your constituents and to all consumers. 

Mr. JEFFRIES. Thank you. 

Mr. COBLE. Thank you. I thank the gentleman. 

The distinguished lady from Texas is recognized. 

Ms. JACKSON LEE. Mr. Chairman, thank you. I think all of us are 

expressing our appreciation to our Chairman and to the Ranking 

Member and indicating that our calendars caused us to be delayed. 

In one instance, the Homeland Security Committee was discussing 

Syria, and I might add that the combination of gentlemen that are 

before us, content and the various providers, have helped to contribute to America’s education and discourse on this very important 

issue. So we are here for more than just a separation of powers as 

to who has what, who is to be regulated, but to be able to thank 

you for how you contribute to the public discourse on some very 

vital issues. 

We are engaged in this regulatory discussion because Congress, 

in its wisdom, saw fit to regulate both the content and the providers in order to create more robust competition, which I think is 

vital, and particularly the responsibilities of the Judiciary Committee are on the issue of competition. And I might add that there 

is merit in everyone’s position, as I have been able to glean, as I 

have sat here. 

And certainly to the National Association of Broadcasters, I want 

to just be historic in my reflection on the old days of the black and 

white television with that antenna where you did provide content 

of joy to those communities that could get a television. And all they 

had to do was to plug it into the socket. So we have come to a new 

posture that for many was a very difficult change because they had 

to now pay for something that they had been able to plug in and 

receive some form of content. But in the wisdom of the Congress 

and the innovativeness of technology, we have all come to live together with the new access that consumers have. 

In the course of that, I want to raise a number of questions. All 

of us I think or many Members have expressed certainly the con-
106 

cern of the issue of blackout and how it impacts not so much the 

two entities that are having a disagreement. I heard someone say 

that that is only a minute percentage that occurred, but if it occurs 

at all, it is a difficult challenge for many of us who deal with our 

constituents. 

With all due respect and reflection, the customer will be calling 

the satellite company or they will be calling the cable company, 

and they will not be calling the entity that has the content. And 

we have to find a balance with that because there are concerns 

that this would be a growing problem. 

So I am going to be posing a generic question to start out with, 

and I would appreciate those who would answer it could do so. And 

I might have missed. So this is just a plain, simple question. Do 

we expect to have these content conflicts coming up over and over 

again? And is there a way that the industry will look to solve those 

kinds of concerns? We know what the issues are. The issues I have, 

content. You are a provider. You want to get my content. You have 

to pay. But are there ways to handle that in a preferable way than 

to skew what Congress tried to regulate and balance to protect the 

content, rightly so, and also to give competition. That is one question. 

The other question is should the upcoming reauthorization include a discussion of other issues related to satellite, cable, and the 

Big 4 broadcasters? And what do you think they should be or do 

you think—and again, to those who would want to answer that— 

it should be simply a clean reauthorization? The Judiciary Committee has its jurisdiction and others have theirs. 

Specifically to Mr. Dodge on the DISH Network, are the cord cutters or cord shavers, those who do not subscribe to multi-channel 

video programming distributor, reduce the scope of the MVP’s ability—are they of concern to the DISH Network? And if Congress did 

not reauthorize section 119 compulsory license, how expensive or 

burdensome would that be for you? Now, that is specifically to you. 

Can you answer the other questions about getting a resolution on 

how you debate this question going forward and then the reauthorization question? 

Mr. DODGE. Sure. 

Ms. JACKSON LEE. And this is for everyone, Mr. Dodge. Why 

don’t you wait on the question I specifically asked you? 

Others on the comment please. 

Mr. CAMPBELL. Yes, I think something can be done to resolve 

this. What we need to do is look at the rules that are currently in 

place that are slanted in favor of the broadcasters that were created at a time when the broadcasters were facing issues with the 

incumbent operators, and now the shield has turned into a sword. 

And so if some of those issues were removed, such as network nonduplication and syndicated exclusivity, then I think you would see 

a much more balanced negotiation process. We have incentive to 

get local channels, the local news channels to our consumers, and 

I think the broadcasters have the incentive as well. But the problem is that so much of a national content is tied to it. If we were 

able to carry that content, I think the negotiations would be more 

balanced. 

Ms. JACKSON LEE. Mr. Dodge, on your question. 
107 

Mr. DODGE. Oh, sure. I would say to answer your first question, 

is this problem going away, for lack of a better term, the proof is 

in the numbers. In 2010, there were 10 local blackouts. In 2011, 

there were roughly 50. Last year, there were roughly 100, and now 

we are on track to set a record with 120, which is not a record I 

think any of us will be happy to hit. 

With respect to your question on whether cord cutters were a 

concern for DISH, the answer is no. We welcome the competition, 

and we need to find a way ourselves to actually evolve and participate in that. 

Ms. JACKSON LEE. Thank you. 

Anyone else? 

