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74–085 2012

THE SATELLITE HOME VIEWER ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS, 

TECHNOLOGY, AND THE INTERNET 

OF THE

COMMITTEE ON ENERGY AND 

COMMERCE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 16, 2009 

Serial No. 111–51 

( 

Printed for the use of the Committee on Energy and Commerce 

energycommerce.house.gov 


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COMMITTEE ON ENERGY AND COMMERCE 

HENRY A. WAXMAN, California, Chairman 

JOHN D. DINGELL, Michigan 

Chairman Emeritus 

EDWARD J. MARKEY, Massachusetts 

RICK BOUCHER, Virginia 

FRANK PALLONE, JR., New Jersey 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

ELIOT L. ENGEL, New York 

GENE GREEN, Texas 

DIANA DEGETTE, Colorado 

Vice Chairman 

LOIS CAPPS, California 

MICHAEL F. DOYLE, Pennsylvania 

JANE HARMAN, California 

TOM ALLEN, Maine 

JANICE D. SCHAKOWSKY, Illinois 

CHARLES A. GONZALEZ, Texas 

JAY INSLEE, Washington 

TAMMY BALDWIN, Wisconsin 

MIKE ROSS, Arkansas 

ANTHONY D. WEINER, New York 

JIM MATHESON, Utah 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

JOHN BARROW, Georgia 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

JOHN P. SARBANES, Maryland 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

BETTY SUTTON, Ohio 

BRUCE BRALEY, Iowa 

PETER WELCH, Vermont 

JOE BARTON, Texas 

Ranking Member 

RALPH M. HALL, Texas 

FRED UPTON, Michigan 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

ED WHITFIELD, Kentucky 

JOHN SHIMKUS, Illinois 

JOHN B. SHADEGG, Arizona 

ROY BLUNT, Missouri 

STEVE BUYER, Indiana 

GEORGE RADANOVICH, California 

JOSEPH R. PITTS, Pennsylvania 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE ROGERS, Michigan 

SUE WILKINS MYRICK, North Carolina 

JOHN SULLIVAN, Oklahoma 

TIM MURPHY, Pennsylvania 

MICHAEL C. BURGESS, Texas 

MARSHA BLACKBURN, Tennessee 

PHIL GINGREY, Georgia 

STEVE SCALISE, Louisiana 


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SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET

RICK BOUCHER, Virginia 

Chairman 

EDWARD J. MARKEY, Massachusetts 

BART GORDON, Tennessee 

BOBBY L. RUSH, Illinois 

ANNA G. ESHOO, California 

BART STUPAK, Michigan 

DIANA DEGETTE, Colorado 

MICHAEL F. DOYLE, Pennsylvania 

JAY INSLEE, Washington 

ANTHONY D. WEINER, New York 

G.K. BUTTERFIELD, North Carolina 

CHARLIE MELANCON, Louisiana 

BARON P. HILL, Indiana 

DORIS O. MATSUI, California 

DONNA M. CHRISTENSEN, Virgin Islands 

KATHY CASTOR, Florida 

CHRISTOPHER S. MURPHY, Connecticut 

ZACHARY T. SPACE, Ohio 

JERRY MCNERNEY, California 

PETER WELCH, Vermont 

JOHN D. DINGELL, Michigan (ex officio) 

FRED UPTON, Michigan 

Ranking Member 

J. DENNIS HASTERT, Illinois 

CLIFF STEARNS, Florida 

NATHAN DEAL, Georgia 

BARBARA CUBIN, Wyoming 

JOHN SHIMKUS, Illinois 

HEATHER WILSON, New Mexico 

CHARLES W. ‘‘CHIP’’ PICKERING, 

Mississippi 

VITO FOSSELLA, New York 

GEORGE RADANOVICH, California 

MARY BONO MACK, California 

GREG WALDEN, Oregon 

LEE TERRY, Nebraska 

MIKE FERGUSON, New Jersey 


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C O N T E N T S 

Page 

Hon. Rick Boucher, a Representative in Congress from the Commonwealth 

of Virginia, opening statement ............................................................................ 1 

Hon. Cliff Stearns, a Representative in Congress from the State of Florida, 

opening statement ................................................................................................ 3 

Hon. Edward J. Markey, a Representative in Congress from the Commonwealth of Massachusetts, prepared statement .................................................. 4 

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

opening statement ................................................................................................ 5 

Hon. Nathan Deal, a Representative in Congress from the State of Georgia, 

prepared statement .............................................................................................. 7 

Hon. George Radanovich, a Representative in Congress from the State of 

California, opening statement ............................................................................. 9 

Hon. John D. Dingell, a Representative in Congress from the State of Michigan, prepared statement ...................................................................................... 136 

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

Carolina, prepared statement ............................................................................. 137 

Hon. Anna G. Eshoo, a Representative in Congress from the State of California, prepared statement .................................................................................. 139 

WITNESSES

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

DISH Network ...................................................................................................... 10 

Prepared statement .......................................................................................... 13 

Derek Chang, Executive Vice President, Content Strategy and Development, 

DIRECTV, Inc. ..................................................................................................... 20 

Prepared statement .......................................................................................... 22 

Mike Mountford, Chief Executive Officer, NPS LLC ............................................ 36 

Prepared statement .......................................................................................... 38 

Preston Padden, Executive Vice President, Worldwide Government Relations, 

The Walt Disney Company .................................................................................. 87 

Prepared statement .......................................................................................... 89 

Paul Karpowicz, President, Meredith Corporation ............................................... 102 

Prepared statement .......................................................................................... 104 

SUBMITTED MATERIAL

Letter of June 15, 2009, from Fox Television Affiliates Association to the 

Subcommittee, submitted by Mr. Boucher ......................................................... 140 


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THE SATELLITE HOME VIEWER ACT 

TUESDAY, JUNE 16, 2009 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY, AND THE INTERNET, COMMITTEE ON ENERGY AND COMMERCE, 

Washington, DC. 

The subcommittee met, pursuant to call, at 10:07 a.m., in Room 

2322 of the Rayburn House Office Building, Hon. Rick Boucher 

[chairman pf the subcommittee] presiding. 

Members present: Representatives Boucher, Markey, Eshoo, Weiner, Butterfield, Christensen, Space, McNerney, Stearns, Upton, 

Deal, Shimkus, Shadegg, Radanovich, Walden, Terry, and Barton 

(ex officio). 

Staff present: Amy Levine, Counsel; Tim Powderly, Counsel; 

Greg Guice, Counsel; Shawn Chang, Counsel; Roger Sherman, 

Chief Counsel; Pat Delgado, Chief of Staff; Sarah Fisher, Special 

Assistant (Waxman); Neil Fried, Minority Counsel; Amy Bender, 

Minority FCC Detailee; and Garrett Golding, Minority Legislative 

Analyst. 

OPENING STATEMENT OF HON. RICK BOUCHER, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF VIRGINIA 

Mr. BOUCHER. Subcommittee will come to order. 

Today the subcommittee takes another step toward renewal of 

The Satellite Home Viewer Act which enables satellite carriers to 

retransmit distant television signals under certain circumstances. 

Some provisions of The Communications and Copyright Acts expire 

at the end of this year, making reauthorization of this measure a 

must-pass undertaking. At the subcommittee’s oversight hearing in 

February, I indicated that Congress should proceed with the reauthorization in the most straightforward manner possible, and I believe today as I did then that we should avoid in this measure collateral matters such as retransmission consent reform that are relevant to all multi-channel video providers not just to satellite platforms. 

The discussion draft that we have under consideration today 

takes this straightforward approach. It renews for 5 years the provision allowing carriers to deliver a distant network station to 

homes under specified circumstances which otherwise would expire 

at the end of this year. It reauthorizes the good faith negotiation 

requirements in The Communications Act that also otherwise 

would expire at the end of this year. It provides needed clarificaVerDate Mar 15 2010 05:15 Aug 10, 2012 Jkt 074085 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 E:\HR\OC\A085.XXX A085

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tion regarding the provision by satellite carriers of significantly 

viewed signals by stating that a significantly viewed signal may 

only be provided in high-definition format if the satellite carrier is 

passing through all of the high-definition programming of the corresponding local station, also in high-definition format. It directs 

the FCC to develop a predictive methodology for the reception of 

digital signals within six months in order to determine with accuracy which households are eligible to receive distant network signals. It makes technical changes to the Law to reflect the fact that 

after last Friday, full-power television stations are no longer broadcasting analog signals. 

In addition to these changes that are made by the discussion 

draft that is before us, there are additional matters that we could 

potentially address. One is developing appropriate incentives to encourage satellite carriers to provide local service in all 210 designated market areas nationwide. Today, DIRECTV offers local 

service in about 150 markets while DISH will soon offer local service in 182 markets but that still leaves about 28 markets without 

any service at all. Most of the DMAs that lack local-into-local service today are in rural areas and many of these markets do not have 

a full complement of network affiliates within the local market. In 

our parlance they are referred to as short markets. 

While I understand that the numbers of subscribers in these 

unserved rural markets are small, their residents are highly vocal 

in expressing their views that they should have the same opportunities to receive local programming delivered by satellite as people 

who live in more densely populated regions. I am hopeful that ongoing discussions among the stakeholders will lead to an arrangement through which all 210 markets will receive local satellite delivered service. 

Another matter for possible discussion is whether residents in 

short markets should be able to receive the programming of networks missing in their local market from an adjacent local market 

within the State of their residence. While satellite carriers can 

today import distant signals from any market, they are hindered 

in their desire to do so by the so-called Grade B believed problem 

that prevents them from offering distant signals to those households that can receive the signal of an out-of-market network affiliate over the air. That problem as well as the larger short market 

concern could potentially be successfully addressed by the subcommittee. Stakeholders are currently discussing the short market 

and local 210 matters, and it is my hope that these conversations 

will lead to an arrangement whereby we will be able to address 

both of these concerns when we conduct our subcommittee’s markup. 

I want to welcome our witnesses this morning and thank them 

for sharing their views with us. I also want to say thank you to 

our Republican colleagues, primarily our ranking Republican member from Florida, Mr. Stearns, and his very fine staff for their excellent cooperation and collaboration as we have assembled the bipartisan discussion draft which is before the subcommittee this 

morning. 

And that said, I am pleased to welcome Mr. Stearns for his opening statement. 


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OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF FLORIDA 

Mr. STEARNS. Good morning and thank you, Mr. Chairman, and 

thank you, frankly, for including us in a bipartisan fashion so that 

we could be instrumental and helpful in developing this draft bill. 

I would point out in retrospect, the DTV transition went smoothly by most reports and many of my colleagues had been concerned 

about it. I think this smooth transition will help everybody realize 

that there is probably few issues we can talk about anymore about 

it because it is pretty much good news and we can forward. Some 

consumers simply need to have their converter boxes rescanned for 

stations that have moved or might need a different antenna, and 

some stations may need to increase their broadcast power but basically it appears that we could have saved some money, at least that 

is our position but the good news is that we can move forward. 

Turning to today’s topic, I am glad that we have a discussion 

draft, legislation to reauthorize the satellite television act. The 

original satellite legislation in 1988 is credited with helping foster 

competitive video marketplace that we have today to the benefit of 

all of our consumers. Indeed, one of my district employees tells me 

how much he enjoys his satellite service and my sense is this sentiment is equally shared by lots of consumers across this country’s 

satellite subscribers. That is why we have to reauthorize this legislation each time it comes up for renewal and that is why the discussion draft before us extends for another 5 years the authority 

of satellite operators to provide the signals of out-of-market station 

to subscribers who cannot receive their local stations over the air. 

In addition, my colleagues, the draft makes clerical and substantive changes to the statute to reflect the end of analog broadcasting. In particular, it directs the FCC to update for digital 

broadcasting both the predictive model and on-location testing 

rules for determining whether a subscriber is eligible for a distant 

signal. 

The draft also rectifies the FCC’s poor implementation of the 

‘‘significantly viewed’’ provisions. These provisions added to the 

statute 5 years ago, allow a satellite operator to provide subscribers 

in a local market with signals from a network affiliate in a nearby 

market if that nearby affiliate is watched over the air by a significant number of consumers in the local market. The statute prohibited a satellite operator however from carrying the significantly 

viewed affiliate in high-definition format if it didn’t also carry the 

local affiliate of the same network in high-definition format. The 

FCC construed that provision to prohibit carriage of the significantly viewed affiliate in high-definition at any moment of the day 

that the local station was not simply broadcasting in high-definition. Because satellite operators find it difficult to match the transmission formats of the two stations moment-by-moment, they usually choose not to carry significantly viewed stations at all. So to 

address that, the draft makes clear that a satellite operator may 

carry the significantly viewed affiliate in high-definition when the 

local affiliate is not broadcasting in high-definition so long as the 

satellite operator does carry the local affiliate at high-definition 

when it is simply available in that format. 


