Monday, March 2, 1998

University of Southern California
Annenberg School for Communication
3200 Watt Way
Los Angeles, California 90089-0281

Morning Session
Go to the transcript of the afternoon session

 4                                               (9:08 a.m.)
 5                            WELCOME
 6                     GEOFFREY COWAN, DEAN
 8                        DEAN COWAN:  Good morning.  I'm Geoffrey
 9    Cowan.  I'm the Dean of the Annenberg School for
10    Communication.  And on behalf of USC and the
11    Annenberg School, I want to welcome this extremely
12    distinguished group to your first meeting outside of
13    Washington.
14              For 25 years I've been teaching and
15    practicing law and writing about the communication
16    field.  And, in my view, the work of this group and
17    the issues that it's considering is the single most
18    important issue that the American government has had
19    to deal with with regard to telecommunications policy
20    in a quarter of a century.  So I wish you the best of
21    luck in your deliberations and I'm very, very pleased
22    to have you here.  I am looking forward to today's
23    events.
24              Les, thank you.
25              CO-CHAIR MOONVES:  Thank you, Jeff.

 1              As one of the few resident members of Los
 2    Angeles, I'd like to welcome the Commission to our
 3    fair city.  We are proud to host the first meeting
 4    outside.  And a special thank you to Jeff Cowan and
 5    Carolyn Naifeh and the rest of Dean Cowan's staff for
 6    their hospitality.
 7              Jeff has been after me to come here with
 8    this Commission since day one, and the timing
 9    couldn't have been better.  And all the arrangements
10    have been terrific.  And we thank you very much for
11    providing us this great platform.
12              There are four members who will be unable
13    to attend the meeting:  Peggy Charren, Barry Diller,
14    Newton Minow, and Richard Masur, who will be joining
15    us this afternoon.
16              Just as a matter of interest, the meeting
17    will be broadcast live over the Internet, thanks to
18    the Annenberg School.  In addition, the National
19    Association of Broadcasters will be filming this
20    meeting.
21              A couple other housekeeping things.  I'd
22    like to turn the meeting over for one short moment to
23    Harold Crump, who has been involved in what we think
24    is a fairly interesting study on digital television,
25    which he'd like to talk about and something that we

 1    would like to give to all the membership for your
 2    perusal.
 3              So, Harold.
 4              MR. CRUMP:  First of all, I want you to
 5    know I'm going to drop a few numbers on you.  Don't
 6    worry about not being able to keep up with them at
 7    the moment.  We will have in the mail to you later
 8    this week the complete rundown on what I have here.
 9              As you know, I work for Hubbard
10    Broadcasting, Incorporated, which is headquartered in
11    Minneapolis, St. Paul.  We have 10 television
12    stations to radio stations.  Each year we have a
13    management meeting in the month of January.  And as
14    would be of great interest to us this year, we
15    commissioned some research by the Frank Magid
16    organization, a nationally recognized group, to look
17    at consumer attitudes and opinions toward digital
18    television.
19              And, as I say, there are a lot of numbers,
20    a lot of graphs in here which you'll have the
21    opportunity to look over, and then at future meetings
22    we can discuss at greater length.  But the conclusion
23    that they come to in all of this is that it's going
24    to be a pretty tough sale when it comes to the public
25    buying new sets to have digital, particularly from an

 1    HDTV standpoint.
 2              Jim, when I look at you down there, we all
 3    know too that all of these people who were researched
 4    across the country had not seen it.  So you have to
 5    take that into consideration.
 6              In addition to that, we also developed some
 7    information out of the Consumer Electronics Show
 8    which took place, as you know, in Las Vegas in early
 9    January.  We will share that information with you as
10    well.  What that one boils down to is that one of the
11    larger manufacturers, Thompson, made a presentation
12    there.  And they gave projections as to what they
13    expect the sales of the total industry to be in
14    digital sets for the first four years, starting in
15    1999.  And the total projection for those four years,
16    total, is 3,575,000 sets.
17              To give that some perspective, in a normal
18    year, 1998, '97, 96, when we think about the number
19    of total analog sets that are regularly sold, it
20    normally runs about 24 million per year.  So that, I
21    think, you will find of interest.
22              And then we are going to add into that
23    another sheet that comes, again, out of the Consumer
24    Electronics Show that simply has more basic
25    information in it about HDTV, what's going on with

 1    the digital set manufacturers.  And, as I say, this
 2    will all be shared with you so that you will have the
 3    detail of it before the next meeting.
 4              Thank you.
 5              CO-CHAIR MOONVES:  Once again, a caution. 
 6    On paper, at least, we have not supposed to have
 7    begun our deliberations, so this is one piece of
 8    research that I think is of interest to all of us. 
 9    But, once again, it is one piece of research.  Norm
10    will be talking about something later on.  I have the
11    same cautionary measure on that.
12              This morning we have two extraordinary
13    panels that I think will be of great help to us.  And
14    then this afternoon we will begin our formal
15    deliberation or our informal deliberation, because
16    time is starting to run out.  And, on that very
17    subject, let me turn it over to my Co-Chairman, Dr.
18    Ornstein, to talk about time and other issues.
19              CO-CHAIR ORNSTEIN:  It appears that we will
20    be getting our extension from the White House.  I'm
21    not exactly sure of the dates, probably October 1. 
22    Although, what I heard was they hope we would
23    expedite our process, and that would be the outside
24    date of which we could issue some recommendations.
25              But, as we'll discuss some this afternoon,

 1    the simple process of putting a report together and
 2    writing a report and circulating it among the rest of
 3    us, means that basically if we don't get started
 4    probably by next month with getting the process
 5    underway, we would have some difficulty getting it
 6    all done by October.  So we're going to have to pick
 7    up our efforts in terms of moving towards whatever
 8    consensus or recommendations we can make.
 9              Let me remind you about the next two
10    meeting dates.  We checked around with everybody's
11    schedule to see if it was possible to change the next
12    date, and it turned out it simply was not possible. 
13    We could not find another date where there was even
14    close to a consensus or a majority of people who
15    could make it, so the next meeting will be April 14th
16    in Washington.
17              And the following meeting will be in
18    Minneapolis on June the 8th.  Harold Crump has some
19    information about that.  We might have a brief
20    discussion of it later on, although we've got time
21    for that, but very likely it will be at the Marquette
22    Hotel in beautiful downtown Minneapolis.
23              MR. CRUMP:  True, true.
24              CO-CHAIR ORNSTEIN:  And, I think, actually,
25    Les, we can probably wait for the discussion of what

 1    we're going to be this afternoon until that time, so
 2    we can move on and get our panel underway.
 3              CO-CHAIR MOONVES:  Good.  Absolutely.
 4              Let me now turn it over to our moderator of
 5    our panel on independent programming and access in
 6    the digital age, Jim Yee, Executive Director,
 7    Independent Television Services.
 8              Jim.
 9              MR. YEE:  Thank you, Les, and thank you,
10    Norman.
11              Before I begin, I need to also be time
12    conscious because a number of our guest panelists
13    have other commitments here in the city as well as
14    elsewhere in the state, so what I will be doing is to
15    be introducing the four panelists.  And then after
16    the presentation there will be hopefully a very --
17    I'm quite sure it will be -- stimulating Q&A with
18    members of the Commission with their remarks.  So I
19    will try to keep -- I asked the guest panelists to
20    speak up to maybe five to seven minutes.  And if I
21    have to, I will wave my hand just to help democracy
22    move along.
23              This morning's presentation is titled very
24    broadly, "Independent Program and Access in the
25    Digital Age."  And as part of our charge, obviously

 1    of this Commission, is to help shape public policy. 
 2    And one of the concerns and one of the ongoing
 3    concerns of any commission is to hear from as diverse
 4    points of view and members and people who have been
 5    working in this broad arena of affecting programming
 6    commercially and noncommercially.
 7              And I'm very happy to echo the comments of
 8    our host, that we are outside Washington to be in the
 9    thick of it, so to speak, at least to get I think
10    what can be a broad horizon of perspectives from this
11    morning's guest panel about programming, independent
12    programming; how those issues, such as the public,
13    are not normally, shall we say, driven by commercial
14    motivation but one by needs and creative needs as
15    well as community needs, get it to be addressed; and
16    how can that be, shall we say, replicated, if not
17    more so, in this new age that's coming before us.
18              So, again, I'm glad we're going to have
19    this opportunity.  And, also, may I remind our guest
20    panelists that your comments and your supplemental
21    comments will also be on the record, if time does not
22    permit otherwise to engage you more extensively.
23              The order of the presentations will be as
24    such:  Kelley Carpenter, Jerry Isenberg, Marian Rees
25    and Herbert Chao Gunther.

 1              Allow me to quickly do their bios.  And if
 2    I am short, I apologize.  But, again, I want to allow
 3    you as much time to engage us and to share your
 4    thoughts as freely and as extensively as possible.
 5              Kelley Carpenter is a communications
 6    specialist whose expertise encompasses both
 7    television and magazine.  She is now serving on the
 8    Board of Directors of the Southern California Indian
 9    Center, a nonprofit center which serves one of the
10    nation's largest Indian populations.  She began her
11    television career working in "Jeopardy!" both in
12    terms of coordinator and a representative involving
13    talent and representing the program in all facets of
14    its production.
15              She also has worked in and directed public
16    relations for Sony Picture Television in their first
17    cable venture for a number of years.  And she is also
18    a noted artist, as well, where her work is seen
19    throughout the country.
20              Obviously she will be speaking, obviously
21    in her representation on the Board of the Southern
22    California Indian Center and their issues and
23    comments about the representation issues around
24    Native American programming, I believe.
25              So let me then go on to Jerry Isenberg. 

 1    I'm going to do all your bios all at once, and if I
 2    speak fast it's only because of time.
 3              Jerry Isenberg is also a noted veteran and
 4    an accomplished producer and programmer working in
 5    this business for a number of years.  He comes armed,
 6    obviously, with an academic background, but he's
 7    obviously taken that before he reached the Annenberg
 8    School to be working in all facets of production. 
 9    He's formed a number of companies including the Jozak
10    Company back in the '70s, and then in the '80s he
11    formed I&C Productions, all of which have generated a
12    number of impressive movies and films for television.
13              He's one of the most active producers.  He
14    comes well regarded in this town, obviously.  And I'm
15    quite sure his comments will be indeed provocative,
16    if not, to say the least.
17              Most recently, and I think at his present
18    point in the reincarnation of a life in this business
19    of reincarnation, he's now, I believe, a full-time
20    member of the faculty at USC here in Cinema-
21    Television as a full professor and as well as their
22    Executive Director of Electronic Media Programming.
23    And I think his vantage point of both working in the
24    field and having the opportunity to think about where
25    we're going, again, would be most welcome.

 1              Marian Rees, another noted veteran in this
 2    business of entertainment and programming.  She has
 3    worked a number of years in making what I think was
 4    some of the most interesting and some of the most
 5    thoughtful programming for television.  She's
 6    produced well over -- forgive me if the numbers are
 7    off -- but, many, about a couple of dozen or three
 8    dozen of well-noted programs.  And she has been an
 9    Emmy award winner.  They include "Love Is Never
10    Silent, "Decoration Day, "A Son's Promise."  And
11    she's most recently involved in a collaboration with
12    some public television money in developing a new set
13    of drama initiatives, which would be most sorely and
14    most welcome for public television.
15              She also has a recent strong record in
16    promoting and advocating to enrich the quality and
17    ethical content of programming in television.  She is
18    the Co-Chair of the National Council for Film and
19    Television.  She's held the post of president of
20    Women in Film for two consecutive terms.  She's been
21    the vice president of the Academy of Television Arts
22    and Science.  She's served on various notably boards
23    such as the American Film Institute, Women in Film,
24    the Humanitas Children's Award, and the Center for
25    Population Options and the Producers' Guild of

 1    America.  And she's currently serving on the Steering
 2    Committee for the Caucus of Producers, Writers and
 3    Directors.
 4              Lastly, from Northern California, on the
 5    wet side of our state, is Mr. Herb Chao Gunther. 
 6    He's the Executive Director and President of the
 7    Public Media Center.  He has extensive experience in
 8    the design, implementation, evaluation of marketing
 9    as it affects the nonprofit sector in shaping public
10    policy, media campaigns and advocacy that will, in
11    some ways, in one way or another, shape, I think,
12    domestic and international policy around the whole
13    issue of civic empowerment.
14              Many of his clients include:  The
15    California Wellness Foundation, Planned Parenthood,
16    Self-help for the Elderly, Catholic Charities, the
17    Department of Labor.  He's aware there has been an
18    issue, I would say, that PMC's been there to try to
19    shape, to involve and -- most importantly -- to
20    inform the public to make what I think are very
21    important decisions in our lives.  I think his
22    comments today would certainly add to that list of
23    things we need to be concerned about in this era of
24    the new digital television.
25              So, again, my apologizes if my descriptions

 1    of you are indeed short but, for the record, all of
 2    this will be entered for our deliberation.
 3              Let's begin with you, Kelley.
 6              MS. CARPENTER:  Good morning.  Thank you
 7    for the kind reading of that bio.  But I would like
 8    to say that rather than working in "Jeopardy!" it was
 9    on the show "Jeopardy!", although sometimes it felt
10    like the other.
11              And thank you again for the opportunity to
12    speak to you this morning and address community
13    concerns regarding major broadcast networks.  In the
14    interest of time, I have put my comments in a very
15    succinct format and will be reading them to you, and
16    welcome any questions if there should be time for
17    them.  So let me begin.
18              While working on the show "Jeopardy!", I
19    witnessed firsthand the immense influence that
20    American television broadcasters have on national and
21    international viewers.  Technological developments
22    will only serve to expand the strongest arm of the
23    world's media.  They will allow broadcast networks to
24    inspire, educate and galvanize the viewing
25    population, as well as create programming that serves

 1    and unites individual communities.
 2              I have the privilege of working with
 3    community development professionals from a variety of
 4    nonprofit and grass-roots organizations, all engaged
 5    in projects designed to be of benefit.  A common
 6    concern I hear among these professionals is their
 7    lack of access to major broadcast networks.  Unless a
 8    story arose that was suitable for immediate news
 9    coverage, these professionals found quite regularly
10    that their phone calls weren't returned when they
11    tried to submit programming ideas.  Although several
12    of these people had worked successfully with
13    community service departments at some of the
14    networks, for the most part they couldn't obtain the
15    coverage on stories that would have appealed to large
16    segments of the population.
17              When faced with closed doors at major
18    networks, these community spokespersons continue down
19    the television food chain until they reach local
20    cable access channels that will consider their
21    suggestions.  While some coverage is certainly better
22    than no coverage, these spokespersons are nonetheless
23    frustrated in their attempts to reach large numbers
24    of viewers in their communities.
25              To address this challenge of community

 1    access to programming, I'd like to suggest the
 2    formation of community development panels within
 3    networks, which would use and establish not-for-
 4    profit criteria to accept, evaluate and produce story
 5    ideas submitted by local community organizations. 
 6    The panels would solicit submissions on a regular
 7    basis to offer these groups viable outlets for their
 8    ideas, as well as offer viewers the types of human
 9    interest stories that promote pride in their
10    communities.
11              Once organizations and service groups learn
12    that broadcasters are initiating this type of
13    programming, they could focus on submitting ideas
14    that could educate and inspire children, motivate
15    elders, eliminate cultural barriers and provide
16    viewers with information that they might not seek out
17    in any other media.
18              The stories could take the form of weekly
19    documentaries compiled into an hour of programming. 
20    The key to their success, from a community
21    perspective, ladies and gentlemen, would be the time
22    slots in which they are aired.  Airing community
23    stories at 2:00 or 3:00 a.m. doesn't really serve
24    these vital organization because the viewers who can
25    be inspired by or act on the information presented

 1    are either working the night shift or they're
 2    sleeping in preparation for work or school.
 3              So perhaps broadcasters who air two hours
 4    of daily local news broadcast could limit this news
 5    coverage just one day a week, to begin, and air one
 6    hour of well produced, compelling community
 7    programming and one hour of local news.  Advertisers
 8    could support the production costs by sponsoring
 9    segments within the community hour.  If aired during
10    this time, during weekdays, the programming could
11    reach the viewers that would most benefit by it,
12    including children and teenagers.
13              Local news departments at the major
14    networks are to be applauded for their trend toward
15    inclusion of upbeat segments at the end of their
16    broadcast.  And I might say that L.A. local networks
17    are very strong in this regard.  When expanded into
18    documentaries, these segments could have an even
19    greater positive effect, providing a counterpoint to
20    the negative news stories that sometimes dishearten,
21    depress and distress viewers, especially in the case
22    of the community's youth and elderly.
23              The second issue I would like to request
24    that broadcasters address with a community
25    perspective is the issue of employment.

 1              Broadcast networks bring the world into
 2    viewers' homes every day.  It follows that these
 3    broadcasters are particularly poised to demonstrate
 4    that the world can work together under one roof to
 5    create successful programming.
 6              At a recent awards dinner sponsored by
 7    First Americans in the Arts, the Board of Trustees
 8    presented Beth Sullivan, creator of "Dr. Quinn,
 9    Medicine Woman" with an honorary award for her show's
10    accurate portray of American Indian life.  In her
11    gracious acceptance speech, she commented that
12    although her staff practiced due diligence with
13    regards to historical research, she looked forward to
14    the day that American Indians could tell their own
15    stories through the television media as writers and
16    producers.
17              Taken in a larger context, her comments can
18    be applied to talented members of the community from
19    all backgrounds.  In preparation for my testimony
20    this morning, I spoke to American Indian, Latino,
21    African-American and Asian-American students and
22    community members who still believe that there's a
23    glass ceiling where they're concerned with regards to
24    landing high-paying creative, production and
25    executive jobs at major broadcast networks.  They are

 1    encouraged by the cultural variety of on-air talent
 2    which serves their particular demographics, but
 3    wonder if those hiring choices extend to all
 4    departments.
 5              These students still believe -- and this is
 6    their opinion -- that internships at broadcast
 7    networks may lead to entry-level or technical
 8    positions, but question if they'll open doors in a
 9    hiring system that they consider to be based on "who
10    you know."
11              So in conclusion I'd like to add that jobs
12    at broadcast networks are highly coveted, no matter
13    who you are or what your background may be.  The
14    advent of new technologies will create an even
15    greater number of jobs to fill as well as a greater
16    potential for diverse programming that will require
17    multicultural voices and talents.
18              If broadcast networks are incorporating
19    hiring policies that draw from a broad, multicultural
20    talent pool, communities would like to know about it. 
21    This is yet another area in which broadcasters can
22    exhibit enlightened leadership in an increasingly
23    culturally diverse nation.
24              Thank you, Kelley.
25              MR. YEE:  Jerry.

