Meeting Transcript -- Morning Session
[Go to the afternoon session transcript]
1 ADVISORY COMMITTEE MEETING
2 (9:20 a.m.)
3 MR. MOONVES: Good morning, ladies and
4 gentlemen. Welcome back to our second meeting of our
5 advisory committee. I think we had a very successful
6 first meeting, and we look forward to continuing
7 discussions today.
8 I think we are going to have a really
9 interesting day, with two panels in the morning -- we will
10 have a public interest panel. We would like to thank you,
11 Gigi Sohn, for putting this panel together. Then later
12 this afternoon there's a panel of broadcasters put
13 together by Robert Hecker, and I think today we can get a
14 lot of the important issues on the table that are facing
15 all of us.
16 A couple of housekeeping notes. I will
17 introduce Jose Luis Ruiz, our newest member, but he is not
18 here yet to introduce, but he has been appointed as a new
19 member of our commission, as well as I would like to
20 introduce Jonathan Cohen, a gentleman right over there,
21 who has been detailed to the advisory committee from the
22 FCC, and he will be with us during the course of our year
23 together here.
24 As you may have seen in your packet -- a little
25 housekeeping -- we have set up our dates for the next four
3
1 meetings. The first meeting, Friday, January 15, the
2 next, Monday, March 2, the next, Tuesday, April 14, and
3 finally, Monday, June 8. The June 8 meeting, obviously we
4 will need an extension from the Government on our
5 commission, as we are supposed to end June 1.
6 I think we all agreed at the last meeting that
7 trying to finish this by the beginning of June or early
8 July was going to be impossible, and we are going to
9 officially request in the next few weeks an extension on
10 this time.
11 You were all kind enough to send in your
12 calendars, and obviously some of these meetings can't be
13 attended by everyone, but we feel like we did the best we
14 could and by and large there are only a couple of people
15 who will be missing from each one of those meetings.
16 Today I am very pleased to report that outside
17 of Richard Masur the entire committee is here.
18 Before going on, I would like to turn it over to
19 my cochairman who will discuss some of the ideas for what
20 we would like to accomplish at the next group of meetings
21 and open that up to discussion this morning, so Norman,
22 please take it.
23 MR. ORNSTEIN: Thanks, Les.
24 We not only have set dates, we also have to
25 consider what we're going to be doing at these meetings,
4
1 and we clearly are starting a course now getting
2 perspectives from the public interest community, from the
3 broadcast industry itself.
4 We're moving towards an end goal in our
5 meetings, and of course a little bit further down the road
6 discussing specifically what options we want to pursue and
7 recommendations we would make, and these several meetings
8 ahead in the interim are going to be additional
9 opportunities for us to gather information and discuss
10 some of the particular substantive areas we had originally
11 designed.
12 You will remember from our last meeting this
13 meeting to have three sessions, including one on a variety
14 of technology issues that Rob Glaser was putting together,
15 and we have decided to delay that and, if it makes
16 sense -- we'll double check with Rob when he arrives -- to
17 do that at the beginning of the next session, which would
18 be our January meeting, take the morning on that.
19 What Les and I would propose for discussion
20 purposes at the moment is the following. I think we
21 basically have three major substantive areas that we want
22 to spend some time on. One is the broad question of
23 education, including children. A second is the question
24 of free time, or time in the political arena, and then
25 there is an array of other issues, from closed captioning
5
1 and public service announcements to emergency broadcast.
2 We have, if you'll notice in your packets, a
3 very interesting letter from a Federal advisory group on
4 emergencies about where the technology might be able to
5 take us there. It is something we're going to have to
6 discuss a little bit more.
7 Those are areas where we need some, at least
8 extended time for direct discussion and deliberation, I
9 think. What makes sense to me, perhaps, is that we focus,
10 in part because it will flow from some of the discussion
11 of the technology we will be considering, including the
12 computer area, into a discussion of education on the
13 afternoon of January 16.
14 We then turn on March 2 to the question of free
15 TV time for political candidates and the whole
16 relationship that the public interest issue has to
17 campaigns. Then we move to a discussion in April of these
18 other issues, from the closed captioning question to the
19 public service announcements, emergencies, and so on, and
20 then focus very specifically on what we're going to do, or
21 what we would recommend as we move into June and whatever
22 would flow from that.
23 Let me throw that open as a likely agenda ahead,
24 recognizing we will stay flexible if something intervenes
25 and see what people think.
6
1 Peggy.
2 MS. CHARREN: Are you suggesting that public
3 input in these areas follow this agenda?
4 MR. ORNSTEIN: I think what we do during these
5 sessions is very much open and doesn't have to follow the
6 same format that we're following today. Yes, absolutely,
7 and I think when we -- either now or at the end of the day
8 we will want to discuss very specifically what format we
9 pursue next time. I'm assuming we're talking about having
10 the panel that you are going to do at the beginning of the
11 next session that we have. The date now set is
12 January 16.
13 MR. GLASER: The next one.
14 MR. ORNSTEIN: I assume we can follow the same
15 format that we're going to do here. For the discussion on
16 education and children there is no particular driving
17 necessity to follow that format. If it works, great, but
18 if there are other suggestions, why not, and just as with
19 any of these areas we may want to bring in outsiders. We
20 may want to discuss them among ourselves. We may want to
21 do it a different way.
22 Gigi.
23 MS. SOHN: The Vice President talked about the
24 possibility of some sort of reservation of capacity for
25 civic discourse. I think that is an important topic, and
7
1 something that will be raised by one of the panelists, or
2 several of the panelists on my panel today. I was
3 wondering if you see that being folded into the discussion
4 on political free time, because it's not exactly the same
5 time. I don't know if you see that being folded into the
6 same discussion or something separate.
7 MR. ORNSTEIN: I would see that as we will have
8 a day for that subject, and to me it is a subject broadly
9 defined. It basically includes discourse in the public
10 square as it relates to politics and issues, and so I
11 would certainly see a specific focus there as well.
12 MR. MOONVES: Gigi, I think there's going to be
13 obviously in every single panel cross-over between all
14 these various issues. I think a lot of things we'll talk
15 about today clearly will involve free time for candidates.
16 There will be certain repetitions in that, and I think
17 there is no reason why each panel has to be just cut and
18 dried.
19 MR. ORNSTEIN: And I would also -- you know,
20 we're going to focus on these issues and then turn to
21 solutions. That doesn't mean that we will avoid
22 discussion of alternatives, innovative ideas, ways for us
23 to go generally as we go along, too.
24 Erin.
25 MS. STRAUSS: I just wanted to just briefly
8
1 throw on the table another issue that will be coming up.
2 Closed captioning has been mentioned a lot, but video
3 description has not, and I would like to put forth the
4 possibility that at one of our future meetings I be
5 permitted to make a very brief presentation on video
6 description. I have a tape that shows it.
7 The presentation could be brief, like I say
8 around 15, 20 minutes, but I think it would help for
9 people to understand what this new form of access is.
10 MR. MOONVES: Although we haven't gone into it
11 specifically, absolutely, on the April 14 panel you
12 certainly will be given that time to make that
13 presentation, as will any other issues that anybody wants
14 to bring up, which will include all of the potpourri of
15 other significant things.
16 MR. BENTON: It says here on the agenda there
17 will be discussion of future agenda. Do we come back to
18 this at the end of the day, after we've thought about all
19 of this all again, and revisit the suggestions?
20 MR. ORNSTEIN: I think we need to revisit it,
21 including a discussion of the specific format we want to
22 follow in the next meeting.
23 We also -- this may be a good time to talk about
24 some of the issues that were raised in our public
25 outreach, including whether we can do this simultaneous
9
1 broadcast of our meetings on our Web site, and we have the
2 world's leading expert here, and we had a brief discussion
3 of that last time. What do you think, Rob?
4 MR. GLASER: We would love to do it, starting
5 with the technology panel. That might make good sense if
6 we can kick it off by then.
7 I think at the last meeting we discussed whether
8 anybody thought there were any policy matters associated
9 with doing it. I know it's been done in the past with
10 congressional hearings and the like. I don't imagine
11 there are. I don't recall.
12 MR. ORNSTEIN: I can't imagine any. If anybody
13 has any objections or reasons for us not to do it -- it
14 seems like a logical and pretty exciting thing for us to
15 do, and it's a good way to reach out for those who can't
16 be here with us.
17 MR. DUHAMEL: I have a question. Last time we
18 talked about getting an extension beyond June into the
19 fall. It seems to me like we have a pretty full agenda
20 here for the next three meetings.
21 MR. ORNSTEIN: We do, and as Les mentioned we
22 were supposed to have our report done June 1 and then have
23 a month to wrap up all of our other business. It is
24 fairly obvious from the schedule that we are not going to
25 be able to meet that timetable.
10
1 We're going to make it -- we have not made a
2 formal request. I think the White House wanted us to stay
3 flexible for a while in that regard, and since this is not
4 anything that has to be done by legislation that will take
5 a sizeable period of time, it can be done first, I think,
6 directly by OMB, and then you could formally revise the
7 executive order, we are under no rush to do that.
8 I mean, we're going to follow the timetable that
9 makes sense for us, and then we can feel confident we will
10 have the time we need to finish our work, but we will
11 begin the formal process within the next couple of weeks
12 of getting that done formally.
13 We're going to move expeditiously. I don't
14 think we need to say, well, we're going to take till
15 October and therefore we will take till October.
16 And we also need to be mindful of something
17 else. The FCC will begin very likely and fairly soon its
18 own proceedings. In what fashion, it has not been set.
19 We just have in effect a newly constituted FCC that held
20 its first meeting last week, and they may move through a
21 very slow process with the notice of inquiry and then on
22 forward to the proposed rulemaking, or they may just move
23 to the rulemaking. Either way, it takes some time.
24 But while our recommendations, they go in the
25 executive order to the Vice President, they are clearly
11
1 out there for policymakers and Congress, and the Federal
2 Communications Commission and elsewhere to be mindful of,
3 we want to be sure that we mesh in some fashion rather
4 than clash with their schedule, so we will keep them
5 abreast of that, too.
6 MR. CRUMP: Having the four dates here, have you
7 discussed locations? Will we stay in Washington, or as
8 was expressed the last time, will we be allowed to move
9 around the countryside?
10 MR. MOONVES: We have not come to any conclusion
11 on that. As well, there are certain problems with moving
12 out. I don't think there's any reason why we couldn't try
13 to do one of them away.
14 Karen, would you agree with that? Is that
15 possible?
16 MS. EDWARDS: I think that's possible. Of
17 course, the agency doesn't want to be a stumbling block to
18 the committee meeting in other States or cities, so if
19 there are a couple of meetings you want to do elsewhere I
20 think we can scare up the money, and Anne and I will be
21 there.
22 MR. ORNSTEIN: This much we can tell you, we
23 will not be meeting in St. Paul in January.
24 (Laughter.)
25 MR. CRUMP: May I say thank you?
12
1 (Laughter.)