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An issue not addressed but I am sure will come up today is what 

to do about consumers who cannot receive programming they truly 

consider local either because they are missing local affiliates from 

one or more networks in their market or because they have been 

assigned to a designated market area which is simply outside their 

State. My sense is there will be sympathy for such viewers. If we 

address this issue however, we must do so in a way that clears existing regulatory obstacles rather than creates a whole new set of 

rules. As I have already mentioned, the video market is robustly 

competitive. In that environment there should be less interference 

in the market, not more. Whatever we do, we should ensure that 

the satellite operator, the out-of-market station and the owners of 

the content are allowed to freely negotiate. That is the best way to 

ensure that consumers get as much desirable content as possible 

at simply the lowest rates. Anything else simply protects one company at the expense of another without really helping the consumers. And at bottom, this legislation is all about the consumers. 

So thank you, Mr. Chairman, for holding this hearing. Again, 

thank you for your allowing us to participate freely. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The gentleman from Massachusetts, Mr. Markey, former chairman of this subcommittee, is recognized for two minutes. 

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN CONGRESS FROM THE COMMONWEALTH 

OF MASSACHUSETTS 

Mr. MARKEY. Thank you, Mr. Chairman, very much and thank 

you for having this hearing. 

The Satellite Home Viewer Act is a Law that this subcommittee 

revisits every 5 years to both reauthorize certain aspects of it and 

to review the applicability of particular provisions in light of 

changes in the marketplace. For example, it was 10 years ago that 

I was able to successfully offer the so-called local-into-local amendment that permitted satellite video providers to carry local broadcast stations in local markets providing a major competitive boost 

to such satellite providers. 5 years ago, the subcommittee made 

other adjustments to the Law, including adding provisions for the 

carriage of significantly viewed stations. The issues of short markets and significantly viewed signals must be dealt with in a serious fashion this year and I look forward to working on them. 

Clearly, a major change that will need to be factored into this 

year’s legislation is the conversion of the broadcast television industry to digital service. When I held the first Congressional hearing on high-definition TV in this room in September of 1987, and 

I never imagined that it would take 22 years to reach this moment 

but it appears that the delay we enacted to move back the date 

from February resulted in over three million additional households 

that were able to receive greater education and awareness to occur 

and for those three million homes to be properly prepared. The 

fielding of hundreds of thousands of consumer calls was facilitated 

by the ramp-up in the last few months of critical call center operations. 

This is a government program that worked. We made the transition. We have been able to move from analog to digital, compress 


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the amount of spectrum that was needed, auction off the remaining 

spectrum for $20 billion opening up a whole new area for entrepreneurial activity while giving a more flexible technology to consumers that in the years ahead will benefit them. So this has been 

a success and it proves that the government when it puts its mind 

to it can work for the benefit of consumers. 

I thank you, Mr. Chairman, for conducting this hearing. 

Mr. BOUCHER. Thank you very much, Mr. Markey. 

The gentleman from Michigan, Mr. Upton, is recognized for two 

minutes. 

Mr. UPTON. Thank you, Mr. Chairman. I want to also commend 

you and Mr. Stearns and our staffs for working together. 

This has been a success and it is critical that we send the proper 

message to consumers and subscribers and providers that we are 

going to act in a timely way that will not let this legislation expire. 

I look forward to working with you as we have had a great relationship over the last number of years as we move this bill through 

the committee. This is one of the bills that our committee can take 

credit for in working in a bipartisan manner and I am glad that 

we continue that trend. 

And I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Upton. 

The gentleman from California, Mr. McNerney, is recognized for 

two minutes. 

Mr. MCNERNEY. Thank you, Mr. Chairman, for convening this 

hearing to discuss the legislation to reauthorize The Satellite Home 

Viewer Extension and Reauthorization Act. I would like also to 

thank the witnesses for coming here today to share their inputs on 

the legislation. 

A tremendous amount of behind-the-scenes work is required 

every day to ensure that Americans are able to turn on their television sets any time to watch a program. The intricacies of how satellite providers and broadcasters interact are complex. Today’s 

hearing should offer an opportunity to hear thoughtful evaluation 

of the proposed reforms. 

I am excited to be a part of the debate and I look forward to the 

hearing and the resulting legislation. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you, Mr. McNerney. 

The gentleman from Illinois, Mr. Shimkus, is recognized for two 

minutes. 

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

Mr. SHIMKUS. Thank you, Mr. Chairman. 

I, too, want to kind of highlight the successful transition on Friday. I have only received, I think, four phone calls in my congressional office on the DTV transition and I have five DMAs that kind 

of cover my congressional district, a great success. Obviously, we 

have ushered the most significant revolution in television since the 

advent of color broadcasting. We have cleared 24 megahertz of 

spectrum for public safety use and that is what I have been focusing on for a long time of providing first-responders with a billion 

dollar grant program for interoperability. And another thing that 

has been critical in this whole transition, 84 megahertz of spectrum 


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nationwide for advanced wireless broadband services and $20 billion in auction proceeds for the taxpayers. 

I also want to thank both government and industry for what they 

did in promoting this, the National Association of Broadcasters, the 

National Cable Telecommunications Association, the American 

Cable Association, DISH Network and DIRECTV, they are here 

today along with the NTIA and the FCC, because we informed the 

public and the public was able to respond as we hoped they would. 

It is important to note that if SHVERA were not reauthorized, 

there would be more Americans affected by changes to their television broadcast then during the DTV transition. That is the importance to this reauthorization. It is my hope that we will have 

a frank and open discussion and not move hastily with this important legislation. 

I appreciate both Chairman Boucher and Ranking Member 

Stearns for calling this hearing. I look forward to hearing from the 

witnesses and I yield back my time, Mr. Chairman. 

Mr. BOUCHER. Thank you, Mr. Shimkus. 

The gentleman from Georgia, Mr. Deal, is recognized for two 

minutes. 

Mr. DEAL. Thank you, Mr. Chairman. I, too, appreciate you holding the hearing. 

If it does make the news, it is unfortunate that some of my folks 

in North Georgia will have to learn about it by watching Tennessee 

television. 

I have a statement for the record that I will submit and I yield 

back my time. 

[The prepared statement of Mr. Deal follows:] 


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Mr. BOUCHER. Thank you very much, Mr. Deal, and your statement along with that of other members will be included in the 

record. 

The gentleman from California, Mr. Radanovich, is recognized for 

two minutes. 

OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA 

Mr. RADANOVICH. Thank you, Mr. Chairman. I want to thank 

you and Mr. Stearns for holding this hearing to review the draft 

legislation reauthorizing The Satellite Television Act and I appreciate both your leadership and your efforts to reauthorize this bill 

continuing to provide satellite operators with the authority to provide the signals of out-of-market broadcast ability to subscribers 

who cannot receive their local affiliates over the air. 

My staff and I learned a few years ago when many in my district 

lost their access to distant signals. We have a large population of 

constituents who are very vocal satellite subscribers and while this 

problem has since been addressed, it illustrates the impact and importance of this legislation to me and my constituents, although 

there are still a few issues that we need to look out. 

I look forward to working with the committee in a bipartisan 

manner towards a product that reflects the best interests of all television viewers. And I want to thank the witnesses for being here 

today sharing your testimony and, Mr. Chairman, I yield back. 

Thank you. 

Mr. BOUCHER. Thank you very much, Mr. Radanovich. 

We are pleased now to turn to our panel of witnesses for this 

morning and I want to thank each of them again for taking the 

time to join us here and share their very thoughtful views and comments with us on our discussion draft. Mr. Stanton Dodge is executive vice president and general counsel and secretary for DISH 

Network. Mr. Derek Chang is the executive vice president for content strategy and development for DIRECTV. Mr. Mike Mountford 

is the chief executive officer of NPS, one of the companies that is 

in the business of delivering distant network signals to households 

that are unserved according to the law’s definitions. Mr. Preston 

Padden is executive vice president for Worldwide Government Relations for the Walt Disney Company. Mr. Paul Karpowicz is the 

president of Meredith Corporation. He testifies today on behalf of 

the National Association of Broadcasters. 

Without objection, each of your prepared written statements will 

be made a part of the record. We would welcome your oral summaries and ask that you keep those summaries to approximately 

five minutes. 

Mr. Dodge, we will be pleased to begin with you. 


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STATEMENTS OF R. STANTON DODGE, EXECUTIVE VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, DISH NETWORK; DEREK CHANG, EXECUTIVE VICE PRESIDENT, CONTENT STRATEGY AND DEVELOPMENT, DIRECTV, INC.; MIKE 

MOUNTFORD, CHIEF EXECUTIVE OFFICER, NPS LLC; PRESTON PADDEN, EXECUTIVE VICE PRESIDENT, WORLDWIDE 

GOVERNMENT RELATIONS, THE WALT DISNEY COMPANY; 

AND PAUL KARPOWICZ, PRESIDENT, MEREDITH CORPORATION 

STATEMENT OF R. STANTON DODGE 

Mr. DODGE. Thank you for the opportunity to testify today regarding renewal of The Satellite Home Viewer Act. 

The subcommittee’s discussion draft provides a foundation to 

help shape how satellite TV providers will offer broadcast stations 

in the digital world, a world that began in earnest over the weekend with the digital transition. For that transition, the Federal 

Government, Congress, broadcasters, satellite TV providers and 

other industry leaders came together in a coordinated fashion to 

further a key national objective. We hope that same spirit of cooperation can carry over to satellite TV’s transition from analog to 

digital rules. 

The discussion draft provides a number of key provisions to help 

with that transition, however standing alone, we believe, it does 

not go far enough to provide consumers with the access to programming they desire. In each previous iteration of The Satellite Home 

Viewer Act, Congress has taken incremental and concrete steps to 

expand the ability of satellite TV providers to offer consumers the 

services they want while protecting the rights and interests of local 

broadcasters and content providers. At each juncture, satisfied consumers and enhanced video competition has been the result. Starting from the important building block that you have provided, we 

have the opportunity to again enhance competition and meet consumers’ needs this year with additional reform in two key areas, 

designated market or DMA reform and serving all 210 markets. 

Mr. Chairman, members of Congress have noted that the need 

for DMA reform to ensure that all customers have access to instate broadcasters, yet in 43 States today, that is not the case. 

Similarly, it was provided for four markets in 2004 and importantly consumers benefited but I am not aware of any evidence of 

harm to broadcasters in those markets. We believe at a minimum, 

that a full national rollout of that program is now warranted so 

that all consumers can gain access to key in-state news, information and other programming. This would be a necessary, incremental step but would not address our consumers concerns fully. 

Broader DMA reform that provides consumers with the ability to 

receive the local stations of their choosing should remain our longterm objective limited only by what technology allows. 

To date, broadcasters have failed to offer constructive DMA reform proposals and instead offer solutions that are consumer unfriendly and technically not possible. It should be highlighted that 

satellite TV providers and broadcasters have not been able to resolve this consumer issue through private contract arrangements in 

the decade since local-to-local service was introduced underscoring 


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the need today for affirmative action by Congress to achieve this 

result now. 

The second area of reform we can achieve this year is serving all 

210 markets. Mr. Chairman, you and others on the subcommittee 

have expressed a desire for satellite delivered local stations at all 

210 DMAs. We believe that an incentive-based structure to achieve 

this result can be accomplished if satellite TV providers and broadcasters are willing to compromise and contribute to serving these 

economically challenging markets. We pledge our willingness to 

work with DIRECTV and the broadcasters to find common ground 

and share your believe that this would be a pro-consumer result. 

We serve 178 local markets today by satellite which is more than 

any other pay TV provider in the nation. We are proud of that investment and are equally excited to report that DISH Network will 

maintain its leadership position for launching four additional markets in the next month, Marquette, Michigan, Bend, Oregon, Alexandria, Louisiana and Lima, Ohio. That brings the DISH Network 

total to 182 out of the 210 markets. The upcoming launch of these 

markets underscores our good faith commitment to continue to extend service to even more local communities provided certain conditions exist. 

Critically, each of these four new markets has a local affiliate of 

each of the big four networks. The vast majority of the remaining 

23 markets, however, do not and we are unable to justify the substantial cost of investing in markets who not provide the means to 

offer a competitively viable service. That said, we are ready to provide service to the remaining markets assuming the broadcasters 

are willing to partner with DISH Network and DIRECTV to find 

a commonsense regulatory and financial framework for doing so 

and that we have successful satellite launches to enable us to do 

that. 