 3              MR. ISENBERG:   Mr. Co-Chairmen,
 4    distinguished members of the Commission, it's my
 5    pleasure to appear before you today to discuss the
 6    television creative community's concerns regarding
 7    access and diversity of voices on free television as
 8    we move into the digital age.
 9              While I'm currently a Professor at the USC
10    School of Cinema-Television, it is as Chairman of the
11    Caucus of Producers, Writers and Directors that I
12    appear before you.  The Caucus is an organization of
13    nearly 200 professionals in the television industry
14    elected to membership because of their creative
15    achievements.  The primary mission of the Caucus is
16    to protect the creative rights of its members and to
17    work for a creative and financial environment that
18    supports our doing our best work.
19              It is my sad duty to report that the
20    environment for independent creative people in free
21    television has never been worse.  Without
22    exaggeration, we are in the final stages of the
23    extermination of the independent creator in
24    television.  In what has amounted to a business
25    version of "ethnic cleansing," the proud tradition of

 1    creators working independently to produce
 2    television's finest programming is being
 3    systematically destroyed.
 4              Twenty years ago, three networks controlled
 5    95 percent of the prime-time audience.  But the
 6    product was, for the most part, produced by seven
 7    nonaffiliated major studios; four mid-sized
 8    independently-owned companies:  Lorimar, Spelling,
 9    MTM and Tandem; and a host of even smaller
10    entrepreneurial or talent-owned companies.
11              From "The Waltons" to "Family," from "All
12    in the Family" to the "Mary Tyler Moore Show"; from
13    movies such as "The Autobiography of Miss Jane
14    Pittman" to "The Missiles of October," these and
15    other independently-created and produced
16    entertainment were the hallmark of our medium.
17              Today we are blessed with an enormous
18    diversity of broadcast and cable services, yet we are
19    suffering from a systematic concentration of
20    production distribution activities into the hands of
21    those same people who are the exhibitors.  At this
22    moment, approximately 90 percent of the prime-time
23    programming aired by the six national networks is
24    owned by those same six companies.  That's
25    ABC/Disney, Fox, NBC/GE, CBS, Warner Brothers,

 1    Viacom/Paramount or Sony or Universal -- Barry
 2    Diller's company.  They're the same.
 3              These major corporations own and control
 4    virtually every major cable service that produces
 5    original series or movies.  They produce for
 6    themselves.  They produce for each other.  They
 7    compete between themselves, yet act to exclude
 8    everyone else.  They dictate the conditions of access
 9    for outsiders.  They are a veritable American cartel.
10              So what?  You might ask.  What does the
11    demise of independent voices have to do with the
12    quality of television shows?  Who really loses from
13    lack of diversity?
14              Let me tell you three short stories to
15    answer those questions.  Two took place years ago and
16    could not happen today.  The other is taking place
17    today and could not have happened 10 years ago.
18              In 1987 my company, Phoenix Entertainment,
19    developed a four-hour miniseries for ABC to star
20    Oprah Winfrey, "The Women of Brewster Place."  When
21    it came time to decide whether to order the project,
22    ABC executives were deeply concerned that a
23    miniseries about seven poor African-American women
24    could not attract a sufficient audience.  They
25    ordered the project as a three-hour one-night movie,

 1    despite the calamitous effect the cuts would have on
 2    the project.
 3              My company discovered a way to afford to
 4    shoot the fourth hour using our own money, based on
 5    foreign values we believed existed.  ABC was
 6    incredulous:  How could we do this?  More to the
 7    point, they were very unhappy with us because, of
 8    course, ABC then had to reconsider based on the
 9    opportunity to view the longer film.
10              After viewing the final film, ABC chose to
11    air the complete version to terrific reviews and
12    ratings that won the week for them and nearly won
13    them the season.  We believed in our film.  We had
14    the entrepreneurial abilities.  We were willing to
15    risk our money.  And the viewers won.
16              Ten years earlier, my company was the
17    producer of a two-hour movie for NBC on the life of
18    James Dean, written by Bill Bast, that focused on
19    Bill's relationship with Dean.  At the last moment,
20    after the picture was ordered, someone at NBC had
21    second thoughts about some scenes which, while
22    acceptable to standards and practices, might not fit
23    the audience's "vision" of Dean.  They ordered us to
24    make wholesale changes that would have emasculated
25    the movie and the truth of Bill Bast's life.  We

 1    refused.  NBC threatened cancellation of the order. 
 2    We held firm and threatened legal action.  Facing no
 3    choice, they relented.  And at the final screening
 4    those same executives admitted they were wrong.
 5              The picture stands today as maybe the
 6    finest biography of one of America's true screen
 7    icons.  Without our ownership and independence, the
 8    project would have been trashed.  Again, the viewers
 9    won.
10              Finally, today's story.  NBC has recently
11    informed certain agents that they are preparing to
12    produce a series of movies for television which have
13    certain economic givens.  All the main creative
14    talent will be offered Guild minimums or drastically
15    reduced fees and all the films will be produced and
16    owned by NBC itself.  But last September, claiming
17    low ratings, NBC canceled the night of movies, most
18    of them produced by non-NBC entities using top-level
19    talent.  Now NBC believes that lower-level talent
20    working for less can produce those ratings.  Why? 
21    NBC owns and controls all aspects of those programs. 
22    Today the audience loses.
23              There are hundreds if not thousands of
24    similar stories.  I'm sure the Co-Chair can
25    personally attest to how Lorimar saved the "The

 1    Waltons" from cancellation in its first year by
 2    appealing directly to the public when the network had
 3    lost faith.
 4              So I hope it is becoming clear.  Who
 5    suffers from the lack of diversity and concentration
 6    of production in the hands of the
 7    production/distribution cartel?  It is the American
 8    viewing public.
 9              Finally the question arises:  So what can
10    be done about this condition?  And let me preface
11    this by noting that in the matter of independent
12    access, our interests and those of the networks,
13    including the network of the Co-Chair, Les Moonves,
14    seem to be in direct conflict.
15              In part, the demise of the independent
16    comedy series supplier can be traced to their
17    inability to compete with the vast wealth and powers
18    of the major companies in attracting the writing
19    and/or acting talent that is in favor with the
20    networks.
21              However, additionally and importantly,
22    independents lack the additional abilities of
23    controlling blockbuster film packages or current
24    on-air series, which act as an inducement to network
25    programmers to "give considerations" at order time,

 1    scheduling or renewal time.
 2              The historic path for independents gaining
 3    access in the dramatic series business is through the
 4    television movie segment of programming, the
 5    "backdoor" entry into the series business.  "The
 6    Women of Brewster Place" actually received an order
 7    for episodes based on that movie's success.  But the
 8    even more powerful story is how the Co-Chair's own
 9    ex-company produced independently a movie called "The
10    Homecoming," which became "The Waltons" and which
11    launched Lorimar as a competitive series supplier.
12              The demise of the independent movie maker
13    is not based on large-scale economics.  Historically,
14    the independents have always been more efficient
15    producers, more flexible and entrepreneurial business
16    people.  The demise is based simply in the
17    broadcasters' desires to own the product and their
18    abilities to enforce it.
19              The solution?  Short of a negotiated
20    settlement or the action of courts in an unfair
21    competition action, the only solution is to
22    re-mandate access through some form of government
23    intervention.  Certainly requiring networks to
24    reserve a preponderance of television movies for
25    nonbroadcast or cable owners is practical and without

 1    major economic consequences to the health of the
 2    majors.  Additionally, some smaller allowances for
 3    series producers must be enacted to help break the
 4    stranglehold of the majors.
 5              Is this an optimal or even an attractive
 6    solution?  Not for all of us who believe in free
 7    competition.  Yet it is in the public interest to
 8    have diversity of voices and independent access.  And
 9    the marketplace has clearly failed to protect both
10    public interests.
11              What we ask of you as you consider the
12    responsibilities of broadcasters, who have been
13    granted additional bandwidth for digital
14    transmission, is to demand diversity of production
15    voices, demand access for creators to do their work
16    in an environment that supports creativity.
17              Thank you.
18              MR. YEE:  Thank you.
19              Marian.
22              MS. REES:   Co-Chairman Mr. Moonves and Dr.
23    Ornstein and the members present of the Advisory
24    Committee on Public Obligations of Digital Television
25    Broadcasters -- mercifully known as the Gore

 1    Commission -- my fellow panelists, colleagues and
 2    guests, good morning.
 3              It is a privilege and a responsibility to
 4    share with you in the awesome task you have to
 5    soberly consider the enormity of the exploding
 6    horizon of digital TV and its perceived impact on the
 7    industry we live in and work in together.
 8              For us to contribute by way of informing,
 9    enlightening and/or guiding your deliberations toward
10    formulating your final report in October 1998, it is
11    a daunting challenge.
12              The only way for me to gain any confidence
13    in why I'm here and/or how I can meaningfully
14    contribute, I must contain my remarks to that which I
15    know only by virtue of my lifelong experience in the
16    television industry.
17              To begin my remarks, it seemed first to
18    talk about the producer, more specifically, the
19    independent producer; even more accurately, as I am
20    defined, an entrepreneurial independent producer. 
21    There is a continual speculation about how to define
22    or recognize a producer beyond the title, as in the
23    recent movie "Wag the Dog."  The most pejorative
24    image of a producer was brilliantly portrayed by
25    Dustin Hoffman.

 1              What and who are the independent producers? 
 2    We like to think the producer is integral to an
 3    industry whose core product is crafted out of ideas,
 4    ideas that in and of themselves lie dormant until an
 5    impassioned producer breathes life into it, protects
 6    and gathers about him or her all the resources to
 7    realize and deliver it for broadcast.  We are a
 8    fiercely independent, highly competitive and
 9    intensely passionate group.
10              We come from a wide range of diversity, of
11    backgrounds and geographical locations.  How did a
12    youngster growing up in a small Iowa town, who first
13    wanted to be a missionary; then shifted her goal to
14    working at the United Nations, a goal she pursued all
15    the way to New York after college at Iowa University,
16    find herself across the continent in a temporary job
17    as a receptionist at NBC to earn her bus fare home,
18    and these years later and thirty-some films produced,
19    find herself sitting before this august body?  It's
20    been a wondrous journey.
21              In many ways, television and I grew up
22    together.  From receptionist to a producer is a
23    tribute to television itself that one person's vision
24    can be supported and found to be viable in an
25    intensely profit-driven industry.  Independent

 1    producers like Grant Tinker, Norman Lear, Marsy
 2    Carsey, Tom Werner, Steve Bochko, Bonny Dore, Jerrys
 3    Isenberg and Abrams, Suzanne DePasse, Dorothea
 4    Petrie, my partner Anne Hopkins -- all are legend. 
 5    The roster is growing with the influx of a generation
 6    of producers who take the opportunities we have
 7    pioneered for granted.  And they should.
 8              The role of the independent producer is
 9    unique.  Those of us who have assumed the financial
10    risk of our programming, unattached to a studio or a
11    network as employees, are not as maverick as it may
12    seem.  Rather, that independence gave us the ability
13    to move about freely in the marketplace, to find the
14    right home for our idea that could, would assure its
15    integrity.
16              For me, who chose to mortgage her home, her
17    car and insurance to start her own company, to strive
18    for excellence was possible through the balanced
19    environment regulated by the financial interest rules
20    and regulations.  An entrepreneurial woman producer
21    was unthinkable before the 1970s, when the Equal
22    Opportunities Act was passed into law.  The door of
23    opportunity for us women was opened.  A decade later,
24    my risk was minimized by a direct access to a
25    regulated marketplace.

 1              Let me describe an experience which I hope
 2    will illustrate the necessity for freedom of access. 
 3    "Love Is Never Silent" is now legend as the film that
 4    would never get made at the network which broadcast
 5    many of my movies through the years.
 6              A story of a family:  A deaf couple with a
 7    hearing daughter.  It was inherently a difficult
 8    sale.  But my commitment to cast actors who were deaf
 9    in principal, in the starring roles, was
10    insurmountable.  I became inflexibly determined to
11    put a public face to the diversity issue and to
12    defrock the veiled ignorance, the myth that "to be
13    deaf was to be dumb."
14              For prime-time television it was considered
15    a taboo -- fearing that the audience would not watch
16    and advertisers would shun any such film.  In this
17    case Hallmark joined in unflappable support of the
18    project, accepting my stance on casting.  Despite the
19    significant support from Hallmark, the network held
20    firm in their resistance, stubbornly refusing to
21    approve Phyllis Frelick and equally talented Ed
22    Waterstreet, both gifted deaf actors, to be cast in
23    the leads.  The edict came back:  Unless we cast
24    Joanne Woodward and Paul Newman in the roles, the
25    movie would never get made.

 1              Now a side comment, which I said to the
 2    executive, consider that I could call Joanne and Mr.
 3    Newman and invite them to appear in the movie, did
 4    the network realize that in a two-hour movie neither
 5    of these gifted actors would speak one word?  There
 6    was a long pause on the phone.
 7              Well, we held firm.  And with Hallmark's
 8    blessing, I took the film to another network, where
 9    it aired to high rating, critically acclaimed and
10    winning the Emmy for the Best Movie of the Year.
11              It is important to note that had I been an
12    employee of the network this movie simply would have
13    never been made.  As an independent owning the film,
14    I was free to move the film and have access to
15    another market.
16              Throughout my career I have consistently
17    favored and benefitted from an entertainment
18    marketplace that assured the creative process as much
19    flexibility and access as possible.  I fear the
20    concentration of ownership we are now experiencing,
21    which has already diminished the fragile nature of
22    the independent producing community.  I fear that
23    concentration will be passed on into the digital
24    future, where the broadcasters will have as many as
25    six channels instead of the current one.

 1              I humbly suggest to this Commission that,
 2    as you develop your report on the public policy in
 3    the expanded world of digital TV, you will address
 4    the value and needs of the true independent
 5    production community.  I believe that it is important
 6    from a public policy standpoint to establish some
 7    content-neutral regulatory mechanism to allow that
 8    community to gain access to the digital television
 9    airwaves during prime time.
10              The challenges to the digital world is to
11    cherish, nurture and provide access to those
12    producers, especially those that are burgeoning all
13    over the country in our colleges and universities,
14    already absorbed and comfortable in the tumultuous
15    world of communications technology.  Those aspiring
16    producers will be the ones to flourish in the digital
17    future only if -- and I am here on suggest two things
18    -- one, secure the opportunity to provide more
19    programming that will reach different and diverse
20    viewers; and, two, assure the creative community that
21    you want substantial ideas that help people
22    understand what's happening in their lives, that
23    those ideas have access.
24              These public policy deliberations on the
25    obligations of digital broadcasting, to quote Vice

 1    President Gore, may be the last chance to assure that
 2    the public interest be served.
 3              Hopefully wise men and women like
 4    yourselves who help shape public policy will
 5    formulate First Amendment-sensitive government
 6    policies that will balance the explosion of
 7    opportunities for the broadcasters by a significant
 8    commitment to the public interest.  I do believe that
 9    such a commitment would ensure the independent
10    spectrum the vital prime-time access to the digital
11    spectrum.
12              In Vice President Gore's closing remarks to
13    this Commission at its inaugural meeting he stated, I
14    quote, "Beyond free enterprise, we must also
15    acknowledge that broadcasting is not a right, but a
16    privilege, one that confers great responsibilities,"
17    close quote.
18              I can assure you that a vigorous
19    independent production community would stand ready to
20    share those great responsibilities if given the
21    opportunity, if provided the access.
22              Thank you.
23              MR. YEE:  Thank you, Marian.
24              Mr. Gunther.
25              MR. GUNTHER:   I think when Jim first

 1    invited me to come to address the Gore Commission, I
 2    thought it had something to do with violence on
 3    television.  Unhappily, I found out it was simply
 4    named after the Vice President.
 5              I don't come here representing the
 6    independent production community.  I think I'm here
 7    for several reasons.  Gigi, from Media Access
 8    Project, will remember the Public Media Center.  It's
 9    the organization that has its name on the landmark
10    case that established the Fairness Doctrine.  It was
11    a court decision, Public Media Center versus KATY,
12    that first established the practical definition of
13    the Fairness Doctrine as applied to providing balance
14    on television spots of a political nature.
15              You're in California.  You probably are not
16    aware that there is something going on here that is
17    analogous to what you have been asked to address as a
18    Commission, which is this transition in technology. 
19    We have in California underway, unbeknownst to most
20    of the citizenry, a comparable transition in
21    technology in the deregulation of electricity, a
22    massive shift in the paradigm around which
23    electricity is produced and distributed.  It's
24    happening first in California and slowly it will
25    trickle across the rest of the country.  And it is a

 1    massive shift in that paradigm.  It is not unlike
 2    what you all are looking at in terms of the
 3    introduction of digital technology to television,
 4    broadcast television.
 5              It would be worth looking at the experience
 6    in California very briefly.  A hundred million
 7    dollars has been spent by the utilities trying to get
 8    people excited about the transition to a deregulated
 9    marketplace -- a hundred million dollars -- which has
10    resulted in 29,000 people in California out of a
11    potential 11 million ratebase expressing an interest
12    in changing their electric providers.
13              There has been a rather dramatic reaction
14    from the public as they've learned the cost of
15    deregulation.  Forty-five cents of every dollar they
16    pay their utilities for the next five years is being
17    diverted to pay off the three incumbent monopoly
18    utilities for their stranded nuclear assets.  People
19    weren't aware that this was happening.  When they saw
20    it on their bills beginning in January, the folks in
21    Sacramento began to hear about it.
22              You need to be aware of that process
23    because there is a comparable surprise the public is
24    going to express when they find that there has been
25    this tremendous transfer of public assets into the

 1    hands of people who really haven't demonstrated
 2    anything that would leave the public with a lot of
 3    confidence, that you know or you deserve an
 4    opportunity to program the public resources that are
 5    being put into your hands, or to meet the public
 6    interest obligations that historically you have a
 7    dramatic poor track record in achieving.
 8              In California we have the initiative
 9    process.  And already there is an initiative being
10    qualified for the November ballot, and polls
11    currently indicate that 80 percent of Californians
12    who are likely to vote will pass an initiative that
13    will essentially undermine deregulation as the
14    legislators have defined it and take away the
15    wholesale give-away to the incumbent monopoly
16    utilities.
17              Now if we had a national initiative or
18    referendum, I suggest that likewise, if the public
19    were to find out the terms of this transfer of public
20    assets and how little we're getting, that that
21    initiative would have probably a vast majority of
22    opposition as well.
23              The entire process of this Commission is
24    interesting.  I would have preferred a process where
25    we heard the ideas from you as to what you, in fact,