Mr. WALDRON. If I may, 

Mr. COBLE. The gentlelady’s time has expired. I will give you 1 

more minute. 

Mr. WALDRON. I was just going to say broadcasters support a 

clean reauthorization of STELA, and the vast majority of deals do 

get done. 

And with your opening comment, still today you can get a TV 

and an antenna and plug it in and you get TV for free. 

Ms. JACKSON LEE. Thank you, Mr. Chairman, for your indulgence. And thank you. I look forward to talking with you all individually. Thank you very much. 

Mr. COBLE. I thank the gentlelady. 

The distinguished gentleman from North Carolina, Mr. Watt. 

Mr. WATT. Thank you, Mr. Chairman. And I want to thank the 

Chair for convening this hearing and all of the witnesses for participating. It has been a delightful, free-flowing discussion. It has 

been great to see Mr. Dodge and Mr. Waldron seated next to each 

other going toe to toe. 

I will always benefit, since I have started going last in the series 

of questioning on our side, from what has taken place because 

there is always one comment that kind of pops up in the whole discussion that hits my mind. And that comment today came from Mr. 

Dodge when he looked at Mr. Waldron and said you cannot talk out 

of both sides of your mouth. My thought was that most of us—in 

all of the industries is my experience—have talked out of both sides 

of their mouths depending on what is beneficial to their particular 

industry. 

But I did note that it was particularly applicable to the broadcasters because I have been a strong advocate for people being paid 

for their intellectual property, and for that reason, I have been a 

strong advocate of your ability to negotiate for payment for your 

products. I think that is very important. 

What I have not been able to reconcile, however, is how you 

apply a different standard to the people who provide copyrighted 

material on radio, the performers. And I just do not understand 

that dichotomy. And so I am hopeful that you all will maybe come 

around on the radio side to the same position that you hold on 

the—when you own the protected material, understand that there 

are performers out there that own the protected material that they 

produce, and they deserve to be paid also. 

So I am not going to belabor that, although I would note that it 

seems to me to be unfair for you all to take the position that there 
108 

is some kind of performance tax when the Government gets no part 

of the performance rights revenue. Yet, there is no performance tax 

when you get paid for what you have the copyright to. So I hope 

you all will help me reconcile that. I will not do it here in public. 

But it is a concern that I have. 

I think these are inordinately difficult issues. I kind of come 

down closer probably to where Mr. Padden does than most people. 

We would probably be better off to get the Government out of the 

way not only in this context but in the performance rights context 

too. 

So it will not be a surprise to anybody because I announced it 

at a hearing right before the break that I was introducing a bill 

to do away with the compulsory license of music, but to make sure 

that if you play a performer’s music that you compensate them and 

go and work out a deal with them if that is what you want to do. 

I am kind of free market on a lot of this stuff, Mr. Padden, and 

I was particularly appreciative that your testimony was the last 

testimony. 

So I thank all of you for being here. I will not necessarily ask 

a question unless Mr. Waldron wants to respond to what I did not 

intend to be a personal attack on NAB because I started out by 

saying we all are self-serving and talk out of both sides of our 

mouths. I think that is characteristic of all of us at one time or another. I just used your industry as an example, as Mr. Dodge did. 

I thought his comment was appropriate. 

Mr. WALDRON. I was just going to say we look forward to further 

conversations with you. It probably is best in private. We do not 

accept all that you said, but we can continue those conversations. 

Mr. WATT. Well, we have continued those conversations on a 

local and national level, and they have always been cordial and 

congenial. So as you all said, you and Mr. Dodge and Mr. Waldron 

are good friends, and Mr. Dodge and Mr. Padden are good friends. 

All of us are good friends. We do not always agree on every issue. 

Mr. Chairman, before you close the record, the Motion Picture 

Association of America has requested that we submit this infographic illustrating the continued rapid growth of online viewing 

options for audiences for the record. So I would ask unanimous consent that we make this a part of the record. I am not even sure 

what it is. [Laughter.] 

But I am in complete agreement that anything that will help us 

make good decisions ought to be part of the record. I ask unanimous consent to submit it. 

Mr. COBLE. Without objection. Now, if it ignites in my hands, Mr. 

Watt, I will not hold you harmless for that. But we will accept that 

without objection. 

[The information referred to follows:] 
109 
110 
111 

Mr. COBLE. I thank the gentleman. 

I want to thank those of you who have been in attendance for 

the entire hearing. Obviously, your interest is more than just casual. And I particularly want to thank the witnesses. You have contributed significantly to a very complex and a very important issue. 

And we may meet again. But it has been a pleasure having you all 

with us. 

The hearing is now concluded. 

Without objection, all Members will have 5 legislative days to 

submit additional written questions for the witnesses or additional 

materials for the record. 

This hearing stands adjourned. 

[Whereupon, at 12:25 p.m., the Subcommittee was adjourned.] 

Æ