As an industry, DISH Network and DIRECTV have come together with a set of principals that should be included in any solution. First, all satellite providers should enter the digital world 

with the same set of rights so consumers have true choice across 

all 210 markets. The regulatory disparities should not dictate consumer choices. For example, in any market missing one or more 

network affiliate, all satellite TV providers should have the ability 

to import a missing network affiliate to that entire market regardless of whether there is bleed over from a nearby market. 

Second, the finite amount of satellite spectrum available for any 

video programming should be addressed heads on. As a national 

provider, DISH Network provides over 1,400 local broadcast stations today. If we move forward towards service in all 210 markets, 

realistic limits on the amount of local broadcast stations that can 

be shoehorned into our national satellite platform should be established. Similarly, broadcasters should be obligated to provide a 

minimum amount of local content to earn satellite carriage. 

Finally, making local stations available to all Americans for the 

first time on any platform is a noble but financially daunting undertaking. To achieve the same result for telephony, our nation has 

established a $7 billion a year universal service program and there 

is an ongoing national dialog on how to fund similar universal 

broadband coverage. Asking satellite carriers alone to expand to 


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every market is a substantial burden, a burden that is not being 

asked of broadcaster, the cable industry or telecos. There should be 

clear financial commitments from broadcasters to share in the burden of getting local TV service to remote areas for the benefit of 

our mutual viewers. 

In conclusion, increasing the number of communities served by 

satellite TV providers and the number of households able to receive 

in-state broadcasters are obtainable and worthy public policy objectives for this year. The discussion draft provides a starting point 

to achieve these consumer goals but does not go far enough. We 

stand willing to work with this subcommittee, broadcasters, 

DIRECTV and the contact community to find the proper balance to 

accomplish both goals. 

Thank you again for inviting me to testify. 

[The prepared statement of Mr. Dodge follows:] 


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Mr. BOUCHER. Thank you. 

STATEMENT OF DEREK CHANG 

Mr. CHANG. Is this all right? 

Mr. BOUCHER. That is pretty good. 

Mr. CHANG. I apologize. I am neither an engineer nor an attorney so I may be at a severe disadvantage here. 

Chairman Boucher, Ranking Member Stearns and members of 

the subcommittee, thank you for inviting DIRECTV to testify today 

regarding the reauthorization of The Satellite Home Viewer Act. 

We support the straightforward approach of the subcommittee’s 

draft bill which makes narrow but nonetheless important changes 

to the law for the delivery of broadcast stations in today’s all-digital world. However, if the subcommittee chooses to broaden the 

draft bill to address other issues we offer the following suggestions. 

These include modifying the DMA system, allowing distant network stations to be delivered in DMAs with missing affiliates and 

further improving the significantly viewed rules. I would like to address each of these issues. 

First, I would like to discuss improving choice in local service. 

Throughout the country, viewers in so-called orphan counties on 

the edges of DMAs cannot receive local broadcast service from 

within their own State. The 2004 reauthorization allowed consumers in a handful of these orphan counties to gain access to instate local content. The results have been heralded by consumers 

and public officials. Even broadcasters who originally opposed these 

changes found their areas of service expanded and gained revenue 

from the additional copyright payments. These pilot projects provide Congress with a roadmap for applying this concept nationally. 

Representative Ross has drafted legislation that seeks to do just 

that. We urge its adoption. The approach is simple. It would allow 

consumers in these orphan counties the opportunity to watch their 

home State programming. 

Second, we would ensure that all consumers have access to network programming. Today overall DMAs lack one or more local affiliates. Subscribers in such markets are ineligible for distant signals if they are predicted to receive even a faint signal from a 

neighboring, out-of-market station. This is known as the great D 

bleed problem. It prevents subscribers in those markets from getting any network service via satellite. We see no reason why outof-market stations should deny consumers access to network programming. There is a simple solution. Subscribers should be able 

to receive distant signals unless they receive a sufficiently strong 

signal from an in-market station. 

Third, I would like to briefly address significantly viewed stations. We applaud your decision to remove the onerous equivalent 

bandwidth requirement. Yet satellite carriers face another obstacle 

in offering significantly viewed service, obtaining consent from 

broadcasters to offer stations outside their DMAs. Some broadcasters tell us that network affiliation agreements prohibit them 

from granting consent to satellite operators. Others have proven on 

interest sitting granting consent outside their DMAs even when 

they grant such consent to cable. We recommend that broadcasters 

be required to grant consent for significantly viewed carriage on 


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equal terms and conditions to all distributors seeking such carriage. Alternatively, Congress could remove the retransmission consent requirement and instead compensate broadcasters under the 

distant signal regime. 

Last, Mr. Chairman, you and others have expressed an interest 

in satellite delivered locals in all 210 DMAs. While DIRECTV does 

not generally support a universal carriage mandate, we have 

worked constructively with DISH Network to develop a minimum 

set of requirements we believe are necessary for any such mandate 

to be imposed. By way of background, DIRECTV has spent billions 

of dollars to provide local service to 95 percent of the country. In 

10 short years, the satellite industry has reached 98 percent of the 

country with local service. Broadcast and cable which have been in 

business since the 1920s and 1940s respectively, have still not 

reached those numbers. Cable still does not pass nearly four million households, a figure larger than homes and markets without 

satellite delivered locals. Additionally, there are over 50 DMAs 

lacking one or more network affiliates leaving almost seven million 

households without a full complement of network programming. 

Universal carriage is a worthy public policy goal but it requires 

an enormous capital investment that would be difficult if not impossible for us to recoup and while the broadcasters would prefer 

that the entire burden be placed on satellite operators, this approach is neither economic nor fair to our subscribers who ultimately bear the cost of such mandates. If Congress is to pursue a 

universal carriage mandate, it must do so in a way that shares the 

burden more equitably among all parties and accounts for other 

critical factors in the marketplace. We developed with DISH Network the following set of minimum criteria for your consideration, 

applying a one-third capacity cap similar to cable’s, limiting carriage rights to those stations with local content, requiring broadcasters to shoulder their fair share of the financial burden for expansion of their over-the-air footprint, prohibiting broadcasters 

from increasing the already substantial cost of such a mandate 

through retransmission consent fees and as discussed above, addressing the missing affiliate problem and improving the significantly viewed rules. 

Mr. Chairman and members of the subcommittee, I thank you 

and your staff for all of your hard work. I am happy to take your 

questions. 

[The prepared statement of Mr. Chang follows:] 


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Mr. BOUCHER. Thank you very much, Mr. Chang. 

Mr. Mountford. 

STATEMENT OF MICHAEL MOUNTFORD 

Mr. MOUNTFORD. Chairman Boucher, Ranking Member Stearns 

and members of the subcommittee, I am Michael Mountford, CEO 

of National Programming Services LLC and we do business as 

AllAmericanDirect.com. 

Mr. Chairman, before I get started, I just want to mention that 

I have been in this industry for 26 years and no one has done more 

for satellite TV consumers, especially rural satellite TV consumers 

than you, so thank you. 

I am pleased to have the opportunity to testify here today on behalf of not only my company but also frustrated consumers everywhere. From my experience, consumers want their local stations 

first and foremost however thousands of people have come to our 

Web site to urge you, Congress, to allow them to purchase distant 

network signals without restrictions. They have several reasons. 

Maybe they have elderly parents who live in a different city. Maybe 

they have a child who goes to a school somewhere else in the country. Heck, you guys probably want to check in on your districts 

once in awhile, don’t you? These customers don’t understand and 

these consumers don’t understand why they can’t purchase this 

product like they can purchase the New York Times or a Chicago 

radio station, for example. This country was built on the principle 

of the freedom of information. Consumers want that freedom and 

they don’t understand why Congress won’t grant them those rights. 

I understand the concern about localism and I would like to suggest a simple solution, allow the consumers to purchase distant 

networks only after they purchase the local channel of the same 

network. This is allowed under the current legislation for significantly viewed stations from adjacent markets. Why not expand 

that? 

I urge Congress to take this bold step now and lift the restrictions on distant networks because if you don’t, more and more constituents are going to be frustrated by these rules and they will be 

asking you, how could you have passed such a law. Hopefully, you 

will agree with me that lifting the restrictions is the best solution 

however please let me comment on the draft legislation. It calls for 

a predictive model which we agree is the best way to determine eligibility. The most important thing about a predictive model is 

viewability standard. The analog model right now calls for 90 percent viewability—that means 10 percent non-viewability. This 

would allow for 12 30-second interruptions during an hour program 

and with digital the interruptions are outages, they are gone. 

Clearly, that is unacceptable while viewing the digital signal. 

We urge Congress to require the FCC to adopt a minimum 

viewability standard of 99 percent, better would be better. Even at 

that rate, it would allow for 12 3-second interruptions in an hour 

program. We urge the committee to ensure that no additional expense be required of the consumer to get their local networks. Congress did an excellent job with the digital conversion coupons. In 

the same spirit, we urge you to direct the FCC not to require addiVerDate Mar 15 2010 05:15 Aug 10, 2012 Jkt 074085 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 E:\HR\OC\A085.XXX A085

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tional equipment purchases by the consumer to get network programming. It just wouldn’t be fair. 

The waiver system was put into the legislation because it is universally known a predicted model cannot be perfect and it will not 

be perfect. The waiver system as it exists today is broken and 

needs to be changed. Your constituents are being denied service 

without the proper appeal envisioned by the legislation. Thirty-four 

percent of all the stations we submit waivers to deny over 90 percent of those submittals. In essence, a third of the stations are denying all the waivers that come to them except for maybe a friend, 

a relative or after a call from a congressional office. That is not the 

spirit of the law. That is not fair to your constituents. 

Fortunately, the digital conversion allows for us a simpler, less 

expensive, more consumer-friendly waiver system that works in 

this way. A consumer who is denied by the predicted model can 

sign an affidavit under penalties of perjury and fines that they do 

not receive the signal. The provider can temporarily authorize that 

consumer and submit the consumer information to the broadcaster. 

The broadcaster can challenge by sending a clerical employee or a 

contractor to the home to view the signal for about 10 minutes. 

That is all it takes. With digital, the signal is either there or not 

there. It is not like analog where you see ghosting and artifacts. 

It is very simple. 

So in closing, I would urge you to listen to your constituents and 

lift the restrictions on distant networks signals. Require the FCC 

to adopt a 99 percent or better viewability standard in the predictive model, and fix the waiver system. 

Thank you very much. 

[The prepared statement of Mr. Mountford follows:] 


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Mr. BOUCHER. Thank you, Mr. Mountford. 

Mr. Padden. 

STATEMENT OF PRESTON PADDEN 

Mr. PADDEN. Thank you, Mr. Chairman and Ranking Member 

Stearns. 

I want to begin by thanking this committee for creating a competitive marketplace for subscription for television. It wasn’t all 

that long ago that I was chatting with many of you about the problem that we only had one provider in the business, the local cable 

company. And when you think about what this committee has accomplished for the American people and for programmers like our 

company, it is really remarkable now the amount of competition 

that we have out there and I think the committee ought to take 

great pride in that. 

I also want to emphasize that we love our satellite customers 

over here at DIRECTV and DISH. Disney Channel and ESPN were 

two of the first channels that were willing to license their content 

to the satellite industry to help them get off the ground. They now 

carry many, many of our channels. They are excellent customers 

and we love them very much. 

We are appreciative to the committee for its straightforward discussion draft and particularly appreciative that the committee 

avoided collateral issues such as completely trying to revamp the 

system of free transmission consent in the context of this legislation. I want to talk just a minute about the underlying compulsory 

underwrite license. A compulsory license is just what it sounds 

like. It is a government act that takes private property, in this case 

our programming, from us and compels us to license it to certain 

customers designated by the government at a price set by the government. 

Now, I know that sounds like something that could only happen 

in Moscow or Tehran but it actually did happen here in the United 

States. How did that happen? The answer is that back in 1976, the 

Congress found that it would be impractical and unduly burdensome to require every cable system to negotiate with every copyright owner whose work was retransmitted by a cable system. A 

reasonable position back in 1976, and then the satellite industry 

came along and to be fair, Congress extended the same compulsory 

copyright license to the satellite industry. But when you extended 

it to satellite, you put a 6-year sunset on it and you said this committee does not favor interference with workable marketplace relationships for the transfer of exhibition rights in programming. The 

committee expects that the marketplace and competition will eventually serve the needs of home satellite dish owners. 

Well, the good news is there now are workable marketplace 

mechanisms that can take the place of this government compulsory 

license. The industry created cable networks. This is after the compulsory license was first adopted and there are now about 500 

cable networks, none of which are eligible for the compulsory copyright license which applies to broadcasting. And yet, without the 

help of the government, the owners of these cable networks managed to get them in front of virtually every man, woman and child 

in America. 


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Just to give you one example, we have two networks at our company. One is called ABC and the other is called ABC Family. They 

actually carry some of the same programs. ABC Family is not eligible for a compulsory copyright license and yet we have signed 

agreements with these gentlemen at the end of the table to transmit that programming to the American people. 