 1    proposed to do with this gift from the public,
 2    instead of us coming before you to recite the
 3    problems of trusting you to do what's best; of
 4    trusting you to meet the public interest obligations
 5    that you have, by and large, failed to meet -- the
 6    history of modern broadcasting.
 7              Obviously the issues are much broader, much
 8    wider than how the independent film production
 9    community has been affected.  Entire communities have
10    been left out.  Entire ideas, ideologies have gone
11    unrepresented in what has been essentially a dominant
12    commercial paradigm, television as a sales tool in
13    that alone.
14              I think you can trace most of the social
15    pathologies in our cultural probably to the dominance
16    of a technology that has been used for nothing else
17    than to sell things with very little room for
18    anything else.  Those of you who have resisted that
19    process should be proud that you've resisted.  Those
20    of you who have been part of that process, I
21    certainly think this is the time to examine your
22    commitment to what your role as public trustees need
23    to be.
24              As I said, look at the deregulation
25    experience in California.  It had very little public

 1    participation.  It is, by definition, an illegitimate
 2    political process:  Very little public width, very
 3    little depth and very little width in terms of public
 4    participation.
 5              And I certainly hope the public has an
 6    opportunity to learn about from you your news
 7    operations, where any comment, any news story
 8    coverage of digital television and this gift of
 9    public resources to the principal economic interests
10    that have dominated this market has gone, by and
11    large, unreported.  There has been very little public
12    information.
13              And despite your best efforts to involve
14    the community in these hearings and to have
15    individuals like ourselves on this panel come and
16    talk to you, the fact is most of America has no idea
17    that this is going on.  They will wake up one morning
18    to find out that you have amassed even more
19    resources.  And given the rather poor track record of
20    the past, I don't think you're going to have happy
21    campers then.
22              As I said, if there were a national
23    referendum, this would not pass.
24              You know I think it was Senator Dole who,
25    in fact, used the term "corporate welfare" as calling

 1    the give-away here.  And interesting because Mr. Dole
 2    obviously, as one of the Republican tribal leaders,
 3    is enamored of a market paradigm and would like to
 4    see the marketplace work with real competition of
 5    interest.  And I think I would concur with former
 6    Senator Dole.
 7              You know it really is incumbent on the
 8    industry to set and achieve higher standards of
 9    public access, diversity of viewpoints, all the
10    things that even sound funny for me to mention,
11    because it feels like it's an alien language to use. 
12    I think the dominance of commercial purposes,
13    television, as I said, has got to be an underlying
14    cause for the deterioration of democratic values in
15    our society.
16              The fact that we have such poor voter
17    turnout, the fact that you all have been asked to
18    look at the role of money in politics and how
19    television can speak to that problem begs the
20    question of the role of television itself in having
21    distorted our Constitution, our culture -- our
22    political culture certainly -- and flattened
23    everything into a commercial marketplace where there
24    is little room for anything else, including higher
25    purposes.

 1              I think we would look to you for a
 2    restatement, a reformulation of a public interest
 3    standard.  I hope the Gore Commission certainly tells
 4    us why the commercial broadcast industry deserves
 5    this gift from the public and how you plan on being
 6    accountable to the American people in terms of what
 7    you do with this gift of the spectrum; and that you
 8    define some process by which the public can actually
 9    signal its participation and its unhappiness with
10    your failure to do anything more creative and more
11    responsive than you've done in the past.
12              I think that a higher standard, something
13    that goes beyond the use of commercial television
14    entirely for the purposes of buying and selling would
15    be a good place to start.
16              The kinds of models that you ought to look
17    at, I mean probably the best example, most compelling
18    example of the pernicious influence of commercial
19    television on other access opportunities, beginning
20    with public television, is how commercial public
21    television has become.  There isn't a public
22    broadcaster that doesn't talk in terms of audience,
23    doesn't talk in terms of ratings for their programs
24    when, in fact, in the enabling legislation for public
25    broadcasting we very specifically said that public

 1    broadcasting was going to be exempt from the
 2    pressures of finding an audience, exempt from the
 3    pressures that commercial television imposes upon
 4    itself.
 5              And public broadcasting is a thin mirror
 6    these days of commercial television.  And certainly
 7    to the extent that you all as a Commission can
 8    address the shortcomings of public broadcasting as
 9    sort of a pale imitation of commercial television, we
10    might then see public broadcasting as a genuine
11    alternative as well.
12              With that, let me end my comments.
13              MR. YEE:  Thank you, Herb.
14              I don't know where to begin.  We have heard
15    quite a range of commentary of both history concerns
16    and challenge.  And I can only speak for myself as a
17    member of this Commission, that coming out to meet
18    with the public, in this case here in Los Angeles, in
19    California, affords us an opportunity to be reminded
20    as well as to engage ourselves more broadly, and I
21    think we will endeavor to do that.
22              CO-CHAIR MOONVES:  Jim, I would like to
23    make a comment, if I may.
24              First of all, Mr. Gunther, I've never been
25    compared to Jeffrey Dahmer or Charles Manson before

 1    as much as I have today, so thank you very much for
 2    making every broadcaster the most despicable,
 3    disreputable human being on the face of the planet.
 4              MR. GUNTHER:  It wasn't meant personally.
 5              CO-CHAIR MOONVES:  You know what, there is
 6    more to broadcasting than how you present it.
 7              I have to address the two people on my
 8    right who are close friends and colleagues and both
 9    people whom I have worked with very closely on a
10    number of projects.  Ms. Rees and I won an Emmy award
11    together.
12              I think this panel, and I was not aware
13    that this panel, called Independent Programming and
14    Access in the Digital Age, should have been properly
15    titled, "Let's bash the networks."  I feel it is
16    necessary, since no one was added to this panel on
17    the part of the broadcasters or producers, who may
18    have had a more satisfactory experience as a producer
19    with a broadcast, so I feel it's incumbent upon me to
20    sort of remove my role as Co-Chairman of this
21    Commission and make some statements to this panel
22    about what exists today in the television industry.
23              The industry has evolved to a very
24    different place than it was before.  Granted, the
25    independent production companies:  the MTMs, the

 1    Lorimars, the Tandems have disappeared.  They are
 2    gone.  Once upon a time I was president of a company
 3    called Lorimar.  Subsequent to that, the economics of
 4    the system have changed.
 5              Granted, as Mr. Isenberg said, the
 6    concentration of the power of what is on the
 7    commercial broadcast systems today is in the major
 8    companies.  However, the independent producer has not
 9    lost his power.  Instead, he is being paid millions
10    and millions and millions of dollars by the studios
11    to become exclusive to that particular studio.
12              David Kelley who creates a show like
13    "Chicago Hope" or "Ally McBeal" or "The Practice" is
14    paid by Twentieth Century Fox many million dollars of
15    dollars to be at that studio.  Has he lost his
16    independence?  I would say no.
17              The people who created "Seinfeld" are part
18    of Castle Rock which is part of Warner Brothers. 
19    Have they lost their creative ability?  I would say,
20    once again, no.  They are still independent.  The
21    economic system has changed.
22              I think the speeches that Mr. Isenberg and
23    Ms. Rees made would have been more appropriate, and I
24    think some of them may have been pulled out of the
25    files when we were dealing with the changes in the

 1    financial interest rules, which enabled the networks
 2    to own their own product.  Yes, there are very ugly
 3    stories, and we've lived them.  But the ugly stories
 4    to which both these people referred existed 30 years
 5    ago, as well, with network interference, with network
 6    problems.  And they will continue on many years from
 7    now.
 8              So I would argue that the independent
 9    producer has not disappeared.  In fact, he has had to
10    change where he gets his money and what happens
11    within the system, because now he's being paid a
12    guaranty in front by the studio, which means whether
13    or not he succeeds or not he will be paid a sizable
14    sum of money.  And I think you will deal with the
15    fact that if you analyze the number of producers in
16    the world today on commercial television, you'll find
17    the economics for them are greatly increased.
18              So having said that, I will turn it back to
19    you, sir.
20              MR. YEE:  Thank you.
21              I'm trying to figure out what the next
22    steps are because we have some time to engage in
23    questions and answer and commentary, as Les has done. 
24    I'd like to open this up to the members of the
25    Commission to perhaps respond, inquire to our four

 1    guest panelists, because I know time is of an issue. 
 2    I'm sure the content of your remarks will indeed come
 3    back in our deliberations, most surely.  But because
 4    of time, I wish to open up the Q&A to the members of
 5    this Commission as well.
 6              Karen.
 7              MS. PELTZ STRAUSS:  Thank you for coming
 8    here today.  First of all, I want to thank you for
 9    "Love Is Never Silent."  I'm with the National
10    Association of the Deaf, and we appreciate the use of
11    deaf actors.
12              But, beyond that, you mentioned the need
13    for a content-neutral regulatory mechanism to enable
14    independent producers to have access to the networks.
15              Although Ms. Carpenter did talk about one
16    means of accomplishing this, for example, one hour of
17    community programming each week, I'd like to know if
18    any of the rest of you have any concrete proposals
19    for how you would achieve this.  Specifically, how
20    you would make room within the existing commercial
21    paradigm, as you call it, for this independent
22    programming.
23              MR. GUNTHER:  Yes.  We had an experiment. 
24    Unfortunately, it never reached its potential.  It
25    was called local access time.  We had three hours

 1    which all local television stations were to program
 2    for local community purposes, news programming, which
 3    unfortunately became the catalyst for the independent
 4    syndication market.
 5              It wasn't the concept when the FCC went
 6    with the rulemaking procedure of creating local
 7    access time, three hours every night, with the
 8    restriction that it not be network programming, that
 9    it not be, that it be anything other than "Jeopardy!"
10    or game shows, which is what those three hours
11    became, not children's programming, not news
12    programming.
13              There isn't one major market where
14    successfully during those three hours in the brief
15    period when local access time had its opportunity
16    that any market, any commercial television station in
17    any market delivered on the potential of local access
18    time.  It certainly is an appropriate moment to
19    revitalize that concept.  And perhaps with the
20    lessons learned from the past, making sure that
21    syndicated programming doesn't then fill the
22    definition of what's to go in local access time.
23              MR. ISENBERG:  I'm Jerry Isenberg.  We
24    suggested that specific forms of program, which were 
25    television movies, for example, that a specific

 1    set-aside of some percentage for nonowned producers
 2    is a simple solution.
 3              I think the comment the Chair offered, that
 4    we may have dusted off some speeches from the
 5    financial interest states is somewhat specious.  And,
 6    I'm sorry, I don't like it.  That's not what we're
 7    suggesting, we go back to that complex and wide a
 8    band.
 9              We understand that the economic
10    circumstances have changed, but the complete
11    surrender to owned, the merged together of the
12    producing elements in the broadcast elements into one
13    combined, vertical entity, which was unthinkable,
14    basically institutionalizes creativity into business
15    plans.  And you can go back to 2,000 years ago and
16    you will find that the greatest creativities, the
17    great brilliance of art was designed independently. 
18    It was created independently.  It did not come out of
19    a business plan.  It did not fit the model of CBS'
20    need for ratings.  And that's what's lost.
21              CO-CHAIR MOONVES:  But some of the were
22    paid by the Court, weren't they?
23              MR. ISENBERG:  The money.
24              CO-CHAIR MOONVES:  They were under
25    contract?

 1              MR. ISENBERG:  Yes, they were.
 2              MS. PELTZ STRAUSS:  Just one quick
 3    follow-up question.  You talk about a specific
 4    set-aside.  Is that basically what you're asking our
 5    Commission to do and do you have any proposed
 6    percentages?
 7              MR. ISENBERG:  I would rather not offer a
 8    proposed percentage, because that's -- I mean the
 9    percentage I'd like to offer is a hundred percent. 
10    That's a great one, and we'll go down from there.
11              I think it varies.  I think the television
12    movie business, which is where I want to focus
13    because it's an historic entry point in the dramatic
14    series business.  There's no real economic need for
15    the broadcasters to own television movies.  They
16    could literally cut their license fees and let
17    independents do it, and economically it doesn't mean
18    anything to them.  It's nice.  It makes them a little
19    bit more money.
20              When you get into the series business,
21    you're beginning to get into macroeconomics that are
22    different.  And I think the percentage of set-aside
23    in the series business would be somewhat less.
24              It's interesting to note that all news and
25    public information is network owned.  All the

 1    networks have a policy that in prime time all their
 2    news shows or all their information shows are network
 3    owned.  There is no -- zero -- place in broadcasting
 4    for someone other than the network news department to
 5    develop a news show.
 6              MR. YEE:  Thank you.
 7              In this order I have:  Jose Ruiz, Norman
 8    and Charles and then Paul.
 9              MR. RUIZ:  First I'd like to thank the
10    panelists for taking time out of their day to come
11    and share with us their expertise.
12              We spent a lot of time on the technology
13    and the capacity of the technology.  And now I think
14    we're moving more into a content issue.  And I've
15    heard things like community development committees,
16    employment, independent access, diversity of
17    production services.  I've heard about programming
18    like "The Waltons," "Love Is Never Silent," "Children
19    of a Lessor God."
20              You as producers in producing that type of
21    programming, which is programming to me that shows
22    the human side, the American experience side of us,
23    what are the difficulties and could it have been
24    casted to be a Native American family, an Asian
25    family, a Latino family, in one case, an

 1    African-American family, why don't we see more
 2    programming on the human experience, the American
 3    experience that deals with other groups?
 4              MS. REES:  I'm going to risk to answer that
 5    question, but I first have to respond to Les and to
 6    all of you.
 7              I think the purpose that brought me here
 8    today was not to carp about the past, Les.  I mean
 9    it's really the future that is your concern.  And I
10    won't be producing for digital TV, I'm quite sure. 
11    I'm hoping to get to Santa Barbara with Jerry.  But I
12    am always compelled by the idea.  And if I were to
13    say anything, this is not a self-serving appearance
14    that I make before you today, it is not, it would be
15    to hopefully urge you to keep in your deliberations a
16    mindset of that future, and that there is a ground
17    swell of very diverse and talented and eager young
18    people who want access.  And I think that's what
19    we're talking about.
20              I think it's very difficult to answer you
21    directly, Jose, in the current -- except for you.  I
22    have to come back and congratulate you for the Ann
23    Margaret series.  It's a real wonderful step outside
24    of the status quo, Les.  I really, really do,
25    sincerely.  But there are the constraints of the

 1    commercialization of television as a sales tool.
 2              And I can't give a lecture on the dynamics
 3    of a very intricate system of cost per minute or cost
 4    per second, as it's coming down to.  I do understand
 5    that dynamic.  I do know that I've been challenged
 6    every time.  Well, I don't think that idea will
 7    garner an audience.
 8              How can we deliberate that in that six-band
 9    spectrum that there will be, through your
10    deliberations, an embrace of the idea that ideas are
11    the product, but they are consumed.  And I feel
12    strongly that that focused, concentrated sense on the
13    bottom line, it is a profit industry -- I understand
14    that -- but it seems imperative that in the face of
15    our growing diversity and its intense eagerness to
16    participate in a multicultural nation that's the
17    future.
18              It's been denied right now because, in many
19    respects -- my opinion, I am not an authority, I
20    experience it through the desire that I want to do a
21    story.  I tried very desperately to sell the Carl
22    Gorman story.  And for those of you who have read any
23    of the newspapers, Carl Gorman recently passed.  An
24    extraordinary leader in the Native American
25    community.  An extraordinary man.  A dedicated hero,

 1    soft-spoken, an artist.  Nobody wanted to hear that
 2    story.  Nobody wanted to be interested in that story. 
 3    I went everywhere.
 4              And until recently, I mean Latino stories
 5    have been very difficult.  You know that.  But they
 6    do buy.  They are consumers.  Somebody has to lift
 7    the level of expectation of television.  And I don't
 8    know how you will pass your deliberations on, but if
 9    there's any way in the spectrum, which I kind of
10    think of as the rainbow in the sky -- I mean look at
11    the hues that can be there.  We don't want it black
12    and white.  That's not a rainbow.  But even a band,
13    one spectrum, almost like a Sundance, where those who
14    have ideas and can find ways to do them that don't
15    cost $40 million, let them have access.
16              I just keep coming back to that:  Provide
17    the opportunity.  There are Asians, Latinos -- there
18    are Americans coming out of our educational systems
19    that are ready to tell their story from their point
20    of view, from their perspective and from their voice. 
21    It is essential to me that our future be protected
22    from this narrowing of ideas to a perceived audience,
23    to a perceived profitability.
24              There's room for it all.  Just protect some
25    room.