2 MR. MOONVES: Harold, I think we can establish
3 right now the January meeting will be in Washington.
4 However, we're willing to take certainly, and it probably
5 would be best done by memo, any other suggestions for
6 future meetings, or any proposals, and we will look at
7 those.
8 MR. ORNSTEIN: We may want to take a couple of
9 minutes at the end of the day to talk about alternative
10 sites and certainly we both -- there are a couple of
11 things that would be served by meeting out of the city.
12 We can reach a broader range of people who otherwise can't
13 come to Washington, the public, and accommodate members
14 who have to travel a sizeable difference, although we want
15 to be mindful of the cost of travel to other places as
16 well.
17 So we ought to think about that, and clearly we
18 also need to have, if we're going to go to other places,
19 willing hosts, as Harold has been willing to help us out
20 in that regard, but let's discuss that for at least a
21 little bit at the end of the day and point towards the
22 possibility of having either the March or April meeting
23 somewhere else.
24 MR. CRUMP: And if we are going to do two outs,
25 I'd perhaps, since we're on the East Coast here, one in
13
1 the middle and one on the West, just to give the public a
2 wider range of choice.
3 MR. MOONVES: The good news is within a few
4 weeks we should know exactly how long our extension is and
5 probably be able to plan out the rest of them and possibly
6 plan two trips, one in the middle of the country and one
7 in California for us California people.
8 MS. SOHN: Norm, one of the things Peggy raised
9 at the last meeting was our need to educate the public,
10 and that may be having the passive Web site just wasn't
11 enough. In fact, I've gotten a couple of letters from
12 members of the public saying how can we get the
13 information faster, and that sort of thing.
14 Has any thought been given to how that can be
15 facilitated better? Is that something we need to discuss?
16 I think there are some people on this committee who would
17 like to see the public more educated about this process
18 and why it's important.
19 MR. ORNSTEIN: We need to focus a little bit
20 more on outreach. I had hoped that C-Span would be here,
21 and I was going to start by saying that literally dozens
22 of people from around the country will be watching us.
23 (Laughter.)
24 MR. ORNSTEIN: It turns out it will be literally
25 dozens of people at the NAB who will be watching us.
14
1 (Laughter.)
2 MR. ORNSTEIN: Along with many of their outside
3 representatives to reach a larger number.
4 MR. MOONVES: I think there is a CBS cameraman
5 here, which is watched by lots of people.
6 MR. ORNSTEIN: Then, in fact, the largest
7 audience in the country will be watching us.
8 But we need a more effective means of outreach.
9 I think an active Web site, where we let lots of people
10 know that there's a lot more there than just a bunch of
11 documents, may be a very good way, and I suspect that many
12 in the public who are interested in these issues are going
13 to be very familiar with how to reach them on the Web
14 site, but we ought to think about other ways that we can
15 get our deliberations out there and reach out to more
16 people.
17 Peggy.
18 MS. CHARREN: One way that works is that there
19 are organizations who work with other organizations that
20 are very interested in these issues, like the PTA, the
21 American Psychological Association. There are groups that
22 focus on media concerns, and we can use them to help get
23 the message out, too. I mean, there are people who really
24 get involved in outreach, and at least the message that we
25 are interested in hearing from people.
15
1 I think that the Web is a terrific way to get
2 what we are doing out to people, but we have to make them
3 want to look at it so that they understand that there is a
4 process happening, and a very open process, and we could
5 use organizations to help make that happen.
6 MR. ORNSTEIN: Let me also -- I think we should
7 all be out talking to as many people as we possibly can
8 and as many groups, and pulling in ideas, and let me
9 suggest -- I mean, what I tend to get is, I suspect what
10 most of you tend to get is people pleading for more of the
11 piece of the public interest pie with ideas about
12 additional things to load in.
13 We also should be thinking not just about what
14 areas encompass a public interest obligation but how we
15 achieve these goals, where we are really talking about a
16 very tricky set of issues with the technology changing
17 minute by minute, and where we don't know exactly where it
18 is heading, and we have to come up with innovative means
19 of being flexible, looking to a future that none of us can
20 absolutely predict.
21 So we should be reaching out and encouraging
22 others to give us some ideas about how we achieve our
23 goals, not just how we slice up the pie or add on new
24 layers of obligations.
25 MR. MOONVES: Once again, forgive me, but a word
16
1 of caution. I do want the public to be aware of what
2 we're doing. By the same token, we are in an exploratory
3 process right now. I don't want us to be grandstanding
4 for the press, or be dealing with a specific point of view
5 when dealing with the press until we have examined the
6 issues a lot further.
7 I know I and Norm have received a number of
8 calls from the press wanting comments on where we are,
9 where we're going, and I have avoided that by and large,
10 because I think it is not necessarily a positive thing to
11 do right now, so that's my only caution.
12 Any other issues?
13 MR. ORNSTEIN: I don't know if we have any other
14 initial business that we need to deal with. We may, in
15 fact, want to expedite our timetable. I don't see any
16 need for a break right now.
17 MR. MOONVES: Gigi, is your group all ready?
18 MS. SOHN: Yes, I guess we're ready.
19 MR. ORNSTEIN: Karen is saying we need a moment
20 or two to set up -- oh, Jose Luis Ruiz, welcome to our
21 commission. We're glad to have you with us.
22 MR. ORNSTEIN: We need to have the cameras moved
23 so we can get our panelists set up, and maybe we need to
24 take 5 minutes. I hate to have everybody get up.
25 (Recess.)
17
1 MR. MOONVES: Before we get to our panel, I was
2 remiss in not welcoming Barry Diller, as well as Jean
3 White.
4 We are going to begin, as I mentioned before,
5 with our two panels. The first panel is, Perspectives
6 from the Public Interest Community. I would urge all of
7 us, each one of the panel members will be making a short
8 introductory remark, or semi-short, and at which point we
9 will be open to questions, comments, and I hope we will
10 have a lively discussion with both panels, so please work
11 on that.
12 So Gigi, I would like to turn it over to you to
13 introduce your panelists. It's all yours.
14 MS. SOHN: Thanks, Les. I wanted to thank you.
15 I know this was your idea, and I think it was a terrific
16 one to get on the table, what we're thinking about what we
17 would like to see come out of this committee.
18 Also, I know we have all gotten tons of stuff to
19 read, but I think this is a very nicely organized packet
20 of materials, and you should have also gotten an extra
21 couple of sheets that were just passed around. I think it
22 would be helpful not to read now, but to sort of follow up
23 on some of the discussion. Our panelists will be
24 referring to it. So happy reading.
25 Let me introduce our distinguished panel, and I
18
1 want to thank them for coming as well. The first speaker
2 is going to be Paul Taylor, to my immediate right. Paul
3 is the faculty director of the Free TV For Straight Talk
4 Coalition, a public interest group dedicated to improving
5 the conduct and discourse of politics, especially on
6 television.
7 The coalition's chairman is Walter Cronkite.
8 Our major funding comes from the Pew Charitable Trusts and
9 the Annenberg Policy Center of the University of
10 Pennsylvania.
11 Paul was a newspaper reporter for 25 years, the
12 last 14 with the Washington Post, where he covered
13 national politics and social issues, and he's written
14 several books on the issue of political journalism and
15 presidential campaigns.
16 Paul graduated with a B.A. in American Studies
17 from Yale and he was the executive director of the Yale
18 Daily News, and Paul will present the legal and policy
19 arguments in favor of a requirement that broadcasters
20 provide free time for political candidates.
21 Right next to Paul is Mark Lloyd. Mark is the
22 director of the Civil Rights Telecommunications Forum, a
23 project created to bring civil rights principles and
24 advocacy to the policy debate. Mark is a jack of all
25 trades. He previously worked as a communications attorney
19
1 at the D.C. law firm of Dow, Lohnes, & Albertson, and
2 represented both commercial and noncommercial
3 communications companies. He also had nearly 20 years of
4 experience as a print and broadcast journalist, and has
5 been honored for some of his work.
6 Mark is chairman of the board of directors of
7 the Center for Strategic Communications, a New York-based
8 nonprofit, providing communications support to community-
9 based organizations, and he is also a member of the board
10 of the Independent Television Service, of which Jim is the
11 executive director, Jim Yee.
12 Mark received his bachelor's degree from the
13 University of Michigan and his law degree from Georgetown
14 University, and Mark will make the case for the need for
15 digital broadcasters to provide greater opportunity for
16 discussion of critical issues of importance to their local
17 communities.
18 Finally, next to Mark is my colleague, Andrew J.
19 Schwartzman, who is the president and CEO of Media Access
20 Project, where he has directed that organization since
21 1978, and he is recognized as one of the Nation's foremost
22 experts on telecommunications law and public policy, and
23 he's taught me everything I know.
24 MAP is a nonprofit public interest
25 telecommunications law firm which represents the public in
20
1 promoting the First Amendment rights to speak and hear.
2 Over its 25 years, MAP has represented scores of
3 consumers, civil rights, civil liberty, children's,
4 educational, religious, and labor organizations.
5 On the issue of digital television alone, MAP
6 has worked for dozens of organizations, including the
7 American Library Association, Common Cause, Consumer
8 Federation of America, Consumers Union, the NAACP, the
9 National Federation of Community Broadcasters, the
10 National Education Association, and the United States
11 Catholic Conference.
12 Andy has been published in numerous magazines
13 and newspapers. He has also been on radio and television
14 numerous times. He graduated from the University of
15 Pennsylvania undergraduate and law school, and Andy will
16 discuss the legal and policy arguments for new and
17 different public interest obligations for digital TV
18 broadcasters.
19 So with that, I turn it over to Paul.
20 PAUL TAYLOR, FACULTY DIRECTOR
21 FREE TV FOR STRAIGHT TALK COALITION
22 MR. TAYLOR: Thank you, Gigi, and thank you to
23 this panel for providing this forum. How can digital
24 broadcasting enhance democratic processes? That is one of
25 the central questions that President Clinton and Vice
21
1 President Gore have asked you to address.
2 It seems to me your inquiry could hardly have
3 come at a more pregnant moment, and I would like to take a
4 few moments to set the political context in which you will
5 be deliberating and then offer a few ideas for you to chew
6 on.
7 In our last election, as everybody knows, our
8 campaign finance system experienced something pretty close
9 to a total systems failure. Money and politics is now a
10 relationship covered more by loophole than by law. The
11 media, the Congress, and the Justice Department have spent
12 all of 1997 and will doubtless spend a good portion of
13 1998 poring over the multiple abuses of 1996.
14 We have had a year of headlines. We have had
15 months of hearings. Just this week we've had the Attorney
16 General and the FBI Director disagreeing in public over
17 whether an independent counsel is needed to clean up some
18 of this mess.
19 But with all of the spectacle and drama there
20 has been one ingredient notably missing from the stew.
21 The public. The sound we've heard from the grassroots on
22 this issue this year has not been an angry roar. It's
23 really been more of, kind of like a resigned sigh. The
24 message from out there seems to be they all do it. They
25 have always done it. If they pass new laws, they will
22
1 just figure out new ways to keep on doing it.