We have a huge self-interest in wanting to get our programming, 

whether it is ABC or ABC Family in front of every eyeball in 

America and you can rely on that self-interest that we are going 

to get the product to everyone. The last time you extended The Satellite Home Viewer Act, you asked the copyright office to conduct 

a study of the underlying compulsory copyright license. They did 

that study. They released it last summer and they concluded that 

the Congress should begin to phase out the compulsory copyright 

license and associated regulations and we would urge that as this 

bill goes through the legislative process and all of the relevant committees of jurisdiction, that we take a look at trying to get out of 

this business of government licensing where it is not necessary. 

In the meantime, we urge that you not expand the scope of the 

compulsory license and in particular, don’t adopt the proposal that 

has been discussed for adjacent markets. We are completely supportive of the idea of getting local in-state news and other local 

programming to consumers. It can be done today without a compulsory license. All it takes is an agreement between the station and 

either the cable operator or the satellite operator. There are many 

cable operators that today carry local news outside of the designated market area to other orphan counties they are called, in 

the State. For example, our Philadelphia station news is carried 

down in Harrisburg and recently two of the leading Little Rock 

local news stations sent letters to DIRECTV and DISH openly offering to sit down and work out arrangements to retransmit their 

local news in the Shreveport market. 

The problem with the adjacent market proposal is the proponents 

are talking about bringing the entire signal of the adjacent market 

station, not just the local programming. Our affiliation agreements 

with our affiliates give them exclusive rights to the network programming in their market. We have 220 affiliates across the country. We only own 10 of those stations ourselves and we are here 

today to stand shoulder to shoulder with our affiliates for the exclusive rights we have granted them and say to you please do not 

abrogate our contracts. Please do not duplicate the programming of 

the local affiliate. It serves no public interest for consumers to be 

able to watch Desperate Housewives on two different channels at 

the same time. 

We are fully supportive of bringing in the local news and local 

programming. That can be done without expanding the compulsory 

license. 

Thank you very much, Mr. Chairman. 

[The prepared statement of Mr. Padden follows:] 


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Mr. BOUCHER. Thank you, Mr. Padden. 

Mr. Karpowicz. 

STATEMENT OF PAUL KARPOWICZ 

Mr. KARPOWICZ. Chairman Boucher, Ranking Member Stearns 

and members of the subcommittee, thank you very much for having 

me here today. 

My name is Paul Karpowicz and I am president of the Meredith 

Broadcasting Group which operates 11 television stations in small, 

medium and large markets throughout the United States. I testify 

today in my new role as chairman of the NAB Television Board. 

Local broadcasters appreciate the opportunity to talk with you 

about the issues of importance for local television service we provide to our communities. Chairman Boucher, I want to especially 

thank you and the committee staff for all of your work on the draft 

bill. Broadcasters support the discussion draft and look forward to 

continuing to work with you and other members of the committee 

as we move forward. 

As we discuss the draft legislation today, it is imperative that 

two principles remain paramount, localism and the respect for relationships that cover the distribution of programming and that have 

been found by the government to serve the public interest. Meredith Broadcasting, along television stations across the country, 

works everyday to embody the spirit of localism which Congress 

has affirmed time and time again as a vital public policy goal. We 

don’t charge our viewers to watch our programming. We rely on 

payments from advertisers to deliver a free service to your constituents. The draft we are discussing today is a positive step towards updating telecommunications law for the new era of digital 

broadcasting. 

Local broadcasters have stepped up and invested billions of dollars to complete the transition and we are excited about the benefits that digital broadcasting will bring to your constituents. We are 

particularly appreciative that the draft continues to recognize the 

value of the DMA structure. The DMA system which is updated 

every year enables broadcasters to serve every community with 

highly valuable local programming. 

Now for example, our company owns and operates WHNS in 

Greenville, South Carolina. Now 34 percent of the households in its 

DMA are located in North Carolina and four percent are in Georgia. WHNS provides locally attuned service to those North Carolina 

and Georgia communities everyday just as it does the South Carolina communities within its coverage area. The nearest North Carolina television market to these North Carolina counties is Charlotte 

which is 95 miles away while Greenville is only 25 miles away. 

These out-of-state communities all share with Greenville the same 

weather, topography and have very close economic and cultural 

ties. WHNS serves these communities everyday with the news stories of specific relevance to the region of service that cannot be 

matched by distant stations. 

Now the satellite industry wants to change the law so that they 

can bring in duplicative network and national syndicated programming. As a practical matter, let me explain what would happen if 

this were to occur. Our station in Greenville has exclusive rights 


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from Fox and our syndicaters to air popular programming including American Idol, 24 and the Simpsons in its local market. If a 

satellite or cable operator could import the signal of a FOX station 

from Charlotte including the exact same primetime programming 

into the Greenville market, it would significantly reduce our 

viewership and thus our advertising revenues. As a result, we 

would have fewer resources to serve the viewers whether they are 

in South Carolina, North Carolina or Georgia with local programming including news, weather, emergency information and all 

these other local services our viewers have come to expect. In addition, a satellite or cable operator in a retransmission consent dispute could try to drop the viewers’ local station in these North 

Carolina communities and instead a distant Fox affiliate thereby 

depriving viewers of local information. 

It is important to recognize that cable and satellite carriers can 

already import news and information into distant in-state counties 

today without changing the law. Finally, we appreciate the efforts 

of Congressman Stupak to make sure that no community is denied 

access to local programming by satellite carriers and we hope to 

work with the community to address this problem. As you consider 

reauthorization of SHVERA, I urge you to preserve our ability to 

serve every local community. We are very appreciative of the important steps reflected in this draft bill and believe the subcommittee is headed in the right direction. 

I thank you for your efforts so far and look forward to answering 

any questions. 

[The prepared statement of Mr. Karpowicz follows:] 


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Mr. BOUCHER. Thank you very much, Mr. Karpowicz, and thanks 

to all of the witnesses for their testimony here this morning. 

I am going to ask unanimous consent that a variety of letters we 

have received addressing issues concerning the reauthorization of 

The Satellite Home Viewer Act be made a part of the record. These 

have been shared with Mr. Stearns and his staff. Without objection, they will be included. 

Mr. Chang, let me begin my questions with you. You had noted 

in your testimony that in order for service to be provided in the 

markets that do not have local-into-local service today, those approximately 30 markets across the country that the carrier would 

have to find a means of getting the broadcast station’s signal to its 

uplink facility and the uplink facility for some of these very rural 

markets could be hundreds if not more than 1,000 miles away, I 

would assume. On the other hand, the law as of several years ago 

required that for every market in which local-into-local services 

provided that the satellite carrier have a local receive facility within that market in order to receive the signal from the local broadcasters. Why would it not be sufficient to simply take the backhaul 

to take that local broadcast signal from the unserved market to a 

nearby market, perhaps an adjacent market where a local receive 

facility by the satellite carrier would be located? Why would that 

not be sufficient? 

Mr. CHANG. As I said earlier, I am not an engineer so I don’t 

know the details but my understanding is the cost of build out the 

facilities within each of the markets that we are not serving in addition to the transmission costs. 

Mr. BOUCHER. Well, I will grant you that there are costs associated with it but the cost of getting it to something as close as an 

adjacent market where a receive facility is already in place would 

be substantially less than the cost of having to take that signal 

hundreds if not more than a thousand miles to one of the satellite 

carriers’ uplink facilities. So let us assume for the sake of the question that getting it to a receive facility would be satisfactory, Mr. 

Dodge, would you confirm that it is? Is that a means of getting it 

to your uplink facility? 

Mr. DODGE. I would say that is a constructive suggestion towards 

reducing the cost but you still have to pay for the fiber from, if you 

will, the adjacent receive facility back to our uplink facility. 

Mr. BOUCHER. Back to your uplink facility? 

Mr. DODGE. Right, back to our uplink facility. 

Mr. BOUCHER. Well, doesn’t that already exist because the purpose of that local receive facility is for you to receive the signal in 

that market of the local broadcaster and then take that over your 

already in-place infrastructure back to your uplink. 

Mr. DODGE. Correct and we use either we backhaul via satellite 

or via fiber and the question would be you would need additional 

fiber or a satellite capacity to uplink it to bring it back to the 

uplink facility. 

Mr. BOUCHER. So you are saying that the existing infrastructure 

by which you are taking the signals of the broadcaster in that adjacent market back to you uplink would not be sufficient in and of 

themselves to enable you to carry the signals from broadcasters in 

the unserved market next door. 


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Mr. DODGE. I believe so. 

Mr. BOUCHER. OK. Let us check this. Let me ask both of you if 

you would go back and examine this and maybe talk to some of the 

engineers. 

Mr. DODGE. Sure. 

Mr. BOUCHER. We occasionally do accept testimony from engineers here, it is not always lawyers, and give us an answer as to 

whether or not, A. we are right in saying that providing that signal 

to the receive facility nearby is a possible means of lowering that 

backhaul cost and if it is, would the infrastructures that typically 

are already in place to take the signal from that receive facility 

back to your uplink, be satisfactory for this purpose? 

Let me on the same issue, slightly different aspect of it, ask Mr. 

Karpowicz and Mr. Padden a question. I have heard it estimated 

that the cost of backhaul for all 210 unserved markets, the new capacity by whatever means would have to be added, would be about 

$30 million collectively and the broadcasters have a tremendous interest in getting all 210 markets served. It is their signal that 

would then be disseminated to a broader group of viewers in a way 

the viewers would like to have that signal, and among the suggestions made by DIRECTV and DISH in their offering to you in 

terms of how they would be willing to serve these 210 markets, was 

a suggestion that on some terms broadcasters be willing to help 

share in that cost, given the benefits that inure to you if those markets are served. So, Mr. Karpowicz and Mr. Padden, your companies own some television stations, what is your answer to that? Is 

there a possibility that you would be willing to help them in some 

measure share in that cost? 

Mr. KARPOWICZ. I think what we have heard are a lot of different 

numbers relative to what that cost might be and at the NAB we 

have established a subcommittee that consists of technical people, 

real engineers and members of our board that are from small markets that would have a very real stake in this, you know, in this 

type of a decision. So we would stand very ready to work with the 

committee and work with the satellite operators to continue discussions about exactly how that would work, whether it be fiber, additional satellite, whatever but I think there is still not enough information relative to what the real costs might be for us to make a 

determination as to what our level of participation might be. 

Mr. BOUCHER. The broadcast industry has had this proposal from 

the two satellite carriers now for more than a week and I know you 

have a committee that is looking at it. Do you have a timeframe 

within which you intend to have a response? 

Mr. KARPOWICZ. We actually have had one committee meeting already and it would be my hope that we could get back to you very 

shortly. I don’t have the specific days in my mind yet but it would 

be our intent to get back with you very quickly. 

Mr. BOUCHER. OK. I am going to pursue one other question and 

the chair will be lenient with other members in taking time to ask 

their questions. These are important matters. 

The current law contains a curious legal consequence that with 

the digital television transition and the termination of analog television broadcasts by the full-power television stations, virtually 

every viewer in America today is classified as being in a white area 


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and therefore being eligible to receive distant network signals. Now 

of course, that was never the intent of the law and the old law, well 

the current law says that the standard for eligibility is determined 

over whether or not the viewer can receive by means of an outdoor 

antenna an analog signal of Grade B intensity and of course then 

when the analog signals were turned off nobody was getting analog 

signals and so no one could get analog signals of Grade B intensity. 

Therefore, under current law you have got this curious consequence 

that technically everyone if eligible to get a distant network signal. 

Realizing that problem, last year I asked the satellite carriers to 

refrain from offering distant network signals until we had an opportunity in this reauthorization to address that problem and correct it, and commendably all of the carriers responded favorably 

and sent letters indicating their restraint, and so far no one has 

taken advantage of this existing loophole in the law. But I just 

want to ask Mr. Dodge, Mr. Chang and Mr. Mountford for your 

statement of continued adherence to that pledge not to utilize that 

loophole in the law. There was some discussion last week about 

whether that might change and given that little bit of confusion I 

though it appropriate to get on the record a statement from all 

three of you that you would not seek to utilize that loophole while 

we are in the process of changing the law to say that it is digital 

signals that are in question here not analog signals. Mr. 

Mountford, can we get that pledge from you? 

Mr. MOUNTFORD. We currently are using the existing analog 

model because the digital model which we have ordered is not 

ready yet so as soon as that becomes available we will be using 

that. In the interim, we are telling customers who get rejected by 

the analog model that we will rerun them once we get a digital 

model and we will continue to use that digital model, and we will 

be testing those consumers. As I said in my testimony, there is an 

easy way to test consumers so we will be testing consumers who 

get rejected under the digital model and depending upon those 

tests we will go forward. 