 1              MR. YEE:  Do you wish to respond?
 2              MS. CARPENTER:  Yes, I'd like to respond to
 3    that.
 4              I'd like to say that I think this panel,
 5    this Committee is very exciting and that you're
 6    listening, at least, to the genuine hunger for access
 7    by community members and by multiculturally talented
 8    writers, producers, et cetera.
 9              And to answer the question of stories for
10    different groups and why we don't see more of them, I
11    think with a number of factors over the past several
12    years, a lot of cultural pride is emerging in the
13    different varied communities.  And people that might
14    have felt discouraged in the past are now realizing
15    they do have a voice, and they will become more
16    insistent, and they will not give up and they will
17    knock on more doors for hiring, for producing, et
18    cetera.
19              And the wonderful thing about this
20    insistence is that you're now providing the access to
21    it.  So it's almost a great synchronicity, I think. 
22    And I think that you have that responsibility, and I
23    think you're taking it seriously.  So I think you
24    will see more stories because the pride is there and
25    the access will be there, and those two combined --

 1    obviously I have a positive viewpoint on this -- but
 2    I think it will be successful.  I don't think it will
 3    happen over night because things take longer in
 4    development, as you know.  But I think in a couple of
 5    years it will become more standard fare, and I think
 6    access is the first key.
 7              CO-CHAIR ORNSTEIN:  I want to thank you all
 8    for coming and for your passion.  I must tell you I'm
 9    a little disappointed in the panel overall.  I had
10    expected we would have some other things discussed.
11              Our mandate is in significant part to look
12    at what makes the digital age different from the
13    analog age, an age in which we're going to see a
14    veritable explosion of outlets for broadcasters and
15    different ways of approaching things.
16              And I had expected we would have some
17    discussion of what plans were being made or, if there
18    were any, for filling all of these different outlets
19    and not just to focus on the notion that because we
20    have this new grant of spectrum that we should use
21    our leverage to kind of bludgeon people to move from
22    an oligopolistic setting to something more.
23              Let me frame a question then in the
24    following way.  We're moving into an era where we are
25    going to have very possibly, we don't know exactly,

 1    but we're going to see broadcasters -- and remember
 2    that the networks here, we consider only because they
 3    own stations.  Our focus is not networks; it's
 4    stations -- but where stations are going to have the
 5    capacity at times to put on six or eight different
 6    programs at the same time or channels at the same
 7    time, transmitting data, sometimes transmitting
 8    broadcasts.  It's also, of course, in an era where
 9    there will be an explosion of other outlets of
10    programming.
11              So presumably the whole marketplace is
12    going to change in some fashion.  The demand for
13    programming, for something to fill those channels and
14    to attract viewers is going to be different and much
15    greater.  Isn't it likely under those circumstances
16    that a small set of outlets, which after all was
17    three networks, now it's four or five or six, and
18    we're seeing some of the greatest creativity emerging
19    on some of those other networks, UPN or even Fox in
20    some cases, where they're having outlets for programs
21    like "Ally McBeal" or that new UPN show -- what's 
22    the --
23              CO-CHAIR MOONVES:  "Dawson's Creek."
24              CO-CHAIR ORNSTEIN:  -- "Dawson's Creek,"
25    that certainly have some very positive elements to

 1    them; that when you move to a situation where at
 2    least at different times of the day where there's now
 3    one stream of programming, there may be five or six,
 4    it's going to be impossible for a small group of
 5    oligopolists to basically maintain a stranglehold on
 6    what's going on.  And the demand and, in fact, the
 7    leverage of those who come up with creativity and
 8    programs and options will be much greater.  And the
 9    opportunity to fill niches will be greater as well.
10              MR. ISENBERG:  Let me say, number one, as
11    regards stations in the major marketplaces, virtually
12    all the VHF stations are owned by networks.  That is
13    the way networks get formed, by owning the stations
14    in their own major cities.  The government has
15    basically allowed them to expand the coverage, so
16    CBS, NBC, ABC/Disney have expanded their ownership.
17              Secondly, as regards plans of kinds of
18    programming in the digital age, I think everybody, at
19    least in my School of Cinema-Television, we talk
20    about it a lot.  We talk about lots of interactive
21    forms.  And I think there's going to be a great
22    blossoming in the forms of programming through the
23    digital age.  I don't think you have to worry about
24    it.  It's coming.  The creativeness of our
25    communities will give it to you.

 1              As far as the naive assumption that
 2    sixplexing the spectrum is going to bring out a vast
 3    expansion of opportunities for independents, if you
 4    went back 15 years and you looked at cable and you
 5    said, "We're about to go from a three-network economy
 6    to a fifty-network economy.  Wow.  It's going to be
 7    great for independents"; it didn't happen.  So I
 8    don't see any reason we should assume it's going to
 9    happen when you sixplex it.  Most of the major cable
10    services are owned by the same companies.
11              The dream of cable is that we will get out
12    of broadcast system which destroys programming to
13    minorities.  I mean my history over 30 years in this
14    industry is when you walk into a network and you
15    propose something that is specific to an ethnic
16    section, the programmer will turn, "Yeah, but how do
17    we cross over?"
18              It was that problem with "The Women of
19    Brewster Place."  There's a million stories like
20    this.  And that is the nature of the broadcast
21    medium.  In theory, cable gets past that because
22    you're going to get into Black Entertainment
23    Television, blah-blah-blah.
24              But still the issue has always been:  If
25    the public is deserving of excellence, does

 1    excellence come from large corporations or can and is
 2    -- yes, to some extent, it does, by the way.  It
 3    isn't that large corporations can't produce
 4    excellence.  They do.  I mean there's too much good
 5    television right now, especially in the dramatic
 6    form.  And the dramatic form is because of the power
 7    of the Dick Wolfs and the Steve Bochkos who, frankly,
 8    no network with a brain will mess with.  But that's
 9    great for the established, $10 million player.  It
10    isn't an answer to excellence throughout.
11              MR. BENTON:  So it sounds like you should
12    be testifying in front of the Antitrust Division and
13    not us.
14              MR. ISENBERG:  In all probability, that's
15    going to end up there if we could get enough people
16    who not afraid of being blackballed together.  You
17    know the problem of putting antitrust case together
18    in this industry is, if you put your name on it, you
19    probably are out of the industry.  So we need a whole
20    bunch of people at my age and independents to do
21    this.
22              MR. YEE:  If I could --
23              CO-CHAIR MOONVES:  Just consider yourself
24    out of the industry already.
25         (Laughter.)

 1              MR. ISENBERG:  At least as a dependency. 
 2    I've dropped the co-dependency issue.  There was no
 3    co-dependency.
 4              MR. YEE:  In the remaining time of my
 5    moderation, I need to move this along.
 6              Herb, 20 seconds, then I need to get to the
 7    other Commission members.
 8              MR. GUNTHER:  Yes.  My rather mild
 9    observations should not be taken as anything other
10    than just rather mild observations.  I think my
11    critique of the failure of the broadcast industry to
12    meet the public interest standards from before
13    certainly leaves one with no sense of optimism, that
14    in the digital age we're going to see a higher
15    standard met.
16              And certainly this is not intended to do
17    network bashing.  And I'm rather puzzled and
18    concerned that what is, in fact, sitting right next
19    to you, Mr. Benton -- the Benton Foundation certainly
20    provides a much more articulate and specific critique
21    of the broadcast industry and has over the last 25
22    years.  And Mr. Benton on the panel, I'm sure you
23    respect his views and respect his perspective.  But I
24    certainly have not said anything other than what the
25    Benton Foundation itself has tried to raise, the

 1    issues it's tried to raise about this.
 2              The fact is regulation has benefitted the
 3    regulated.  It has not benefitted communities.  And
 4    the conversation here about independent production
 5    and public access, public access is about creating in
 6    your imagination some new ways that the public can
 7    use a technology for some of the loftier purposes
 8    that have to do with the survival of the democratic
 9    values in our society besides entertainment,
10    distraction and trivia.  And my thesis is simply that
11    you should be telling us what your plans are.
12              And as for the Fairness Doctrine, which we
13    know no longer is in force, certainly my view
14    expressed today here, the views of the panel itself,
15    this Commission represents, by and large, the
16    dominant view of the industry.  I mean hardly to
17    consider me other than a voice in the wilderness when
18    it comes to raising some of these issues.  I'm simply
19    saying that the legitimacy of this process turns on
20    broader public awareness of the process,
21    participation.
22              And if the public were part of this
23    process, you will find that they do not understand
24    the concept of regulation benefitting the regulated,
25    a gift of, what, 20 to $50 billion worth of spectrum

 1    to a small group of very powerful economic interests. 
 2    Put yourself in the shoes of the public, what is
 3    going on with this transfer of public resources. 
 4    It's like giving away all of our national parks to a
 5    few developers.  You'd be concerned, too.
 6              These are not wild-eyed, ideologically-
 7    tainted concerns, but simply good old American values
 8    here.  You know, we're not getting the good deal. 
 9    And you guys should be telling us what you're giving
10    us for this exchange because, the fact is, we're not
11    getting much.
12              MR. YEE:  In this order:  Charles, Paul,
13    Karen and, lastly, Gigi.
14              CO-CHAIR ORNSTEIN:  I'm not sure how much
15    time we're going to have to complete this, Jim.
16              MR. YEE:  I know.  I'm just -- okay.
17              MR. BENTON:  Thanks for those comments,
18    Herb.
19              I want to address the issues of structure
20    and money, because two years ago the new regulatory
21    framework of the Telecommunications Act brought
22    telephones, cable and broadcasting into one
23    regulatory framework.  The reason for this was more
24    competition, in theory, and to try to deal in a
25    structural way with the concentration of control in

 1    these three mega-industries.
 2              I think the last years have shown that we
 3    have not only not created much more competition, but
 4    the concentration of control seems to be growing. 
 5    And so my first question, and then I'll make my
 6    second point and then stop, is:  Had you thought
 7    about alternative structures?  Channel 4 in England
 8    is often cited as one great and very successful
 9    public/private combination model that we might be
10    thinking about here in this country.  There are
11    certainly other models.
12              But the structural issue of access for
13    independence is then combined with the second point,
14    which is money.  I have spent my entire career,
15    outside of our foundation work, in the area of
16    educational media.  And I find it absolutely
17    appalling that this great country is spending
18    approximately $5 million in new instructional
19    television programming per year.  It is outrageous. 
20    In contrast with England which has a $50 million
21    budget.  A country that's one-fourth our size.
22              We're spending no money.  There's no money
23    available.  So when we're trying to move from the
24    paradigm of television for selling because delivering
25    audiences to advertisers is what commercial

 1    television is about, and that will not fundamentally
 2    change.  But the panel has an opportunity to rectify
 3    at least in a small way the balance between the
 4    commercially-dominated system and the noncommercial
 5    interests that are represented now very weakly and
 6    feebly by public television in this country, that is,
 7    in comparison to commercial television.
 8              So the money, the issue of money.  How do
 9    we get money to support independent creative
10    production of information, education and cultural
11    programming, including more and better programming
12    for children?  Where does the money come from?  That
13    is the central -- so I think there's a structural
14    issue and there's a money issue.  And unless we deal
15    with the structural issues and the money issues we're
16    not going to make progress, we'll just be making
17    speeches.  And hopefully, as we move from getting
18    testimony and getting down to business, to try to
19    create something, we can deal with these
20    fundamentals.  And I'd love to have your reactions
21    and advice on the structural challenges before us and
22    the money challenges before us.
23              MR. GUNTHER:  Well, the parameters for this
24    have already been set, I mean, unfortunately. 
25    Otherwise we'd be talking about license fees.  We'd

 1    be talking about bidding on the spectrum.  We'd be
 2    actually getting the market value for the transfer of
 3    assets.  And obviously the revenue from that could be
 4    dedicated to the purposes that you just mentioned. 
 5    But, in fact, those assumptions have already been
 6    addressed in the reform.  We're not getting licenses,
 7    license fees.  We're not getting a bid on the
 8    auctions or, rather, we're not auctioning off the
 9    spectrum.
10              So the traditional mechanisms have already
11    been given up, and so it becomes a voluntary thing. 
12    And we're going to appeal to the social
13    responsibility of those who are going to benefit
14    massively from this new arrangement and from this
15    give-away, to ask them entirely on a voluntary basis,
16    as good citizens, to put something back in the system
17    on the dubious wisdom that it benefits all of us to
18    have a strong vital democracy sustained by a
19    broadcasting system that nurtures those values and
20    gives communities an opportunity to hear themselves,
21    to hear the diversity and above and beyond
22    entertainment programming as well.
23              MR. YEE:  I must exercise the role of
24    moderator here due to time, but also I think the
25    commentary I will look for from Paul, Lois and Gigi

 1    will continue after our break.  But because of time,
 2    and I know two of you have some severe time
 3    constraints, but also ourselves, I'd just like to say
 4    thank you.
 5              I think we've been reminded by the
 6    challenge provoked by history and hopefully by the
 7    challenge of our future.  So I must say thank you. 
 8    Any additional comments and thoughts you have, any
 9    communication with you, also can be welcomed at a
10    later time.  So I will bring this to a close.
11              Before I do, to the Co-Chairs, I also want
12    to thank Jose Luiz, Frank Blythe, Gigi Sohn and
13    Michael Gardner from NAPI who helped in assembling
14    this distinguished panel.  So from me back to the
15    Co-Chairs.
16              CO-CHAIR MOONVES:  Thank you to the panel.
17              PANEL MEMBERS:  Thank you.
18         (Brief recess taken from 10:38 a.m. to 10:52
19    a.m.)
20              CO-CHAIR ORNSTEIN:  Why don't we get
21    underway with our next panel.
22              I wanted to mention one thing to you, to
23    the members of the panel.  In your packets you have a
24    paper which was submitted to us by the Aspen
25    Institute Working Group on Digital Broadcasting and

 1    the Public Interest.
 2              The Aspen Institute's Communications in
 3    Society Program, under Charlie Firestone, who is
 4    actually here today with his deputy, Amy Garmer, has
 5    set up a working group just consisting of a range of
 6    people from the industry and elsewhere and all across
 7    the spectrum to periodically get together and do a
 8    little work that may help us in our deliberations.
 9              And they prepared what is basically a
10    framework paper offering some models of public
11    interest obligations with pros and cons.  A brief
12    paper that Angela Campbell of the Georgetown
13    University Law Center put together that I hope we'll
14    use, at least in part, to structure some of our
15    afternoon sessions as we start this afternoon to get
16    into where we might go ultimately with this.  So,
17    keep that in mind.
18              And let me turn to Cass Sunstein to
19    moderate this panel on political broadcasting.
20              MR. SUNSTEIN:  It's a pleasure to introduce
21    this very distinguished panel, very distinguished and
22    very balanced panel.
23              I will just introduce the three panelists
24    very briefly, in the order in which they will speak.
25              Tracy Westen is a Professor at both USC and

 1    UCLA, specializing in communications.  He specializes
 2    in communications law and policy.  And he has also
 3    worked for both the FCC and the FTC.
 4              Cameron DeVore is a very distinguished
 5    advocate for advertising companies and others before
 6    the Supreme Court and other tribunals who will be
 7    presenting a legal argument -- our first legal
 8    argument, I think, in a while -- on behalf of the
 9    National Association of Broadcasters.
10              The third speaker will be Paul Taylor from
11    whom we've heard before, a well-known journalist who
12    worked for the Washington Post and the founder and
13    director of The Free TV for Straight Talk Coalition.
14              Thank you.  And we'll begin with Tracy
15    Westen.
18              MR. WESTEN:  Thank you.
19              I want to start by thanking you for the
20    time you're spending on this issue.
21              This process may seem, at times, to you, to
22    be a thankless one; all controversy and no rewards.
23              And on top of that I understand you have to
24    pay your own way out here.  So what I wanted to say
25    is I think you're addressing an extraordinarily

 1    important issue and you're to be congratulated for
 2    that.
 3              I'll try to keep my comments brief to leave
 4    time for discussion.  But I want to make a few
 5    preliminary observations.
 6              First, I think the advent of digital
 7    television gives us more.  It gives us more channels,
 8    more capacity, more flexibility.  But more than that,
 9    it gives us, I think, the chance to rethink its role
10    in American Democracy.  And I think that's, perhaps,
11    its most important contribution.
12              Secondly, although I personally believe
13    that some free broadcast time for political
14    candidates is absolutely essential, I think it would
15    be bad policy and impractical as well to hand it out
16    willy-nilly to all candidates or to hand it out with
17    no concern for formatting, cost burdens on licensees,
18    or the risk of boring the public to death.
19              Finally, although I believe the FCC has the
20    legal power to mandate free time under its current
21    jurisdiction -- and under the First Amendment -- I
22    think there are clear advantages to a broadcast-
23    industry-adopted solutions, including greater
24    flexibility, the ability to experiment with more
25    interesting program formats, variety between the

 1    states, variety among different elections.  So I'll
 2    come back to this point.
 3              But to the extent the broadcast industry is
 4    able to devise an innovative, creative solution, I
 5    think it would be to everyone's benefit.  In short, I
 6    think the issues here are quite difficult and not
 7    easily subject to an ideological litmus test.
 8              I think what we need is a mix of
 9    practicality and vision.  And, as I look at the
10    composition of this panel, I think it's ideally
11    suited to that task.  You represent a very broad
12    range of public and private interests and you're
13    confronting very difficult and important problems. 
14    And if this group can't do it, it's hard to imagine
15    who can.  So I applaud your dedication to this
16    effort.  And I wish you well.
17              I'd like to make seven brief points. 
18    First, I believe that some free broadcast time for
19    political candidates is absolutely essential if we're
20    to improve the integrity of our elections.
21              And I think this for two reasons:  First,
22    we need to improve the information the public has in
23    the electoral context so they can make intelligent
24    decisions, which are the foundation of our democracy.
25              Secondly, I think we need to make it

 1    possible for all candidates to participate in
 2    elections, to present their ideas and not only to
 3    present their ideas if they have access to
 4    considerable wealth, which seems to be the developing
 5    pattern.
 6              James Madison once said, "A popular
 7    government without popular information or the means
 8    of acquiring it is but a prologue to a farce or a
 9    tragedy or perhaps both."
10              Madison and Jefferson understood the vital
11    connection between democracy and information.  They
12    knew that placing actual political power into the
13    hands of ordinary citizens -- a very radical
14    experiment in governance -- would be doomed unless
15    citizens had access to the information on which to
16    base an intelligent vote.
17              Recent polls have shown that those
18    Americans who know the least about government are the
19    most likely to be mistrustful of it and that levels
20    of mistrust and cynicism have increased sharply in
21    the last decade, paradoxically, although television
22    is the most powerful and effective means -- to use
23    Madison's word, "means" -- of delivering information
24    ever invented.
25              And although most people cite it as their

 1    principal or only source of information, public
 2    ignorance about candidates and governance seems to be
 3    high and even increasing.  Television's ability to
 4    inform the electorate has been unrealized, in part,
 5    because its costs are growing beyond the reach of
 6    many candidates and because the price candidates pay
 7    to raise that money, in my view, is distorting the
 8    political system.
 9              In 1956, for example, the amount of money
10    spent by all federal, state and local candidates for
11    office in the United States was about 155 million. 
12    Twenty years later, in 1976, total candidate spending
13    had increased 250 percent, to about 540 million.  In
14    the last 20 years, however, from 1976 to '96, that
15    amount has shot up 2,600 percent to the sum in 1996
16    of 4.2 billion.
17              In California, by analogy, in the last 40
18    years, campaign spending for legislative office has
19    gone up 5,000 percent.  That's a 250-percent increase
20    every two-year election cycle for the past 40 years.
21              In short, television has an extraordinary
22    capacity to inform the voters, but many candidates
23    simply lack the money to purchase it or, in their
24    efforts to acquire it, create the appearance of
25    impartiality in their actual votes.