2 This is a message that Congress, believe me,
3 hears loud and clear, for it's precisely the message they
4 hope to hear on an issue like this. Campaign finance is
5 the last issue on earth that Congress wants to tackle, for
6 two diametrically opposite reasons.
7 The first is that it is an issue on which it is
8 genuinely difficult to forge a policy consensus in
9 Congress. Politics is a pretty tough business, and what
10 you have in Congress are 535 politicians who cannot help
11 but view campaign finance reform through the prism of
12 their own fundraising needs and experiences.
13 Do they come from a rich district, or a poor
14 district? Do they come from a big State or a small one?
15 Are they Republican or Democrat? Do they serve in the
16 House or the Senate? Are they supported by labor or by
17 business? Would they fare better with low limits or high
18 limits or no limits? Are they wealthy? Do they have
19 wealthy supporters? Do they have wealthy opponents? The
20 permutations add up to 535.
21 But at the same time, this is an issue on which
22 all 535 lawmakers share one common perspective that's more
23 potent than all of these differences. Every single one of
24 them is an incumbent, and under the current rules of the
25 game incumbent Members of Congress out-raise challengers
23
1 by a ratio of roughly 5 to 2.
2 Now, ask yourselves, how enthusiastic would you
3 be to change a status quo that gave you that sort of edge
4 over the person who wants your job, and who is prepared to
5 say some pretty nasty things about you in order to get it?
6 So the bottom line here is, don't expect
7 comprehensive campaign finance reform from this Congress.
8 It might enact a narrowly drawn fig leaf of a bill in 1998
9 to get out from under some of the publicity that's been
10 generated over the last year or two, but absent a great
11 deal more public pressure than we have seen thus far, it
12 is not going to go for fundamental change, certainly not
13 in this go-round, and in particular, don't expect any
14 provision that would provide free air time for political
15 candidates.
16 Those of you who have followed the fate of the
17 McCain-Feingold bill in the Senate this fall know that its
18 free air time provision was the first ones the sponsors
19 tossed overboard in their unsuccessful effort to win the
20 60 votes that they would need to invoke cloture to move
21 that bill along.
22 That's pretty much been the fate of free air
23 time in Congress over the decade. 163 free air time bills
24 have been introduced in Congress since 1960. This is a
25 testament both to what an enduring good idea this is, and
24
1 how difficult it is to move this particular good idea
2 through a Congress that perceives quite correctly, that
3 it's a better idea for challengers in the end than it is
4 for incumbents.
5 So where does that leave us? Well, it seems to
6 me free air time remains today what it has always been, a
7 great idea for citizens and for democracy. I believe it
8 is the most promising, the most potentially transforming
9 way to fix what ails our electoral system. I think it
10 would work well all by itself as a stand-alone political
11 reform.
12 I think it would work even better if paired with
13 a provision to ban soft money from politics, those
14 unlimited five, six, and seven-figure checks to political
15 parties that have been at the heart of nearly all of the
16 scandal stories that we have been reading about and
17 watching unfold over the past year.
18 I think actually both reforms are politically
19 achievable, perhaps not this month or next, but in the
20 not-too-distant future, but it's clear that Congress is
21 going to need a shove from the outside. At the moment,
22 that shove is not coming from the broad public.
23 If this committee and even more if this Nation's
24 broadcast industry were to step forward and start the
25 processes of applying this kind of shove it seems to me
25
1 you will indeed be serving the public interest.
2 Why is free air time so attractive and so
3 powerful? Let me suggest four reasons. First, and this
4 is a very important reason in the context of the current
5 political situation on campaign reform, free air time
6 offers a way to change the paradigm for reform from an
7 approach based on limiting the supply of money to an
8 approach based on relieving the demand for money, or, put
9 another way, from a reform based on ceilings to a reform
10 based on floors.
11 Some of this paradigm shift actually is already
12 beginning to occur. Again, those of you who followed
13 McCain-Feingold know that the other thing that the
14 sponsors dropped from their bill in an effort to make it
15 work were spending limits.
16 That move was a fairly dramatic one and made a
17 lot of traditional reformers very unhappy, because
18 spending limits had been the heart of most reform
19 proposals over the last few decades, but I think that
20 shift is the beginning of a rethink that one day is going
21 to lead to a meaningful package of reforms.
22 The problem with spending limits is that the
23 courts have told us that they are unconstitutional if
24 mandatory, and experience has taught us that they are
25 porous if voluntary.
26
1 Floors, on the other hand, present no such
2 constitutional impediment, nor do they offer such an
3 inviting target for loopholes, and if you want to build a
4 floor in the political system, in political campaigns, by
5 far your best and most efficient building material, it
6 seems to me, is free air time.
7 The cost of political ads is the largest single
8 expense in electoral politics. It accounts for roughly 30
9 percent of the expenditures in congressional campaigns, 40
10 percent in Senate campaigns, and 50 percent in
11 presidential campaigns, and if you were just to restrict
12 your universe to the competitive races, those numbers
13 would rise significantly.
14 Now, this cost, the cost of political ads, has
15 risen more than five times the rate of inflation over the
16 past generation. We spent $25 million on political
17 advertising in 1972. We spent an estimated $500 million
18 in 1996.
19 If you were to provide that much air time for
20 free, you would substantially relieve the demand for
21 campaign contributions. No, you would not completely
22 eliminate the money chase. My own guess is that in our
23 political culture, where money and politics will always
24 mix to some degree, you will never completely eliminate
25 the money chase, but you can surely slow it down, and a
27
1 floor will do that.
2 Second, free air time will make political
3 campaigns more competitive. Floors, by their very nature,
4 are more beneficial to underfunded challengers than they
5 are to well-funded incumbents.
6 The research on campaign spending tell us that
7 the figure that best determines whether or not a political
8 campaign is competitive is not how much the incumbent has
9 raised, but how much the challenger has raised and, in
10 particular, whether that challenger has raised enough to
11 begin to get a message out.
12 Why is it so important to have competitive
13 races? Electoral competition is at the very core of the
14 ideal of democratic self-government. It is quite
15 literally what makes the citizenry sovereign.
16 I was in Pennsylvania the day before yesterday,
17 where I used to be a political reporter, and I asked all
18 my old buddies, what's going to happen with the political
19 races there next year. Their Governor Tom Ridge is up for
20 reelection, and he has a $10 million war chest, and no
21 opponent in sight. It's only 11 months away from that
22 next election. No Democrat has come forward.
23 A somewhat similar situation pertains in New
24 York, where its Governor is up for reelection, and a not-
25 too-dissimilar situation pertains in Texas. These are the
28
1 three biggest States in the country where we're going to
2 have an incumbent up for reelection as Governor, and the
3 incumbent has raised an enormous sum of money, and there
4 is virtually no challenger.
5 There's an announced Democrat in Texas. He's
6 52 points behind in the polls.
7 Now, some of this may be, you have three very
8 successful, popular incumbent Governors, but if you don't
9 have that competition before the public, you're not
10 serving it.
11 In addition, robust competition in political
12 races is what enables political campaigns to be what they
13 need to be, which is a meaningful forum for policy debate,
14 a place where the outs can test their ideas against the
15 ins, a time when citizens can come to new collective
16 judgments or reaffirm old ones, a platform on which
17 popular mandates can be built, and from which Government
18 policies can be launched.
19 But in order for competitive races to confer all
20 these benefits, campaigns have to be waged in a
21 responsible and substantive manner. Unfortunately, modern
22 campaign discourse has come to be dominated by the
23 familiar, trivialized mud-slinging politics of 30-second
24 attack ads and 7-second sound bites.
25 This is the sort of discourse that doesn't
29
1 nourish, it repels. It helps explain why our turnout
2 levels are so dismal, and why our citizens have become so
3 cynical and disengaged that in this season of political
4 scandal they haven't summoned the energy to demand a
5 campaign finance fix.
6 This brings us to the third potential benefit of
7 free air time. If we provide the air time to candidates
8 for free, we are in a position, either by law or by
9 stigma, to require that the time be used in a format
10 designed to induce candidates to engage in more
11 substantive discourse about issues.
12 By my lights, that means encouraging candidates
13 to the greatest extent possible to appear in their own
14 free time spots. This would increase accountability, and
15 the record shows that when you increase accountability,
16 you produce more accurate and more substantive political
17 discourse.
18 The fourth reason for free air time is such an
19 important idea is that it will help ensure that candidates
20 remain the most robust communicators in their own
21 campaigns.
22 In this past election cycle we saw the beginning
23 of an important shift in the nature of campaigning. Large
24 sums of campaign dollars no longer passed in the coffers
25 of the candidates, or even to parties.
30
1 Instead, we had well-established groups such as
2 the AFL-CIO or the chamber of commerce, and much less
3 well-known groups such as the Citizens Flag Alliance, or
4 the Coalition for our Children's Future, sort of fuzzily
5 named groups, and dozens of others like them, that spent
6 tens of millions of dollars in 1996 airing their own TV
7 ads, ads that in the eyes of the law are so-called issue
8 advocacy ads, but that for all practical intents and
9 purposes are campaign ads.
10 These groups are exploiting a loophole that
11 allows them to run such ads without any meaningful
12 disclosure requirements, and to pay for them without the
13 limits on contributions that would apply if they were to
14 give their money to candidates or parties.
15 This is going to be an extremely difficult
16 loophole to close, for a combination of constitutional and
17 political reasons, but free air time again is at least a
18 partial solution. It assures that the voices of the
19 candidates will not be drowned out by this new cacophony
20 of electoral voices on television. The public should be
21 free to hear from everybody during campaigns, but it has a
22 special need to hear from the candidates.
23 Now, how would you go about crafting a plan that
24 achieves some of these worthy goals? Over the years, most
25 free time proposals have been structured around one of two
31
1 formulas. Either all broadcasters are required to offer X
2 amount of free air time per election cycle, or all
3 candidates are guaranteed X amount of free media per
4 election cycle.
5 The trouble with these approaches is that one
6 size doesn't fit all, not in politics, and not in media
7 markets. Heavy air time makes sense in some districts,
8 not in others. It's needed in some races, not in others.
9 Under a rigid allocation system, how do you
10 handle the New York media market, where you have more than
11 3-dozen congressional seats up every 2 years? There would
12 be nothing but political spots morning, noon and night in
13 the even-numbered fall of those years.
14 The solution to this dilemma, it seems to me, is
15 surprisingly simple. All broadcasters could be required,
16 as a part of their public interest obligation, to pay into
17 a special fund for democratic discourse. This payment
18 could be made in money or minutes, and it could be
19 assessed on each broadcaster as a small percentage of
20 revenues.
21 The fund would then distribute the air time to
22 the political parties, both the major ones and any
23 qualifying minor ones, in the form of vouchers, and then
24 you let the parties sort out all of the messy questions
25 about which candidates get how much time in which media
32
1 market.