Mr. BOUCHER. OK. I think that means yes, you are going to continue to restrain and not utilize the law. 

Mr. MOUNTFORD. That means yes unless we are disenfranchising 

a bunch of consumers and then we may come talk to you. 

Mr. BOUCHER. Well, Mr. Mountford, we are rewriting the law in 

such a way just as to contain a clarification of this issue and use 

the word digital instead of analog, and I would assume until that 

happens you would continue to abide by the terms of the letter that 

you sent last year and not seek to utilize that loophole in order to 

serve those customers, is that correct? 

Mr. MOUNTFORD. We will never seek to use that loophole. 

Mr. BOUCHER. Thank you, Mr. Mountford. Mr. Chang, I would 

like to hear from you as briefly as possible. This could be just one 

word, a yes would do but if you want to elaborate, that is fine. 

Mr. CHANG. Yes, we will. 

Mr. BOUCHER. Thank you. Mr. Dodge, I know you are not delivering distant network signals but if something happens that should 

enable you under some circumstances to do that would you agree 

to this pledge? 

Mr. DODGE. We would. 


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Mr. BOUCHER. Thank you, Mr. Dodge. That was a good answer. 

That was right to the point. Thank you. 

My time has expired. The gentleman from Florida is recognized 

for five minutes. 

Mr. STEARNS. Thank you, Mr. Chairman, and I think we on this 

committee should feel blessed because you serve on judiciary and 

I know judiciary has had a hearing and they will have a referral 

on this. I don’t think the Senate had a hearing yet but when they 

go into the right to carry signal and the copyright protection you 

will be right there protecting us and perhaps the nuance of this bill 

will be protected. But my feeling is just overall that the bill has 

to move forward and I am not sure many of us on this side or either side want to hold this bill up to solve this problem which 

seems a little bit complicated. Just as a observation, Mr. Padden 

mentioned how cable is solving the problem so I would ask Mr. 

Mountford, the solution to which cable is doing this problem is that 

something that could be as a paradigm or something that we could 

work off in this bill? 

Mr. MOUNTFORD. I am not sure if I understand the question. 

Mr. STEARNS. The missing affiliates problem that Mr. Padden 

mentioned so basically he is saying that the local broadcasters have 

been solved through the cable and he described how they did it. I 

don’t know. Do you remember what he said? 

Mr. PADDEN. I think you are referring to my reference to the fact 

that some cable operators are carrying local news and other local 

programming. 

Mr. STEARNS. Right. 

Mr. PADDEN. From an adjacent market station today. 

Mr. STEARNS. Right. 

Mr. PADDEN. And there is no reason that we are aware of why 

a satellite distributor couldn’t make the same? 

Mr. STEARNS. Right, that is my question and I will let each, Mr. 

Dodge and Mr. Chang, yes. 

Mr. MOUNTFORD. That would be something we would have to 

look into, something that I haven’t even considered or we haven’t 

even thought about yet but it sounds interesting. 

Mr. STEARNS. OK. Mr. Chang. 

Mr. CHANG. Can you hear me OK? 

Mr. STEARNS. Yes, sure. 

Mr. CHANG. From DIRECTV’s perspective, we do blackouts as 

Mr. Padden suggested but they are difficult to implement and we 

do them on an irregular basis, mostly for sports product which is 

kind of mandated by various sports leagues and teams and such 

and to be quite honest with you, it is a very difficult process to implement from an operational perspective for us. We do it because 

we are forced to. Our customers do not like it. To do what Mr. 

Padden has suggested would in essence be the reverse of that 

which is really, literally to blackout probably 90 percent of a channel from an adjacent market to just then show the local news that 

they are allowed to pass through to the adjacent market and I 

think to do that, you know, across the country itself would be difficult. It would compound incredibly our operational issues. I think 

also from a customer perspective, to sit there and have to see a 

black screen for kind of 90 percent of the time in order to see local 


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news doesn’t make a lot of sense. It is not a customer-friendly proposition. 

Mr. STEARNS. Mr. Dodge? 

Mr. DODGE. I guess I would just reiterate what Mr. Chang said. 

I mean we really look at it as a three-fold issue which is at the top 

of the list we agree with you, Ranking Member Stearns, that this 

is all about the consumers and quite frankly to reiterate what Mr. 

Chang said they don’t want their screen black 90 percent of the 

day, let alone paying for that privilege. And additionally, while the 

screen is black, they will miss important emergency weather alerts 

because they won’t see the crawls that would be coming through 

on the programming from that broadcaster. Additionally, there are 

substantial technical difference between satellite and cable where 

they have people generally in all their local areas monitoring. They 

can monitor these signals 24/7. We have a single staff who is, as 

I said earlier, is monitoring about 1,400 different channels which 

is basically impossible for us to monitor in blackout programming 

at all. And finally, from legal perspective we are not quite sure that 

the broadcasters have all the necessary rights to do what they are 

saying. For example, they have the rights to the copyrights to send 

through the national programming clips that they include in their 

broadcast and advertising. And similarly while the cable folks are 

able to splice in alternate programming, we don’t have the similar 

provision in our statutory license that would allow us to do it, so 

we couldn’t do it even if it was technically feasible. 

Mr. STEARNS. So you are saying right now it is not technically 

feasible in your mind? 

Mr. DODGE. It is not. 

Mr. STEARNS. And that is what you are saying, Mr. Chang, that 

it is not technically feasible to do this, and forget the idea that 

you’re blacking out. I mean that could be worked through but you 

are saying it is not even technically feasible? 

Mr. CHANG. I don’t know if strictly it is technically infeasible. It 

would be very difficult to implement. I know that. 

Mr. STEARNS. Thank you. Mr. Padden. 

Mr. PADDEN. I think Mr. Dodge said he wasn’t sure it was lawful 

under his statutory license but we are talking about is simply an 

arms length marketplace negotiated license where the local station 

says as the two Little Rock stations have said in their letters that 

are in the record to both DIRECTV and to DISH we, the local station, would like to license you in a normal contractual license arrangement, our local news to carry to these in-state viewers and I 

believe that all of the satellite operators are required to dedicate 

a certain percentage of their channels for public service programming. And maybe one thing you might think about is rather than 

worry about a blackout, simply license the local news and carry it 

on one of those public service channels that you are obligated to 

transmit anyway. I think it would be a tremendous service to your 

customers and it might help attract customers. 

Mr. STEARNS. Anyone else on this question? Do you have anything? 

Mr. KARPOWICZ. I guess my only thought would be the beauty of 

our six o’clock news and our eleven o’clock news, it runs at six 

o’clock every night and eleven o’clock every night. 


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Mr. STEARNS. Right. 

Mr. KARPOWICZ. So compared to trying to schedule around a 

blackout of a sports event which is a live, fluid event that there is 

no timeframe, our six o’clock news runs 30 minutes every night and 

I would think that with server technology available as it is today 

that it would not be that difficult to set up a system like that. 

Mr. STEARNS. OK. 

Mr. PADDEN. All the networks I am told and certainly our network has given their affiliates the necessary clearance for the national news that is included in these local newscasts so there is no 

legal impediment in that regard. 

Mr. STEARNS. I am just going to ask one more question, Mr. 

Chairman. The bill as such is we are trying to get the FCC to update the predictive model and the on-location test for digital broadcasting. Mr. Chang, what would be your advice to the FCC and 

then I will ask Mr. Padden. What would be your advice to the 

FCC? 

Mr. CHANG. I think we said we are willing to adhere to the FCC’s 

digital predictive model. 

Mr. STEARNS. So the predictive model that they have now, you 

could adhere to? 

Mr. CHANG. We would adhere to, yes. 

Mr. STEARNS. OK. Yes? 

Mr. KARPOWICZ. Again, I am not an expert relative to what that 

would entail but my sense would be that we continue to look at it 

but I don’t think we have any major objections. 

Mr. STEARNS. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Stearns. 

The gentlelady from California, Ms. Eshoo, is recognized for five 

minutes. 

Ms. ESHOO. Good morning, Mr. Chairman, and thank you for 

holding this hearing. To all of the witnesses, thank you for being 

here and providing your testimony. 

I have two questions. The first of Mr. Dodge, as a longtime supporter of public television, I am concerned with the disparate treatment that DISH is affording our nation’s local public television stations. As you probably know, I have reintroduced in this Congress 

the Satellite Consumers’ Access to Public Television Digital Programming Act to address DISH’s refusal to negotiate meaningfully 

on the carriage of local multi-cast public broadcast programming. 

It has been brought to my attention that DISH is carrying the HD 

signal of the big four stations in 85 markets and yet to date, you 

haven’t carried the HD signal of public television stations anywhere except in Alaska and Hawaii where you are legally obligated 

to do so. 

In my district, for example, DISH is carrying the big four networks and KRON in HD but not in my local public television station, KQED. It seems to me that DISH is engaging in a pattern of 

discriminatory behavior against public television stations. Stations 

which are funded get some funding from Congress annually because of the quality of their noncommercial, educational programming that they deliver to the American public. I think that this behavior is reminiscent of past discriminatory actions including the 


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practice of placing public television stations and Spanish language 

stations on a second satellite receiver. 

So my question to you is why is DISH almost alone in refusing 

to negotiate a carriage agreement with public TV that provides for 

nondiscriminatory carriage in HD and at least some multi-casting. 

I think if there is a market failure here, Congress should address 

it and I will continue to pursue that. Now, what is really deeply 

disturbing to me is that it has been reported that DISH has targeted the Hispanic caucus members and telling them that if my bill 

were to pass, DISH would be forced to stop carrying Spanish language channels. You know and I know and many of us know that 

this is really completely false. My bill does not prevent satellite 

carriers from carrying any program. It merely mandates the carriage of all digital PBS programming, and I know that I have heard 

the argument before that you don’t have enough room, enough 

space and that you would have to drop some. And I would suggest 

that you drop some of your pay-per-view channels that carry soft 

porn. I would take PBS any day over soft porn so would you address yourself to the question as to why you refuse to negotiate a 

carriage agreement with public TV that provides for nondiscriminatory carriage in HD? 

Mr. DODGE. I would be happy to. 

Ms. ESHOO. I don’t know about happy but if you can explain it, 

yes. I really can’t, I mean I ask this every time we have a hearing 

on this subject matter and others have negotiated an agreement, 

you haven’t. What is the sticking point here? 

Mr. DODGE. Well, I guess first and foremost I believe we have for 

years engaged in good faith negotiations with the public broadcasters and during that process the FCC actually had a proceeding 

to determine how best to implement HD must-carry, that the public broadcasters fully participated in that hearing. 

Ms. ESHOO. What was the most recent discussion you have had 

with the FCC? 

Mr. DODGE. On that issue. 

Ms. ESHOO. I mean with public broadcasting people. What is the 

most recent meeting you have had with them? 

Mr. DODGE. I do not know the answer to that question. 

Ms. ESHOO. Well you can get that back to us. 

Mr. DODGE. I definitely can. 

Ms. ESHOO. I really think that there shouldn’t have to be legislation for you to get to do this and it seems to me that you have 

stayed in a place where I don’t really think distinguishes you and 

you should look for ways to distinguish yourself. I mean you do 

other things that are good but this is you are cheating I think or 

holding back on the consumer because PBS is important in the life 

of the American people and I think what they do has already been 

set down and is a gold standard and this business of not having 

room and can’t, you have got these pay-per-view things. You can 

make some room there. So I would like you to get that information 

back to me. 

To Mr. Karpowicz, I know that Mr. Ross, a member of this subcommittee, is raising a very important interstate issue. I think I 

have an important intrastate issue. I have constituents in the 

southern portion of my congressional district that would prefer to 


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view the local news of San Francisco or San Jose but they are in 

the Monterey-Salinas DMA. Now, I mean there is a lot to be said 

obviously about localism and it is best served when the consumer 

has the choice to receive the broadcast signals of the community 

that they identify with. I don’t know if you can appreciate the geography of the district but the identification is in the very southern 

part and not with San Francisco that it might as well be 500 miles 

away. That is not what they identify with and I know that these 

issues are politically sensitive but for many consumers in my district, these distinctions defy logic. How do you think localism and 

consumer choice are balanced correctly in the new digital age? 

Mr. KARPOWICZ. I think. 

Ms. ESHOO. It seems to me that we have got some kind of 

blurred old line dictating this. 

Mr. KARPOWICZ. Well, I don’t know if the lines are old to the extent that the DMA lines are changed every year and are up to variability and every year. 

Ms. ESHOO. How about old looking? 