 1              The second point is that even though free
 2    time would significantly ease campaign finance
 3    pressures, I think it's important even in its own
 4    right without considering campaign finance reform. 
 5    Neither this Commission nor the FCC has the mandate
 6    or the power to solve campaign finance problems --
 7    it's extraordinarily difficult as we've seen from
 8    events in the Senate in the last week -- even though
 9    free broadcast time, in my view, would certainly
10    help.  But free broadcast time would address a number
11    of other important issues as well.
12              It would help challengers compete.  It
13    would give them some access to present their ideas to
14    the public.  And, currently, many challengers lack
15    the fundraising power of incumbents.
16              It would enhance the overall dialogue in
17    the campaign.  It would help voters understand the
18    issues.  It would provide balance for candidates who
19    might get swamped by very personally wealthy
20    candidates, a phenomenon we've seen many times in
21    California.  And, in fact, Senator Feinstein dropped
22    out of the race for governor in part because she did
23    not want to take on a wealthier millionaire, is
24    basically what it amounted to.
25              Free time would create a minimum level

 1    playing field, a level floor, so that all have an
 2    opportunity to present their ideas.  And it would
 3    also allow -- I think, if we do it creatively -- to
 4    create the opportunity for some innovative formats. 
 5    And I'll talk more about that in a minute.  So this
 6    Commission does not have to wait for campaign finance
 7    reforms to make a major contribution to an informed
 8    electorate.
 9              Third, free time, I think, should include
10    format restrictions.  It should not be a simple blank
11    check.  And these format restrictions should be
12    carefully thought out, I think, with the creative
13    energy and thought of the broadcast industry to
14    encourage a better, more improved debate.
15              Simply giving candidates free time to
16    engage in more 30-second negative ads won't
17    substantially improve public information and I don't
18    think will have the support of the public.
19              TV news coverage, good as it can be, is
20    probably by itself insufficient, because candidates
21    need some opportunity to present their own views in
22    their own words.  So, in my view, candidates should
23    be given specific, limited quantities of time.  And I
24    would suggest both short spots as well as longer
25    opportunities -- two minutes, maybe 15 minutes or

 1    even 30 minutes for presidential candidates -- so
 2    that they have the opportunity to address significant
 3    issues.
 4              I would also consider format restrictions
 5    such as the following:  Requiring candidates to
 6    appear in at least 75 percent of their time, which
 7    the research shows that if candidates appear in their
 8    own ads there tends to be considerable less negative
 9    advertising and negative attacks.
10              One alternative format might be, for
11    example, showing a person on the street asking a
12    question for 30 seconds, and then for 45 seconds each
13    of two candidates rebut.  So you have a little two-
14    minute package that is, in essence, a mini debate.
15              Perhaps running all the spots in a day or
16    even one week on a particular topic, such as
17    education, considering "roadblocks" so spots appear
18    at the same time across the dial.
19              I'm not arguing any one of those.  But I'm
20    simply saying there's an opportunity here for
21    experimentation and creativity in ways that will
22    engage the audiences interest.
23              The fourth point is that I think
24    discussions of free time should not be limited to the
25    Beltway.  In other words, they should apply to

 1    candidates at all levels, if possible, not just
 2    president, but congressional and state candidates and
 3    even local candidates where applicable.  And I think
 4    that's the important qualification.
 5              Obviously we have to prevent broadcasters
 6    from being swamped by requests for free time.  But
 7    let me suggest a way of possibly doing that.  For
 8    president, for example, we might set aside, for each
 9    of the two major party candidates in the general
10    election, up to two and a half hours for them to
11    control.
12              Of that two and a half hours, there might
13    be two half-hour programs, leaving an hour and a half
14    for, let's say, two-minute spots.
15              So what that would create is, for each of
16    the presidential candidates, two half-hour
17    opportunities to address issues in depth to the
18    entire nation.  And then they would be given in the
19    60 days before the election 45 two-minute spots.
20              For U.S. Senate and Congress, the national
21    political parties might be given a grant of about two
22    hours of time on each broadcast station per state. 
23    And let them divide up the time as they see fit. 
24    They have a number of congressional candidates, a
25    number of senatorial candidates.  Some will be in

 1    safe seats; some will not be controversial; some will
 2    be very important, hot races.  This gives a ceiling
 3    on the time but allows them to divide it up as they
 4    see fit.
 5              For state and local candidates, again, the
 6    same concept.  Give the state political parties two
 7    hours to divide up as they see fit.  And what this
 8    would amount to, for instance, state and local party,
 9    is about two minutes a day for the 60 days before the
10    election.  For U.S. Senate and Congress, again, two
11    minutes a day for the 60 days before the election.
12              In total, although it sounds like a lot, it
13    would give candidates at the federal, state and local
14    levels a total of 13 minutes a day for the 60 days
15    before the election which, in my view, is a
16    controllable, but a reasonable amount of time.
17              The fifth point involves digital and analog
18    TV.  In my view -- and, obviously, you'll be
19    discussing this one -- I think the fee broadcast time
20    in limited amounts should be given on both digital
21    and analog television for the principal reason that
22    if we relegate it or confine it only to digital
23    television, then it will create certainly for many
24    years to come a kind of ghetto in which a very small
25    number of people -- and, presumably, the people who

 1    have the money to buy digital television sets -- will
 2    be the only observers.
 3              At the same time the advent of the digital
 4    spectrum might create interesting opportunities to
 5    give local and state candidates, who otherwise would
 6    not be able to afford the time, some access
 7    particularly in urban areas on subchannels or regular
 8    definition television channels.
 9              The high definition signal allows a
10    broadcaster or licensee to carve up that spectrum in
11    different ways, perhaps generating more than one
12    channel, two, three, based on compression
13    technologies.  And there may be ways of giving
14    candidates access to that newly-created spectrum in
15    ways it would be not be unduly burdensome on
16    licensees and at the same time give them an option.
17              The sixth point is that in my view
18    reasonable amounts of free time and reasonable format
19    restrictions will not violate the broadcast
20    licensee's First Amendment interests.
21              The Supreme Court has said in both Red Lion
22    and CBS versus FCC that requiring broadcaster to
23    share their channels with others, particularly
24    candidates for office, does not violate the First
25    Amendment.  And I don't mean to get into a technical

 1    First Amendment discussion, but let me draw one
 2    analogy.
 3              This room is an interference-based medium. 
 4    We cannot all talk at once -- well, we can but, if we
 5    do, nobody will be able to understand anything.  So
 6    there have to be rules to decide who speaks even in
 7    this particular forum.
 8              And Mr. Yee, when he started the discussion
 9    earlier, said something very interesting.  He said,
10    "I'm going to raise my hand after five or seven
11    minutes so that democracy can move along."  Very
12    interesting and accurate observation.  In other
13    words, he was threatening to censor panelists if they
14    spoke too long in order to preserve democracy in this
15    particular forum.
16              If I appear in front of the United States
17    Supreme Court, and I'm told I only have a half an
18    hour to present my argument, I can't say, "Well, I
19    need at least three hours to present my argument. 
20    And you're violating my First Amendment rights.  And
21    if you don't give me three hours, I'm going to sue
22    you."  Obviously, I'd lose that argument.  We have to
23    have time restrictions or channel-sharing
24    restrictions in any interference-based medium such as
25    speech and such as broadcasting.

 1              For the FCC, for example, to say, "We will
 2    give a license to a broadcast station for seven
 3    years, minus one day.  And for that one day we will
 4    turn on, let's say, government or public interest
 5    transmitters and let all political candidates use
 6    them on a first-come, first-serve, content-neutral
 7    basis," would that violate the First Amendment rights
 8    of the licensees?  Would the licensees say, "I have a
 9    First Amendment right to get that last day"?  I
10    think, clearly, not.
11              In an interference-based medium, the
12    government can adopt rules, just as the Chair has, to
13    share the time.  And it does not violate the First
14    Amendment rights of broadcasters operating in an
15    interference-based medium to be asked to share that
16    time.
17              So I think asking licensees to provide a
18    small amount of time, 13 minutes a day for the two
19    months before the election, is a reasonable form of
20    channel sharing because it also enhances the First
21    Amendment speech rights of the candidates and the
22    access of audiences to their views.
23              My last point is that we should try to
24    minimize, wherever possible, the costs and burdens on
25    the broadcast industry.  And I'd like to suggest some

 1    ways in which that might be considered.  Obviously,
 2    costs of free time could be offset against free
 3    spectrum.  That's one model that's been presented to
 4    you.  But I think there are other ways of reducing
 5    costs on licensees.
 6              First, lowest unit rate might be repealed
 7    for candidates who receive free time.  In other
 8    words, if they want to buy any time beyond their free
 9    time, they should pay full market rates.
10              315, equal time obligations could be
11    suspended in elections in which candidates are
12    receiving free time, thereby minimizing
13    administrative and legal burdens on licensees.
14              Tax deductions, I think, could be
15    considered for the costs of free time offered, at
16    market rate.
17              Must-carry rules on cable television for
18    digital signals might be considered, in part, as an
19    offset.  In other words, cable systems ought to be
20    required to carry digital signals as well and that be
21    deemed as part of the overall package.
22              For state and local candidates for whom
23    prime time or even television time is inefficient,
24    since their districts are small and only include a
25    portion of a broadcast licensee's coverage we might

 1    think of creative alternatives such as, for example,
 2    giving them the opportunity to broadcast their
 3    messages at 3:00 a.m. in the morning, but also asking
 4    broadcasters to promote the existence of those
 5    programs to voters who have VCRs and are willing to
 6    set them ahead of time to pick up that message.
 7              In addition, the broadcast industry might
 8    devise alternative schemes and test them in different
 9    states.  For some reason public policy seems to shy
10    away from what scientists like, which is
11    experimentation.  And I'd be interested in seeing
12    different formats tried in different states on an
13    experimental basis to find out what works, what
14    engages the audience.
15              In conclusion, I think I would say only
16    that, obviously, free time solutions are politically
17    quite difficult.  They're controversial.  But, again,
18    to quote James Madison, he said, "Knowledge will
19    forever govern ignorance.  And the people who mean to
20    be their own governors must arm themselves with the
21    power which knowledge gives."
22              Together -- and I think, together this
23    Commission and the American public has the power
24    significantly to advance the interests of electoral
25    democracy if we exercise the creativity and the

 1    willpower to do it.  I think what is at stake here
 2    fundamentally is the continuation of a democratic
 3    form of government based on information.
 4              For better or worse, many of you in the
 5    broadcast industry have, through your time and talent
 6    and entrepreneurial efforts, created an
 7    extraordinarily powerful medium which, we may not
 8    have anticipated at the time, but now has a
 9    substantial impact on the conduct of American
10    government.
11              So, I think, together, the challenge is: 
12    Can we figure out a way to improve this system of
13    government and, at the same time, keep the burdens on
14    the broadcast industry minimal.
15              Thank you.
16              MR. SUNSTEIN:  Thank you very much, Tracy,
17    for that.  And also for keeping, so tightly, within
18    your 15 minutes in accordance with the substance of
19    your legal argument.
20              We will now hear from Cameron DeVore.
23              MR. DeVORE:  Thanks, Cass.
24              I must say I got derailed listening to
25    Tracy.  I had this image of my speaking up to Chief

 1    Justice Rehnquist in the Court and suggesting that,
 2    really, even though the time was up, that my
 3    fundamental rights required that I have an
 4    opportunity to continue my argument to the Court.
 5              I think I would not like to be the one to
 6    try that on the Chief Justice who, like Mussolini,
 7    likes to make the trains run on time during oral
 8    argument.  But it's an intriguing idea.
 9              Well, here we are I think nose-to-nose with
10    the question of and I think the intractable
11    constitutional issue of whether the free air time
12    proposal will pass muster under the First Amendment. 
13    The last time I debated this with some of you was
14    last March in the Annenberg Forum in Washington,
15    D.C., March 11.  Lots has changed since then.  At
16    that point Senator McCain was the keynoter. 
17    Certainly free air time was a fundamental and
18    critical part of McCain-Feingold.
19              Since that time that has dropped from
20    McCain-Feingold.  And, of course, McCain-Feingold, at
21    least for this term of Congress and regrettably for
22    perhaps longer disappeared from Congress' scope.
23              And I suppose we're now left with a
24    consideration of free air time, to some extent, as a
25    kind of a vestige or a remaining isolated proposal

 1    out of that package.
 2              President Clinton, I noticed -- I was at a
 3    meeting out of the country, or out of the continental
 4    part of the United States early in the week -- I
 5    noticed a statement that apparently he made I guess
 6    on Thursday asking again the FCC to act to adopt free
 7    air time, as he put it, to renew our democracy.
 8              Of course, your Committee will in due
 9    course decide what the public interest duties of
10    broadcasters are in this digital era.  That's your
11    job.  And it's a great one and one that we are all
12    watching with great interest.
13              But focusing on free air time, which is our
14    job in this segment of your deliberations, I think,
15    as the last vestige of campaign finance reform, now
16    not in the hands of the elected congress, but in the
17    hands of the appointed Commission, the FCC.  And if I
18    read the Commissioners properly in their public
19    statements, I guess if it were adopted it would be by
20    a three-to-two vote of that Commission.
21              I guess you all have to decide how many
22    public-policy angels can rest on the head of the
23    free-air-time pin.  But I suppose, as a part of that
24    process, you're going to have to consider the
25    constitutionality of the effort.

 1              When Paul and Walter Cronkite and others
 2    embarked on their crusade with the networks to cajole
 3    and leverage voluntary time for federal candidates, I
 4    think their efforts enjoyed wide support, not just in
 5    the Beltway, but nationally and among broadcasters. 
 6    And some of what they got from the networks and the
 7    broadcasters was perhaps grudging, but they got a
 8    fair amount.  And I think that the consciousness,
 9    certainly, of the broadcasters were raised to really
10    focus on their structure of providing time for
11    candidates and how it was done.
12              But I think we now have to, as I say, get
13    down to the constitutional fundamentals.  I filed a
14    paper with you all last week, which I think is
15    somewhere in your materials, expressing my views on
16    behalf of NAB and adding my voice I think to the, I
17    believe, constitutionally impeccable analyses of
18    Professor Rodney Smolla, whose paper has also been
19    filed with you by the Media Institute, and Lillian
20    BeVier of the American Economics Institute.  I've
21    attached that to my paper.
22              I think Lillian, who many of you know, has
23    provided the absolute text analyzing this.  It is a
24    public policy changing analysis, which I commit to
25    your careful review.

 1              I also have at least a secondhand
 2    endorsement, at least, of the Governing First
 3    Amendment Principles by Professor Burt Neuborne at
 4    NYU.
 5              That spectrum of First Amendment scholars
 6    ranging on other issues, at least from the liberal to
 7    the libertarian, all concur that the central meaning
 8    of the First Amendment is offended by the free air
 9    time proposal.  I think the long search for a
10    constitutionally-respectable rationale for the
11    concept has failed.  And I hope that the Committee
12    will reach that conclusion after its deliberations.
13              In fact, it's really been surprising to me
14    that free air time has enjoyed as long a run as it
15    has without much apparent constitutional concern by
16    its sponsors.
17              The times that I've discussed this during
18    the year, both in Washington, D.C. in March and after
19    that, I think that the arguments have been viewed --
20    to use Tracy's word -- as a "technicality," as sort
21    of an annoying technicality, and brushed aside.
22              I think seeking counter authorities, the
23    most often cited is Red Lion or FCC v. CBS.  And Red
24    Lion is supposed to heal all constitutional wounds. 
25    And then the public trustee, public ownership trope

 1    is used as well.  Broadcasters, in effect, are sort
 2    of virtual trespassers on the public way.  And
 3    nothing can stand in the way of wise regulatory
 4    mandates to the broadcasters.
 5              In fact, given their status as sort of
 6    squatters on the public way, to use Professor
 7    BeVier's words, "They should not look a gift horse in
 8    the mouth.  Look what they got.  And we're not asking
 9    much of them."
10              I think those arguments really don't work. 
11    And my paper I leave with you, but let me summarize
12    it in a couple of critical ways.
13              What's happening here?  What we have is, if
14    free air time is adopted by the FCC, or any other
15    governmental body, or the Congress, it's a mandate to
16    broadcasters to publish and broadcast federally
17    selected and defined core political speech.  That's
18    whether or not you accept Tracy's notion that a great
19    deal of regulation should go on as to how it's put
20    together, how many minutes, what you get, who can
21    appear on the camera and who not.  Each one of those
22    things is a First Amendment hot button.  But in any
23    event, let's assume it's just a bald mandate that
24    there be free air time.
25              It runs afoul of the two very central First

 1    Amendment concepts about which there really can be no
 2    debate.  Either one of which would require what us
 3    constitutional types call a "strict scrutiny review,"
 4    meaning that you have to have not just a compelling
 5    interest -- and you can always debate that -- but a
 6    meaning it has to be the least restrictive way of
 7    dealing with the great goals that you purport to deal
 8    with.  That's where this all flounders, regardless of
 9    which constitutional test is applied.
10              The first of these great constitutional
11    issues is that the First Amendment really prevents
12    and provides a wall against government compelling
13    journalists, the media, to print, broadcast certain
14    things, for them to require that this be done.
15              The big case is, of course, a print case,
16    Tornello, the Miami Herald case.  And that said the
17    state of Florida could not permissibly pass a statute
18    requiring replies by people who'd been "pinked" in
19    the pages of the Miami Herald or any other newspaper
20    in Florida.  It was by Justice Berger.  It was a
21    unanimous Court.  It's a principle that really has
22    established, in the hierarchy of protection of the
23    media, the highest bright line of strict scrutiny to
24    the print media.
25              The Hurley case, Justice Souter's opinion

 1    of four -- now almost four years ago -- three and a
 2    half years ago.  There was a parade in Boston where a
 3    gay group wanted to be included in this
 4    Irish-American parade, and they were denied the right
 5    to do so.
 6              Justice Souter for the Court, again for a
 7    unanimous Court, held that if you organized the
 8    parade, you call the tune and select the marchers.
 9              That wall of editorial freedom is virtually
10    absolute.  And if there is not a Red Lion excuse for
11    not applying it to the broadcast media, it applies to
12    the broadcast media as well -- and will.
13              The second problem is one of government
14    requiring content to be broadcast or whatever.  And
15    here this isn't just a print issue.  When government
16    selects content, then we have the same strict
17    scrutiny issue.  This isn't just a matter of meddling
18    with editorial freedom.  It's a matter of
19    impermissible government preference for a kind of
20    speech based on its content.
21              There's a lot of cases here.  The Turner
22    cases are really -- Turner 1, from 1994 and Turner 2,
23    from last year, deal with this, I think, in great
24    detail about what the limits are.  FCC versus League
25    of Women Voters, Consolidated Edison, Pacific Gas &

 1    Electric, Texas v. Johnson, Flag Burning, that stuff
 2    is -- -- for the lawyers in the group -- that is
 3    contained in the analysis that I have.
 4              Now the key challenge for supporters of
 5    free air time is how to escape from the strict
 6    scrutiny trap which their mandate -- this kind of
 7    mandate -- would inevitably fail.  There are four
 8    ways that that is tried.
 9              One is to say, "Well, this isn't really
10    content regulation.  This is, after all, it may be --
11    it's certainly viewpoint neutral.  We're not saying
12    that only Democrats or only Republicans" -- and I
13    missed this in Tracy's comments -- "only Ross Perot's
14    party would have some time in this concept."  This is
15    just saying candidates, whatever their ilk, however
16    they're defined.
17              Professor BeVier, I think, deals
18    marvelously in her piece about how you cannot escape
19    from the fact that this is content regulation.  I
20    commit that to you.  But certainly even if you avoid
21    all the detail of what Tracy was talking about and
22    really get into the nitty-gritty of how this time is
23    to be used and by whom and whose faces and all of
24    that come on, it cannot avoid being considered
25    regulation of content.