2 This brings marketplace flexibility and
3 efficiency to the allocation system. It also enhances
4 electoral competition, for the parties are the one
5 political institution in our system that has an equal
6 interest in electing challengers as in electing
7 incumbents.
8 Moreover, if you provide these free
9 communication resources to parties, you are in a stronger
10 position to do away with the soft money that parties have
11 grown so addicted to, so if you get free air time into the
12 system, you can get soft money out of the system, it seems
13 to me that's a formula for reform that is both within
14 constitutional bounds and ultimately is going to be within
15 political reach.
16 How much free air time should there be? Well,
17 one target might be that $500 million that candidates
18 spent on television in 1995 and '96. That's very big
19 money in politics, but it is not a great deal to the
20 television industry. Over a typical 2-year cycle, that's
21 less than 1 percent of gross advertising revenues.
22 Still, $500 million I fully understand is not
23 pocket change to anybody, and perhaps there are ways to
24 ease the bite. It seems to me one way might be to do away
25 with the existing broadcast subsidy for political
33
1 communication that has been on the books for the past 25
2 years. Lowest unit rate.
3 Without going into its many complexities, it
4 seems to me lowest unit rate doesn't work for two reasons.
5 One of them is operational. It's based on a rate card
6 system, when in fact air time is sold on some combination
7 of a rate card system and a sort of running auction. As a
8 result, lowest unit rate is burdensome for broadcasters to
9 keep track of, and it's burdensome for candidates to take
10 advantage of.
11 But secondly, lowest unit rate doesn't work
12 because it targets the subsidy in the wrong place. It
13 gives the greatest benefit to the best-funded candidate,
14 and if the goal of campaign reform and providing
15 communication resources is to make races more competitive,
16 lowest unit rate is really working at cross-purposes.
17 Let me conclude by saying I'm offering all of
18 these ideas in the spirit of promoting a discussion. In
19 the end, it seems to me, any change is only going to work
20 if it works within the broadcast industry, and you know
21 your industry much better than I do.
22 But let me close with one last question on a
23 subject about which we may be all equally in the dark, and
24 that is, how do we provide for democratic discourse in the
25 digital future, when no one is quite sure yet what the
34
1 contours of that future are going to look like?
2 As you ponder that question, I would urge you to
3 keep in mind the very thing that has been so unique and
4 powerful about broadcast television for the last 50 years.
5 It provides a space for a shared national experience.
6 In an ideal world, our election campaigns should
7 unfold as shared national experiences, unification
8 ceremonies where we affirm and celebrate our core
9 democratic values. They ought to be places where we can
10 forge the most important working relationship in America,
11 the relationship between citizen and elected official.
12 Sadly, modern campaigns have fallen short of
13 this goal, witness the turnout rates of fewer than half of
14 the adult population in the last presidential election.
15 As we think about the digital future, it seems
16 to me safe to predict that we are not going to reverse
17 this steep decline merely if we open up new opportunities
18 for political discourse on some new niche channel in a
19 multiplexed broadcast universe. That approach will only
20 make those who are already rich in political information
21 even richer. It will build a high-class ghetto for
22 political junkies.
23 The citizens we really need to capture are the
24 political drop-outs, the information-poor. The place we
25 are going to find them in the digital future is likely to
35
1 be the place we now find them in the analogue present, on
2 the big channels, watching the most popular entertainment
3 programs. Our challenge, it seems to me, is to find a way
4 to deliver to that semi-captive audience a better brand of
5 political communication, ideally, in short, efficient,
6 substantive, and entertaining segments that they will want
7 to watch.
8 In the first 50 years of television we haven't
9 quite figured out that formula. Perhaps in the digital
10 era, either through the time voucher system I've talked
11 about today or perhaps some other innovation you can come
12 up with, I hope we can do better. If we can come up with
13 a way to cut the cost of politics while increasing the
14 quality of political discourse, we will have gone a long
15 way, indeed, to bringing the missing citizens back into
16 our democracy, and I urge you all Godspeed.
17 Thanks.
18 MARK LLOYD, DIRECTOR
19 CIVIL RIGHTS TELECOMMUNICATIONS FORUM
20 MR. LLOYD: Good morning. Thanks to you all for
21 the opportunity to come here. My thanks especially to
22 Gigi Sohn and the other members of the advisory committee.
23 It is an honor to sit here and join my friend and mentor,
24 Andy Schwartzman, and to join Paul Taylor, who has done so
25 much to advance the debate about free broadcast time for
36
1 political candidates.
2 I should also recognize my friend Charles Benton
3 and Louise and Jim Yee, and I would be ashamed not to
4 acknowledge the great intellectual debt I owe to Cass
5 Sunstein and Newton Minow. Professor Sunstein has helped
6 form much of my understanding of constitutional law, and
7 Professor Minow has informed much of my understanding
8 about the important role of communications policies.
9 Paul has talked about the special public
10 interest obligations of broadcasters in the political
11 process, and I would like to frame my remarks around a
12 political relationship between broadcasters and viewers
13 and what public interest obligations that political
14 relationship suggests, and I would like to focus your
15 attention on the needs and interests of the local
16 communities of broadcasters you are licensed to serve.
17 I direct a modest project dedicated to the
18 proposition that the work which engages this committee,
19 communications policy, will determine whether all citizens
20 will be able to participate effectively in the political
21 process, have access to public space, share in the fruits
22 of publicly funded research, or maintain the privacy that
23 we take for granted. In other words, we believe that
24 communications policy is a civil rights issue.
25 I am proud to lend my voice to this morning's
37
1 session on public interest views before becoming a "public
2 interest advocate" I was a lawyer representing mainly
3 commercial broadcasters, and proud to do that, and before
4 that I was a commercial broadcaster, and proud to do that
5 as well.
6 I reported on floods and fires in Toledo, Ohio,
7 produced local and national news programs here in
8 Washington, D.C., and I even produced local and national
9 public affairs programs. Some aired on Sunday morning,
10 but some even aired on prime time.
11 I am a member of a growing number of former
12 broadcast journalists concerned about the direction of the
13 industry we love. We know that television is not a
14 toaster with pictures, and we know that it could be more
15 than a mass entertainment machine making profit for few.
16 Television can be a powerful tool for democracy and civil
17 society, and that is what I think the public interest
18 obligations of broadcasters really boils down to.
19 I would also like to share with you my
20 particular perspective as one of a very few minorities
21 allowed to produce local and national news and public
22 affairs programs, and let me start by saying that I owe my
23 opportunities to the civil rights movement, and perhaps
24 especially to the work of a living civil rights legend,
25 Dr. Everett C. Parker of the United Church of Christ, and
38
1 permit me just a few moments to tell this story.
2 In March of 1964, Reverend Parker took a group
3 of idealistic students from the North down to Jackson,
4 Mississippi. They began to record the practices of the
5 local television stations there, WLBT and WTVJ, or JTV,
6 and they found the result of an unregulated market
7 southern-style.
8 Though blacks comprised 45 percent of the
9 audience, the stations ignored them. The white citizens'
10 council could get on the air to express its opinion, but
11 the local black ministers couldn't buy time. What local
12 news there was either ignored or insulted the black
13 community.
14 When the networks ran a documentary about the
15 civil rights movement, or an interview with Thurgood
16 Marshall, or Martin Luther King, the network transmission
17 was replaced with a sign indicating network signal
18 problems.
19 Parker joined with the NAACP and challenged the
20 license of the Jackson stations. While the FCC expressed
21 regret at the actions of the television stations, they
22 approved their licenses anyway. Among other things, the
23 FCC argued that the local viewers did not have the right
24 to challenge the license of the local television station.
25 Parker then took the FCC to court. In a
39
1 thunderous opinion, written by Warren Burger, soon to
2 become Chief Justice of the Supreme Court, the Court ruled
3 that the FCC failed in its duty to protect the interest of
4 the community. Burger rightly noted that by not fully
5 airing issues of public importance, the stations failed
6 both the black and the white citizens of Jackson,
7 Mississippi.
8 I began this story by saying that I owe my
9 career to these civil rights leaders. You see, once the
10 courts made clear that the local stations had to serve the
11 entire community, even the blacks, and Latinos, and
12 Asians, and women, and the disabled, the local stations
13 began to hire more of us. Some of us actually were
14 assigned to talk to those community people who might not
15 be found on the golf course.
16 I was hired to talk to some of those people, and
17 to compile the reports of all the interviews -- they were
18 called ascertainments -- and then to report to the FCC and
19 to place in our public file how local, or how our local
20 CBS affiliate actually went into the community with a
21 license to serve, found out about what the local important
22 issues were, and created television programs about those
23 issues. It was 1978. Imagine.
24 I know community leaders felt empowered because
25 they knocked on my door. Local stations finally had to
40
1 listen to us. This led directly to an increase in local
2 television programming, much of it channeled to Sunday
3 morning, but sometimes not.
4 My ascertainment work in fact led to
5 documentaries I produced for prime time, some on the
6 disabled, some on the Asian community in Toledo, Ohio, and
7 other places. The burden of ascertainment and program log
8 requirements generated the benefit of creative programs
9 and loyal engaged viewers.
10 I believe the cost of not doing ascertainment is
11 simple-minded blood and guts news and angry viewers, but
12 the Reagan-Fowler FCC eliminated ascertainments in 1984
13 with little more than faith to support their arguments.
14 They claimed that the market would protect the interest of
15 the local communities. The result has been the death,
16 frankly, of a great deal of local public interest
17 programming.
18 News programming, noncontroversial except for
19 the violence, may have increased, but reports on issues of
20 importance to local communities is in many places around
21 the country difficult to find. For example, we just had
22 an election here in the Nation's capital. Issues were
23 important on the ballot. You wouldn't really know that by
24 the local news coverage, and the single digit turnout was
25 a result.
41
1 In addition to this harm to democratic
2 deliberation and participation, women, minorities, and the
3 disabled continue to be badly stereotyped and
4 underrepresented in decisionmaking positions in local
5 television. I come, however, not to belabor the obvious
6 problems with local television. As Professor Minow said
7 35 years ago, just sit down in front of your television
8 set and watch for yourself.
9 No, I don't want to waste this opportunity
10 complaining about the past or the present, and I come to
11 propose a future. As the Government prepares to give
12 public space to existing broadcasters, this committee
13 should recommend that the broadcast license be conditioned
14 upon at least two obligations.
15 One, at a bare minimum, as a start, the local
16 broadcasters should be obligated to find out, record, and
17 report to the FCC what all segments of the local community
18 are interested in.
19 And two, the local stations should find the
20 director of the local senior center, and head of the local
21 YWCA, and the local union leader, and the director of the
22 local medical center, and other community leaders, and
23 give them the microphone. Authentic community voices need
24 to be given an opportunity to speak to issues of concern
25 to the local community.
42
1 The national dialogue on race, for just one
2 example, will not succeed if it is not first a local
3 dialogue.
4 Licenses are freely given to local stations to
5 serve local communities. In exchange, those stations make
6 millions. Community service cannot be measured in
7 advertising revenues and Nielsen ratings alone, and to let
8 the local broadcaster get away with empty claims of
9 knowing and serving their local community is worse than
10 letting the fox guard the chicken coop.