Mr. KARPOWICZ. But to answer your question relative to your 

constituents in Salinas-Monterey, if in fact the cable systems down 

there wanted to make a deal with the broadcast stations in San 

Francisco to get those newscasts that can happen today. There is 

no reason to change the law. Where the broadcasters have said we 

have a problem with what Congressman Ross was proposing was 

the ability for the viewers in Salinas-Monterey to get two Wheels 

of Fortune, to get two Desperate Housewives. We don’t think that 

is necessary but if in fact there is interest in the community to get 

local news out of San Francisco that can happen now without any 

change in the law. 

Ms. ESHOO. All right. Well, we may follow up with you on that 

but I appreciate your answer and, Mr. Dodge, I would like you to 

get back to us and I wish that we didn’t have to use the hammer 

of legislation to get these negotiations done and done well and out 

of the way. I just would really urge you—I mean you said that you 

have negotiated in good faith. I don’t know when that was. I don’t 

know if it was 5 years ago, 2 years ago so I am asking the date 

but I would use this hearing to once again urge you to come to the 

table and really take care of this. For you to be leaving out public 

broadcasting and carrying some of this other stuff, it just square 

off with consumers so thank you. 

Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you, Ms. Eshoo. 

Mr. DODGE. If I could address one of the issues you brought out. 

Mr. BOUCHER. Very briefly, Mr. Dodge. 

Mr. DODGE. Thank you. First, we are working with Congresswoman DeGette’s office referring to the last hearing to set up another round of discussions with PBS. 

Ms. ESHOO. I am sorry. I didn’t hear you. 

Mr. DODGE. I said we are working with Congresswoman 

DeGette’s office to set up another round of discussions with the 

folks from PBS as we said we would at the last hearing. 

Ms. ESHOO. Well, I would like to be included in those if I might. 

I think that I can bring something to that. You may not think so 

but I think I can. 


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Mr. DODGE. I have no reason to believe you wouldn’t. 

Mr. BOUCHER. OK. Thanks very much, Ms. Eshoo. 

Mr. MOUNTFORD. Mr. Chairman. 

Mr. BOUCHER. Mr. Mountford, we are going to move on to the 

next member now who is going to be asking questions. 

The gentleman from Georgia, Mr. Deal, is recognized for five 

minutes. 

Mr. DEAL. Thank you, Mr. Chairman. 

I have this mental picture that we are all standing on the loading dock of a train station. Some of us are holding the hands of 

some people that we call orphans. Some of them are wiping their 

eyes and they are sniffling and people are sitting in those railcars 

that are saying come on over, we would like to adopt you. And we 

are being told as we hold their hands and saying, well, Congress 

has said you don’t belong to them, we have let you be adopted by 

somebody else. And the only answer that I have heard today is to 

say to those orphans, well, we will let you go to their house and 

you can watch the local news but as soon as the news goes off, we 

are going to turn that television off and you got to come home because you belong to us. Congress has let us adopt you and by the 

way, you got to pay us because we have adopted you. Now, that 

just doesn’t make a whole lot of sense to me and the question I 

guess that comes up is why is that fair, and if we are not going 

to deal with it today what other piece of legislation and what timeframe is going to be appropriate to deal with that issue? And I will 

just let you all talk. 

Mr. DODGE. Well, I would say it is fair and there is more than 

that, there is a precedent for it. As Mr. Chang and I both said in 

our testimony, this issue was recognized in 2004 and was fixed for 

four communities to great success for the consumers and as far as 

I can tell, to no harm to the broadcasters. And the reason I say 

that is because if there was some harm I think we would be hearing about it for the last four years and I haven’t heard a peep so 

I think it is unfair. 

Mr. CHANG. I would reiterate what Mr. Dodge has said, I think 

that we feel there is a solution and it has been proposed and we 

want to support it. I think that what is difficult for us is what 

these folks have suggested in terms of and what you reiterated 

which is having it only be able to watch the news and then getting 

sent home and that is difficult for us to implement. 

Mr. MOUNTFORD. I agree and it is not only just the orphan next 

door. It is the orphan anywhere else in the country. My wife has 

a sister who lives in a different city and her sister calls her up 

when she is watching a different program and sees a commercial 

that she wants my wife to see. That wouldn’t happen if we were 

only showing the news. So and it doesn’t happen obviously but 

there is one other quick point I would like to make about the predicted model. This sheet tells you got in my written testimony, it 

shows the mathematical formula on a predicted model and how 

much outage is predicted and I also have a disc for you, a DVD 

that shows you a 30-second outage, 71⁄2 second outage and other 

outages which we can supply to you now or later. Thank you. 

Mr. PADDEN. Mr. Deal, the rationale that has been articulated to 

us for Mr. Ross’ adjacent market proposal is to get in-state news 


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and other in-state local programming to viewers and we are just 

here to explain that that can happen today. It does happen today 

as I said in my testimony. We own a TV station in Philadelphia. 

Our cable operator is in Harrisburg who believe their customers 

have an interest in seeing our Philadelphia newscast and they provide it to their customers today. And we got the two leading local 

news stations in Little Rock to send letters to DISH and to 

DIRECTV saying we are ready to sit down with you and make arrangements for you to carry out Little Rock news into these Arkansas counties in the Shreveport market. To date, I don’t believe the 

local stations have even gotten a response from DISH or DIRECTV. 

Mr. DEAL. Is your answer that they have to turn it off after the 

news goes off and go home? 

Mr. PADDEN. No, my answer is that in our free market society, 

it is wrong for the Congress to abrogate free market negotiated exclusive licenses just so people can watch Desperate Housewives on 

two channels at the same time. That is wrong. 

Mr. DEAL. I understand your concern for your affiliates but I 

don’t understand why you would take your programming and put 

it on ABC.com and totally bypass your affiliates if that is your concern. 

Mr. PADDEN. Well, actually we don’t totally bypass our affiliates. 

We have included our affiliates in that operation. We use a geo-location service. There are four commercial positions in each program 

on ABC.com and the local affiliate gets to sell the ad in one of the 

four, very similar to the shared advertising arrangement we have 

on our network. We are also concerned about local advertisers who 

the local station says would you like your ad to run in Desperate 

Housewives, well yes I would and I am going to pay you a lot of 

money to run it in Desperate Housewives but if you bring in a second Desperate Housewives at the same time, some portion of the 

audience that that local advertiser expected to reach is not going 

to see his ad because they are watching the out-of-market signal. 

We are completely sympathetic. 

Mr. DEAL. Even if that advertiser has to try to attract that audience from across State lines which doesn’t make a whole lot of 

sense to me, quite frankly. Yes, sir. 

Mr. KARPOWICZ. I guess I would say that given the example that 

I gave in my testimony about our station in Greenville, we would 

be challenged to continue to produce six hours of live, local news 

everyday if in fact our advertisers were being whittled away by 

other signals coming into our market. I mean if Mr. Mountford’s 

sister-in-law was watching a commercial coming in from Indianapolis versus the commercial that I ran in Greenville, that is a viewer 

that I have lost. 

Mr. DEAL. Well and you say you got four percent in North Georgia and I use to be in that four percent area and had to buy television in Greenville to reach four percent of your market. Got a lot 

of votes in South Carolina by running political ads in Greenville, 

but they realistically could not vote for me. Those four percent in 

that northeast Georgia area that are having to be tied into your 

Greenville station, I think in many instances would prefer to be 

tied into the State of Georgia where they live and I just I do not 

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fere with that and or why there can’t be some realistic accommodation to it other than going dark or going blank or having to duplicate. 

Mr. BOUCHER. Thank you very much. 

Mr. DEAL. Who in the world would like to have two versions of 

Desperate Housewives is beyond me. 

Mr. BOUCHER. Thank you very much, Mr. Deal. 

The gentleman from North Carolina, Mr. Butterfield, is recognized for five minutes. 

Mr. BUTTERFIELD. Thank you very much, Mr. Chairman, for convening this hearing today and I particularly want to thank the five 

witnesses who have come forward. I am sorry I missed your testimonies. I have a written copy of your testimony in my binder and 

when I get a chance I will try to scan most of those. 

Mr. Chairman, as you know, I am relatively new to this committee and so this subject matter is new and so I am trying as best 

I can to learn it and get up to speed on it. When I first got appointed to this committee, the broadcasters in my State came to my 

office and very painfully and carefully worked with me in trying to 

understand SHVERA and I am still struggling to get the detail and 

so this hearing today is certainly very helpful. I am going to ask 

unanimous consent, Mr. Chairman, that my opening statement 

that I was not able to give be included in the record. 

Mr. BOUCHER. Without objection. 

Mr. BUTTERFIELD. I had two questions that I brought to the committee and, Mr. Chairman, you asked one of those two questions 

and so I only have one that I would like to very briefly ask if I can 

find it but it has escaped me. Here it is. It deals with the terrestrial loophole and I want to address this again to Mr. Chang and 

to Mr. Dodge and the terrestrial loophole permits vertically integrated cable operators to deny programming to certain multi-channel video programming distributors when such programming is not 

transmitted by way of satellite. What can you tell me about the terrestrial loophole and any harm to customers who might not be able 

to get this programming? 

Mr. DODGE. I think I would let Mr. Chang take that because of 

the programming expert. 

Mr. CHANG. We do believe we are at a disadvantage to the cable 

operators on account of the terrestrial loophole in the areas that 

this exists particularly in the Philadelphia market. We do see penetration rates in terms of our subscribers take lower than in other 

areas and I mean it is due to the lack of local sports programming. 

I think that simply put it is we are at a disadvantage because we 

don’t have that program to share with our customers. 

Mr. BUTTERFIELD. Do you concur with that, Mr. Dodge? 

Mr. DODGE. We do and I don’t see why the method of distribution 

is relevant to whether or not we have access to the programming. 

Mr. BUTTERFIELD. All right. Thank you and I yield back, Mr. 

Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Butterfield. 

The gentleman from Illinois, Mr. Shimkus, is recognized for five 

minutes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. 


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My first question will be to Mr. Karpowicz. I know there has 

been talk on the regional aspects and crossing State lines. In my 

opening statement I mentioned that I had five DMAs that cover my 

congressional district so depending upon the intensity of the campaign you make choices and you eventually buy. You guys like it. 

We have to buy all even though the broadcast sector of who we are 

going to hit could be very, very limited. If the Ross bill, how would 

the Ross bill affect smaller broadcasters? If in my five DMAs, if 

they all had to compete with St. Louis how would they affect, you 

know, the other four or really the other four probably would be 

competing with maybe Indianapolis and maybe Memphis and so 

maybe you would have a sector there that would be challenged. 

What is your response to how they affect the smaller broadcasters? 

Mr. KARPOWICZ. Effectively, what would happen in those smaller 

DMAs with a St. Louis or an Indianapolis station coming in over 

the top not only with local news but with additional NBC programming or CBS programming or Fox programming and additional 

syndicated product, I think it would put a tremendous challenge on 

those broadcasters in the smaller DMAs to have the same resources available to them to continue to provide the services that 

they provide today because their audience would be splintered, 

quite frankly, so that instead of having all of the audience for 60 

minutes, you may have, you know, audience coming in from KMOV 

in St. Louis would be coming in over the top. That is the risk that 

we run that the small broadcasters and this is a very difficult time 

for small broadcasters. I have a station in Flint, Michigan that is 

going through an incredibly difficult time right now and to put this 

burden on those broadcasters whereby they would have additional 

signals coming in over the top, I think it would really hinder their 

ability to serve their local communities. 

Mr. SHIMKUS. So it is not just the news aspect. I mean I think 

that is where a lot of members come. It would be, you know, if it 

was broadcasting in but there is the basic programming would in 

essence compete with the local broadcasters paired programming. 

Mr. KARPOWICZ. I think we have tried to be—we are sensitive to 

the fact that, you know, these out-of-state stations or I guess instate stations out of DMA stations that may want to come in and 

that constituents in those areas, those counties may want to see 

their news from the capital, for example. We understand that but 

we think that if that is limited to local news that that should be 

adequate to serve their needs but we don’t see any need for duplicative programming to come in over the top of those smaller broadcasters. 

Mr. SHIMKUS. What about the issue of emergency service broadcasting for the elements that may be occurring? 

Mr. KARPOWICZ. Well as I indicated in my testimony, in most 

cases as we have looked at these, in most cases the severe weather 

would be closer to their DMA base so in the case of Greenville that 

I had given in my testimony, if Greenville is only 25 miles away, 

they are certainly going to be responding to severe weather that is 

happening up in North Carolina more quickly than Charlotte 

would be which is 95 miles away. And beyond that, I think every 

broadcaster understands it is their responsibility to make sure that 

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er updates and so forth. So whether it is at the far northern end 

of your DMA or the far southern end, it is our responsibility to 

cover that. 