 1              And even if intermediate scrutiny applied
 2    -- in other words, even if you dropped off the train
 3    and you didn't apply the fullest strict scrutiny,
 4    you'd drop back to something called -- and this is --
 5    I'm sorry to do this to you, but somebody needs to do
 6    it -- you drop back to something called "intermediate
 7    scrutiny," the so-called O'Brien test, the draft-
 8    card-burning case test.  Even under intermediate
 9    scrutiny, this concept would not pass muster.
10              You certainly would have substantial
11    reasons.  Cleaning up the swamp of America's campaign
12    system is certainly a high and valuable goal.  But,
13    in order to meet the second part of the test, there
14    has to be direct and material advancement of that by
15    this.  In other words, you're going to have to prove
16    that this concept is going to do all that nice stuff
17    that you assume that it will.  And, most importantly,
18    you're going to have to prove that there are not
19    other ways of achieving this which do not have the
20    same impact on speech.  And there are lots of those.
21              I mean there are those that would provide
22    federal funding of candidates.  There could -- and
23    this is all under Buckley v. Valeo -- there could be
24    further limitations on campaign contributions.  There
25    are lots of ways.  Soft money, I think, could be

 1    wiped off the slate in spite of what Senator
 2    McConnell may think.
 3              And I think that there are lots of
 4    alternatives that simply would not impinge on speech. 
 5    And the Constitution requires you've got to do that
 6    stuff first before you can get into content
 7    regulation.
 8              Now the nature of broadcasting is another
 9    out, another way to escape from this.  Herein of CBS
10    versus FCC and Red Lion.  Let's start with CBS versus
11    FCC.  Tracy said it.  It's a case that upholds
12    reasonable access of candidates to broadcast
13    facilities.  Sounds good.  Except that what it's
14    about are those portions of the act which require the
15    broadcasters, if, in fact, they are going to allow
16    access to their broadcast facilities of candidates at
17    all -- they don't have to do that -- if they're going
18    to do that, then they have to provide access to paid
19    time by candidates to get on there and have their
20    views expressed.  That's all that it holds.  That's
21    all that it's about.
22              The key cases in this area have long been
23    -- for a long, long time, not long after Red Lion --
24    CBS versus Democratic National Committee, FCC versus
25    League of Women Voters.  They are the last, the

 1    Supreme Court's keywords on this.  And both cases
 2    require narrow tailoring.  Both require that you
 3    cannot have means that intrude on the journalistic
 4    integrity of broadcasters, meaning broadcasters --
 5    not print media -- we're right in the broadcast
 6    industry in those cases -- make it very clear.  And I
 7    think free air time simply cannot meet part two of
 8    that test.
 9              Then comes Red Lion.  Now Red Lion has been
10    the catch all.  Red Lion covers all.  And if you read
11    the Congressional Research Services analysis of this,
12    it's sort of like a fly in amber trapped in 1969. 
13    And there it stands and it's still the authority.
14              Well, I suppose, like a lot of other
15    Supreme Court cases, Plessy v. Ferguson comes to
16    mind, it's still on the books.  It hasn't been
17    overruled.  But the basis for Red Lion is history,
18    the scarcity concept.
19              And listening to the discussion here this
20    morning of the proliferation, not just through
21    digital means, but everything else, the available
22    electronic media that are out there, everything is
23    changed.  And the whole concept of Red Lion, based on
24    that scarcity of the spectrum is simply not with us
25    anymore.  Whether it's spectrum compression, whether

 1    it's satellites, whether it's the Internet, we can
 2    talk about it all.
 3              And the concern the Supreme Court expressed
 4    about the Internet and the protective nature of --
 5    it's protection of it in the ACLU case last year, I
 6    think, is symptomatic.
 7              So I think the basis for Red Lion is simply
 8    gone.  It's not here anymore.  And the case simply --
 9    in a case like one challenging the free air time
10    rules, Red Lion would be brushed aside by the Court
11    as any kind of a rationale for upholding this.
12              And even if Red Lion lives, people forget
13    what Red Lion is about.  It was about the Fairness
14    Doctrine.  It was about approving the Fairness
15    Doctrine at that time -- which, of course, is not
16    with us anymore.  But that's what it was about.
17              And it was a very narrow decision.  It --
18    people are fond of cherry-picking, you know,
19    one-liners from Red Lion.  But if you look at what
20    the case concerned, it was a doctrine that required
21    broadcasters not to exclude voices.  But here, in
22    this situation, with free air time, the views of
23    these candidates, whatever you think, are widely
24    available.  They have lots of ways to get on. 
25    Sometimes they don't respond to the invitations of

 1    local broadcasters to debate, at least the incumbents
 2    don't.  There's lots of available ways for these
 3    voices to be heard.
 4              And also, fundamentally, if you look at Red
 5    Lion, free air time is just plain unrelated, and its
 6    attempt to cure the woes of the campaign system is
 7    simply unrelated to any claim of any remaining
 8    scarcity of voices.
 9              There's other things that have been argued. 
10    The quid pro quo concept, I think Professor Smolla's
11    piece.  I commit to you, on that.  There really is no
12    nexus between the curing of the campaign system in
13    the country and the regulation of frequencies.
14              I mean I do agree that no one could argue
15    at all that the FCC is on shaky constitutional
16    grounds.  Certainly the interference on the spectrum
17    remains a critical nexus of the entire broadcast
18    regulatory structure.  But that structure is one
19    that's based on allowing the broadcasters to choose
20    their content.  When the licenses are renewed there
21    is a review of whether or not they have done that.
22              And I think as was said in the Democratic
23    National Committee case, the Congress has wisely
24    stayed away from being too specific in what it is
25    that even with that periodic review would require.

 1              I sort of took Cass on a little bit in my
 2    paper, because I suggested another argument that
 3    might be made would be the notion of sort of the
 4    First Amendment having a flip-side, that it really
 5    enables the Congress and the regulators to provide
 6    for speech which would provide a level playing field,
 7    which would provide a way for all voices to be heard.
 8              It's a concept that I disagree with
 9    fundamentally.  And I certainly know that Professors
10    Neuborne and BeVier and Smolla and a lot of other
11    First Amendment scholars disagree with.  It's a very
12    interesting, thought-provoking concept.  But it's one
13    that has no real-case support.
14              And I think if Red Lion is no longer a
15    viable authority, it's not something that really has
16    -- it's a debating point, but not something which you
17    can talk about as a matter of supported
18    constitutional jurisprudence.
19              So, here I am, raining on your parade,
20    today, or the parades of those who feel so strongly
21    about this.  But I think I have the feeling, having
22    gone through a lot of discussion and debate on this
23    in the last year, that it's important for you all to
24    hear that at least there's a body of constitutional,
25    scholarly opinion in this country which is not off in

 1    one corner, which thinks that the free-air-time
 2    emperor is not wearing any constitutional clothes.
 3              MR. SUNSTEIN:  Thank you, Mr. DeVore.
 4              I'd like to mention that you've gone
 5    substantially over your time.  And I thought that as
 6    moderator, I was prevented from holding you to your
 7    time.  It was an excellent presentation.
 8              MR. DeVORE:  Thanks, Cass.
 9              MR. SUNSTEIN:  Paul.
12              MR. TAYLOR:  Thank you, Cass.
13              I will try to go substantially under my
14    time because I hope the value here is going to be a
15    discussion.  And I also did have one crack at this a
16    month or two ago.
17              Let me just start my comments, very
18    briefly, by bringing -- I assume everybody is up to
19    date.  But a lot has happened on this issue in the
20    last month or two.  We had the President talking
21    about the public trustee standard in the State of the
22    Union and urging the FCC to move forward on a
23    rulemaking on the end of January.
24              The very next day, as you all know, the
25    Chairman of the FCC, apparently backed by two other

 1    votes, said he would like to move forward.  And this
 2    has triggered a real tug-of-war, a jurisdictional
 3    tug-of-war, where Congress has said, in effect, "Over
 4    our dead bodies."  And there are riders on various
 5    appropriations bills to try to block the FCC from
 6    moving forward.
 7              So a classic, sort of intergovernmental
 8    tug-of-war is going on.  In the meantime, we have had
 9    some sort of denouement on this year's version of
10    campaign finance reform.  Came to the floor of the
11    Senate last week no longer including free air time. 
12    That had been dropped off last fall.  But the bill
13    itself didn't make it through.
14              And it looks as though -- although it got a
15    majority of votes, it was eight votes short of the
16    filibuster-proof majority it needed.  So it looks
17    like that issue, at least in this Congress, is dead.
18              And when Cam says, "Now there's some effort
19    to treat free air time as a component of this, as a
20    last vestige," I would turn that figure of speech
21    around and suggest that what it can be, in the real
22    world of politics, is not a last vestige, but an
23    important first step.
24              Those of us who care about this issue
25    believe that free air time works best in the context

 1    of a broader campaign finance reform fix of some
 2    kind.  We all understand how difficult that is.  We
 3    have ample and fresh evidence of that today.
 4              It seems to me there still is an argument
 5    for moving forward.  It's a good idea on its own.  It
 6    doesn't solve every problem, but it works on its own. 
 7    And it is a better idea tactically in this
 8    circumstance, because this is a Congress -- as most
 9    Congresses -- that doesn't want to take on campaign
10    finance reform, that is well served by the current
11    system no matter how embarrassing it becomes, how
12    much it becomes the subject of a year's worth of
13    hearings.  It is a system that got all 535 men and
14    women in Congress, it got them there, and helps keep
15    them there.  And they understand that.
16              And that's why, again at the level of
17    tactics, it does become important to search for
18    solutions that can kind of change that dynamic a
19    little bit.  And, I think, in some ways, that's part
20    of the spirit in which this body was appointed.
21              What I would like to do in just a couple of
22    minutes is to separate out two models.  The phrase
23    "free air time" is put out there.  And it seems to me
24    there are really two different models that we are
25    discussing that ought to be teased apart.

 1              One of them is free air time, that under
 2    some government mandate, broadcasters would be
 3    required to give to candidates or to parties in some
 4    system that would achieve many of the objectives
 5    Tracy was talking about in terms of making races more
 6    competitive, reducing the role of money, giving
 7    people more access to the system, et cetera, all very
 8    worthy goals.
 9              The broadcast industry, under the public
10    trustee standard, must turn this over.  And the
11    candidates have editorial control.  Perhaps you would
12    tinker with how much editorial control.  Perhaps you
13    would put a format restriction on whether the
14    candidates must be on screen.  But basically it would
15    be understood to be their time.
16              I think that's extremely valuable.  And
17    that's the sort of thing that would, obviously, have
18    to be mandated.
19              There is another model for this which is
20    that the broadcast industry itself, perhaps through
21    self-regulation, might consider ways to improve
22    coverage of political campaigns.  One of the things
23    so distressing to those of us who care a lot about
24    elections is when the election season rolls around,
25    the dominant dynamic of the conversation is the

 1    crossfire of advertising.
 2              That's certainly the dominant dynamic for
 3    the greatest number of citizens.  That's how people
 4    experience politics.  They see the 30-second ads,
 5    often with just one eye and one ear as they're doing
 6    something else.  But it overwhelms almost everything
 7    else in our political culture.  And I think a lot of
 8    us feel that a lot of this deep cynicism that people
 9    feel, the deep disengagement people feel comes
10    because this is such a powerful form of
11    communication.
12              It seems to me that without Uncle Sam
13    moving in and wagging its finger at you and saying,
14    "You must do better," -- because, I think, that does
15    get on very precious First Amendment grounds -- would
16    there not be value in the industry planting its own
17    flag and saying, "What are ways we can do to build
18    alternate models for this conversation to happen on
19    television?"  Debates that we would sponsor. 
20    Interview programs that we would sponsor.  News
21    coverage that would be directed more towards the
22    coverage of politics and government.  Again, I don't
23    mean to be waving the public trustee standard at you.
24              There is a -- and I don't want to hit you
25    over the head, because I know that you folks get hit

 1    over the head a lot.  I lived in a newsroom for 25
 2    years where, I think, we were less exposed in
 3    broadcast.  But I understand when people come in and
 4    tell you that you're not doing your job and you've
 5    got to serve this interest or that.  I know that it
 6    tends to get people's backs up.  But let me make one
 7    citation that I think is important.
 8              There is a study that was just released by
 9    a consortium of universities, led by the University
10    of Miami.  It was done by eight other universities, I
11    believe, including USC here at Annenberg.  And it was
12    a content analysis of local news programs in eight
13    U.S. television markets.  This was done over four
14    different times over the last year.
15              And the fundamental finding is:  "According
16    to the content analysis" -- which, by the way, was
17    carried out by former news executives and news
18    producers -- "coverage of government affairs, once a
19    mainstay of local television news, now occupies just
20    15 percent of the news during an average program."
21              That's 15 percent of the news they've
22    already separated out the time that goes to weather
23    and sports and other things.  That's a pretty small
24    number.
25              And if you go to the big markets in that

 1    survey, L.A., for example, that's down to five
 2    percent.  Five percent of the news whole in the local
 3    news programming is given over to government and
 4    politics.  That is one of the reasons why this
 5    discourse dominated by these attack ads is so
 6    powerful.
 7              It seems to me the response of the
 8    industry, when I raise this with programmers, is,
 9    "You know, we give the public what it wants.  We
10    submit to a vote every day of the American public. 
11    What could be more democratic than that?  We have to
12    be ratings driven.  We have to be in business to make
13    money."
14              I respect all of that.  And that's
15    absolutely right.
16              What it seems to me has been missing here
17    from this equation is the kind of creativity and
18    inventiveness that television is so good at in its
19    entertainment programming, so good at it in other
20    forms of public affairs programming.  Look what you
21    have done with the weather.  The weather seems like
22    sort of a mundane subject.  But it's not a mundane
23    subject this year in California, in particular, but
24    you have brought a lot of creativity to presenting
25    weather which, on its face, doesn't seem like the

 1    world's most fascinating topic.
 2              A lot of creativity to covering traffic.
 3              It seems to me if one signal from this
 4    group is, "Let's take our brainpower -- we know our
 5    medium better than anybody else.  Let's invent forums
 6    that get candidates on the air, that get their ideas
 7    exposed to the broadest number of citizens, test it
 8    against one another, test it against journalistic
 9    scrutiny," I think we're a whole lot better off.
10              And while, I think, in the real world, it's
11    going to be difficult for the broadcasters on this
12    panel to give any signal that they can live with a
13    mandated system of free time -- I understand your
14    objections.  I wish it was otherwise.  We have an
15    honest difference of opinion here -- but if you do
16    send some signals through the industry, because I
17    think this is a well-respected and would be a widely-
18    followed group, that, "We want to move in this
19    direction.  We want to do it ourselves.  Here is some
20    goals.  Here are some standards.  Here is some self-
21    regulation," I think it would be a very powerful
22    step.
23              Thank you, very much.
24              MR. SUNSTEIN:  Thank you, Paul.  That was,
25    indeed, under your 15 minutes.  And also very

 1    constructive.
 2              And, thank you, all of the panelists, for
 3    really wonderful presentations.
 4              The floor is open.
 5              Gigi.
 6              MS. SOHN:  Thank you very much.
 7              Cam and I have battled on several
 8    occasions.  And I really respect him a great deal. 
 9    And, Tracy and Paul, I think you did a terrific job.
10              I just want to make two, I guess,
11    substantive points and one procedural point.
12              Cam, I'm really glad you mentioned that Red
13    Lion hasn't been overturned because, fortunately or
14    unfortunately, depending on your point of view, it is
15    still the law of the land.  But the point I wanted to
16    make about Red Lion is it -- and this is where you're
17    wrong, Cam -- it wasn't about the fairness doctrine. 
18    It was about the constitutionality of the personal
19    attack and political editorial rules which, without
20    getting into the minutiae -- and if anybody wants to
21    ask me about it -- was about mandating free time. 
22    Because both the political editorial rules and the
23    personal attack rules require broadcasters and
24    certain events to give free time to either candidates
25    or other folks.  So I just want to make that point. 