11 Yes, I'm talking about bringing back the
12 ascertainment requirement. This is, I think, the
13 baseline, and yes, I'm talking about forcing broadcasters
14 to get real community people on the air to talk about
15 something other than crime.
16 No, I'm not talking about content regulation.
17 The new digital multichannel environment in computer-
18 based interactive communications technologies ought to
19 make it much easier to accomplish these things than ever
20 before.
21 Service should improve for the disabled beyond
22 closed captioning. Increased channel capacity should
23 create opportunities to put more voices on the air.
24 Broadcasters have proven marvelously inventive with the
25 proper incentives.
43
1 As I said earlier, broadcaster journalists
2 understand that television is more than a toaster with
3 pictures. We understand that it can be a powerful tool
4 for democratic deliberation. It will not be that tool if
5 ordinary citizens are not empowered in their political
6 relationship with local broadcasters and given some
7 opportunity to take the microphone and speak their minds.
8 As Professor Sunstein reminds us, while we
9 purport to honor free speech we have left it mostly to a
10 system of unregulated markets. The Federal Government
11 has the power to correct this. Under the First Amendment,
12 with regard to broadcasting, it is the free speech rights
13 of citizens which are paramount, not the free speech
14 rights of private industry.
15 The free speech rights of viewers is harmed if
16 the Government continues to leave diversity of expression
17 to the prerogative of broadcasters. If spectrum is no
18 longer scarce, surely there is room for local community
19 activists to find a broadcast platform. If spectrum is
20 scarce, as I believe it is, the broadcasters should be
21 obligated to put a priority on creating a vital place for
22 public discussion.
23 That means setting aside time periods where
24 large numbers of viewers are watching, devoting production
25 time and creative producers to make those programs
44
1 watchable, and promoting those programs.
2 Broadcasters will undoubtedly follow this panel
3 and moan about the great cost of free time to candidates
4 and the needless burden of interviewing community leaders,
5 and the impossibility of making interesting programs by
6 providing a platform to local leaders.
7 I urge you to remember what Newton Minow said in
8 1961. Never have so few owed so much to so many. It was
9 true in 1961. It is definitely true today, and the debt
10 will grow when broadcasters get even more public space
11 tomorrow.
12 I urge this committee to look to the local
13 community as you develop public interest obligations.
14 Thank you.
15 ANDREW J. SCHWARTZMAN, PRESIDENT AND CEO
16 MEDIA ACCESS PROJECT
17 MR. SCHWARTZMAN: Thank you, Gigi. I am going
18 to complicate everyone's life here by seeing if we can try
19 to address the high technology future with a low
20 technology problem, which is to say I'm going to direct
21 your attention to the screen in the corner of the room
22 where the overhead has been set up on the opposite side of
23 the room from me, and encourage you to watch the screen
24 and pay no attention to what I look like, and just kind of
25 look away from me.
45
1 I will accept the back of your heads as a paean
2 to the old technology, and I'm sure you will be able to
3 follow my presentation better if you just don't look at
4 me. If I'm making a really appropriate gesture I will
5 tell you and you can turn around.
6 With that said, thank you very much, Gigi, and
7 thank you to everybody on the committee for agreeing to
8 serve. I understand the kind of disruption and the
9 difficulties and the personal expenses involved in this,
10 and it is service to the country for which we all should
11 be appreciative.
12 I would also like to thank the staff of the
13 Commerce Department. They've just been wonderful. And I
14 would also like to thank Joe Piccell, the Access Project
15 staff attorney who performs with marvelous professionalism
16 and has done a tremendous amount of the important work
17 that we've done, the legal work, and done so with great
18 sophistication, but today has been dragooned to operate
19 the overhead projector, and I can assure you it is the
20 least sophisticated of his talents.
21 I'm going to address commercial broadcasting for
22 the most part this morning. PBS and NPR do magnificent
23 work. Public broadcasting stands on a special footing,
24 and what we should be expecting of public broadcasting
25 deserves discussion by this committee, just not by me here
46
1 today. There's just not enough time.
2 I've got a lot of thoughts about that, and I
3 would be happy to share them. Gigi and I had a wonderful
4 meeting with Bob Coonrod at CPB the other day, and we've
5 had a wonderful dialogue with Irvin Duncan over time.
6 This is an important mission for the committee, and I
7 encourage you to pursue it, just not with me this morning.
8 The framework for my discussion is the Red Lion
9 case, the Supreme Court's Red Lion decision.
10 (Vugraph.)
11 MR. SCHWARTZMAN: The quotation from Justice
12 White, and there will be several more as I go on on the
13 screen, is central to the principle about how the FCC
14 administers the public interest standard of the
15 Communications Act. This case was about the public
16 interest standard of the Communications Act. The emphasis
17 was that as between the two it is the rights of the
18 viewers and the listeners, and not the broadcasters, which
19 are paramount.
20 We have included a lot of materials to lay this
21 out. There is no one who has written more eloquently or
22 more persuasively about this than Professor Sunstein, and
23 those of us who work in the mass media area are blessed
24 atypically for a field in having some academic writers who
25 write wonderfully excessively, Eric Brenner's histories,
47
1 which many of you may be familiar with, for example, and
2 also Professor Sunstein's work, and also Newton Minow's
3 work.
4 We have included some chapters from their books.
5 We have included some articles in these presentations.
6 It's not painful. I would encourage you to take a look at
7 this stuff, and in particular I encourage my broadcaster
8 friends to sit down and try to rethink things with, and
9 look at those writings with that in mind.
10 One of the things that I think would be very
11 important for this committee is for people who have been
12 working a long time, as have I, on one side of the game,
13 to try to hear what the other side is saying, to rethink
14 the arguments and see if maybe there isn't room for some
15 common ground and there isn't some merit in arguments that
16 have been not thought about or instinctively reacted to
17 rather than evaluated, and I would urge you to take a look
18 at those materials with that in mind.
19 Okay. That's the point. It is the right of the
20 viewers and listeners.
21 Can I have the next overhead, please?
22 (Vugraph.)
23 MR. SCHWARTZMAN: America has the best system of
24 broadcasting in the world. This is because of and not in
25 spite of the regulatory scheme established by the
48
1 Communications Act of 1934. That is not Justice White,
2 that's me, and that's true.
3 We have a wonderful system. The question is not
4 are broadcasters doing a good job. Most broadcasters are.
5 The question is whether broadcasters are doing a good
6 enough job. There's a question whether all broadcasters
7 are doing a good job, and it's a question about what kind
8 of expectations we should have for an industry that is
9 receiving vast new opportunities to use public spectrum
10 for personal profit.
11 Is the commercial broadcasting industry
12 successful? Yes.
13 Next overhead, please.
14 (Vugraph.)
15 MR. SCHWARTZMAN: It is an immensely successful
16 and profitable industry with a great future. What do I
17 mean? Profits and revenues are skyrocketing. There's --
18 I think it was left out of the materials, and it's in a
19 separate handout. Some of the Veronis stuff which
20 summarizes what I think the broadcast industry people here
21 happily know, which is that these are great times.
22 TV group owners' revenue up 16.6 percent in 1996
23 alone. '97 is going far better than that. Cash flow,
24 which is even more important, is up even more.
25 I know it's cyclical. I remember 1990-'91, when
49
1 values went down and things looked tough, but the outlook
2 for the long-term is stunning. That is what Wall Street
3 thinks.
4 Sales prices reflect an understanding of the
5 coming of digital. The valuations put on broadcasting
6 stations are based on knowing that there's going to be
7 capital investment for digital, and the revenue streams
8 that it's going to bring in are taken into account, and
9 what do we have?
10 Traditional cash flow valuations for stations
11 were 10 times cash flow, and now they're going at 12, 13,
12 even 15 times cash flow, and some of the people in this
13 room have made a couple of deals reflecting that of late.
14 Prices are doubling and tripling. People are making, 200,
15 300 percent on stations that they bought just a couple of
16 years ago. People are investing because digital is going
17 to be a great business. The future is good.
18 Next overhead, please.
19 (Vugraph.)
20 MR. SCHWARTZMAN: Broadcasters receive many
21 special privileges, most notably the free use of spectrum
22 others must now buy. The '96 Telecom Act allowed
23 incumbent broadcasters, and only incumbent broadcasters,
24 to receive digital licenses.
25 Until now, broadcast spectrum when it became
50
1 available was put up for competition, initially through
2 competition by offering better programming and localism.
3 Now, for bid. Either way, there was competition.
4 There's no competition here. If you have a
5 license today, you get twice as much digital spectrum.
6 You, and only you get it. The value of the exclusivity
7 alone is very significant.
8 Next overhead, please.
9 (Vugraph.)
10 MR. SCHWARTZMAN: Back to the Red Lion case. A
11 license permits broadcasting, but the licensee has no
12 constitutional right to be the one who holds the license
13 or to monopolize the frequency to the exclusion of his
14 fellow citizens.
15 There's nothing in the First Amendment which
16 prevents the Government from requiring a licensee to share
17 his frequency with others and to conduct himself as a
18 proxy or a fiduciary with obligations to present those
19 views and voices which are representative of his community
20 and which would otherwise, by necessity, be barred from
21 the airwaves. In other words, the FCC has the power to
22 require that which does not happen by itself.
23 The digital spectrum is not the only benefit.
24 Broadcasters have been allowed to receive and retain the
25 old spectrum indefinitely. Call it a loan, call it
51
1 whatever, but for a long period of time twice as much
2 spectrum as before is being warehoused and kept out of the
3 hands of other potential competitors.
4 Must carry. My organization and other citizens
5 groups went all the way to the Supreme Court with the
6 broadcasting industry on the principle, which the Supreme
7 Court upheld, that broadcasters should receive free
8 carriage on cable systems because they are serving the
9 local communities, providing service in the public
10 interest. That was the basis upon which the must-carry
11 privilege was accorded broadcasters.
12 Their copyright benefits, far too complicated
13 for me to understand, much less explain license terms,
14 have been extended from 3 years to 5 years and now 8
15 years, 250-percent extension that effectively increases
16 protection from any possibility of loss of license by two-
17 and-a-half times.
18 There is Federal preemption of local zoning and
19 environmental regulations in order to make sure that
20 towers can get up. There is all manner of other kinds of
21 benefits that broadcasters are now receiving.
22 Next overhead.
23 (Vugraph.)
24 MR. SCHWARTZMAN: Many broadcasters have done
25 little to provide service which is not financially self
52
1 sustaining. Again, the quotations from Professor Sunstein
2 and Mr. Minow -- I guess that's Professor Minow, too.
3 Next overhead.
4 (Vugraph.)
5 MR. SCHWARTZMAN: The Office of Communication
6 case -- Mark referred to Justice Burger. By whatever
7 name, broadcasters are temporary fiduciaries of a great
8 public resource and they must meet the highest standards
9 which embrace the public interest concept.