Mr. SHIMKUS. Yes, I would tell you in just about a month ago, 

maybe 5 weeks ago we had what was called an inland hurricane 

in southern Illinois which in essence wouldn’t have been covered by 

St. Louis just on the periphery. It would be covered by Carbondale. 

It would have been covered by Marion. It would have been covered 

by maybe Paducah, maybe Cape Girardeau but it was a major, 

major event that the public really had to be concerned about. 

Mr. Padden, if you could wave the magic wand and eliminate all 

statutory and FCC video regulations so that Disney could negotiate 

directly with any entity that wants to distribute Disney programming to anyone that wants to watch it, would you? 

Mr. PADDEN. Absolutely. We negotiate with every program distributor today for all of our networks and programs except ABC because ABC is covered by the compulsory license. If the compulsory 

license and the related regulations went away, we would be working 24 hours a day to see that ABC was in front of every set of 

eyeballs in America because that is how we make our money, and 

the more rules that the government layers on top of this compulsory license, the more mixed-up the market gets. 

Mr. SHIMKUS. Do you think that approach would lower cost? 

Mr. PADDEN. Yes. 

Mr. SHIMKUS. Thank you, Mr. Chairman. I yield back. 

Mr. BOUCHER. Thank you very much, Mr. Shimkus. 

The gentlelady from the Virgin Islands, Ms. Christensen, is recognized for five minutes. 

Ms. CHRISTENSEN. Thank you. I am similarly situated to my colleague here from North Carolina being new and new to some of the 

issues so some of my questions may be very basic but one question 

to Mr. Padden. On the issue of securing so-called orphan counties 

with in-state local programming, you testified that the satellite carriers can today cut deals with local stations to retransmit those signals. Do your affiliation agreements prevent your affiliates from 

granting retransmission consent to send the signal outside of that 

station’s DMA? 

Mr. PADDEN. There is nothing in our affiliation agreement that 

prevents our local affiliate from making an arrangement for their 

local news and other local programming to be distributed by anyone they want. 

Ms. CHRISTENSEN. On the issue of the DMAs from listening to 

Mr. Karpowicz and looking at your testimony you think that it is 

fine the way it was. We don’t need to change it because that has 

come up in several hearings and I would like to just know what 

all of the panelists feel if we can work within the DMAs as they 

exist today or do we need to change them? 

Mr. KARPOWICZ. I believe we can. 

Ms. CHRISTENSEN. Because it would seem to me that—I mean I 

come from a small community so I can’t even use mine—but if say 

the southern part of North Carolina was in with South Carolina 

and might be much more similar to the northern part of North 

Carolina, so DMAs should work. Does everybody agree or do we 

need to change how the DMAs are configured. 


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Mr. KARPOWICZ. The DMA is determined by the Nielsen Rating 

Company and it is a measure of to which city is most of the viewing from this county directed, so it is a living definition that 

changes every year based on to which television market the people 

in that county are directing most of their viewing. So by definition 

it reflects consumer preferences. 

Ms. CHRISTENSEN. And we can address all of the emergency—the 

situation that Mr. Shimkus talked about is kind of scary if they 

can’t get the information because they are based out of St. Louis. 

Mr. KARPOWICZ. Right, I think as a practical matter what we 

have found is that the information coming from the DMA that 

those so-called orphan counties are in is certainly more relevant 

and closer to those counties than the information that would be 

coming from a distant DMA. 

Mr. MOUNTFORD. Congresswoman Christensen, thanks for the 

question. 

The DMA system works and people do want their local station 

however, how do I respond—and I have to respond to this about 

five times a day now—to a consumer who says how come I can’t 

get your channel from San Francisco or from New York and my 

only response is because that is the law. People know that that 

channel is up there and that it is on their DISH Network system 

and they want to receive it. Why can’t they. 

Ms. CHRISTENSEN. Mr. Chang? 

Mr. CHANG. From DIRECTV, we believe that the current DMA 

system is not perfect. It is also probably not wildly broken. I think 

we highlighted earlier in my earlier testimony some of the simple 

fixes we would probably make to the extent that this became part 

of a broader discussion including dealing with the orphan counties, 

the significantly viewed issue, the Grade B, and all that sort of 

stuff. 

Mr. DODGE. I think it is not surprising we do favor DMA reform 

because I guess in the broadest sense we think as technology 

evolves and the current market in which we live where contents 

are free on the Internet, a consumer should be able to decide what 

is local for them, and for every case where there might be an example where you are in an out-of-state DMA and that is actually closer to your home, there is probably a case where it is not true. For 

example, in Wyoming there are many people in the Denver DMA 

where Denver is actually about 300 miles from their house. And 

similarly, although there is a parade of horribles that gets rolled 

out every time the concept is floated, we do have examples today 

of the four markets where this was approved in 2004. And if you 

look at Vermont, I don’t think you hear the Albany broadcasters or 

the Boston broadcasters complaining that the folks in southern 

Vermont have access to Burlington signals. 

Ms. CHRISTENSEN. OK. The committee staff had mentioned in the 

briefing that satellite carriers and I guess I would direct this at 

Mr. Chang and Mr. Dodge, had problems with the interpretation 

of Section 340 of equivalent bandwidth as being too restrictive and 

therefore limiting the practical utility of it for satellite carriers. 

Could you explain what concerns you might have with that or are 

there no concerns with the interpretation of equivalent bandwidth 

as being too restrictive? 


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Mr. CHANG. I think in the prior bill and I believe it is being or 

in the current draft it has been changed to the language that we 

think is fine in terms of the equivalent bandwidth? 

Ms. CHRISTENSEN. OK. 

Mr. DODGE. We agree. 

Ms. CHRISTENSEN. Thank you. Thank you, Mr. Chairman. 

Mr. BOUCHER. Thank you very much, Ms. Christensen. 

The gentleman from Oregon, Mr. Walden, is recognized for five 

minutes. 

Mr. WALDEN. Thank you very much, Mr. Chairman. I appreciate 

the panel and the testimony today and I wanted to thank DISH 

Network, Mr. Dodge, thank you for your opening statement announcing you are going to be in the Bend market, local-into-local 

by July 9. We appreciate that in the Bend market. I was down at 

another hearing that is going on in the O and I Committee so I 

wasn’t here for the openings. I am a big fan of local-into-local and 

I would certainly encourage you to continue on down the rankings 

until all communities that have television have that ability and the 

viewers have that ability to see their local stations on their satellite system. 

I want to talk a little bit about this notion of the evils of blacking 

out the rest of the duplicative programming and the effect that has 

on viewers. I have before me a channel changing device and it 

seems to be that during the course of any day, people pick and 

choose programs on different channels whether it is over-the-air 

broadcast, or cable, or satellite. And it seems to me that if I want 

to watch an out-of-market local program, I have the ability to push 

this button. I won’t because God only knows what I will do to this 

monitor but I will never get it back. But I would have that ability 

wouldn’t I? I mean this happens on your systems, right? People 

change channels. 

Mr. DODGE. You certainly would. 

Mr. WALDEN. They do that with pay-per-view, right? The pay 

program ends, they are done. It goes blue screen to the next pay 

program until they buy, right? 

Mr. DODGE. That is true for pay-per-view. I mean I think the 

general concept is as you are scrolling through people don’t want 

to see a black screen 90 percent of the day. 

Mr. WALDEN. But they might see a blue screen with a pay-perview sales pitch, right? So I mean you do that. 

Mr. DODGE. Well but, you know, quite frankly if you are watching the news and you don’t want to change the channel, you want 

to just roll on to the next program. 

Mr. WALDEN. Can you get that mike a little closer, too. 

Mr. DODGE. If you are watching the news and it is rolling into 

your next favorite program, you know, why should you have to 

change the channel when you could otherwise? 

Mr. WALDEN. Well, yes but I think viewer habits are such that 

people do watch the local news and I know this will be sacrilegious 

to those in the networks but they may choose a different network 

newscast then the one that—I mean they change, right? They make 

those choices. Let me—so it seems to me that you have a legal way 

to do non-duplicative programming a customer wants to see by it 


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can be offered to cable and satellite customers without a change in 

the law, correct, if you negotiate it for their local content? 

Mr. DODGE. We are actually not. I am not certain of that. Mr. 

Padden said that ABC has granted the right to all of its affiliates 

to broadcast. 

Mr. WALDEN. Well, you would have to negotiate it. It is their 

local programming but you would have under the current law you 

are allowed to do that? 

Mr. DODGE. Included in their local programming are advertisements for which they may not own the copyright and therefore 

have the rights to allow us to broadcast it because it is out of their 

DMA. 

Mr. WALDEN. Well, correct. 

Mr. DODGE. And their national content as well although Mr. 

Padden says. 

Mr. WALDEN. Right but they would have to order. That would be 

their responsibility. 

Mr. DODGE. It would. 

Mr. WALDEN. To make sure they are offering you something they 

are legally allowed to offer, right? 

Mr. DODGE. It would, correct. 

Mr. WALDEN. And that doesn’t require a change in the law? 

Mr. DODGE. If they have those rights, it would not. 

Mr. WALDEN. Right, that is all I am talking about. I am not talking about selling you the Brooklyn Bridge, you know. If they have 

the rights to sell it they should be able to sell it. Mr. Padden, isn’t 

that correct? 

Mr. PADDEN. That is absolutely correct and it is being done today 

by cable operators. 

Mr. WALDEN. Mr. Karpowicz. 

Mr. KARPOWICZ. And in addition to ABC, we also know for a fact 

that CBS and NBC have agreed that any content of theirs that 

would end up in our local newscast, we would have the right to 

move that forward to a provider. 

Mr. WALDEN. And I serve in a district of 70,000 square miles 

with all kinds of media markets surrounding. I am not unsympathetic to my constituents certainly who would like to see Oregon 

news. If you are out on the Idaho border and 360 or 400 miles from 

Portland, I still have people out there who say I would like to see 

the Oregon news but what I am hearing in this hearing is there 

is a way to do that within the law to get that product because they 

don’t say I want to see, pick your show. They are really talking 

about how they get that local news and that seems to me it can 

be done now. And I know that you raised a technical issue of how 

you would go in and out of that local programming that would 

come up to your satellite systems. Now, I confess I spent almost 22 

years in the radio business and actually have been on the cool end 

of a soldering iron a number of times wiring in those satellite receiver systems to pick up different programming, and they are 

pretty sophisticated yet simple if I was able to make it work, systems of switching, and couldn’t the local stations as you do your 

uplink simply have a coded digital switching, Mr. Karpowicz? Isn’t 

that the way it works? 


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Mr. KARPOWICZ. Yes, you would build in a tone and the tone 

would trigger a switch at their head end which would then trigger 

the programming. 

Mr. WALDEN. I mean this happens all the time so I think that 

is important for the committee to know. It is not—this is sort of 

normal backroom stuff and the engineers do all the time. And I 

guess my final question would be to Mr. Mountford because you 

said how many interruptions should be allowed per hour in terms 

of this digital programming I think you meant. Don’t you face that 

problem with satellite distribution, you know, especially during the 

sort of sun cycles in the spring and the fall? Don’t you have interruptions, as well, and storms? 

Mr. MOUNTFORD. Absolutely. 

Mr. WALDEN. And I am not picking on satellite. 

Mr. MOUNTFORD. No, no, no. 

Mr. WALDEN. You get your share of digital interruptions, so does 

cable and so does broadcast now. 

Mr. MOUNTFORD. There is rain fade and there is sun interruptions but in the predictive model what you are saying to a rural 

consumer is that if you are saying it is 90 percent viewability, you 

are saying that 10 percent of the time we are going to allow your 

signal to be totally unviewable. Now, mathematically that would 

work out to as I said before, 12 30-second interruptions which is 

totally unacceptable or even six 1-minute interruptions in an hour 

program. I truly believe that the FCC has to tighten that standard 

because it is digital, because an analog interruption is twice as bad. 

Mr. WALDEN. Is much different. Much different, I agree. Mr. 

Padden, Mr. Karpowicz, do you have any? 

Mr. PADDEN. We favor the Congress adopting the noise-limited 

signal intensity standard in Section 72.622(e)(1) of the FCC’s rules. 

Mr. WALDEN. And you were just reading that again this morning, 

I bet, that whole rule. 

Mr. PADDEN. It is fascinating. You know, if I could make one 

point. I have just met Mr. Mountford. He is a wonderful man, a 

great advocate. He is in the business of selling ABC to people. Now, 

how does that happen? We have no contract with him. We spent 

billions of dollars a year creating this programming. He is selling 

it to people by satellite. He neither owns the network nor a satellite system. This is entirely a creation of the Congress and it 

helped get the satellite industry launched but the existence of 500 

other networks that we manage to get out to satellite customers 

without government intervention strongly suggests as the copyright 

office found, that we ought to be looking at how to phase out of 

what we have got here because I just think the existence of someone who is selling something that is not theirs through transmission facilities that are not theirs, suggests that there is something wrong here. 