 1    That's point number one.
 2              Point number two is I wanted to address
 3    your two First Amendment touchstones that you talked
 4    about, about preventing compelling speech and also
 5    government requiring content.  They really are one of
 6    a piece.  And, I guess, my point with respect to
 7    those is that FCC, in numerous -- numerous -- areas,
 8    both compels speech and requires content.  I'll give
 9    you some examples.  Children's programming, violence,
10    indecency, sponsorship by identification, news
11    distortion.
12              So this is not unheard of.  And I don't
13    agree with the FCC doing some of that stuff.  But the
14    fact of the matter is is that just by reciting the
15    First Amendment doesn't mean that the FCC hasn't used
16    its powers and constitutionally used its powers to
17    regulate content and compel access.
18              And the perfect example, frankly, is the
19    Reasonable Access, Section 31287 provision that was
20    upheld in CBS versus FCC and Equal Opportunities. 
21    That's all compelled speech.  And it's all -- so far
22    nobody has challenged it as unconstitutional -- or
23    nobody's won, let's put it that way.
24              And that leads me to my, sort of, overall
25    procedural point, is that we're not the Supreme Court

 1    here.  There are serious constitutional questions. 
 2    Don't get me wrong on -- I respect -- I really
 3    respect, you know, your opinions and the other
 4    scholars that you've named.  And I'm not saying we
 5    should ignore the constitutional implications.  But I
 6    just don't think it is for this body to decide
 7    whether certain things, especially if it's a very
 8    close call, whether they're constitutional or not.
 9              It is for us to decide what the public
10    interest obligations are with the constitutional
11    issues in the background.  But I don't think that we
12    should sit here, as a Supreme Court -- especially
13    when I just reeled off another of things which either
14    the Supreme Court has upheld or has chosen not to
15    address or -- well, I'll just leave it at that.
16              So that's my procedural point, is that I
17    think we have to recognize what kind of body we are
18    in comparison to the FCC, which can also make these
19    constitutional decisions, and the Supreme Court.
20              MR. SUNSTEIN:  Yes.
21              MR. DeVORE:  Gigi.  Yes, we have squared
22    off, always in a friendly and respectful way.  And
23    I've enjoyed it and I will continue to enjoy it.
24              As far as Red Lion, yes.  I was using kind
25    of a shorthand in saying "fairness" -- it's the

 1    personal attack.  But, whatever, it was something
 2    that came out of what was on -- what the broadcasters
 3    had chosen to put on air.  And that was the basis for
 4    the rule.  This comes, I think, from a different
 5    universe.
 6              As surely there are things that compel
 7    speech.  And, certainly, the Supreme Court, for
 8    example, if you're dealing with kids and indecency,
 9    you've got both Pacifica and you've got Denver Area
10    of two years ago, two Supreme Court decisions.  In
11    that specific area, where the Court has said, "Um,
12    yes.  That is something that we will uphold: 
13    Indecency being put in the hands, in an uncontrolled
14    way, of children."  And I think that's one where the
15    Supreme Court is not going to waiver from that.
16              I don't think we're talking about that
17    here.  And if you'll pardon me -- I don't know. 
18    Maybe I'm the only one old enough to know who Tom
19    Lehrer is, but I hope some of you remember Tom Lehrer
20    and his wonderful songs.
21              But your comment about, "This Commission or
22    this Committee shouldn't worry too much about the
23    First Amendment side; let's get on with it," reminds
24    me, I regret to say, of his Werner Von Braun song,
25    right?  No.  "We Just shoot them and where they come

 1    down is not our department," said Werner Von Braun.
 2              Now I hope that this Committee, in
 3    considering this, will not turn away from a
 4    consideration of the constitutional issues.  Because,
 5    I think, to make it somebody else's problem is going
 6    to -- is "ain't fair" and is going to lead to a
 7    process that I think is going to be very frustrating
 8    and difficult for everyone.
 9              MS. SOHN:  Yes.  I just want to clarify. 
10    It's not what I said.  In fact, I said we should take
11    into account the constitutional issues.
12              What I said is, especially in places where
13    the Supreme Court has already spoken, okay, I don't
14    think that we have the right or the duty to overturn
15    what they've said.
16              MR. SUNSTEIN:  Rob Glaser.
17              MR. GLASER:  Well, thanks a lot.  If I
18    wasn't already cautious about venturing into any
19    constitutional areas, Gigi has reminded me why I need
20    to be very, very cautious.  And I thank you for that.
21              Actually, I do want to follow up on what
22    was sort of a lot of part of your point and to Mr.
23    DeVore and the other panelists.
24              The argument about whether or not certain
25    categories of reforms are constitutional or not is

 1    very important.  But if it were to turn out that
 2    there was an implementation issue only associated
 3    with this, couldn't we get to that?
 4              In other words, wouldn't it be possible for
 5    the government to say, "Hey, here is some spectrum. 
 6    We are willing to give it to you, if in exchange for
 7    your receipt of that spectrum you voluntarily agree
 8    to a certain set of rules with regard to access to
 9    some of the programming time, let's say for campaign
10    finance reform."
11              If that were the case, i.e., it were a
12    contract between the recipients of the spectrum and
13    the government, wouldn't that completely obviate the
14    free speech issues?
15              MR. DeVORE:  In other words, can you waive
16    your First Amendment rights?  I guess the answer to
17    that has got to be yes.
18              But, I think, again, without going off into
19    the area of constitutional conditions and so forth
20    which is one of those other areas that First
21    Amendment lawyers like to talk about, take a look at
22    Rod Smolla's piece, which goes through that, I think,
23    in some detail and points out that the usual
24    rationale for saying, "Well, you're getting a lot so
25    we can ask something of you," really does not apply

 1    in the area of governmentally mandated content of
 2    speech.
 3              If, instead, you're talking about a regime
 4    where, without pointing a gun at the broadcasters'
 5    heads and saying, "We're going to take something away
 6    unless you do this," there can be something like what
 7    Paul was talking about in a free-ranging discussion
 8    of what can be worked out and what might be worked
 9    out voluntarily by the industry, I think a lot of
10    that has happened.
11              And I mean, Robert Decherd, I don't mean to
12    point at you, but I think Valeo did a lot of that in
13    response to what Paul and Walter were talking about. 
14    There's a lot of room for that volunteerism.
15              But, I think, if you try to turn it into a
16    quid pro quo without even getting into the discussion
17    about what the value of the digital frequencies are
18    -- reasonable minds are differing all over the map
19    about that -- I think the notion of unconstitutional
20    conditions, you really run afoul of that, to
21    shorthand this -- if you'll forgive me -- when you
22    get into the quid pro quo area.
23              MR. GLASER:  Well, but, I guess, you --
24              MR. DeVORE:  When you're dealing with
25    volunteerism, you can do that.

 1              MR. GLASER:  But if it's a voluntary thing
 2    that actually has the legislative teeth associated
 3    with it, i.e., you get this set of spectrum or you
 4    get this set of spectrum as a loan for a set of
 5    years, plus a much broader set of rights to broadcast
 6    in terms of multichannel and in terms of data feeds,
 7    in terms of all kinds of other things, that just
 8    seems like it's the equivalent of spectrum auction
 9    where the currency that you're giving back is in
10    dollars, but the currency you're giving back is
11    access to some elements of that spectrum under
12    certain sets of circumstances.
13              So, I guess, if you cast this as an
14    economic issue rather than a constitutional law
15    issue, isn't that -- well, perhaps, not necessarily
16    something that the NAB would want, given that there
17    might be a view that some of those issues were
18    already determined economically, it just seems like
19    it's pretty clean.
20              And what I hear you saying is, "It is
21    clean.  You might have a personal public policy view
22    to characterize the volunteerism in a more ad hoc way
23    than a legislative way."  But that does take away
24    from the constitutional issues, if I'm hearing you
25    correctly; does it not?

 1              MR. DeVORE:  I guess I would say this:  In
 2    constitutional issues, you can't view it as horse
 3    trading.  You've got to look at this as something
 4    where you really are asking, in whatever ways you can
 5    do, a voluntary system that the broadcasters would
 6    agree to.
 7              But if there is a gun or if there is a
 8    statement that, "Unless you do this, we will do
 9    that," then the unconstitutional condition doctrine,
10    which is very -- I won't go into cases, but I'll be
11    happy to do that with Gigi or Norm or Cass or anyone
12    else, it just won't work.
13              And it's a hard thing to grasp, but it
14    isn't just, "Let's just sit down and we'll give you
15    this if you'll do that."
16              Anyone can waive First Amendment rights.  I
17    mean the tobacco industry has, at least in a part of
18    this, this thing that's going on, is talking about
19    waiving their constitutional rights to advertise. 
20    Certainly, people can do that.  But I haven't heard
21    the broadcasters say so far they're willing to do
22    that.
23              MR. GLASER:  Okay.  Thanks.
24              MR. SUNSTEIN:  We have Jose and then Les
25    and then Norm.

 1              Jose?
 2              MR. RUIZ:  Yes.  I want to thank the
 3    panelists, first of all, for being here.
 4              This is basically addressed to maybe I
 5    guess Paul and Tracy.
 6              You gave us a lot of different scenarios,
 7    Tracy especially.  It is my understanding that the
 8    concern right now is of campaign spending.  And I
 9    thought, Tracy, you were going to get to that as you
10    started giving us statistics on how that has excelled
11    so much over the years.
12              I didn't get an understanding from either
13    of you on how any of those formulas, without limited
14    campaign spending by the broadcaster would affect
15    this.
16              If they still have the ability to buy time
17    and we're going to give them additional time, what
18    are we accomplishing?
19              MR. WESTEN:  The point I would make is
20    this:  -- I think you're right, by the way -- If you
21    give candidates free time, on one level it simply
22    enables them to raise as much money as before and
23    spend it on other things.  So free time will not
24    solve our campaign finance problems.
25              Campaign finance problems, on the other

 1    hand, have created a need for free access because the
 2    only way many candidates can now compete in the
 3    marketplace is by raising extraordinary amounts of
 4    money.
 5              So by creating free access for candidates,
 6    it at least let's all of them to get in on a minimum
 7    basis.  At least it lets challengers, third-party
 8    candidates, other majority party candidates in
 9    reapportioned districts to get in, reach the
10    attention of the public and say, "Here's what I
11    think."  That creates a floor.
12              It will not solve the campaign finance
13    problems because the very wealthy candidates or the
14    candidates with access to funds will simply use the
15    free time and then raise as much money and spend it
16    on other things.  But at least it allows everyone to
17    get in the door.  And it lets the press cover their
18    ideas.  It gives them some minimal exposure.
19              So my point is this will not solve campaign
20    finance problems.  Ultimately, we need, in my view, a
21    total campaign finance solution here.  But it will,
22    nonetheless, make a significant contribution to the
23    debate.  And that, I think, is the critical point.
24              This is not a new issue.  Voter's Time was
25    a publication Newt Minow involved in almost 30 years

 1    ago.  I think it was published in 1969, before
 2    Watergate, before a lot of these problems surfaced. 
 3    And it called for free time for presidential
 4    candidates and expressed the fear that without that,
 5    the vitality of our democratic form of government
 6    would suffer.
 7              So what I'm saying is that this form of
 8    time is necessary for the governmental process.  It
 9    won't solve campaign finance problems, but the need
10    for it has been made more intense because of campaign
11    finance problems.
12              MR. TAYLOR:  Can I just say very briefly,
13    political scientists who study elections will tell
14    you all money is not equal.  First dollars are more
15    important than last dollars.
16              Having the seed resources to get a message
17    out is what tends to get you in the mix and allows
18    you to become competitive.  And that's good for
19    democracy.  So while, again, it doesn't solve every
20    problem, it does serve that purpose.
21              Secondly, if you go a couple of miles up
22    the coast here into a special election in
23    California's Twenty-Second District in Santa Barbara
24    -- the run-off election is next week -- a lot of TV
25    advertising is going on in that election.  The

 1    biggest spender is neither the democrat nor the
 2    republican.  The biggest spender is the National
 3    Right to Life Committee, America Family First and
 4    America's Term Limits Movement.
 5              This is an important change in the culture
 6    of campaigning, in the culture of campaigns where
 7    lots of voices are using the electoral megaphone to
 8    get their own messages out.  Very, very difficult to
 9    control this or stop this.  Maybe you don't even want
10    to stop it.  But you do want to create a regime where
11    the candidates don't get drowned out in their own
12    campaigns.  That's what happening.  And this is a
13    partial response to that.
14              MR. RUIZ:  Can I say something?
15              MR. SUNSTEIN:  Sure.
16              MR. RUIZ:  It seems to me, though, that to
17    address the three points and the Constitution and
18    everything else, that limited spending is as
19    reasonable if not more, because then it isn't the
20    most wealthy that's going to win the race.  It does
21    create access.  It does protect the broadcaster.
22              But why can't we just limit the amount you
23    can spend, and then they have to find other means?
24              I mean one of the problems I have in one of
25    Tracy's analysis is that if you give the money to a

 1    party, they may chose to give the money to one
 2    candidate in a race, but the other party may not give
 3    any money to his opposition.  So they're out dry. 
 4    They're not getting any access from it.
 5              But if they have limited spending, at least
 6    they know what to raise for that and it forces them
 7    to spend the money in other areas and, hopefully,
 8    addressing the public issues.
 9              MR. SUNSTEIN:  A crisp answer, if you
10    would.  We have a lot --
11              MR. WESTEN:  Very briefly.
12              I've written a number of books calling for
13    expenditure ceilings.  So I agree that expenditure
14    ceilings are a long-term, important solution.  But my
15    basic point to this group is you don't need to
16    address campaign finance reform.  God forbid, that's
17    a big enough and difficult enough issue.  You've got
18    a big enough issue on your plate as it is.
19              And my basic point is that there are
20    important reasons for considering free time apart
21    from campaign finance issues.
22              Yes.  If you want to get into those, yes,
23    expenditure ceilings, others, will be part of the
24    package.
25              But I think we need to raise the floor to

 1    make sure that all candidates have some minimal
 2    ability to get their ideas in front of the public.
 3              The growth of spending in campaigns has
 4    made that more difficult.  And, therefore, this, I
 5    think, is an information solution.  It's not a
 6    campaign finance --
 7              MR. SUNSTEIN:  Les.
 8              CO-CHAIR MOONVES:  Part of the same issue
 9    -- and, Paul, it's something we addressed last time
10    you appeared before.
11              And, Cam, I'd love to have you comment as
12    well as you, Tracy.
13              You are a broadcaster.  And last time I
14    asked you the same question, Paul:  Shouldn't
15    campaign finance reform -- shouldn't free time for
16    candidates be tied to other things that are involved
17    with changing it?
18              To use your example, Dianne Feinstein did
19    drop out because she didn't want to face with Al
20    Checchi what she had to with Huffington.  So, let's
21    say we give Checchi's opponents two minutes a day for
22    60 days.  It's not going to stop Checchi from
23    spending his $30 million on top of that.
24              When you mention whether this is a great
25    first step versus the last vestige, which I think is

 1    a good way of defining what our situation is, as a
 2    broadcaster what do you say when you are asked to
 3    give and you're the only one that's asked to give?
 4              That's what broadcasters and I think that's
 5    what the NAB is facing.  And that's what we on the
 6    panel, who are trying to do the right thing here, are
 7    faced with.
 8              MR. TAYLOR:  Well, this flops into the
 9    argument about whether there's an appropriate quid
10    pro quo arrangement to the award of the new digital
11    spectrum.  And I think it goes to the some of the
12    questions Rob Glaser was asking.
13              I believe there is an appropriate quid pro
14    quo.  I think the quid pro quo has been in law and in
15    policy for 64 years, since the FCC.  It's a social
16    compact.  The broadcasters get something.  The public
17    gets something in return.  I think it served the
18    country enormously well.  And the spirit in which
19    this body was created was to say, "As we move into
20    this new technology let's update that compact and
21    those arrangements."  And it seems to me it is the
22    right time to think about free air time as part of
23    that.
24              So why are the broadcasters being singled
25    out?  Because the broadcasters, as recently as the

 1    Telecommunications Act of 1996, the Turner decision
 2    must carry last year, the broadcasters continue in
 3    our regime of regulation of policy in our society to
 4    be granted special privileges.  And from that comes
 5    special responsibilities.
 6              That would be the basic answer.  And,
 7    again, to go back to my sense, tactically one of the
 8    reasons Congress -- Congress has a lot of reasons not
 9    to want to do campaign finance reform.  One of them
10    is they don't want to go after free air time.  They
11    don't like it because they know their challengers are
12    going to get it.  And they don't like it because
13    having a good relationship with the news director
14    back home is one of the most important things in the
15    firmament of what a member of Congress cares about.
16              So to the extent that the signal from the
17    industry is, "Don't tread on us," that signal is
18    heard loud and clear in Congress.
19              If you were to send a somewhat different
20    signal, which is, "Let's try to construct a regime,
21    and maybe it involves getting rid of lowest unit rate
22    which doesn't work very well for a policy reason and
23    get somewhere else," it's not going to -- you know, I
24    do believe that would be a first step and a prod to
25    Congress and a very helpful prod.

 1              MR. SUNSTEIN:  Norm.
 2              MR. WESTEN:  I would just add quickly that
 3    I think other media ought to be included.  And I
 4    would apply these -- I didn't get into it.  But I
 5    would apply my same recommendations, for instance, to
 6    cable television or microwave or satellite.  And I
 7    think that could constitutionally be done as well.
 8              Cable is required to set aside whole
 9    channels for public educational, governmental access. 
10    I think some of that capacity could be used for
11    political access as well.  For example, if we wanted
12    to recarpet up.
13              I think, in many races, candidates really
14    are better off using print, direct mail.  It's more
15    efficient.  It's more direct.  And, I think, public
16    financing's subsidies of that are things that ought
17    to be included in the entire packet.  So I don't
18    think broadcasters should be singled out at all.
19              It's just that it is the medium of choice
20    for candidates.  If they have the money they will
21    always want to buy broadcasting because it is clearly
22    the most effective medium.
23              You've done too good a job, basically, is
24    what it comes down to.  You've done an extraordinary
25    job.  You've created the audiences.  And that's where

 1    they are.  And every candidate wants to reach them.
 2              MR. SUNSTEIN:  Norm.
 3              MR. DeVORE:  Just quickly.
 4              MR. SUNSTEIN:  Oh, wait.  Okay.  Quickly. 
 5    And then we'll go to Norm.  Poor Norm.
 6              MR. DeVORE:  Well, just in response to Les.
 7              Certainly, I think, the feeling is that it
 8    really is loaded on the broadcasters.  And I think
 9    that if you look at CBS v. FCC, the balance that the
10    Court approved there under the reasonable access
11    notion was one that was a very careful balance.  And
12    the Court was very clear about the fact that they did
13    not believe that this got into content.  And that was
14    something that shouldn't be done.
15              And, again, I think most recent word on
16    this in Turner, Justice Kennedy said, "In particular,
17    the FCC's oversight responsibilities" -- this is
18    addressing the quid pro quo point, Paul -- "do not
19    grant it the power to ordain any particular type of
20    programming that must be offered by broadcast
21    stations."
22              I mean, it's a fairly direct statement, I
23    think, by not a Court 30 years ago, but by a Court
24    now.
25              MR. SUNSTEIN:  We have Norm and then Frank

 1    and then James Goodmon.
 2              Norm.
 3              CO-CHAIR ORNSTEIN:  Thanks, Cass.
 4              I want to thank you all.  And, Paul, I'm
 5    glad you mentioned exploring voluntary ways.  We're
 6    going to, obviously, look at a whole range of things. 
 7    But, certainly, ways of trying to work out
 8    partnerships with broadcasters, including something
 9    that we discussed briefly, returning to a code of
10    conduct that might include some explicit
11    recommendations, is one that I think we'll explore
12    very carefully.  Things that could come from
13    broadcasters as well.
14              Cam, I want to ask you a few questions just
15    to explore more deeply what you've been talking
16    about.  I'm not even a country lawyer.  So it's as
17    the risk of taking on a distinguished constitutional
18    scholar.
19              MR. DeVORE:  You sound like one of those
20    southerners who starts --
21              CO-CHAIR ORNSTEIN:  Yes.
22              MR. DeVORE:  -- with that kind of corn-pone
23    approach --
24              CO-CHAIR ORNSTEIN:  Not even Sam Irvin
25    here.