10 Now, I point to every broadcaster. The core
11 problem today is that the good guys are here. I have been
12 going up to testify on the hill for 25 years, and I see
13 the best broadcasters in the industry time and time again
14 coming up with fabulous demonstrations of the kind of work
15 that they do.
16 Here we have Belo, which has been a leader in
17 free time, WRAL, which is famous for its public service,
18 which has been a leader in terms of the high definition,
19 its special involvement with sports. It's one of the
20 great broadcasters in this country.
21 Mr. Duhamel is a path-breaker on early broadcast
22 tradition, which they demonstrated how to address needs of
23 rural communities and bring people who are physically
24 distant and apart closer together, and Barry Diller is
25 converting 24-hour home shopping stations into all local
53
1 news, sports, and service programming.
2 If everybody was like the people on this
3 subcommittee, if everybody was like the broadcasters who
4 come up to the Hill to testify, we would be having a
5 different discussion.
6 Where are the owners who do no local news, who
7 don't even have a local production facility? Where are
8 the people who run 24-hours of home shopping off of
9 satellites just like a translator? They never come to
10 these hearings, and the broadcasters who come here, and
11 the trade associations who come and say how good
12 broadcasters do are letting the worst people off of the
13 hook.
14 I find that most unfortunate. We need
15 regulation for the ones who won't do it by themselves. We
16 don't need it for the people who are going to do it, and
17 that is what we're talking about. We're talking about a
18 mandate for the broadcasters who don't show up here. You
19 do it already, but you are the ones who are going to argue
20 about whether or not it should be done.
21 Next overhead, please.
22 (Vugraph.)
23 MR. SCHWARTZMAN: The law requires every
24 broadcaster to provide service in the public interest, and
25 the FCC can and should define this to include discussion
54
1 of local issues, sharing publicly owned spectrum with
2 members of the public, meeting the needs of children, the
3 disabled, and of those who are too old, too poor, too
4 young to be demographically attractive. That's where the
5 market has failed. That's why we had to have a Children's
6 Television Act, and that's what even the best broadcasters
7 don't always do.
8 Now, public interest is not a synonym for what
9 the public relations industry now calls cause-related
10 marketing. Signing up with a charity, collecting toys for
11 tots is great. Safeway and Wal-Mart do that, too, and
12 they don't have licenses, and that's not a reason to get a
13 license.
14 Sending Bozo the Clown to the hospital, which
15 was offered as a justification, as part of public service
16 that should be counted as part of broadcasters' public
17 services obligations to children, as opposed to
18 programming, is not what this is about.
19 I've seen stacks and stacks of letters from
20 charities thanking broadcasters for thousands of dollars
21 worth of free time. Whose time is it? What it really is
22 is unsold inventory in many cases, and PSA's have become
23 promos. You don't see a lot of PSA's that don't now
24 feature network figures, including now, increasingly, news
25 figures, and at the local level it's always your local
55
1 news anchor on with a promo. It's being turned into a
2 business opportunity.
3 That's fine. It's great to help local
4 charities, but that's not news, that's not information,
5 that is not debate, that is not controversy, and that's
6 what we're talking about.
7 Next overhead, please.
8 (Vugraph.)
9 MR. SCHWARTZMAN: We didn't have to do it this
10 way. As Justice White said, Government surely could have
11 decreed that a frequency could have been shared among many
12 people.
13 In the U.K. they had weekend television. We
14 could have the same channel 7-days-a-week, one person each
15 day sharing the same transmitter, seven voices, diversity.
16 We didn't do it. We gave an exclusive monopoly right
17 protected by the criminal law. If somebody jumps on your
18 frequency, the U.S. Attorney sends the FBI in to arrest
19 them, and the FCC has been doing that a lot lately. This
20 is the kind of protection that broadcasters get, an
21 exclusive monopoly.
22 Next overhead, please.
23 (Vugraph.)
24 MR. SCHWARTZMAN: What are we talking about?
25 The public -- again the Supreme Court -- the public
56
1 interest in broadcasting clearly encompasses the
2 presentation of vigorous debate of controversial issues of
3 public importance and concern to the public -- not PSA's.
4 Next overhead, please.
5 (Vugraph.)
6 MR. SCHWARTZMAN: This is a quote within a quote
7 from a different Supreme Court case. Was this Garrison,
8 Professor Sunstein? Speech concerning public affairs is
9 more than self-expression, it is the essence of self-
10 government. It is the right of the public to receive
11 suitable access to social, political, aesthetic, moral,
12 and other ideas and experiences which is crucial here.
13 That's a discussion of the public interest
14 standard of the Communications Act.
15 Next.
16 (Vugraph.)
17 MR. SCHWARTZMAN: News makes money, especially
18 when it's not really news, when it's promoting your own
19 show and when it's doing service pieces involving
20 advertisers' products, but what the law requires is that
21 broadcasters also serve those who are not served by the
22 marketplace. Too old, too young, too poor. For them, the
23 coverage might actually cost broadcasters money.
24 In particular, service to the hearing impaired,
25 video descriptors, this has great relevance to meeting
57
1 those needs.
2 The theory of program deregulation at the FCC
3 wasn't that these things are unimportant. It wasn't that
4 broadcasters no longer had to do them. The theory was
5 that broadcasters would do them anyway. There was no need
6 to require it.
7 It didn't work. It hasn't worked for children.
8 Congress had to pass a law. It hasn't worked for coverage
9 of local issues. A lot of stations no longer have any.
10 Broadcasters, including some of the broadcasters
11 in this room, now routinely refuse to sell -- not give,
12 sell -- time to candidates for public office. There's a
13 requirement in the law that Federal candidates have a
14 reasonable access right. Increasingly, broadcasters are
15 refusing to sell time to candidates standing there, check
16 in hand, its lowest unit rate. If they can squeeze an
17 extra dollar out of the Chevrolet dealer, that's what they
18 do. That's not service in the public interest. That's
19 not addressing the needs of the local community.
20 Digital television provides multiple revenue
21 streams, long-term access to twice as much spectrum as
22 before. We've got a lot of materials in here. Certainly
23 the broadcasters are familiar with some of this, and
24 there's a lot of debate. I urge the other members of the
25 committee to take a look at it, because this is one of the
58
1 things that's going to have to be doped out.
2 If you're doing multiple channels you've got new
3 revenue streams, you've got new advertising, you've got
4 opportunities, through clicking on on a mouse, or punching
5 a remote control and getting additional advertiser
6 information, getting the sports scores with an additional
7 logo that will come up on the bottom of the screen, so
8 there's lots of revenue opportunities, and on the cost
9 side, who knows?
10 What I do know is, the same people who make the
11 computers that cost less and less -- HP Today is
12 announcing a 233 megahertz PC for under $1,000. Those are
13 the people making the transmitters and antennas, and we've
14 included some materials. There's increasing indications
15 that you're going to be able to put a second transmitter
16 on the same tower.
17 I'm telling broadcasters things they know, but
18 the cost is going down. We need to get some more
19 information about what's involved here, but what I see is
20 costs going down, revenue going up.
21 The next overhead.
22 (Vugraph.)
23 MR. SCHWARTZMAN: Free access to twice as much
24 spectrum and other new benefits justify commensurate
25 increases in public service.
59
1 The next overhead, please.
2 (Vugraph.)
3 MR. SCHWARTZMAN: Again from Justice Burger, a
4 broadcaster seeks and is granted the free and exclusive
5 use of a limited and valuable part of the public domain.
6 when he accepts that franchise, it is burdened by
7 enforceable public obligations.
8 A newspaper can be operated at the whim or
9 caprice of its owners. A broadcast station cannot. After
10 five decades -- we can now say after nearly seven decades
11 of operation the broadcast industry does not seem to have
12 grasped the simple fact that a broadcast license is a
13 public trust, subject to termination for breach of duty.
14 Thank you.
15 MR. MOONVES: Thank you, gentlemen, all three of
16 you. We appreciate your remarks. I would like to now
17 open it up to the rest of the panel for comments,
18 questions. Peggy.
19 MS. CHARREN: Andrew --
20 MR. SCHWARTZMAN: You only call me Andrew when
21 you're mad at me. Usually it's Pumpkin. Everybody knows
22 this, of course.
23 (Laughter.)
24 MS. CHARREN: The history that came out from
25 both of your presentations, Mark and you, is the history
60
1 on which the Children's Television Act was based. It is
2 no accident that the rulemaking that caused that to happen
3 was 1970, and all these nice quotes were 1969. Without
4 that attitude from the courts, there would have been no
5 children's rulemaking.
6 The result in that law applies to broadcasting,
7 commercial broadcasting, and it's more than existed
8 before, when obviously the marketplace didn't work. What
9 do you think can happen in terms of children with this new
10 opportunity? Do you think that the digital spectrum
11 issues will be limited to what broadcasters had to do in
12 these last hearings?
13 MR. SCHWARTZMAN: Well, this is as good a time
14 as any for me to say that I'm a big fan of multicasting,
15 and I'm highly skeptical about the vitality and future of
16 high definition except for some very limited purposes, and
17 I will wait for Mr. Goodman to go mug me in the hall
18 later, but certainly there are going to be parts of the
19 day, and I think close to 24-hours of the day when I think
20 broadcasters are going to be doing multiple feeds, and
21 it's not unreasonable to talk about having a lot more
22 programming for children.
23 In that connection, Peggy, I think that that is
24 a real opportunity, and the digital technology will offer
25 lots more opportunities for kids by providing supplemental
61
1 information, by providing additional kinds of graphics, by
2 providing some semblance of interactivity with telephone-
3 back calls, so there's a lot of creative ways that
4 distance learning can be done, education can be done, not
5 just by the public broadcasters, and this, of course, is
6 something that you know better than anyone.
7 We need every broadcaster to contribute to this.
8 Unless we have a competitive environment in which
9 everybody takes their cut at trying to deal with the
10 problem of raising our children, rather than just leaving
11 it to a few, we're not going to get the right solutions.
12 MR. ORNSTEIN: Frank.
13 MR. BLYTHE: Thank you. Andy, Mark, and Paul, I
14 appreciate your presentations. As this panel hears more
15 and more of these presentations I'm beginning to feel the
16 depth of the issues that we're looking at is going to be
17 quite immense and cut out a lot of work for us at future
18 meetings.
19 I was wondering, nobody has really -- I don't
20 think we really got into the depth and the impact of the
21 recent Telecommunications Act of 1996, which opened up
22 ownership, multiple ownership of stations in single
23 markets, whereas before it was one ownership per market.
24 Do any of you have any comments on how that
25 impacts on -- how you see ownership in those markets
62
1 impacting on public service in those markets, whether
2 there's -- in some markets, I know there's one marketing
3 plan for all stations.
4 I don't know if there's one public service plan
5 for all the stations or anything like that, but do you see
6 a dilution, public service eroding even more, in view of
7 some of the comments you've made so far at this point?