Mr. MOUNTFORD. We pay for that programming. It is called the 

copyright fee and so we do pay for it. We also pay for all of our 

transmission facilities, our backhauls through a lease agreement. 

Thank you. 

Mr. PADDEN. My point only is you are paying a price set by the 

government rather than through a negotiation with the people 

whose programming you are distributing. 


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Mr. MOUNTFORD. And the government has chosen to set that 

price as a fair price. 

Mr. BOUCHER. Thank you very much. Thank you, Mr. Walden 

and gentlemen. 

The gentleman from New York, Mr. Weiner, is recognized for five 

minutes. 

Mr. WEINER. Do you guys want us to leave while you keep doing 

this? 

Mr. Chang, does DIRECTV produce content in the classic sense? 

Does it produce programming? 

Mr. CHANG. We do produce a limited amount of programming. 

Mr. WEINER. I mean I don’t mean like what is on TV at eight 

o’clock, nine o’clock and ten o’clock but that is not your primary 

model here, is it? 

Mr. CHANG. No, our primary model is the distribution of programming content. 

Mr. WEINER. I just think it is worth us taking a step back here 

as a group and recognizing that consumers do have, in your term, 

an interest in wanting to choose from moment to moment what is 

on their screen but there is also a higher imperative that Congress 

has always endeavored to protect to make sure that content in the 

general sense was incentivized by the marketplace and that we figure out how we get people a rich amount of content distributed in 

a way that they want to get it. 

Now, that latter part, how they want to get it, is changing every 

single day but one of the things that we try to do and I think that 

Mr. Boucher’s draft does, is it protects the idea that yes you naturally want to be able to go out and distribute Mr. Padden’s content 

any which way you want but we need to figure out a way to 

incentivize Mr. Padden’s company to produce it and that is ultimately in the long term interest of our constituents, as well. If 

you—you know, you are not going to have Desperate Housewives 

getting produced at all if we don’t have a model that allows Disney 

or ABC to produce the content, negotiate for how it is distributed 

in the marketplace. So I think we have to be careful not to say yes, 

why shouldn’t someone be able to get five or six or eight Desperate 

Housewives because that is a model that would have guaranteed 

them in a very short time of being able to get none. 

That also—now I don’t know in Mr. Deal’s metaphor which I 

frankly lost track of—I don’t know who is holding the hand and 

whose hand was being held or who was on the train or who was 

driving the train or what the next stop was but I do know that if 

we look at the interests of consumers, we can’t only look at the 

near term decision that they may want to make to see content. We 

also have to figure out a model that works that incentivizes creation. Now, sometimes the industry is going to have to work that 

out and they did it woefully badly in the music business but sometimes government is going to have to help by saying that we are 

going to be much tougher and making sure people can’t copy or pirate information. So we strike that balance here and I think that 

Mr. Boucher’s bill does that fairly well. If there seem to be kind 

of shotgun relationships between your companies, it is because we 

are trying to find the way to ensure that we incentivize content 

being produced. 


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It is not in Mr. Chang’s job description to be all that concerned 

about it. You are trying to figure out a way to get consumers as 

much choice as you can, zapping it all over the place and I can tell 

you as someone who represents New York City, I probably would 

benefit. My, you know, when Mr. Shimkus says probably the opposite for me. I probably could run statewide just advertising in New 

York on New York City because the guys in Albany wouldn’t have 

a chance to compete against the resources of a New York market. 

So I just think we have to remind ourselves that the interest of the 

consumer is not a near term thing, it is also a larger framework 

that we invoke going back to the Cable Act in the ’80s, we have 

tried to balance. Maybe we don’t get it exactly right. Mr. Chang, 

do you want to respond to that? 

Mr. CHANG. Sure. I don’t disagree with you. I think that it is in 

the interest of the consumers long term to deliver as much content 

as possible that they want to see. I think that where you talk about 

incentives for the content producers to make sure that they can invest in their content, similarly I think we need to talk about not 

having disincentives for folks like us on the distribution side who 

provide a very valuable service to customers, not having to invest 

in unnecessary technologies or capital investments such as potentially duplicating signals and thereby wasting valuable bandwidth 

in terms of having to black out for instance, programming that is 

not the local news. When, in fact, we think the impact of what we 

are talking about here is limited in nature and I think in the limited areas where it has been done in the past, we don’t believe that 

there has been a significant impact. So I don’t think there is a huge 

disincentive from a content producer’s standpoint and for folks like 

Disney, who also own multiple other content sources, I think it is 

up to them to decide how they want to divvy up there own internal 

resources and whether they put it on ABC. 

Mr. WEINER. But it is also under their control to decide when 

they are making contractual arrangements of how and when their 

product is going to be distributed in local markets to not have the 

specter of you guys hanging over and say we will just drop in someone else here. I think that is the problem. The problem is they have 

a right to some control over their content and I think you agree 

with that and you say that well in some selective cases they should 

lose that control and I think that is where you and I part company. 

I mean I think that if we both agree, you know, Mr. Padden says 

that his solution and Mr. Karpowicz says their solution for getting 

local content, they say it is a relatively small thing. You say your 

solution is a relatively small thing. The problem is your relatively 

small thing would have a rather dramatic structural problem in 

those communities that you are seeking to serve, meaning essentially Mr. Padden would lose the right to make exclusive arrangements, essentially. 

Mr. CHANG. Right but I would ask a question. I mean how big 

or what percentage of the population are you talking about and 

how would that really impact the programming cost. 

Mr. PADDEN. I just come back to you want to abrogate our contracts for the purpose of the customer being able to watch the same 

show on two channels. I just don’t see the public benefit. 


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Mr. CHANG. No, we are trying to respond to Congressman Ross 

and his desire to have his constituents as well as several of the 

other congressmen, have their constituents be able to watch relevant programming and try to do it in a fashion that is not a huge 

burden to any one of us from an economic standpoint. 

Mr. WEINER. Well, can I interrupt this conversation and ask this 

question, Mr. Chang. Do you agree that you shouldn’t be in a position to offer Desperate Housewives on two different stations in the 

same market? 

Mr. CHANG. What I would agree with is that we are trying to deliver relevant programming to customers. 

Mr. WEINER. Understood. But would you answer, take a stab at 

my question. Do you agree that you shouldn’t have it in your rights 

to distribute two Desperate Housewives not the housewives but the 

show, two Desperate Housewives? 

Mr. CHANG. That I would agree with. 

Mr. WEINER. To the same customers? 

Mr. CHANG. Listen, I think that when you take into account the 

law and the various contracts, it is what it is in terms of what we 

are allowed to do. All we are asking for is to try to be responsive 

to various members and their requests that their customers can 

see, their constituents can see relevant programming. 

Mr. WEINER. Well, I have already gone well over my time and 

I thank you, Mr. Boucher, but I think that if we can reach one conclusion that the answer is no, they shouldn’t be able to because 

that severely undermines Mr. Padden’s ability to negotiate a contract and therefore by extension, to produce the content. And I 

think we are at a foundation where Mr. Boucher starts us which 

is let us try to solve the other problem and I think then I think 

you will find broad agreement here and I think we want to solve 

Mr. Ross’ problems but I don’t think that what your solution is, is 

a real structural undermining, at least in those communities there 

is structural undermining of the thing that makes Desperate 

Housewives available once, let alone twice but I thank you, Mr. 

Chairman. 

Mr. BOUCHER. Thank you very much, Mr. Weiner. 

The gentleman from Arizona, Mr. Shadegg, is recognized for five 

minutes. 

Mr. SHADEGG. Thank you, Mr. Chairman. 

As I sit here and listen to this debate and review the issue, I 

have got to tell you that it drives into my mind the issue of our 

inability to discern reasonable requests from unreasonable requests. Mr. Chang, you just struggled mightily to try to answer Mr. 

Weiner’s question about whether or not people should be able to 

see Desperate Housewives two times. I guess you would have the 

same problem with people demanding to see it 20 times on the 

same TV station in one town. And the problem with that is that 

Mr. Padden’s constituents, the people he represents, have to have 

the capital to make attractive programming and if you are allowed 

to sell that programming in one particular area two times, five 

times, eight times, each time it gets sold or made available in the 

same area and you say they are demanding this, I don’t particularly see that demand. I don’t see—I am not sure I know why anybody watches Desperate Housewives but I don’t know why you 


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have to be able to watch it twice at once. And I guess it seems to 

me that with regard to local news or with regard to sports, I can 

understand some issue but how do you deal with the fact that Mr. 

Padden has right now a certain level of exclusivity that lets him 

market that product in a way that creates enough economic value 

that he can produce something that is worth watching. And how 

is Mr. Ross’ problem not solved by what is currently available? 

Mr. CHANG. Again, I don’t know specifically how many people we 

are talking about and what sort of overlap we are talking about 

whereby people would get duplicative programming such as Desperate Housewives and what that would do to his advertising. 

Mr. SHADEGG. Well, let me stop you right there. If we don’t know 

how big a problem this is, why are we struggling here in this hearing so mightily to overcome it? 

Mr. CHANG. Well, we don’t think it is a large problem. I don’t 

know the specific number I guess is a better characterization. And 

I guess the question that I would have back to these folks, is if we 

end up having to duplicate signals and thereby investing a lot more 

in terms of our satellite infrastructure and our maintenance infrastructure, is that our burden to bear alone to solve this problem or 

are they going to pay for that? 

Mr. SHADEGG. Well, why don’t you ask the customers to pay for 

it? If the customers really want that local thing, why don’t you 

make that pay-per-view? Mr. Padden, let me ask you, have I accurately expressed your concern with regard to having the same show 

made available multiple times in one market or otherwise destroying the economic value of what you produce? 

Mr. PADDEN. Yes, you have captured it precisely and let me give 

Derek an example. Under Mr. Ross’ proposal, the satellite operators would be able to bring the Richmond stations to every household in northern Virginia in the Washington, D.C. television market. They represent about a third of the market. You would be duplicating the exclusive network programming in a third of the market. It would have a devastating impact on the Washington station. 

On the other hand, if what we are trying to do is get Richmond 

news to folks in northern Virginia, there is absolutely no bar under 

current law for you to negotiate a deal with the Richmond station 

to carry their news to your northern Virginia customers and we 

would encourage you to do that. 

Mr. SHADEGG. Mr. Mountford, you said that the only thing that 

stops this from happening right now is the law. I guess I would say 

to you that is right. It is the law of copyrights. Mr. Padden has a 

property right to the program he produces. If you diminish that 

property right, you can destroy the value of the program he produces and we will have nothing worth watching. It seems to me 

that nobody here is looking at the choices people make. If somebody chooses to live in some backwater town in Idaho or Montana 

or Wyoming and they say but I want to be able to watch the Miami 

local news station in Miami because my sister lives in Miami and 

I want to look at the news she is watching, maybe you should make 

that available to her for a price and let her pay in Wyoming to 

watch the news programming in Miami, Florida but I don’t see how 

you should do it in a way that costs Mr. Padden his business. 


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Mr. MOUNTFORD. That is exactly what we want to do, is offer it 

to the person in Wyoming at a price. 

Mr. SHADEGG. So she can buy the second right to watch Desperate Housewives. 

Mr. MOUNTFORD. Well, it wouldn’t be Desperate Housewives. 

Mr. SHADEEG. You would compensate Mr. Padden for the diminution in the value of Desperate Housewives in that marketplace? 

Mr. MOUNTFORD. We would pay what, you know, either a negotiated agreement or a set copyright fee to the providers. That is 

what we do today, for people in Wyoming, for example and a lot 

of the rural customers, it wouldn’t be a duplicative program because they don’t get it. They don’t get their station. That is why 

I am advocating the 99 percent viewability standard because at 90 

percent it is going to say you get your station but 10 percent of the 

time it is not there but Congress says you get it, so that is the law. 

That is not right. 

Mr. SHADEGG. I think he is now saying, Mr. Padden, he is willing 

to pay you but I don’t see that in the legislation before us. 

Mr. PADDEN. No, if the government wasn’t involved we would 

have every economic incentive to meet with and license our content 

to anybody that can get us additional eyeballs because that is in 

our self-interest. 

Mr. SHADEGG. That is the copyright you are selling. Thank you. 

Mr. BOUCHER. Mr. Shadegg, thank you very much. 

All of the members present have been recognized for questions. 

We want to thank our witnesses very much for your testimony here 

today. This subject is always interesting. Every five years we address it again and it seems to get even more interesting over time, 

so thanks to all of you for excellent testimony today. 

And with that this hearing is adjourned. 

[Whereupon, at 12:15 p.m., the subcommittee was adjourned.] 

[Material submitted for inclusion in the record follows:] 


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