 1              MR. DeVORE:  -- before he zaps the
 2    opposition.
 3              CO-CHAIR ORNSTEIN:  So I just have a couple
 4    of areas I want to explore for a minute.
 5              Do you believe that lowest unit rate is
 6    unconstitutional?
 7              MR. DeVORE:  It's not been tested.  It's
 8    been there a long time.
 9              CO-CHAIR ORNSTEIN:  Has it ever been
10    challenged by broadcasters as unconstitutional?
11              MR. DeVORE:  It's not been challenged. 
12    Yes.  They have not -- not ever law that's on the
13    books, Norm, as you know, that is subject to
14    constitutional challenge has been challenged.
15              But I just don't think that lowest unit
16    rate provides any kind of a precedent for what would
17    want to consider here.
18              CO-CHAIR ORNSTEIN:  No, but do you believe
19    it's unconstitutional?
20              MR. DeVORE:  I think I'd be skeptical about
21    it.
22              CO-CHAIR ORNSTEIN:  Okay.
23              MR. DeVORE:  If we really knuckled down
24    under the law and the constitutional law as it is
25    developed since that became a part of the broadcast

 1    code.
 2              CO-CHAIR ORNSTEIN:  Would then half of
 3    lowest unit rate be unconstitutional?
 4              MR. DeVORE:  A little bit pregnant, Norm. 
 5    We'd have to talk about this and figure out just what
 6    it's worth.  But I mean these hypotheticals, I think,
 7    don't have a lot to do with what's before you --
 8              CO-CHAIR ORNSTEIN:  Okay.  But let me ask
 9    you this:  Ed Fritz, Eddie Fritz, the head of the
10    NAB, has said over and over and over again that
11    lowest unit rate is an enormous burden on
12    broadcasters.  It costs them 30 percent of what they
13    would otherwise get.
14              If it's unconstitutional, why hasn't it
15    been challenged?
16              MR. DeVORE:  You're asking me a question
17    that I simply can't answer.  I mean to some extent
18    the broadcasters have lived with this system and
19    started a very, very regulatory mode in the late '20s
20    and early '30s when there were very few stations and
21    very few frequencies.
22              If you chart this over time, Norm, I think
23    a fair observer would have to say that there has
24    been, in effect, deregulation over time as the number
25    of frequencies, the amount of spectrum, all of that

 1    is included.
 2              So we're talking about things that happened
 3    on a timeline over time.
 4              I don't know why it hasn't been challenged,
 5    but it hasn't been.
 6              CO-CHAIR ORNSTEIN:  Okay.  Well, I can see
 7    I'm not going to get you on that slippery slope.  So
 8    I'll move along.
 9              You have a little section in your paper on
10    property rights.  And I notice you say here that,
11    "While broadcasters may have no legal claim against
12    the government for the spectrum as such, broadcasters
13    certainly have a cognizable interest in the
14    businesses they have developed using that spectrum,
15    and an interest that cannot be eradicated by
16    government fiat."
17              There's only one senator, so far as I know,
18    who has taken that perspective, and that's Arlen
19    Specter, who said that there is a property right that
20    has come not because the grant of the spectrum, but
21    because over the years they've developed that
22    property right.
23              But when I asked Arlen Specter whether that
24    same right would apply to the digital spectrum --
25    which has not yet taken hold -- he said no.  And

 1    that, in fact, there were not property rights
 2    attached to the digital spectrum.
 3              Is Arlen Specter wrong?
 4              MR. DeVORE:  I have considerable respect
 5    for Arlen Specter, although I don't turn to him for
 6    my Constitutional opinions.
 7              I think as far as this part of my paper is
 8    concerned, it's in much less detail.  We're not First
 9    Amendment -- having a First Amendment discussion,
10    we're having a Fifth Amendment taking discussion
11    about whether there --
12              CO-CHAIR ORNSTEIN:  Yes.
13              MR. DeVORE:  -- will be compensation if you
14    did this.
15              I think the best thing I can do is just to
16    commit you to Lillian BeVier's paper.  And she deals
17    with this in remarkable detail, citing cases and so
18    forth.  And I come away from reading her paper even
19    more convinced than I have been that there would also
20    be a second and valid Fifth Amendment argument.
21              CO-CHAIR ORNSTEIN:  I came away from her
22    paper with exactly the opposite.  But, let me --
23              MR. DeVORE:  You're using the eye-of-the-
24    beholder.
25              CO-CHAIR ORNSTEIN:  Yes.

 1              Let me move on and just ask you a couple of
 2    other quick questions.
 3              Do you think there are any public interest
 4    obligations that broadcasters have with the grant of
 5    the spectrum?
 6              MR. DeVORE:  That's such a vague question,
 7    Norm, that I wouldn't even know how to respond to it.
 8              CO-CHAIR ORNSTEIN:  Should the government
 9    has the ability to mandate obligations in the public
10    interest with the grant of the spectrum of any
11    variety, any sort; or are they all unconstitutional?
12              MR. DeVORE:  That's sort, "Have you stopped
13    beating your wife," Norm.  And I just don't see how I
14    can respond.
15              I mean, what do you suggest?
16              CO-CHAIR ORNSTEIN:  That's a simple
17    question.
18              MR. DeVORE:  What are you proposing as a
19    regulation?
20              CO-CHAIR ORNSTEIN:  Well, no.  If this is
21    unconstitutional, is children's television time, as a
22    mandate, unconstitutional?
23              MR. DeVORE:  That's a very complicated
24    issue, and it may not be, I don't know.
25              CO-CHAIR ORNSTEIN:  So --

 1              MR. DeVORE:  I already told you there were
 2    special children authorities in the First Amendment
 3    jurisprudence.
 4              CO-CHAIR ORNSTEIN:  But you wouldn't
 5    suggest that public interest obligations, imposed on
 6    broadcasters in return for the grant of the spectrum,
 7    are by definition unconstitutional?
 8              MR. DeVORE:  It depends on what they are. 
 9    If they deal with content and they deal with
10    editorial freedom, then they are.
11              CO-CHAIR ORNSTEIN:  One last question.
12              If Congress had auctioned off the spectrum,
13    and it h gotten whatever sum of money had accrued
14    from that and had used some of that money to then
15    bring about a program with now funds that had come to
16    the government to purchase time or to give time to
17    parties or to candidates, is that unconstitutional?
18              MR. DeVORE:  I think Buckley v. Valeo
19    teaches that it would not be unconstitutional.
20              CO-CHAIR ORNSTEIN:  And if, as a part of a
21    process of determining public interest obligations,
22    we adopted a model similar to the one that Billy
23    Tauzin has suggested or that Henry Geller suggested,
24    that broadcasters be able in lieu of committing some
25    public interest obligations to pay some fee.

 1              And that fee were used not simply for
 2    Public Broadcasting, but fee going to the government
 3    used for air time, would that be unconstitutional?
 4              MR. DeVORE:  Again, you're talking about
 5    something we'd have to analyze in some detail, Norm. 
 6    I mean, it seems to me that if you're going to work
 7    out something where, in effect, you're taxing the
 8    broadcasters on a different basis to fund all of
 9    this, you're going to have exactly the same
10    Constitutional problem that you have now.
11              CO-CHAIR ORNSTEIN:  If broadcasters are
12    given options of either doing some of these things or
13    paying the fee in lieu of them, is that
14    unconstitutional?
15              MR. DeVORE:  No, I've never seen that
16    proposal written down.  Now if you want to have an
17    exchange outside this forum, I'd be glad to try to
18    respond to specific proposals in whatever detail
19    you'd like.
20              CO-CHAIR ORNSTEIN:  Okay.
21              MR. SUNSTEIN:  Frank.
22              MR. CRUZ:  He had some of my questions
23    there, Norm.  But let me try to re-ask one of them
24    because I think it is of interest.
25              Given the fact that the search for this

 1    Holy Grail of the public interest obligations over
 2    the years have been upheld either by the FCC or
 3    imposed or approved by Courts and the Congress of the
 4    United States, what if we as this particular body,
 5    and I've got two different areas to ask, but what if
 6    this particular body here imposed regulations on the
 7    broadcast industry now, with that additional
 8    spectrum, are we being unfair or unconstitutional or
 9    wrong in letting cable and satellite and others
10    slide?
11              Don't answer it yet.  Three of you can ask.
12              The other one has to do with the idea that
13    could it be the time right now appropriate, at this
14    particular juncture, given this technological
15    revolution that we're going through, that we really
16    should, perhaps, deregulate the industry and perhaps
17    take some of that onus of some of those public
18    interest obligations away from the commercial
19    broadcaster, and in lieu of that -- as I predicated
20    the statement by saying that FCC and the Courts and
21    others have upheld obligations -- freeing them of
22    those obligations and in exchange for that, perhaps
23    using that funding to, perhaps fund all political air
24    time on public broadcasting in America.
25              MR. DeVORE:  Those seem to me to be

 1    perfectly appropriate subjects for this Committee and
 2    Commission to consider.
 3              Certainly a model of National Public Radio
 4    or a governmentally funded broadcasting is something
 5    which doesn't exist to a large extent in this
 6    country, certainly not to the extent that would solve
 7    the problems that Paul and Tracy have defined.
 8              It's possible that we could have juggled
 9    ourselves a different way and that you may recommend
10    that some of that be done and that we do it a
11    different way in the future; but the present model
12    doesn't work that way.  As far as whether it "ain't
13    fair" to just do it to broadcasters and maybe it
14    would be better if it also included cable and some
15    perhaps entities that are growing increasingly strong
16    on the Internet, there's a whole bunch of folks out
17    there who might bear some part of this burden.
18              It seems to me that just generally, that if
19    free air time is what we're talking about as opposed
20    to increasing the regulatory scope of what the FCC or
21    some new agency does, you have the same
22    constitutional problem in mandating content even if
23    you have a broader set of regulated entities.
24              MR. SUNSTEIN:  James Goodmon -- yes.  Okay. 
25    A brief comment.

 1              MR. WESTEN:  Very briefly.  Yes.  I think
 2    it would be unfair to apply these burdens only to
 3    digital broadcasters.  I think they ought to be
 4    applied across the spectrum including cable,
 5    particular the pay cable networks.
 6              By "pay," I mean advertising supported
 7    networks such as ESPN and so forth.
 8              Secondly, I think the answer -- in
 9    listening to your first panel, the best answer I can
10    think of for dealing with the problems of independent
11    producers is the Geller solution in which some money
12    is given to public broadcasting to fund, among other
13    things, independent productions.
14              What makes this issue difficult and
15    different is that you don't want to create a -- you
16    don't want to "ghetto-ize" political speech.  And
17    excuse me for using the word "ghetto" in the context
18    of public broadcasting, which is extraordinarily
19    important.  But it has a special audience.
20              Now when -- it is important that political
21    ideas reach everyone.  And for that reason I've
22    proposed this "access system," if you like, that will
23    allow political candidates to reach all broadcast
24    audiences, not just public broadcast audiences.
25              I think our democratic system is so

 1    important that it be broad based, that we have to
 2    consider that option.
 3              With respect to innovative programming, I
 4    think the public broadcasting options is the right
 5    move.
 6              MR. SUNSTEIN:  James Goodmon, and then Cass
 7    Sunstein has a brief question or two.
 8              MR. GOODMON:  Let me just mention two or
 9    three notions to get your response to this.
10              I think we're all on the same page: 
11    Informed electorate, more vibrant democracy.  The
12    notion that I have as a broadcaster, though, is that
13    I am dealing with very sophisticated and capable
14    marketeers.
15              I think one of the first groups would say
16    that they don't particularly like your proposal is
17    the candidates.  They don't want two minutes a week. 
18    They want 30 seconds on Thursday night between the
19    local news and the national news on Thursdays.
20              I mean they have a very targeted marketing
21    strategy for what they're doing.  And while I agree
22    with you that from the informed electorate, the
23    program time for candidates and more information, is
24    a really good idea.  I don't think it'll change by
25    one dollar the amount of money they spend on

 1    television.
 2              I mean because that's how they do it.  And
 3    it's a targeted buy and it's marketing.  And it's not
 4    just get time, it's get time on certain stations at
 5    certain times on certain days.  So that they're going
 6    to lower their television spending because of this is
 7    not the reason I think it should be done, as the most
 8    -- another couple of things I'm going bring up.
 9              I don't think the lowest unit rate works to
10    the benefit of the candidates.  And I do think that
11    if the candidates do have any preference, whether it
12    be free time or equal -- all of these preferences
13    that federal candidates have, my notion is they
14    shouldn't have any of those unless the candidates
15    appear.
16              To me, the whole notion here is to give the
17    candidate an opportunity to appear, not to give the
18    advertising agency another reason, another shot at
19    something.  So whatever we come up with as a
20    preference for candidates, my notion is it should be
21    the candidates should have to appear.
22              The most serious notion I've seen -- and,
23    by the way, the President, in his last radio -- the
24    last time the President talked about this, he said
25    free time for candidates in return for spending

 1    limits.  Those were his word- -- I mean so there is
 2    the notion that all of this fits into some kind of
 3    campaign reform package.
 4              The most serious thing that I've noticed in
 5    observing this is the third-party expenditures.  And
 6    I don't think we can talk about this without talking
 7    about that, in terms of what is the overall -- what
 8    are we doing?  I mean the candidates are almost
 9    forced into these spending, rising spendings when
10    these third-parties, who are under no control, start
11    doing all their spending.  And to me that's more
12    important than what the candidates are spending,
13    because I think it's a cause and effect.
14              And one other thing that I'm just -- I'm
15    not trying to be smart, but from the broadcast -- you
16    know, nobody has to buy television.  Sometimes when
17    this s presented, it's like broadcasters make
18    candidates.  If you want to be elected you have to
19    buy television.
20              I mean nobody has to raise $10 million in a
21    senate campaign.  Nobody has to buy television.  I
22    mean we're not causing this.  That doesn't make any
23    sense -- but you don't have to buy television.  You
24    can spend it in the newspaper.  You can spend it on
25    radio, you can do anything.  This is not a

 1    television-orchestrated notion.
 2              But I'm with you on the informed electorate
 3    and program time and stuff like that.
 4              MR. WESTEN:  There's a lot I agree with
 5    you.  And a lot of what you said that I agree on.
 6              I think two -- I've suggested two minutes
 7    because I think it would allow them to get more into
 8    the issues.  And I want to encourage them to do that. 
 9    I don't think they really want to.
10              MR. GOODMON:  No.
11              MR. WESTEN:  If the best we can get is 30
12    seconds, I would take it in a minute.  But I --
13              MR. GOODMON:  Well, let me just add that I
14    think the majority of the time that we offer time to
15    candidates to appear to discuss issues, they do not
16    want to do it.  That's not part of the plan.  It's
17    not part of their plan.
18              MR. WESTEN:  Yes.  But I think creating a
19    longer format would, in many instances, create
20    incentives to address more issues than you can
21    address in 30 seconds.
22              MR. GOODMON:  Right.
23              MR. WESTEN:  But of this the only option
24    were 30 seconds or nothing, I think that's clearly
25    better than what we now have.

 1              I think you're right.  This would not
 2    change the amount of money spent on television. 
 3    This, by itself, is not a campaign finance solution. 
 4    You'd need expenditure ceilings.  But, nonetheless,
 5    it will considerably add to the information mix.  And
 6    I think that's its main benefit.
 7              Lowest unit rate, I agree with you a
 8    hundred percent.  I think candidates ought to
 9    participate.  And I think it's an innovative idea the
10    whole Commission should to consider.
11              The third-party expenditures, yes, a major
12    and growing problem.  But that's why I think we've
13    got to at least give the candidates some say in the
14    outcome of their own election.
15              And, finally, no one has to buy television,
16    you're absolutely right.  But in many instances, if
17    you don't do it, you're just not competitive.  And
18    that also is the reality.  And it is the medium of
19    choice simply because it is the most effective.  Any
20    candidate, if they can get television, will pick it
21    over virtually any other medium.  And that's the
22    reality we have to deal with.
23              So I think you've had several innovative
24    suggestions.  And I think the whole group ought to
25    consider them.  And I think there are many ways we

 1    can get from here to there, and they ought to be
 2    explored.
 3              MR. SUNSTEIN:  I have just two very small
 4    questions.
 5              The first is for Cam DeVore.  I just had a
 6    chance to look over your brief very quickly.  But on
 7    the takings issue, what did you say about the
 8    Kaiser-Aetna case, it's a little technical, but it's
 9    the closest case?
10              MR. DeVORE:  Which case?
11              MR. SUNSTEIN:  Kaiser-Aetna against the
12    United States.
13              MR. DeVORE:  I don't really discuss it in
14    the thing.  And, again, you'll find I think a longer
15    discussion of it in Lillian's piece.  And I'm not
16    that familiar with the case.
17              MR. SUNSTEIN:  Okay.  The more general
18    question is -- there's a factual issue here, which
19    is:  If we had free air time for candidates, how many
20    people would watch?
21              It's a factual question crucial to, Tracy,
22    your point.
23              Do any of you have anything that ranges
24    toward the "hard," that is, in terms of projection of
25    numbers, worst-case/best-case, of the number of

 1    people who would watch?
 2              MR. TAYLOR:  Well, I think it depends
 3    entirely on the format.  If you created a regime of
 4    mandatory free air time and that you gave to
 5    candidates in a way that the candidate would most
 6    likely use it, they would simply take those resources
 7    and do more of the 30-second spots that we are all so
 8    familiar with.
 9              I saw one survey that from April through
10    October of 1996 there were something like 750,000 of
11    those 30-second political spots in markets around the
12    country.  And there is a variety of political science
13    analysis as to how much they move votes.  But that's
14    a pretty substantial volume.  That's what you would
15    get -- that's what you would get more of.
16              MR. SUNSTEIN:  The question isn't really
17    what we'd get more of.  It's how many people would
18    watch.  Because the skeptics would say, "You're just
19    going to have people turning off the TV or watching
20    other things, so you won't accomplish the
21    informational goals."
22              MR. TAYLOR:  But the whole purpose of
23    packaging in a 30-second spot is to reach a semi-
24    captive audience, is to put it -- everybody
25    understands that.  That's why we get them there.  The

 1    people who don't voluntarily want to watch these
 2    things, but there they are, they land in their lap.
 3              If you go to other kinds of formats, you
 4    know, will diminish the audience to some degree, but
 5    there is still something between a 30-second spot and
 6    some other high-minded PBS type of format.  It's very
 7    hard to give you hard numbers on it, but common sense
 8    would suggest let's try to invent something that's
 9    both engaging and informative.  I think most of us
10    are frustrated we're not there yet.
11              MR. SUNSTEIN:  All right.  Thank you all. 
12    This was an excellent panel and we're very grateful.
13         (Comments off the record.)
14              MS. EDWARDS:  Actually, what I think the
15    members are going to do is they're going to have
16    lunch provided by the Annenberg School in a
17    second-floor conference room.  And we'll meet you
18    there.  And then we're going to reconvene at about
19    1:30 for everyone else.
20         (Whereupon, the Committee broke for lunch from
21    12:17 p.m. to 1:34 p.m.)

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