8 MR. SCHWARTZMAN: I would say that justification
9 for permitting relaxed ownership rules -- and this is an
10 ongoing process at the FCC -- is efficiencies. That is,
11 it is more profitable to operate more than one station in
12 a market. You could combine sales forces and the like.
13 If there's more profit, there's more opportunity for
14 reinvestment in the public.
15 Second, there's greater obligation, because
16 where the goal is diversity, if there is, by definition,
17 less diversity, fewer owners, each of those owners has a
18 far greater obligation, and again I go back to what I
19 emphasized, to share their frequencies, to give the
20 microphone to someone else.
21 News reportage, we're going to hear a lot, I
22 know, about, we do all of this news coverage. It's not
23 the same thing as handing the microphone to the candidate.
24 It's not the same thing as giving voice to people in the
25 community.
63
1 The best reporter and the most experienced
2 editor's news judgment is not the same thing. They're
3 complementary. They're both important, but it's not the
4 same thing as direct access, and the multicasting
5 capabilities of digital television, the opportunity to
6 provide this access, are manifest, and it's appropriate
7 for the FCC to take some steps to make that happen.
8 MR. LLOYD: If I can just very quickly respond
9 to that, a lot of what -- we're doing some research to see
10 if we can understand better the impact of the
11 Telecommunications Act, particularly on diversity of
12 ownership.
13 We have not, I don't think, well-enough
14 established the link between ownership and expression of
15 views. I think there are a number of us who are fairly
16 certain that there is a link, but I don't know if we've
17 made that strong case yet.
18 A lot of what we have found is that the
19 Telecommunications Act seems to have a great impact on
20 ownership of radio operations. I don't know if it's had
21 the same sort of impact on television, quite yet.
22 That's certainly possible, but just to repeat
23 what Andy says, I think the lengthening of license terms,
24 particularly under the Telecommunications Act, and I think
25 the opportunity for multiple ownerships in the same market
64
1 I think suggest that there are increased obligations of
2 broadcasters in this particular time, not fewer.
3 MR. MINOW: My question is for Paul Taylor. As
4 you know, Paul, I support what you're doing. My question
5 is about your proposal. If you have this bank, would you
6 still permit the purchase and sale of time by candidates?
7 MR. TAYLOR: Yes. I would emphasize there are
8 lots of different ways to do this, but under what I
9 envision as the most practical and politically achievable
10 approach to this that doesn't get you in trouble with the
11 First Amendment, that you would still allow -- there is
12 still going to be privately raised money in the political
13 system.
14 It seems to me it's very difficult to ban
15 candidates who raise that money from wanting to use it any
16 way they wish, which would certainly continue to include
17 putting their own ads on television, and is likely to
18 include direct mail and all the other ways candidates
19 appeal for votes.
20 Now, that is a frustration to a lot of people.
21 A lot of people say, well, if you're only providing free
22 air time, but then on top of that you're still allowing
23 candidates to raise money and go on the air, what have you
24 accomplished?
25 It seems to me you have accomplished a number of
65
1 things in terms of promoting competition, in terms of
2 removing a barrier to entry to politicians, or would-be
3 politicians who are not particularly well-funded. There
4 are a lot of good things you do just by providing this
5 floor.
6 I think the effort to provide a ceiling in the
7 end is going to be unavailing. If you say you can't raise
8 private money, you can't go on television, we're going to
9 see more of what we've already begun to see. Those
10 messages will still get out. We will have outside groups
11 that will convey those messages. We will find loopholes.
12 The market will plug away and plug away.
13 And so my suggestion is, let's provide the
14 floor. It seems to me there are ways you can do it. If
15 you provide the floor and eliminate the current subsidy of
16 lowest unit rate, you're making it more expensive for them
17 to go on the air with the private dollars you raise.
18 It seems to me in this conception you might also
19 do away with reasonable access. Again, you've already
20 provided an enormous subsidy for discourse. Why, then,
21 should you provide an additional subsidy for private
22 dollars for this discourse? Why shouldn't they have to
23 line up with the Chevy dealer? It may be possible to
24 crowd out the private messages. The messages funded by
25 private dollars will make them less attractive.
66
1 I don't know exactly how you get that market
2 balance right, but it seems to me it's worth the effort.
3 It's probably the most promising way to go.
4 MR. CRUZ: A couple of questions, one for Mark
5 and one for Paul, and let me ask Mark's first, and then,
6 Paul, I will ask you second, but you answer first on this
7 one.
8 Mark, did I hear you perhaps suggest that the
9 commission come up with the set of recommendations in
10 reference to diversity of ownership, as has existed in the
11 past, where there was encouragement of minority ownership?
12 Do I hear you correctly saying that with multiplexing
13 possibilities perhaps that might be a recommendation in
14 terms of encouragement again of minority ownership of VHS
15 and UHF stations in this country?
16 And Paul, your question. Have you given any
17 thought to the suggestion by Congressman Tauzin that free
18 political air time be offered by public broadcasting,
19 taking away, if you will, the duty and obligation of the
20 regular commercial broadcasters to have to carry the
21 commercial air time on political ads, and what that would
22 mean, and that suggestion of letting public broadcasting
23 carry that responsibility in exchange for the commercial,
24 and creating some kind of a trust fund in terms of then
25 funding public broadcasting as a way of doing it?
67
1 MR. TAYLOR: It seems to me that is a promising
2 piece of a solution. It is a way one might go, either
3 through public broadcasting or perhaps in a new multiplex
4 world, where you have lots of new channels of
5 communication open, you can open up the airwaves of lots
6 of candidates, of lots of levels in the way that public
7 access does now, and it seems to me there's room for that,
8 and we ought to explore ways of doing that, whether by
9 creating a trust fund, or through other mechanisms.
10 But I go back to what I said in my remarks. You
11 don't want to lose the opportunity, the most important
12 opportunity that television has given us for 50 years, and
13 that it will continue to give us in whatever the digital
14 future is, to gather large aggregations of people around
15 vitally important democratic processes.
16 And that's where it seems to me the Tauzin
17 approach doesn't offer a solution, and that's frankly
18 where the biggest problem is. We are losing our citizens
19 from our democracy. The way we conduct that discourse now
20 on the big channels it seems to me drives them away. We
21 owe it to ourselves to think about ways to recapture them.
22 Secondly, if you wind up giving the
23 communication resources to the candidates, but it is off
24 on a public channel, it is not going to be what the
25 candidates want. The candidates are in the business of
68
1 appealing to the greatest number of citizens they can, and
2 so they will continue to search for ways to go back on the
3 channels that continue to aggregate the biggest audience.
4 That's where it seems to me you've got to target the most
5 important part of the fix, but this could be also a
6 portion of it.
7 MR. SCHWARTZMAN: Frank, can I speak to that,
8 because I have some disagreement with Paul on this.
9 First, it would require legislation to create
10 the trust fund that you're talking about, because, as I've
11 stressed, under current law every broadcaster is charged
12 with fulfilling part of that responsibility, so every
13 broadcaster in the community has a different take, and you
14 get the benefit of each of those editorial perspectives.
15 I would vehemently oppose any notion of feeding
16 into a fund in exchange for being relieved of that
17 obligation, because it would deprive the community of that
18 diversity.
19 I would analogize it to buying one's way out of
20 the draft and hiring somebody to go to war for you. that
21 is the highest calling of the broadcaster, and I would
22 vehemently oppose trying to save public broadcasting by
23 simply destroying the value that commercial broadcasting
24 brings to the public debate.
25 As I said, we have the best system in the world.
69
1 It is a thoroughbred. Why take it out of the race?
2 MR. LLOYD: Let me see if I can respond in two
3 ways. One is a little perspective. African Americans,
4 Asian Americans, Native Americans, Latinos own less than 3
5 percent, combined, of the stations that are licensed to
6 broadcast in this country. Diversity of ownership is a
7 very serious and important issue, and I believe needs to
8 be addressed very seriously by the Commission.
9 There have been some recent balloons raised that
10 perhaps tax certificates need to be reinstituted. And I
11 certainly prefer incentives rather than sticks for the
12 broadcast industry. I believe diversity of ownership is a
13 serious problem and issue in this question. I know
14 Chairman Kennard has been encouraging diversity of
15 ownership not just to broadcast operations, but cable and
16 emerging technologies, and is suggesting incubator
17 programs and other things, as well. I think those efforts
18 need to be supported.
19 I am really here to make a very small argument
20 that I, along with Andy, think that multiplexing is a
21 wonderful avenue for the broadcasters, perhaps
22 particularly in those non-prime time periods, where
23 diverse audiences might be more properly niched.
24 I am, though, concerned that, along with Paul,
25 that there be one place for all Americans to go to,
70
1 particularly in a local community, for programs that they
2 are interested in. And I would feel that we were doing a
3 disservice to communities if somehow we had channels that
4 were specifically segregated for African Americans and
5 Latino Americans only.
6 My argument, again, is that we need to think
7 very seriously about allowing all the diversity of local
8 communities and how people combine, to combine in their
9 local YWCA's or their senior centers, or all the different
10 places that they combine, you know, or their -- in all
11 their diversity, I think they should be allowed to combine
12 and to present their views to the majority of folks in
13 their community.
14 I hope that does not slip your question too
15 much.
16 PROFESSOR SUNSTEIN: Here is a proposed
17 principle. It is that any regulatory requirements imposed
18 in the name of the public interest ought, as an
19 aspiration, to leave all or most broadcasters at least as
20 well off as they are now. That would be great if we could
21 have that as an aspiration -- that any regulatory
22 restrictions would not make broadcasters worse off than
23 they are now. That may be impossible, but it is a nice
24 goal.
25 And, Paul, you suggested a couple of points that
71
1 bear on this, and I want to ask for some details. One is
2 this lowest unit rate idea, which you suggested be
3 abolished. And, offhand, it sounds like that is a pretty
4 intrusive requirement, which is very expensive for
5 broadcasters, and the relationship between that and the
6 public interest is ambiguous.
7 And the other point you suggested was, in the
8 nature of this at least as well off now idea, is money or
9 time as a possibility. And I know, with respect to the
10 children's educational requirements, some people have
11 said, at least informally, that they do not like its
12 rigidity. That they would rather pay money than have the
13 3 hours.
14 Now, children's TV may have some special
15 characteristics that make rigidity worthwhile, but it is
16 less clear for free candidates. So I am trying to think
17 how would the non-rigid flexible mechanism work.
18 One way would be the government would set a
19 dollar amount which broadcasters would have to pay. Which
20 sounds very crude. Because how would the government know?
21 Another possibility that would be modelled on
22 the environmental area is that each broadcaster would,
23 let's say presumptively, have to pay, have to provide 2
24 hours of air time a year. And then, other broadcasters
25 could -- and you could sell it. For 2 hours, you could
72
1 sell it, if you gave money, along with the 2 hours. It
2 would be like a hot potato for some, but it would -- is
3 this clear? -- it would work out in market-driven deals
4 that might make most people better off.
5 Like one network might say, look, I will take an
6 hour off your hands if you pay me enough. And then both
7 parties could be better off. That would be a more market
8 model, like the environmental area.
9 Now, my two questions for you are basically
10 simple. First, a question of law: Is the lowest unit
11 rate requirement statutory or a regulation? If it is a
12 regulation, then it sounds like the FCC ought to get rid
13 of it in return for something better tailored.
14 The second question is, can you say a little
15 more on the mechanics of this money instead of time?
16 Andrew Schwartzman raises a nice question about how this
17 worked at the local area.
18 MR. TAYLOR: The lowest unit rate is statutory.
19 I leave it to my legal betters to determine whether,
20 because it is statutory, whether you could remove it only
21 through regulation. And then, politically, let's be
22 frank. The political scientists can agree, the lowest
23 unit rate does not quite get it for you, in terms of
24 targeting your incentives, but members of Congress who
25 passed that law like it. So it is not going to be an easy
73
1 one to do away with for that reason.
2 As for your question of money or time and how do
3 you achieve that and what is the model, it seems to me
4 that the most important thing you want to achieve, in
5 terms of the flexibility of this time into the marketplace
6 is to acknowledge the fact that every campaign cycle there
7 is need for more time in different places and in ways it
8 is very difficult to predict.
9 Take a media market like Raleigh. You know, one
10 year it may have a very hot congressional race and a hot
11 gubernatorial race and a hot senatorial race, and the
12 money wants to pour in. The political market wants to get
13 a lot of air time there. The next year the issues are not
14 there, for whatever -- the combination of candidates has
15 not come forward -- and so there is much less demand for
16 political time.
17 The most important thing you want to do is build
18 a model that allows the political system to move the time
19 and the places where political competition need it the
20 most.
21 Now, let's back up to how you do that in an
22 equitable way to the broadcast industry. And it seems to
23 me it is this notion of asking an equal contribution from
24 all broadcasters. So even though some broadcasters might
25 sell 8 or 9 or 10 percent of their time in a political
74
1 season to races, whereas others might sell only 1 or 2,
2 everybody contributes equally according to gross revenues
3 or some other common criteria.
4 You then create money-denominated vouchers that
5 are sort of like in-store credits that the political
6 system can spend. If they want to spend it for 30 seconds
7 in New York, it is going to cost them 10 times more than
8 for 30 seconds in Raleigh. The political system has to
9 make all of those judgments.
10 And in the end, some stations will have had to
11 redeem more than 2 hours worth of these vouchers. Others
12 will have redeemed fewer than 2 hours. And you have an
13 accounting mechanism that evens it up and takes all
14 broadcasters back to the notion that they have all made an
15 equal contribution.
16 Now, I think that model creates the need for a
17 bank, a central bureaucracy, that I think has basically an
18 accounting function. In the end, it has to tote up who
19 spent where, who cashed in these vouchers in what
20 stations, and make the necessary adjustments. But at the
21 end of the cycle, all 1,600 television broadcasters have
22 come out even.
23 MR. SCHWARTZMAN: Professor Sunstein, if I may
24 briefly speak to this. First, it is statutory. And Paul
25 is quite right -- he is the political expert here -- it is
75
1 not reasonable to expect members of Congress to vote to
2 take away a discount they have voted themselves. However,
3 the time bank model that Paul and Norman Ornstein have
4 devised is elegant and I think quite workable and a very,
5 very important contribution and something that should be
6 looked at very closely -- this trading of the credits.
7 And I do think that there is a great deal that
8 can be done with it. And I certainly would be willing to
9 go up, together with the broadcasters, to join in seeking
10 repeal of the lowest unit rate. I just do not think it is
11 going to happen. But where I would draw the line is, in
12 your EPA model, again, the time bank works along -- it is
13 market based. But this is not broadcasters trading rights
14 to pollute, which is what the EPA sells with the air
15 bubble rights. This is trading a first amendment
16 obligation to inform.
17 And I would point out that there is yet another
18 first amendment right that comes into play here.
19 Candidates have rights. Federal candidates have a
20 statutory confirmation of this right in Section 312(a)(7),
21 which gives Federal candidates reasonable access.
22 And the FCC has interpreted it, in the CBS v.
23 DNC case -- CBS v. FCC case, excuse me -- the Supreme
24 Court upheld Section 312(a)(7) against a constitutional
25 challenge by stressing the candidate's right to be able to
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1 determine to whom the candidate wishes to speak, how the
2 candidate may engage in the highest form of discourse
3 under the Constitution of the United States, one citizen
4 asking another citizen for their vote, and to say, you
5 cannot have that channel because that channel chooses not
6 to carry political speech, I think undermines the essence
7 of the broadcasting system.
8 I do not want one or two stations to say, okay,
9 I will take it on. I want every broadcaster to share that
10 obligation. And the time bank system works equally well
11 with every broadcaster participating.
12 MR. MOONVES: Thank you.
13 Lois.
14 MS. WHITE: Good morning. My name is Lois Jean
15 White, and I am with the National PTA.
16 I certainly agree with Peggy that we will have
17 to insist upon more quality programs for children. But I
18 would like to go beyond that, and have each panelist
19 address my concern. Certainly, with digital television,
20 we will have more fee-based services. Is it reasonable
21 for us to insist upon some of the benefits from these
22 services going to community efforts, education, health, or
23 other children's projects? And how do you feel about
24 that?
25 MR. LLOYD: I would hope that, whatever this
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1 committee insists upon, that it is not secondary to
2 broadcast work. That the work that broadcasters do and
3 the public service they provide in the community should be
4 in the form of broadcasting.
5 I think when Andy makes the point that Wal-Mart
6 and other organizations and communities engage in a
7 variety of public service activity, that is very different
8 than the first amendment duties of broadcasters to protect
9 the interests of local communities, to make sure that
10 there is a diversity of views and controversial opinion
11 expressed on the airways.
12 Frankly, we do not have that now. I would hope
13 that if there is some fee-based, or subscription, service
14 established, that if there is money derived from that,
15 that there be some sort of funds set aside to make sure
16 that local voices can speak in local communities about
17 local concerns.
18 But, again, it sort of touches on the last
19 conversation. I am very skeptical of elegant economic
20 models imposed by the Nation. I would hope that
21 broadcasters can engage the folks in the local community,
22 and make some decision about how they are going to serve
23 that community. And I would imagine that it would be very
24 different from community to community. I cannot imagine
25 that conversation that folks in Albuquerque, New Mexico,
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1 would be the same as the conversation in Los Angeles or in
2 New York City.
3 There is a strength to that diversity. We also
4 must be aware that different things work in different
5 communities. The same thing does not always work in the
6 same communities.
7 So, again, I would be very skeptical of trying
8 to impose one solution on every community about what ought
9 to be done, except that the local communities need to be
10 consulted.
11 MR. MOONVES: Thank you.
12 Paul LaCamera.
13 MR. LACAMERA: Mr. Taylor, I just wanted to
14 follow up a bit on your model. And I realize it is but a
15 model.
16 Does its value and viability, though, depend
17 upon market size? And I am asking for a practical
18 perspective. I am talking about a 2-hour time bank. And,
19 again, I will take the extreme of the New York City
20 market, the tri-state area, in any 2-year period, among
21 those three States. There will be two Senate elections
22 probably. And I am not sure how many congressional
23 districts are covered, but it might be 15 or 20 within
24 their grade A and grade B contours.
25 Now, if we are to accept your premise that this
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1 concept is going to provide greater engagement in the
2 political process -- in other words, spur more competitors
3 and challengers and whatever -- there should be more races
4 and more heated races. However, what is accomplished by
5 distributing 2 hours of time to what might be 15, 20, 25
6 races, including perhaps some important local races as
7 well? And however is that going to affect the current
8 process?
9 A congressional candidate may wind up with 1
10 minute from this time bank on a Manhattan station. It
11 will have absolutely no affect, won't it, on the general
12 fundraising?
13 MR. TAYLOR: More likely, he will wind up with
14 what he now winds up with, which is zero minutes. It does
15 not make sense for a congressional candidate in the New
16 York City media market to go on television. He is
17 advertising to 95 or 98 percent of the recipients of that
18 advertisement who cannot vote for him. So the political
19 marketplace has already made that adjustment. And in most
20 urban districts, candidates choose not to go on
21 television. They use other means of getting their message
22 out, whether by direct mail or good, old-fashioned
23 doorbell ringing or whatever.
24 This system tries to accommodate to that
25 reality. It does not try to plug a system that says that
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1 candidate must have X minutes of time in that media
2 market. I just do not think that will work.
3 What this system does do is provide the
4 political marketplace, through the parties, the freedom
5 and flexibility to say, you know, we have a particularly
6 hot race in an urban district in New York, where we have a
7 very promising challenger. And we think, maybe, with a
8 little air time, in addition to other resources, we can
9 get that challenger over the hump.
10 That creates a more robust kind of
11 communication. But, again, you let the people who
12 understand the world of politics make those allocation
13 decisions.
14 MR. LACAMERA: But, conversely, you can also
15 have a very seriously challenged incumbent, and the
16 political party may make that same decision -- that the
17 resources need to be invested in the protection of this
18 incumbent.
19 MR. TAYLOR: Absolutely. And that is fine as
20 well.
21 MR. LACAMERA: Let me ask you to address one
22 other issue. And that is so-called viable or meaningful
23 third-party challengers, and where they fit into your
24 model.
25 MR. TAYLOR: They would. That is a tension that
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1 we have in this country for two centuries. How do you
2 draw the line? Where do you create the threshold? And
3 that would be a challenge with this model.
4 Let me just go back and make one other point
5 about the existing system of television and politics.
6 About one-quarter of all congressional races do not
7 advertise on television at all. It is one of the reasons
8 why the numbers, the aggregate numbers, of what percentage
9 of the expense of politics goes on television are lower
10 than a lot of people think. Most people, when they think
11 of political campaigns, they think of the high-profile
12 races, the heavily contested races, the ones that wind up
13 on television.
14 MR. LACAMERA: But that may be because there
15 were no serious challengers. And, again, coming back to
16 your premise, more challengers should emerge under this
17 system.
18 MR. TAYLOR: That is correct.
19 MR. MOONVES: Paul, let me follow up a little
20 bit with a question for you. Because, to agree with
21 Andrew, some broadcasters, are better than others. Some
22 broadcasters want to do the right thing. Some are less
23 inclined so.
24 You mentioned the people on the panel. The
25 people on this panel were chosen specifically because they
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1 were people who believed that it was important to do this.
2 MR. SCHWARTZMAN: If I may take this opportunity
3 along the way, I did not mean to slight Mr. LaCamera and
4 WCVB. I realized, when I went through my throwing out for
5 instances extemporaneously, and then part way through I
6 looked over there. And this is a station that has had a
7 local commitment, literally, from the day it went on the
8 air, in the circumstances it went on the air.
9 MR. MOONVES: Andy, may I compliment you as
10 being a very clever advocate, to compliment every
11 broadcaster on the panel.
12 (Laughter.)
13 MR. SCHWARTZMAN: I really do like Brooklyn
14 South.
15